Spectrum Pharmaceuticals Inc (SPPI) 2007 Q4 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Hana Biosciences fourth quarter and year end 2007 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Remy Bernarda, Director of Investor Relations for Hana Biosciences. Thank you, Ms. Bernarda, you may begin.

Good afternoon, everyone, and thank you for joining us. With me today on the call are Dr. Steven Deitcher, our President and CEO; and John Iparraguirre, our CFO. Before we begin, we'd like to remind you that we will be making forward-looking statements throughout this call regarding our operations, product development and market opportunities. For further information on our SEC filings please visit our Web site at hanabiosciences.com. With that said, I will now turn the call over to Dr. Steven Deitcher.

Thank you, Remy, and good afternoon to everyone. On our earnings call back in November 2007, I laid out the results of our comprehensive product portfolio and operational review. I also discussed how Hana would move forward in 2008 with a clear, committed and singular focus on the development of novel oncology products.

At that time, we presented the three keys that I believed were crucial to turning around the Company, the people, the products and the funding. We have a strong and committed team here at Hana Biosciences and I am impressed every day with how much we are able to accomplish with a lean organization.

As our product candidates continue to progress through development, we will add experienced people where needed to strengthen operations, maintain forward momentum and ensure quality. As we announced last week, we recently strengthened our Board of Directors with the addition of Paul Maier. With this team in place, my biggest promise to you was to remain focused on our product development efforts, supporting the advancement of Marqibo and Menadione, our M&M strategy.

I will discuss the status of our pipeline and progress in more detail later in this call. Importantly, we have the financial resources to fund our operations. I will now ask John to provide a finance update.

Thank you, Steven, and good afternoon to everybody. I'll begin with our fourth quarter and year end financial updates and then provide some financial guidance for 2008. As of December 31, 2007, Hana ended the quarter with approximately $21 million in cash equivalents and short-term investments. In the fourth quarter of 2007, Hana used cash of approximately $4.1 million in its operations. For all of fiscal 2007, cash used in operations was approximately $24 million. These funds have been primarily used in the advancement of our clinical stage product candidates.

For the three months ended December 31, 2007, Hana reported a net loss of $3.6 million or $0.11 per share compared to $9.8 million or $0.34 per share for the three months ended December 31, 2006. For the 12 months ended December 31, 2007, Hana reported a net loss of $26 million or $0.85 per share compared to $44.8 million or $1.69 per share for the 12 months ended December 31, 2006.

Consistent with our guidance provided in November with our current development plans, we estimate our cash burn to fall in the range of $5 million to $7 million per quarter for 2008. With our cash position of $21 million at the end of 2007 along with up to $22.5 million available to us from our funding commitment from Deerfield Management we believe that we have the financial resources to carry us into the second half of 2009.

I will now turn the call back over to Steven.

Thank you, John. Moving on to our pipeline review I will start with Marqibo. Our registration enabling Phase 2 clinical trial of Marqibo, known as rALLy, now has 25 sites up and running in the United States, Canada, Germany and Israel. Enrollment into this study has accelerated as new clinical sites have come on board.

I'm very pleased to announce that we are in double digits for our enrollment in the rALLy trial and we remain confident in our time lines for this trial. We plan to have dosed 29 patients and be able to report on the results of the interim futility analysis from our data safety monitoring board in the second half of the year. Overall, we anticipate completing enrollment in rALLy in the first half of 2009.

Leveraging results from the rALLy trial we believe we have a very clear regulatory strategy to file our NDA by the end of 2009 and potentially gain approval in 2010. Last summer when we met with the FDA they asked for our NDA to include data from at least 100 patients treated with Marqibo in adult ALL. We have already completed two trials that provide us with 52 patients that count towards the 100.

Promising data from these trials was presented by Dr. Debbie Thomas from M.D. Anderson at the American Society of Hematology meeting this past December. These 52 patients plus the 56 patients from the rALLy trial will total 108 patients for our NDA submission for accelerated approval.

According to the guidelines from the FDA in order to file for accelerated approval our confirmatory trial must be initiated, which means that we need to have at least one patient enrolled. Our confirmatory trial will be in front line, elderly ALL patients which we call the ALLy trial. Our strategy is to collaborate with the oncology cooperative groups, providing us with access to their broad network of leading physicians and thought leaders who treat this disease. We anticipate the ALLy trial will commence by the end of the year.

