Pete De Spain - VP, IR & Corporate Communications Troy Wilson - President & CEO Heidi Henson - CFO Antonio Gualberto - Chief Medical Officer

Good day, ladies and gentlemen, and welcome to Kura Oncology Incorporated Fourth Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be provided at that time. [Operator Instructions] As a reminder, this conference call is being recorded. Now I'd like to introduce your host for today's conference, Pete De Spain, VP of Investor Relations. Sir?

Thank you, James. Good afternoon, and welcome to Kura Oncology's conference call. Joining me on the call from Kura are Dr. Troy Wilson, our President and Chief Executive Officer; Heidi Henson, our Chief Financial Officer; and Dr. Antonio Gualberto, our Chief Medical Officer. Before I turn the call over to Dr. Wilson, I would like to remind you that today's call will include forward-looking statements based on current expectations. Such statements represent management's judgment as of today, and may involve risks and uncertainties that could cause actual results to differ materially from expected results. Please refer to Kura's filings with the SEC, which are available from the SEC or on the Kura Oncology website for information concerning risk factors that could affect the company. I'd also like to point your attention to the latest version of our corporate presentation which is now available on our website. With that, I will now turn the call over to Dr. Troy Wilson, President and CEO of Kura Oncology.

Thank you, Pete. At Kura, we're committed to realizing the promise of precision medicines for the treatment of cancer. Our pipeline of small molecule drug candidates target signaling pathways and other drivers of cancer where there is a strong scientific and clinical rationale to improve outcomes by identifying those patients most likely to benefit from treatment. Our goal is to help patients with cancer lead better longer lives. I'm pleased to report, we recently took another step closer towards achieving that goal with a successful and a Phase 2 meeting with the FDA regarding a registration directed trial of our lead drug candidate tipifarnib, more on that in a moment. We enlicensed tipifarnib, a potent, selective and orally bioavailable inhibitor of the farnesyl transferase enzyme from Janssen in December 2014. Using advancements in cancer genetics and new molecular diagnostic tools such as next-generation sequencing, we at Kura Oncology are evaluating tipifarnib in multiple solid tumor and hematologic indications. Our most advanced indication is in patients with head and neck squamous cell carcinoma's or HNSCC that carry specific mutations in the HRAS gene. Last month, we reported updated results from our Phase 2 trial of tipifarnib in patients with HRAS mutant, HNSCC at the Multi-Disciplinary Head and Neck Cancer Symposium in Scottsdale. The update presented by Dr. Alan Ho of Memorial Sloan Kettering Cancer Center showed that 5 of the 6 valuable patients achieved a confirmed partial response. 2 of these patients achieved durable responses beyond 18 months. The 1 valuable patient who did not achieve a response based on standard resist criteria experienced tumor shrinkage and prolonged disease stabilization. 3 additional patients were enrolled in the trial, however none of these 3 was valuable as of the February 8, data countries-off date. Unfortunately, one patient passed away shortly after joining the study, one withdrew consent and one had not yet reached on-treatment disease assessments. Tipifarnib has been generally well tolerated in the trial and adverse events observed are consistent with it's known safety profile. All 9 patients joined the trial upon progression from between 1 and 4 lines of therapy including chemotherapy, cetuximab or immune therapy with the patients having had a median of two prior therapies. We're particularly encouraged by these results when we consider that for the three agents currently approved for the treatment of HNSCC in the second line, response rates are in the range of 13% to 16% with a median progression free survival of approximately two months and a median overall survival of less than 8 months. Based on these positive Phase 2 results, we've been preparing for the initiation of a clinical trial designed to support registration in HRAS mutant HNSCC while awaiting feedback from regulatory authorities. I'm pleased that following interactions with the FDA other regulatory authorities, we are finalizing the design of the trial. We plan to conduct a single-ARM study of recurrent or metastatic patients with HRAS mutant, HNSCC. We anticipate that a majority of the patients on-study will have relapsed from or be refractory to first-line platinum containing therapies. However, patients who have received first-line treatment with non-platinum containing regiments may also be eligible to enroll in the study pending further input from the agency upon submission of the final protocol. We're calling these two groups second line post platinum and potentially second line non-platinum respectively. In addition to these two groups, another group of eligible patients includes those who are post-adjuvant or post-primary if refractory to platinum. This group consists of patients with progression or recurrent within 6 months of platinum containing therapy in the adjuvant setting; i.e. after surgery or chemotherapy and radiation for primary disease. Finally, patients who have received prior platinum containing regiments and have later progressed on or recurred after additional lines of therapy, for example, second or third line patients may also be enrolled in the study; we're calling this fourth group, third line plus patients. We're pleased that each of these four groups of patients may be eligible to participate in the trial as it would enable us to maintain the most flexibility in recruiting patients into this global multi-center study. The trail will enroll at least 59 HRAS mutant HNSCC patients with measurable disease as determined by resist version 1.1 criteria. Objective response rate or ORR as determined by independent radiological review is the