Cellectar Biosciences Inc (CLRB) 2017 Q3 法說會逐字稿

Welcome to the Cellectar Third Quarter Earnings conference call.

(Operator Instructions)

As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Mr. Jules Abraham from JQA Partners. Sir, you may begin.

Thank you for joining us today to review the financial and operational results of Cellectar Biosciences for the third quarter of 2017 on this conference call and live webcast.

Following the close of market yesterday, the company filed its financial statements with the FCC for the quarter ending September 30th, 2017, which can be found both on the SEC Web Site at www.sec.gov, and the investor relations section of the company's Web Site at www.cellectar.com. In addition, a replay of this conference call will be available on the company's Web Site.

Joining me today from Cellectar are Jim Caruso, Chief Executive Officer; John Hamill, Cellectar's interim Chief Financial Officer; John Friend, M.D., Vice President and Chief Medical Officer and Jarrod Longcor, Cellectar's Chief Business Officer.

Before I turn the call over to Mr. Caruso, please note that some of the remarks you will hear today may contain forward-looking statements about the company's performance. Additionally, there may be forward-looking statements during the Q&A session, following prepared remarks. These statements are neither promises nor guarantees and there are a number of risks and uncertainties that could cause actual results to differ materially from those set forth in these forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements is contained in the company's filings and periodic reports filed with the SEC. Copies of which are available on the company's Web Site or maybe requested directly from them.

Forward-looking statements are made as of today's date. And the company doesn't undertake any obligation to update any forward-looking statements made during today's call.

With that said, I'll now turn the call over to Mr. Caruso. Jim?

Thank you, Jules. And thank you to all participants for joining us today to review Cellectar's financial and corporate performance results from the third quarter of 2017.

We are pleased with our progress, going to third quarter, and continue to rapidly advance the company on all stated strategic fronts. Our development of CLR 131 for liquid tumors continues at an encouraging pace, with strong results in our collaboration with the University of Wisconsin for the NCI-funded head and neck solid tumor program is ahead of schedule.

Our Chief Medical Officer, John Friend, will discuss our liquid rumor results shortly, including our recently-announced multi-dose regimen for cohort five of our Phase I multiple myeloma study. We continue to create value-generating opportunities through additional strategic corporate collaborations, such as Avicenna and Acunova, that allow us to further optimize our PDC delivery platform and to enrich the company's small molecule pipeline with proprietary assets.

In parallel, our relationship with Pierre Fabre continues to expand. We are also developing an internal pipeline through our pre-clinical development programs, for solid tumors. Jarrod Longcor, our Chief Business Officer, will provide additional insight regarding these activities.

From a financial perspective, we believe our September 30 cash balance and the proceeds from our recent registered direct financing are adequate to fund the operations of the company for the next 12 months. Our interim CFO, John Hamill, will provide further details of the financing as well as our financial results for the quarter.

Following these discussions, I will provide some closing comments, after which the entire executive team will be available to answer your questions.

At this time, I'd like to turn the call over to Cellectar's interim CFO, John Hamill, for an overview of the third quarter 2017 financials.

Thank you, Jim. And good morning, everyone.

Yesterday afternoon, we filed our 10-Q for the third quarter, ended 2017. Additionally, we filed with the SEC a registration statement on Form S-1 for the resale of up to 3,108,538 shares of our common stock, issuable on the exercise of outstanding (inaudible) warrants. We are not selling any shares of our common stock. These warrants were issued in October 2017, as part of the recent financing and we agreed to file the registration statement within 60 days of the issuance of the warrants.

We also filed a registration statement on Form S-8, primarily to register 1,620,000 shares of the company's common stock, issuable in accordance with the terms of the company's amended and restated 2015 Stock Incentive Plan.

For the third quarter, ended September 30, 2017, our company's financial results were in line with our expectations. Cellectar's research and development expenses increased to approximately $2.3 million from approximately $1.3 million in the third quarter of 2016, primarily as a result of increased support for the ongoing Phase II clinical trial in hematologic malignancies at increased pre-clinical development costs.

