Aveo Pharmaceuticals Inc (AVEO) 2022 Q1 法說會逐字稿

Good morning, and welcome to Aveo Oncology First Quarter 2022 Financial Results Conference Call. (Operator Instructions) As a reminder, today's conference is being recorded.

I will now turn the call over to Hans Vitzthum of LifeSci Advisors. Please go ahead, sir.

Good afternoon, and thank you all for joining us on today's call to discuss Aveo's First Quarter 2022 Financial Results Conference Call. I'm joined today by Michael Bailey, Chief Executive Officer; Mike Ferraresso, Chief Commercial Officer; Erick Lucera, Chief Financial Officer; and Jeb Ledell, Chief Operating Officer.

Before we begin today's call, let me remind you that during this discussion, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to important risks and uncertainties, including those that are detailed in today's press release and in the Risk Factors section of our most recent report on Form 10-Q, which is on file with the SEC, that may cause actual results to differ materially from those results expressed in such statements. Furthermore, we caution you that these forward-looking statements represent our views only as of today, and we do not assume any obligation to update these statements, whether as a result of new information, future events or otherwise, except as required by law.

With that, I will now turn the call over to Aveo's President and Chief Executive Officer, Michael Bailey. Michael?

Thank you, Hans, and thank you to everyone for joining us on today's call. We're excited to share with you the continued progress we made during the first quarter of 2022. Importantly, the end of this quarter marked the 1-year anniversary of the approval and commercialization of FOTIVDA or tivozanib for patients with relapsed or refractory advanced renal cell carcinoma following 2 or more prior systemic therapies. As this is our first commercial product, the success of FOTIVDA's launch over the course of this first year was critical to our long-term growth strategy and marks a major milestone in our company's history. Despite pandemic-related restrictions for in-person access to prescribers and other health care professionals throughout much of 2021 and early '22, our sales team has been able to drive a steady increase in commercial uptake of FOTIVDA in each quarter since the launch commenced.

In terms of the first quarter of 2022, we reported a 25% increase in prescriptions filled compared with the fourth quarter of 2021. One of the key potential drivers behind this growth is that we believe many physicians who initially used FOTIVDA with later-line patients are now moving FOTIVDA to earlier-line patients based on their positive experience. In fact, our third-party data indicates that starting in December of 2021, FOTIVDA has been the leader in third-line RCC new patient starts. And as you know, new patient starts is an important leading indicator of market penetration.

With that said, we are still only a year into this launch, and there is much more work and opportunity ahead of us as we progress towards our goal of establishing FOTIVDA as the standard of care for third-line RCC patients, which we believe would in turn drive our continued growth. Let me conclude my FOTIVDA commercialization comments by reaffirming our 2022 full year net sales guidance of FOTIVDA of between $100 million to $110 million. With $20 million of net revenues for FOTIVDA in the first quarter, we remain confident that we can meet our 2022 full year guidance target.

Turning to our clinical trial activity. We have issued several exciting clinical announcements in the first quarter, including positive clinical data updates for FOTIVDA at both ASCO GU in February of 2022 and ASCO GI in January of 2022. At ASCO GU, we presented 5-year follow-up data for progression-free survival and overall survival from our TIVO-3 trial. These data show that long-term PFS rates at 3 and 4 years were consistently higher among patients treated with tivozanib when compared to patients treated with sorafenib. Importantly, this prolonged progression-free survival benefit translated to continued improvement of the overall survival trend favoring FOTIVDA with a hazard ratio now standing at 0.89.

At ASCO GI, we presented top line efficacy and safety data from the first-line cohort of our Phase II DEDUCTIVE clinical trial in which patients with advanced unresectable HCC or liver cancer are treated with a combination of 0.89 milligrams of tivozanib plus durvalumab. These top line results demonstrate that the combination was well tolerated and showed a 28% partial response rate with a median progression-free survival of 7.3 months and a 1-year overall survival rate of 76%, which we believe positions the combination favorably when compared to other VEGF checkpoint inhibitor combinations in this setting.

