Daniel Cole - Chen Schor - Chief Executive Officer, President and Director Vojo Vukovic - Chief Medical Officer and Senior Vice President Marc R. Schneebaum - Chief Financial Officer, Senior Vice President and Treasurer.

Christopher S. James - FBR Capital Markets & Co., Research Division Arlinda Lee - MLV & Co LLC, Research Division Nicholas Abbott - BMO Capital Markets U.S. George B. Zavoico - MLV & Co LLC, Research Division.

Good day, and welcome to the Synta Pharmaceuticals First Quarter 2015 Earnings Conference Call. Today's conference call is being recorded and webcast. At this time, for opening remarks, I will turn the call over to Daniel Cole of Synta Pharmaceuticals. Please go ahead, sir..

Hello, and thank you all for taking the time to join us today. With me are Chen Schor, Chief Executive Officer; Vojo Vukovic, Chief Medical Officer; and Marc Schneebaum, Chief Financial Officer. This morning, we issued a press release that reported financial results for the first quarter 2015.

This release can be found on our website at syntapharma.com. Before we begin, I would like to point out that we will be making forward-looking statements based on our current intent, beliefs and expectations, which are subject to certain risks and uncertainties.

Additional detail can be found in related SEC filings and are also available through our website. I will now turn the call over to Chen..

Thank you, Dan, and good morning everyone. Thank you for joining our call today. As you all know, we recently announced an executive transition and my appointment to the role of CEO.

I would like to start by saying that I'm thrilled to assume this role at an exciting time for Synta, and look forward to the important milestones on our horizon in the near term.

With our strategy firmly in place and endorsed by the entire executive team and our Board of Directors, Anne Whitaker's departure for both personal and professional reasons should not have any effect on our direction and our focus.

We have very strong team here at Synta that is well positioned to continue executing on our broad ganetespib development program, including GALAXY-2 Phase III study in non-small cell lung adenocarcinoma and advancing our lead candidate, STA-12-8666, or 8666, towards the clinic next year.

These 2 assets are critical for driving near-term value for our shareholders. First, ganetespib, our novel potent small molecule inhibitor of heat shock protein 90, or Hsp90. Ganetespib holds tremendous potential to benefit patients and improve outcomes across a number of different indications due to the pervasiveness of Hsp90 in cancer biology.

This potential is under-recognized due to the challenges of drugging this target in the past. Most agents in the Hsp90 inhibitor class failed due to toxicity, primarily in the liver and the eye. Ganetespib, however, is different. It is 10 to 100 fold more potent than first-generation Hsp90 inhibitors.

Its chemical structure does not have the moiety associated with liver toxicity observed with first-generation Hsp90 inhibitors. And its rapid clearance from the retina is associated with near-absence or even mild to moderate visual disturbances. Ganetespib has activity both as single agent and in combination with other treatments.

Its tolerability ability allows it to be combined with a wide range of therapeutic approaches, so in chemotherapy, targeted therapy, immunotherapy as well as radiation therapy.

This level of combinability is rare and suggests that ganetespib may serve as a backbone to many therapeutic options, allowing us to augment activity with little added toxicity.

Our confidence in ganetespib to date is supported by a large randomized data set from GALAXY-1 supporting the design and patient selection for GALAXY-2 and an extraordinary broad level of support from investigators for this agent, demonstrated by 5 investigator-sponsored large randomized studies which are planned or ongoing, and nearly 2 dozen smaller studies that are planned or ongoing.

We monitor closely the evolution in the non-small cell lung cancer landscape, and view ganetespib as a significant opportunity for cancer patients and our investors for a couple of key reasons.

First, assuming GALAXY-2 demonstrates an overall survival benefit and profile similar to that seen in GALAXY-1, we believe ganetespib will be differentiated and compare favorably to recently introduced docetaxel-based combination options in non-small cell lung cancer.

