Spectrum Pharmaceuticals Inc (SPPI) 2014 Q4 法說會逐字稿

Hi, good morning, everyone, and welcome to Spectrum's fourth-quarter and year-end 2014 and analyst day presentation. My name is Shiv Kapoor, and I head Investor Relations at Spectrum. And I want to remind everyone that we will be making forward-looking statements and that you should read our Safe Harbor statement.

Here is the agenda for today. We will have a short overview of our business strategy and financial review upfront. Later on we will have medical and commercial overview of four of our important pipeline drugs; and towards the end of the presentation, we will take questions. So please hold on to your questions until the end.

Without any further ado, let me call upon our CEO and Chairman, Dr. Raj Shrotriya, to give a business strategy review.

Thank you, Shiv. Thank you very much for coming. This is the -- after a long time we have had an occasion to do this analyst day. I have been waiting for more than five years. And as you will see, as it all rolls down, you will see why we chose this day.

As you see, on the left side is our faculty. These are all experts in their field who will be talking and sharing their views on some of our drugs. And on this side we have our senior management members, and they are split all over in the group. Please feel free to ask any questions.

As some of you might know -- and all of you might know -- that Spectrum is a company that was started about 12 years ago, based right now -- headquartered -- in Henderson, Nevada. Our R&D offices are in Irvine, California.

Our focus is oncology. We do nothing else but oncology. We have no drug discovery inside the Company. In fact, the way I like to say that the whole world is our laboratory.

Our business model is that we bring our core expertise, passion, and excellence -- and in those three words are important, because I interview every single person who joins the Company to make sure that they have the passion, commitment, and excellence in their blood. And our business model is that we acquire. It means we have a good business development operations -- absolutely outstanding.

We acquire; we develop. It means we have an excellent medical development team, regulatory affairs team. And then we commercialize; that means we have number -- numero uno -- number one commercial team in the world. I'm very proud of them.

So our business model is very simple. We don't discover any new drugs, because it takes a long time to bring a drug from test tube to patient, and it takes a lot of money. People don't realize it. It takes almost $1 billion and almost 18 years to develop a drug. What we do: we cut short the cycle. So we acquire, develop, and commercialize these drugs for unmet medical needs.

Let me talk about, too, how this Company has grown in last 10, 12 years. We have five drugs, all anticancer drugs, that are currently being sold or marketed by Spectrum Pharmaceuticals. To really be able to focus on what is exciting, why are we here today, why is this team of about 220 people inside the Company excited? Why is the faculty excited about our portfolio?

I am here to share today about the drugs that are value drivers in the short run, within the next 3 to 5 years. But before I do that, I do want to say about Fusilev. You heard recently that Sandoz has been granted approval to market or launch generic levoleucovorin. We're in the process of filing appeal with the higher courts. And we have asked for injunction to not allow Sandoz to market the drug. We have been temporarily granted this injunction. And if Sandoz is allowed to market the drug, we could lose revenue. That's a fact.

And I wanted to just not focus today about yesterday as much as I want to focus about going forward, about what the future lies for the Company. Today you will be hearing about four of our drugs. Two are near-term NDAs. In other words, one NDA has already been filed for Captisol-enabled Melphalan. FDA has given us a PDUFA date, or the decision date, of October 23, 2015. In fact, if it is approved, this drug -- we could be selling this drug before the end of this year.

The second is that we plan to file another NDA for Apaziquone, the bladder cancer drug. And we have two experts talking about CE Melphalan: Professor Hari, Parameswaran Hari; and Professor Witjes, who has been involved with the development of this drug from its inception.

Then I would like to talk about two of our exciting futuristic drugs. One of them is a LAPS-GCSF, which is a drug that will participate in a blockbuster market potential. The only drug on the market today is pegfilgrastim that sells about $4.8 billion in the United States.

We believe our drug is novel, has exciting Phase II data. In fact, we are going to showcase the data to you today. And we have Professor Vacirca, who will be talking more about his perspective, as he is the end user of a drug like Neulasta. And he is one of our principal investigators doing clinical trial, participating in a Phase III trial with our drug, which we call SPI-2012.

The second drug is Poziotinib, which is a pan-HER inhibitor we just acquired -- recently acquired. And we'll hear from New York University Professor who will be talking about why he believes that this drug has the potential of being the best-in-class.

They are very excited about these two drugs. Let me just tell you: neratinib belongs to the same class of drugs as our Poziotinib, and you will see some data why we are so excited about Poziotinib. So we have got two drugs; both of drug have potential -- blockbuster potential. If you look at the story of Spectrum, it's all about future-looking. It's about the excitement that we are building in the Company.

With this, I would like to request our Chief Financial Officer, Kurt Gustafson, to come here and share with you the numbers earnings that we typically present in earnings call -- but also, more importantly, how our financials look at this time. Kurt?

Thank you, Raj. As Raj said, today is mostly about the pipeline, but we would be remiss if we didn't talk about our financial performance. We released our fourth-quarter earnings and full-year results this morning in a press release, and you can take a look at the details of that. And I just want to cover a couple of the highlights.

Sales in the fourth quarter were over $50 million, and that drove the strong year-over-year performance. You see here 2014 product sales of $187 million. That's a 30% growth rate over the previous year. That was driven by strong demand for Fusilev and Folotyn, but we were also excited to see contributions from some of our newer products. We launched Beleodaq in the third quarter. Marqibo also added to that growth.

We kept a strong check on expenses as well. You will see very modest growth in both SG&A and R&D in those figures. And the combination of strong sales growth and modest operating expense growth is seen over there on that right, where we grew non-GAAP earnings from a loss of $5.6 million last year to a profit of $21.4 million in 2014.

Just a couple of comments about the balance sheet and our cash position. We started last year with $160 million, closed out the year at $133 million. But, importantly, take a look at the cash milestones that were paid last year. This is an unusual year for us in the amount of milestones that we paid: $35 million.

If you were to pull that out, I want to point out the fact that the core operating part of our business was actually cash flow positive last year -- so pulling out those one-time milestones. The Company is well positioned financially to go fund this exciting pipeline that you're about to see here today.

So that's all we are going to cover on the financial side. With that, I will turn it over to our President, Joe Turgeon.

Thanks, Kurt. Listen, I hope you will indulge me. I won't stand behind the podium for two reasons: number one, I feel like I am on a leash; and I'm excited today, so I want to move around a little bit. But secondly, you probably wouldn't see me in the back. You would think you heard a voiceover or something, because I'm not that tall.

Thank you for being here, those of you who are here. Thank you for those of you who are on the phone. Thank you Dr. Raj, Kurt, and Shiv. We are excited to be here. It's the first time in five years we have had an analyst day. We have a lot of stuff to show you today.

The theme I hope you take away when you leave is simply this: that Spectrum is positioned well for long-term growth. That's what we are focused on today. I hope that's what you do see as we show you -- and we're going to show you data, because my background is microbiology. When I start on a bench, I always go to data first. I know you asked for data. We're going to show you some data today.

So in order to look forward, let's look back for just a minute. From where I sit as a COO and a President, I'm very pleased with those numbers that you just saw. Because when you dissect it, I will take a bit further on the numbers -- what you saw is 30% year-on-year growth when you look at revenue.

That is because we have a commercial team that did a great job executing a great plan. Very pleased with that. And then when -- if you further dissect it, what you will see when you look down is yes, we had price -- we're taking price action as you would expect. And we're doing that appropriately, more appropriately than maybe we have in the past.

But secondly, you are noticing demand growth. And that's the true marker of success. So I'm very pleased with the commercial team when I see demand growth.

Then the other thing that really pleases me is when I look at the cash flow positive -- when you take out -- that Kurt just showed us -- when you take out the one-time milestones that we paid. It was a good performance. I'm really pleased with that.

But another thing I want to look at as you look back are the milestones: the goals that we set that we told you about last year and that we accomplished. I think it's important to look at those milestones, because these milestones are part of our future. They are catapulting us into that future.

Let's look at them. First one was SPI-2012, which we will talk a lot about today. Potential blockbuster market. We told you last year: we are going to make a go/no-go decision based on the Phase II data. We saw the data. We were very excited. You're going to see that data today, and you'll see why we were excited and saw a no-brainer decision to go forward to Phase III. That's a milestone that was hit.

Another one was Beleodaq was launched. And let's look at Beleodaq. Remember, this was not only an accelerated review due to the great file by the team on our regulatory -- Anil Hiteshi is here in the room, and by Dr. Lee and his team -- so it was an eloquent file done very well. It was an accelerated review and accelerated approval.

Two weeks after approval, Tom and his team launched the drug. First patient, 21 July last year. And remember what a lot of you asked us about this: uh-oh. Okay, this is great news. You got an HDAC, you got a folate. Are you really just going to cannibalize your folate, Folotyn, with this new drug? Because, remember, what is PTCL, this disease that these treat?

PTCL is a fatal disease. All of the drugs after chemo that are given to patients -- they average three of them -- only have about a 25% to 30% response rate. What happened is -- it's a great question you guys asked us: are you just going to cannibalize your Folotyn with this new drug?

I am happy to tell you that when you look at what happened last year, the plan that was executed did work. What you saw as our folate, Folotyn, did grow in demand. At the same time, our HDAC we positioned against the other HDAC, and that's what you are seeing as incremental growth there.

We grew the market, which is what we planned to do. I'm very, very pleased with that. And the plan was working.

Next is CASI. This is another thing. With the doors now going both ways, CASI is an out-license we did with a company in China on three of our drugs. But it doesn't stop there. CASI is a company in itself that has an oncology pipeline. We now on 19.9% of that company. As a matter of fact, they recently were presenting to the FDA.

So you can see, we are now looking in our business development approach to out-license as well as in-license. That was a first, I think, of a good deal that will -- the gift that keeps on giving, we hope.

Captisol-enabled Melphalan: last year we told you we would file it. We did file the drug. Now it's at the FDA. We have our PDUFA date. It's October 23 this fall, so we plan on launching our sixth drug this year. That's exciting.

This is really exciting to me, and I'm glad -- this is great timing, because here we are, standing with you. And Poziotinib -- what is this? This is an exciting space. You are all looking at -- you have the pan 1s, the pan 2s, pan-HERs -- the HER1s, HER2s, rather; the pan-HERs. A Lot of excitement in the marketplace, a lot of excitement of clinicians.

We have licensed in a pan-HER. We're going to show you the Phase I data that is very, very exciting. It's a potential best-in-class drug, and you'll get to see the data today. So I'm very excited about that.

This brings us to today. You have got to tell a story, and pictures still great stories. So here we are in New York. I chose this picture for a reason. Famous old picture. What this is -- it is -- first of all, we're in this picture somewhere, right? Because that the Empire State building going up. That's on Fifth Avenue between 33rd and 34th, as you know. And you look towards the East River; you see the Chrysler Building. That's at Lexington and 42nd, as I recall. So we are in there somewhere in this picture at the Palace Hotel.

But the reason I chose this is because the picture does tell a story, and there are synergies to where we are here at Spectrum. Firstly, what you see is something being built, okay? And this was something special. At the time it's the tallest building in the world, so you have something special being built. It's held up by a foundation. It's important you have a foundation as you build up. Guess what? That foundation today, when you go to Empire State Building, is still holding up that structure many years later. It's always the core -- the core, just like in a business.

Thirdly, what I -- what really hit me when I looked at this picture is technology -- just like in biotech, it's very important. You have to move forward with technology. As I look at this guy with a hand wrench, screwing in a bolt -- you know, and those rivets were being thrown to someone, and they didn't have pneumatic wrenches and everything. So technology move things forward, and that's what we want to show you today. When you look at this, there is a lot of synergies there with Spectrum.

By the way, I have to mention the guy has got no helmet, no goggles, and no safety harness. There was no OSHA back then, either. So that's obvious. (laughter) But we are positioned for long-term growth when you look at the things we have now.

Let's look at this. SPI-2012 -- I want to be clear on something: what it is not. It is not a biosimilar. I know we haven't shown you the data in PHN. You're going to see that today.

It's not a biosimilar. This is a novel molecule. It's at minimum -- what we have shown so far is at least non-inferior, with the potential of some superiority. We will -- again, we will show you the Phase II data today.

