Susan Kanaya - Senior Vice President and CFO Dr. Thomas Schall - President and CEO Pirow Bekker - Senior Vice President, Clinical and Medical Affairs

Brian Klein - Stifel Anupam Rama - J.P. Morgan Yatin Suneja - Cowen and Company

Good day, ladies and gentlemen. And welcome to the ChemoCentryx Fourth Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded. I would now like to turn the call over to Susan Kanaya, Senior Vice President and Chief Financial Officer at ChemoCentryx. Ms. Kanaya, please go ahead.

Thank you. Good afternoon. And welcome to the ChemoCentryx's fourth quarter 2014 financial results conference call. This afternoon we issued a press release providing financial results and company highlights for the quarter ended December 31, 2014. This press release is available on our website at www.chemocentryx.com. Joining me on the call today is Dr. Thomas Schall, President and Chief Executive Officer of ChemoCentryx, who will provide a corporate update and review our anticipated milestones for 2015. Following his comments, I will provide an overview of the financial highlights for the fourth quarter and 2015 financial guidance, before turning the call back over to Tom for closing remarks. As a reminder, during today's call, we will be making certain forward-looking statements. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These risks are described in our filings made with the Securities and Exchange Commission, including our annual report on Form 10-K to be filed on March 13, 2015. You are cautioned not to place undue reliance on these forward-looking statements, and ChemoCentryx disclaims any obligation to update such statements. In addition, this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, March 12, 2015. ChemoCentryx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. I will now turn the call over to Tom. Dr. Thomas Schall: Thank you, Susan, and thank you to everyone for joining us on our fourth quarter financial results conference call. Today, I will discuss our recent accomplishments and then turn to the important milestones in the pipeline that we expect to achieve in 2015. We made a great deal of progress in 2014, culminating December with the successful Phase II clinical results for CCX140, which is our lead inhibitor targeting the chemokine receptor known as CCR2 in diabetic nephropathy. I am also pleased to see that momentum carrying into 2015, exemplified by the recent initiation of a clinical study in pancreatic cancer with our second-generation CCR2 inhibitor CCX872. I have previously described our pipeline as comprising four key opportunity categories or four pillars of value. In our prepared remarks today, I will focus primarily on two of the four pillars of value, which we expect to drive much of the progress in our pipeline this year, specifically, our chemokine receptor CCR2 inhibitor program and our complement C5a receptor inhibitor program. Specifically, I will discuss the following three key topics. First, I will discuss our CCX140 Phase II diabetic nephropathy trial results and our plans to further advance that program in 2015 and beyond. Second, I'll describe our plans to expand our CCR2 program into oncology, including our initiative advancing our second-generation inhibitor CCX872 into pancreatic cancer. And third, I'll update you on our progress to advance our complement C5a receptor inhibitor program in ANCA-associated vasculitis and our efforts to further expand the program into other orphan indications, specifically, atypical hemolytic uremic syndrome. First, I'll start with our CCR2 program. Many lines of evidence suggest that the chemokine receptor known as CCR2 plays a crucial role in the progression of diabetic chronic kidney disease or diabetic nephropathy. We believe that inhibition of CCR2 may change the treatment paradigm for this disease. Today, the standard of care to treat diabetic nephropathy is essentially blood pressure medications. With that in mind, we believe that treatment with an orally available CCR2 inhibitor, CCX140 would provide a significant advancement in the treatment of this disease. Such advances could be both clinically and economically quite meaningful. Let me highlight for you recent positive Phase II clinical results with CCX140 in diabetic nephropathy and add some very recent information from ongoing prospective and pre-specified additional analyses of that trial. First, our clinical trial achieved the primary endpoint based on reduction of protein levels in the urine as measured by urinary albumin creatinine ratio or UACR. These results showed a statistically significant improvement in UACR from baseline in the patients who received orally dosed CCX140 at 5mg once a day continuously for a 52-week period in addition to a standard of care when compared to patients taking the standard of care alone. This was true across the all patients group in the trial. Second, also in the all patients category, we observed positive results across an important secondary endpoint, the estimated glomerular filtration rate or eGFR. This included most notably a 44% annualized improvement in eGFR over standard of care alone. This measurement in particular is key since eGFR as calculated by changes in serum creatinine will form the basis of the Phase III approval endpoint in this disease. Also it is important to note that CCX140 was safe and well-tolerated in the Phase II trial. We view these results as very promising, particularly if translated into preservation of renal function as measured by a meaningful delay in the time to dialysis or end-stage renal disease. Importantly, we very recently provided further analyses on pre-specified subpopulations in the study. Specifically those patients who are highly proteinuric having baseline albuminuria levels of 800 mg of albumin to gram of creatinine and above. This particular subpopulation represented approximately one-third of the patients in our Phase II study. These