CTI Biopharma Corp (CTIC) 2018 Q2 法說會逐字稿

Good day, and welcome to the CTI BioPharma Second Quarter 2018 Financial Results Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference call over to Julia Balanova with Solebury Trout, Investor Relations. Please go ahead.

Thank you, and welcome to CTI BioPharma second quarter financial results conference call. Following formal remarks by management, the conference call will open for questions. Joining me today are Adam Craig, President and Chief Executive Officer; David Kirske, Chief Financial Officer; Bruce Seeley, Chief Operating Officer.

Before we begin, please note that during the course of this call, we'll take -- we'll 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 might 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 second quarter, the Risk Factors section of the company's quarterly report on Form 10-Q for the quarter ended June 30, 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 Adam.

Thank you, Julia, and good afternoon to everyone. Thank you for joining the call today. As many of you know, we had a busy and productive second quarter. We announced the continuation of the PAC203 trial following a first interim review of data by the independent data monitoring committee. We met with the FDA to discuss the pathway for submitting a new drug application for pacritinib. We received a 180 Day -- Day 180 list of outstanding issues from the European Medicines Agency, or EMA, for our pacritinib marketing authorization application, and we reported the top line data for the PIX306 trial. We will discuss each of these developments in greater detail on the call today and then take any questions you may have.

Our lead development candidate, pacritinib, is a second-generation JAK2 inhibitor, which we are developing to address the unmet medical need of myelofibrosis patients, particularly those who have thrombocytopenia and patients who've received prior ruxolitinib therapy. Pacritinib is currently being evaluated in the open-label PAC203 dose ranging study in patients with myelofibrosis following ruxolitinib therapy. The study would enroll up to 150 patients, and recruitment is expected to be completed by the end of the year, with top line data expected in the second quarter of 2019. The purpose of this study is to identify the dose of pacritinib that will be studied at Phase III.

We reached an important clinical milestone during this quarter with the planned first-interim analysis of the PAC203 study. Following the IDMC's review, the study continues without modification. Importantly, no safety concerns were identified by the IDMC, and specifically, they did not identify any concerns about cardiac or bleeding events. The IDMC agreed to meet again to review a second-interim analysis of the PAC203 study later this quarter when more patient data will become available.

As we recently announced, CTI has conducted a type B meeting with the U.S. FDA to discuss the regulatory approval pathway for pacritinib. We now have a very clear regulatory path for bringing this product to patients in need, and we are pleased with the positive and collaborative relationship we now have with the FDA.

As we announced in July, CTI now plans to conduct a new randomized Phase III study of pacritinib in patients with myelofibrosis, a study expected to address the unmet medical needs of these patients, such as those with severe thrombocytopenia or following ruxolitinib therapy. Following the identification of the optimal dose from the PAC203 study, we expect to finalize the protocol and begin Phase III patient recruitment in 2019. We plan to meet with the FDA to discuss the new Phase III trial design following the second-interim analysis of PAC203.

We're also actively pursuing a marketing authorization application in MAA in Europe for pacritinib. The company has just received the Day 180 list of outstanding issues and has been granted a 2-month extension by CHMP that will allow us to incorporate additional data from the PAC203 study into our responses to the outstanding issues. As such, we now expect to submit our responses in October and to receive a CHMP opinion on the application later in the fourth quarter of 2018.

Now I'd like to discuss pixantrone and provide an update for that program. In July, we announced the top line results from PIX306, showing that PIXUVRI combined with rituximab did not meet the primary endpoint of improved progression-free survival compared to gemcitabine and rituximab in patients with aggressive B-cell non-Hodgkin's lymphoma. We are currently reviewing the clinical data set and will make a decision on the future of the pixantrone program later this year. At this time, no further studies are planned by CTI. Pixantrone is marketed by Servier in Europe under conditional approval as a monotherapy for the treatment of adult patients with relapse or refractory aggressive B-cell non-Hodgkin's lymphoma. Our partner Servier is currently evaluating the next steps for the pixantrone program in Europe.

In conclusion, we see strong potential for our lead compound pacritinib to address the unmet medical needs in clearly defined patient -- populations of patients with myelofibrosis. The need for new options is evident -- new therapeutic options is evident, and this has been a major focus of our interactions with the regulatory agencies.

I would now ask David to provide the financial update.

