Spectrum Pharmaceuticals Inc (SPPI) 2022 Q1 法說會逐字稿

Thank you for standing by, and welcome to Spectrum Pharmaceuticals First Quarter 2022 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to Mr. Michael Grabow, Vice -- Senior Vice President of Corporate Strategy and Operations. Please go ahead, sir.

Thank you, operator. Good afternoon to everyone. Thank you for joining us today for Spectrum Pharmaceuticals' First Quarter 2022 Financial Results Conference Call. Our first quarter financial results press release was sent out earlier this afternoon and is available on our website at www.sppirx.com. Joining me on the call today from Spectrum Pharmaceuticals will be Tom Riga, President and CEO; and Dr. Francois Lebel, Chief Medical Officer.

Before we get started, I would like to reference the notice regarding forward-looking statements included in today's press release. This notice emphasizes the major uncertainties and risks inherent in the forward-looking statements they will make this afternoon. These statements are not guarantees of future performance, and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in the future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements.

With that, let me hand the call over to Tom Riga, CEO of Spectrum.

Good afternoon, and thank you for joining us on the call today. The year is off to a strong start as we anticipate FDA approvals later this year for our late-stage assets, poziotinib and eflapegrastim. Both are under active review with the agency. The first -- in the first quarter, we continued to make progress on our core business objectives, which are: one, gaining FDA approvals and further advancing our 2 late-stage assets; two, streamlining our company and optimizing our cash burn; and three, ensuring we are prepared to successfully launch both products.

Let me provide some highlights starting with poziotinib. Our NDA is under active review and the agency has set a PDUFA date of November 24, 2022, with the initial indication for the treatment of patients with previously treated locally advanced or metastatic non-small cell lung cancer harboring HER2 exon 20 insertion mutations. This product is a Fast Track designation, and there are currently no approved treatments for this indication.

In the first quarter, we initiated a global confirmatory study in support of our application. This is an important and required step in the approval process. Additionally, we presented positive frontline data at the AACR meeting, which is our second successful cohort in their HER2 exon 20 insertion mutation space.

Finally, we announced today that the FDA plans to host an ODAC meeting in connection with its review of the poziotinib NDA. We are preparing for this advisory meeting and look forward to the opportunity to highlight the role that poziotinib can play in addressing an important unmet medical need in the treatment of previously treated patients with HER2 exon 20 insertion mutations. The fall ODAC meeting is scheduled for September 22 and 23. We will share the specific date and time for the poziotinib discussion when it becomes available.

Now let me shift to eflapegrastim. In the quarter, the FDA accepted our resubmitted BLA, and assigned a PDUFA date of September 9, 2022. This is a significant step forward in bringing this novel therapy to patients. We are actively working with our partner, Hanmi, to prepare for the upcoming preapproval inspection of the drug substance facility.

Furthermore, we have kicked off our commercial readiness efforts, and our enthusiasm to enter this market remains high. Our commercial leadership infrastructure is in place and ready to engage key customers, group purchasing organizations and third-party payers to ensure we optimize the launch trajectory if approved.

The long-acting G-CSF market remains a competitive yet substantial market, and we are looking forward to the opportunity to compete. We will share our detailed commercial plans as we move closer to launch.

Moving to our operations. We began the strategic restructure of the organization in January, and we continue to evaluate ways to optimize our cash burn and streamline our operations while investing in our future success. The initial results of those efforts can be seen in our Q1 financials.

We also strengthened our partnership with Hanmi Pharmaceuticals. This included a $20 million equity investment by Hanmi and amendments to the licensing and supply agreements for both poziotinib and eflapegrastim. The amendments will allow us to maximize our near-term cash flows and provide improvements to our cost of goods.

A strong partnership with Hanmi is critically important to Spectrum as our late-stage assets stem from their research engine. The Spectrum-Hanmi relationship and partnership dynamics have never been stronger than they are today.

We welcomed to Ms. Juhyun Lim to our Board of Directors in the first quarter. Ms. Lim currently serves as the President of Global Strategy and Planning at Hanmi Pharmaceuticals. Juhyun has been an exceptional advocate for our partnership, and she's having an immediate impact on our Board.

