CTI Biopharma Corp (CTIC) 2017 Q4 法說會逐字稿

Good day, and welcome to the CTI BioPharma Fourth Quarter and Full Year 2017 Financial Results Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Tricia Truehart from Solebury Trout. Please go ahead.

Thank you, and welcome to CTI BioPharma's Fourth Quarter and Full Year 2017 Financial Results Conference Call. Following formal remarks by management, the conference call will be open for questions. Joining me today are Adam Craig, President and Chief Executive Officer; David Kirske, Chief Financial Officer; Bruce Seeley, Chief Operating Officer; and Jack Singer, Chief Scientific Officer.

Before we begin, please note that during the course of this call, we will make forward-looking statements based on current expectations. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those anticipated by the forward-looking statements. Additional information concerning these risks and uncertainties is contained in the press release reporting our financial results for the fourth quarter and full year, the risk factor section of the company's quarterly report on Form 10-K for the year and quarter ended December 31, 2018, and in the company's other periodic reports and filings with the Securities and Exchange Commission.

I will now turn the call over to Dr. Adam Craig.

Thank you, Tricia, and good afternoon. During the early part this year, CTI has continued to build on the progress made during 2017 that has led us to be a lean, focused company, and we believe we are now well financed to achieve our goals. We recently completed an oversubscribed public offering of our common stock and now have sufficient cash to carry us through key clinical and regulatory milestones over the next 2 years. Next quarter, we anticipate 2 important clinical milestones, including the interim data analysis for the PAC203 study of pacritinib in patients with myelofibrosis and the top line results of the PIX306 Phase III trial of PIXUVRI in patients with NHL.

I will now provide a more detailed update on the development stages of the pacritinib and PIXUVRI programs as well as a brief corporate update before turning the call over to David for a presentation of the financials.

Pacritinib, our lead development candidate, is a second-generation JAK2 inhibitor, which we are developing to address the unmet medical need of myelofibrosis patients who've received prior ruxolitinib treatment and/or have thrombocytopenia. After successfully working with the FDA to have the clinical hold removed in January 2017, we initiated the PAC203 trial, a study designed to evaluate the dose response relationship of pacritinib. This trial is enrolling well, with the interim data analysis expected next quarter and the top line results expected in the first quarter of 2019. This dose exploration trial is expected to enroll up to approximately 105 patients with primary and secondary myelofibrosis, all of whom who failed prior ruxolitinib therapy; expected to evaluate the safety and the dose response relationship for efficacy at 3 dose levels: 100 milligrams once a day, 100 milligrams twice a day, BID dozing and 200 milligrams BID. The 200-milligram BID dose regimen was used in the Phase III PERSIST trial of pacritinib in patients with myelofibrosis and is the dose that we believe has the most favorable risk-benefit profile. Once the interim analysis has been completed, we plan to request a meeting with the FDA to discuss the further development of pacritinib in the second-line treatment setting.

Last July, our Marketing Authorization Application, or MAA, for pacritinib for the treatment of patients with myelofibrosis who have thrombocytopenia whose platelet count is less than 100,000 per microliter, was validated by the EMA, initiating the review process by CHMP. Subsequently, we received the Day 120 list of questions from CHMP in November. And just last month, we were granted an extension for submitting our responses in order to provide new pharmacokinetic analysis that include data from the ongoing Phase II PAC203 study. We expect to submit our responses to the Day 120 list of questions in May, with the CHMP opinion expected in the third quarter.

Turning to PIXUVRI, which was granted conditional approval in Europe in 2012 for the treatment of third- and fourth-line aggressive B-cell non-Hodgkin's lymphoma. We completed enrollment to the Phase III post-marketing commitment in August last year and now look forward to top line results in the second quarter 2018. This study is comparing PIXUVRI and rituximab with gemcitabine and rituximab in patients with aggressive B-cell NHL or follicular grade 3 lymphoma and is being conducted as a post-authorization requirement of a conditional marketing authorization. If positive, the trial could potentially support a second-line label extension.

In April 2017, CTI and Servier announced the expansion of our licensing and collaboration agreement regarding PIXUVRI. The new agreement provides Servier with rights in all markets, except the U.S., where CTI retains the commercial rights.