In addition, Aveo continues to enroll patients in the Phase III TiNivo-2 clinical trial evaluating tivozanib in combination with nivolumab or Opdivo, Bristol Myers Squibb's antibody directed against programmed death 1, as compared to tivozanib monotherapy in patients with advanced refractory RCC who have progressed following prior immune checkpoint inhibitor therapy. If successful, we believe this trial has the potential to expand the market opportunity for FOTIVDA in the larger second-line RCC setting. Bristol Myers is providing nivolumab clinical drug supply, pursuant to the clinical trial collaboration and supply agreement. Aveo currently expects enrollment in the TiNivo-2 trial to be completed in the first half of 2023.

In addition, we've entered into a clinical trial collaboration and supply agreement to evaluate tivozanib in combination with NKT2152, NiKang's novel hypoxia inducible factor or HIF2a inhibitor, which is an emerging target of interest in RCC. We believe this program is on track to initiate a Phase II trial in mid-2022.

Collectively, we believe that these combination clinical initiatives have the potential to further establish FOTIVDA as the combination VEGFR-TKI of choice. It's important to note that all these clinical initiatives are included in the 2022 OpEx guidance, which Erick will be able to provide some additional color on in a moment.

Turning to ficlatuzumab. We believe this asset is well positioned to potentially address a significant unmet medical need that exists for patients with HPV-negative recurrent or metastatic head and neck cancer, a patient population whose prognosis is very challenging. Importantly, in Q1, we completed scale-up manufacturing work for ficlatuzumab and expect to complete full-scale drug substance manufacturing for the clinical supply in the second quarter of 2022. This initiative will be followed by standard drug stability studies and drug packaging of the final clinical trial materials while we prepare for the initiation of our potential Phase III clinical trial in the first half of 2023. In the meantime, we expect to finalize the clinical trial design in consultation with the FDA as well as continued ongoing partnership discussions.

For AV-380, we remain on track to initiate a Phase Ib clinical trial in GDF-15-expressing cancer patients during the second half of this year, where we hope to generate additional data supporting the safety and the ability of AV-380 to lower elevated GDF-15 expression in cancer patients, which we believe is a key driver for the cachexia syndrome. All in all, we are pleased with our continued progress that we have made in advancing our pipeline as well as the success to date with the FOTIVDA launch, both of which we believe position us well for future value creation.

I'd like to turn the call over to Mike Ferraresso to walk us through the more detailed commercial update, including first quarter 2022 metrics. Mike?

Thank you, Michael. As Michael mentioned, as we look back over the past year, we're pleased with the commercial launch of FOTIVDA to date. The team has successfully executed our go-to-market strategy to raise awareness and starting in December of last year, established FOTIVDA as the #1 treatment option for new third-line patient starts. With our continued success, we believe FOTIVDA has the potential to become the overall market share leader and standard of care for third-line RCC patients.

Let me highlight this point with some of the sales and market data we're monitoring internally. To start, this was the fourth consecutive quarter of growth for FOTIVDA with U.S. net product revenue of $20.1 million, which reflects a 20% increase in revenue from the fourth quarter of '21. Finally, during the first quarter, we recorded a total of 977 commercial prescriptions, reflecting a 25% increase in commercial prescriptions compared to the fourth quarter of '21.

Perhaps even more importantly, we remain excited by the level of interest and overall feedback we're receiving from physicians. Many of these physicians have had an opportunity to treat a few patients with FOTIVDA and as Michael mentioned earlier, will typically try a new therapy initially in a later-line patient and then move earlier to third-line patients with positive experience. I'm pleased with the growth trajectory that we are currently experiencing as FOTIVDA now has the leading share of third-line new patient starts as evidenced by third-party data, which we first achieved in December of '21 and have continued for the first quarter of 2022. We are hopeful that with continued leadership in third-line new patient starts, this will translate into continued growth and future leadership in the overall total patient market share, establishing FOTIVDA as the third-line standard of care in advanced RCC.