Additionally, we announced last week that Ms. Brittany Bradrick has also joined our Board of Directors and will serve as our Audit Chair as of the second quarter. Ms. Bradrick is a seasoned executive with 25 years of experience in life -- in the life sciences sector, including M&A, investment banking, finance, strategy and corporate development. She currently serves as the Chief Financial Officer at Neurelis.

Just yesterday, we announced the appointment of Ms. Nora Brennan as the new CFO of Spectrum. Nora has been on the Board of Directors and serving as the Audit Chair to the company. Her intimate knowledge of the company and familiarity with the team will allow her to hit the ground running in her new role. I'm thrilled to welcome Nora to our senior leadership team as she will officially join the company on May 25.

Given this, I would like to review our financials for the quarter. Total research and development expenses were $4.2 million for the first quarter of 2022 as compared to $19.4 million in the same period of 2021. The favorability is primarily related to the noncash reversal of an $11.2 million eflapegrastim drug substance accrual that was no longer payable to Hanmi Pharmaceuticals.

SG&A expenses were $9.9 million in the quarter compared to $14.3 million in the same period of 2021, driven by our recent restructuring. The net loss for the quarter was $15.4 million or $0.09 per share compared to net loss of $35.7 million or $0.25 per share in the comparable period in 2021. On a non-GAAP basis, the net loss was $9.6 million or $0.06 per share, compared to a non-GAAP net loss of $29.4 million or $0.20 per share in the comparable period in 2021. We ended the first quarter with approximately $89.2 million in cash plus marketable securities compared to $100.6 million at December 31, 2021.

As previously reported, we received a strategic equity investment from Hanmi in January of $20 million, which is included in the ending balance. Our operating cash burn was approximately $30.3 million as compared to $34.5 million in the prior period and was elevated due to onetime restructuring costs. The cash, combined with the restructuring announced in January, will extend the company's runway into 2023.

With that, I will now turn the call over to Dr. Lebel for a more detailed update on our clinical development progress.

Good afternoon, everyone. I'm glad to be with you on today's call and pleased to report on our latest achievements.

The poziotinib NDA is currently under active review at the FDA. This is a major step towards advancing treatment for patients with HER2 exon 20 mutation in non-small cell lung cancer. The filing is based on our positive data from cohort 2 of the ZENITH20 clinical trial, which consisted of patients with locally advanced or metastatic non-small cell lung cancer, harboring HER2 exon 20 insertion mutation who had failed previous treatment. The R&D team is actively supporting the FDA review and already preparing for the ODAC meeting in September.

We believe poziotinib has the potential to be the first to market for this specific indication, an area of great unmet medical need. We now have initiated a randomized confirmatory study following discussion with the FDA and are operated with a great sense of urgency. Study SPI-POZ-301 or PINNACLE is designed to enroll 268 patients with previously treated non-small cell lung cancer, harboring HER2 exon 20 mutation. Patients are being randomized 2:1 into this global multicenter study to receive 8-milligram of pozi-administered BID versus 75-milligram per meter square of docetaxel-administered IV every 3 weeks. Patient will be evaluated at week 6 and every 6 weeks thereafter.

Following progression on docetaxel, the patient will be allowed to cross over to the pozi arm. The primary endpoint will be progression-free survival, with overall survival, objective response rate, duration of response, disease control rate and safety as secondary objectives. This design will provide a power of 95% to test the hypothesis that pozi is superior to docetaxel for a hazard ratio of equal or smaller than 0.58 using a two-sided logrank test. A futility analysis conducted by an independent data monitoring committee to evaluate the PFS rate will be used to validate the size of the study.

Separately, I would like to highlight that our pozi clinical program has now achieved 2 positive cohorts as demonstrated more recently by the positive results of cohort 4 in first-line patients that were presented in March at the ESMO TAT Congress by Dr. Sun from the British Columbia Cancer Center. This data from the ZENITH20 study included a total of 70 patients, who received 16-milligrams per day of oral poziotinib. The first 48 patients of the cohort received 16-milligram once daily and an additional 22 patients receive 8-milligram BID. The primary endpoint was ORR, evaluated centrally by an independent image review committee using RECIST 1.1 criteria.