patients exhibited a 66% improvement in eGFR versus standard of care alone. If one were to use the standard extrapolation of eGFR slopes for this population of patients and estimate the time to dialysis, treatment with 5 milligram once daily of CCX140 could result in an estimated seven-year delay to dialysis, compared to standard of care alone. We believe this particular population, which includes over 1.7 million chronic kidney disease patients represents clinically and commercially meaningful population and also represents a potentially attractive population to evaluate in our Phase III program. The momentum in our CCR2 program continues with CCX872, our next-generation CCR2 inhibitor. Having several sites now activated, we are positioned to commence enrollment in a multicenter clinical trial of CCX872 in patients with non-resectable pancreatic cancer. The goal of this study is to evaluate the safety and efficacy of CCX872 in combination with one of the standards of care FOLFIRINOX. Tumors subverts inflammatory and in fact, a factor of immune responses. In the tumor cell microenvironment, CCR2 bearing cells are thought to be largely of a suppressive behavior so-called myeloid-derived suppressor cells or MDSCs which effectively helped the tumor hide from the body’s cytotoxic immune response to tumor cells. Inhibiting CCR2 and thereby the myeloid-derived suppressor cells controlled by CCR2 could then lead to liberation of the cytotoxic immune response against tumor cells and improved patient survival. We have evaluated CCX872 in several pre-clinical studies and have found that CCR2 inhibition results in significant reduction in tumor burden. Regarding the initial safety of CCX872, we have already completed extensive Phase I clinical development in healthy volunteers in which all tested dose levels, including those doses that we are using in the pancreatic cancer trial were well tolerated. At the ASCO GI meeting this past January, positive data from an investigator-led Phase Ib study of a Pfizer CCR2 inhibitor in pancreatic cancer were presented, providing additional validation for inhibiting CCR2 in the treatment of this disease. Our clinical study with CCX872 is just getting under way and we are encouraged by the clinical activity observed in the other study. We believe that in the next year, there will be additional discussion in the medical and scientific communities regarding CCR2 inhibition, in the treatment of pancreatic cancer and we look forward to CCX872 being part of that discussion. Our pancreatic cancer study is an open label, multicenter clinical trial designed to evaluate CCX872 plus FOLFIRINOX in up to 54 patients with non-resectable pancreatic cancer. The primary efficacy measurements will be progression-free survival when all patients have completed at least 24 weeks of treatment. We look forward to reporting initial data from this trial towards the end of the year. Now I will turn to our second pillar of value, our complement C5a receptor inhibitor program. CCX168 is our lead compound in this program. It is a very potent, orally available, highly specific, small molecule inhibitor of the complement C5a receptor or C5aR. The European CCX168 Phase II clinical trial, known as the CLEAR trial in patients with ANCA, associated vasculitis or AAV, made excellent progress in 2014. Buoyed by investigator enthusiasm, following the release of positive data from steps one and two of this trial, we have surpassed the halfway mark in terms of target enrollment numbers for step three of the study and we remain confident that we will complete enrollment in the CLEAR trial this year. AAV is a rare, severe, often fatal, autoimmune disease that is caused by autoantibodies called antineutrophil cytoplasmic autoantibodies, or A-N-C-A, ANCA. AAV is characterized by the inflammation that can affect many organs and areas of the body such as kidney, lung and your nose and throats. The annual incidence and prevalence of AAV in Europe and United States is estimated to be approximately 10 to 20 cases per million people per year and 150 to 200 cases per million people, respectively. Additionally, we have an ongoing North American Phase II CCX168 AAV trial, known as the CLASSIC trial. We've been actively initiating clinical sites and have commenced patient enrollment in that trial. CLASSIC will examine the safety and efficacy of two dose regimens of CCX168, when added to the full standard of care in patients with newly diagnosed or relapsed AAV. I look forward to updating you on the progress of that trial as year progresses. Also on the CCX168 clinical front, we mentioned last quarter that we would be initiating a Phase IIa proof-of-concept study in patients with atypical hemolytic uremic syndrome, or aHUS in 2015. And that we plan to report early data from this study later this year. We remain on track to do so. The primary objective of this trial is to assess the effects of the C5a receptor inhibition therapy by once CCX168 on both in vitro and ex vivo thrombus formation, as well as disease activity in end-stage renal disease patients with aHUS. Our plans to further expand or complement C5a receptor program into other orphan diseases, such as IgA nephropathy are moving forward as well. And I will tell you more about those efforts next quarter. Finally during the fourth quarter, we also achieved some important regulatory milestones with CCX168. Specifically, the FDA granted Orphan-Drug Designation for CCX168 for the treatment of atypical hemolytic uremic syndrome. And the European Commission granted orphan medicinal product designation for CCX168 for the treatment of microscopic polyangiitis and granulomatosis with polyangiitis, two forms of AAV. Indeed, there is a great deal of momentum heading into 2015, with our complement C5a receptor program. And I look forward to updating you on relevant developments throughout the year. With that, I'd like to turn the call back over to Susan.