In terms of outreach, we're now seeing significant improvement in our in-person access, which we believe will continue to expand our account penetration. Throughout our launch, we focused on building a new commercial model with extensive in-person and remote capabilities and multi-channel approaches to reach our customers. We have supplemented the field sales team's efforts with extensive marketing outreach, peer-to-peer influence opportunities and social media initiatives in order to drive awareness in areas facing access restrictions. With a year of launch success behind us and a continued leadership position in share of voice in the relapsed or refractory RCC market, we believe we have validated the capabilities and impact of our innovative commercial model and the team's ability to execute in the landscape of evolving customer access. We believe this commercial model will continue to drive our progress with FOTIVDA within the current label as well as support any future label expansions and future launches from our pipeline.

In closing, we continue to be pleased with the momentum that our commercial team has generated since launch and the encouraging reception FOTIVDA has received from oncologists, patients and the broader medical community. We look forward to updating you on our continued progress over the coming quarters.

I will now turn the call over to Erick Lucera to discuss first quarter 2022 financial results. Erick?

Thank you, Mike. Total net revenue for the first quarter of 2022 was $20.9 million, driven by U.S. net product revenue of $20.1 million. Selling, general and administrative expense for the first quarter of 2022 was $17.3 million, a level consistent with the prior 3 quarters and is compared with $15.1 million in the first quarter of 2021. Research and development expense for the first quarter of 2022 was $10.2 million compared with $5.8 million in the first quarter of 2021.

Looking to our full year guidance for 2022. We continue to expect our commercial spending levels to remain relatively constant during the year. Specifically, we expect commercial spend for 2022 to increase slightly over the last year to approximately $50 million, reflecting the full year expenses of the commercial launch as compared to only 3 quarters in 2021. Gross margins are expected to remain in the mid- to high 80th percentile.

In addition, we expect general and administrative expenses to remain flat at approximately $20 million for the year. In terms of our research and development expense, we continue to expect it to be in the range of $60 million to $70 million for 2022. This increase in R&D expense reflects the clinical trials we expect to conduct during the year. As Michael Bailey mentioned earlier, we continue to expect to report $100 million to $110 million in FOTIVDA U.S. net revenue for the year.

We ended the first quarter of 2022 with cash, cash equivalents and marketable securities of $79 million compared with $87.3 million at December 31, 2021. We believe that our cash, cash equivalents and marketable securities as of March 31, 2022, along with expected U.S. net product revenues from the sales of FOTIVDA, will enable us to maintain our current operations for a period of at least 12 months following the filing of our report on Form 10-Q for the quarter ended March 31, 2022. A full overview of the results for the first quarter of 2022 is available on our quarterly report on Form 10-Q.

I will now turn the call back over to Michael Bailey. Michael?

Thank you, Erick. To close, we continue to establish FOTIVDA as the leading treatment option for new third-line RCC patients, and we continue to make great progress towards becoming the overall standard of care in this setting. In addition, we are executing on the clinical front to further expand the market potential for tivozanib into earlier lines of RCC with the TiNivo-2 study. We look forward to providing updates on our progress in the coming quarters as we continue on our mission of improving the lives of patients with cancer.

We'll now open up the line to Q&A. Operator?

(Operator Instructions) We'll proceed with our first one from Colleen Kusy with Baird.

Congrats on the progress this quarter. This is obviously your first full first quarter of the year, so is -- I'm sure there are some learnings about the dynamics there. Can you talk about anything you saw in the first quarter that might be particular to the January, February, March time frame?

And you had a higher gross to net this quarter. Can you just talk about what your expectations for the gross to net going forward are? And then I have a follow-up.

Yes. Thanks, Colleen , for the questions. So yes, this is a very exciting time for us with the full -- first full year of sales in this quarter with a little over $20 million in revenues. Again, increasing quarter-over-quarter is very encouraging for us. I'm going to turn it over to Mike Ferraresso to answer your first question, and then we'll turn it over to Erick for the gross to net.

Thanks, Michael, and thanks for the question, Colleen. So I would say the only significant dynamic we saw, and you honed in on it with the gross to net, is just the reset in co-pays. So we did see an increased utilization of our co-pay support to make sure we can keep patients on active treatment through this reset period. So we launched last year around the second quarter and certainly saw a lot lower then. So that may be an estimate of when things return to more normalcy on the co-pay front.

And Erick, can you give some guidance on the longer term?

