Clovis Oncology Inc (CLVS) 2021 Q3 法說會逐字稿

Good morning. My name is Julianne, and I will be your conference operator today. At this time, I would like to welcome everyone to Clovis Oncology Q3 2021 Operating Results Webcast and Conference Call. (Operator Instructions) Anna Sussman, Vice President Investor Relations, Corporate Communications, you may begin your conference.

Thank you, Julianne. Good morning, everyone. Welcome to the Clovis Oncology Third Quarter 2021 Conference Call. Thank you for joining us. You have likely seen this morning's news release and if not, it's available on our website. As a reminder, this conference call is being recorded and webcast.

Our remarks may be accessed live on our website during the call and will be available in our archives for the next several weeks. Today's agenda includes the following: Patrick Mahaffy, our President and CEO, will discuss the highlights of today's corporate update. And then Dr. Tom Harding, our Chief Scientific Officer, will present an update on our FAP-2286 and targeted radionuclide therapy development programs. Dr. Lindsey Rolfe, our Chief Medical Officer, will discuss the anticipated upcoming clinical milestones for Rubraca and FAP-2286. And Dan Muehl, our Chief Financial Officer, will cover the quarter's financial results in greater detail. Patrick will then make a few closing remarks, and then we'll open the call for Q&A, during which time, Pat, Dan, Tom and Lindsey will be available to answer questions.

Before we begin, please note that during today's conference call, we may make forward-looking statements within the meaning of the federal securities laws, including statements concerning our financial outlook and expected business plans. All these statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Our actual results could differ materially due to a number of factors, including the extent and duration of the effects of the COVID-19 pandemic and the timing and extent of recovery from it. Please refer to our recent filings with the SEC for a full review of the risks and uncertainties associated with our business. Forward-looking statements speak only as of the date on which they are made, and Clovis undertakes no obligation to update or revise any forward-looking statements. Additionally, please note that we'll be discussing cash burn, a non-GAAP financial measure during today's conference call. Required disclosures related to those are in today's news release, which can be found on our website.

Now I'll turn the call over to Patrick Mahaffy.

Thanks, Anna. Good morning, everybody, and welcome. We appreciate you taking the time to hear us today. Sales in Q3 2021 were $37.9 million, an increase of 3% over the prior quarter and 2% lower year-over-year compared to Q3 2020. This [year-over-year decline] was primarily due to fewer patients being diagnosed and treated for ovarian cancer during the pandemic in the United States. Our experience is consistent with another [indiscernible] on our quarterly call (inaudible) or 16% [within] 2019 monthly averages prior to the pandemic.

Despite the continuing impact of COVID-19, based on the data available to us, we believe we have maintained our U.S. market share for Rubraca in the second-line maintenance ovarian cancer setting, and (inaudible) fatal disease grows, the second-line maintenance treatment of ovarian cancer will increase as will the use of Rubraca. Importantly, we see a larger potential for Rubraca in first-line maintenance treatment of ovarian cancer, and we have continued to make significant progress in the advancement of our clinical trial program.

Three Phase III data readouts for Rubraca are anticipated in 2022: ATHENA monotherapy in first-line maintenance treatment of ovarian cancer in Q1 2022, TRITON3 monotherapy in second-line metastatic castration-resistant prostate (inaudible) in Q2 2022 and ATHENA combination with Opdivo in first-line maintenance treatment ovarian cancer in the second half of 2022.

These trials provide the opportunity for Rubraca to address larger patient populations in earlier lines of therapy for both ovarian and prostate cancer and potentially [drive] Rubraca sales in both United States and Europe. Lindsey will provide an update on these clinical trials shortly. In addition, and importantly, we continue to advance our targeted radionuclide therapy pipeline as we seek to [assert] ourselves as the leader in this emerging field of oncology development. FAP-2286, our lead asset in this program, the first peptide-targeted radionuclide therapeutic (inaudible) to enter clinical development, and we continue to anticipate that 2022 will be transformational for this program.

