Spectrum Pharmaceuticals Inc (SPPI) 2021 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Spectrum Pharmaceuticals' First Quarter 2021 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Mr. Kurt Gustafson, Chief Financial Officer.

Thank you operator, and good afternoon to everyone. Thank you for joining us today for Spectrum Pharmaceuticals' first quarter 2021 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 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, and thank you for joining us today in the call. In 2020, we laid the groundwork that I believe will allow us to achieve a number of important milestones in 2021 and beyond. During the fourth quarter 2020, we had a call with the FDA to review the filing strategy for the submission of an NDA for poziotinib 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 it met the pre-specified primary endpoint in these patients. Based on our discussions and agreement with the agency, we are proceeding with the submission of a New Drug Application for poziotinib. That work is well underway and we're planning to submit the NDA later this year.

In addition, the FDA granted Fast Track designation, which is an indicator of the importance of this drug for patients with this terrible disease. We presented additional data for poziotinib at the ESMO TAT meeting in March, and at the AACR Annual Meeting in early April. Our aspiration for pozi extends well beyond the initial NDA filing. We believe this product can be a targeted therapy in Oncology across multiple indications. The recent data from the ESMO TAT and AACR was an important step in realizing this promise. The twice-daily dosing has demonstrated a significant improvement in both efficacy and tolerability, which will be important for the program as we advance our development efforts.

Now regarding ROLONTIS. The FDA scheduled the pre-approval inspection of our manufacturing facility for later this month. We believe this inspection marks the final step in the approval process, and that Hanmi's world-class facility is ready for this inspection. We are making real progress on our 2 lead clinical programs with major catalysts expected in the coming months, including a launch and an NDA filing.

And with that, I'd like to turn it over to Dr. Francois Lebel, our CMO for an update on our clinical development progress. Dr. Francois?

Good afternoon, everyone. I'm glad to be with you today. I will begin with poziotinib. Preparation for the submission of our NDA under Fast Track designation is well underway, and as Joe mentioned the submission will be based on our positive data from Cohort 2 of the Zenith20 clinical trial. This important milestone will be achieved later this year. As you may know, there is no approved treatment for patients with HER2 exon 20 insertion mutations in non-small cell lung cancer, and we believe pozi has the potential to be first to market to address this area of great medical need.

Additionally, a meaningfully improved safety profile and enhanced anti-tumor activity was observed and reported recently at 2 medical meetings. These results may make a real difference, not only for HER2 but also for EGFR mutation, and eventually with other solid tumors with activating mutation. The data presented at AACR for -- from Cohort 5 of the Zenith20 trial, includes previously treated non-small cell lung cancer patients, with EGFR or HER2 exon 20 insertion mutation, and provide further support of our hypothesis around BID dosing. For the 38 patients who receive 16-milligram per day, in randomized either to pozi 16 once a day or 8-milligram BID in Cohort 5. Improved response were observed in the BID arm with 31.6% of patient reaching a partial response. Other arms demonstrated activity, but were not as effective as the 8-milligram BID dose. A clinically meaningful improvement in tolerability was also observed. The Grade 3 or higher 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 reductions and interruptions. We are now dosing patients exclusively at the 8-milligram BID dose and expect that this change will accelerate enrollment in Cohort 5. Now, Cohort 4 of the Zenith20 clinical trial is continuing to enroll well, with patients with non-small cell HER2 exon 20 mutation, receiving 8-milligram BID in first-line treatment. At the upcoming ASCO annual meeting in early June, we will be presenting data on patients who had CNS metastases at baseline in our Cohort 1 to 3. As you can see, the body of evidence supporting the safety and anti-tumor activity of pozi continues to get stronger as we progress.

