Spectrum Pharmaceuticals Inc (SPPI) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Talon Therapeutics, Inc. fourth-quarter and full-year 2010 results and business update. and business update. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference call is being recorded.

I would now like to turn the call over to your host today, Dr. Steven Deitcher, President and CEO. Please begin.

Thank you very much. Welcome to today's Talon Therapeutics investor update call. Craig Carlson, Talon's Senior Vice President and Chief Financial Officer, and I will provide a general corporate and financial update focused on the key accomplishments of 2010 and plans for 2011.

Before we get started, I would like to remind everyone that Craig and I will be making forward-looking statements. Please visit our new Company website at www.talontx.com, in order to review our most recent SEC filings and press releases.

2010 was a transformational year for the Company, and symbolic of what a talented and experienced management team and Board of Directors can do together. 2010 was replete with key events related to Talon's lead product candidate, Marqibo, our cancer therapy skin toxicity mitigating product candidate, Menadione Topical Lotion, and our financial regulatory and organizational strength.

The key accomplishments for 2010 include the following. First, along with our international network of dedicated leukemia expert investigators and committee members, Talon completed the pivotal Phase II rALLY study of Marqibo in adults with advanced relapse and/or refractory Philadelphia chromosome negative acute lymphoblastic leukemia. The complete data from rALLY was presented at the American Society of Clinical Oncology or ASCO meeting by the study lead investigator, Dr. Susan O'Brien from M.D. Anderson Cancer Center.

An integrated analysis of the rALLY along with the Phase I and Phase II VSLI 06 study was presented at ASH this past December.

Number two, Talon completed the two study Phase I program for Menadione Topical Lotion.

Number three, we completed a financing with Warburg Pincus and Deerfield Management for up to $100 million of which $40 million was received in June of 2010.

Number four, Talon completed two successful pre-NDA submission meetings with the FDA.

And number five, we strengthened our intellectual property coverage with new patents issued for Menadione Topical Lotion in the USA and Europe and for Marqibo. The Marqibo patent broadened the disease coverage to include, in addition to acute lymphoblastic leukemia, lymphomas and myeloma, and in addition to the relapse setting, added front-line therapy.

Our 2010 corporate strategy was and continues to be in 2011 highly focused on submitting the New Drug Application or NDA for Marqibo. Virtually all of our talented and motivated human resources and cash resources are dedicated to this NDA effort.

The manufacturing, clinical, preclinical and regulatory teams have made great progress towards completing the preparation and quality checking of the five major NDA modules. The Company is fortunate to have such a success-oriented and driven team.

Let me provide some additional Marqibo specific updates. Our goal is to submit our original complete NDA seeking accelerated approval to the FDA by the end of June 2011. We have had this goal for some time. It is worth noting the February 8, 2011 Oncology Drug Advisory Committee or ODAC meeting that addressed for all companies the celebrated approval process in general and postapproval confirmatory studies in particular.

The ODAC and FDA made statements that could affect the timing of these types of NDA submissions, especially for companies like Talon, that are at the tail end of their NDA submission preparation.

The FDA clearly stated that sponsors and that the FDA should agree on the design features of Phase III confirmatory study or studies before sponsors submit their NDA package. This constitutes an unanticipated change in the rules during the middle of the game.

Fortunately, Talon has been developing or our Phase III confirmatory study in collaboration with the Agency for some time now. Our confirmatory study design and target population were prominent topics discussed in our two pre-NDA meetings with the Agency in 2010.

These discussions resulted in a Phase III confirmatory study proposal that is currently under review by the FDA. We anticipate receiving formal comments in the near future. Following incorporation of any suggested changes we will submit a comprehensive protocol package for FDA approval.

In addition to the proposed Phase III confirmatory study which will study Marqibo versus standard dose standard Vincristine as part of a multi-drug regimen for elderly patients with newly diagnosed ALL, Talon is developing two other potential label expansion programs, one in childhood cancers with a focus on childhood ALL being conducted in conjunction with the National Cancer Institute pediatrics branch and another in elderly patients with newly diagnosed aggressive Non-Hodgkin's Lymphoma, being conducted ex US.

It is worth reminding everyone on this call of the fact that Talon already has orphan drug designation in ALL from the FDA and European Medicines Authority, as well as fast-track status in the US. In addition to our US regulatory efforts, Talon will seek formal scientific advice and protocol assistance from the EMA in 2011.

In Europe, we are exploring the possibility of using the existing rALLY data to seek authorization under exceptional circumstances or conditional approval, which is analogous to accelerated approval in the US.

I will now shift gears and provide an update on Menadione Topical Lotion. MTL, as it is referred to internally at Talon, has the potential to provide targeted therapy to prevent and ameliorate the cancer treatment limiting skin toxicity associated with commercial EGFR inhibitors, such as Erbitux, Tarceva, Tykerb and Vectibix, as well as next-generation EGFR inhibitors and development. The completed Phase I program in normal volunteers and active cancer patients identified the Phase II MTL lotion's strength, dose-limiting toxicities and, most importantly, the fact that the MTL lotion delivers Menadione to the skin but does so without appreciable systemic absorption and exposure.

Our current strategy is to build upon the these exciting Phase I results and move into Phase II along with a strategic development partner. Confidential diligence and discussions underway with more than one potential partner.

I will close by providing the high-level Talon corporate goals for 2011. For Marqibo, we plan to submit the Marqibo NDA to FDA by the end of June and receive priority review unless otherwise instructed by the Agency. We intend on holding an ODAC meeting and gain FDA approval by year end. We plan to initiate the Phase III Confirmatory Study as previously described. We plan to commence enrollment in the pediatric Phase I trial being conducted at NCI and we plan to commence a Phase III clinical trial in Non-Hodgkin's Lymphoma.