During 2022, the first presentations of Phase I data from the LuMIERE study are expected at medical meetings. And following identification of a recommended Phase II dose of FAP-2286, we also expect to initiate LuMIERE Phase II expansion cohorts. Tom and Lindsey will speak in more detail about developments in the FAP-2286 program.

Lastly, I'm pleased to announce that in addition to retiring the remaining $64.4 million in principal amount of the 2021 notes in September, in the third quarter, we also raised $41.5 million in net proceeds through our at-the-market equity offering program. We now have no convertible debt due for almost 3 years in August 2024. Dan will speak to our financials in greater detail shortly.

And now I'll turn the call over to Dr. Thomas Harding, our Chief Scientific Officer, to discuss the FAP-2286 and targeted radionuclide therapeutic development programs.

Thanks, Pat. Hello, it's a pleasure to speak to you today. As we've discussed on prior calls, emerging as a leader in targeted radionuclide therapy is a key strategy for Clovis. FAP-2286, our lead targeted radiotherapeutic compound licensed as part of our ongoing collaboration with 3B Pharmaceuticals, is the first peptide-targeted radiotherapy candidate or PTRT targeting fibroblast activation protein, also known as FAP in clinical development.

And as Pat mentioned, 2022 has the potential to be transformational for this program. FAP is highly expressed on cancer-associated fibroblasts, or CAFs, which represent one of the most abundant cell components in tumors and they're found in the majority of cancer types. CAFs play a critical role in tumor initiation, progression, metastasis and therapeutic resistance. For example, recent nonclinical studies have demonstrated FAP-expressing CAFs [exert] a potent immunosuppressive activity that can promote tumor progression and confer resistance to immune-based therapies, such as PD-1 or PD-L1 blockade.

At the recent AACR-NCI-EORTC Conference in October, we were pleased to present nonclinical data that confirm the high expression levels of FAP across multiple solid tumor types screened using immunohistochemistry. High FAP expression is observed in pancreatic ductal adenocarcinoma, salivary gland, mesothelioma, colon, bladder, sarcoma, squamous non-small cell lung and squamous head and neck cancers as well as cancers of unknown primary. In these tumor types, high FAP expression was detected in both primary and metastatic tumor samples and was independent of tumor stage or grade. The analysis also demonstrated that in most tumor types, FAP expression is predominantly localized to CAFs surrounding tumor cells and integrated into the tumor microenvironment.

In addition, in cancers of mesenchymal origin, including sarcoma and mesothelioma, FAP expression was observed in tumor cells in addition to the cancer-associated fibroblast. These data support the investigation of FAP-2286 in multiple tumor types in the planned Phase II expansion cohorts of LuMIERE. As interest in FAP as a target increases and the field grows larger, we are pleased to be in a first-mover position with FAP-2286, the first peptide-targeted radionuclide therapeutic [tapping] to enter the clinic and [now enrolling] patients as Lindsey will describe in greater detail. Clinically, we are focused on FAP-2286 monotherapy development in ongoing LuMIERE study. However, preclinically, we are evaluating a number of FAP-2286 drug combinations.

Given the role of FAP expressing CAFs in mediating resistance to gene-based therapies, such as PD-1 or PD-L1 blockade, combination with these agents will be a priority. We are currently evaluating in nonclinical studies, the efficacy and mechanism of action of FAP-2286 and the PD-1 monoclonal antibody in syngeneic mouse tumor models.

In addition to immune checkpoint inhibitors, there are a number of publications reporting nonclinical data for the combination of targeted radiotherapy with PARP inhibitors to augment efficacy. This makes sense since radiotherapies worked by causing DNA damage by radioactive [emission]. If this damage is not repaired, the cell will eventually die.

One of the critical proteins for repairing radiation-induced damage is PARP, and its inhibition augments efficacy in combination with multiple targeted radiotherapy agents. We are currently preclinically evaluating a combination of FAP-2286 with our PARP inhibitor rucaparib in tumor models.