We are also very enthusiastic about progress in our Phase 2 metastatic uveal melanoma trial with Marqibo. This is a disease that originates in the choroidal tissues of the eye and the majority of patients will develop liver, lung and/or bone metastatic disease after approximately two years. As you may recall, we initiated this single agent Phase 2 trial in November of last year after we saw very promising results in previous melanoma trials.

In these trials, in part presented last year at ASCO, we reported a 31% disease control rate in patients with relapsed refractory metastatic melanoma of any origin. But we also reported a 25% complete response rate in metastatic uveal melanoma which is unprecedented. This was the impetus behind starting the current Phase 2 trial. Metastatic uveal melanoma is a rapidly progressing and deadly disease where there are absolutely no currently approved treatment options.

We are pleased to announce that this trial is enrolling far more quickly than anticipated thanks to the efforts of Dr. Bedikian and his team at MD Anderson. We have had strong demand for participation in this trial and are now planning to add additional sites, particularly to assist those patients who are too sick or unable travel to Texas. After we dose the first 15 of 30 patients in the trial, we will review the available data and make a decision per protocol on whether to advance further and dose an additional 15 patients.

We anticipate this decision in the second half of this year. If the data proves viable, we plan to take the results from this trial to the FDA and to work with them to illuminate a registration enabling development pathway. We believe that we may have the potential for an NDA submission for the uveal melanoma indication as well by the end of 2009.

While our primary focus is on the advancement of Marqibo and Menadione, we are maintaining progress with our two other Optisomal compounds, Alocrest and Brakiva. Last month, we announced that enrollment is complete in our Phase 1 trial of Alocrest which is encapsulated vinorelbine. This trial was designed to assess the safety, tolerability and preliminary efficacy of the compound. Top line results show that we achieved a 46% disease control rate across a broad range of dose levels.

We believe that we have identified an excellent Alocrest dose to advance into mid-stage trials in order to achieve desirable efficacy and safety profiles. In preclinical studies, we have shown that nine and a half fold more active chemotherapy enters tumor tissue when delivered as Alocrest versus being delivered in a non-Optisome encapsulated form. With this data from Phase 1 and preclinical studies we believe that we may achieve a higher tumor cell kill due to the fact that more drug even at the same dose will actually reach the tumor.

In addition, our selected Alocrest dose for further study affords us more efficient and clear development opportunities. I am pleased to report we saw no unexpected or excessive toxicities and the most common dose limiting toxicity observed in the Phase 1 trial was neutropenia, as is seen with vinorelbine. Any neutropenia attributable to Alocrest resolved with either dose reduction or a cessation in all of the treated patients. And finally, no peripheral vein irritation was observed due to the Optisomal encapsulation.

We plan to present the full data set in July at the European Society of Medical Oncologists meeting in Lugano, Switzerland. As I have mentioned in the past, we only plan to advance Alocrest into the next stage of development with a partner as we focus our near term efforts on the clinical development of Marqibo and Menadione. With this Phase 1 data in hand, we believe we are well-positioned to seek out an enthusiastic partner with whom we can advance Alocrest.

Brakiva is our Optisomal formulation of topotecan for which we currently have an open and active IND. We are in the process of completing the manufacturing technology transfer for this compound from Canada to Gilead here in California. We plan to complete this task in the first half of this year and initiate the Phase 1 clinical trial in the third quarter.

This Phase 1 study will enroll patients with relapsed or refractory solid tumors. Now let's discuss our exciting first-in-class compound, Menadione. This compound is being developed as a supportive care topical lotion for the treatment and or prevention of the very problematic and common skin rash associated with epidermal growth factor receptor inhibitor, or EGFRI therapies.

These skin toxicities may cause the reduction, interruption or discontinuation of the EGFRI treatment for the cancer patients and currently there are no FDA approved products or therapies available to address this. We announced in February that we now have open and active INDs in both the United States and Canada for Menadione. We are pleased that we were able to negotiate with the FDA to go directly into patients and bypass the normal volunteer studies, thus speeding up our development time lines by about nine to 12 months.

The primary objective of the Phase 1 study will be to evaluate the systemic absorption of Menadione topical lotion as an emergent and pre-emergent, or prophylactic, treatment for EGFR inhibitor associated rash. The Phase 1 trial is designed to enroll a total of 24 adult subjects who are about to begin treatment with an approved EGFRI for cancer. Subjects will be divided into either two cohorts run sequentially.