This is a market that is large. It's a blockbuster market. And I will date myself -- and some of you know; some of you don't -- it's a market that I personally and many of us know a lot about. I was responsible for not only the launch of pegfilgrastim; I was also responsible, I will date myself, for the launch of GCSF originally. The short-acting.

There's nothing I don't know about this marketplace, I can assure you. And we're excited about this space and that we can compete in this space. And you'll see the data today that we are so excited about.

There is one of the building blocks as we move up. CE Melphalan: okay, we have a PDUFA date, I said. Somebody told me when I was new in this business -- one of my mentors said, hey, it's the drug, stupid. When you launch a drug, it's what does the drug do? What is the promise of the drug?

When you look at this marketplace, it's about $100 million market. The current drugs today that are available -- there is a generic and one other drug. First of all, it's in a multiple myeloma, which unfortunately for mankind is a growing market, about 85,000 patients year or so. So the market is growing.

And the problem today, if you don't know, on the drugs that they use are really twofold. There is propylene glycol in the formulations today, which causes cardiac and renal side effects, toxicities. And also, stability of the current drugs is only one hour, and that's from the time you crack it, shake it up -- vigorously, it says -- you got two vials, put them together.

You got to get it down from the pharmacy to the unit, infused in the patient in that one hour. Every minute you are losing stability. So it's bad for the pharmacy; it's bad for the docs; it's bad for the nurses and techs who are actually administrating the infusion; and it's bad for the -- potentially bad for the patient.

What I can tell you about CE Melphalan when you have a promise to sell is it doesn't have propylene glycol in it, so you won't have those toxicities. And also the stability -- we don't know exactly until we get the label, but I can tell you it's probably going to be somewhere north of four hours -- four-plus hours, we will call it.

So you can see the benefits of that drug. By the way, price isn't really an issue with this, because it's paid for in a bundle of transplant. So there is no incentive to go down on the price, and there is no incentive to go up, because they're going to pay for it in the bundle. So basically the price is dictated for you.

We're excited about this, and that's this year. Apaziquone -- some of you know about Apaziquone; some of you don't. This is an exciting molecule. And the reason I say this is when you look at bladder cancer, it's an insidious disease. There has been nothing for 40 years to treat this. You talk about unmet medical need.

What happened in the past is we did two Phase III trials, and unfortunately, when you got to the end, the p-value wasn't appropriate on either one. But interesting enough, when you put the data together and looked at the data, wow. You had a subset of patients that looked really exciting. There is potential that this drug works.

What we also know is that when blood gets in contact with Apaziquone, it breaks it down. And that happened to some patients, because you have the TERP procedure before, which is a surgical procedure. There was some bleeding involved.

So now what we have done -- we have gone through the update. We're going to resubmit at the end of this year the same data combined. We've also designed a new Phase III trial that we'll obviously give probably two doses and we'll have -- make sure there is no blood involvement. So that's a potential drug here in a big unmet medical need.

Then, finally, Poziotinib -- we're going to talk about that today and let you see this. I am super excited about this, as people seem to be, because this is such a big market. We are talking breast cancer. You will see the early data shows pretty robust response in several tumor types, especially in breast.

By the way, I will pimp you a little bit on -- when you see the data, one of the things that excites me about the data is these patients that you see in their Phase I were already treated and failed other drugs. You see this response. That's exciting potential.

This is a huge potential. So what you are seeing up here are two blockbuster-potential drugs in our future, and that's why Spectrum is positioned for long-term growth. That's what I hope -- the theme you get today.

I'm very excited. I look forward to continue talking to guys and moving forward.

And what we're going to do next now is we have this panel we talked about, but what I want to stress about this panel: they are great researchers. They do research. They develop drugs, but they also are physicians who see patients -- who understand the ramifications, the upside/downside of all these drugs when they do come to market commercially. I think that's a great combination.

So rather than just hear the data and hear about it from us, we thought we would bring a panel of experts. And they're all great guys, too, by the way. When I get to know them, they are really good guys.

With that I would like to bring up our CMO, who is doing a lot of great things here, who is going to talk a little bit about our whole development program and then introduce all the KOLs. So Dr. Lee Allen, please come up. Thank you.

Welcome, everybody. We're really glad that you are here with us today. I just want to echo the excitement that we've heard from Joe and Dr. Raj about our drugs and we're going to talk about today; but more importantly, what impact they have on patients, what opportunities they provide to patients and on the long-term growth of Spectrum, both very important aspects.

I consider us very fortunate in that we have multiple pipeline assets. And we have expanded that through our business development activities; and, as you have heard, two assets with near-term NDAs, one submitted. Two drugs with blockbuster potential. It's a great story for growth in the future.

Importantly, to make sure we can manage that and execute on it, we have built an experienced medical development team. This team has great drug development experience and also a strategic perspective on clinical development and competitive regulatory strategy. So we're really trying to be strategic in how we develop our drugs -- get them to market fast, but make sure there is a program behind them to maximize the value of each of these assets.

This team has an established track record. And it's this that's really going to enable us to realize the promise of this portfolio and this pipeline.

If you look at the products that we have in our pipeline, what's important to realize is that, again, we have a mixture of small molecules. We have biologics. We have targeted therapies. We have cytotoxic agents. We have supportive care products. We have therapeutic products.

And importantly, as you can see, they work through multiple different mechanisms of action. And why that's important is that it gives us an opportunity to combine these drugs in unique combinations to develop new standards of care and new treatment paradigms for patients with cancer.

Now, delivering on the promise of this pipeline requires that we be excellent in our execution, and that's really critically important -- and that we have the ability to use the data that we have to develop a compelling story that supports both registration and commercialization. I think we have a track record of doing that. And I think our team has demonstrated that with the recent submission and approval of Belinostat, and then the reason submission of the CE Melphalan NDA. And we will be continuing to build on the successes with the submission of the Apaziquone NDA and then execution of the development plans for SPI-2012 and Poziotinib.

So, again, we have a team really that's in a position to harness the promise of this pipeline and bring that promise to reality in a relatively short period of time. As Joe mentioned, we're going to be highlighting four of the key assets in our portfolio today -- SPI-2012, our novel biologic with blockbuster potential; CE Melphalan, again, a new formulation of Melphalan that addresses some of the limitations of the existing formulation and also potentially broadens the label and indications for that product. And we will hear more about that later.

Apaziquone -- again, it's a drug that, again, really meets an unmet medical need. And we will hear more about that later today. Then Joe has talked about Poziotinib and its potential as an irreversible pan-HER inhibitor.

Again, we have a lot of exciting data to share with you today. And we are very fortunate that we have speakers with us today that really will be able to give you their perspectives and insights on these products and how they may impact clinical practice.

We're going to start off with SPI-2012, and Dr. Vacirca will be highlighting the features of this compound and how he sees it. Obviously, he is a very prominent medical oncologist. He has leadership roles at the North Shore Hematology/Oncology Associates, and really, more broadly, with community oncologists more broadly. A very active clinical research program, as we have heard. And he will share more about his day-to-day activities and his experiences.

So we welcome him to come and present this to us.

Thank you. And since I tower over Joe Turgeon, I can use the podium. (laughter). Obviously not. Thanks very much. I really want to thank my friends at Spectrum, Dr. Raj, Lee, and Joe for inviting me here today. This is quite a unique experience.

I am very fortunate; on a daily basis I get to wear multiple hats. Clearly, first and foremost, my favorite and most important hat is I am a medical oncologist. And I'm very active in both clinical trials as well as day-to-day taking care of patients. I probably see near 600 or 700 unique patient visits every month right now. And that's probably not going to stop for another 20 years, because it is a blessing that I get to do that.

But on top of that, I also get to run probably one of the most nationally recognized community cancer programs in the country at North Shore Oncology in Setauket. We're a 20-person practice, and we have had a unique opportunity to really grow our clinical trials department to where we are operating about 50 clinical trials at any one time, taking care of thousands of patients.

So it gives me kind of a different perspective when I get to evaluate new drugs, because I get to look at them from multiple sides: first and foremost, from the patient side and from taking care of patients; but I also have to look at it from the business side, because to incorporate them into my practice they have to work for the practice, and they have to allow my practice to stay in business. Because most importantly, I have to be here next week, next year, and in 10 years to keep taking care of these patients.

We are going to go through some of the data right now. And then later on we'll be available to answer questions on it.

SPI-2012 is a novel biologic chemically conjugated form of recombinant GCSF. As you can see from the figure, GCSF is taken with a linker protein to a peptide. Now this peptide is a recombinant carrier. It is a non-glycosylated Fc region taken from an IgG antibody.

This has a lot of importance to us. First and foremost, IgG/Fc regions have very low immunogenicity. Secondly, IgG by its very nature has a longer half-life. So this allows the drug to stay available and to stay there for the patient to get their white count back up and keep it up.

This is through the long-acting protein discovery technology, and this gives long-acting properties through decreased renal as well as decreased vascular endothelials clearance. This Fc-mediated transport of the GCSF leads to increased bone marrow uptake.

This is looking at the Phase I trial, because before we try this on cancer patients, we want to see what the pharmacokinetics of this drug is in normal, healthy individuals. Looking at this graph, you can see that when compared to pegfilgrastim, that at both of the doses -- 135 as well as 270 -- you are seeing almost identical curves to what we see with the standard dose of pegfilgrastim at 6 milligrams. The time frame for which we see this -- the white count rise and stay risen -- is almost identical to what we also see in pegfilgrastim, and that is utilizing both of these variable doses with SPI-2012.

Now we will get to the Phase II study, of which I had the opportunity to participate in. This is 144 patients: 36 in each treatment arm. One treatment arm was pegfilgrastim; the other three were the three different dosing of the SPI-2012.

These patients were newly-diagnosed patients with breast cancer who needed either adjuvant or neoadjuvant chemotherapy, with a standard NCCN guideline drug regimen of Taxotere at 75 milligrams per meter squared and Cytoxan at 600.

The primary objective was to assess the effect of various doses of the SPI-2012 and to look for the mean duration of severe neutropenia. And for those of us who treat patients every day, this is our biggest fear. If the white count goes down for a couple of hours on a day, we don't got really excited about it. But if the white count stays down for a couple of days, below 500, that's where we get worried. And that's where the risk of infection comes in.

Secondary objectives included looking at the duration of severe neutropenia in cycles 2 through 4 as well as the absolute neutrophil count in cycle 1 through 4. Additionally, time to ANC recovery, depth of ANC nadir, febrile neutropenia rates, and safety profile hospitalization and immunogenicity -- all of which are very important when looking at a new and unique drug.

And that's something to keep in mind. This isn't a biosimilar. This is a drug that's truly unique, with a whole different molecule as compared to what we have seen previously.

Now, looking at the study design, this is the demographics. Very important, because for me as a clinician there is nothing worse than seeing a trial that is done on patients that I can't apply to my own practice. This actually looks completely applicable to what I see in my office every day.

Average age of most breast cancer patients is around 60 years of age, and you could see that this was done purposefully -- so that when the drug gets commercialized, it goes right into the patients that were in the trial and is completely applicable. The average age was about 55 to 60. You can see that the average weight was about 75 kilograms, which is rather reasonable. And there was some deviation from this. We had patients who were significantly heavier and significantly lighter.

This is where we start to get the important slides. And this is the ones that are truly applicable to taking care of patients every day. This is looking at that endpoint of severe neutropenia in cycle 1. What you can see on that mean line we are going to look at a little more closely, but what I would want to just draw your attention to is the first line.

This is that days of severe neutropenia, where there is zero; and in the two doses of SPI-2012 at 135 and at 270, you can see that those numbers are very, very robust and compare considerably well to what's been the standard. Blowing up that mean, we can see that the days of severe neutropenia for the 2012 in the 135 as well as the 270 mic dose was basically less than 1.

So what that translates to in a clinical setting like my own is: I don't have to worry about the patient. This gives me an opportunity and an option for my patients now that doesn't exist right at this moment. I have something else I can use now, too.

You could see from the difference with pegfilgrastim that there is really no significant difference between days of severe neutropenia. We can go one step further and highlight them, and you can see that statistically they are not significant.