Thank you, Adam. As of June 30, 2018, cash and cash equivalents totaled $92.8 million compared to $104.6 million as of March 31, 2018. Total revenue for the second quarter ended June 30, 2018, was $600,000 compared to $22.2 million for the same period in 2017. And that decrease in total revenues for the second quarter compared to the same period in 2017 was primarily due to license and contract revenue that included the recognition of payments received from the expansion of the license collaboration agreement for pixantrone with Servier in 2017 as well as the receipt of a payment from Teva Pharmaceutical Industries related to the achievement of a sales milestone for TRISENOX in 2017.

GAAP operating loss for the second quarter 2018 was $14 million compared to GAAP operating income of $5.3 million for the same period in 2017.

Non-GAAP operating loss, which excludes noncash share-based compensation expense for the same quarter 2018, was $13 million compared to $6.4 million for the same period in 2017.

Noncash share-based compensation expense for the second quarter of 2018 was $1 million compared to $1.1 million for the same period in 2017.

Net loss for the second quarter of 2018 was $11.3 million or $0.20 per share compared to net income of $1 million or $0.03 per share for the same period in 2017. Net loss for the 6 months ended June 30, 2018, was $15.4 million or $0.29 per share compared to a net loss of $18.8 million or $0.63 per share for the same period in 2017.

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

Thanks, David. This concludes our formal remarks. Jonathan, please open the call for questions.

(Operator Instructions) Our first question comes from Matthew Andrews with Jefferies.

Adam, just curious, could you walk through how FDA feedback on the need for this new Phase III study, how that may impact your European commercial strategy, assuming approval by the EC early next year?

Thank you, Matthew. Thanks for the question. The 2 pathways in U.S. and Europe are very different at the moment. We still have a very active MAA in process. We've received good outcomes of the Day 180 -- with the Day 180 response, and we have managed to reduce the number of outstanding issues significantly. From a commercial point of view, we are -- have started considering whether -- considering a -- the potential for EU partnership with respect to EU territories. But apart from that, the -- really, the 2 territories are working independently of each other at the moment. The U.S. pathway is clearly -- the FDA has clearly stated to us is for us to conduct another Phase III trial. And as I said during the opening remarks, we do plan to conduct that in areas of unmet medical need as advised by the FDA.

And then as it relates to the Phase III, what are your options, if you're free to stay at this time, in terms of the populations you may target as it relates to a true second line or perhaps intolerant to or incapable of taking ruxo? Like, what are the patient options that you're considering?

Yes. Thanks, Matthew. The -- so the FDA guided us to two areas. The first -- in both areas there are no approved therapies. The first was patients who have platelet counts less than 50,000, and we -- obviously, we have a substantial amount of data on that population from both the PERSIST-1 and the PERSIST-2 trials. The second population were patients who were in the second-line indication. We did, at the FDA at the type B meeting, discuss the definition of the second-line definition with the FDA, and we got -- based on the 203 study, and we got some feedback on the definition. So we're very aware, moving forward, what the definition should be if we conduct another trial. But at this point, the first objective here is to complete the 203 trial, identify the optimal dose to the satisfaction of the FDA using all available data, including the PK data. And once we have that, then we'll make a final decision on which of those 2 scenarios, we'll go in either less than 50,000 or the second line.

And then just on the first interim, were you a bit surprised that the lowest-dose arm was kept open, considering you did not -- S*BIO did not see any objective SVR responses in that population in the early Phase I, II studies?

Not really. The sample size is very, very small, with respect to the efficacy population. So not really. One of the -- and this is discussed with the IDMC. One of the advantages of looking again is we'll have nearly 3x the number of patients with 12 week data who'll [be available for] -- I think we'll get a much better look at the data. I think the variability of the data and the small sample size at the interim really made it very difficult to make a conclusive division. So I'm glad the IDMC agreed to a second interim and agreed to us having a look with, as I say, which should be at least 3x the number of patients they originally saw.

Our next question comes from Konstantinos Aprilakis with JMP Securities LLC.

Just regarding the new Phase III trial for pacritinib in the U.S., when should we expect to hear sort of more detailed -- more details on the design? Specifically, what doses, endpoints, the timing so on and so forth? Should we just think of it as sort of a rehash of the PERSIST-1 and 2 trials? Or would there be new endpoints and new way to think about it?