Second, we expect ganetespib to serve as an attractive therapeutic option for non-small cell lung cancer patients regardless of their PD-L1 expression level. Consistent with its known effects on the immune system, ganetespib has shown promising preclinical data in combination with PD-1 and PD-L1 inhibitors as well as other immuno-oncology approaches.

In patients that are PD-L1 negative or progress after PD-1 or PD-L1-based therapy, we believe that ganetespib in combination with chemotherapy may offer significant clinical benefit.

The other program that makes this particularly exciting time for us at Synta is 8666, the first clinical candidate coming out of our Hsp90 drug conjugate, or HDC, platform.

The HDC is based on leveraging the preferential accumulation of HDC compounds in tumors, which allows for the sustained exposure of novel and proven cancer drugs in the target -- in a targeted session. 8666 is an Hsp inhibitor conjugated to SN-38, the active form of irinotecan.

8666 has demonstrated profound preclinical antitumor activity in a number of tumors, including those resistant to other therapies. These data, including data independently generated at centers like the Fox Chase Cancer Center show both durable activity and lack of drug resistance as demonstrated by retreatment in mice.

We continue to retain rights to both ganetespib and to the full HDC platform, which as we continue to generate data, will lead to significant opportunities to build value for our shareholders through commercialization and collaborations with potential partners.

Like the rest of the team, I look forward to progress in the coming quarters and to building a leading oncology biopharmaceutical company. I'll now turn the call over to Vojo.

Vojo?.

Thank you, Chen. We are indeed encouraged by the continued progress of ganetespib in the clinic, in particular the GALAXY-2 Phase III trial and the strides we're making with 8666, our first HDC candidate. First, let's touch on ganetespib and GALAXY-2.

GALAXY-2 is an ongoing Phase III trial evaluating ganetespib and docetaxel versus docetaxel alone for the second-line treatment of patients with non-small cell lung cancer with adenocarcinoma histology.

Conduct and execution of GALAXY-2 has been greatly refined thanks to what we've learned from our large randomized exploratory Phase II study, GALAXY-1. We continue to be pleased by the rate of enrollment in our pivotal Phase III study thus far, as we have enrolled well over 500 patients to date out of a total of up to 850 patients.

At this study size, the trial is very well powered, with a 92% power to detect a 25% reduction in risk of death, or a hazard ratio of 0.75 at the time of the final overall survival analysis. Our operational performance in the past quarter keeps us on track regarding time of the data analysis.

The first interim efficacy analysis will occur in the second half of 2015. The second interim analysis and the final data analysis will take place in 2016. The interest in ganetespib, though, extends beyond the GALAXY-2 trial in non-small cell lung cancer.

We have significant support in the oncology community, as evidenced by the high level of interest in conducting investigator-sponsored studies in other tumor types. There are several ongoing studies, and should be noted that many of these studies are being conducted without any financial support from Synta other than supplying drug.

Among these studies, investigators are currently conducting 4 ongoing large randomized trials with a fifth expected to begin soon. These include the AML-LI-1, AML-18 and AML-19 trials, 3 separate trials in patients with acute myeloid leukemia and high-risk myelodysplastic syndrome.

The AML-LI-1 trial is the most advanced trial in the series, having moved into the Phase III extension after meeting pre-specified efficacy criteria in July 2014. Passing this efficacy hurdle is not to be underestimated, as it is one which no other therapy in this study has done successfully.

Another randomized trial is the GANNET53 trial in metastatic platinum-resistant ovarian cancer, in which the Phase I safety lead-in portion is complete. And finally, the I-SPY 2 TRIAL in woman with newly diagnosed, locally advanced breast cancer, in which recruitment into the ganetespib arm began in the fourth quarter of 2014.

We're also pleased to announce that 3 abstracts from our ganetespib IST collaborators have been accepted for presentation at the upcoming ASCO meeting in Chicago. One poster will present Phase I data from the GANNET53 study of ganetespib and paclitaxel in patients with ovarian cancer.

