Ladies and gentlemen, thank you for standing by and welcome to the Calithera Biosciences Fourth Quarter 2019 Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session.

[Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions]I would now like to hand the conference over to your speaker today Ms. Jennifer McNealey. Thank you. Please go ahead ma'am..

Thank you, Daniel. Good afternoon everyone. Welcome to our fourth quarter and year-end 2019 conference call. Joining me today are Susan Molineaux, our Founder, President and CEO; Keith Orford, Chief Medical Officer; and Stephanie Wong, Senior Vice President of Finance.

We have issued our press release and it can be accessed through our website at calithera.com.Before we begin, I'd like to remind you that today's discussion will include statements about our future expectations, plans and prospects that constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Security Litigations 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 in the risk factors discussed in the Risk Factors section of our annual report on Form 10-K filed with the 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 that this call is being recorded.And with that, I'll turn the call over to Susan..

Thanks Jennifer. Good afternoon everyone and thank you for joining us today on our fourth quarter and year-end 2019 conference call. At Calithera, we are building an integrated biotechnology company that develops novel small molecule oncometabolism drugs.

Drugs that are targeting tumor and immune cell metabolism pathways for the treatment of cancer and other diseases.By building a pipeline of novel therapeutic product candidates, we are creating multiple opportunities to positively impact clinical outcomes for patients and drive development programs towards commercialization.

We are the first company to take a selective glutaminase inhibitor into the clinic and the first to demonstrate clinical activity in cancer patients.Based on the compelling results for the ENTRATA trial in advanced renal cell carcinoma, which we presented at the European Society for Medical Oncology, or ESMO meeting in September 2019, we believe we have demonstrated proof-of-concept for the activity of telaglenastat in renal cell carcinoma.We have now fully enrolled the telaglenastat CANTATA trial, a study with registration potential in renal cell carcinoma patients.

This moves us a step closer to becoming a commercial biotechnology company.

We are pleased with the enrollment of CANTATA ahead of schedule and are grateful to the investigators and patients who helped us exceed our enrollment goal.We are, of course, closely monitoring the developments related to the coronavirus outbreak and its potential impact on Calithera and specifically the CANTATA trial.

As you know, it is a fluid situation making it difficult to determine the exact impact on the conduct of our CANTATA clinical trial. But that said, we do not anticipate any major challenges or treatment interruptions for our patients.

Based on what we know today, we remain confident we can meet our time line for top line data in late third quarter or the fourth quarter of this year.This quarter we also made progress towards initiating a randomized trial in first-line non-small cell lung cancer patients harboring genetic mutations in nerve or KEAP.

Recent clinical data indicates that activation of the NRF/KEAP pathway results in very poor clinical outcomes, demonstrating that there remains a significant unmet need in this population.

And we are on track to initiate this trial in the first half of the year with a potential for interim data in 2021.Our arginase inhibitor INCB001158 or 1158 is the first arginase inhibitor to enter the clinic. Arginase is an immunosuppressive enzyme expressed by immune cells in the tumor microenvironment.

At the ESMO meeting in September 2019, the first efficacy data for this compound were presented demonstrating activity and providing proof-of-concept for arginase inhibition for the treatment of cancer.

We are pleased with the progress of this program as we seek to develop a first-in-class product for patients with multiple types of solid tumors.Last year, we completed a Phase 1 trial in healthy volunteers for our wholly-owned arginase inhibitor CB-280 for the treatment of patients with cystic fibrosis.

A Phase 1b trial in people with cystic fibrosis is on track to start enrollment in the first half of the year. Beyond our three clinical-stage programs, we have a broad pipeline and a productive R&D team.

We remain focused on producing novel drug candidates with the potential to be highly differentiated new therapies in areas of unmet need.Our most advanced preclinical-stage program are in immuno-oncology.

We have promising preclinical data with CB-708, our oral small molecule inhibitor CD73, but at this time we have chosen to deprioritize development of this program and we do not have plans to advance CB-708 into clinical trials this year.