The first cohort will consist of subjects who develop the first signs and symptoms of rash on the face, neck and/or upper chest following the initiation of their cancer treatment. In the second cohort, subjects will receive Menadione lotion prophylactically starting one day prior to the beginning of their EGFRI therapy. In both cohorts, subjects will serve as their own control and apply Menadione lotion on one side of the treatment area and placebo lotion on the other side in a blinded fashion.

Treatment duration will last approximately one month. For our Phase 1 study there are no restrictions on any of the four brands of EGFRIs administered to patients. We are on track with our guidance to dose our first patient in our Phase 1 trial for Menadione in the second quarter. In addition, we will also be presenting new Menadione preclinical data at the European sOciety of Medical Oncologists.

In summary, we are fortunate to have four distinctive clinical stage products in our portfolio. As I mentioned with Alocrest, we remain committed to finding strategic development partners for one or more of our Optisomal compounds. We currently maintain worldwide rights for all of our product candidates which allows us the freedom to partner our compounds in a variety of ways including research, development and commercialization.

In closing, I feel very good about where we sit today with our team, our pipeline and our balance sheet. I am excited about the progress we are making with both our ALL and uveal melanoma trials for Marqibo, and am very enthusiastic about our prospects for Menadione. We plan to maintain this momentum throughout the year.

Thank you for your time and attention, and we now welcome your questions.

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. (OPERATOR INSTRUCTIONS) Our first question is from Joe Pantginis with Canaccord Adams. Please proceed with your question.

Hi, guys, thanks for taking the question. Good progress. A couple quick questions and then I'll jump back in the queue.

Steven, you guys have obviously in the past focused entirely on ALL and over the last several months or so you've been really focusing also on the uveal melanoma indication. Can you describe a little bit more about the market opportunity for that indication?

Well, thanks, Joe, for your question. And I think that our attention to uveal melanoma and the time that we have committed to it in our presentations and discussions is a reflection of the enthusiasm, not only by us in the Company, but certainly the investigators that are involved in the trial and physicians involved in taking care of this group of patients.

The enthusiasm stems from the fact that there is essentially nothing to do for this group of patients, and, therefore, a true unmet medical need. While there are approximately 3,000 new diagnosis cases of uveal melanoma annually in the United States alone we feel that there is an opportunity to start with uveal melanoma, and then potentially expand into the general metastatic melanoma population.

So from a commercial opportunity uveal melanoma is the tip of the iceberg, just as ALL in our opinion is the tip of the iceberg since Marqibo has potential to work in all of the lymphoid malignancies not just ALL.

Sure, thanks. If I could just follow with a bit of a technology question. I think maybe it would be a good opportunity to review, obviously, there are multiple companies out there developing encapsulated forms of drugs, and I was just wondering if you could give us a synopsis, again, why the Optisome technology can be a bit differentiated versus the other type of liposomal delivery technologies?

Thanks for that question, too, Joe. We've been very consistent from the start with our beliefs in having scientific data to support the fact that it seems very important to extend the circulating half life of a drug, have it targeted specifically to areas where there's tumor involvement and to have the drug freely disassociate from whatever the carrier technology or molecule is.

We, therefore, feel that compared to some of the other products out there that the sphingomyelin and cholesterol liposome encapsulation of our Optisome is really the perfect match for drugs such as vincristine, vinorelbine and topotecan.

And our data supports that we not only increase the circulating half life so that the drugs can circulate in encapsulated form and then exit the circulation preferentially where there is leaky vasculature and deposit itself in higher amounts in the tumor bed where then the chemotherapy can leak out in a continuous fashion over days, thus taking a cell cycle specific chemotherapy and, in essence, providing a continuous infusion directly where the tumor is.

We think that all of this adds up to a justification and a supporting evidence for the type of response that we've seen to date with drugs like Marqibo and now with fresh Alocrest data.

Great. Thanks a lot for the information.

You're welcome.

Thank you, our next question comes from Ren Benjamin with Rodman & Renshaw. Please proceed with your question.

Hey, can you guys hear me?

Yes, hi, Ren, how are you?

Good, how are you guys doing? Thanks for taking the question. A couple of questions for you.

Regarding the, regarding Marqibo, let's start with the rALLy trial. You mentioned that, I think it was the first time that you kind of clued us into the enrollment that's occurred so far, and I want to try to get away with this question, but maybe you can try to give us a better sense when you talk about double-digit, is it like low double-digit or high double-digit or mid-double-digit?