The second poster will show Phase I data of ganetespib in combination with crizotinib in ALK-positive non-small cell lung cancer. The third poster will show Phase I data of ganetespib in combination with chemoradiation in rectal cancer. We're also encouraged by the continued progress with our candidate 8666 from our HDC program.

Our team and collaborators recently presented data on 8666 in 2 posters at the AACR meeting in April. Two additional abstracts for 8666 have been accepted for the upcoming ASCO meeting. 8666 has demonstrated activity in multiple preclinical models, including patient-derived xenograft models of pancreatic cancer and small cell lung cancer.

8666 has also demonstrated improved tolerability compared to irinotecan in preclinical models. The 8666 program is on track for IND submission by the first quarter of 2016. We look forward to providing updates on this and other HDC candidates as they move towards the clinic. I will now turn the call over to Marc Schneebaum for a financial review.

Marc?.

Thanks, Vojo, and good morning, everyone. As of March 31, 2015, the company had $76.6 million in cash, cash equivalents and marketable securities, compared to $97.7 million as of the end of December 2014.

Also, early last month we completed a public equity offering, in which we raised approximately $44 million of gross proceeds, or approximately $42 million net. As a result, we expect our combined cash resources will be sufficient to fund our operations at least through mid-2016.

This estimate assumes no additional funding from new partnership agreements, equity financing or further sales under our ATM facility. The timing and nature of certain activities we planned for the remainder of 2015 and 2016 will be conducted subject to the availability of sufficient financial resources. Moving to our results of operations.

We didn't recognize any revenue in the first quarter of 2015 or 2014. Research and development expenses were $16.2 million for the first quarter of 2015 compared to $17.6 million for the same period in 2014.

This decrease was primarily the result of lower costs in our ganetespib program, specifically for the Phase II GALAXY-1 study and other earlier stage company-sponsored clinical studies and for related validation manufacturing. We also had lower costs in our early-stage preclinical programs other than our lead HDC program 8666.

General and administrative expenses were $4.2 million for the first quarter of 2015 compared to $5.3 million for the same period in 2014. This decrease was due primarily to lower personnel-related costs in 2015 compared to the prior year.

Overall, the company reported a net loss of $20.7 million or $0.19 per basic and diluted share in the first quarter of 2015 compared to a net loss of $23.6 million or $0.28 per basic and diluted share for the same period in 2014. With that, let's now open the call for questions.

Operator, are you there?.

[Operator Instructions] Our first question is coming from the line of Christopher James with FBR..

I guess my first question is regarding the potential to combine ganetespib with one of the checkpoint inhibitors, I guess, specifically the anti-PD-L1.

Do you think just based on what you know about the PK/PD half-life and tissue distribution, do you think that you're -- potentially combine it with a small molecule or would this be potentially combinable with an antibody?.

Christopher, it's Chen. I'll try to address your question. And first, let me mention that, actually today, I believe there has been a publication in cancer immunology research, which is a little bit about Hsp90 inhibition and ganetespib and how it works in combination with immune checkpoint blockers.

So I encourage you to take a look at that publication. Generally, we see very nice efficacy in combination. We think we understand the biology behind it. We see that ganetespib seems to down-regulate the expression of PD-L1 in the tumor, and when combined with PD-L1 or PD-1 inhibitors, antibodies, in our case, we see very nice efficacy in combination.

As you know, when you move to the clinic, there is always some art and some science behind how exactly one would want to sequence the therapies and what exactly is the right selection of doses. And I would say, it's still early and we're looking into what could be the potential combinations and what would be the potential sequencing.

But as we gather more data, and potentially at some point embark on clinical studies, we may understand better what would be the best sequencing for patients. So hopefully, that addresses your question and helpful..

It was helpful. And I definitely will check out that publication. Second question is regarding the conjugate platform. What additional pre-talks work needs to be done with 8666 before you file the IND next year? And is there any potential to move that up to the fourth quarter? That's just one, and then a multiple-part question, I'm sorry.

And in which solid tumors do you think you'd expect to find the greatest response rates?.