When we look at the absolute neutrophil count -- yet another measure of how well these GCSF drugs work -- you can see that in both of the dose things that we looked at that came up against the pegfilgrastim, the 135 and the 270, it's very obvious that these curves are significantly -- they look significantly better than what we see with the pegfilgrastim. See, the white count goes up more robustly; stays up more robustly; but comes down at the appropriate time. And that's important for us, because we want the white count to come back down to be ready for the next cycle of chemotherapy.

Looking at the percentage of patients with no severe neutropenia in cycle 1, you can see that the three bars on the right -- whether it's the SPI-2012 at 135, 270, or the pegfilgrastim -- all came out virtually the same. The ANC recovery was considerably stronger in the 270 arm, which -- at 97% of patients with no severe neutropenia. Between 135 and the 6 milligrams of PEG, there was no difference in degree of severe neutropenia -- days, rather.

So we have shown the efficacy of the drug, which is obviously very impressive. Now, most importantly, then, we have to move on to what we also worry about when treating patients is adverse reactions. Because it doesn't help if you have a drug that works better, and it causes more problems. But what we can see from this slide is that's clearly not the case.

Overall 2012 was well tolerated. There was no significant dose-related toxicities observed. The incidence of most of these AEs were similar between 2012, the treatment groups, as well as pegfilgrastim.

Most common treatment related AEs were observed in all the patients -- and this is something common with GCSF -- those are musculoskeletal pain and leukocytosis. And then one thing that is always important: there was no unexpected toxicity. We didn't see anything that we didn't expect, which for a new, clearly unique drug is very important.

What's next? Well, obviously, we want to take this to the Phase III. This is underway as we talk; we are accruing more sites, and we're going to have this out and running in the near future. This is going to run in the United States -- or, I should say, North America as well as Europe. It's going to be two different studies.

Outside of the United States the chemotherapy is going to be TAC, which is a standard outside of this country. In the US the chemotherapy is going to be the same thing we saw in the Phase II, which is Taxotere and Cytoxan. It's going to be a 500-person trial. Half the patients are going to be randomized to a standard dose of SPI-2012 at 3.6 milligrams. The other half of the patients are going to receive pegfilgrastim.

The rationale behind that 3.6 milligrams is that's a dose somewhere between the 135 and the 270, which we all saw was at least as good or better than pegfilgrastim. But it gives us the same exact volume that we deliver right now with pegfilgrastim. So once this goes to commercialization, it is very easy for the clinicians, the nurses, the pharmacists to make the switch without a concern about the volume.

In summary, we have over 230 patients treated to date. We have seen this is clearly an innovative, biologically-based, elegant developed product. We see noninferiority when looking at a comparison to the standard of pegfilgrastim right now.

We see comparable safety with no unexpected toxicity. We have seen very low immunogenicity, and that comes from the linker molecule to that Fc region of the IgG. And we see a novel biologic that expands patient options. And this is not a biosimilar. Thank you.

I hope you can see why we're excited about this molecule and why, again, we want to bring another treatment option to our physicians and patients. And it looks very, very exciting. In the interest of time, we going to move right onto Captisol-enabled Melphalan.

Again, this is a formulation, a change in formulation, but it has important consequences in terms of improving the side effect profile -- improving the solubility of the product and the stability of the product. I think Dr. Hari will share some of that information with you.

Dr. Hari is an academic hematologist/oncologist. He leads the Bone Marrow Transplant Unit at the Medical College of Wisconsin. And he will give us some more specifics about his responsibilities while actively involved in clinical research and treatment of patients. So, welcome.

Thanks, Dr. Allen, Dr. Shrotriya. I think we have a team of sharp people here.

I am Parameswaran Hari. I am from Wisconsin. It's good to be in New York. It's always good to escape Wisconsin once in a while. I am a Professor of Hematology and a clinical physician in the field of multiple myeloma and bone marrow transplantation.

We're going to talk about Captisol-enabled Melphalan or CE Melphalan, which is one of the pipeline drugs that Spectrum is developing. I've been involved with this drug for a long time, probably from before two companies ago.

This drug is being developed for autologous bone marrow transplantation in multiple myeloma. This slide gives you the amount of activity happening in that space right now. As you can see, we do about 12,000 autologous transplantations every year in this country and about 8,000 allogeneic transplantations.

Just by way of background, autologous transplantation is when we have a person with cancer -- typically myeloma, lymphoma, and testicular cancer. You give them very high doses of chemotherapy to destroy their cancer; and the cancer is also typically in the bone marrow, but it can also work for lymphoma that is outside the bone marrow. So this high dose of chemotherapy wipes out their bone marrow.

Then they need to recover their bone marrow with their own stem cells, so that's why it's called an auto transplant. We collect the patients' stem cells before we give them the high-dose chemotherapy, and then we save them with their own bone marrow infused.

The high-dose chemotherapy is tough. Patients stay in hospital, typically, although we do more and more outpatient nowadays. And these patients do get some side effects from chemotherapy. Universally their bone marrow gets wiped out. Their blood counts decline. They all get Grade 3 and 4 hematologic toxicity, and then they recover from that.

The benefit is that the cancer is killed, and you are able to give them really high doses of chemo drug that you cannot otherwise give. Allogeneic transplant -- similar thing, but you actually have a different person's stem cells rescuing the patient.

We have about 20,000 of these transplants happening in the country, and we have about 45,000 happening all over the world. The most common indication for bone marrow transplantation is multiple myeloma. And within multiple myeloma the majority of transplants that we do -- probably 95%-plus -- are done with Melphalan as the agent, as the high-dose chemotherapy. And they are autologous transplants.

The other indications for auto are in red here -- like, non-Hodgkin's lymphoma, Hodgkin's disease, and some other diseases. So myeloma -- Melphalan happens to be the first and the one of the most effective drugs in myeloma, even in the age of all these new drugs for myeloma. And 95%-plus of the myeloma transplants of those 6,500 in the US are done with Melphalan. Across the world, too, that remains true.

All these other indications for auto also are predominantly Melphalan-driven. So Melphalan is a drug that we give to destroy the patient's bone marrow. And also we rescue the patient with their own stem cells from there.

Some off-Melphalan use in this country is actually also for the allogeneic setting. Some of them -- I have just put some stars there -- acute myeloid leukemia, MDS, et cetera. That's a lower number.

The problem with Melphalan: Melphalan is a variant of nitrogen mustard, which, if you know your world war history, you have probably heard about it. Melphalan is a very poorly soluble drug. It has to be solubilized in a compound called propylene glycol. Again, if you know your chemistry, it is similar to other glycols, like anti-freeze, et cetera.

So you can't give too much propylene glycol to people. We have to dilute it. And when you dilute it, it hydrolyzes and it gets degraded at the rate of 10% per hour.

It actually -- if you are trying to give a person 200 milligrams per meter squared, if you waited an hour, you are actually going to give them 180 milligrams of effective, soluble drug. We all believe that there is a dose response curve for Melphalan. Your goal when you are doing an auto transplant is to give full-dose Melphalan; so if you wait, you're going to get into trouble. You won't get enough Melphalan into the patient.

So most good bone marrow transplant programs try to get the drug made and to the patient, actually hanging -- the needle going through the tube -- in about 15 minutes. We actually order that. Most bone marrow met transplants try to order that. And the pharmacist, the nurses, they try to make sure that it happens in that time window. If you waited for an hour, that's not good.

So there's a logistical issue. There is a propylene glycol issue, which is actually -- there are restrictions on how fast you can give propylene glycol. We actually break those restrictions, and we actually throw them to the wind when we're giving the current Melphalan product. Thirdly, Melphalan as we use now is not approved for high-dose treatment or autologous transplant right now.

The current approval for the current standard Melphalan is actually for palliative care in myeloma for patients who are unable to take oral Melphalan at low doses. So for palliative treatment for myeloma, which is a completely different -- you could say the opposite end of the spectrum from somebody who we are trained to transplant -- that is the only approved indication for IV Melphalan right now.

But we use that indication to use off-label Melphalan for all those transplants that I showed you just now. This product actually solubilizes the Melphalan in a compound called Captisol. There already seven FDA-approved drugs, some of them like voriconazole, carfilzomib or Kyprolis, and amiodarone. Many other drugs. Seven FDA-approved drugs which use the Captisol technology. And that's how I got involved in it.

It's a specific chemical formulation called beta-cyclodextrin, which Melphalan binds to. When you inject the Captisol-enabled Melphalan into the patient's bloodstream, it dissociates and Melphalan is freely available. Captisol is a very good stabilizer, and -- until it gets into the bloodstream, and there is a dilution effect, which in chemistry we call the Le Chatelier Principle. That's what dissociates Melphalan off.

So it's very simple, and it is very stable. So you can actually give it over 24 hours. You can give it -- keep it for 24 hours. You can even keep it for 48 hours. We have dog data that it's very stable at that.

So once in the bloodstream, you don't need propylene glycol. You have a very stable drug, and you don't need to worry about the logistics of administration.

The first study that was done was a Phase IIa study, purely to show that there was bioequivalence. This is a randomized crossover design, open-label, obviously. One set of patients got the CE Melphalan first on day one at half of the total intended dose. The full dose was 200, so 100 milligrams came in on day one. And the next day they got a standard Melphalan.

The other half of patients got standard Melphalan followed by CE Melphalan, and then they went on to have their autologous transplant for myeloma. So these are all myeloma patients undergoing autologous transplant. Either CE Melphalan followed by standard Melphalan, or standard Melphalan followed by CE Melphalan. And then the endpoint measured was bioequivalence.

All of the patients achieved myeloablation; nobody died. All of the patients engrafted. Median time to myeloablation -- myeloablation means entire eradication of the bone marrow. We know that from the peripheral blood counts dropping in that patient, and then the counts recovered at a median of 11 days for the neutrophils. We have 100% that achieved the therapeutic goal here.

What was the bioequivalence? This is the bioequivalence slide. So as you can see, these are overlapping curves. If you want to be specific, the Melphalan plasma concentration, the peak, the AUC, they were similar for both CE Melphalan and Alkeran, whether they were given one first and the others next or the other first and CE Melphalan next.

The Cmax was 112% of standard Melphalan, so a tiny bit more, 10% more. AUC was also 10% more. Essentially this did not indicate any additional toxicities. This achieved the goal for myeloablation and engraftment. And it bioequivalent at a probably 10% more exposure to drug that you got and we gave CE Melphalan. But remember, only 50% of the drug was CE. It was just to compare the two formulations that it was done.

The safety profile in this is shown here. As I mentioned before, autologous transplant is associated with high-dose chemotherapy. So you expect these events -- nausea, diarrhea, vomiting, low potassium, fatigue, low platelets, a decreased appetite. This is uniformly seen in anybody who undergoes an autologous transplant. This is not drug-specific. This is specific to the procedure that the patient is undergoing.

These are the conclusions from a this pharmacokinetic study. CE Melphalan is bioequivalent to standard Melphalan. This is propylene-glycol-free, and the peak and systemic exposure were about 10% higher. Efficacy and safety were consistent with what we already know for high-dose Melphalan followed by transplant for multiple myeloma.

100% patients achieved myeloablation followed by engraftment, with nobody dying. And adverse events were consistent with the profile of the patients and the treatment they were going through. As I showed you before, it has improved stability. It is propylene-glycol-free. And clearly, the stability is a big thing.

Then we proceeded to a Phase IIb study. This was a safety and efficacy study. Again, the primary goal being the safety and the achievement of our transplant goals. It is a multi-center, open-label study of high-dose Melphalan with CE Melphalan alone, no standard Melphalan in this, for multiple myeloma patients undergoing autologous transplant.

Even relapsed myeloma patients were also eligible. The majority of transplants for myeloma right now, of those 6,500 transplant that we said in the country every year, happen for patients who were within about 12 to 18 months of their diagnosis. But we actually took patients who had relapsed too, so that we got a full profile of patients. We actually didn't limit the age limit. Again, the majority who get transplanted are below the age of 70. We have patients above the age of 70 here.