Pozi met the primary endpoint in these 70 frontline patients with an ORR of 41%, including 1 complete response and an evaluable patient ORR of 50%. The safety profile was consistent with the TKI class. Notably, on-target adverse event were reduced with BID dosing.

Treatment-related Grade 3 or higher adverse events were as expected with rash, stomatitis, diarrhea and paronychia being the most common. The incidence of Grade 3 or higher pneumonitis continued to be low at less than 3% or 2 out of 70 patients with no drug-related deaths.

Now let me shift to a presentation at the recent AACR meeting in New Orleans a few weeks ago. Preliminary results suggest a decrease in plasma circulating tumor DNA during pozi therapy correlate with clinical response in patients with HER2 exon 20 insertion mutation in non-small cell lung cancer. Additional data from this study has been accepted for a presentation at the upcoming ASCO Annual Meeting in June. These new data will provide further evidence of a correlation between a decline in ctDNA with a clinical response to pozi treatment and cover a longer observation period. So stay tuned.

As you can see, we continue to make solid progress on our 2 late-stage development programs and regulatory strategy. We will keep you posted as we achieve additional key milestones.

That concludes our prepared remarks. And I'd like to open the call for questions. Operator?

(Operator Instructions) Our first question comes from Maury Raycroft with Jefferies.

Congrats on the progress. I'll start off with the Phase III program. Just wondering if you can talk about your view for the bar for docetaxel in that group. And how confident are you that you can be substantially enrolled by the PDUFA date in November?

Sure. Pleasure to talk about this. So the -- obviously, we're quite confident that we can beat the docetaxel. The extent of the -- establishing the superior already given to you by the number of patients and the parameters that I've declared to you. I'm not going to go beyond that, but the literature right now does not have solid data.

It's a true medical need. There's no prior control study. And there is a small retrospective study. The average PFS is of the order of 4 months or less. And we think we could definitely beat that. I'm not going to go further on that. I can't recall, there was another aspect to your question, I believe?

Yes, yes, just if you can talk about enrollment time line expectations and if you can be substantially enrolled in this study by the time of the PDUFA in November.

Sure. So obviously, the language of substantially enrolled does not actually have a definition. So it's a matter -- we believe, to demonstrate that, we have made meaningful progress. It's a rare disease, and we will be able to demonstrate that we have made a very strong effort to recruit patients. We are anticipating having potentially in excess of 100 sites globally, and we are actively engaged in opening these sites as we speak. So we think we will be able to demonstrate by the time of the PDUFA date that we have made tremendous commitment and progress to bring a new drug with a benefit for patients who currently have no drug to rely on.

Got it. That's helpful. And then I'll just ask one other question on the Phase III study. Can you just talk more about the types of patients that you're anticipating enrolling into the study? Will you allow prior in HER2 or other targeted therapies prior to going on to the study for poziotinib?

Yes, we are. So this is the second line or more study, and the -- it will be essentially platinum-based core initially where they fail, and plus or minus checkpoint inhibitor because there's -- depending on which country you're talking about. And within the U.S., the practice differ. And we will allow potentially other with a proper washout period, additional type of therapy, including experimental therapy. We really want -- are trying here to address the medical need.

Our next question comes from Ed White with H.C. Wainwright.

So maybe just switching to eflapegrastim. We've talked many times in the past about the changing market in the G-CSF. I'm just wondering now if there are any recent updates as far as generic penetration goes. What you think the hurdles will be to launch? And when you're -- you had mentioned that you had the leadership for the sales team in place, when do you expect hiring the salespeople?

So thanks for the question, Ed. Let me take the first one regarding the market. We are still very enthusiastic to enter this market. It still sits today over a $2 billion market. The biosimilar penetration really is concentrated in 2 of them. Overall share of biosimilars versus the innovator products sits at 40% today, really with 2 lead drivers of that penetration. We really believe today that having a novel agent that is not a biosimilar that we can bring customers, payers and patients a solution that is not restrictive to some of the inherent realities of the reimbursement dynamics as well as some of the patient offerings we can bring puts us in a position to be competitive.

I mean, ultimately, we need to get the product approved, which that is our internal focus. But when we think about this commercially, we remain enthusiastic and we believe that the core leadership infrastructure that we've capped even post our restructuring carries a lot of the industry's best talent. And we think that, that is scalable should we need it.