General and administrative spending in the third quarter was approximately $1.2 million and flat compared to third quarter of 2016.

Our net loss in the third quarter of 2017 was approximately $3.5 million, or 26 cents per common share, as compared to a loss of approximately $2.3 million, or 43 cents per share, in the third quarter of 2016. The results included non-cash stock-based compensation charges of approximately $176,000 in the third quarter of 2017 and approximately $174,000 for the third quarter of 2016.

Turning to the balance sheet, total cash and cash equivalents, as of the third quarter, ended September 30, were approximately $5.7 million versus approximately $11.4 million at year end 2016.

As Jim mentioned, on October 12th, we raised approximately $7 million, net of offering expenses, and public and private offerings of 1,954,838 shares of common stock and 4.0412949 shares of preferred stock, which is immediately convertible into 2,190,330 shares of common stock. In addition, through a private placement, we issued 3,108,538 warrants that are immediately exercisable at $1.78.

The Resale S-1 that was filed yesterday afternoon is for the shares issuable upon exercise of these warrants. The warrants have a seven-year term. And if all warrants issued in the private placement are exercised, additional net proceeds would total approximately $5.5 million.

We believe our September 30 cash balance of approximately $5.7 million and the approximately $7 million in net proceeds from the October financing are adequate to fund our operations for the next 12 months from today.

And now, I'll turn the call back over to Jim.

Thank you, John. As you know, we recently completed the fourth cohort of our phase one dose escalation trial of CLR 131 for the treatment of relapsed, refractory multiple myeloma. And have initiated our NCI-supported Phase II trial as well.

John Friend will now provide us with an update on those clinical programs.

Thank you, Jim. Good morning, everyone.

We continue to be quite pleased with the performance of our lead PDC compound, CLR 131, and our Phase I open label dose escalation study in relapsed, refractory multiple myeloma patients.

As you recall, the primary objective of this study is to determine the safety and tolerability of CLR 131. We continue to observe clear signals of both safety and efficacy in all four cohorts to date. Of note, we recently completed the fourth cohort of this study, in which one of the three evaluable patients experienced a partial response to treatment.

The enrolled cohort four patients were heavily pretreated, relapsed or refractory multiple myeloma, with greater than five prior lines of radiation or chemotherapy. And had a high degree of tumor burden upon entering into the trial. Each patient in the cohort received a single 31.25 millicurie per meter squared dose of CLR 131 at a 30-minute infusion, and was evaluated over the course of 85 days for safety and efficacy.

All three patients in the cohort experienced a measure of clinical benefit, with two patients achieving stable disease and one patient achieving a partial response. One of the patients experiencing stable disease attained a 44 percent reduction in M Proteins. The patient experiencing a partial response had an 82 percent reduction in free light chains, the appropriate biomarker as this patient did not produce M Protein. This patient had received seven prior lines of treatment, including radiation, stem cell transplantation and multiple combination treatments, including one with Daratumumab that was not tolerated.

We are still collecting survival data on the patients from all four cohorts. These data are provided to us in batches, as the patients are seen in their respective cancer care clinics every two to four months.

As we reported earlier this week, following the single line infusion of 12.5 millicurie per meter squared, patients in this first cohort have achieved an impressive median overall survival of 26.2 months. While patients from the second and third cohorts, who received 18.75 millicurie per meter squared and 25 millicurie per meter squared doses, have experienced median overall survival of 15.4 months and 10 months, respectively. Please remember that this trial remains ongoing and median overall survival may continue to increase over time.

While we provide an update as soon as additional data is made available, it is worthwhile to note that, while no head-to-head studies have been conducted to date with CLR 131 for comparison purposes, the median overall survival benefit seen with the three most recently FDA-approved third-line therapies for multiple myeloma ranges from 11.9 to 18.6 months in separate trials.