Meanwhile, we are continuing preclinical studies with our small molecule inhibitor of IL4I1, a novel target involved in tumor immunosuppression.And with that I will pass the call over to Keith for additional details on our clinical programs..

Thank you, Susan. Let's begin with a more detailed update of telaglenastat our glutaminase inhibitor and our most advanced product candidate.

We are currently focused on forging a clinical and potentially commercial path for telaglenastat in renal cell carcinoma.In the quarter, we announced completion of enrollment of CANTATA, a global randomized double-blind trial of telaglenastat in combination with cabozantinib in second and third-line RCC patients.

CANTATA enrolled 444 patients ahead of schedule demonstrating the significant unmet need for advanced RCC patients in the second and third-line setting.CANTATA is designed to evaluate the efficacy and safety of telaglenastat in combination with cabozantinib versus placebo plus cabozantinib in clear cell RCC patients who have previously received one or two prior lines of therapy including at least one prior anti-angiogenic agent or the ipilimumab/nivolumab combination.Patients were randomized in a 1:1 ratio to either telaglenastat plus cabozantinib or placebo plus cabozantinib.

Patients were stratified by IMDC risk category and prior treatment with anti-PD-1 PD-L1 therapy. The primary endpoint is progression-free survival by independent review.

Overall survival will be assessed as a key secondary endpoint.The trial is designed with registrational intent and we remain on-track to report top line results of CANTATA in late third quarter or fourth quarter 2020.

We also believe telaglenastat has the potential to be developed in patients with NRF2/KEAP1 mutations.Multiple in vivo preclinical models have demonstrated that activation of this pathway through a loss of function KEAP1 mutation or a gain of function NRF2 mutations accelerates tumor formation and spread.

In addition to making tumor models more aggressive the activation of the NRF2/KEAP1 pathway also makes them sensitive to the inhibition of glutaminase activity by telaglenastat.

An NCI-sponsored trial evaluating single-agent telaglenastat in patients with solid tumors that have NRF2 or KEAP1 mutations is currently ongoing.Recently presented clinical data have demonstrated that activation of the KEAP1/NRF2 pathway results in very poor outcomes in non-small cell lung cancer patients receiving front-line standard of care chemotherapy or chemo-immunotherapy.

Based on these recently presented data and the unmet need of this population, we have designed a randomized trial in lung cancer patients which we expect to begin in the first half of 2020.The study will evaluate telaglenastat in combination with standard of care therapy chemo plus pembro in approximately 120 first-line metastatic, non-squamous lung cancer patients with tumors that harbor mutations in either KEAP1 or NRF2.

The study will include an initial safety run-in period. And co-primary endpoints are safety and investigator set progression-free survival.

An interim analysis is planned in 2021.Next the arginase program INCB001158 also known as 1158 is an investigational first-in-class immuno-oncology, metabolic checkpoint inhibitor targeting arginase, an immunosuppressive enzyme secreted by myeloid-derived suppressor cells or MDSCs to block T-cell activation in tumors.1158 is being developed with insight in a co-development co-commercialization collaboration.

1158 is being evaluated as monotherapy as well as in combination with pembrolizumab across eight cohorts of patients with different types of metastatic or locally advanced cancers not amenable to local therapy.

The first data from this study were presented at ESMO in September 2019.A dose escalation with monotherapy to find the recommended Phase II dose of 1158 was followed by expansion in three cohorts; non-small cell lung cancer, colorectal cancer and the basket arm of solid tumors.

Following a dose escalation of 1158 in combination with pembro, eight cohorts were expanded, four enrolled patient populations that were PD-1 naive and four enrolled patient populations that were PD-1 refractory.PD-1 refractory patients had to be on a checkpoint inhibitor-based therapy and failing to drive benefit at the time of study entry which means that they had active disease progression or prolonged stable disease without a response.The colorectal monotherapy and MSS colorectal combo cohorts advanced to Simon stage 2 and data on both cohorts were presented at ESMO.

The PD-1 PD-L1 naive head and neck cohort -- combo cohort has also advanced to stage two and is actively enrolling.As the colorectal cohorts were the most mature at the time of data cutoff they were the focus of the presentation.