Thank you, Tom. As I mentioned earlier, our 2014 fourth quarter financial results were included in our press release provided earlier this afternoon. There was no revenue recognized for the three months ended December 31, 2014, compared to $0.7 million in the same period in 2013. The decrease in revenues from 2013 to 2014 is primarily due to funding of clinical support from former partner, GlaxoSmithKline for CCX168 in 2013. Research and development expenses were $9.1 million for the three months ended December 31, 2014, compared to $7.4 million for the comparable period in 2013. Higher expenses associated with CCX168 or C5aR inhibitor reflect the increased patient enrollment rate in the ongoing European CLEAR trial and expansion of Phase II clinical development for the same in North America. This increase was partially offset by lower expenses in our CCR2 program, primarily for CCX140, due to the completion of the Phase II clinical trial in patients with diabetic nephropathy. General and administrative expenses were $3.2 million for the three months ended December 31, 2014, compared to $3 million in 2013. This increase was primarily due to higher stock-based compensation for stock option grant and restricted stock unit awards. Total shares outstanding at December 31, 2014 were approximately 43.4 million shares. Cash, cash equivalents and investments totaled $114.6 million at December 31, 2014 Before I turn the call back over to Tom, let me summarize our 2015 financial guidance. Our projected cash utilization for 2015 is expected to range from $45 million to $49 million. We therefore expect to end the year with cash and investments of approximately $70 million. With that, I will now turn the call back over to you, Tom. Dr. Thomas Schall: Thank you, Susan. We anticipate several milestones for both our CCR2 and C5a receptor program, which we expect to drive momentum in 2015. Starting with CCR2 program, we look forward to first presenting detail study results from the CCX140 Phase II trial in patients with diabetic nephropathy at upcoming medical meetings, second preparing for an end-of-Phase II meeting with regulatory agencies, and announcing initial data from our open label clinical trial from CCX872 and patients with non- resectable pancreatic cancer in the second half of 2015. In our complement C5a receptor program for CCX168, we look forward to first completing enrollment in the CCX168 Phase II CLEAR trial in Europe in patients with AAV, second continuing enrollment in the Phase II CLASSIC trial in North America in patients with AAV, and in the Phase IIa proof-of-concept clinical trial in patients with IgA nephropathy, third presenting data supporting the anti-thrombogenic effect of CCX168 in serum from patients with aHUS in the second quarter of 2015v, and initiating a CCX168 Phase II proof-of-concept clinical trial in patients with atypical hemolytic uremic syndrome or aHUS. On the corporate development front, with our two lead programs yielding positive Phase II data, our alliance discussions continue to intensify and we look forward to advancing these partnering efforts in 2015. In closing, we have much to accomplish in 2015 and we remain intensely focused on the execution of all of our clinical opportunities and partnering initiatives. We will now take your questions. Operator?