Also, this gives us a better exposure of how the drug is going to do in all these extremes of patients. As I showed you before, again, a 100 milligram dose given on two successive days, so to a total of 200. This is a standard dose for autologous transplant for myeloma.

Transplant on day zero, which is about one day of interval, one rest day in between. Patients had daily safety assessment until their blood counts came up. The most common toxicities in the setting are, again, GI; nausea; vomiting; mouth sores; and what we call mucositis, which means patients may not be able to eat sometimes. And that lasts for about 5 to 7 days in anybody going through transplant, whether -- with any drug.

Safety assessments continued weekly through day 30, and then monthly till day 100. And then there was a final safety assessment and a response assessment as to how the myeloma did. Did they go into remission, et cetera?

Again, in this study we had zero treatment-related mortality. Nobody died, which is a very good thing. The national treatment-related mortality for multiple myeloma going through transplant across the country of those 6,500 patients is about 1%.

The secondary endpoints were all achieved. Median time to myeloablation was five days; so within five days the bone marrow got wiped out. Neutrophil engraftment, median time was 12 days. It was 11 in the previous study. Platelet engraftment, where the platelets recovered again, was 13 days. And non-engraftment, which would be an adverse event that we don't like, was zero. Nobody had non-engraftment.

This is the myeloma response, which, again, I'm excited about. Of those 61 patients that we assessed, 95% had a response. Stringent CR, which means we cannot detect any myeloma with our best possible tests, including flow cytometry, was 16%. Some of the patients actually do not have those kind of stringent CR measured because of the limitation, so we can only establish that there weren't in CR at this time. That was 15%.

And the goal in myeloma is to get maximum number of patients into what we call a VGPR, very good partial response. That is a goal that has been shown in randomized studies to be associated with long-term survival and survival benefit from transplant. So that goal was 74% of patients. So all these patients are 74% better than VGPR, or VGPR.

21% achieved a PR, which means at least 50% disease reduction compared to where we started. And two people had stable disease, no change. And 1% had progressive disease. So this is 5% who really did not benefit as much as we liked, 95% who benefited.

Adverse events -- if you, again, think about it, let's start with Grade 4. 50 people, 82%; but the majority are hematologic, which is what we expect, which means we want that. That is a desirable goal. We want the blood counts to go away to a Grade 4 level. They have to disappear. So platelets, white blood lymphocytes, neutrophils all went down. And we had one person or 2% with a Grade 4 GI side effect and two with metabolism, which means they couldn't eat because of their mucositis.

Similar thing with Grade 3. 10% with GI Grade 3 side effect, suggests -- would claim that it is low, but obviously not a randomized study. You don't know what would have happened if these same patients got standard Melphalan. But compared to historical, this would be considered low. I did the study myself, and I feel that.

These are the data for mucositis. This is what we monitor in terms of GI side effect. So Grade 0 means no change. You gave them the high-dose treatment and their mucosa remained intact. They didn't have any mouth sores; they didn't have any problems eating. So that was Grade 0, no change at day seven. This is when we expect the GI side effects to be maximum.

50% were actually with no change in their mouth or mucositis at that time. That's pretty exciting. By day 14 73% had recovered, so some of these people got to normal. That's why it showed that.

Let's look at anybody who couldn't eat at all. And you expect a few people to not be able to eat at all, and for us to be giving them total parenteral nutrition, which means IV -- food-in-a-bag IV. Nobody had to do that. Some people needed liquid diet; that's seven people or 13%. So Grade 3 mucositis was 13%. That, again, is -- compared to historical averages it is kind of low.

Grade 1 soreness was very common; again, 25%. Grade 2 with some erythema, which means redness; and some ulcers, 16%. So while 50% had GI side effects, 50% did not, or 48% did not have any.

In summary, CE Melphalan causes reliable myeloablation followed by reliable engraftment, with no treatment-related mortality in all the patients studied to date, which is very exciting. Promising myeloma responses at day 100, obviously, with the caveat that we are not comparing it in a randomized fashion to standard Melphalan.

VGPR, which is the major goal of transplant in myeloma, is 74% of patients, very good data. And, obviously, we have the chemical stability of the drug; and the thing that we avoid, propylene glycol, in the formulation, which was, again, goes with the territory here.

Thank you.

Just to remind everybody, this application is under review by FDA this point in time. It is a 505(b)(2) application, so, again, as the data that we looked at, some of the key data for that approval is the bioequivalent study. And you show that those data were unequivocal in terms of a bioequivalent. So this is a bioequivalent product.

Unusual in that regard is that we have applied for a different indication or an additional indication to the 505(b)(2) indication. As Dr. Hari mentioned, the standard indication is for palliation for patients who cannot take oral therapy. So that will be part, we expect, of the indication that we have requested.

But we have also asked for a specific indication for high-dose therapy conditioning. And as Dr. Hari mentioned, current Melphalan is not indicated for that by label, but it is used off-label. A couple of things unique here: this will be a product that has, again, a broader label than Melphalan and also improves stability.

Let's move on to Apaziquone. And, again, Apaziquone is an interesting compound, and again really addresses an important unmet medical need. We are fortunate to have Dr. Witjes here today to talk about this. He is an academic urologist -- again, actively involved in clinical trials and practice. And he is going to share his perspectives. As we have heard, he has been with this drug almost from the beginning. And I think his perspectives are really important for us to hear.

Okay, Lee, Raj, and Joe. Thanks very much. I realize that I am too tall for giving a lecture, actually. But I will try. I will sit on my knees if that's really a problem. (laughter)

Being Friday the 13th, I have to fly back to Holland tonight. I thought, what's going to happen? It's already happened yesterday, when I came in from JFK. My taxi had a flat tire, so I was alongside -- how is that road called? -- for half an hour or almost an hour. So I guess it's not going to get worse tonight. I hope it's not getting worse tonight.

Okay, so my name is Fred Witjes. I'm a professor in urology in the Nijmegen in the Netherlands. I also do clinical work. I don't see as much patients as Jeff, but I am sure I operate more than he does. (laughter) And apart from that, I do clinical research; I do basic research; I train residents; and I teach students.

Since I'm already in bladder cancer for almost two decades, I have some tasks outside my hospital. I am the Chairman of the Dutch Guidelines on Bladder Cancer. I am Chairman of the European Guidelines on Bladder Cancer. I have been chairman on the EORTC, European Organization for Research and Treatment of Cancer, also for bladder cancer.

Like Joe said, I'm going to emphasize two things. I'm going to emphasize bladder cancer and the high unmet needs; and I am going to talk, obviously, about Apaziquone.

First, about epidemiology and awareness. Just for the audience, you're not only here to listen. I want to have some response from you. Does anybody know a celebrity in the US with prostate cancer or who is associated with prostate cancer? Just name one.

(inaudible - microphone inaccessible)

I don't know him, but he might have had prostate cancer. (laughter) Nobody?

(inaudible - microphone inaccessible)

Okay. Well, there are a lot. A lot of my previous year was Frank Zappa. My youth hero, Kojak, the guy with a lollipop. And just for people who don't know this guy, this is the husband of the former Dutch Queen -- also died of prostate cancer. And the rest, of course, you know: Schwarzkopf had -- he won one medal, and then he went into the other.

Prostate cancer -- there is a lot of awareness. Testicular cancer, also something I treat as a urologist. Of course, everybody knows what Lance Armstrong has done for cancer in general and for testicular cancer in particular. He did a huge job.

Bladder cancer, I don't know anybody -- I know a Dutch people, of course, but they are not very famous. And the only guy I could find was Andy Williams. Probably some of you don't even know him, but he was a singer from the US. And he died around three years ago of bladder cancer.

Maybe that awareness is correct, because if you look at the number of new cases a year -- so that's what we call the incidence -- the big four: colon, lung, prostate, and breast, it's huge. If you look at bladder cancer in the US and in Europe, it is much, much less. I have to realize that, that that's a problem.

However, bladder cancer recurs a lot. So if you look at the number of patients that are being treated because they actively have bladder cancer -- you only get prostate cancer once. It is taken out, and that's it. If you are unlucky, you get lung cancer twice. If you are unlucky, you get breast cancer twice. But bladder cancer comes back a lot.

If you look at the prevalence, the number of patients being treated, these numbers are huge. And that translates into a huge consumption of drugs. So the number of people that are being treated and the number of drugs that are being used for bladder cancer is a very, very high number.

Fortunately, this doesn't really translate into funding for research. Here you can see the NCR funding for 2010, 2011, and 2012. And you see that bladder cancer is very, very low. For example, less than 10% of prostate, less than 5% of breast cancer. Unfortunate, because really it is a very prevalent disease.

So my first conclusion: bladder cancer, very prevalent, very costly. It has a limited awareness. It has limited funding, and it is a large, a very large potential market.

So let's focus on nonmuscle-invasive bladder cancer. What do I mean by that? Bladder cancer has actually two entities. You have on the right the invasive tumors. That's a tumor that really grows into the wall of your bladder. And the treatment in the north, in the south, in Rusland, in America -- everywhere would be cystectomy. Major surgery. You'll use chemotherapy; you might use radiation, systemic chemotherapy.

So that's a totally different ballgame from nonmuscle-invasive bladder cancer. You see those on the left side. Those are tumors that we take out as urologists with a small instrument. I will show you some slides in a few moments.

We just take those tumors out and we give additional intravesical instillation therapy. So that's not systemic, almost no toxicity. That's a totally different way of treating bladder cancer patients than those with the bad tumors, where you do cystectomy, chemotherapy, and radiation therapy.

So we take out that tumor, I told you. The guideline, US guideline, European guideline -- all guidelines are very clear: you have to take out all visible tumors. Sounds logical.

This is how that looks. We put a small instrument in the bladder through the urethra with a diameter of 7 millimeters. This is an electrical loop with a diameter of around 5 millimeters, and with that electrical loop we can resect and coagulate the tumor and the tumor bed. And then it's out.

We always thought as urologists that we are doing that very well. Now we have newer techniques that we can check what we did, we realize that we don't do very well. Because in newer series we see that in some patient groups, up to 250% of the tumors are missed. We don't see everything. We think we do; we don't see everything.

That obviously is one of the reasons why there are many recurrences. Recurrences is then actually the wrong word. It is not a recurrence; it's a leftover. But anyway, that means that in the future, those patients again or still will have tumor.

Adjuvant treat -- so after the resection, I can imagine that people leave when they hear a urologist speak. The restrooms are clear by. I see that all the time, so I'm not worried about that. No problem. (laughter)

Adjuvant treatment: so we have taken out the tumor. We know it's not that good. So we use adjuvant treatments. That's also not very effective. If you look at guideline adjuvant treatment, you see that the efficacy of that treatment -- depending a little bit on the group of patients you treat -- is actually less than 50%. So it's not that effective.

The second problem is, and we looked into that in Europe, in the US, that it's not even done in all patients. These are some studies from the US, from Europe, looking at low-risk patients. And you see that less than 50% of these patients get their guideline treatment.

There are reasons for that. Sometimes the reasons are acceptable; sometimes it is just forgotten, whatever. But less than 50% of those patients get the treatment, which is not even very effective.

We also look at that in high-risk patients, of which you might hope that they would definitely get a treatment; and actually, unfortunately, you see the same figures. 50% of less of these patients do get guideline treatment. So problem one: it's not very effective. Problem two: it is not even given in all patients. The majority does not get their treatment.

The very nasty current problem is that one of the most effective drugs we have -- we actually only have two, but anyway -- one of the most effective drugs we have, BCG, there is a production shortage. So there is a major unmet need currently with regard to treatment of these patients. And that's a worldwide problem. We have that in Europe. I have that in my hospital. We have that in United States.

Conclusion two: treatment of nonmuscle-invasive bladder cancer results are not very good. We have to be honest. Many, many recurrences. Now, reasons for that are that the operation we do is actually not a very good operation; it is not very complete. The guideline advice is not very effective. The guidelines are actually not even followed very well. And if you would follow the guidelines, you would like to follow the guidelines, if you would like to give the most effective drug, currently it is limited available.

So I really think there is a large and already for a few decades existing unmet medical need. Something I really am afraid for for my patients.