I'd just like to take a minute or 2 to discuss some of the leadership and corporate changes that CTI BioPharma has made over the last 12 months. As most of you know, I began working with the company as a consultant in late 2016 and was asked by the Board of Directors to join as CEO in March 2017. Our CFO, David Kirske, also joined as a consultant and was appointed to CFO in September 2017. Bruce Seeley has served as the -- had served as the company's Chief Commercial and Administrative Officer and Secretary since 2015 and was promoted to Chief Operating Officer in 2017. Importantly, over the last year, we have added 3 new independent directors on our board, including our Chairman, Laurent Fischer; as well as Michael Metzger; and Dr. David Parkinson. All 3 directors bring with them many years of management experience in the biotech space.

Throughout the year, we have strengthened our balance sheet and significantly reduced our costs to better focus the company on the clinical development of pacritinib.

In February 2018, we closed an oversubscribed, underwritten public offering of stock with gross proceeds of $69 million, with participation from existing and numerous new high-quality life science investors. In addition, over the last year, we have received 2 $10 million milestone payments from Teva as part of our TRISENOX deal: The first in June 2017, where the milestone payment related to sales; the second in February 2018, where the milestone payment related to the front-line approval of TRISENOX in the U.S.

I will now ask David to provide the financial updates.

Thank you, Adam. I will now briefly review our financials for the fourth quarter and 12 months of 2017. Please refer to our press release issued today for complete details. Total revenues for the third quarter and 9 months ended September 30 were $460,000 and $25.1 million, respectively, compared to $9.1 million and $57.4 million for the respective periods in 2016. The decrease in total revenues for 2017 is primarily due to the recognition of $32 million in milestone revenue related to pacritinib in the first quarter of 2016.

Net product sales of PIXUVRI for the fourth quarter and 12 months ended December 31, 2017, were 0 and $900,000, respectively, compared to $1 million and $4.1 million for the respective periods in 2016. The decrease in net product sales for the periods in 2017 compared to 2016 is primarily related to the April 2017 expansion of the PIXUVRI agreement with Servier, under which they have rights in all markets, except in the United States.

As Adam mentioned, we took significant steps to reduce our costs through 2017, including a decrease in pacritinib development and manufacturing costs and lower personnel costs. As such, our operating loss for the fourth quarter and 12 months ended December 31, 2017, was $13.7 million compared to $39.5 million, respectively, compared to GAAP operating loss of $5.6 million and $49.2 million respective periods in 2016. Some of the benefits of the actions taken to reduce costs that were implemented are expected to continue to impact subsequent quarters in the near term.

The net loss for the fourth quarter 2017 was $14.3 million or $0.33 per share compared to a net loss of $6.4 million or $0.23 per share for the same period in 2016. So the net loss for the 12 months ended December 31, 2017, was $45 million or $1.24 per share compared to a net loss of $52 million or $1.86 per share for the same period in 2016.

Turning to the balance sheet. As of December 31, 2017, cash and cash equivalents totaled $43.2 million compared to $44 million at December 31, 2016. But again, as Adam mentioned, we recently completed a successful fundraising, bringing in over $69 million in gross proceeds. Importantly, our balance sheet has been greatly strengthened over the past 12 months through successful fundraisings and partnership milestones totaling $124 million.

I'd also like to mention that in January 2018, a merger agreement was approved by the shareholders, which changed the incorporation of CTI BioPharma Corp. from the State of Washington to the State of Delaware, and this triggered an automatic delisting of CTI's common stock from the Borsa Italiana MTA exchange. NASDAQ is now the sole listing of our common stock.

So with that, I will now turn the call back to Adam.

Thank you, David. This concludes our formal remarks. Operator, please open the call for questions.

(Operator Instructions) Our first question will come from Mike King with JMP Securities.

I'm pleased to be joining you guys for the first time. Can you hear me okay?

Thank you, Mike. Yes, we can. Thank you.

Okay, great. Sorry about the background noise. I just wanted to see if we could delve a little bit into PAC203, Adam, and just the upcoming arm in the second quarter. Just what the possible outcomes are if, in fact, there is an arm that is dropped. What happens to those patients in the arm? And how will you account for them from a statistical point of view?