As of the data update, we have now exceeded the median overall survival with a single dose from cohort one by more than 40 percent, met those benchmarks with cohort two and are closing in on the range with cohort three. In addition, given the favorable outcome of the 31.25 millicurie per meter squared dose in the fourth cohort, we recently announced the design of a fifth cohort from the study. In this cohort, we will alter the study protocol and split the 31.25 millicurie per meter squared dose into two 30-minute infusions of 15.625 millicurie per meter squared doses, given one week apart.

Moving into a multiple or repeat dose regimen is extremely exciting, considering our pre-clinical results observed to date. We have tested repeat doses of CLR 131 in various solid tumor xenograft mouse models, including pancreatic and uterine cancer cell lines. And each time, have demonstrated clear efficacy signals, including overall survival increase and/or reductions in tumor volume compared to a single dose of CLR 131. We have been working with our lead investigators to initiate this new aspect of the protocol and anticipate enrollment shortly.

With regard to our NCI-supported Phase II study of CLR 131 in multiple myeloma and other hematologic malignancies, it is active and enrolling. It is being conducted at top cancer centers across the United States for patients with a variety of orphan designated relapse or refractory hematologic cancers. The study's primary end point is clinical benefit rates with additional informative secondary endpoints of overall response rate, progression free survival, median overall survival and other markers of efficacy.

All patients will receive a single dose of 25.0 millicurie per meter squared dose of CLR 131 with an optional second dose of 25 millicurie per meter squared that can be infused approximately 75 to 180 days later. The hematologic cancers studied in the trial include multiple myeloma, chronic lymphocytic leukemia, small lymphocytic lymphoma, lymphoplasmacytic lymphoma, marginal zone lymphoma, mantle cell lymphoma, and potentially diffuse large B-cell lymphoma.

In addition to the CLR 131 infusion, multiple myeloma patients will receive 40 milligram oral dexamethasone weekly for up to 12 weeks. Efficacy responses will be determined by the latest international multiple myeloma working group criteria and efficacy for all lymphoma patients will be determined according to the Lugano criteria. We look forward to providing updates on both of these trials as they become available.

I would also like to provide you with an update regarding the work being performed by the University of Wisconsin-Madison. As you know, they received an exclusive National Cancer Institute specialized program of research excellence, or SPORE grant, to improve treatments and outcomes for head and neck cancer patients.

Dr. Paul Harari, Chair of Human Oncology and Project Leader, and his colleagues have made tremendous progress over the past 14 months and are currently working on the design of a Phase I clinical study to evaluate the safety and tolerability of CLR 131 in combination with external beam radiation in recurrent head and neck cancer patients. Over 300,000 people in the United States are living with oral cavity or pharynx cancer, and over 80,000 with larynx cancer.

A majority of head and neck cancer patients will experience recurrence following their initial therapy. Reirradiation must be considered with great caution, due to the risk of severe injury to normal tissue structures that maintain long recall from the prior radiation exposure. Several studies have examined the role of reirradiation in head and neck cancer. However, there is considerable risk for high-grade toxicities, including death.

On October 28th, 2017, additional pre-clinical data was presented at the International Conference on Molecular Targets and Cancer Therapeutics, that pre-treatment with one of our PDC molecules, CLR 127, prior to external beam radiation both enhances the radiation effects as well as inhibits DNA repair mechanism across numerous adult and pediatric tumors. We will continue to provide updates as more data becomes available, and as the University of Wisconsin team closes in on launching the first head and neck cancer study utilizing CLR 131 and external beam radiation.

With that, my pleasure to turn the call over to Jim.

Thank you for the summary of our progress with CLR 131, John. We remain very pleased with our program momentum and look forward to sharing future updates.

At this time, I'd like to turn the call over to Jarrod Longcor, Cellectar's Chief Business Officer, to discuss select pre-clinical programs as well as our collaboration efforts with Pierre Fabre, Avicenna Oncology and Acunova Therapeutics.