Responses were observed in both the combination and monotherapy cohorts.We were also pleased to see increases in total intratumoral CD8-positive cells following treatment with 1158 with pembrolizumab in MSS colorectal cancer patients with the increases occurring most notably among those patients that derive clinical benefit.

We believe this provides proof of concept for arginase inhibition in the treatment of cancer.A second ongoing clinical trial is evaluating 1158 in combination with three different chemotherapy regimens FOLFOX, gemcitabine/cisplatin and paclitaxel in patients with ovarian, endometrial, colorectal, gastroesophageal and biliary tract cancers.

An additional trial in multiple myeloma patients, treating patients with 1158 plus daratumumab or daratumumab alone is also ongoing. We are pleased with the progress of this program and we look forward to additional data updates from the 1158 program in the future.We are also developing an arginase inhibitor outside of oncology.

CB-280 is a novel arginase inhibitor in development of the treatment of cystic fibrosis. Under our collaboration agreement with Incyte, we retain worldwide rights to develop arginase inhibitors in specific non-oncology rare disease indications including cystic fibrosis.

Arginase has been posited to play a critical role in the pathophysiology of cystic fibrosis as well as several other non-oncology diseases.CF patients have neutrophil infiltrates in their lungs, and these neutrophils secrete high levels of arginase. High arginase activity depletes arginine, which in turn depletes nitric oxide.

Nitric oxide or NO, has potent antimicrobial activity and exogenous NO has been shown to improve lung function when administered to CF patients.

We hypothesize that inhibition of arginase with CB-280 can restore normal arginine and NO levels and improve lung function in CF patients, a concept that is supported by previous proof-of-concept clinical trials.The Phase I clinical trial to evaluate the safety, tolerability and pharmacokinetic profile of oral CB-280 in healthy volunteers has been successfully completed.

A Phase Ib clinical trial in CF patients, which is expected to start enrollment in the first half of 2020 will test multiple doses of CB-280 compared to placebo in approximately 30 adult CF patients to determine a safe dose range for CB-280. Patients with any CFTR mutational status will be eligible for study.

Patients will receive CB-280 or placebo for 14 days. Lung function, NO production and sputum microbes will be evaluated.A dose-finding expansion of the study is planned in which additional cohorts of patients will receive different doses of CB-280 or placebo for 28 days in order to select the optimal dose of CB-280.

For the entire study patients will continue their existing CF -- existing therapies for CF including CFTR modulators. We plan to present data from this trial in 2021.With that, I'll pass it over to Stephanie for an update on our financials..

Thank you, Keith, and good afternoon everyone. Detailed financial results for the fourth quarter and year-end 2019 were included in today's press release. I will briefly review our results on this call.Calithera ended the year well capitalized.

Our cash and investments were $157.4 million at December 31, 2019 and we expect to utilize $75 million to $85 million in 2020. We believe our cash position enables us to drive our clinical programs to meaningful value inflection points.Research and development expenses were $76.3 million in 2019 compared to $66.2 million in 2018.

The increase in 2018 to 2019 was primarily in the telaglenastat program including for our CANTATA trial where we completed enrollment in 2019.

And in our 1158 program, research and development expenses for the fourth quarter 2019 were $17.9 million compared to $17 million for the same period last year.General and administrative expenses were $16.6 million in 2019 compared to $13.3 million in 2018.

The increase from 2018 to 2019 was primarily related to higher professional services costs, mainly for legal and accounting services and higher personnel-related costs, primarily from higher headcount.

General and administrative expenses for the fourth quarter 2019 was $4.6 million compared to $3.2 million for the same period last year.Interest and other income net was $3 million in 2019 compared with $2.6 million in 2018. Interest and other income net for the fourth quarter of 2019 and 2018 was $0.7 million.

Net loss for the quarter ended -- for the quarter ended December 31, 2019 was $21.7 million.And with that, I will now return the call back over to Susan..

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

[Operator Instructions] Our first question comes from Mohit Bansal with Citi. Your line is now open..

Hi, guys. This is actually James [ph] on for Mohit. I had a question about the lung trial and the liquid biopsy to identify the NRF2/KEAP1 patients.