Now let me shift to ROLONTIS. On the regulatory side, Joe has already updated you on the status of the pre-approval inspection, and we remain confident that our preparation with our partner Hanmi, should result in a positive outcome for this FDA plant inspection. As it relates to our ongoing ROLONTIS clinical development program, the same day dosing study has now achieved full enrollment, with 15 patients. This is an exploratory study evaluating the dosing of ROLONTIS on the same day as chemotherapy. Generally, white cell growth factor on the market must be given the day after chemotherapy. This can create significant logistical difficulties for patients.

Following our initial safety evaluation examining dosing at 30-minute, 3 and 5 hours, post chemotherapy, we expanded the enrollment in the 30-minute arm to 15 patients. We plan to present the results from those same Cohort at an upcoming scientific meeting later this year. While this indication is not part of our current DLA, it is further evidence of this being a novel compound with different pharmacodynamic property, giving us the potential to further differentiate ROLONTIS from the seal of biosimilars and the innovator. The balance of the year is rich in key regulatory milestone and additional data readouts. We plan to provide you with updates on our progress in the coming months. I will now turn it over to Kurt for a review of the financials.

Thank you, Francois. Our SG&A expense for the first quarter of 2021 was $14.3 million versus $14.8 million in the previous year. R&D expense was $19.4 million versus $16 million, due to increased program costs primarily associated with poziotinib program. Our net loss for the quarter from continuing operations was $35.7 million, down from $40.6 million in the comparable period of 2020. On a non-GAAP basis, which primarily backs out stock compensation costs, and the change in value of our CASI securities, our loss for the quarter was $29.4 million versus $25 million in the prior year period.

We ended the first quarter with approximately $163 million in cash plus marketable securities, compared to $180 million at December 31, 2020. Our March 31 cash balance included net proceeds of $21 million from equity issued off our ATM agreement in the first quarter. Operating cash burn for the quarter was $34.5 million. This is consistent with where we have been in the last few quarters. After the end of the first quarter, we issued an additional $23.9 million in equity, utilizing our ATM agreement. These proceeds are not included in the $163 million March 31 cash balance. These proceeds will be used for our planned launch of ROLONTIS and furthering of the poziotinib app development program.

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

Thank you, Kurt, and thank you Dr. Francois. Spectrum continues to make strong and steady progress on our development pipeline. We look forward to the completion of the inspection of our ROLONTIS manufacturing facility, which is planned to begin shortly. We are actively preparing our NDA for poziotinib, and plan to share additional results from our ongoing Cohorts in the ZENITH20 clinical trial later this year. And with that, I'd like to open the call for questions. Operator, could you please open up the line for questions?

(Operator Instructions) Your first question is from Maury Raycroft from Jefferies.

Joe, congrats on the progress. I'll just ask about conversations with FDA, and what are specific gating factors for filing that you can mention. And was the switch to exclusively 8 mg BID in Cohort 5, was that based on your talks with regulators or can you provide a little bit more perspective on that?

Yes. Francois, why don't you talk about that?

Sure. So first, you got to remember Cohort 2 was done at 16-milligram -- the successful Cohort 2 where we met the prespecified endpoint was done with 16-milligram once a day, so that's the base of the filing. We met what we had to do, the safety profile we believe is acceptable, manageable and that's -- the discussion with the FDA was around that, and they basically upon the discussion with us said, yes you can file this. And so that's exactly what we're doing. Now, since then, it's clear that we have not only maintained the type of performance we saw in Cohort 2, but actually we have built on it, and by BID dosing, we can actually improve efficacy and the adverse event profile, as we've mentioned. So this type of information will be shared with the agency. But the primary filing is with the positive Cohort 2. I hope that answers that answers you.

Yes.

Your next question is from Alethia Young from Cantor Fitzgerald.

This is Nina on for Alethia. I just have a quick one. With the presentation at AACR, can you talk about how you're thinking about both dose and dosing frequency?