primary endpoint. The trial design has approximately 80% power to detect a difference between a no hypothesis of 15%, the point estimate of second line therapy ORR for recurrent and metastatic disease, and 30% on ORR considered of interest. The FDA indicated in the minutes from the end of Phase 2 meeting that the trail is currently designed, maybe adequate to support an NDA seeking accelerated approval. We expect to initiate this registration directed trial which we now call our AIM-HN trial in the second half of this year. In the meantime, we continue to open additional sites and to enroll additional patients in the ongoing Phase 2 trial. Although we're still completing our feasibility assessment in collaboration with our clinical CRO, we anticipate the AIM-HN trial will require approximately 100 clinical sites worldwide. We expect to provide additional details once we've completed our feasibility studies and finalized the clinical protocol. We are collaborating with third-parties for the development and validation of a PCR-based companion diagnostic to identify patients with HRAS mutant tumors for inclusion in the AIM-HN trial. This PCR-based assay is technically similar to other PCR-based test that have already been approved by the FDA. In addition to the AIM-HN trial, we are also initiating a multi-center non-interventional case controlled study which we're calling our SEQ-HN study to characterize the natural history of patients with recurrent or metastatic HNSCC with HRAS mutations. This screening and outcome study is also expected to enable the identification of patients with HRAS mutations for potential enrollment into our AIM-HN trial. We're excited to begin our AIM-HN and SEQ-HN studies and expect to have more to say about each of them in the months ahead. Now let's turn our attention to tipifarnib and other solid tumor indications. Last fall, we expanded our ongoing Phase 2 clinical trial of tipifarnib in solid tumors to include a cohort of patients with other HRAS mutant squamous cell carcinoma's including patients with cutaneous cancers and squamous non-small cell lung cancer, a histology with a similar genetic pattern to HNSCC. In addition to our company-sponsored clinical trial in solid tumors, we anticipate a Phase 2 investigator sponsor trial of tipifarnib for the treatment of HRAS mutant, squamous non-small cell lung cancer to initiate in 2018. This proof-of-concept trial will be a cooperative group study sponsored by the Spanish Lung Cancer Group which consists of more than 150 public and private oncology centers in Spain. It's been just over 3 years since we began clinical development of tipifarnib. As I mentioned at the outset, we're pleased to have received encouraging feedback from regulatory authorities including the FDA and we look forward to initiating our AIM-HN trail in the second half of the year. Now let me transition to our work on tipifarnib hematologic malignancies. Tipifarnib was previously studied in more than 5,000 patients, many of whom suffered from blood cancers such as acute myeloid leukemia and myeloiders [ph] syndrome. Although tipifarnib demonstrated objective responses including complete responses and other signs of clinical benefit in certain of those patients, no molecular mechanism of action was previously identified that could explain the activity of tipifarnib in those patient populations. At ASH [ph] in December, we presented new findings that identified activation of the CXCL12 pathway and bone marrow homing of myeloid cells as potential biomarkers of tipifarnib's activity in certain hematological malignancies, including PTCL, MDS, CMML, and AML. Based on these observations we're now prospectively investigating these potential biomarkers in our ongoing Phase 2 trials. For each disease indication, we plan to evaluate a number of criteria in determining whether to advance tipifarnib. These criteria include biomarker validation, evidence of durable clinical benefit, potential for rapid clinical development, potential to move into earlier lines of therapy, potential for patent and regulatory exclusivity and the commercial potential. Our goal is to demonstrate proof-of-concept in one or more of these disease indications by the end of 2018 and we anticipate we will have additional preliminary data to share in the second half of the year. Now let's quickly turn our attention to our earlier stage programs beginning with our ERK inhibitor, KO-947. We're advancing KO-947 as potential treatment for patients with tumors that have disregulated activity due to mutations or other mechanisms in the MAP-K pathway. Our Phase 1 trial of KO-947 in patients with locally advanced unreceptible or metastatic relapse refractory non-hematological malignancies is ongoing. The trial design includes a dose escalation, maximum tolerated dose expansion and one or more tumor specific extension cohorts. We're working to define a dose and schedule that will enable us to evaluate KO-947 in genetically selective patients who tumors are sensitive to ERK inhibition. In that regard we plan to present additional preclinical data at AACR in April 2018 relating to the potential biomarkers for identifying patients with squamous cell carcinomas who may be sensitive to the activity of KO-947. Our other pipeline program KO-539 is a potent in selective small molecule inhibitor of the MML protein-protein interaction. Although KO-539 was originally designed as a potential therapy for MLL rearranged leukemia's we have generated preclinical data that support the anti-tumor activity of KO-539 in additional genetically defined subsets of acute leukemia including those with oncogenic driver mutations in MPM-1 and DMNT-3A [ph]. We estimate that together with a mix lineage leukemia's; these mutations represent approximately half of diagnosed cases of AML. Pending completion of successful IND enabling studies, we expect to submit an IND application for KO-539 in late 2018 or early 2019. This covers the update on our development programs. I'll now turn the call over to Heidi for a discussion of the financial results for the fourth quarter and full year 2017.