Are the biopsy results limited to just binary output? I guess is it just positive/negative for NRF2/KEAP1 activation? Or is there some sort of quantitative output that can help track changes in the I guess levels of NRF2/KEAP1 or the amount of circulating tumor cells?.

Yes. Hi, James, great question. So no it's not just a binary outcome or results on these -- on the assay. So we'll get the results first of all for a number of other mutation status across all the genes in the panel. But also it will be a quantitative result.

And we will be following or taking samples during the study that would allow us to do just what you're talking about following circulating free DNA levels to look for potential response..

Awesome. And then just like a quick second question. It maybe a bit early, but you guys talked about being one step being – one step closer to being a commercial company.

But can you talk about some of the – I guess, early planning or strategies around telaglenastat for RCC?.

For commercialization? We've been starting to put a whole plan in place for a potential launch. As you know, we have fast track status. And so if the CANTATA data at top line were positive, we would move towards filing and submitting an NDA, and with again potential for priority review.

And on those time lines, we've been readying the company for a whole set of precommercial activities. And we have started some of them prior to seeing the top line results, but of course, a lot more activities will occur after we see top line results as they are positive..

Awesome. Thanks, guys..

Thank you. Our next question comes from Jonathan Chang with SVB Leerink. Your line is now open..

Hi. Thanks for taking my question. First question, you've refined your guidance around the CANTATA readout slightly to late 3Q to 4Q from second half previously. Any color on the more granular time line? It sounded like it's not coronavirus-related..

No that's – it's really just the fact that, as the data mature, as we analyze the data, we can get – we're able to tighten up our guidance essentially. So it's really just based on what we've seen in terms of event rates and allows us to project a little more accurately..

Got it. Second question on the lung cancer study.

Can you talk about your expectations for enrollment and what investors should expect regarding the nature of the interim data in 2021?.

In terms of enrollment, so we have taken the – our efforts to open the study and to operationalize the study, include a few specific things that are meant to optimize enrollment and to accelerate enrollment given that we're looking at a subset of patients in the frontline setting, which is a significant proportion, where we're in the order of 20% of patients – non-squamous patients.

So it's a significant population, but obviously, we still need to screen and then only enroll those patients that screen positively.So for those purposes, we put into place a liquid biopsy that we will make available to all sites to screen patients in order to make this study attractive, and also just to facilitate finding these patients on a timely basis prior to starting their front line therapy.

So that's one key element is that, we're making this – the liquid biopsy available.Secondly, we are going to open a significant number of sites in order to be able to identify these patients. So we are aggressively identifying and opening sites for the purposes of keeping enrollment at a rapid pace.

So there is an initial safety run-in as we mentioned. So enrollment will go until, we've demonstrated that the regimen is safe, which we expect it will be. And then it will be open to full enrollment.

The expectation is that that will allow us to get to our interim analysis, which is – it's going to be on approximately half of the patients, a little bit under half of the patients. When we have results from those patients, we'll be able to do an interim analysis, and we expect that would be in 2021..

Got it.

And then just lastly on your cash position, any color on how we should be thinking about runway and burn in 2020?.

Sure, Jonathan. We don't really guide to cash runway, but our cash guidance this year is $75 million to $85 million. And so we ended the year at $157 million end of the year 2019 yeah..

Thank you..

Thank you. Our next question comes from Swayam Ramakanth with H.C. Wainwright. Your line is now open..

Good afternoon, ladies. A couple of quick questions.

In terms of the NCI-sponsored study that Keith was referring to could you give us a little bit of color in what cancers this study is being conducted? And anything on data expectations? And if the data is positive, what sort of indications would look interesting for Calithera to take over and run them?.

Yeah. So this is a study that's looking at actually a couple of different mutations and NRF2/KEAP1 are two of the key mutations. But it's identifying patients with these specific mutations not limited by their histology.

So it's essentially open to solid – patients with solid – I mean, solid tumors that have documented mutations in NRF2/KEAP1 as well as a few others as well.So, it's not restricted by tumor type.