Sure. Well, essentially the way to think about it is that we have a Cohort 2 that was positive, it may have the pre-specified endpoint. So that's very, very important. And that's what allows us to file for an NDA, and also the nature of the disease. you'd be medical need and the fact that the data that we have shared with the FDA, we were able to secure Fast Track designation. That's also very important, because that allows us to have what's call a rolling submission. So the data we've shared at AACR, as I've just mentioned, is basically establishing that not only have we -- as we have added patients, not only have we maintained the previous performance of the drug in the past but also we've actually seen our improve results in terms of efficacy, as well as reducing to 60%, the Grade 3 or higher related AE. So those are -- this is getting better as we add patient. So we have a Cohort that was successful and now we are improving on it. So that's why we're pretty excited about this filing and as we go forward.

Your next question is from Ed White from H.C. Wainwright.

Joe, my question is, you mentioned pozi in other -- in multiple indications. So I just want to know if you're circling back to the EGFR exon 20 mutations. Will you have enough data coming out of Cohort 5 to perhaps reconsider filing again for that indication or are you thinking of developing another study to pursue this or will you be looking at other indications outside of non-small cell lung cancer?

Sure, Ed. So it's a little premature for me to answer you as to how the SPPI will think about our data but obviously, there is going to be -- we're already in communication. There will be continued communication through the NDA review. And as I've indicated just a minute ago, the data that the body of evidence here that we have shown at ESMO TAT and at AACR will be shared with the agency. I can't predict how they are going to react to it. But what I can tell you or remind you is that the data we showed at AACR, the majority of the patient in the 8-milligram BID actually were age -- EGFR exon 20 patient, they weren't HER2. And that's where we got -- we saw the best data.

We will be showing, I think some very interesting data at ASCO also about CNS activity. And given what we're seeing here, we just think the case if you want or the -- it's just getting better on top of what we had done in Cohort 2 which met what we needed to do. So after you have to have additional discussion with the FDA, but certainly we have shown now that the activity we're seeing is not strictly to HER2, but also in the preliminary expansion also covers EGFR.

Okay. And if I may, just a quick question on ROLONTIS. Once you get the pre-approval inspection done on the Hanmi plant, what are the next steps? And will the FDA issue a new PDUFA date or how should we be thinking about timing?

Yes, we don't know the exact timing, but let's go back in time where we, as you recall, and I know you well know, we received a deferral back in our PDUFA date -- back in October, not a CRL, which -- clearly if there were problems like many other companies got with our clinical data, we feel we would have gotten the CRL. We didn't. But because of the pandemic, we couldn't get people to South Korea to do the file. And I know you know all of that. We're prepared for the inspection, we're looking forward to it. I can't give you an exact date, but I think the FDA would take a reasonable amount of time to get back to us once the inspection is done and we feel that's the last step. So without giving an exact time, I think it'll be a reasonable amount of time after the inspection is done. I hope that answers your question.

Your next question, we have Reni Benjamin from JMP Securities.

Joe, maybe just to start off, can you give us an enrollment update or a timing update into Cohort 4 and beyond? I think you guys mentioned in your prepared remarks that enrollment continues well for Cohort 5. How many more patients are we planning on enrolling there? And is everything focus now on the 8 mgs, the ID dose? And then, how are we doing with Cohort 4,6 and 7 as well, and when we might see data from those cohorts?

Sure. So Cohort 4 -- what we have communicated is that, we were roughly in the mid-40's, when we switch to be BID dosing. And you will recall that our target enrollment as discussed with the FDA was 70 patients. So that's Cohort 4 and it's continuing to enroll today, Cohort 5, we -- the study design if you want -- we were randomizing patients to a number of arms. And as a result of the presentation at AACR, we have switched completely now to 8 BID, and that's because we had completed the stage one stage of a sum in Stage 2 design, and we had to enroll 19 patients per arm, which we did. And the 8 BID showed itself to be the best arm to expand and continue, and that's what we're doing. So I don't think we have indicated the number of -- exact number of patient, but let's just say that we're working or it's going very well in enrollment. And because we're no longer assigning patient to the other arms, all the patient now are going in the 8-milligram BID.