Thank you, Jim.

I've mentioned previously, based upon the results that we have seen to date with PDC Platform and its ability to target cancer cells and deliver various payloads to tumors, we have expanded our pipeline to include two proprietary PDC programs. The first of these PDC programs, the CLR 1700 Series, is focused on hematologic cancers. And the second, CLR 1900 Series, is focused on solid tumors.

During this quarter, we were able to demonstrate that the phospholipid ether delivery vehicle was able to reproducibly provide a meaningful increase in the therapeutic index of the chemotherapeutic payload, as compared with the chemotherapeutic parent molecule alone, in in vitro studies.

Our research shows that, even though we have changed the payloads, we continue to see between a sixfold and thirtyfold increase in the uptake of the PDCs into the various tumor cell lines. Upon uptake of the PDC and release of the payload into the cytoplasm of the tumor cells, the molecules become active and kill the tumor cells in vitro. While, at the same time, we do not see a similar effect occurring in healthy cells. We continue to progress both our internal programs and our partnered PDC programs into animal models with the goal of entering clinical trials as rapidly as possible.

I would now like to discuss our collaborations and our collaboration strategy. Our collaborations are designed to provide long-term value generation for Cellectar and its shareholders. That value will be captured either in the form of up-front milestones and royalties, and/or by defraying our cost of research through research and development reimbursements and/or in providing the company with access to interesting therapeutic molecules or payloads that we believe can be improved by becoming a PDC molecule, and which we have the rights to continue development of the new PDC molecule.

Pierre Fabre, Avicenna Oncology and our most recently-announced collaboration with Acunova Therapeutics each [provide] these types of strategic benefits. Avicenna provides us with the unique opportunity to collaborate with experts in the antibody drug conjugate, or ADC field. Not only does this provide the opportunity to work with a very promising small molecule payload, but it also allows us to produce data to further differentiate our PDCs from ADCs in a head-to-head comparison rather than via a retrospective analysis of ADC data. We expect to be able to start reporting data from this collaboration next year.

Similarly, our collaboration with Acunova provides us with access to multiple interesting proprietary molecules within Acunova's early-stage product pipeline. As with our other collaborations, we will perform the conjugation of the molecules to our phospholipid ether delivery vehicle, perform the early preclinical assessments through our efficient and rapid screening process. Acunova will be responsible for supplying the payloads to Cellectar, which will include molecules that target eukaryote initiation factor 4E, or eIF4E.

Again, this collaboration provides us with access to proprietary small molecules that target intracellular pathways that might be enhanced with the ability to target the delivery specifically, to the cytosol of the tumor cells.

Finally, our collaboration with Pierre Fabre continues to make significant progress. We have successfully conjugated several molecules and progressed them through our rapid and iterative screening process. Based upon the results seen to date, we have identified several lead molecules that have been optimized and are now slated for additional in vivo analysis.

Given our progress with these molecules and both Pierre Fabre and Cellectar's mutual desire to advance, we recently announced an expansion of our original collaboration agreement with them. The expansion provides us with the opportunity to further test and advance some of these molecules prior to entering the next phase of development within our collaboration.

Additionally, during the preceding quarter, we completed a handful of in vivo experiments evaluating CLR 131 and various solid and liquid tumors, including multiple myeloma, myeloid leukemia, ovarian, prostate, bladder and lung cancer as well as glioma. CLR 131 has shown excellent activity in each of these models as a single agent.

We also have explored the use of multiple doses in several of these tumor types. Here, again, we have seen that CLR 131, when given in multiple doses and/or fractionated doses of two or three, provides excellent single-agent effect with statistically significant improvement in efficacy over the single dose, including more than doubling of survival in the -- in several solid tumor models.

We expect to have further updates on all of these programs in the weeks and months to come.