Lastly, radiation is known to synergize with a number of agents that are currently approved as standard of care in specific candidates or indications. For example, gemcitabine, used as a first-line chemotherapy in pancreatic cancer and other carcinomas, is a well-known radiosensitizer and could have utility in combination with FAP-2286. We are currently performing a high-throughput screen of approved oncology drugs in combination with radiation to identify promising combinations for 2286 development. We look forward to reporting results of this preclinical work at upcoming scientific meetings.

To support our commitment to this emerging field, we have created educational materials about targeted radiotherapy. The first of these materials are a microsite and an introductory video to provide more information about targeted radiotherapy, FAP-2286 and Clovis' targeted radionuclide development program. To learn more, please visit targetedradiotherapy.com.

I also want to quickly note that we have recently completed a clinical supply agreement with ITM that provides Clovis with ITM's therapeutic radioisotope, no-carrier-added Lutetium-177, EndolucinBeta, for use in the clinical development of FAP-2286 for the next 5 years. Ensuring supply is integral to the success of this program, and we are pleased to have this agreement in place.

Lastly, we are collaborating with 3B Pharmaceuticals on a discovery program directed at 3 additional targets for targeted radionuclide therapeutic development to which we have global rights. We currently expect to file an IND for a second candidate in this program in the second half of 2022.

Now I'll turn the call over to Lindsey for a clinical update.

Thanks, Tom. Good morning, everyone. I'm really glad to be here with you today to discuss the clinical programs and key clinical milestones across the portfolio. Rubraca, we're expecting top line clinical data from ATHENA monotherapy arm in the first quarter of 2022 based on current event-based projections. Data from the combination arm of Rubraca plus Opdivo versus monotherapy are expected in the second half of 2022 based on our protocol-defined assumptions. As a reminder, ATHENA is a Phase III 1,000-patient study in front-line newly diagnosed advanced ovarian cancer maintenance.

With ATHENA, we believe we are uniquely positioned to evaluate Rubraca in terms of 2 independent outcomes, monotherapy versus placebo in the first-line maintenance setting as well as any potential advantage of the combination of Rubraca and Opdivo over Rubraca alone in the same first-line maintenance setting.

We believe this study offers an opportunity to truly differentiate Rubraca in the first-line maintenance setting. Once top line monotherapy results are available, we plan to file an sNDA and a variation to the European MAA shortly thereafter. Continuing with near-term milestones for Rubraca, top line data from the TRITON3 trial are now expected in the second quarter of 2022. TRITON3 is a Phase III study evaluating Rubraca versus physician's choice of chemotherapy or second-line androgen deprivation therapy in patients with mCRPC with BRCA or ATM mutations. This trial is expected to serve as the confirmation study for Rubraca's current approval in the prostate indication as well as the potential second-line label expansion, and we plan to file an sNDA shortly after results are available.

These 3 anticipated data readouts, ATHENA monotherapy, ATHENA combination and TRITON3, provide the potential to reach larger patient populations in earlier lines of therapy for both ovarian and prostate cancers for which Rubraca is currently approved in later line indications. As a reminder, the timing for each data readout is contingent upon the occurrence of protocol-specified progression-free survival events.

Lastly for Rubraca, the LODESTAR study, our Phase II pan-tumor study to evaluate the response to Rubraca in patients with various solid tumors with DNA repair mutations. Based on initial results from the ongoing study, we see encouraging evidence of activity in patients with a biallelic tumor mutation or double hit in BRCA or other homologous recombination repair target genes. Importantly, the BRCA mutated breast, pancreatic and certain other tumor types, the majority of tumors have biallelic loss. We are continuing to evaluate the potential development time line and regulatory path, and we'll provide an update as we know more.

Let me briefly discuss the LIO-1 combination study of lucitanib and Opdivo in gynecological cancers. There were sufficient responses in Stage I of each of the cervical, endometrial and clear cell cancer cohorts to advance to Stage II. Stage II enrollment continues in the cervical cohort, and we are evaluating potential path forward for lucitanib supported by the encouraging LIO-1 data set. We look forward to presenting these data at future medical meetings.