[Operator Instructions] And our first question comes from Brian Klein from Stifel. Your line is open. Please go ahead.

Hi, guys. Thank you for taking my questions and nice progress. Dr. Thomas Schall: Thank you, Brian.

First question is on CCX140. So you reported the data last year, it looked very good. Just wondering why the delay in meeting with the FDA in for the second half of this year. Is there any chance that you could expedite that meeting to the first half? And secondly, have you already started to think about a registrational program and maybe give us some insights there? Dr. Thomas Schall: Yes. Brian, all good questions. I would like to add to that I had the great pleasure today of being joined not just by Susan Kanaya but by Pirow Bekker, our Chief Medical Officer. So Pirow will also fill some of the questions as well. Let me a little bit of the stab at the first part of your question at least. So clearly, what we have is a trial with many hundreds of people, several important analyses that were pre-specified and prospective. We are still doing those analyses. As I mentioned, we have very recent information about the upper third pre-specified subpopulation with the high proteinuria where they showed quite a marked, even more marked improvement than the all patients population in the eGFR slopes. And so those are very important both for thinking about the total package of data that we need to put in a briefing document for the FDA, as well as the second part of what you are asking how to think about the Phase III clinical trial. So to the extent that we are moving as expeditiously as possible to getting our documentation together and putting it to the FDA and scheduling a meeting, as you may well imagine those, while it sounds straight forward, actually involve an enormous amount of data and we are in the process of getting that package together. We will get it to the FDA as expeditiously as we can. They, of course, need chance to review it and then get calendar it for the meeting, and obviously we will push forward with that. As I alluded to, one of the compelling features coming out of some of these pre-specified analysis is, are there populations that would be attractive in terms of both numbers of patients and time to the kinds of conversions of event that we need in a Phase III trial, Pirow will correct me on this if I am wrong, but we anticipate that the Phase III endpoint is essentially going to be an outcome driven study with the time to increase a 50% serum creatinine as the endpoint. Now serum creatinine, we convert by calculation to eGFR. So we use serum creatinine and eGFR kind of interchangeably. An increase of 50% serum creatinine is essentially about a 40% change in eGFR. And having these additional analyses it really allowed us to really focus on exactly what the Phase III might look like and what we might -- we will discuss with the regulatory agencies. I don’t want to specify too many details beyond that at the moment on the Phase III trial design other than to say, we are very pleased that the Phase II data does directly inform in our opinion Phase III trial design. The Phase II data does read to what we believe is the endpoint in Phase III and that’s been quite a luxury I think in the diabetic nephropathy space. Pirow, do you disagree with that or have something to answer at maybe?

No. I think, Tom, you’ve answered it well. I think, Brian, we are beginning to really sort of hone the design of the Phase III trial that we will be discussing with the regulatory agencies. And as Tom has pointed out, we are seeing evidence that CCX140 is particularly effective in the patients with the high level of baseline albumin urea. It's also true that that patient population have a pretty steep decline in eGFR in -- that would actually be very meaningful in a Phase III study in the control group. So those aspects are all important in terms of design of the Phase III study and we’re beginning to put together what that study might look like.

Great. Thank you. And then just two more quick questions, first, on CCX872, have you looked at combining that drug preclinically with other immuno-oncology or Checkpoint Inhibitors agent? And the second question is on CCX140, the data from the CLEAR trial, have you discussed with the European regulators about potentially utilizing that for an accelerated approval? Thank you. Dr. Thomas Schall: Thank you, Brian. We have ongoing work right now on the combination approach of CCR2 inhibition with other emerging therapies such as Checkpoint Inhibitors, yes, we do. We’ll be talking about some more of that work a little later on in this year. So we don’t have any details to give you right now. It’s very relevant, however, because even with the Checkpoint Inhibitors emerging is certainly very significant therapies. There is some limitations in dose, as you know and others will perceive for Checkpoint Inhibitors. So still a lot of benefit to be gained by looking at combinations and we're very optimistic about some of that work and the data we will be able to present a little later on. And the other question about CCX168. So, Pirow, perhaps, you want to say something about that.

