Spectrum Pharmaceuticals Inc (SPPI) 2012 Q2 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Talon Therapeutics Reports Second Quarter 2012 Financial Results and Business Update. 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. It's now my pleasure to turn the call over to Dr. Steven Deitcher, President and CEO and Board Member of Talon Therapeutics. Sir, the floor is yours.

Good day to everyone on the call. It has been one entire business day since our last call, and I will provide some brief remarks and updates. Here with me today is Craig Carlson, Talon's Chief Financial Officer and Senior Vice President. I'd like to start by indicating that we will be making forward-looking statements and I'd like to refer you to our website, www.TalonTX.com, where you can review our most recent SEC filings and press releases, and also would like to refer you to www.Marquibo.com for any questions, or if you would like to review our package insert.

I'd like to start by noting, as I did on the investor call last week, that we are extremely heartened and enthusiastic about the receipt of accelerated approval for Marquibo last Thursday, August 9, 2012. This is the greatest accomplishment for this Company to date and is being used as a catalyst to drive our momentum forward as we continue with important and hopefully value-generating Company activities.

These activities include first and foremost continuation of the Marquibo program. The approval is in adults with Philadelphia Chromosome Negative Acute Lymphoblastic Leukemia in second or greater relapse, or whose disease has progressed following two or more prior lines of leukemia therapy, but beyond that indication, we have additional indications being investigated. We have two ongoing, active, and enrolling Phase III clinical trials. One trial is in the front-line adult ALL setting, namely individuals with newly diagnosed Philadelphia Chromosome Negative ALL. This trial, known as the HALLMARQ trial, is a randomized multi-national trial. This trial will serve to confirm the observed clinical benefit from our Phase II rally trial, which served as the basis for the accelerated approval, but also provides Talon with a near-term potential for an additional labeling for Marquibo.

Our other Phase III active and enrolling clinical trial known as the OPTIMAL>60 trial, is currently being conducted in Germany by the German high-grade lymphoma group. This is a randomized trial in adults with newly-diagnosed, aggressive histology, non-Hodgkin's lymphoma. These are two un-met medical needs in the hematology/oncology realm, very important areas to improve care, and we are thrilled to have such significant attention and enthusiasm to evaluate the potential role Marquibo could play in enhancing the care of these patients. Third, and certainly not last, is our ongoing pediatric program being conducted at the US National Cancer Institute, where we're nearing completion of the Phase I dose identification trial, and are making plans for the late-stage development program in pediatric ALL.

Beyond this, we have ongoing and mounting commercial preparedness taking place at Talon, with a target commercial launch of Marquibo in our initial indication in the United States targeted for the first quarter of 2013. A parallel track for us, our ongoing partnering discussions regarding Marquibo. These are discussions taking place for ex-US commercial rights, but also other forms of transactions are being evaluated. These areas are being explored by companies both with and some without existing oncology presence.

I'll close by mentioning that the Menadione topical lotion randomized Phase II trial continues to enroll. This is a trial being run by the Mayo Clinic at several sites. This trial will help us advance our lead development compound into the Phase III development realm. We're excited about this, since this topical location addresses an extremely important mounting and relatively new toxicity observed in the oncology realm. At this point, I'm going to turn the call on over to Craig to go over the financials, and then would be happy to address any questions during the Q&A portion of the call. Craig?

Thanks Steven, and thank you to all of you participating in the call today. To echo Steven's remarks, the approval of Marquibo is indeed a game-changer for the Company. We have begun our transition from being 100% focused on the approval of Marquibo to adding the commercialization of Marquibo to our priority list, and of course as Steven indicated, we remain focused on the Marquibo clinical development program, as well as for Menadione topical lotion.

Let's begin with a statement of operations. I will discuss the current quarter. I'm not planning to discuss the six-month period, but if questions come up during the Q&A of course I'll be happy to answer them. For the three months ended June 30, 2012, we reported a net loss of $60.8 million, and deemed dividends attributable to preferred stock of $1.5 million, which resulted in a net loss applicable to common stockholders of $62.3 million, or $2.85 per share. This compares to a combined net loss of $7 million for the three months ended June 30, 2011. Of our net loss this quarter, $55.5 million, or $2.54 per share, reflected the change in fair value of the preferred shareholders right to purchase additional shares of preferred stock, and the primary driver of that change in fair value was the increase of Talon common stock.