Yes. We've always said that over the long run, that we would be getting to a gross to net similar to our

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continue to expect that

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mentioned last year was a bit of an anomaly because we did not

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first quarter revenue. So we

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and get closer to peer group.

Yes. And Colleen, I'll just

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question with a couple of other dynamics that were mentioned during

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One is the access is opening up. And we're very encouraged by that, and we hope that will help us continue to drive growth. And then reiterating this third-line new patient start leadership. This is a really important leading indicator for overall market penetration, so we're excited about maintaining that into the first quarter.

That's really helpful. And yes, certainly encouraging to see maintained leadership in the new scripts for the third line. I guess are you able to -- do you have any granularity into the FOTIVDA scripts and where those fall in terms of line of therapy? Like is third line also the largest share of FOTIVDA scripts that you've been seeing to date this quarter?

Yes. Mike, do you want to try to tackle that?

Yes. So we don't have that granularity as to our current base of business. So I'll say most of your business at this point of your launch is refills. So a lot of it is patients who started in earlier quarters who may or may not have been third-line patients.

But we are seeing now we have a 25% share in the first quarter of new patient starts in the third line, which is the #1 product share. And we're very proud of that significant achievement by the team in this short time of our launch, and we see that we're well on our way to becoming the overall share leader if we maintain that share. So we're seeing reported a 14% share for overall market share in the first quarter. So it's less than half of what our new patient share is, so significant room for growth there as we continue to own this space.

That's great. And in prior quarters, you had mentioned -- or at least in the last quarter, you had mentioned that some of those early discontinuations that you saw earlier in the launch have kind of stopped. Any additional commentary on early discontinuations that you saw in 1Q?

Yes, absolutely. So we've seen a positive continuation of the trend. So what we shared last quarter, and we can extrapolate this now into the first quarter, is in our first couple of quarters of launch, as is common with relapsed/refractory oncology drug launch, you get a lot of trial initially in very late-line patients. And then if they have a positive experience

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more to the extent of the label and for us really focusing on that third-line population.

So in our first 2 quarters of launch, we had somewhere between 25% and 30% of patients who discontinued after one cycle. And what that tells us is these were very late-line patients who really weren't going to benefit from any additional treatment. In the fourth quarter, we saw an improvement. It very much lined up with our movement into the third-line share increase, and it dropped to 16%. And in the first quarter now, we're reporting 15%. So it's, again, very consistent. As we move to an earlier third-line population, we've seen a significant decrease in those early drop-offs.

And I'll just add to that. I mean those early patients, they're not all absolutely late line. And we do have a percentage of those that start in the first -- or the second quarter of '21 that are still on therapy. So the drug is delivering on its promise, and we're very excited about that.

We'll get our next question on the line from Stephen Willey with Stifel.

Can you guys hear me okay?

Yes.

Okay. This is Bonnie on for Steve. I just have a -- I might have missed it, in case you guys mentioned it, but I have a few follow-up questions. So first one is would it be possible for you guys to quantify the contribution of inventory shipments to sales realized during this quarter?

I'll turn that over to Mike to answer the inventory question.

Sure. So our inventory has been very consistent. It fluctuates between about 2 or 4 weeks' supply on hand. And so it was right within those bounds at the end of this quarter as well. So all of our distributors can readily order product and typically get it the next day. So there's really no incentive for them to build up any inventory. So they try to manage in that 2- to 4-week range.

Great. And my next question would be related to beta. So Exelexis will be providing top line -- their top line CONTACT-03 data in the second half of this year, and this trial appears to serve as a surrogate of the TiNivo-2 trial and presumably have more statistical power due to an increased number of patients. So can you guys speak to how, if at all, potentially negative data readout from this trial would influence TiNivo-2 plans?

So your question, if I may restate it, you're asking about any impact of CONTACT-03 on the overall TiNivo-2 results. Is that correct?

Yes, correct.

Yes. So just to remind everybody, CONTACT-03 is a very similar study to TiNivo-2, and that was very intentionally done on our part because this will be a great opportunity for us to kind of compare and contrast not only the combination of cabo and checkpoint versus tivo and a checkpoint, but also it will give us an opportunity to compare the single agent.