Thank you, Troy and good afternoon, everyone. Hopefully you've all had a chance to review our press release this afternoon. For more detailed information I invite you to review our 10-K filed today. Now let's get started with a quick overview of our financial results. Total operating expenses for the fourth quarter of 2017 were $11 million compared to $7.5 million for the fourth quarter of 2016. For the full year 2017, total operating expenses came in at $36.1 million compared to $28.4 million for the prior year. Now let me break that down for you. R&D expenses for the fourth quarter of 2017 were $8.1 million compared to $5.5 million for the fourth quarter of 2016. The increase in R&D expenses for the fourth quarter was primarily due to increases in clinical development activities related to tipifarnib offset by a decrease in research expense related to our other preclinical stage programs. Research and development expenses for the full year of 2017 were $26.4 million compared to $20.4 million for the previous year. G&A expenses for the fourth quarter of 2017 were $2.9 million compared with $2 million for the fourth quarter of 2016. The increase in G&A expenses was due to increases in non-cash share-based compensation, personnel costs and professional fees. For the full year 2017, G&A expenses were $9.7 million compared to $8 million for 2016. The net loss for the fourth quarter of 2017 was $10.7 million or $0.37 per share compared to a net loss of $7.3 million or $0.38 per share for the fourth quarter of 2016. Net loss for the full year 2017 was $35.4 million or $1.52 per share compared to a net loss of $27.6 million for 2016 or $1.47 per share. As of December 31, 2017, we had 93.1 million in cash, cash equivalents and short-term investments. Subsequently in January 2018 we sold an aggregate of approximately 3.1 million shares of our common stock under an ATM facility for net proceeds of 57.4 million. We expect that our current cash, cash equivalents and short-term investments will be sufficient to fund current operations into the first half of 2020. With that, I will now turn the call back over to Troy.

Thanks, Heidi. In just over 3 years since we enlicensed tipifarnib, we've confirmed it's clinical activity, validated our biomarker hypothesis and optimized dose and schedule in HNSCC and we're now on the verge of our first registration directed study, that's the power of our precision medicine approach. We're very pleased with the progress we've made and are particularly encouraged by the FDAs feedback on the regulatory path forward for tipifarnib and HRAS mutant, HNSCC. We look forward to providing additional updates regarding the design and execution of the study in the months ahead. With that operator, we're now ready for questions.

[Operator Instructions] Our first question comes from Constantino [ph] with JMP Securities. Your line is now open.

So you mentioned that as currently design the AIM-HN trial may be adequate to support accelerated approval for [indiscernible] HNSCC; have you discussed with the agency the specifics of what would be required for full approval of TP in the setting? And then I've got a quick follow-up after that.

Let me let Antonia address that question for you.

