Spectrum Pharmaceuticals Inc (SPPI) 2021 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Spectrum Pharmaceuticals Second Quarter 2021 Earnings Call. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Mr. Kurt Gustafson, Chief Financial Officer. Please go ahead.

Thank you, operator, and good afternoon to everyone. Thank you for joining us today for Spectrum Pharmaceuticals' Second Quarter 2021 Financial Results Conference Call. Our second 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 Joe Turgeon, 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 that we 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 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 Joe Turgeon, CEO of Spectrum.

Thank you, Kurt. Good afternoon, everyone, and thank you for joining us, and thank you for your interest in Spectrum. As most of you are aware, Spectrum received a complete response letter from the FDA last week regarding the BLA for ROLONTIS, seeking an indication for the treatment of neutropenia in patients receiving myelosuppressive anti-cancer drugs. The entire company is greatly disappointed by the CRL. However, I can assure you that our team is already working closely with our partners to resolve the CRL.

The CRL cited deficiencies related to manufacturing at the bulk manufacturing facility, which will need to be remediated and indicated that reinspection will be necessary. The CRL also cited deficiencies at the fill and finish facility, which will need to be remediated. We are in communication with our CMOs and the remediation work is already underway. The company is seeking further clarification from the FDA regarding the remediation timelines and the plans to meet with the agency as soon as possible. The CRL did not cite any need for new clinical trial. We look forward to providing an update following this engagement with the FDA.

Now let me shift to poziotinib, our other late-stage pipeline asset. Spectrum's poziotinib program has continued to make great progress in 2021, and we are advancing to a very important milestone, the submission of the NDA. The NDA for poziotinib will be based on the positive data from cohort 2 of the ZENITH20 study. The cohort evaluated previously treated patients with non-small cell lung cancer with HER2 exon 20 insertion mutations and met the prespecified primary endpoint in these patients.

Poziotinib has Fast Track designation, an indicator of the medical need that this drug may be able to alleviate for patients with this terrible disease, for which there is no approved therapy. An additional advantage of Fast Track designation is the ability to have more frequent interactions with the agency. During the second quarter, we took advantage of this designation to meet with the agency, and Dr. Francois will update you further. We remain on track to submit the poziotinib NDA later this year. Our recent data presentations at ESMO TAT, AACR and ASCO shows that twice daily dosing data appears to provide a significant improvement in both efficacy and tolerability.

And with that, I'm going to turn the call over to Dr. Francois Lebel, our CMO, for an update on our clinical development progress for poziotinib. Dr. Lebel.

Yes. Good afternoon, everyone. I'm glad to be with you on today's call. Joe has provided you the updates on ROLONTIS, so I will focus on poziotinib. The submission for our NDA under Fast Track designation is well underway and planned for later this year. It will be based on our positive data with QD dosing from cohort 2 of the ZENITH20 clinical trial. We recently had a Type C meeting with the FDA to agree on the data package to be provided in the submission. The submission will be aiming for an indication in the treatment of patients with HER2 exon 20 insertion mutation in non-small cell lung cancer, and we believe poziotinib has the potential to be first to market for this indication in an area of great unmet medical need. As part of our Type C meeting, I am pleased that the FDA agreed that we can include our recent data on bid dose.

At the ASCO meeting in June, we presented data on patients with brain metastases. This analysis look at the result for 284 patients from cohorts 1, 2 and 3, of which 36 patients had brain metastasis at baseline, 3 of these patients a percent achieved intracranial complete responses. Brain metastasis occurs frequently in non-small cell lung cancer and in up to 25% of patients and is associated with short survival. The patient in this analysis received pozi at a dose of 16-milligram once daily. These data show clinically meaningful CNS activity for pozi, treated non-small cell lung cancer patients with CNS metastasis with either EGFR or HER2 exon 20 insertion mutation.

In April, we presented data at AACR from cohort 5 of the ZENITH20 trial. These results have provided further support of our hypothesis around BID dosing. For the 38 patients, who received 16-milligram per day and randomized to either pozi 16-milligram QD or 8-milligram BID in cohort 5, improved response were observed in the BID arm with 31.6% of patients reaching a partial response, which represents near doubling of the response rate. Other arms to refine the minimum effective starting dose demonstrated activity, but the 8-milligram BID performed best.

A clinically meaningful improvement in tolerability was also observed, the grade 3 or IR related adverse events were reduced by approximately 60% with BID dosing. Dosing at 8-milligram twice a day also allowed for an improved rate of dose reduction and interruption. As a result, in cohort 5, we are dosing patients exclusively at 8-milligram BID. Cohort 4 of the ZENITH20 clinical trial is continuing to enroll well at 8-milligram BID in first-line treatment. During the balance of the year, we expect to meet our key regulatory milestones and have additional data readout. We plan to provide you with updates on our progress in the coming months.