We really like the study design for a couple of reasons. One is we can't really lose. If the combination is not better than the single agent tivo, we've really established tivo further as a great opportunity or alternative to treating after immune checkpoint inhibitors. If at the end of the day, the CONTACT-03 is not successful in the combination arm, I'm not sure there's a huge read-through there for us in that our tolerability profile is very different than cabozantinib. And we believe the importance of being able to maintain dose and not have to dose reduce or dose interrupt is a significant advantage.

I'll also say, kind of related to that topic, at CONTACT-03, cabo is using their full dose, whereas they had great success in the first line, they used to reduce those. As you recall from our prior call, we

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0.89, the lower dose in this combination. We did that specifically and strategically because we believe tolerability is incredibly important in combination success. And I would argue that the FDA is also kind of moving in this direction with their Project Optimus where they're really looking to try to better balance toxicity and efficacy or risk/benefit, if you will.

So I think we're right on track to be able to have the highest possibility of success here. So we'd be very interested to see what happens in CONTACT-03. I don't

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data for some time now, but it will be an interesting data set to compare to the TiNivo-2 at the end of the day.

Great. And if may, I have one more question. So what would be -- what is the contribution of ficlatuzumab manufacturing scale-up to 2022 R&D guidance? Again, I guess I might have missed it. Can you guys quantify that for us?

Sure. Erick, do you want to...

Yes. This is Erick Lucera. As we previously guided before, we're expecting about $10-or-so million of manufacturing for the study drug material during the current year.

And proceed to our next question on the line from Andrew Berens with SVB Securities.

I'm sorry if I missed some of this because I came onto the call at the tail end. Can you give us color on the duration of FOTIVDA that you're seeing in the market now? And what other drugs that are being used in the third line are comprising the 75% in RCC? And then also, what percentage of third-line patients are not being treated that you see as addressable? And then lastly, what would we expect to see in the HCC second-line setting in regards to duration?

Lots of great questions there, Andy, and thank you for them. I'm going to turn it over to Mike to tackle a little

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I'll start by saying

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early to be able to get a very specific duration of therapy because, as you know, even with the updated data we presented at ASCO GU, you have a lot of patients who are really on tivo for a very long time, even 3 to 4 years, as reported just recently. So Mike?

Yes. Thanks for the question, Andrew. So as Michael said, it still is difficult for us to calculate the duration. It is very encouraging in that even when we look back to the group of patients who started in Q2 of last year, which is the longest follow-up, we still have a significant portion of those patients still on active treatment. And recalling as well that was the time when we're getting our initial trial where it was a lot more biased towards later-line patients. So we believe it's going to get even enriched as we go forward, and we're getting more third-line patients. So we'll need to follow that for a longer period of time.

As far as the other drugs in the third line, so historically, it was -- cabo and len/Afinitor were the top choices. And then essentially, there was a lot of fragmentation amongst share beneath that of essentially whatever treatment a patient hadn't had before. You used to see a fair amount of nivolumab historically. But now that most people are getting an immunotherapy in the front line, you're seeing less and less use of nivolumab in that later-line setting.

For the percent treated, what we look at is decision

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combination of third line plus, as we're stating it. Prior to our approval, it was estimated only about 50% of patients who were eligible were going on to active treatment. And so that's about 5 out of 10,000 patients per year. Since our approval, DR has revised that percent treatment up to 58% and correspondingly increased the size of the market from $350 million to $480 million.

So we think we're making an impact. We're clearly driving -- being the leading new patient starts and getting a lot more patients on treatment. We believe that rate has a lot of room to continue to increase. In the first and second line, it's about 85% or 90% going on to active treatment. So we'd love to see that in the third and fourth-line setting.

Yes. And Andy, just to answer your last question on what we'd expect to see in the HCC duration after bev/atezo. Importantly, remember, there's no data after bev/atezo at this point. So this is one of the exciting parts about this study. But if we look at second-line activity as single

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ramucirumab, the duration is somewhere in the 3 to 5 months. So really not great extension of duration of therapy for that second line. So the bar is relatively low, but we'll be excited to see what we see in the second cohort of the DEDUCTIVE trial.

We'll get to our next question on the line from Soumit Roy with Jones Research.