Finally, in late October, our academic collaborators from the University of Wisconsin-Madison presented a poster at a medical conference, demonstrating that our phospholipid ether delivery vehicle conjugated to a nonradioactive iodine known as I-127, or CLR 127, decreased tumor volumes and markedly delayed tumor regrowth, when given in combination with external radiation in an in vitro and in vivo animal models of both pediatric and adult cancers.

Additionally, the effect of the radiation is significantly increased and persists at higher levels for up to 24 hours post-administration of the external radiation. Investigators observed that CLR 127 was taken up and retained in the tumor cells at a six to tenfold higher level than normal tissue and sensitized those tumor cells to external radiation. This sensitization appears to be the result of the phospholipid ether molecule inhibiting the normal double-stranded DNA repair mechanisms within the tumor cell.

We will keep you updated with regard to any plans we have on pursuing this approach as appropriate.

I'd now like to return the call to Jim.

Thank you, Jarrod.

As always, we look forward to announcing additional company milestones and events as they occur, including results from our CLR 131 program as well as our early-stage programs and collaboration efforts. In the meantime, I'd like to thank you very much for your participation on this call and your continued interest in Cellectar.

I would also like to take this opportunity to thank our employees for their hard work and continued dedication to moving these programs forward.

At this time, John Hamill, Jarrod Longcor and John Friend and I welcome any questions that you may have.

(Operator Instructions)

Wangzhi Li from Ladenburg Thalmann.

First question is about the -- so the cohort of one, two, three, just for survival updates, especially the cohort one already exceeds 26 months. I mean, that's eight months more than what expects from Daratumumab. I'm just wondering, maybe you can give more color in terms of what you expect for your double-dose regimen.

Because if the single infusion already seems to be pretty good worthwhile benefits so far, right, for quarter one especially. Right now, you're exploring the two-dose regimen. I understand there is a pre-clinical result showing benefit for two dose, but I mean, just what's your expectation you hope to achieve from the double dose?

Terrific. Well, first of all, thank you for the question, Wangzhi. And thank you for your participation in the call today. Obviously, the company is very pleased with the data we've seen to date with median overall survival, not only in cohort one, where we currently sit at north of 26 months, but also the preceding or subsequent cohort, two or three, already rivaling a chemotherapy and other recently-introduced compounds.

I think [the double] dose is also really exciting for the company and I'll have Dr. John Friend further address and give additional color to both of those questions.

It is a great question and definitely a somewhat forward-looking, of course, that we can't really predict, in terms of the survival, what we expect out of the multidose. As you mentioned, you know, seeing the survival of cohorts one, two and three was very encouraging, extremely encouraging, actually.

By splitting this dose of 31.25, we're taking a dose in cohort four that, actually, we did see a very nice partial response in some -- obviously, all patients have some sort of clinical benefit -- and splitting that in half over seven days. Considering the preclinical results in multiple tumor models that we've seen, both in vitro and in vivo, as you heard Jarrod Longcor give some flavor to.

We would hope to, at least, see some continued benefits in terms of safe profile. We've already demonstrated a very nice safety with all four cohorts to date. But we could potentially see some additional safety benefits. And in terms of efficacy, I'll have to say time will tell, time will tell whether those preclinical results then translate into the clinic. Stay tuned.

The only other color I will provide there is that, in that cohort five, Wangzhi, the single doses, the split dose of the 31.25 millicuries per meter squared will be split into two 15.6 millicurie per meter squared doses. And they will be one week apart.

Additionally, I think it's also important for us to note our Phase II trial for multiple myeloma and other hematologic malignancies. We're introducing that second dose in that 87 days and beyond area. And if you recall our data, for many of these patients, their response to the single dose is extended and, oftentimes, remains below their baseline M Protein or FLC surrogate markers beyond those 85 days.