I'd like to discuss our FAP-2286 program next. Thomas provided an overview of the nonclinical work undertaken to support it. And now I'll review the clinical work under way. In our ongoing Phase I/II LuMIERE study, FAP-2286 is used both as an imaging agent and a therapeutic agent, a concept often described as a theranostic. For the imaging agent, FAP-2286 is attached to the isotope Gallium-68 to allow positron emission tomography, or PET imaging, and selection of patients for inclusion in the study.

For the therapeutic agent, FAP-2286 is attached to the isotope Lutetium-177, an emitter of beta particle ionizing radiation that causes DNA damage and cell death. The Phase I portion of the LuMIERE study continues to enroll patients, and the second dose cohort is anticipated to begin enrolling this quarter. As a reminder, for this first-in-man study, this is a dose-escalation study with each of the 5 dose cohorts being enrolled sequentially with a 6-week safety follow-up period after the last patient in each cohort has enrolled to ensure it's safe to move to the next dose cohort. While this 6-week period is longer than in Phase I trials of other classes of oncology agents, it is standard for targeted radiotherapies.

Following the Phase I evaluation of the safety of FAP-2286 and determination of a recommended Phase II dose, expansion cohorts are planned in multiple tumor types and are expected to begin in 2022. In addition to our own program, a separate investigator-sponsored imaging study with FAP-2286 is under way at UCSF to evaluate FAP expression in multiple tumor types and is currently enrolling patients. Results from this study, along with the preclinical data we're generating, are expected to help inform selection of tumor types for our Phase II expansion cohorts.

While we do not control the timing of data disclosure for the study, we understand that UCSF will submit initial imaging data for presentation at a medical meeting in the next few quarters. In addition to initiating LuMIERE Phase II expansion cohorts during 2022, we anticipate several key milestones for the program, including the first presentation of Phase I data from LuMIERE at medical oncology and nuclear medicine focus meetings, the launch of our combination study program to explore FAP-2286 in combination with other oncology compounds. Given the role of FAP-expressing CAFs in mediating immunosuppression, exploring the combination with PD-1 or PD-L1 blockade is a priority.

As noted by Tom, we are exploring multiple combination studies in preclinical animal models to inform our choice of combinations for clinical development. And a potential IND filing for FAP-2286 linked to an [alpha-emitting] isotope is planned for 2023.

I would like to recognize again the dedicated efforts of the teams involved in our clinical trials, both employees, investigators and the patient participants of our clinical programs advance.

And with that, I'll turn the call over to Dan to discuss third quarter financial results.

Thanks, Lindsey, and hello, everyone. We reported net product revenues for Rubraca of $37.9 million for Q3 2021, which included U.S. net product revenues of $28.7 million and ex U.S. net product revenues of $9.2 million. Third quarter 2021 net revenues represent an increase of 3% over Q2 2021 and a 2% decrease compared to Q3 2020, in which we reported net revenues of $38.8 million, including net product revenues in the U.S. of $33.9 million and ex U.S. of $4.9 million.

Clovis reported net product revenue for Rubraca of $112.8 million for the 9 months ended September 30, 2021, which included U.S. product revenue of $88.1 million and ex U.S. product revenue of $24.7 million compared to net product revenue for the same period in 2020 of $121.2 million, which included U.S. net product revenue of $109.8 million and ex U.S. net product revenue of $11.4 million.

Gross to net adjustments totaled 27% globally in Q3 2021 compared to 28.6% in Q2 2021. Decreased discounts in the U.S. were the main driver. This metric fluctuates quarter-to-quarter, and it's difficult to estimate our future revenues, but the high 20% level seems likely, depending on the revenue and distribution mix with the U.S. and Europe. As previously discussed, as European revenues increased in proportion to the U.S., global GTN will increase correspondingly.

Research and development expenses totaled $46.2 million for Q3 2021, down 27% compared to $62.9 million for the comparable period in 2020, primarily due to lower spending on Rubraca clinical trials. We expect research and development expenses to be lower in the full year 2021 compared to the full year 2020.