Yes, certainly. So to remind people, the -- thank you for your question, Mike. To remind people, the study has 3 treatment arms, each of which are at different parts, each of which were at 3 doses, which are different parts of the dose response curve. And the purpose of the interim analysis is to identify an arm that is futile at -- with 12-week spleen volume data, together with the safety data at that time. So we have an Independent Data Safety Monitoring Committee that will make an assessment. If an arm -- the interim analysis is conducted at a minimum of 6 patients per arm. And as we said, during the written remarks, we plan to conduct that in the next quarter. If an arm is -- survives the interim analysis and continues, up to 35 patients per arm can be enrolled in the arm. If the IDMC decides -- recommends the closure of an arm, then the arm will be closed and the patient -- no more patients will be treated at that dose level.

So they will then just go off study?

Correct. That's how the protocol is done. They'll go off study because the treatment at those levels will have been considered to be futile.

Okay. The -- so just to follow up on that then. Can you speak to -- from a regulatory perspective, from an FDA point of view, if PAC203 will be sort of the final request from FDA as far as demonstrated -- demonstrating risk and benefit from pacritinib? Or to your knowledge, is there any other requirement that you might have to satisfy the FDA's guidance or requirements?

Yes, certainly. So we haven't met with the FDA yet. We have said that we will meet with the FDA once we have the interim analysis data. One of the requirements following the clinical hold was that we design the study to identify a minimally effective dose. And we believe the PAC203 trial is designed to do that, and the interim data should be able to provide data on what is the minimally effective dose. Once we have that, we will go back to the FDA and discuss with them the findings of the interim. That's the first thing. At that meeting, we then hope to have the opportunity to discuss the further developments of the program. And so where we are interested at the moment is looking at a second-line indication and second-line approval for the drug. We already have second-line data on the PERSIST-2 trial. We will have additional -- as you know, the PAC203 trial is purely second line. So we'll have data from 2 trials at that point, and we would like to have a discussion with the FDA about a potential NDA pathway. But as I said, we haven't had that discussion yet. We hope to have it -- once we have the interim data in-house, we'll request a meeting, and we'll know more as we progress into the summer.

Our next question will come from Matthew Andrews with Jefferies.

Adam, I noticed in your most recent presentation from earlier this year that you've changed the sizing of the interim analysis from -- up to potentially 45 to 6 per arm, so 18. What's changed between now -- or when you made the protocol amendment and when you designed this with the FDA? And then second, has the agency officially agreed to the sizing of the interim?

The -- what changed was we -- when I joined the company formally as the CEO rather than a consultant, I took a look at many aspects of the way we develop the drug and we look at the pacritinib program in a lot of detail. And it became obvious that the 45-patient interim that you referred to was over -- made the study overpowered. There were too many patients who could potentially receive -- with that sample size, too many patients who could potentially receive a dose that wasn't working before the interim analysis was conducted. So we went back to the biometrics group to our statistician and asked them whether that number could be adjusted because we -- what we don't want to do is to -- as a company, is run a trial where patients aren't benefiting from one of the treatment arms. So the motivation around it was we just really -- we just questioned. When I joined, we questioned everything. And we were looking to see whether we could reduce it just to improve -- to look at a certain time point without over-enrolling and overpowering the interim analysis. So we're very comfortable with 6. It's actually going to be more than 6, Matthew, because enrollment has gone quite briskly recently. It will be more than 6, but we think it's adequately powered to answer the question about what is the minimally effective dose. And then the second question is, we did submit a protocol amendment to the FDA. We did not receive any comments back from the FDA when we submitted the amendment that included the change in sample size for the interim.

And so it's more of a safety issue than anything? If the patients aren't responding to 1 or 2 of the arms, no need to expose them to potential risks so you could get the efficacy answer with the smaller end. Is that the right way to think about it?

Yes. It's -- we do not want to -- because the way the trial is designed, there has to be one -- there has -- the doses are different parts of the dose response curve. And if one of those dose levels is identified as having poor efficacy, then I think it's important that we stop that arm as quickly as possible and allow patients to -- future patients to enroll in arms where there's been some benefit.

Okay. And one more. As it relates to the interim analysis, how could you potentially leverage this as part of your Day 180 -- sorry, response to the EMA's Day 180 questions that you'll receive over the summer?

Thank you, Matthew. We haven't had any direct questions regarding the interim from the European reviewers. However, they are interested in the study. And I think the importance of the interim is it's the -- it will be the first time we report data and we see data since the clinical hold was lifted. So that's nearly 15, 18 month ago. So I think it will be the first time we see that. And I think it's important to show -- be able to show the Europeans that we are back on track; we're able to run a trial in a population that we understand and that we can move forward. So we will share the results with them, but they haven't formally asked for them.