So, we're also excited to report on data from our Phase II with that second dose occurring, you know, two, three, four months beyond the initial dose as well, to see if we can continue to extend disease control and, potentially, with that second dose, further reduce these [brigade] efficacy markers of FLC and M Protein, further beyond the baseline at the -- at time of the initial dose.

Great. That was very helpful, thank you. Maybe another question. As Jarrod mentioned that you have multiple collaborations ongoing, maybe remind us the timeline, what we expect from updates from the collaborations, what you -- what you expect or what you hope to achieve from these three collaborations.

Before I turn this question over to Jarrod, I will tell you this. We're very excited about the manner in which we're advancing our collaboration model. The team executed in a very effective manner, on the terms of all of our key collaboration objectives. And I will turn this over to Jarrod to provide additional color. He and his team are leading our efforts in this area and I think he can provide additional insight.

And it's an important question. So, when it comes to timeline, obviously, yes, what I'd say is there -- that there are, each of the programs, or each of the collaborations, is sort of on their own timeline at this juncture, just because of when they were constructed.

Obviously, we've been in a collaboration with Pierre Fabre the longest and we just made a -- what I think was a pretty significant announcement about the extension, or expansion of our collaboration with them.

As we look to go forward, the outputs from that, obviously, will be sort of driven by, as I mentioned, we are in the process right now, we've optimized a handful of lead molecules and we are looking to down-select those into one or two candidates, perhaps with a backup or two along with that, just so that we have the diversity of molecules that we want and can get the optimal program moved forward and into the clinic.

So that's sort of, you know, I haven't really answered the timeline portion of that but that lays out, sort of, the outputs that would be coming from that. And we expect to execute against that extremely rapidly, here, in the near term.

With regard to our collaboration with Avicenna, you know, that had -- that and the Acunova one occurred earlier this quarter or last -- later last quarter. And so those are sort of just getting kicked off and getting up and operational at this point in time. That said, based on our understandings and learnings, both from each of those collaborators and what we've learned as we've optimized the program with Peter Fabre, we expect those programs to move quickly and to be able to get significant readouts in the course of time over the next year or two.

Again, sort of, those outputs will be to move those programs as rapidly as possible from where we are, which is going to start with just achieving or conjugating the molecules with the desired linkers, and then executing and screening those as rapidly as possible through our screening paradigm, and then moving, again, moving forward with the candidate molecule.

And obviously, you know, it's probably important to reiterate the strategic nature of these, in the sense of -- whether it be, you know, that comparative data versus an antibody drug conjugate with an exactly-like molecule, as we're doing with the ADC collaboration -- or the Avicenna collaboration. Or -- and/or be getting access to very interesting molecules that are targeting an interesting target with inside tumor cells, as in the Acunova program.

And obviously, in all of these, there's a component that will -- could potentially lead, or does lead to rapid regeneration eventually.

Jarrod, thank you for that overview. And also for taking the time to compare and contrast, to a certain extent, potential benefits that our PDC delivery platform will have, or we believe has, relative to antibody drug conjugates, and how we'll lever the Avicenna Oncology collaboration to provide that data -- same tumor type, same payload.

And so, we think that'll be, as opposed to retrospectively looking at data, having that head-to-head or side-by-side with the antibody drug conjugate delivery platform, is going to be very instructive for us. I will also say -- summarize, when you think about our collaboration model, to further summarize, you know, the three major takeaways, as Jarrod alluded to.

The collaboration model allows us to gain access to very interesting proprietary compounds, it allows us, in a very rapid manner, to expand and diversify our pipeline and also, most importantly, accelerate drug development while offsetting the associated R&D costs.

And I am showing no further questions.

I would now like to turn the call back to Jim Caruso, CEO, for any further remarks.

Wangzhi, we appreciate your coverage of the company as well as your participation in the call, as well, today. We look forward to providing additional updates as they occur. We are very pleased with our Q3 results, as we continue to build the company and advance all of our primary strategic objectives in a timely fashion. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program and you may all disconnect. Everyone have a great day.