But I think when you look at sales force sizing today in oncology, there's a lot of consolidation in the business as well as some post-COVID realities from access standpoint that we believe we could get done our launch in a very lean and efficient manner. And we may have some nominal adds as needed, but our base commercial infrastructure will be our first line of defense as we engage both group purchasing organizations and large customers out of the gate to get the product off the ground should it get approved.

And just a question on the restructuring. And you had mentioned the -- I guess, the charge back to Hanmi. Can you just review why that happened? And then what the run rate is you think going forward? Are the cuts that you have made going to be more predominantly seen in the back half of this year?

So let me take the $11.2 million noncash reversal first. That -- as I mentioned in my prepared remarks, not only did we solidify an equity investment from Hanmi, but there were also changes to the licensing in the supply agreement. And this is ultimately some of the fruits of those agreements, which enables us to free up near-term cash flows from just a supply standpoint. So that reversal, I think, is the first you're seeing of some of the fruits of the second half of that statement on the licensing and the supply agreement. So that is a onetime noncash reversal.

As it relates to run rate, so I think if you think about the first quarter, it's usually our highest burn quarter, right? So if you look period-over-period, it was $34.5 million or so a year ago, and today, we announced $30.3 million. That has onetime charges in it. So the number is lower by $4.5 million, but there are some of the restructuring costs that are built in there. So the impact of the FTE change, I think, will continue to show itself in subsequent quarters. But I also think as we get to our action dates and we start launching these products, you'll see a rise in the back half of the year in the SG&A line just to prepare and execute on those launches.

Okay. And perhaps the last question just regarding the ODAC meeting. I just wanted to get your thoughts on maybe -- what preparations are you doing? What are you expecting the advisory committee to ask?

Thanks, Ed. So here's how we're thinking about it. We're looking forward to the opportunity to bring this to an advisory committee and really share the full benefit that pozi could bring in this high area of unmet need. So if you think about even at the acceptance, we had made some statements that the FDA had questions about the status of the confirmatory study as well as questions on the dose. And today, we announced the PINNACLE study which has a dose of 8-milligrams BID, which is different than the 16-milligram QD registrational data.

So it's, for us, very -- it makes a lot of sense. It's very logical that the FDA could have additional questions on dosing and wanting to hear from industry experts on how to bring that issue to resolution. But that's us looking at where we've been, what the discussions have been with the agency, those are 2 of the issues that certainly could be discussed at ODAC. But as the date gets closer, we will gain more clarity from FDA, and obviously, be prepared to represent the full NDA.

So our preparation efforts are -- the last half of your question, they're under -- they're actively underway. We think we've got the right team in place to prepare, and are looking forward to the opportunity.

Our next question comes from Mayank Mamtani with B. Riley Securities.

Congrats on the progress on regulatory filings. So maybe just following up on the prior sort of commentary on the 8-mg BID dose. I was just curious, between now and ODAC, how much we will learn from your ongoing studies? And what might be the data you are able to present to the panel on the 8 mg? And how do you reconcile a full approval in a different dose with the accurate approval with a sort of a different dosing schedule? And just my final question was on the path for first-line approval given you have some data there in BID dose? And yes, so what does the path look like in front line, if you can remind us on that?

Mayank, you got a couple of questions in there. Francois and I will tag team this one. Let me start with your first question. So the registrational -- the filing is based on cohort 2. As you mentioned, the 16-milligrams given QD, and the PMR is at 8-milligrams BID. So both are 16-milligrams per day. We believe that 16-milligrams QD demonstrated a safe and effective dose for a patient population that needs a solution.

I think the subsequent data has given an indication that there could be a more optimal way to reduce some of the on-target toxicities. So I think that conundrum that you mentioned is likely a topic that FDA would like to hear from industry experts at the ODAC panel. But we believe that 16 QD is a safe and effective dose and obviously aligned with FDA on the confirmatory study to go with the 8-milligram BID.

Francois, any other comment?

Yes, sure. Yes, so exactly. The NDA is based on cohort 2, 16-milligram and taken once per day. And during the early phase of discussion with the agency, we've indicated to them that we had gathered additional data in cohort 5 and that we had explored -- and it was exploratory. We had looked at different dose, different frequency, et cetera, and basically asked them if they would be interested in seeing this data or not. And it's always very sensitive because once you seek an indication, you don't want to add additional data unless it's asked by the FDA. Otherwise, you modify the PDUFA date.