Selling, general and administrative expenses totaled $32.2 million for Q3 2021, down 17% compared to $38.6 million for the comparable period in 2020 due to a decrease in personnel costs and share-based compensation expense due to the reduction in size of our U.S. commercial organization during the fourth quarter of 2020 and a decrease in legal expenses.

Further, we expect SG&A expenses to decrease in 2021 compared to 2020. We reported a net loss for Q3 of $67.4 million or $0.56 per share compared to a net loss for the third quarter of 2020 of $78.7 million or $0.89 per share.

Turning now to a discussion of cash and debt. As of September 30, we had $171.9 million in cash and equivalents. During the quarter, we raised $41.5 million in net proceeds through our at-the-market equity offering program, which has the capacity of $125 million of shares of common stock. We also paid off in full at maturity the remaining $64.4 million in principal amount outstanding of our 2.5% convertible notes due in 2021. Our next convertible debt is not due for almost 3 years with the maturity of August 1, 2024, and conversion prices of $7.29 for a portion and $6.24 for the remainder.

Also, as of September 30, we had drawn approximately $137.5 million under the Sixth Street Partners, LLC ATHENA clinical trial financing and had up to $37.5 million available to draw under the agreement to fund expenses of the ATHENA trial. We expect this $37.5 million to be mostly drawn down between Q4 2021 and Q4 2022.

Net cash used in operating activities was $46.1 million for Q3 2021, down 15% or $8.3 million from the $54.3 million reported in Q3 2020. Cash burn in Q3 2021 was $35.5 million, down 6% from $37.7 million in Q3 2020.

We have reduced both our R&D and SG&A expenses considerably compared to prior years, most recently reduced R&D and SG&A expense by $23.1 million or 23%. As you can see, we have aggressively reduced expenses and cash burn over the last year, and we will continue to have a strong focus on this moving forward.

At this time, as will be disclosed in our Form 10-Q for the period ending September 30, based on our current revenue estimates, we have sufficient cash and available liquidity under our ATHENA financing agreement to fund our current operating plan for at least the next 12 months. However, mostly related to the continuing impact of COVID on ovarian cancer diagnosis, we cannot predict revenues with sufficient accuracy to provide cash guidance beyond that. This is consistent with what we stated last quarter. And as noted, we maintained our focus on cost controls and balance sheet management to mitigate the cash impact of Rubraca's unpredictable revenue situation in this challenging environment. We believe there is adequate flexibility within our operating plan to adjust variations in our expected Rubraca revenues and the availability and timing of potential sources of financing.

Now I'll turn the call back to Pat.

Thanks, Daniel. Despite these challenging times, we have set the stage for a very important year to come. During 2022, we are on track to announce top line data for 3 Phase III Rubraca studies that offer the potential (inaudible) expansion in ovarian and prostate cancers, including a study that should definitively inform whether adding a checkpoint inhibitor to Rubraca [monotherapy] in the first-line maintenance treatment ovarian cancer setting extend through BRCA's progression-free survival benefit. In addition, the targeted radiotherapy is significant, and 2022 may be transformational for the program [as] we present initial data for the Phase I LuMIERE study of FAP-2286, the first peptide-targeted radionuclide therapy targeting FAP to enter clinical development.

We intend to maintain our lead as we advance our Phase I/II study and begin our combination development program. These anticipated pipeline events and our continued progress on improving our balance sheet support our efforts to execute Clovis' 3 core strategies: expand the Rubraca label to drive revenue growth, emerge as a leader in targeted radionuclide therapy and achieve long-term financial stability.

And with that, we'll be happy to answer any questions you may have.

(Operator Instructions) Your first question comes from Cory Kasimov from JPMorgan.

This is Gavin on for Cory. Just a higher level one on the radionuclide program. Interested to get your perspective on others joining the field and your thoughts on the strategy to get ahead and differentiate 2286.