New developments, look at that! There are a few drugs registered in the US: Thiotepa, BCG, valrubicin -- valrubicin is not even on the market anymore -- mitomycin-C is not even registered in the US. It is used for that indication, off-label use. That is accepted by the FDA. But these are drugs from the 1970s. That's it.

BCG was registered in 1984. That's it. 30 years, 40 years, no new developments. So let's look at one of the drugs that I think is very promising: Apaziquone. It has been produced in the 1980s by accident by a guy in Amsterdam. A biochemist in Amsterdam just produced a lot of drugs. One of those was Apaziquone.

In the EORTC, so the European organization which I told you about, we used that drug in the 1990s for systemic use, so intravenous use of this drug. Didn't work. Reason is that when it's in contact with blood, it is degredated within a few minutes. So the half-lifetime is only a few minutes. The drug never reaches the tumor. It doesn't work.

Then, let's say, end of the 1990s/beginning of this century, we thought, how can we use this effective drug? Because in some lines, it's very effective. Let's look into the bladder. I will tell you how we did that and why we did that.

Why we did that? Well, actually Apaziquone is an inactive prodrug. And it is activated in a hypoxic environment. The bladder is an hypoxic environment.

Second thing is you need an enzyme for that which has high levels in bladder cancer. So from a, let's say, a theoretical point of view, Apaziquone should be very reactive in bladder cancer. But it has a molecular weight which is high enough that it is not absorbed. So if you put it in a bladder, it only stays in the bladder. There is no systemic uptake that's safe. And if there would be systemic uptake, it's gone within a few minutes. So it should be active, and it should be very safe in bladder cancer.

This is one of the studies we did. In the beginning we use that against mitomycin-C in cell cultures. And you see that it is very more -- much more effective than mitomycin-C, the drug of choice currently in the US for these patients. You see the graph; that is cell survival. And the dose you see that you have a better result with Apaziquone, and you see that you need much less drug for that. That's a factor of 10. So it's an effective drug. No doubt about that.

Then we went into clinical Phase I and clinical Phase II studies. We identified the optimal dose in the clinical Phase I study, which was 4 milligrams. And then we did something which is a little bit strange for the US situation. I'm going to the NIH in two weeks to defend this marker lesion concept, because we did a marker lesion study.

What's a marker lesion study? Normally, we try to take out all bladder tumors and treat. But then, actually, you don't know to do it, because there is no tumor. What we did in our marker lesion study is take out all tumors except one and then start treating. After three months you see what happens. If it's gone, you're successful; if it's not gone, you're not successful. It is a very simple concept, and you have a very rapid endpoint.

We did that with Apaziquone, and we had a marker lesion response after three months of almost 70% -- highest ever. And the second thing is that if a patient responds, he also has a very long, recurrence-free survival. These were very highly pretreated patients. We had an 18-month response rate of almost 50%. And if you compare that to some of the other drugs, you see that it is much bigger.

You see what we did. You see the bladder with a small tumor. You leave something behind of around 5 to 10 millimeters; you treat. And after that, you see the tumor is gone. That's all video registered, so there is no doubt about looking at the wrong spot. That's all quite obvious and quite safe. So this is very effective.

Just to put that into perspective, there was a review in 2010 on all marker lesion studies ever done. It's all in Europe, by the way -- 1,200 patients, 23 studies. And Apaziquone had the highest marker lesion response of all studies and of all drugs. And, again, it promising efficacy in response. You see that manuscript -- highs complete response rate in these patients was obtained with Apaziquone. So it's a very effective drug.

Reason to go on. Reason to go to Phase III studies. What we have done there is we had -- at once had two parallel studies in North America: resection of the bladder tumor and then one instillation of the drug within six hours. That's what we did. Primary endpoint recurrence rate at two years.

You see that within two years there was a huge accrual of patients -- not of those patients there. There are a lot of unmet needs, so patients are really willing to join a trial. 1,600-plus patients within two years.

First thing you have to realize: it's very safe. Here you see the adverse events. And actually, Apaziquone is even safer than placebo. So in normal words, I don't harm my patients by giving this drug. It's very, very safe.

Second thing -- Joe already said that, unfortunately, the two studies separately just didn't get the anticipated endpoint, although there was a difference of around 5% to 6% between Apaziquone and placebo, with an advantage for, of course, Apaziquone in the recurrence rate. In itself these two studies were not significant.

However, I just told you that blood doesn't activate Apaziquone. I know as a urologist what I take away the tumor, it still bleeds a few minutes. So we thought, well, let's exclude those patients that had their instillation within this first 30 minutes. And you suddenly see, then, that there is a large difference.

This is where patients have been excluded in these two studies, who had the study drug within the first 30 minutes, so there might have been some bleeding. Probably there was some bleeding, which inactivates the drug. There you see suddenly that the difference is much, much higher. Not only statistically significant, but the difference of around 15% to 20% is also clinically very, very relevant for my patients. So that's very nice.

And if you then combine again the two studies, obviously, also in the initial data set, you will reach statistical significance. That's, of course, because of the numbers; they are much higher then. But also, if you would look at those patients that didn't have a very early instillation -- if you will exclude those, you see that the difference is very, very large, around 20% plus. Statistically obviously very significant, but again, clinically also very relevant for my patients.

My last slide, my conclusion: noninvasive bladder cancer and Apaziquone -- first, we do need something new, guys, in bladder cancer. Please. We are already doing the same for around 40 years. With regard to mechanism of action, Apaziquone really has some advantages. That translates to very well efficacy in vitro and also in vivo. We have some studies where this shows to be a very effective drug.

Thank you for your attention.

Now we're back to the short people. I think Dr. Witjes made a very compelling argument for, again, a significant unmet medical need in this disease of bladder cancer. And clearly, the data supports that in a subpopulation of patients that were studied, there is activity that is pretty significant. We are moving forward with this NDA filing. We will have discussions with the FDA about that further. And also we will be starting another study that looks at that subpopulation.

I mean, obviously, targeting a subpopulation in all of our clinical trials where we think we will see the most positive activity is the best strategy in drug development. So that's a study that will be up and running as well. In that study we are also going to add a second dose as a little bit of reinforcement. And that dose will be a little bit later, so a little bit more distant from the surgery. So, again, the bleeding won't be an issue for that.

But, again, I think a very exciting opportunity for us. And we're looking forward to bringing that NDA to filing.

The last piece of data that we want to share with you -- and again, this is very early and preliminary; and, again, we just acquired this asset very recently -- is Poziotinib. I think we all understand the HER2 inhibitor, tyrosine kinase and antibody space pretty well. It's been pretty popular for a while. I have been involved in a couple of them myself -- Tarceva and neratinib, in the early developments of those, when they were Pfizer products and Wyeth products. And again, we know those drugs work in the right patients.

I think as we will hear from Dr. Esteva, the specificity of these agents is really, really important. And you can't really lump them. So a pan-HER is not a pan-HER; you have got to look at the affinities at the receptor, because, again, they're going to have different target effects.

But what's really exciting is, again, the early preliminary data that he is going to share with you. So I welcome him to come -- again, another academic hematologist/oncologist, who is going to share his perspectives on this product.

Good morning. I am at NYU Cancer Center. I was at MD Anderson for many years, for 16 years, and moved to New York about a year and a half ago. I lead the breast cancer program as well as the clinical research at the Cancer Center at NYU, which is an NCI cancer center. So we treat lots of patients with breast cancer. We do a lot of research in-house as well as with other groups in the US.

Personally, I have been involved with HER2 targeted therapies for many years since the development of Herceptin many years ago, when I was a fellow. And then more recently with trastuzumab, T-DM1, lapatinib, et cetera. I am going to give you an overview of the HER2 field and where this new agent may play a role in the future.

HER2 is part of a family of receptors: the EGF receptor, which is the epidermal growth factor receptor; HER2 is the second member of the family; HER3; and HER4. These are tyrosine kinase receptors, except for HER3. That does not have kinase activity inside the cell. The others do have a number of ligands outside the cell. They have kinase activity inside the cell, and the number of kinases -- kinase inhibitors that actually block the different receptors for phosphorylation.

Apatinib, lapatinib, gefitinib, for example, are very specific for EGF receptor. Lapatinib inhibits both EGF receptor and HER2. And then neratinib does both, plus a little bit of the HER4. And the new agent, Poziotinib, inhibits both EGF receptor, HER2, and HER4. The point of the slide is to show that they are not all the same. They do all different things to these receptors.

HER2 accounts for about 20% to 25% of breast cancer. Breast cancer is not one disease. Now we know there are many types of breast cancer. The estrogen receptor type of positive breast cancer, HER2-positive breast cancer, triple negative breast cancer, and there are many others. The ones with BRCA mutations, and PI3 kinase mutations, and so on.

But HER2 -- it stands out as its own group, so 20%/25% of patients. So if every year we diagnose about 200,000 patients, you can make the math. That's a huge number of patients.

This slide shows the pivotal studies that led to the FDA approval of Herceptin or trastuzumab monoclonal antibody targeting HER2. The study published by [Slamon], randomized patients to chemotherapy with or without trastuzumab in the metastatic setting, frontline metastatic setting. And the survival was improved from 20% to 25%. That led to the approval of trastuzumab in the US.

Then the second study with docetaxel or Taxotere with Herceptin also showed similar results in Europe. This was the standard treatment for a while. Taxol plus Herceptin as the frontline therapy, or Taxotere plus Herceptin.

Then a new, second antibody was developed by Genentech -- pertuzumab -- and that was compared now using the standard taxane Herceptin as the control. And the second -- the experimental group was the Taxotere, Herceptin, and pertuzumab or Perjeta as the experimental group. The progression-free survival and overall survival were improved when you add the second antibody to that.

So now we -- in this clinical trial, which is one of the biggest, probably the largest contribution in the last few years to breast cancer, we are seeing an overall survival. This is not progression-free survival; this is overall survival of about 56.5 months at median in the frontline setting in a tumor in a disease that used to kill most patients.

So these patients have usually a survival of two years or so, median survival. Now in the frontline setting, we are seeing this significant improvement, up to almost 5 years. So this is -- we have made huge amounts of progress in this area.

Now, this is frontline therapy. Now, most patients, as you see in this curve, continues to develop progressive disease after a while. And then a new agent was developed: T-DM1, trastuzumab DM1, which is Herceptin with -- bound to a taxane DM1 cytotoxic. And that was compared to the standard of care in the second line, which was capecitabine and lapatinib. Capecitabine is Xeloda, lapatinib is Tykerb. That was the standard of care for these patients. And this study, again, shows an improvement for T-DM1 versus capecitabine, lapatinib, both in disease-free -- progression-free survival as well as overall survival.

So the FDA approved T-DM1. Now we have trastuzumab, taxane, pertuzumab frontline; T-DM1 as second-line. Another study that was published recently was done in patients who have failed multiple lines of therapy, not -- well, pertuzumab and T-DM1 were not available; but we used to treat these patients with Taxol, with Navelbine, capecitabine, gemcitabine, many type of chemotherapies to keep them going.

This study was done after many lines of therapy comparing lapatinib/trastuzumab versus lapatinib alone. And there was an improvement in overall survival when you give both Herceptin and Tykerb versus Tykerb alone. But, again, here -- the difference here is that if you look at this table, the progress is measured in weeks as opposed to months or years.

This is a summary of what I just told you. The frontline setting: Herceptin, pertuzumab, trastuzumab is better than trastuzumab and Taxotere. In the second-line setting, T-DM1 is superior to lapatinib and capecitabine. And in the third-line, fourth-line, fifth-line setting, lapatinib and trastuzumab is better than lapatinib alone. And you can see the gains. Initially very large, and then you go down to five months, then four months, and so on. So patients end up dying of this disease.

So despite all this progress we actually need novel therapies, because patients continue to progress and die of metastatic breast cancer. So Neratinib was an agent that's taking a lot of press lately. It was tested and compared against lapatinib. It was not clear to have the higher efficacy or not. It was more toxic, that's one; but now it came back, out of this adjuvant trial -- which is in patients who received Herceptin and base therapy, and then take it for a year, and then you follow them.