With regards to Menadione Topical Lotion, our goal is to complete a strategic development agreement with a partner.

I will now turn the call over to Craig.

Thank you, Steven, and thanks for everyone for listening in.

Let's start off with the statement of operations and we will discuss the fourth-quarter 2010 and full-year 2010 results. Then we will finish with the balance sheets.

For the fourth-quarter 2010, we had total operating expenses of $6.5 million compared to $5.4 million during the same period of 2009. The increase in Q4 2010 is primarily attributable to higher expenses for CRO organizations as the Company's push to prepare for the NDA filing for Marqibo.

The net loss for Q4 2010 was $6.3 million compared to $5 million for Q4 2009. As a result of the convertible preferred financing we completed in June 2010, a non-cash line item has appeared since Q2 2010 called Deemed Dividends Attributable to Preferred Stock. For Q4 2010, that amount was $941,000 and that resulted in a net loss applicable to common shareholders of $7.2 million or $0.34 per share.

And of course, the per-share prices have been adjusted for the 1 for 4 reverse stock split that occurred in September of 2010.

For the full-year 2010 the total operating expenses were $25.8 million compared to $19.6 million for the full-year 2009. R&D expenses were $20.2 million for full-year 2010 compared to $14.7 million for the same period in 2009 and the primary source of that increased R&D in 2010 was a one-time $5.8 million payment to Tekmira from whom we license Marqibo, Brakiva and Alocrest.

As stated in a previous press release, this $5.8 million payment reduced our potential future obligations to Tekmira by approximately $13 million.

G&A expenses for the full-year 2010 were $5.6 million compared to $4.9 million in the same period in 2009. And this increased cost was primarily attributable to higher insurance expenses.

The net loss for the 12 months ending 12/31/2010 was $26 million compared to a net loss of $24.1 million for the same period in 2009. As I mentioned earlier, 2010 includes an additional expense item related to the convertible preferred financing, the Deemed Dividends Attributable to Preferred Stock line item for 2010 was $32.3 million, resulting in a net loss applicable to common shareholders of $58.3 million or $2.81 per share compared to a net loss of $24.1 million or $2.27 per share for the same period in 2009.

Cash used in operations for the full year of 2010 was $25.7 million.

Let's move over to the balance sheets. For the year ended 12/31/2010, the Company had total current assets of $22.9 million compared to total current assets of $9.8 million at the end of 2009. Total current liabilities as of 12/31/2010 were $6.1 million compared to $4.1 million at the end of 2009. So our working capital as of the end of 2010 was $16.8 million compared to $5.7 million as of the end of 2009.

At the end of 2010, the Company had long-term liabilities of $29.2 million and that included $23.3 million in notes payable and that references the debt we have with Deerfield Management and $5.1 million for the investors' right to purchase future shares of preferred stock. And as you recall, with the financing that we put in place in June, the preferred shareholders have an option for additional investment and that is what this refers to.

Under the commitments and contingencies, there is a large line item called Redeemable Convertible Preferred Stock that has been valued at $30.6 million. So as of 12/31/2010, Talon had total shareholders deficit of $41.9 million. And as you see also on the balance sheet our total common shares outstanding at this time is 21.2 million.

And that concludes the summary of our financials.

Thank you, Craig. Just a few closing comments. On behalf of the Company we wish to express how much I remain extremely encouraged by our data and steadfast in our goal and efforts to get Marqibo approved. We believe that patients, physicians and others will benefit significantly by bringing this new product candidate to the market, and we are equally excited to expand its role in other cancers so that other patient populations can derive benefit.

With regards to Marqibo, we're extremely enthusiastic to get this product candidate into Phase II and into Phase III and bring it, too, to the market to benefit a large group of patients -- actually a growing group of patients -- who need this therapeutic so that they will remain of client with their EGFR therapy in solid tumor situations.

With that, I will thank you very much for your participation and listening to the call and open up the line for a few questions and answers.

(Operator Instructions). [Shlomo Freiman], a private investor.

The question is related to the conversation today, of trying to get some information. Does anybody know how many shares are held by insiders in the Company?

Hello?

We were just doing a little calculation here. It's outright owned by management. Is that really what you're looking for?

Yes.

That figure is -- we're kind of taking a quick look right now. It will be in the neighborhood of I would say about 5% at this time.

And by institutions?

Institutions, probably by about 30%.

Okay, that's my two questions. Thank you very much.

I'm not showing any other questions in the queue. (Operator Instructions). We do have a question that just came in from [Nia Poe], with Poe Capital Management.

Can you explain is you have any chance you could submit the NDA before June or June is the date?

Thanks for the question. The ability to submit the NDA is not limited by having an NDA completed. It is being limited by our completing our negotiations with the FDA for future Marqibo-related events.

So essentially as I described we want to make sure that we have an agreement with the FDA about the nature of our postapproval commitments, so that we have all of that worked out prior to submitting the NDA. This is what the FDA has been requesting since February 8, 2011. This is -- as I've stated, it's a game changer. It changes the traditional approach of getting the NDA in as soon as it is completed, and all we are trying to do is collaborate and cooperate with the Agency to our fullest ability. We believe that will improve our likelihood of getting a favorable review and getting the drug approved on time.

Thank you.

I'm not showing any other questions at this time. Did you have any closing comments, Dr. Deitcher?

Well, if there are no further questions at this time I just want to thank everyone for their participation. And if there are questions that are at a later point in time, please don't hesitate to contact Craig to address those questions and we will get back to you very quickly if you approach us by telephone or by e-mail.

So thank you very much and I hope you remain as enthusiastic about Marqibo and Menadione Topical Lotion and Talon Therapeutics in general as we are. Thank you.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.