So I'll try to address it and maybe Vojo can help as well. So from a tox perspective, as a company we've done a very thorough work during the preclinical development prior to nominating 8666 as a clinical candidate. We think we understand the PK/PD. We think we understand the therapeutic window.

Still, when you file an IND, you need to go through the motions of IND-enabling toxicology and the right manufacturing, and we're doing this process. We expect to file the IND by -- I think we mentioned publicly by Q1 or during Q1 next year. It may be Q1, it may be a little earlier. But we're along the way of filing the IND within that timeframe.

Regarding the potential clinical indications, I know that there is a lot of interest in this compound, because some of the work has been done with academic centers. And we're in the process of prioritizing what would be the lead indication. But perhaps Vojo can share with you some of our thoughts here and how do we think about that moving forward..

Sure. So considering the nature of the first conjugate, which is composed of an Hsp90 inhibitor and SN-38, our investigators, and our research folks here at Synta, we believe that the top priority indications will include clinical indications where camptothecins are used or haven't shown clinical benefit.

That certainly includes several tumor types, and as Han mentioned, we are in the process of now identifying which of these potential indications would be the right choice for evaluation in the clinic, validating the platform and achieving a hopefully quick proof of concept..

Great. Then maybe just one final before I jump back in the queue. Can you expand a little bit on the data at AACR where you -- the combination approach between the Hsp90 and the PI 3-kinase/mTOR inhibitor. And what would be the timing for a potential Phase I/II combination study in KRAS mutant non-small cell lung..

Yes. So that's certainly a very interesting area. And we have conducted several collaborations with investigators in academia addressing a further understanding and creating a rational therapy for patients whose tumors harbor KRAS mutations.

One approach is that, that you mentioned, that we combine with PI 3-kinase inhibitors, particularly in settings where not only a KRAS mutation exists, but also some other genetic changes occur in the tumor. And to that end, we have discussed 2 potential studies -- clinical studies that we may support with drug at some point in time in the future.

So that's something that we certainly look very actively on. We have, I think, seen some very compelling preclinical data. And we do have some plans about future clinical studies to ask these questions..

Let me just add to what Vojo mentioned.

We're in the midst of really thinking what the right strategy in terms of life cycle management for ganetespib, what should be the next studies as we think about non-small cell lung cancer, but also as we think about other indications in terms of the unmet medical need and efficacy data that we have seen in ISTs or preclinical studies.

So we're going to be very strategic in our approach for additional studies that our company sponsors as well as ISTs. So that process is underway, and it's going in a very positive direction..

Our next question is coming from the line of Arlinda Lee with MLV..

On the GALAXY-2 interim analysis, can you help us bracket kind of how many -- approximately how many events that will be and what the maybe stopping criteria and the go criteria would be for it -- to continue the study?.

Okay. So at the first interim analysis what we have publicly disclosed, the data safety monitoring boards who will be conducting this analysis, will have a data set that will have 60% of the total survival events or death events that are planned for the entire study. That means that we will see more than half of all events.

It will be a highly powered efficacy analysis and clearly has a good chance, good probability of stopping the trial should the efficacy data be similar to the efficacy data we saw in GALAXY-1. So we have not disclosed the exact number of events, but I hope that this provides with some direction.

And to complete the second part of your question, during the first interim analysis, both a futility analysis will be conducted as well as a full-scale efficacy analysis, which potentially can stop the trial.

Regarding criteria for stopping, we have agreed with the FDA on a standard set as to methodology that is used for early stopping for efficacy of trials. So we've basically worked out this statistical analysis component of that analysis with the FDA..

Our next question is coming from the line of Jim Birchenough with BMO Capital Markets..

It's Nick in for Jim this morning. I'm still trying to understand exactly where you think ganetespib fits in this rapidly changing landscape for non-small cell lung cancer. In particular, you've been very deliberate about selecting a group of patients that are not progressing particularly rapidly after frontline chemotherapy.

So if a PD inhibitor plus docetaxel becomes the standard second-line therapy, where does ganetespib fit since you obviously, you don't have data in the third-line setting.