Ren, we are very, very, very pleased that we are in double digits and not just excited about the quantity of enrollment, but also placing a tremendous amount of emphasis on the quality of the enrollment. We are appreciating the fact that with even a 100 plus patient database going into an NDA that while that may be viewed as robust for orphan indications it's still a small number.

Therefore, we are really concentrating on adhering to our protocol, not deviating from the protocol and making sure that every subject that we dose gets to count towards our total of 56. So I know that that does not directly answer your question and we plan on giving further guidance at a future date.

So what you're saying is you are in solid double digits? Sorry. I won't continue going here.

You mention that it was the, you expect the results, the interim results to be available in the second half of '08. Do you have any other clarity as to when in the second half of '08, third quarter, fourth quarter, not too sure?

I think what is most important for people to appreciate is that there is an amount of time following the actual enrollment and initial dosing of that 29th patient. There is an amount of time that it will take before we can actually assess the activity and safety data from that full 29-patient cohort.

Therefore, that 29th patient will need to receive at least four weeks of therapy in order to have their follow-up bone marrow and blood smear and possibly CT scan evaluations. Once we have at least 30 days safety follow-up and that 30-day efficacy assessment on that 29th subject we will need to make sure that key parts of the database are clean, that we can lock that database, that we can generate the appropriate liftings and put the DSMB together to review it.

So I think that with all that we are likely going to be closer to Q4 for announcing the results of that analysis.

Okay. And is the game plan still that if the results are quite robust that there's the potential at that stage itself to go and meet with the FDA and go for accelerated approval, or is the game plan that more or less like a futility analysis and if the results look good you are just going to go to completion?

We view the interim analysis as exactly that. It will primarily serve as a futility analysis, but it will also provide us here at the Company the opportunity to know that if the data is looking positive at that point and trending in the right direction it gives us the opportunity to really start ramping up our NDA filing machinery and be as prepared as possible.

But we must finish the study and go in with a full 56 patients. And this was something that we discussed and was very clearly laid out in our discussions with the FDA last summer.

Okay. Good. Regarding the confirmatory trial, what are the steps that are still, I don't know, call it outstanding that are required in order for you to get that trial started?

Because I think you mentioned that ALLy is expected to commence by the end of the year. I'm just trying to get a little bit more color into what more is expected, could it happen a little bit earlier, could it be pushed out slightly, if you can help us with that?

I will address that in two ways. In no way, Ren, are we putting our foot on the brake pedal, but we are trying to make sure that the study is executed in the best possible way. What we're looking at is what will likely be a landmark trial by being the first ever potentially global ALL trial.

And in order to do that we want to make sure that the protocol, the standard therapy, that everything is worked out in a manner that will satisfy investigators around the world as well as regulatory agencies around the world. We also want to avoid any type of rushing into things where we limit ourselves.

We would like to make this a global trial, and, therefore, we may get, say, an understanding or agreement by U.S. investigators and cooperative groups on what the trial should look like, but we want to make sure that our, say, German colleagues as an example will buy into it as well.

Okay. Fair enough. Regarding Alocrest and Brakiva and any sort of partnering talks, have partnering talks been initiated already or is it more that now we sort of have at least in the case of Alocrest, now we have the data in order to start the partnering talks? Can you give us a sense as to where you are in the process?

The data, even though it's Phase 1, we feel is strong. We have confidence in the product and feel that we will find a good partner. We are receiving inquiries from global pharma and regional specialty pharma companies. We will focus on M&M, but at the same time remain open and optimistic and opportunistic with regards to partnering Alocrest and Brakiva.

Okay. Regarding Menadione, you mentioned the trial was going to start on time in the second quarter of '08. But can you go through maybe some of the details regarding when we might see data? I mean, clearly, this isn't a niche indication or niche opportunity and it looks like enrollment could complete quite quickly.

Could you give an idea as to how many patients are coming in the trial and you mentioned the treatment duration was for a month, but then how long is the follow-up? Everything told, when might we see data from this program?

Of course it's too early to tell. We share your optimism, Ren, that this is the type of trial that really has the potential because of the need and because there's really nothing competing with it, this has the potential to enroll quite quickly. But we also know that sometimes clinical trials don't move forward as quickly as one may hope.

We feel that if we are able to get our first patient enrolled, or if it happens early in second quarter, we would hope to know something or at least have a sense of something by the end of second quarter. Certainly, if enrollment starts later in the quarter, or if there is some unexpected delay in enrollment it could occur more in Q3.