So thank you, Konstantinos. So I'll answer the question about timing and then about the trial design. The timing we need to -- the FDA has made it very clear to us, we need to identify the optimal dose from the PAC203 trial. I do expect to have more clarity on that as the year progresses, as we obtain more data, particularly pharmacokinetic data, which the FDA wants to see. And I think towards the end of year, the early part of next year, we'll have more clarity depending on how the data matures.

With respect to the trial design, it's very important, as a company, that we learn from what happened with PERSIST-1 and PERSIST-2. The FDA during the -- when we spoke with them had -- obviously, didn't agree to both those -- either of those trials being used for registrational purposes, and that's because of various limitations on the trial. And we need to take that into account when we design the trial.

With respect to endpoints, I would -- the FDA has indicated to us that one of the secondary endpoints must be overall survival. It doesn't have to be a primary endpoint, which will most likely be TSS and/or SVR. But the OS will be a secondary endpoint, and they've made that clear during the meeting last month.

Okay. That's very helpful. And then just turning to the opportunity in the EU, can you update us as to sort of partnering discussions there? And how those are going?

We've just reactivated the process following the news of the last month. It's very early. We don't have any updates at the moment. It's the middle of the summer in Europe. So I expect that activity to really kick off in early September. At the moment, we started some early discussions and we're preparing our -- the documentation we need on our end. But I don't think anything is going to happen until after Labor Day.

(Operator Instructions) We'll take our next question from Chad Messer with Needham & Company.

Just on this next interim upcoming with PAC203, can you just walk us through what kind of level of detail out of that we should expect, given there'll be more patients? And maybe tell us what you think a good outcome, something that you would be happy with, what would you hope to get out of it?

Yes. Well, thanks, Chad. So the level of detail that we'll make public will depend on, I've said previously, we do need -- we will be going to the FDA after the second interim to discuss the new clinical trial design and the data. But that trial is still under review by the IDMC at the moment. So we're not going to be able to go public on the data until we are confident that there'll be no more decisions from the IDMC and we've had input from the FDA. So currently, unfortunately, I don't see us being able to go submit an abstract for ASH, which was our intent, but we can't do that at the moment.

With respect to outcome, obviously, no concerns expressed by the IDMC around safety would be the most important, particularly around bleeding and cardiac events. We were pleased with the safety review that the -- or the outcome of the safety review from the IDMC at the first interim.

With respect to dosing, obviously, we would like -- a good outcome would be if the low dose level for example is dropped. I've always said, having the high and the middle dose level go to the end of the trial would be good for us because it gives us some dosing flexibility within the data set. But probably the -- a good outcome would be if the low arm was dropped because it was considered futile, and then that would give some very valuable information as -- with respect to what the optimal dose is.

Great. And then just regarding this next FDA meeting after the interim data, what advice are you hoping to get from them? Is it just input on dosing? Or are there other areas where you're seeking significant input as well?

Well, I think [as there becomes] more clarity on dosing, we can have a discussion with them about the Phase III protocol design. And so we will do that. We will start discussing concepts in more detail. But the other thing is, the FDA has asked us when we conduct the analysis for the optimal dose that we look at the pharmacokinetic data, including dose response and exposure response analysis, the efficacy data and the safety data. And I don't want this to be a one-off discussion with the agency. I want to be -- inform them of the data early, get their input, make sure that we are responding to the needs early on. And that's why we plan to go back after the second interim. And they told us to. They said, come back to us early. Really focus on having a dialogue with them and make sure that they are informed. As I said during the opening remarks, we now have a collaborative relationship with the FDA. We made a very -- we were very careful how we approached them, given the history and the past, and we really were after good responses from them, and we achieved that in the meeting. And one of those outcomes was they wanted to come back and continue a dialogue with us.

Great. And then do you have any thoughts on what the size the Phase III is likely to look like? Is it sort of in that PERSIST size? Or any idea?

Yes, it -- the -- it depends what indication. If we look at the less-than-50,000 population data, and use the data from PERSIST-1 and PERSIST-2, the trial could probably be smaller than the PERSIST trials. That's what we're thinking. The second line, it's hard to predict the sample size because we still, obviously, have an older -- a trial that's ongoing, and we're still collecting data. But our first take of it is that PERSIST -- using the PERSIST data to design a less-than-50,000, the sample size should be smaller

(Operator Instructions) At this time, I'm showing no further questions in the queue.

Well, thank you, Jonathan. In summary, we continue to make progress with pacritinib. We look forward to providing additional updates over the coming months and through year end. Thank you for joining the call today.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.