And perhaps as allied to that is, do you have the opportunity to look at PD ligand expression in the samples from GALAXY-1, or are you planning to do that in GALAXY-2? And then I have a follow-up..

Okay. So regarding your question, or the part of your question about the position of ganetespib in the rapidly changing non-small cell lung cancer landscape, I think we all agree that we have seen some very interesting, very promising changes that hopefully will improve outcomes in patients.

But we also believe that these changes will create and enhance the opportunities for ganetespib in the treatment of these patients. So what we have about that right now is some early data about the efficacy of PD-1 antibodies suggests that some patients clearly benefit from PD-1 monotherapy.

And I think key trials that have been conducted and that have partially read out were all monotherapy PD-1 trials. So they clearly showed benefit for a subset of patients which are high in PD-L1 expression.

And we and others, of course, expect that PD-1 antibodies will have a prominent role and perhaps replace frontline chemotherapy for those patients. But what this data has shown is that the long-term benefit of PD-1 antibodies, even in those PD-L1 positive patients, is limited.

Ultimately, these patients unfortunately progress and die, so they will require subsequent treatments. And the currently available subsequent treatments are chemotherapy-based.

We expect that in a large adenocarcinoma subset of patients, ganetespib will show in GALAXY-2 a considerable survival benefit, which will be a compelling treatment option for patients that are either PD-L1 negative, and will therefore not be treated with PD-1 antibodies, and those patients who are PD-L1 positive but ultimately progress and require further treatments.

Regarding generating additional data in frontline -- what is today frontline and third-line, that will be part of ganetespib life cycle management.

Once we show, with dosages study, the potential of the drug in enhancing survival, we will continue with additional studies exploring the additional treatment options that will also include most likely combinations with PD-1 antibodies and other immunotherapies. Because as I've mentioned before, preclinical data is very supportive of this approach..

Maybe I can just add to that. I think in today's oncology market and how you see pipelines in development, it is being developed in many indication lines of therapy. Whenever a new therapeutic agent is introduced, lines of therapies may or may not change.

And at the end of the day, when you think about this market where hopefully, ganetespib will be on the market as well as other agents, if the patient takes PD-L1 and progresses or a patient is not PD-L1 positive and perhaps does not start with a PD-L1 therapy, they will progress.

And when it comes to docetaxel, at the end of the day, with the main key therapeutic agent, then we believe that ganetespib's positioned to be the best combination therapy together with docetaxel when you compare it to other available agents that have shown efficacy in combination with docetaxel for non-small cell lung cancer.

Another part of your question, Nick, was basically will we check for the presence of PD-L1 in GALAXY-2 and GALAXY-1 samples? In GALAXY-1 sample -- tumor sample, if you collect it, they're a little bit limited by the amount of tissue, because you have already conducted several analyses of different genetic markers.

In GALAXY-2 samples, we certainly have that possibility, and we'll be looking at that alongside with other analyses that are planned for these tumor samples..

And then just a follow-up question. And it's on the HDC program, where the 8666 looks a very interesting compound. And I'm just reading between the lines from your comments that you're not really able to fund the development of other HDCs as fast as you'd like.

So are you going to keep these for later? Or are you going to try and get these developed by partners? And what is the level of interest of external partnerships -- of external partners who want to combine their chemotherapy agent of choice with Hsp90?.

Sure. I'll try to address that. So indeed, we changed our general approach to the HDC program for an approach that was focused on measuring the activity across 40 different payloads and synthesizing more than almost 1,000 compounds to an approach that is more focused. But when we say more focused, we took a 2-pronged approach.

One, we decided to move forward with 8666 patient list profile and that is progressing to the clinic, and we expect to move it into the clinic next year, and we're well funded to do that.

The second approach was, again, strategic focused on a specific payload that we believe that in combination with, or conjugating it to Hsp90 should lead to significant differentiation for patients. And this is a program that's ongoing in a discovery stage.