I will now turn it over to Kurt for a discussion of our second quarter financials.

Thank you, Francois. Our SG&A expense for the second quarter of 2021 was $15 million versus $14.7 million in the previous year. We have continued to delay additional investments in our commercial infrastructure until we gain clarity on the ROLONTIS approval. R&D expense was $29.1 million versus $21.7 million due to increased program costs primarily associated with poziotinib as well as slightly higher personnel-related costs. Our net loss for the quarter from continuing operations was $49.9 million or $0.32 per share versus $32.2 million or $0.29 per share in the comparable period of 2020. On a non-GAAP basis, which primarily backs out stock compensation costs and the change in the value of our equity securities, our loss for the quarter was $39.3 million or $0.25 per share versus $31.8 million or $0.28 per share in the prior year period.

We ended the second quarter with approximately $159 million in cash plus marketable securities, compared to $163 million last quarter. Operating cash burn for the quarter was $29.7 million, which is consistent with where we have been the last few quarters. During the quarter, we received net proceeds of approximately $31 million from equity issued off of our ATM agreement.

With that, let me now hand the call back over to Joe.

Thank you, Dr. Francois and thank you, Kurt. While I'm disappointed in the latest decision of ROLONTIS, we're committed to working with our partners and the FDA to resolve these issues as soon as possible. I'm pleased with the strong and steady progress Spectrum continues to make on our poziotinib development program. We are actively preparing R&D submission for pozi and we're planning to share additional results from our ongoing cohorts in the ZENITH20 clinical trials later this year.

And with that, operator, I'd like to open up the call to questions.

(Operator Instructions) Our first question comes from the line of Maury Raycroft from Jefferies.

Maybe first question on ROLONTIS, just wondering if you can provide a little bit more clarity on what next steps could look like there. If it's possible for FDA to answer some of their questions by reviewing documents from Hanmi or potentially doing additional follow-up virtually or would they have to go back to the site? If you can provide any more clarity there.

Yes. Listen, I love your question because they're all important things, obviously, Maury. But first of all, the next step, you're asking what the next step is, is we're preparing the questions, sending them to the agency, requesting the meeting, because the most important next step to answer everything you're asking is having that meeting with the agency. And because when we have a chance to clarify that everything that you asked with the FDA, the extent of how we -- the deficiencies, how we answer those, how quickly -- the time line is the most important thing. Once we meet with them, we'll be able to clarify all the manufacturing deficiencies, the estimated time lines. And as far as asking, could we do it a different way than a physical inspection? Don't know the answer to that. That's certainly one of the questions we'd be asking with the agency. Great question.

Got it. And it sounds like at base case, they would not request you to do an additional study and maybe if you can just talk more about your confidence to getting this issue resolved and -- and also, one of the other questions we had too is just on communicating with Hanmi. I guess what has Hanmi said about the situation? Have they provided any additional clarity on what FDA could be looking for on their end?

Yes. Let me start with the confidence. I'm confident that -- I think you're asking are these things fixable? And we believe that all the deficiencies and the items can be remediated. There's no question, I'm confident they can be remediated. But I obviously want to gain additional clarity with the agency. I got to keep going back to that until we do meet. And normally, that meeting, once you submit it takes within 30 days, the agency will meet with you. So I am confident that we can fix these remediations. Then you asked about meeting with Hanmi, of course, we've already met with Hanmi. It's ongoing, we're working together very closely. I can even tell you, as I said earlier, a remediation process has already started. So we're already well into working with Hanmi on the remediation, but we want to clarify everything and give you those timelines you're looking for.

Your next question comes from the line of Alethia Young from Cantor.

Maybe just a couple. One, just can you talk to like more specifics on the FDA's comfort with the clinical data package that you provided, like was there anything in the complete response letter that indicated that that part of it was at least crossed off or any color you can provide from that? And then the second question is, isn't poziotinib made in the same facility? So I guess, how should -- I guess, if you resolve these issues for ROLONTIS, does it help for pozi or how do we think about that? Thank you.

Yes. Hey, Alethia. First of all, on the FDA clinical, what I can tell you is they did not request an additional clinical trial. I think any time you resubmit any new safety data or anything you add, you would put into them. But there was no -- the CRL focused -- the remediations are focused around manufacturing. Now as far as pozi, you're asking a question, we did license pozi from Hanmi, and I'll remind you, it's a small molecule, so it's a different manufacturing process. But that's actually manufactured at another South Korean company.