So thankfully, the agency probably out of concern or of interest for patient said, "Okay, please send us the additional data." And that's led to multiple discussion, obviously, as to is BID dosing better, worse or what? And that's why I think Tom was highlighting to you previously that may be a topic for discussion for ODAC. Essentially, we have provided them the data. And during the 120-day update as well, we provided the -- all the update. It's pretty clear that when you give dosing at BID, we can improve the safety profile, which is obviously of great interest to physicians and their patients and the FDA for that matter.

So that's fundamentally what's going on here. 16-milligram, as Thomas said, it's safe and effective on the basis of what we have submitted in the NDA, but the agency may be interested in getting the opinion of various academic experts and industry, et cetera, at the ODAC.

I think your other question, Mayank, was related to cohort 4. We're obviously thrilled with the second cohort specific to HER2 exon 20 insertion mutations, demonstrating positive results. Our strategy with that is to take this in a stepwise fashion for a number of reasons to initially solidify the first approval for the product. But our aspiration for the asset extends both beyond just the initial indication, but also beyond even the front line in HER2 evaluating rational combinations and others. But those discussions as it relates to cohort 4 specifically with the agency would occur after we get through here, the September ODAC meeting and subsequently, the Thanksgiving PDUFA.

Thank you for the detailed clarification there. And then actually, the question I had was also on the AACR data and some of the circulating tumor DNA work you're doing. Can you just talk to the relevance of that in sort of a real-world commercialization setting? And what are you trying to get at with the use of a biomarker like that, that -- yes, it would be helpful how you see that data evolve and the role it plays to your commercialization plan.

I can take this if you want, Tom. So the ctDNA for us is exploratory in nature. So in other words, it does have no direct impact on the NDA review here. But this is data that has been accumulated in the scientific literature that you can use or possibly can use a biomarker that is easy on the patient, meaning it's the peripheral blood sample as opposed to an invasive tissue diagnostics or biopsy. And you can actually or potentially monitor therapy.

And the first thing you have to establish is do they correlate, does the impact of therapy modify the ctDNA level. And that's kind of what we have shown at AACR, and we will add data at ASCO. And the issue becomes, can that be an early biomarker prior to having imaging or confirmatory imaging? Can you predict the outcome of the patient in terms of positive outcome, meaning response? And in terms of if the patient gets an escape and progression, can you predict it?

And that could become a very important tool for us as we go further in development with our program. Especially in combination therapy, you want to move there fast because you have -- when you do combination, you have a lot of dosing questions and other matters you've got to resolve. And any early biomarker that gives you indication of activity is always very helpful. So it's exploratory at this time, but nonetheless, it could become very important in the future.

And I totally appreciate your -- I appreciate your question there. I think it really speaks to how we're thinking about the asset. So the IP of this drug goes well into the 2030s, and our aspiration for development extends well beyond the initial indication. And I think ctDNA is a direction that oncology is going. And I think the sooner we get a body of evidence in that regard, I think it helps position the direction we want to take this as we look forward.

Actually, just maybe a follow-up on the -- that reminds me of the Dr. Heymach presentation from last year. Has there been any progress of trying to work with synergistic mechanisms like [ARC, CC] kind of drugs, which can be good combination partners and you could evaluate -- use a biomarker like this to assess early responders?

Yes. So there's been -- there has been progress. And when we have something formal to announce, we certainly will. But rational combinations is something that grabs a lot of our interest at our internal research committee meetings as well as our business development outreach. So when we have something formal to announce, we will certainly -- we'll certainly do that.

And I'm currently showing no further questions in the queue at this time. I'd like to hand the conference back over to Mr. Tom Riga for any closing remarks.

No, thank you. Thank you for all the participation on the call and for your interest in Spectrum and all of your questions.

We'll be participating at the H.C. Wainwright Conference later this month. We'll also be attending Jefferies and JMP in New York. And we look forward to speaking to many of you then. And if there's any other questions in the meantime, always feel free to reach out. Thank you, everybody. Have a good night.

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.