Yes, certainly they can see prerogative to consider the final outcome of the study. So currently they are no specific discussion of anti-type of approval that sound impact obviously will be discussed when the totality of the data is available.

So just to be clear; if let's say the response rate and the durability of response is above a certain threshold, you could still get full approval on this read out, is that accurate like from AIM-HN alone?

What I can say is that the agency will consider anything that will be transformative. And obviously that will take into account not just the greater response but also the quality of the responses. The agency did not discard any type of approval.

And then, just a related question -- have you guys -- do you have plans or are you in the process of pursuing any regulatory designations like breakthrough therapy to sort of expedite development? Are those part of the discussions?

As we've said in the past, we're going to avail ourselves of any and all avenues to try to accelerate development. So we're not able to give any sort of specific update but certainly we want to take advantage of everything available to us and -- if and when there are appropriate updates, we'll give them.

These label expansions or the broader squamous cell cancer population you've alluded to in the past, I'm just wondering what steps do you think you have to take there to realize that sort of broader opportunity outside of just head and neck?

Certainly the indications that we are referring to the squamous, cutaneous and particularly the non-small cell cancer; molecularly they are very similar to head and neck. And we have already mentioned in the past, the prior technical data, so the expectation is that we will have an encouraging signal from these studies.

[Operator Instructions] Our next question comes from Jo [ph] with Citi. Your line is now open.

The first one is on the design of the screening and outcome study in HRAS, head and neck patients. Could you tussle over above that and also with the FDA consider that? And if so, how in the filing?

We actually are quite encouraged by the fact that the FDA was eager to receive this data and consider the totality of the data, not just only the study but only the sequencing and outcomes of the study as part of the process of the decision making regarding the type of approval and the approval consideration.

The Phase 3 study that's planned for the 59 patients, are you able to get a sense of how long those patients might take to enroll?

We're not yet in a position to give guidance on enrollment in the AIM-HN study. We've been very focused on screening, and as Antonia mentioned, an important development is that we're looking forward to initiating the SEQ-HN study. In addition, as he mentioned to providing -- to characterizing the natural history of HRAS mutations, we're optimistic that that's going to provide patients for enrollment in the AIM-HN study since the former is a non-interventional and the latter is a treatment study. We're also going from a Phase 2 proof-of-concept setting in 20 or so sites to multi-center global trail which is a very different undertaking. So, I think we'll be in a better position a little later when we have a better idea. The final thing I'll say is, we're -- we are finalizing both feasibility testing as I indicated in our prepared remarks and the final protocol with the FDA. So we need to get through this site feasibility testing on a worldwide basis, we want to get through that. We're going through this exact analysis internally.

The lung study that's planned for Europe, could you tell us a little bit about how that could be used to help explore the potential to be fine of a net setting?

Obviously our expectation is that similarly to our Phase 2 in head and neck, this study will be able to provide proof-of-concept in this as squamous non-small cell lung cancer indication. Where we go from there, obviously will depend on the review of the data.

Thank you. This concludes our question-and-answer session. So I'd like to turn the conference back over to Dr. Wilson for closing remarks.

Thank you all again for participating in our call today. For those of you keeping track of our progress, here are potential milestones we're anticipating in the year ahead. For tipifarnib, preclinical data in HRAS mutants, squamous non-small cell lung tumor models at AACR, initiation of our SEQ-HN trial, a screening and outcome study in the first half, initiation of the AIM-HN trial in the second half, additional updates from our ongoing Phase 2 study in HRAS mutant HNSCC in the second half, initiation of a proof-of-concept study in HRAS mutant squamous non-small cell lung cancer through the Spanish Lung Cancer Group, and additional clinical data in hematologic malignancies in the second half. For KO-947, preclinical biomarker data in squamous cell carcinomas at AACR and data from Phase 1 dose escalation trial in the second half. And for KO-539, submission of an IND application in late 2018 or early 2019. Thank you once again for participating in today's call. I invite you to join us via webcast for my presentation at the Cowen Healthcare Conference tomorrow at 8:40 AM Eastern Time, 5:40 AM Pacific Time. If you have any additional questions, please feel free to contact Pete, Heidi or myself. Thank you and have a good evening, everyone.

Thank you, ladies and gentlemen, that does conclude today's conference. Thank you very much for your participation. You may all disconnect and have a wonderful evening.