Brian, I think, the steps 3 of the CLEAR trial is going to provide us with a complete data set for this Phase II study, which I think will provide us with sufficient number of patients and a robust data say to approach agencies with regard to potential accelerated approval. So that's what I think our plan is at this point.

Great. Thank you for taking my question. Dr. Thomas Schall: Thank you.

Thank you. Our next question comes from Anupam Rama from J.P. Morgan. Your line is open. Please go ahead.

Hey, guys. Thanks so much for taking the question. Just wanted to follow-up on Brain’s question on 872. Just with initial data expected in 2015, can you talk about sort of the benchmark for the trial from an efficacy perspective? So just kind of move that program forward, I know you’re doing some combination work in the background but just maybe in reference to the Pfizer trial that readout because to you, I think they only showed a partial response and stable disease response data. I don’t think we’ve done PFS data from them. And then just a quick one on CCX140, I’m assuming that’s the plan is still to go into an end of Phase II meeting with the partner? Dr. Thomas Schall: Let me handle the last question first and I'll turn the first question over to Pirow. Thank you, Anupam. So, we certainly are moving forward as expeditiously, as we can to develop the clinical program for Phase III. As you know, our financial model does not entirely predict having Phase III development be done on all of our sole investments. So, we are actively looking at partnership opportunities for 140. I think there would be some preference if I'm also a potential partner to be involved in the end of Phase II discussions. However, I would not consider that a necessarily an absolute gaining item for us to go on, as we build out our clinical development plan.

Got it.

With regard to your first question, you’re absolutely correct, Anupam. So with the Pfizer study, they only had a 12-week treatment period and so they showed a partial response rate of about 50%. I think the number was 48% at the 12-week time point, compared to the historical control of 28%, so three substantial improvement in the partial response rate. Unfortunately, they did not dose beyond 12-week, so they could not comment or provide data on progression-free survival. Our intent is to dose beyond 12 weeks, so that we could actually generate some data on progression-free survival and overall survival. And for that, the historical data is about 50% progression-free survival, right with fulfilling us only. So, I think we will be looking obviously for an improvement in that right. Our study depending on whether you have the full complete dataset or not, we will be looking at about a 60% plus progression-free survival rate to be clinically meaningful.

Great. Thanks so much for taking the questions. Dr. Thomas Schall: Thank you.

Thank you. [Operator Instructions] And our next question comes from Yaron Werber from Citi. Your line is open. Please go ahead.

Hi, guys. This is [Kenon] [ph] on for Yaron. Congratulations on the quarter and finishing up. Just a couple of questions. So if I’m just doing some sort of back the envelope calculations on eGFR, if third of the patients with the high albumin had 66% of eGFR, based on the 44% overall, is the other two-thirds of the population around 33% eGFR improvement? And then based on that, would you be looking at going into patients with high albumin for your Phase III? Dr. Thomas Schall: Very good question. So what we really -- one of the reasons we did the pre-specified analyses is to look at the population that might be most amenable as a Phase III population among other things. So, I'll stress that the all-patients population, which ranges from 100 milligrams of albumin to a gram of creatinine in UACR up to 3,000. So it’s a fairly broad stretch, showed us a 44% improvement in eGFR. So the question is relevant, if you divide that into tertiles and the upper tertile of 800 mgs per gram of creatinine and above gives you 66% improvement then arithmetically some of the other cells was probably somewhat lower and you are quite correct. So what we see is the higher the albuminuria, the more profound the slope change in eGFR. And that's relevant obviously as we think about doing a Phase III trial. You could, in fact, based on the fact that the efficacy shifts seems to be quite pronounced in eGFR. And by the way for historical reference, drugs have been approved in the space mostly ACEs and ARBs. Losartan comes to mind because it has the most extensive data published from clinical trial. Losartan only gave us 16% eGFR slope change annualized benefit over the background medication at the time it was tested in Phase III. So we are really outstripping some of the historical magnitudes of benefit that one sees for approved agents in diabetic nephropathy. It’s interesting to scale in that way to think about those references. So when we think about the fact that we could in fact design a Phase III clinical trial that covers all the patients that we had in our original phase II trial design and that would take a certain number of patients over a certain number of months, and those numbers are certainly rather larger than if we just focused on the upper tertile of proteinuria, which is the 800 mgs per gram and above as I mentioned. There we could probably reduce considerably and the time to our Phase III endpoints is also reduced considerably. And so that makes it more accessible Phase III trial design, more affordable and shorter. So that's really one other things we are focused on in Phase III. Now, I will say even if you had a label, which was very restrictive, one will not think of that as necessarily problematic because as I mentioned in the remarks about 1.7 million people felt even that fairly restricted proteinuria description. I could give you another comparator, there are two other Phase III programs that people ask about from time to time, one is Atrasentan and AbbVie program in Phase III. If we look at their inclusion criteria in Phase III, it's about 1.8 million people described by proteinuria and filtration. And then also, pyridorin, NephroGenex’s compound in Phase III is about 0.9 million target population based on their inclusion parameters. So I would say that we are right -- predicted or at least one of the considered Phase III designs is as big a target population or bigger than the other [Axon] [ph] Phase III programs.