Total operating expenses for the three months ended June 30, 2012, was $3.7 million, compared to $4.8 million for the three months ended June 30, 2011. The primary reason for the reduced expenses was lower R&D costs for the quarter. For the corresponding quarter last year, we had higher R&D expenses that were specifically related to the preparation of the Marquibo NDA.

Now we'll move over to the balance sheets. As of June 30, 2012, we had cash and cash equivalents of $3 million, and total assets of $4.3 million. You will note that we announced in July that we raised an additional $3 million from the preferred stock financing vehicle. Regarding liabilities, the two largest are the $24.4 million of notes payable net of discount, and just so some folks at times get confused on that our total debt is $27.5, but there's a discount related to warrants that were issued at that time. The other large liability, as I mentioned a moment ago, is the investors' right to purchase future shares of Series A3, and that liability is $89 million. Again, this reflects the increase in Talon Common Stock price. We have a total stockholders deficit today of just about $150 million.

Now looking forward, we expect to have cash usage of $12 million to $15 million for the second half of 2012. We have access to up to $57 million from the preferred stock financing vehicle, and we expect to take down relatively small traunches when needed, rather than a single large amount. Now, the amount of cash we need to access will be greatly influenced by the commercialization strategy that unfolds over the next several months. Should we launch Marquibo alone, our cash needs will be greater than if we develop a strategic commercialization alliance.

That concludes the summary of our financial update for the quarter. I'll hand this back to Steven for Q&A.

Thank you, Craig. We'll now open the call up for questions.

(Operator Instructions)

Richard Mueller, private investor.

Yes, congratulations on the success of getting this thing through the FDA.

Thank you.

There's always been a question of how many customers, how many patients will be needing this drug in the future, not only just in the United States, but Canada, Russia, east Asia, a combined number possibly going to need this?

Well, all I'm really prepared to comment on in detail would be our strictly on-label indication, and we're looking at in the US approximately 2,000 patients per year. If we expand that to include Europe, we could double that, and when we go globally, there's limited epidemiologic data, but we would assume that if we estimate that the rest of the world is like half to a whole of the amount that the US represents, we could be looking here at 5,000-plus potential patients on-label in the world right now.

Okay.

This, obviously, does not take into account future indications, which are actually much larger than our initial indication, and we could certainly provide guidance on that in the future.

Thank you for answering that for me, appreciate it.

Thank you.

(Operator Instructions)

Bob Mattaro, private investor.

Congratulations, gentlemen. Great win. At the conclusion of the HALLMARQ study, will you have to then submit a new NDA, or is there some way that because of the Marquibo being already going through the process that HALLMARQ would not have to take that route?

We would submit what's called a Supplemental New Drug Application, so it's not starting from scratch, as with the most recent New Drug Application.

Okay, so that could speed the whole process up?

That would -- our hope is to always have things happen as quickly as possible. Obviously, there's certain things such as review cycles at the FDA that are beyond mine or anyone else at Talon's control.

Right. Another question, is it possible that current indication could be also used off label?

Well, the current, the approved indication is the approved label. If you're asking could the drug, when it's commercially available, be used off label, that's at the discretion of the treating physicians.

Okay. Very good, thank you.

Thank you for your question.

Thank you, sir. It appears to be no additional questioners on the phone lines. I'd like to turn the program back over to Dr. Steven Deitcher for any additional or closing remarks.

Well again, we appreciate everyone's participation in the call. This is just the beginning of what we think is going to be an extremely exciting, certainly, six months and year if you're at Talon, as we continue to advance the Marquibo program, which we're very fortunate to already have up and running and enrolling. But also with our commercial roll-out, our ongoing business development related discussions, and advancing our second compound, Menadione topical lotion. Again, we look forward to giving you updates in the future. Have a great day, thank you.

Thank you, sir. Again, ladies and gentlemen, this does conclude today's program. Thank you for your participation and have a wonderful day. Attendees you may disconnect at this time.