And regarding interest from partners, as always, our partners that are in different stages of discussions or interest. But it's really premature to talk about whether we expect to partner or not. But so far, we are very happy with the progress of both 8666 and our discovery program..

Our next question is coming from the line of George Zavoico with Jones Trading..

I have a question -- a couple of questions. The first one has to do with the HDC program, the 8666. With ganetespib, you went -- Synta went on a rather broad IST program. You had a lot of ISTs going.

Is it similar -- are you planning a similar strategy too for the 8666 program?.

George, so with ganetespib, the breadth of the IST program was primarily driven by the multiplicity of mechanisms which are affected by genetic inhibition. With 8666, we're taking a different approach. We're focusing primarily on indications that are driven by our selection of the payload.

So in the case of 8666, camptothecins, both irinotecan or topotecan, are used in indications such as colorectal cancer, small cell lung cancer, ovarian cancer and some pediatric sarcomas as well. So these will be probably our top priorities right now..

I mean that's a pretty large, pretty big slate of indications.

And I would imagine, just like there was interest from investigators in ganetespib doing ISTs, are you seeing some inflow interest with 8666?.

Absolutely. I mean, we have multiple discussions as we are narrowing the choice of the lead indication. And we see a lot of enthusiasm, particularly from people that we used to work with in other programs. They want to continue working with us on this new program..

Also, I just want to add to that, that some of the parties that worked with us on preclinical models and have seen the efficacy of 8666, and at least in their hands, we may have not seen the data, were able to compare it to other compounds that they have tested, expressed significant interest in running ISTs.

And then I want to go back to Vojo's point. We're going to be strategic in the indications that we will select. We're going to focus on 1 or maybe 2 indications when we think about our proof of concept. And again, in a very strategic manner, we may enable other ISTs that will enable us to detect signal in other indications..

Okay. And speaking of ISTs, now going over to ganetespib. You mentioned you've got a number of them still ongoing, a number of them are fairly large. The LI-1 trial, I believe the second phase can be pivotal. But the others are probably not eligible to be pivotal trials.

So if they deliver positive results, you will have to transfer funding responsibility back to Synta.

Is there a time line -- or maybe it's too early to speak of time lines and when that might happen for the GANNET53 and I-SPY and the other, AML 18 and 19?.

Yes. Just maybe to complement what you just said, George, in the entire AML program, all 3 studies that are ISTs, they have a Phase III component, which is going to be triggered if you meet prespecified efficacy criteria in the Phase II component of these studies.

For the LI-1 that has already occurred, so LI-1 is now in Phase III and has the potential to generate either a compendia listing or perhaps even a registration, and so do the other trials for AML. And for I-SPY and GANNET53, they are designed as straight Phase II trials.

And if we see positive data, our strategy can include compendia listing and subsequent trials that could lead to approval..

Okay. It sounds as though they still have a ways to go.

Is that correct?.

Yes, as we have previously mentioned, George, we are expecting information to start coming -- and data to start coming out of these large randomized studies probably at some point in time in 2016..

Okay. And final question, back to SN-38 and 8666.

The stability of the linkage is pretty good, right? You don't see any -- or very much interleukin leaking out into the systemic circulation, either prematurely before the compound gets to the tumor, or even after it gets to the tumor, and irinotecan or the SN-38 is released after the tumor cells are killed?.

So that's a very good question. And the linker that is used in this conjugate is cleaved by specific enzymes. And the concentration and localization of these enzymes varies from species to species. We cannot speak about the exact results before we conduct human studies.

We do not expect, however, any significant leakage or premature cleavage of the conjugate outside of the tumor sites..

Thank you. Ladies and gentlemen, that concludes the question-and-answer session. I will now turn the conference back over to Mr. Schor for any additional concluding remarks..

Well, I want to thank everyone for joining. We look forward to sharing with you more in the coming quarters. If you have more questions or you would like to ask more about our progress, please feel free to reach out to us directly. Thank you, and have a great day..

Ladies and gentlemen, this concludes today's call. You may now disconnect..