Next, we'll take a question from Chad Messer with Needham & Company.

On the ongoing Phase II trial of pacritinib, I know we're hoping that the 200-milligram BID dose has the best risk-benefit profile, but I'm interested in what you think the way forward might look like if it turns out that a dose lower than that, indeed, has a better risk benefit. If you think you'd have enough patients to discuss a path forward with the FDA and if you think that would affect any of the EMA's thoughts about the registration.

Well, I certainly -- if we had -- if the 100-milligram BID dosing level was the strongest dosing level at the interim, that's something we would discuss with the FDA. And I will imagine we would -- I would expect that we would expand the arm to enroll more patients and to get more data. As we've been saying over the last few weeks and during our recent road show, we've been very aggressive in the number of sites we've recruited for the trial, and we expect to be up to around 80 sites by the summer. And so if we do need to increase a sample size of one of the treatment arms, we can do it as quickly as possible. So from the U.S. point of view, I think it's a discussion for the FDA and a potentially -- the potential for increased sample size, which is something that we planned for. With respect to Europe, that's a very difficult question to ask because I've not had a discussion with the European regulators on -- about the 100-milligram dosing schedule. The application was around the 200 BID, and that's where they focused their review. That will be something we would have to discuss with them along the way. I can't comment on it now because I haven't had that conversation with them.

All right, great. And then just on, obviously, potential difference between the labels in the EU and the U.S. based on different having different data sets that they're evaluating. Assuming things go well, the first pass with both agencies, would you plan to go back to the EU and try to discuss a rux failure label? Is that something that makes sense? Or is that unnecessary?

We've considered it. It really is going to depend on the label. One of the thing that is pretty clear -- and I'll let Bruce Seeley comment on this. The -- in the second-line patient, many of the patients actually have thrombocytopenia. So there's a substantial overlap between the second-line patient with thrombocytopenia population. So they're very, very similar. Bruce, would you like to comment?

The only thing that I could add is that the relative market sizes are the same. I mean, physicians tell us that it's rare to get a patient with second-line disease that isn't thrombocytopenic, and so we don't feel that there's going to be a big difference between the 2.

(Operator Instructions) Next, we'll take a follow-up from Mike King from JMP Securities.

Maybe further to the previous 2 questions. Just wondering if you could say anything about the demographics or baseline characteristics of the patients in the PAC203 study and whether they're kind of meeting your expectations in terms of the length of prior rux treatment of platelet count, et cetera. Or has there been any shift in that patient population?

No, they're very much meeting our expectations. Typically, we'll have a patient who has a low platelet count, who has had 6 months to a year or 2 of ruxolitinib and will have often developed thrombocytopenia on ruxolitinib therapy. And over time, we'll see that the dose is being reduced. And it's not uncommon on our trial to have patients on ruxolitinib doses of 5 milligrams with drug -- with thrombocytopenia that's been associated with ruxolitinib therapy. And at that time, they'll have an increase in spleen size and symptoms from their MF. Obviously, there's a -- we have a lot of patients on the study, and all the patients are the same. But this pattern of patients receiving -- having received rux with dose reductions in thrombocytopenia is very common. The other thing I've noticed on trials; we have a lot of patients now who have anemia and who also have a blood transfusion requirement as well. So this is very, very much in keeping with what our advisers, our clinicians have told us during the advisory boards, that there are patients out there who are -- who had -- who are now on lower doses in rux than originally prescribed and who have symptoms -- high symptom load, large spleens and anemia in thrombocytopenia. So the study is recruiting very much -- to answer your question directly, the study is very much recruiting the kind of patients we expected. And it's recruiting well because it would appear there are a lot of patients out there who fit this second-line setting.

At this time, we will conclude our question-and-answer session. I will now turn it back to management for any additional or closing remarks.

Okay. Well, thank you, Melissa. In summary, we're pleased with the changes that CTI has undergone over the last year. We look forward to updating you with additional progress for the pacritinib and PIXUVRI programs over the coming months and through year-end. Thank you for joining the call today.

That does conclude our conference for today. Thank you for your participation. You may now disconnect.