Congratulations on all the progress. A quick question on the DEDUCTIVE cohort B. I can't remember if you already enrolled those 20 patients and just waiting for data to be available.

Yes. I'm going to turn that over to Jeb.

Yes. So we've said that we would finish that enrollment during the second half of this calendar year.

Okay. And in terms of the TiNivo-2 enrollment, is that -- do you see like a steady growth going on or you see it picking up as the name is more coming out on FOTIVDA and physicians are getting more aware of it?

We haven't provided any guidance on the shaping of the enrollment. What we've said is that we expect to finish the study in the first half.

Got it. Last question is could you give us like the NRx, TRx number on the current prescription?

Do you want to take that?

Yes. We -- that's actually not a number that we have easy access to. So we don't get that broken out that way. Most of our business is going through the SD channel so we just see volume going into an account. But we would estimate at this point in our launch, most of our volume is refill, but we're growing both the new and refill quarter-over-quarter.

(Operator Instructions) And our next question on the line is from Swayampakula Ramakanth from H.C. Wainwright.

Probably some of -- I'm not sure if some of these questions have been already asked since I'm coming later -- late into this. In some of your prepared remarks, you stated that there are certain physicians being comfortable with FOTIVDA who are actually trying to use the drug in second line as well. Is -- do you have a certain percentage? Or like what percent of physicians are actually trying to use it in the second line as well, which is obviously not on the label, but...

So thanks for the question again, RK. And I'll

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add a little color. Basically, what we've said

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our early patients were kind of fourth, fifth, sixth-line patients who didn't have a lot of

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and hospice came off. What we're

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is the third line.

Now with that said, there are anecdotes and we've heard reports of physicians using tivo in the second line. Again, that's -- the label is after 2 prior systemic

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Theoretically, after, let's say, a cabo/nivo, tivo could be a good choice. And again, we've heard anecdotes about that. But what we're really trying to highlight today is our core focus market of third line, which we estimate -- or Decision Resources estimate

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about $480 million and growing. have taken the leadership role in new patient starts, which, as said, is really an important leading indicator to overall market penetration.

I don't know, Mike, if you want to add anything to that or...

Yes. The only color I would add, RK, is, as Michael said, we've heard anecdotally -- and as he said, most commonly, if they used to use cabo in the second-line setting and now they're starting upfront with cabo/nivo, have heard some physicians say that within our label of 2 prior systemic therapies, they would do that. The other thing we've heard is if they get comfort with FOTIVDA and they have a patient who maybe went on a front-line

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therapy and had some toxicity challenge

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candidate for some of the multi-targeted TKIs or TKIs with a similar toxicity profile that they already struggled with, that they may adopt in that setting. But I would say at this point, as Michael said, we're very focused on third line, and it's been mostly just anecdotes from those with a higher level of experience with the drug and comfort level.

Yes. And I'll just close that thought out, RK, and good question, that our key strategic initiative to getting into the second line and hopefully taking leadership share there is really the TiNivo-2 study. And so we're excited about the progress we've made there.

Okay. Then regarding the TiNivo-2 study, is there going to be an interim look? Or do need to wait until the end of that study?

Yes. We're going to have to wait until the end of that study.

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interim looks on safety and -- that are very typical in a Phase III study. But unless there's

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study, we'll proceed to conclusion.

Okay. And last question from me, Mike, is do you still have the voucher program? Or is it pretty much done with at this point because it's almost a year into your commercialization?

Okay. We do still have physician samples available. And it is intended to be a launch program. But as said, there still are some pockets where physicians have been difficult to launch and things are now opening up. With that said, we're seeing very little need to use the program. So it's likely phasing out soon.

Congratulations again. It's a great start, of course.

Thank you very much, RK.

Mr. Bailey, have no further questions at this time. I'll now turn the call back to you for any closing remarks.

Very good. Well, thank you all for joining us today. Greatly appreciate your continued support, and look forward to updating you all on further progress in the coming quarters. With that, we'll end.

Thank you very much, and thank you, everyone. That does conclude the conference call for today. We thank you for your participation and ask that you disconnect your lines. Have a good day, everyone.