I'll take a first shot at that, and then Tom and Lindsey may jump in too. If any company has learned the benefits of being first and the disadvantages of being third, it's us, given our experience being third to market with Rubraca, which all of you have endured. As a consequence, we're really informed by this and are actively pursuing an aggressive development program for 2286 that not only keeps us first but keeps us first in multiple tumor types and keeps us first with the potential combinations that may add to the monotherapy benefit of 2286. We don't know everything we need to know yet about this drug. But we know a couple of things for sure. We know it gets to the tumor. We know it stays in the tumor. And those are the 2 most important ingredients for an effective targeted radionuclide. So as a consequence, we are optimistic about the importance of the target and the potential for our drug to address that target, hopefully with a significant and meaningful antitumor effect.

Tom, do you want to talk about others in the field and what else is happening? What would you add to that?

Yes. Sure, Pat. As Pat mentioned, a core constituent of an effective target radionuclide therapy is the ability to stay in the tumor and persist so that the radioactive emissions can occur and cause cell death. We're aware of 15-plus different agents in development targeting FAP. But the major limitation of all of these drugs is that they have a very low tumor retention time based upon the way in which they target FAP. We're using a fundamentally different approach for 2286, which is a constrained peptide ring, which is the expertise of our partner 3B Pharmaceuticals, which gives us a differentiated preclinical profile in terms of tumor retention and also tumor -- anti-tumor efficacy compared to small molecule-based FAP radiotracers. So to begin with, we have a differentiated agent. And on top of that, what Pat said about trying to move first and maintaining our position is one of our core drivers.

Anything else in addition, Lindsey?

Well, I'd just say that we're quite uniquely positioned in that we are a small agile biotech company. But we've been around for a while. And development clinical teams are very stable and very experienced. So we are in a little good position to execute the clinical trials efficiently and fast.

(Operator Instructions) Your next question comes from Paul Choi from Goldman Sachs.

A couple of pipeline questions for me as well. First on FAP-2286. Can we expect that the patient population in LuMIERE will be relatively similar to what you've shown with your triple meeting poster here? And does the trial design allow for maybe more narrowing or specification of the patient population as you enroll patients?

Lindsey?

So thanks, Paul. The Phase I portion of the study, as you know is (inaudible) and we're not limiting the tumor types that are eligible...

Lindsey, could you repeat that? I think it faded out.

Okay. So Phase I is there to evaluate safety. So we look at a broad population, and we don't limit the number of tumor types. However, all patients must have a tumor that does express some FAP. The Phase II portion of the study, the expansion cohorts absolutely, we will use the information that Tom's group has gathered to guide selection of the tumor cohort as well as all other available data points from the literature and other emerging science. So we will have a limited number of tumors in Phase II, and we will pick tumor types based on scientific features and probability of success as well as taking potential unmet need and market size into account.

Okay. And maybe as a follow-up, with regard to the potential data presentation for 2286 next year, could you maybe just clarify would that include both expansion cohorts or just the sort of dose escalation or tumor-type population that you're initially working on right now? And then I had a follow-up question regarding lucitanib.

So given the lead time for conference publication submission, et cetera, I would expect most data that we present next year to be based off of the Phase I part of LuMIERE. Although as we noted in the call here, we do expect to start enrolling in Phase II by the end of 2022.

Okay. And then just quickly on lucitanib, I guess you indicated that you're still evaluating populations here. But is there a view that you would potentially present the LIO-1 endometrial cohorts by year-end? Or will that be something to expect in 2022?

Okay. Paul, just based on [fiscal] conferences, I think it will be early in 2022 rather than this year for the data presentation from LIO and remains more [of] endometrial, I think.

We have no further questions in queue. I would like to turn the call back over to Anna Sussman for closing remarks.

Great. Thank you. We thank everyone for your interest in Clovis today. If you have any follow-up questions, please contact me at (303) 625-5022 or Breanna Burkart at (303) 625-5023. This call can be accessed via a replay of our webcast at clovisoncology.com beginning in about an hour, and it will be available for 30 days. Again, we appreciate your interest and time this morning. Thank you and have a good day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.