So after that treatment with chemotherapy and Herceptin, patients were randomized to neratinib or a placebo, and there was an improvement in disease-free survival. So we are waiting for the FDA to decide on that. But this is a huge potential market for these type of therapies, because, as you may know, the market for Herceptin is about $7 billion a year. And all these patients may potentially benefit from this type of therapy.

This takes us to Poziotinib, which is the new kid on the block. And that's what we are talking about today. It is a TKI, a tyrosine kinase inhibitor, that blocks phosphorylation of EGF receptor, HER2, and HER4, including mutations in some of these molecules. For example, the EGF receptor 790M mutation is known to be associated with drug resistance, for example, in patients with lung cancer. It's a very unique agent.

Here we see that the potency of this inhibitor is much higher than the others, like neratinib or apatinib. The lower the number, the better. That means you need less drug to kill 50% of the cells, so with Poziotinib, for example, you see one; neratinib 2 and 16 in this cell line; the other one 0.1 versus 2.5; the other one 5.4 versus 17. That's a cell line that has a mutation in PI3 kinase and tend to be more resistant to therapy.

It seems more potent in vitro, meaning in cell lines growing in plastic. A number of the Phase I trials were done in patients with cancer -- not only breast cancer, but different types of cancer as monotherapy using this agent, and the dose was escalated. The studies were completed and published, presented at ASCO in 2012 and 2013 -- again, solid tumors, monotherapy.

The side effects observed are similar to what you would expect for TKIs -- tyrosine kinase inhibitors -- of this family, which include diarrhea as the most common side effect; a rash, that's dermatitis; and others. But as you can see in the yellow and the orange lines, most of these toxicities were Grade 1. Diarrhea and skin rashes where you see more of the Grade 2 and Grade 3 toxicities.

In terms of responses, in Phase I we don't look -- we look at responses, obviously, but the studies are not powered for that. But we always look and see where we get any signals. And if you see -- this is a waterfall plot. You see what's down from this line means there is a response; there is a shrinkage of the tumor. And if it's less than 30 -- more than 30% down, that means it is a partial response. And you see on the right side there are a number of patients who achieved that even though they had failed prior therapies in these type of Phase I trials.

Then the color code is by disease type. So the red is breast cancer, and that is where you see most of the significant responses, even though there were responses in other solid tumor types as well.

This slide shows the duration of response. That means that the patients are actually able to stay on treatment for a period of time until they develop a progressive disease. That tells us that some patients are actually either stable or achieving a partial response. And their therapy is tolerable. And, again, top you see breast cancer patient; but we also lung cancer patients and others that seem to benefit from this type of therapy.

This is probably the most important slide for today, and we're excited about this drug, because in Phase I clinical trials, again, the goal is safety. We may see responses. The number of patients tested is very, very low. Just to be sure, to be safe.

But what has been observed is a 60% response rate in this population in breast cancer patients who have been previously treated and then the other data which is unfair to compare, you cannot compare trials to trials and drugs to drugs, but it gives you an idea of what has been seen in Phase II trials with lapatinib and neratinib; the response of 6% to 24%. So, again, this is very early data, but it is suggested that this therapy may have significant activity in this population.

The other thing that is important is that these patients were heavily treated, but also that they received prior trastuzumab and lapatinib -- and yet they achieved a partial response. That's what you see in red there, PR, partial response. And that's what I think -- if this is confirmed -- is what makes this an exciting development in the field.

The number of Phase II clinical trials in breast cancer and other solid tumors which will look at this agent in different settings -- most important, probably, in my mind, is HER2-positive breast cancer.

There is also a huge market with less -- that is less clouded. That is gastric cancer. Not so common in the US, but it's common elsewhere, and a percentage -- a number of these patients with gastric cancer is HER2-positive. Herceptin is approved by the FDA to treat those patients with breast cancer and HER2-positive disease, so there are a number of Phase II studies ongoing at the moment.

So in summary, Poziotinib is an orally active, irreversible pan-HER inhibitor and has the potential to be best-in-class. It is active against HER1, HER2, HER4, including patients with mutations in some of these receptors.

Phase I trials have shown and Phase II trials have shown that it's safe, and the activity so far has been very promising, with a 60% response in patients who are heavily treated, including trastuzumab and pertuzumab, and now has been studied in other diseases like lung, gastric, and colorectal cancer.

Thank you very much.

By way of introduction, my name is Tom Riga. I am the Chief Commercial Officer at Spectrum. And I wanted to take a moment to give you some commercial perspective on what you just heard.

But before doing that, I wanted to give a round of applause to our KOLs for their time and energy. They have a lot of choices of how to spend time; and on behalf of the Spectrum senior leadership team, thank you for your presentations. Very much appreciated.

Following this presentation, you will have an opportunity to ask for Q&A. And I won't stand behind the podium, because I get to be a small forward for the first time, because we have a bunch of guards coming up before me. In fact, Witjes, I think you are playing center for the team. (laughter) So here we go.

Joe presented this slide, and I think it is totally apropos of why the 240 employees of Spectrum are absolutely thrilled for the data that you saw today. I'm the guy with a wrench, basically. I spend my time with our commercial team -- that's about 100 people -- with customers on a daily basis, with our GPO partners. And that's where we spend our time.

We carry the wrenches. And the perspective I hope to impart on all of you is why our enthusiasm is high, based on the team that we have on the field; the assets that we have coming in the near-term; and the two potential blockbusters coming thereafter. When you are a Chief Commercial Officer of a biotechnology company, that is your dream.

If you have the confidence in the people who are executing with extreme discipline; you have near-term assets that catapult your revenue while you are performing today; and you have the potential for game changing blockbusters, that's what you want. That's what I fundamentally believe that we have at Spectrum. And I'm excited to show you why.

We are positioned for long-term growth both for the assets that you saw, but also the performance that we are exhibiting today. Kurt briefly went through the revenue, but I have to take a pause, because this is what we do every day. Showing 30% growth year-over-year for me is a signal that the team that we have on the field commercially is competitive and able to win. It's proof-of-concept.

So while the revenue numbers that you see are bars and charts, I get to see the tireless work that the team puts in to produce those numbers. And I can tell you, this team is poised and ready to win both today and tomorrow.

If I look at the team that we have, it's experienced. There are folks that have over 320 nationally recognized sales and marketing awards; 17 years of average experience in our sales and marketing team, and 10 specific in the space that we operate. So critical to what we do in hematology/oncology is the marketplace wherewithal and the ability to compete. Relationships at this time are at a premium, and the companies that have the commercial infrastructure and the wherewithal to be successful will ultimately maximize the assets that they have.

If I look at SPI-2012, this puts a huge smile on my face. What I heard from Dr. Vacirca, who is not only a CEO of one of the largest practices in the country, but is also a clinician that sees patients; a medical director of a GPO that represents 50% of the oncolytic sales across the United States in the community oncology space; as well as Community Oncology Alliance that is all about community oncology? That gets me excited.

I look at a novel agent -- that is not a biosimilar -- that in Phase II is showing at least comparable efficacy, safety, with low immunogenicity, that competes in a $6 billion market worldwide, $4.8 billion of which sits in the US. So you may ask, so what makes you think that as this drug comes to market, it will be successful? It is our job to capitalize on that. When I look at this marketplace, I see 72% of the sales in the US exist in the community oncology space. That's critically important as we look at this product.

It is why it is important that we have folks like Dr. Vacirca that represent the clinical trials and are seeing patients with a median age of 60 years old that fit right within the standard of care of TC. So when it becomes commercially available, the sweet spot will be in the community oncology space.

Why is that so important? First, you have to show that you are at least clinically equivalent. And hopefully you saw in today's data that in Phase II SPI-2012 was that. That's your ticket to entry.

Second, you have to be a unique biologic. This is critical. In a world of biosimilars -- you saw the first one get approved for the short-acting agent -- the key on the 351(k) pathway that is very important here is that all biosimilars will be anchored on the reimbursement of the innovative product. That's what the legislation says. We are going to see that proof-of-concept play out with the first biosimilar that comes into market.

And as other biosimilars come into market, they will ultimately be anchored on the reimbursement of the innovative product. What does that mean if I translate it, the long and short? It brings uncertainty into the access and reimbursement in community oncology.

When you are a unique biologic, you don't have that problem. You are a unique molecule. That is critically important to SPI-2012 and what makes it so fundamentally different from the biosimilars.

Second, you have to have the commercial fortitude to compete. When I showed you the first slide, the team that we have is just that. It is built to compete.

If I look at my leadership team, 85% of the people I have on the field in leadership roles have sold in the white cell growth factor market. If I look at my President, there is only one guy that launched both of them, and he is the President of the Company.

I myself spent six years in this space, selling on the East Coast of the US, leading a sales team selling it. We have the commercial fortitude for us to be successful because of the team that we have on the field. If I look at the folks who are on the ground in front of customers, we are upwards of 35% of them have sold in the white cell growth factor market.

We know this space. We know it well. And what knowing the space does, ultimately, that in oncology is unique is that it forges partnerships -- forges partnerships with the largest customers, both in the community as well as in the GPO space, along with the academic customers.

When I step off the page and I look at SPI-2012, this is a potential blockbuster. I can't wait to get it in the hands of my team, and I have high confidence that we will be successful when this comes to market.

Poziotinib: if I look at this product, this is another commercial dream if you are a Chief Commercial Officer. Why? I look -- when I hear potential best-in-class from a professor at NYU, that gets me excited. Now, the data is early. But if this data plays out in Phase II and Phase III, this is a game-changer.

Breast cancer is the second leading cause of death of cancer in women. The data that you saw was tremendous. This drug has the potential to enter a market of 175,000 patients. The pan-HER space certainly affords us an opportunity to compete in a market that would be a potential blockbuster.

There is two pieces of data -- when our BD team, when we looked at acquiring this product, just as a commercial guy, made me very excited. This is the first one. When I look at the names of the products there -- first, you see a 60% response rate in Phase I. That translates beyond; this drug changes the game.

I also see names in there. I see neratinib; I see Herceptin. I look at 2014 sales of Herceptin at $7.2 billion. If you look at neratinib, the ExteNET study in Phase III was released. Puma's market cap went to $7.2 billion. I look at these products as a commercial guy, and I say, if this data pans out in Phase II and Phase III, I have a team that will win with this asset.

I also see a lot of products in this space. That's what we are built to do. Our commercial team is built to compete and built to win. I hope we have the opportunity to bring that to market, because I think we will do just that.

Another a piece of data that grabbed me was when you look at the breast cancer patients in that Phase I trial, the only two that didn't respond were at 1/10 the dose. So if you look at Phase I data, you take it for what it is; you say, is that a fluke, or do have something here? When you see 8 of the 10 patients responding, and the two that don't are 1/10 of the dose, as a commercial guy gets me pretty excited.

Apaziquone, when I see Dr. Witjes, he flew from Amsterdam yesterday. He lands, and one of the things he says during his presentation is -- the new innovation that has been in this market. He gasps, he goes, oh, 1975 was the last time an agent was brought into this space.

I didn't know who Andy Williams was, honestly, when we first saw that. I will just raise my hand. I had to ask. But what I do know is that there is 52,000 nonmuscle-invasive breast cancer cases a year. And what my team hopes to have an opportunity to do is to bring this new product to those patients who desperately need it.

When we see that we have got no product in the market in the last 40 years, this next-generation product could ultimately answer an unmet need. And I get excited by that.

In the near-term Dr. Hari reviewed Captisol-enabled Melphalan. As I step off the page, I heard a few things. I heard: one, you're going to have potentially two indications -- current treatments for palliative care in multiple myeloma; may have an indication for a high-dose conditioning agent prior to transplant.

I also heard the inconvenience and the administrative challenges that having stability of one hour of the current treatment has. This drug doesn't have that issue. I hear why propylene glycol is not advantageous for patients with some of the renal and cardiac toxicities. This drug doesn't have propylene glycol.

I also hear that this is a $100 million market as I stare at the data. And I look at the team that we have. Today we have -- we go -- with Marqibo, we go into 136 transplant centers. The level of overlap and synergy from a commercial perspective is right down the center of our fairway. This NDA we will have the answer to in October of this year. The team is actively engaged in launch preparations, and we believe that we could compete very well in this market.