Got it. Thank you. That is super helpful. And then actually just one other sort of housekeeping question, during your financial guidance for 2015, is that including beginning a Phase III trial? And is that assuming sort of a partnership just trying to figure out how to accurately model it? Dr. Thomas Schall: Right. So Susan, I’m saying, go ahead.

Sure. Thank you. So this is just a baseline cash utilization projection, does not assume any partnership activity and not initiating a Phase II, III study at this time.

Okay. Great. Thank you so much and congrats again. Dr. Thomas Schall: Thank you very much.

Thank you. Our next question comes from Yatin Suneja from Cowen and Company. Your line is open. Please go ahead.

Hi, guys. Thank you for taking my question. I just have a -- I just have a quick question on the proof-of-concept trial that you are planning to initiate in aHUS. Could you maybe give us more idea in terms of what patient population are you going to enroll? Are you going to enroll? Are you going to enroll some of these naive patients, some of these treated patients where you would be conducting this trial U.S., ex-U.S.? And then I think I missed the endpoint that you talked about earlier, so if you can just repeat that, that would be great? Thank you. Dr. Thomas Schall: Certainly, Yatin. Thank you. I’ll let Pirow handle most of this question, but I’ll just give you some quick background. We have tested the sera of diagnosed aHUS patients in ex vivo assays where we run that sera over activated microvascular endothelial cells mimicking what happens we think in the real world and vessels including the kidney -- I'm sorry blood vessels of the kidney and other organs, but predominantly kidney. And what happens in that reaction is you get huge thrombus formation in the presence of that sera from the patients. Whereas if you run a normal person sera in the same assay you don't get thrombus occurring in that reaction. When we incubate that reaction with our drug, CCX168 we can inhibit the formation of the thrombus. We also see the inhibition of that formation of thrombus with eculizumab, Soliris. So the effects seem to be quite comparable at least as we take the patient sera out of the body and incubate with these therapeutically relevant agents, one of which is approved. So that's the background of what we are doing. In terms of how we are going in our dose to patients directly and what they look like, I’ll let Pirow take that part of the question.

Thanks, Tom. So again, this is a proof-of-concept study. We will be dosing our effective dose that we’ve shown in the ANCA-associated vasculitis study in Europe, the CLEAR study. So this is a 50-milligram twice daily. The dosing period is 15 days. We are planning to enroll up to approximately 10 patients in the study. And we want to, first of all, look at safety tolerability of the compound. These patients are patients with diagnosed aHUS who are on dialysis. And we will be looking at from an efficacy point of view, we will take the blood from these patients and evaluate that in the thrombus assay, as well as Thomas pointed out we’ve conducted some in vitro studies already with that. And we will also be looking at clinical outcome parameters, platelet counts, hemoglobin, LDH, C5a levels, C5b at complex levels and so on in these patients.

Great. Thank you very much.

Thank you. I am showing no further questions at this time. I would like to hand the conference back over to Mr. Tom Schall. Dr. Thomas Schall: Thank you very much. I really appreciate everyone's participation today and their questions. I look forward to talking more about our progress next quarter and wish everyone a great afternoon. Thanks again.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect. Have a wonderful day.