It's really a signal-seeking study that would potentially provide us with data that would support development in any of these tumor types or even conceivably in a tissue-agnostic approach where we look for patients with those specific mutations. And that could be as monotherapy or it could be in combinations with standard therapies..

Okay.

And anything on the data expectations that you have in here?.

It's difficult to predict the timing. So, CTEP is moving along with the program. And they've been a great partner at least from -- we've been reviewing -- we've read the -- reviewed the protocol, but obviously, they run this study completely independently and it's on their time line. So, we really can't speak to that..

Okay.

And then on 1158, can you give us some color as to when we could expect the next update from Incyte on this?.

So, that study continues. Actually those studies -- there's multiple studies the 101 study which is our study with pembro, there's the chemo combination study, and then they also have their myeloma study, and a study in Japanese patients.

All these studies continue to enroll.Given that this is a joint development collaboration, we aren't able to provide that guidance in the absence of sort of our joint agreement on that. So, at this point, no, we're not able to provide further color on that..

Okay. Susan I guess just a strategic question. When -- quite a few of the companies are going after the CD73 as a target and they're not really hardly through their Phase 1 studies most of these folks.

So, what's the reason for you to deprioritize CB-708? Is it something to do with science? Or is that something to do with resources?.

It doesn't have anything to do with the science. We have a really potent and selective oral compound that inhibits CD73.

So, we're quite happy with the preclinical data and toxicology data we've generated on the molecule.Right now with the entire adenosine pathway being interrogated across multiple targets not just CD73 and no definitive data pointing the way as to what combination studies one should do in which tumor types in order to move forward not only would we be in a competitive landscape with other molecules and companies who are ahead of us, but also the path would have to be quite broad.And so we're still open to the concept of going into the clinic if we had resources from a partner to help us.

But right now on our own we have a lot of other priorities on our other programs in clinical that we would like to pursue..

Thank you. Thank you for that Susan. Appreciate taking all my questions..

Thank you..

Thank you. Our next question comes from Matt Phipps with William Blair. Your line is now open..

Hi, thanks for taking my questions.

Keith, I guess, first on the lung cancer trial, how is this -- can you give us anything about how this is powered? I mean how much benefit do you need to see here on top of standard care considering we know that these patients did so poorly with standard care?And then in the previous update of the trial there was -- there were some non-small cell lung cancer patients.

They were -- I guess you call them rescue that they previously had a PD-1 and then go back and look and see if any of those patients had any of the NRF2/KEAP1 mutations just see if there's been anything you can go off of. I don't think it was a ton of patients in this study..

Right. So, in terms of the study design, so it's 120 patients. As you mentioned, the outcomes for these patients based on data that have been recently presented is quite core. So, even with 120 patients which isn't a huge study, but it's also not a small study. We think we'll be able to see a reasonable increase. It's not powered like a Phase 3.

So, we're not talking about a two-sided alpha here for the design. Having said that -- of like 0.05.Having said that, with a significant increase in benefit, then you would be talking about interesting statistics of that source. So, we've tried to design the study large enough so that a home run would be of interest.

But we would also be able to see a reasonable sized signal. So, a two-month benefit or better that would give us evidence to move forward into a subsequent randomized study..

Got it.

And then anything on those previous Telaglenastat lung observation?.

Right. So, yes, so we did have patients on that study that has the pathway activated through mutations. We haven't presented those data publicly, but we're certainly aware of them and were part of our thinking as we plan to go forward with the current study. And I think the plan at some point will be to present those data as well..

Great. Thanks. You guys have shown recently a new slide in the deck that has kind of some preclinical experiments on cell lines that have primarily the KEAP1 mutant cell lines. There's -- most are very responsive. There's a couple that aren't.

And I guess have you looked at those cell lines and see if there's another mutation that maybe could be one that you want to watch out for as not a predictor response? I assume a lot of these patients -- these cell lung cancer patients will have multiple mutations.

But just wondering if you're trying to tease out maybe why some of those cell lines didn't appear to be as responsive?.