Okay. And just as a follow-up to that, I guess, on the first part, like how do you -- how do you know that like -- I guess, like there was like a year that passed, I guess, is the best way to put it. And was it just maybe lack of communication with Hanmi or were they not -- the FDA didn't communicate, like I guess, I'm just trying to figure out, like there was like an ample amount of time with them just not being able to get over there to review it. Was that the factor or were they just not communicative? Thanks.

You know Ale, I don't know if communication along the way is, because they don't really communicating, this was actually -- you're right, it was actually over a year for the actual -- when originally they were going to inspect the plant. Now during the year, we didn't sit still, I can assure you, we had outside experts in there. We did several mock inspections. We -- I thought we were going to get approved, I'm not going to lie you, I expected to pass. However, the reality is they found some deficiencies, they want to be fixed, and we're going to work real hard and real quickly to get those fixed as quickly as possible. I do think they are fixable.

Our next question comes from the line of Michael Schmidt from Guggenheim Securities.

This is actually Charles on for Michael. Thanks for taking the questions. And sorry to hear about the recent ROLONTIS news. But I guess, my first question on pozi. So it does sound like cohort 2 NDAs is still on track for this year. Could you provide a little bit more color perhaps around how I think enrollment for cohort 4 has yet to be completed, I guess where are you guys with that and how should we think about near-term time lines? Thanks.

Francois, why don't you take that?

Sure. So Charles, thanks for the question. We've communicated before that we were pleased with the enrollment in cohort 4. We've also indicated that we had 49 patients enrolled in 16-milligram once daily and as you know, we are now enrolling with BID dosing, 8-milligram BID dosing. I think importantly, as indicated in our formal part of the presentation here, is that one of the key questions we had on Type C meeting was whether or not the FDA would accept that we provide them with some of the information about BID dosing, as I'm sure you appreciate, given the signal -- positive signal we had seen with BID dosing, we felt that it would be good to be able to incorporate some of that information in the filing.

And we've indicated today that new information that the FDA agreed that we can provide this information. Now critically, that doesn't mean necessarily that it's going to find its way in the label, but it certainly gives us a chance to present the data and the improvement and efficacy and the safety profile. So we think that's an important win. And it's going to obviously be subject to the agency, reviewing this data, et cetera, and we'll see where they come out. But that -- that's where we are right now. I assume that answered your question, but maybe you want to come back with further questioning.

Got it. All right. Yes. Thanks for that. And I guess, like my second question back to ROLONTIS and as a bit of a follow-up to Alethia's prior question. I'm kind of wondering, some of the deficiencies that the FDA had mentioned that you guys are aggressively addressing right now. Could you provide some color as to are those deficiencies something that's, I guess, specific to the facility itself or is it something that it kind of pertains to how one would manufacture or fill and finish biologic versus a small molecule? And I guess as a bit of a check the box follow-up to that, could you also remind us, was the prior BLA withdrawal back in 2019, I believe, was that the process where the inspection had already taken place or were you guys with that, I guess, coming into this particular inspection? Thanks.

Yes. Let me -- firstly, I'm not going to go into the specifics of the deficiency until we meet with the FDA, so I can -- we can provide you with clear information on time line, mostly timelines, but also exactly what you have to do to remediate. But you are correct, as you said and as we reported, we have started working on those deficiencies or the remediations of such. Now you asked about the prior BLA. If you recall, if you -- when we first submitted the original BLA, what had happened is it was during the government shutdown, you probably don't recall that. So it's sad. And then they had 60 days to get back to us and what they did is, when they went through the BLA, they hadn't started the actual review yet. They hadn't accepted the file yet.

So what they did is they contacted us and said, look, we want some additional information. It was more information that they wanted on the manufacturing site. It was manufacturing, but it was information at that time that they were looking for. And we had to go and get that information for them. So basically, what they told us, they said, look, if you just leave it as is and by the way, they wanted some translations from Korean in a different way and some other tables, things like that. So they told us, look, in this form, you wouldn't accept it. So you can wait for us to not accept that or you could voluntarily fix this stuff and resubmit. And that's what happened. So no, there was never an inspection prior to that, because it wasn't -- the file wasn't accepted at the time.

Our next question comes from the line of Reni Benjamin from JMP Securities.

I guess just sticking with ROLONTIS here. Joe, can you give us a sense, how many issues are we kind of talking about here, is it just like a handful and is there any way to kind of book end, how long this could take? And I guess just related to that, you mentioned that you had outside experts, you had mock inspections that were ongoing. Were these issues identified during the mock inspections or were they completely out of the blue or was it like the FDA raised the bar you know on what you thought might have passed, I don't know, just didn't -- for whatever reason.

No, all fair questions, Ren. And first of all, on the amount and everything, let us speak with the agency. I want to be as transparent as we can and get all, because we want to know what we have to -- exactly what needs to be remediated and how long it's going to take. Again, do I think they're all fixable? Yes. I'll say this, we're all trying to do the clock. A resubmission normally is a 6-month clock, but I'll remind you, there's not a requirement that it has to take that long either. So let us get that -- we'll provide you with more information. And it'd be -- then we'll ultimately know more about the timelines, et cetera.

Now as far as the outside experts, yes, we had great experts working there. It was a long time over a year. We did several mock inspections. I think everybody was confident that we were going to pass. But you never know until they do the inspection. And they came in, found a few deficiencies. What normally happens is they -- after the inspection, they give the manufacturer, their observations, you have 15 days to get back to them on those observations, which they did with a lot of help of us and the outside experts. And so I guess that's where my surprise is, but the bottom line is now after I got angry and emotional, I said, okay, let's put our head down and fix this thing as quickly as possible, and you get this drug approved.

Got it. And did I hear right in your prepared remarks that there were deficiencies in South Korea as well as the fill-finish manufacturing, which I thought from our prior conversations was actually in California. Can you just correct me if I'm wrong on that?

No, you are correct. There's deficiencies at both that are being remediated.

Okay. So it's both manufacturing plants that are being remediated. Okay. And then, how long will it take to prepare the questions that you have for the FDA and submit it?

Well, obviously, we're doing our best. We're preparing it right now, obviously, as we speak, we're getting the -- our CMO's with us to make sure we're asking all the right questions and get those timelines. So all I can tell you is that we're going to right now, we want to get it as quickly as possible. As I said earlier, within 30 days, they should meet with us, and then we'll have a lot of answers. So we'll get it as quickly as possible.

(Operator Instructions) Our next question comes from the line of Mayank Mamtani from B. Riley Securities.

So high level, Joe, as you wargame the situation going into FDA meeting, can you just give us a flavor of how the Spectrum of NPV for ROLONTIS from all the way back from 2019 to where we are in late 2021. And externally, obviously, things have also evolved. Like where does it get to a point, where you may consider doing something disruptive and it could be as minimal as you work with a different manufacturing partners, Hanmi or you really just focus exclusively on pozi and the earlier stage programs. I just want to get a pulse of how you guys are thinking about this? And then I have a poziotinib question.

Yes. Great. Mayank, you're getting right into what we do for living, right it's strategy. And I understand why you're asking, I'm kind of glad you're asking that question, because obviously, strategically, we have decisions to make, but it's way too early for me to give you that strategy. I like the way you're thinking of, hey, based on what happens, which path do you take. Obviously, let us get with the agency and get these timelines down first, before I make any strategy decisions. But obviously, those are the kind of decisions you have to make to make the right decisions as you go forward for -- for the company, for shareholders, et cetera. So let us get all the information and then strategically, we're always going to strive to make the right decisions. I hope that answers your question.

Okay. No, thank you for the color. And then on pozi, I was just curious, there are a couple of conferences before the end of the year, so any color on -- depending on where we are with abstracts for each of these and where you might be with cohort 4 and 5, what might we see at some of these medical conferences, if you don't mind commenting.

Yes. Why don't -- Francois, why don't you take that?

Sure. Mayank, you're correct. There's a number of conferences upcoming. The only thing I would say is that we have a significant amount of data here that's accumulating, some of the data that's quite interesting and maturing is the QD dosing parts in cohort 4. So that data is maturing. So there's a couple of venue that potentially could be used to communicate that. The BID dosing data is a little less mature, but nonetheless, quite interesting. And also, the other thing that we have not really talked about, but probably should mention is there's some interesting data that is emerging right now in combining poziotinib with some KRAS inhibitor. So we'll -- I don't want to give you specific until we have full confirmation, but just to mention a few meetings, there's ESMO coming up, there's the triple meeting they are AACR, NCI, EORTC. And so again, we'll update you later, but let's just say for now, the next couple of months, we hope to be able to share data with you guys.

And there are no further questions at this time. Let me turn the call back to Mr. Joseph Turgeon for closing comments.

Thank you, operator. And I really appreciate everybody's questions, everybody's interest in the company, and I look forward to updating you more about ROLONTIS after our FDA meeting. We appreciate everybody's time on the call.

With that, operator, we can go ahead and shutdown.

Yes, sir. This concludes today's conference call. Thank you all for participating. You may now disconnect.

Thank you.