If I look at how we will go forward, I think we are very well positioned for growth both now and in the future. I have the pleasure of having a team that is built to win and compete. I look at 2014 performance as proof-of-concept. I know there's a lot of commercial officers that are proud of the team that they have; I look at it both quantitatively and qualitatively, and I have the right people.

I see two near-term NDAs -- one that we'll have an answer to in October, and one that will be submitted this year that will help us catapult into the future. Finally, there are two potential blockbusters that we will flat-out execute against given the opportunity, and that gets me very excited.

So as a guy who holds the wrench, that's my perspective on the agents that you saw today. I would like to bring Dr. Raj back up.

Thank you. In summary, I would like to repeat that Spectrum has two near-term new drug applications: one already filed, waiting for approval on October 23 of this year for CE Melphalan; and I must say that Professor Hari, who presented his exciting story, was actually on way to New Zealand. And he decided to postpone his trip. So he's leaving -- instead of having left two days ago, he is leaving tonight. And his family is there. They went on vacation for New Zealand, and he said, I must attend the analyst day at this Company. Thank you for being here today.

We have two new term NDAs: one of them is Captisol-enabled Melphalan, October 23; and the other is Apaziquone, the bladder cancer drug. We have Professor Witjes has worked with us -- for this really more than 10 years. We acquired the rights to this drug from EORTC in Europe. And we are very pleased with the data that we are seeing, and we are now working on a protocol to finalize and start this trial before the end of the year and file an NDA.

But what is the exciting thing out of these two potential blockbuster drugs -- and you heard about them -- Phase III trials with SPI-2012, the GCSF, we plan to start in the second quarter around middle of this year. And the second is the Poziotinib, where we -- you just saw Phase I data, but there are multiple Phase II trials underway at this time. And we are very excited to have a drug that potentially could be best in the class.

We have multiple assets. Joe showed you a slide about the building a foundation of the Empire State Building. What we have tried to do last 10, 12 years at Spectrum is built the infrastructure. You can't create a castle without a solid foundation. I think at Spectrum we do have a strong foundation now.

We have revenue coming in from five different drugs that have been approved by the FDA, and we have drugs with blockbuster potential now, offering -- the dream is coming to fruition at Spectrum. With this, I would like to close our official presentations.

But I will say, take advantage of the fact that the faculty is here. And I would like to open the session now for Q&A, for question/answers. Any questions? Yes, Adnan. Mic, please?

It is Adnan, RBC. Just a couple questions on SPI-2012, and maybe Dr. Vacirca's views would help a bit here as well. Can you comment on how important that relative superiority would be for somebody like you? And then put the 3.6 mg dose into perspective, tied to the Phase II data?

And for the Phase III trial, the endpoint is a noninferiority endpoint, correct? Would you be looking for superiority there?

I think when you look at the historic data, when the duration of severe neutropenia is less than a day for both of the doses of SPI-2012 as well as for pegfilgrastim, obtaining superiority, quite frankly, is not important. The duration is so nonexistent, the risk is mitigated by both the doses of 2012 as well as with pegfilgrastim.

In terms of the dose that we came up with for the Phase III trial at 3.6 milligrams, it comes out to about 180 micrograms per kilo for a 75-kilogram person. It came out just in between that 135 and the 270 dose that we used in the Phase II trial, but it also give us the opportunity to have an equivalent volume to what is utilized now.

Maybe just add on to that, again, yes, it is a noninferiority design study. But there is the opportunity to demonstrate superiority in that trial. Again, the meaningfulness of that we can discuss, but there is an opportunity to do that in the study.

Just another follow-up: so the innovators have obviously a longer history; so when you look at an agent like 2012, which is new -- it is not a biosimilar; it is different -- how do you decide to fit it into your current factors? How do you make room for something like that?

There is a couple of things. One, we are always open to new options for patients, and that's most important. But I think if you look historically at the marketplace, you have to really look at what biologics mean. Biologics similars to me actually mean generic; and every time we have seen a generic introduced into the market, we have seen significant uncertainty in reimbursement.

You can see this with Taxol, with gemcitabine, with CPT-11 -- with almost every drug that has had a generic come into the marketplace, we have seen a significant erosion of reimbursements going over time, as some of them actually had costs go up.

As someone who has to count every dollar and cent, I am in a community cancer program. I am not part of the out-of-control 340B Drug programs. I have to look at certainty going forward. There is no room for uncertainty in the reimbursement for me, because I have to stay open to take care of my patients.

Thank you. Next?

Ren Benjamin, H.C. Wainwright. Maybe for Dr. Vacirca and Dr. Hari -- I guess it just goes back to this: who makes the decision? I understand the uncertainty up to a point, but I think at least in one case, we had mentioned that this is part of the bundle.

So who is making the decision? If there is pricing variability, I would think that you would be able to keep more of the profit if generics are coming in. So I'm still a bit unclear as to how that's looking?

I will do my part. He will do the bundle part. When generics enter a marketplace, yes, there is a change of profitability, but it's very short term. And changing a formulary in a practice has to take a lot of thought into it. We have a P&T committee that meets and goes over all of these things. We want, first, efficacy; then safety; then we want predictability.

For maybe two quarters you will see an opportunity, when generics come into a marketplace, for people to look at that profitability. But in long-term it creates too much uncertainty for practice like mine. Because after two quarters, you see a spiraling out of control of the reimbursement.

And for the most part, right now, when you look at almost all of the generics that we use in the practice -- and, again, this is not part of a 340B Program -- most of them we are reimbursed at our cost or below our cost, meaning we lose money. That's not a way for us, as a very efficient practice who takes care of thousands of patients, to stay in business.

For the transplant world, which is my world, we have been living with capitated payments for a long, long time. So we get a certain amount of dollars to do a transplant with. If we exceed that we lose money. If we go under, we make money -- or the possibility.

And Melphalan -- collecting the samples, breeding them, storing them, infusing them, hospitalization, other drugs we use. That titled chemo that we use, which will be the Melphalan or the CE Melphalan, as the case may be -- all part of that.

So if we have a effective drug which is equivalent, priced not too differently -- you know, if we are priced to a point where it could be a slight bit safer, could get patients out one day earlier from the hospital, that would be a big deal. So it's a lot of calculation that goes into this.

So in my world, having had experience with this -- if it's about without a randomized study, I wouldn't be able to say for sure; I wouldn't be putting it in the paper -- but this is definitely safer in that we don't have to give people propylene glycol. So the first patients that I would be using this drug would be people who have kidney failure, maybe multiple myeloma diseases associated with -- 80% of the patients have some form of kidney impairment. All the patients who are going to have more toxicity if I gave the full dose of standard Melphalan, for example.

There are populations that I can identify right at the outset. And then we have other studies in the pipeline which look at other differences, which might actually make it more viable. And as people get experience with this, I think we would integrate it. And Adnan, I think you had another question about who makes the decision?

So in the transplant world, again, it's almost always the director of the transplant program in each center that makes the decision. We have about 150 lead transplant centers in the country, and most of them in between. But the majority of transplants are done in a small number -- about 30 or 40 centers do the majority of those 6,000-plus transplants.

Thank you for that. Just as a follow-up for Dr. Witjes, is there a variability in the amount of bleeding that occurs, I guess maybe based on the baseline number of tumors? And would that be a cutoff point that you could design into, let's say, an upcoming Phase III -- if you have less than X number of tumors, you would be enrolled in the trial? Or it doesn't really matter?

Well, I think the trial has been -- the two trials that have been discussed already included, let's say, patients with a limited number of tumors. So then I guess that's the most common reason for more bleeding, actually, is the urologist himself. If you do a nice coagulation of the tumors that you have resected, it shouldn't be a major problem.

But, again, if you have just a little bit of blood in the bladder, (inaudible) that's not that much. So you can imagine that a little bit of blood really inactivates part of the drug. And obviously, maybe when you had more tumors, then you have more bleeding; makes it more sensible to wait at least 30 minutes or an hour to install the drug.

Is there a way to cut down the variability of operator -- you know -- call it error?

I don't think so.

I will just add to that. When we completed our two pivotal trials on the SPA, 540 patients lead to study, when we analyzed the data we found that there were about 20 patients in each study who had frank bleeding. If we exclude those 20 patients from the study, the drug becomes significant.

And when we went to the FDA, we told them so. And they said, well, this is -- you didn't plan for this. If you had written in your statistical plan the patients who had frank bleeding will be excluded, we will grant you this. But since you didn't write it, we will take into consideration that when you combine the two studies, in spite of the blood, the data is highly significant.

So we can grant you that you combine the two studies, and we'll treat it like one study. But we want you to go down and do another study. And while doing this, you can file the NDA, and we will then ask for an ODAC review of the panel only after you tell us that most of the patients have been entered in your trial.

So, clearly, the bleeding was there, but relatively in fewer patients. So therefore the newest study that we are designing is excluding patients, number one, who have frank blood; and giving this other drug after 30 minutes of DUR, so that we can be absolutely certain that blood is not there.

Now we know that the blood inactivates Apaziquone. So we went to make sure that the blood is not part of the Apaziquone administration.

Joe Pantginis, ROTH Capital. On the Apaziquone concept, you just touched upon it -- the FDA seems certainly open and willing to be able to combine the data so you can file, so that's a good thing. Are there any precedents you can share with regard to combining studies that were not significant and then moving on?

So -- I just don't want to mislead this point. So FDA initially said no, forget it. You didn't meet the endpoint. Then we went there, and we pleaded. We took Mark Soloway, one of our consultants and investigator to the FDA. And we were able to convince the FDA, number one, that this is an unmet medical need. No drug has been approved in the last 40 years. And here is a drug that single administration of 4 milligram dose produces this significant effect. And mind you, what data you saw, the protocol that we had the SPA was the relapse rate at two years.

We were pleading with the FDA that you should just allow us to do times relapsed rather than relapse rate at two years, because if you look at the data, we had significance at six months. We are significant at 12 months; we have significance at 18 months in favor of Apaziquone. It is at two years that we lost it. And in all cancer patients, as we were discussing with Dr. Witjes, all patients eventually will relapse.

So this time FDA has agreed. They saw the problem, and they said the new protocol will allow us time to relapse rather than relapse rate at two years. So, clearly, there are subtle differences in the protocol that could have made the difference in the outcome. And we are quite expectant -- we are hoping that this will be the case in the next study.

One small remark from my side. I have been to the FDA now I think around four or five times in the last 10, 15 years. And I have seen them developing from not very open for new ideas, and now they're really convinced that we need something new in this field. So they are really thinking with a company or with us to change this field of treatment, because there is really unmet need there.

And I just wanted to be clear. I know you mentioned potential subpopulations. Can you identify what those might be? Is that beyond bleeders, or did I mishear?

No, no, I think you could use this for all patients. It's just that we decided to test the drug initially in this subgroup of patients with this instillation schedule, but I'm sure you can use this in all nonmuscle-invasive bladder cancer patients. No doubt about that. We did smaller trials in other patients who I had also inspected.

And then just, too, with Apaziquone, to finish up: with the coming Phase III study, will you have any restrictions on background therapy -- say for cardiovascular, say, coumadins, or blood thinners, or what have you?

No, I don't think so.

And then, lastly, just from you look at the landscape, certainly there haven't been a lot of drugs, as you've said, but now all of a sudden there's a lot of immuno-oncology approaches being used. How do you think Apaziquone might be able to fit into the future landscape if the immuno-oncology studies prove positive?

I think the immuno-oncology studies -- those drugs will predominantly be used in very high-risk patients, because they normally have more side effects. The bladder is, thank God, very resistant to side effects, especially if you use chemotherapy. So I think that will be a different group of patients that you are going to treat: the really high-risk refractory patients, like we now use BCG. So there shouldn't be a large overlap. I don't think so.

Ryan Martins, Jefferies. Maybe just a follow-up on Apaziquone. The patients that were excluded from the analysis that had received drug within 30 minutes -- where they actually confirmed to have bled, or there was assumption that they may have bled in those 30 minutes?

Like I said, if you exclude those that have macroscopically -- where you see the bleeding, which, actually, I wouldn't have never even given the instillation, but that's something different, then -- you already see that it is statistically significant. And from a logical point of view, if you then would exclude those that have instillation first 30 minutes, because that's where you will see the bleeding, after that stops -- that also makes the results statistically significant.

Okay, and maybe on 2012, I guess you will have talked about the commercial and reimbursement reasons why you would use 2012. Maybe, Dr. Witjes, from the clinical standpoint, is there a clinical reason that would cause you to use 2012 over anything else that is out there? You are looking for noninferiority, so --?

It's purely observational, but at least at my -- at North Shore, when we were performing the trial, we did see less bone pain. This may have to do with better specificity of the drug. It may have something to do with a lower dose, but that was at least an observation that we saw.

Maybe on Poziotinib, Dr. Esteva, if you could talk about -- I don't know if you have disclosed this -- the duration of those responses, and how they may compare to what you have seen with some of the other drugs?

I think this is very heavily Phase I data, so I don't know if we know the response.

Yes, this is really very preliminary data, so we don't have that detailed information. You get a sense of that from -- we show the duration of treatment, but the actual duration of response -- we don't have that yet. Again, very early times, but we thought it was important to share the data early.

I think the most exciting point of about Poziotinib is that the patients in Phase I have already failed their second line and third line. They have already failed lapatinib and trastuzumab, so these are the patients who had actually no hope. They had failed another pan-HER inhibitor. So I think this is very exciting data from that point of view, 60% response.

Thanks, Dr. Raj. And maybe one final one, just to -- I guess just looking back at the foundation a little bit on Fusilev. So there is a temporary injunction granted. I am assuming this is at the appeals court. And I think there is -- what is it -- a two week timeline before which we judge has to make a decision? Can you give us some color on what the timeline is before the judge has to make a decision on the injunction?

I believe judges has all the authority; they can take two days, two weeks, two months, a year. I have no idea. Once it gets to the court, really, judges decide. I can't comment on that. We don't know. We applied for injunction, and we were granted what's called temporary injunction.

Sandoz is under -- is prohibited to launching the drug until court makes a decision, but courts can make a decision anytime. I can't give you any timeline for that.

Okay, so there is no mandated timeline within which temporary injunctions have to be acted upon?

It has already been acted, yes.

But no -- after a temporary injunction has been granted, is there a --?

We're in the process of appeal, so keep in mind that these are separate things that are running in parallel. They have appealed for the decision, and we applied for the injunction. And the higher court granted injunction, temporary injunction, while the courts are reviewing the paperwork, or whatever they do.

Okay, thank you.

This is [Tomata Tassa], Sobera Capital. Just one quick question around cash, just because it looks like you're going to want to spend more money on some of these clinical trials. How do you think about your cash position and some of your options that you have -- and in the context, also, of the convertible debt?

I think that's a very good point. You can -- if you know the history of Spectrum, you would know that just about five years ago we had sales of $28 million. And just about two and a half years ago, we had sales of $255 million in 2012. In 2013 we went down to $143 million.

So our history is very small, but one thing you will know is fiscal discipline. And we were able to dial down or dial up as the need be. So, clearly, we have a huge pipeline -- as you saw -- and our focus going forward is going to be these two drugs that we are developing now. Poziotinib, which is early. This is studies we have to wait until the Phase II trials are completed.

All the Phase II trials of Poziotinib are being funded by our partner. And mind you, Hanmi is just not a licensing deal. We have partnership with Hanmi. So all the Phase II trials are being funded by them, and we will wait for the results to come in. At the same time, we will be planning our own Phase II and Phase III trials.

Apaziquone -- that is an exciting product. And we have geared all the resources we will put behind 2012 at this time. But we can dial down some of the other studies we were doing with Zevalin, and Folotyn, and Beleodaq for small required. All those things will have to slow down.

We have the ability to slow down. Our team has been working on this not from yesterday. It has been working from the day we got the threat of a generic launch into Fusilev market.

Mind you -- keep in mind, we have a very -- we don't have one drug in the market. This is why we have a business model where we are building a solid foundation, where we are moving along on number of bases to build a foundation. It's not just on one drug or one asset.

Even on the exciting front, we have two drugs, not one. We're not a one-trick-pony company. I learned this lesson 12 years ago when I acquired a bankrupt company called NeoTherapeutics. Because they had one drug in Alzheimer's; it looked very good. When the drug failed in Phase III, company was on bankruptcy door front.

So since then I have decided to build a company which is not dependent on any one asset, or one drug, or one-trick pony, no matter how good the drug looks or asset looks.

Robert LeBoyer, Maxim Group. What is your guidance for revenues and expenses and earnings for the coming year?

If you know our history of Spectrum, we don't give guidance because we don't have enough history. We had these -- we give you these revenue numbers as they come along. We don't give any guidance at this time. Maybe someday we will, and I would like to give that guidance. But right now we're not giving any guidance at this time.

Anything on expenses?

No, we are -- as you can see that we monitor our expenses very tightly. We run a very tight ship here. But our focus is that we want to keep spending money in developing assets that will add further value to the Company.

We are not here for running a business just on one, two, or three, or four, five drugs. We are here -- all the foundations that we have laid in the Company is for drugs like Poziotinib; drugs like SPI-2012. Those are the dream drugs. So we will certainly manage our expenses. Our team has been working day and night to look at as to how to manage what will happen to our revenue.

Certainly our revenue is likely to go down once the Sandoz launches their drug. We are fully aware of it. As I said, we had revenue of only $28 million just five years ago. Last year revenue went down to $143 million from $255 million. So we have managed our expenses extremely well. And thus we plan to -- we are hoping we plan to continue to do that.

George Zavoico, JonesTrading. A couple of quick questions. Regarding the financial guidance, if you hit on all the milestones, because you mentioned you had $35 million in milestones last year; it was a bit of an outlier. If you hit on everything, what will your milestone payments be this year?

Good question, thank you. I should have said that at the beginning. But this year the only milestone we have to pay in 2015 is $6 million, and that is on the approval of Captisol-enabled Melphalan to Ligand. That's the only milestone we have to pay this year.

Okay, thanks. A couple of follow-ons. With CE Melphalan, when you did the trials, there was no difference in safety and efficacy; and yet you are speaking about the propylene glycol issue. In the trial, did you exclude the patients that would have been -- would have had the side effects due to the propylene glycol?

Let me have Dr. Lee answer the question.

Right. So, again, if you remember the studies that we talked about, there was a crossover study, and then it was a single-arm study, so we don't have comparative information. But we are looking at, again, overall side effect profile of the drug compared to historical data.

Again, we know there is a liability with propylene glycol. And we certainly know that the risk of having those side effects if that is not there is zero. So, no, we're not going to make the claim that it's better. But I think the comment that we heard from Dr. Hari was that the experience that he saw in terms of the frequency of severe mucositis was considerably lower than what he would expect, but we did not do a comparative trial.

So maybe Dr. Hari can have a few words on that?

Just to rephrase what Dr. Shrotriya just said -- it was not a comparison between standard Melphalan. These studies were -- basically, the big study, the 60-plus patient study was single-arm. And historical design -- historical comparison is all we have. But as I mentioned, the biggest dose-limiting toxicity of Melphalan is mucositis and GI.

Why do we do only 200 milligrams per meter squared? Because that is all you can give. People get severe mucositis at that dose, and you have to excuse them.

The other issue is that propylene glycol is unsafe in people who are at the end of the spectrum. When we select patients for transplant, we select people who are in robust health. A lot of people are excluded from transplant because they are older. The inure effects. For (inaudible) most of the time they don't do patients above the age of 65. Here we are 60, and up a little bit we go to the 70. But a lot of people don't get transplanted because of the toxicity of the whole procedure.

We have a drug that induces toxicity. We don't have any randomized data showing that, and I want to point that out, but if we do have a drug like that, that would significantly change the equation.

Thank you. Propylene glycol is known -- has known toxicity against cardiac and pulmonary and renal. In this case, we don't have propylene glycol. We will be marketing a single-dose vial where you can take Melphalan and use normal saline to make a dose. So certainly there is an expectation, but these head-to-head comparisons have not been done. But it is very documented what the side effect profile of propylene glycol is.

Finally, a question about Zevalin. Previously it has been shown to have some superiority over Rituxan in certain situations. But the sales and marketing effort doesn't seem to have translated into a robust growth in sales. Can you comment on what kind of headwinds you are still seeing with Zevalin, and what kind of marketing effort you're still putting behind it?

I think Zevalin was marked -- approved by the FDA and launched ahead of its time. The biggest problem with Zevalin is that the doctors who make the decisions to prescribe Zevalin -- doctors who see patients in non-Hodgkin's lymphoma -- cannot give this drug. They have to send this patient away to a radiation oncologist or nuclear medicine physician. So they are not willing to use this drug. They don't want to lose a patient. It's as simple as that.

So right now, in fact, I can tell you what effort we are making. We have approached Senators and Congressmen. We have found a congressman who is a physician who is very excited about Zevalin, and he thinks it is a travesty that a drug will not be -- may be taken off the market. You know, there was another radioimmunotherapy drug called Bexxar, an amazing drug. 90% response rate! And Glaxo was trying to sell; it wasn't like a tiny, small -- Spectrum was trying to sell, GSK; and with all their resources, they could not make -- they sell pieces of like $28 million.

Finally they decided with drug -- same issues -- the doctors will see these patients and make the decision which drug to give. They cannot give it. And doctors, oncologists, hematologists do not want to send the patient to somebody else.

The problem is that somebody else doesn't use drugs, so they are afraid to use these drugs. They don't deal with patients' neutropenia. They don't deal with patients if they have to give blood transfusion.

So I think Zevalin is in a space where there are people who believe -- and there are people who are authorized users. There are about 50 doctors in the country who are hematologists/oncologists. And they are authorized users. They can give this drug. And they are the only ones to use this drug.

So we have had a difficult time because the Congress passed a law in 2001 -- after 9/11 -- that any drug that has a radioisotope attached to it can only be -- cannot be given by oncologists/hematologists; can only be given by a nuclear medicine doc or a radoc who has been trained for 700 hours.

So we are right now -- Zevalin is under Nuclear Radiation Commission, NRC. And I have had meetings with the NRC. Our team has had meetings with the NRC. Now NRC controls missiles. They control nuclear plants in the United States, and they control Zevalin. (laughter).

It's a really powerful drug. (laughter)

And this is a drug that beta emitters; they don't even -- NRC does not understand the difference between beta emitter and a gamma emitter. They don't understand the difference.

But just to give you an idea, it is the gamma emitters that you need the lead in front of you. The beta emitters can be blocked by a thin paper. The rays don't pass through a paper. Patients are not radioactive once you give them Zevalin.

And I have gone sore in my throat trying to explain to the doctors that anybody can give this drug. But I think with Zevalin -- it's an exciting drug. We are counting to this drug. And now we are going to the Congress and Senate to see if they can help us change the law, that oncologists can give this drug. Oncologists use a lot more toxic drugs than this drug.

So just to add one thing to Dr. Raj: there has been huge financial historic issues with the drug, because after the sequester came into being, in about 14 states the reimbursement was more than the cost of the drug. The other states -- for every patient who was treated, it cost the oncologist about $200 to give the drug.

Thankfully, that's changed over the last year. So now 47 states can get adequately reimbursed, so they can give the drug in the office. So now it's -- what Dr. Raj is talking about -- it's the access issue. We'd like to get around, this is the best drug never used. It has the best data out there for a current refractory non-Hodgkin's lymphoma that is low-grade.

You know, you look at the package insert of Rituximab and Zevalin: Zevalin has 83% response rate. Rituximab has 55% response. These are FDA-approved package inserts.

Zevalin is to be given once in eight years, one dose treatment. Rituximab is to be given every 6 to 8 weeks. And it costs $30,000 every 6 to 8 weeks. Yet Rituximab's sales are billions of dollars, and Zevalin sales are probably $20 million. We are trying our best to turn this around. And now we're in the Congress and Senate/House.

More to come. The best is yet to come about Spectrum, folks. Stay tuned. Thank you very much.