So we haven't done a lot of work on that, but we have seen that the one -- I think it was the least sensitive cell line when analyzed for activation of that pathway did not activate it as well as the other cell lines. So while it does -- it did harbor the mutation.

It didn't act and it didn't show itself through its gene expression profile to have fully activated the pathway. I think that's probably about as much as we can say there.I don't know Susan if you have anything else to add..

No that's true. And I would also add that as part of our study, we will be looking at the biopsies of patients and not just the actual mutational status of the patients and we'll be able to see through looking at gene expression profile whether those pathways were really on or not.

So that's just one example out of many cell lines where we knew that they had an activating mutation and yet they didn't activate the pathway. We don't know specifically why in that cell line.

We know it's rare across the cell lines, but we will be able to delineate any patients that carry the mutation but didn't activate the pathway in our clinical studies..

Yeah. That may be gene expression profiles or that could be immunochemistry for some of these genes, yeah..

All right, great. Thanks so much for taking the questions..

Yeah. Thanks, Matt..

Thank you. Our next question comes from Jim Birchenough with Wells Fargo Securities. Your line is now open..

Good afternoon, it's Nick in for Jim this afternoon. Just following up on the lung cancer trial for telaglenastat. I know the protocol excludes patients who have actionable mutations.

So can you just talk about what the overlap is between actionable mutations of KRAS p53 in that 20% of patients to have a pathway activated on the mutation of interest?.

Yeah sure. So there is a -- so most of the patients who have KEAP activated, do not have actionable mutations. So there's sort of -- they're not mutually exclusive but there's a reduced rate of actionable EGFR ALK type mutations in the KEAP mutant patients.

So while you will find overlap, it's less common among the KEAP mutant patients to have actionable mutations.And then in terms of the KRAS/KEAP overlap, Susan correct me if I'm wrong, but I think about -- I think around one-third of the KEAP mutations also have KRAS mutations. So there is definitely overlap there.

But actually it looks like the majority of patients do not have KRAS but a significant proportion do..

Okay.

And then the preclinical data suggests that whether the KRAS is present or not, those cells are equally sensitive to telaglenastat?.

Yes. So there's – the preclinical data are there's different – there's some different models and different opinions on that. But in general from our take on it is that KRAS is not necessary. And then the clinical data suggest that the outcomes are not KRAS-dependent. So you don't have to be – KRAS mutant to have poor outcomes.

So our take on the data is that KRAS is not a problem but it's also not necessary in terms of the likelihood of response to glutaminase inhibition..

Okay. And then I think the patients are going to be stratified based on STK1 or LKB.

Would you expect that to account for 50% of these patients? Or will it be a small fraction?.

Yes. The STK11/LKB is a – it's a significant proportion. I'm trying to remember. It might be in the same range as KRAS. It's probably around a third of the patients are likely to be STK11 mutant. And that's a range where you do want to – if it's 95% or if it's 5%, it's actually not that important to stratify.

But when you're in that more intermediate range it's more relevant to stratify..

And then just this last one on the lung study. So you talked about the interim analysis.

If you do see a profound benefit, do you have the opportunity you think to expand this study for registration purposes or you'd have to essentially close the study and start a brand-new study?.

Yes. So we would think that there are – all those options are possible. So we could either open a new study or even just amend the current study. We would at that point likely select a specific assay to screen for that all patients will be screened by. But we do think we could conceivably amend or do a new study.

Most likely this is something we would talk through with FDA and get their input..

Sure. And then just last one for me.

For the telaglenastat and IBRANCE combinations, should we expect a safety data this year or some efficacy ahead of cohort expansions?.

Yes. I mean so the – those studies are ongoing. They are through – getting through their dose escalation and into expansions. So we haven't guided specifically on timing around data presentation. So I would say, it wouldn't be impossible but we're definitely not guiding at this point to definitely doing a presentation of the data this year..

Great. Thank you very much. And I'll – we'll miss each other at AACR this year unfortunately..

Yes I guess so..

Yes..

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Jennifer McNealey for any closing remarks..

Thank you, Daniel. And thanks to all for joining us and have a great evening..

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect..