Spectrum Pharmaceuticals Inc (SPPI) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen and thank you for standing by, and welcome to the Talon Therapeutics 2011 financial results and business update conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions). As a reminder, today's conference may be recorded. And now, I'll turn the program to over to Dr. Steven Deitcher. Sir, the floor is yours.

Welcome to the Talon Therapeutics 2011 year-end earnings call and investor update. On behalf of the entire Company, I appreciate your interest in and support of Talon. On this call with me today is Craig Carlson, Talon's Chief Financial Officer. Before we get started, I would like to remind everyone that Craig and I might make forward-looking statements. Please visit our Company website at www.TalonTX.com, in order to review our most recent SEC filings, in order to understand the risks associated with Talon.

2011 was a year rich in intense focus, commitment, and accomplishment. Our mission in 2011 was to advance Talon's lead compound, Marqibo, as rapidly and as expertly as possible towards FDA approval. I believe that our passion, actions, and excellence in 2011 positioned us to achieve our first US product approval in 2012. Key accomplishments for 2011 include the following. We submitted a complete original electronic new drug application to the FDA, seeking accelerated approval of Marqibo for adults with advanced relapsed and/or refractory acute lymphoblastic leukemia, also known as ALL. The submission was probably followed by formal acceptance of our application for filing, and the successful completion of FDA pre-approval inspections of several manufacturing-related vendors and high enrolling sites from the pivotal rALLy clinical trial.

Talon also submitted a complete protocol and statistical analysis plan to FDA for a proposed randomized Phase III study of adults with newly-diagnosed ALL, known as TTX 404 or the HALLMARQ trial. The protocol was submitted for review under the SPA process. Full SPA agreement of this front-line treatment trial was achieved, and the study was initiated in the United States, before the end of the year. This trial is currently open for enrollment at a number of US medical institutions. The HALLMARQ trial will jointly serve as our post-accelerated approval confirmatory trial, and a component of Talon's Marqibo label expansion program.

A second robust Marqibo Phase III study, known as the OPTIMAL>60 trial, was commenced in adults with newly-diagnosed aggressive non-Hodgkin's lymphoma by the renowned German high-grade non-Hodgkin's lymphoma study group. This study is currently open in over 20 sites, and is successfully recruiting and enrolling patients. A Phase I Marqibo study in pediatric and adolescent patients with relapsed or refractory cancers, including ALL, being conducted at the National Cancer Institute, enrolled several patients, and has made progress towards defining a Marqibo dose suitable for evaluation in a future pediatric and adolescent pivotal trial.

We met with the European Medicines Agency, also known as the EMA, seeking formal scientific advice as an integral step towards submission of a marketing authorization application for Marqibo in Europe. The 2011 Marqibo activities and accomplishments that I've just outlined culminated in a positive vote in support of our application for accelerated approval by the FDA Oncologic Drugs Advisory Committee on March 21, 2012. The seven to four ODAC vote, including yes votes from all ODAC hematologic oncologists, including the ODAC Chairman was the most significant Marqibo milestone to date, and the highlight of my tenure at this company.

While 2011 was clearly dominated by activities related to Marqibo, a randomized Phase II study of Menadione Topical Lotion was commenced. This study is focused on the prevention of dose limiting and painful skin toxicity related to cancer treatment with the epidermal growth factor inhibitor class of agents. This multi-center trial is sponsored by the Mayo Clinic, and funded by the NIH. Enrollment has begun. The results of this trial are intended to guide the design and sample size determination of a future pivotal Phase III registration trial. The initiation of the Menadione Topical Lotion Phase II trial in 2011 gives Talon further credibility as a Company that can efficiently advance important and novel product candidates into late-stage clinical development, in order to address serious and unmet oncology patient needs.

Our 2011 corporate strategy was, and continues to be in 2012, highly-focused on Marqibo accelerated approval. We will continue to engage the FDA and address any unresolved issues leading up to our PDUFA date of May 13, 2012. We will continue to activate sites for the HALLMARQ Phase III trial in ALL, and anticipate the first patient enrollment in the coming months. We will continue to interface with the European regulatory authorities as we prepare for Marketing Authorization Application submission. We will also continue to hold discussions with potential commercialization partners for Marqibo and Menadione Topical Lotion. These discussions are in various stages of due diligence. I will now turn the call over to Craig to review our financials from 2011.

Thank you, Steven, and thanks to all of you for your interest and listening in. Let's start out with highlights of the statement of operations. We'll start with the fourth quarter and then look at the year end.

So for the fourth quarter of 2011, we had operating expenses of $3.7 million compared to $6.5 million during the same period of 2010. And the decrease in 2011 is primarily attributable to lower expenses for clinical research organizations, as the Company had completed this NDA filing activities for Marqibo prior to this quarter. The net loss for Q4 2011 was $1.7 million, and deemed dividends on preferred stock, which as you know, was a non-cash line item, of $1 million, which when combined, resulted in a net loss applicable to common shareholders of $2.7 million, or $0.12 per share. This compares with a net loss of $6.3 million, and deemed dividends on preferred stock of $900,000, which when combined, resulted in a net loss applicable to common shareholders of $7.2 million, or $0.34 per share for the three months ending December 31, 2010.

Now, onto the full-year 2011. Our total operating expenses for the year were $18.5 million, compared to $25.8 million for the full-year 2010. R&D expenses were up $13.4 million, compared to $20.2 million for the same period in 2010. The primary source of the decreased R&D expenses in 2011 was a one-time $5.8 million payment to Tekmira, from whom we licensed Marqibo, Brakiva, and Alocrest in 2010. 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 2011 were $5.1 million, compared to $5.6 million for the same period in 2010, and the decreased cost was primarily attributable to an overall reduction in operating expenses.

So the net loss for the 12 months ending 12-31-2011 was $18.8 million and deemed dividends on preferred stock of $3.9 million, which when combined, resulted in a net loss applicable to common shareholders of $22.7 million or $1.06 per share. This compares to a net loss of $26 million, and deemed dividends on preferred stock of $32.3 million, which when combined, resulted in a net loss applicable to common stockholders of $58.3 million, or $2.81 per share for the year ended 12-31-2010. And as a reminder, the line item deemed dividends on preferred stock is a non-cash item. For 2011, it refers to the accretion on the preferred shares. For 2010, it refers both to the accretion on those shares, but also to the beneficial conversion feature of the preferred investment that was made in June of 2010. The cash used in operations for the full year of 2011 was $21.9 million, which is almost $4 million less than was used in 2010.

So let's move over to the balance sheet. For the year ended 12-31-2011, the Company had current total assets of $1.7 million compared to good current total assets of $22.9 million at the end of 2010. The current assets at the end of 2010 reflect the $40 million deferred investment that was made in June of 2010. And during the remainder of 2010 and in 2011, the Company had used the vast majority of these funds for the development of Marqibo. Total current liabilities as of the end of 2011 were $4.6 million compared to $6.1 million from the prior year.

And as of the end of 2011, the Company had long-term liabilities of $26.3 million. And that included $24 million in notes payable from the Deerfield debt, and $1.8 million from the investors right to purchase future shares of preferred stock. I'll point out as I have in past times, the line item called commitments and contingencies, a significant line item, that's redeemable convertible preferred stock, valued at $30.6 million when the investment was originally made, and that value will remain on our balance sheet, as we move forward. And at the end of 2011, we had total stockholders deficit of $59 million.

I'd like to make a couple of additional comments, since that completes the formal presentation of our financials. The cash balance at the end of 2011 of $1 million was almost exactly on budget from our projected spend from the $40 million investment that was made 18 months prior. So, we were able to effectively and efficiently move Marqibo forward during that period of time. Now, as you know, we raised an additional $11 million in cash from a preferred stock investment. And as stated in our SEC documents, we anticipate the cash lasting beyond our PDUFA date of May 13, 2012, and getting us into the middle of 2012. That concludes my section on the financials. And let's open it up for questions.

Thank you, sir. (Operator Instructions). Our first questioner in queue comes from [Ronald O'Connor]. Please go ahead, your line is now open.

I had a question concerning the FDA session last week. The pharmacologist on the FDA panel had a question or opinion that's -- Marqibo is basically operating from the plasma perspective. That he didn't understand or buy into the concept that it has a deeper impact, the liposome effect of transporting vincristine in a different manner than vincristine without liposome. So can you address the technical component that the pharmacist seemed to have an issue with?

Sure. This is Steven Deitcher. I'd be glad to address that. It was actually a pediatric oncologist member of the ODAC panel who mentioned these points. We clearly showed, during our core presentation, it was part of the presentation made by Dr. Jeffrey Silverman from Talon, who is a pharmacokineticist and our Vice President of Translational Sciences, we clearly showed that we're able to penetrate and concentrate and deliver far greater amounts of vincristine to critical tissues by utilizing the Marqibo formulation, compared to standard formulation.

So I disagree with the comments that were made by the ODAC panel, and we just did not see any actual benefit to the Company at that time to start challenging each and every minor point. Our data is quite solid on the advantages of not only the dose intensification that's been facilitated by Marqibo, but by the optimization of the drug delivery and pharmacokinetics.

Also, another question about the upcoming study for people aged over 60, the panel -- some of the people on this panel expressed some concern over these studies, the way the study is set up, and the way it's structured. Have you had any further conversation or will you with the FDA about any tweaking of the technical way in which it's going to be carried out, that would make the FDA happy with it? Or is that not necessary? Or what's your position on that right now?

We are committed over the coming weeks, leading up to our PDUFA, to address any and all questions directed to us by the FDA. We have done very careful feasibility and planning for the TTX 404 trial, and feel very comfortable and confident, based on the outpouring of interest in the trial, both in the US and abroad, that this is definitely a feasible trial, and as long as we can focus our energy on this trial, we feel quite confident that we will conduct it in a reasonable manner and in a reasonable set of time.

Thank you. As an investor, I'm obviously very excited about the possibilities, but also, my best friend is over 60. He's 63 years old, and he has undergone his first round of treatment with a standard protocol. So we're hoping that we can make this available to him if he needed, which you probably will. So I have a personal emotional investment here aside from my money. So best of luck to you guys. And thank you.

No. We appreciate that encouragement, and I believe it was very consistently stated by the ODAC panel members that they agreed with the dire need of a population of patients, who really need to have access to Marqibo and our goal and intention is to bring it to them.

Thank you.

Thank you. Our next questioner in queue is [Jane Hatafi], a private investor. Please go ahead. Your line is now open.

My question is somewhat similar to the last question. And that is in light of the ODAC's remarks regarding the patient population and a confirmatory HALLMARQ study and the limited availability of potential study participants over 60, as well as their interest in its efficacy in adult patients under 60, do you anticipate adding another arm to the study, possibly comparing standard vincristine regimen to Marqibo in adults, perhaps 18 to 60? Either as an internal decision, or by request by the FDA?

Thank you for the question. Our primary commitment is to deliver on the HALLMARQ trial, which as you stated, is in persons over the age of 60. But as we also introduced during the ODAC, is our complete and broad development program, which does include a Phase II trial of the hyper-CVAD regimen, popularized by MD Anderson, but with Marqibo in place of the vincristine. And that trial is available at MD Anderson for adults with no age restriction, either on the upper end or lower end, with newly-diagnosed ALL.

All right. Good. Thank you. That's very informative.

(Operator Instructions). Sir, I'm showing no additional questions in the queue. I'd like to turn the call back over to DR. Steven Deitcher for any closing remarks.

I want to thank everyone on the call, and everyone involved in Talon. I appreciate the quality and the nature of the questions that were posed. I do want to say that the Company is continuing to be completely focused, and executing on bringing the positive and very resounding messages that were stated at the ODAC, and convert those into an actual accelerated approval.

On the near-term radar, and it is our goal to complete our mission and bring this drug to patients, who certainly desperately need it. And then continue to execute on the entire broad development program. So we appreciate your time today, and hope you share our certainly excitement and enthusiasm about our recent successes and important milestones. Thank you very much.

Thank you, gentlemen. Ladies and gentlemen, this does conclude today's conference. Thank you for your participation, and have a wonderful day. Attendees, you may log off at this time.