We want to make sure that we actually have enough data and enough data points and enough patients actually treated before we can say anything about whether it works and whether it's safe, but also once we have those data points we will be in a better position to really prognosticate with regards to completion dates.

So you may have mentioned this already, but how many patients, how many patients do you plan on enrolling?

The total enrollment is currently at 24 as a target with 12 of those subjects being more or less rash treatment and 12 of them being in the rash prophylaxis group.

And after the month duration, treatment duration, how long will your follow-up be?

We will continue to follow up the patients for the status of their underlying cancer as well as the status of their cutaneous disease for several months beyond that.

Okay.

But the initial safety data and the ability to comment on activity will be based on the first month's follow-up.

Got it. And I guess not to leave John out of this, you mentioned that there is still a significant amount left in the drawdown. Can you talk a little bit about that schedule, when do you think additional drawdowns will take place, and how much, if you can just remind me as to how much has been drawn down from the total vehicle that would be great?

Sure, thanks, Ren. So to date the Company has drawn down $7.5 million of the potential $30 million given to us through the Deerfield financing agreement. So we still have available to us another $22.5 million.

If you'll recall, the structure of the deal is such that $20 million of that $30 million is available to us at specified time frames with the last $10 million available to us on specified milestones related to Marqibo and Menadione. So we have available to us coming up here in a few of months another tranche available to be pulled down because they are available to us in six-month intervals.

I think at this point in time we are being very responsible in terms of our cash management. As you have seen, our burn came within our guidance. The entire Company has done a great job of really being responsible with the cash on hand. So I think we are going to evaluate it on a quarter-by-quarter basis to see if it's something we are going to pull down.

But I think, overall, it's available to us and another thing to note is that it's not a use it or lose it scenario, Ren. If we don't pull something it's still available to us at a later time.

Okay, and so you have two more tranches left. Have you specified how much is available in each tranche?

We haven't, actually. All we've said is that $20 million of the $30 million is available at specified time frames because they do vary in amount.

Got it. Terrific, guys, thank you very much and good luck.

Thanks for the questions, Ren.

Our next comes from George Zavoico with Cantor Fitzgerald. Please proceed with your question.

Hi, Steve, hi, Remy, hi, John. Thanks for the update on everything. I have a question regarding Menadione. It's clearly pretty exciting that you can go right into patients who are going to be getting these EGFRIs.

Let's assume that the trial is successful, and all evidence seems to point in that direction. What would be the next step after this Phase 2 trial?

So this trial, which is a Phase 1 trial technically, but in patients, if we see that Menadione is successful at both treating and preventing the rash, we would need to assess whether it is better at one or the other and take all the data and work in collaboration with our experts and advisors, as well as with the FDA to map out the most efficient and highest quality development path from that point onward, George.

Okay. So conceivably, I mean, since it's already in patients conceivably a Phase 2 trial could be a registration enabling trial. Is that fair to say?

I think that's fair to say, and I think it's very fair to say that, again, depending upon what we see in this first trial and depending upon discussions with regulatory agencies that this could be a very rapid development program not just because of trial design, but because of the number of patients out there and because of the perceived and actual need for treatment for this problem. So we share your enthusiasm and also this is why this current study is so important.

True. True. Absolutely. I agree. Now, finally, regarding the next step, would it still be do you think, I know this is sort of really speculating, would it still be where each patient might serve as their own control or do you think would you have to do different arms of the trial?

Well, our very experienced dermatologic disease advisors have really pointed out that the type of design we are using right now where a patient serves as their own control may suffice in early stage development, but for a pivotal trial or registration trial we would likely have to have patients not serve as their own controls.

Okay. And, finally, I may have missed it, you mentioned the Phase 1Brakiva. Could you just repeat again, sorry, when do you expect that to commence and what kind of patients do you plan to enroll?

So we are expecting to commence a two-armed dose escalation trial in patients with relapsed and/or refractory solid tumors in Q3.

Okay, and so in any advanced solid tumor, relapsed or refractory?

Yes.

Okay. Great. Thank you very much.

Thank you for your questions, George.

(OPERATOR INSTRUCTIONS) There are no questions in the queue at this time. I would like to turn the floor back over to management for any closing comments.

Again, we very much appreciate everyone's attendance on this call, their interest in our progress and support, and we very much look forward to a very exciting and productive 2008 and providing future updates on our milestones, our progress and very much a very committed group here and looking forward to success. Thank you, again.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.