So we think that the enrollment now it's going to happen faster. So that's probably as much as I can tell you today, other than stay tuned and as the next couple of months advance, we're going to have more information. As to Cohort 6 and 7, these represent very relatively rare mutation if you want. So enrollment is ongoing and we're satisfied, but this is exploratory. We don't expect in the near term, any regulatory activity there, it's really -- the important Cohort as we go forward, clearly, is Cohort 2, that was positive, and now Cohort 4 and stocked. So I hope that answers your question.

It does, Francois. And just going off of Ed's question regarding Cohort 5, even though you don't have, let's say a number as to when you might stop. It seems like and maybe I'm just being overly enthusiastic, but it seems like you could potentially go to the regulatory agency with the Cohort 5 data and discuss a potential expansion opportunity. Am I being a little bit too exuberant about that or is that an actual possibility?

Yes, look we're pretty excited and actually we think there is -- warrants a discussion, not only on Cohort 5 but on Cohort 4 as well. We'll see where it goes. And as we prepare for the NDA filing, the data will be disclosed to the FDA and as such, we'll see where they go, but we basically have what we believe is a winning Cohort 2, and now we have even more exciting data, not only about HER2, but also as given the data that we're seeing Cohort 5, it also includes EGFR again. So we've always seen clinical activity. If you recall, across all the cohorts, we've always had clinical activity. Cohort 1 and 2 had missed their miss the primary endpoint, but not by a huge amount. So now given what we see in Cohort 5, we think that if you were to redo Cohorts 1 and 3 with different dosing, you might get a very different outcome. So that's why we're very encouraged.

The next question is from Michael Schmidt from Guggenheim Securities.

This is Charles Zhu on for Michael Schmidt, congrats on the progress. I had one on the ROLONTIS same day dosing. Presumably this data will arise after you hopefully get the initial BLA approved. Could you help us understand once you get this data, the potential timelines or steps to either fully and formally incorporating it into the label or some help potentially enabling providers to utilize this more convenient schedule before a formal label change?

Yes. So Charles the discussion, the current BLA, we believe has been -- we've answered all the queries, the question and even have discussed the label with the FDA. So we think the only outstanding item is this BAI inspection. So we don't expect the label in the -- what we think would be hopefully an approval in the very near term. We don't think that there's -- there's not going to be any language about same-day dosing in there, and you're correct. We would advance that and discuss result of same-day dosing with the agency, after the full approval here. And you got to remember, although I announced today that we're fully enrolled we still have to analyze that data. And so as the analysis comes, we present the data and some scientific meeting and assuming we have an approval in the near term, we will discuss that data with the FDA, and agree on a plan to potentially seek additional registration if the data is positive, obviously.

Hey, Charles, if I could just add too, Francois' spot on. We have -- all along, we knew that we're going to not have this on label we launch. We're fully prepared to compete with the label as it is. This would be, as Dr. Francois says, down the road if this was added to the label, this is something that's been tried in the past and wasn't accomplished by other products and it would be certainly more convenient for patients for the doctors, the nurses who actually give the injections etc. So that would be a point of differentiation. But I just want to be clear, this was not expected. This is good news. We're moving forward to the next step, but we're fully prepared to launch without it and that's where the plan was all along.

Next question, we have my Mayank Mamtani from B. Riley.

Congrats team on the progress. I have 2 landscape competitor questions. Maybe starting with pozi first. Could you also touch on both separately on the HER-2 and EGFR, if there have been any developments that you might be also benefiting from as you think about enrollment in these trials? That would be helpful and then I have a ROLONTIS question.

Why don't you talk about the competitive landscape first?

Yes, so on the -- first of all, the Cohort 2 was in HER2, so let's start there. For HER2, obviously, we don't want to speak on behalf of other drug developers here, but Daiichi, we think R&D was the closest and they've announced now, a few months ago, that they are going back to the bench looking at different dose and lower dose in order to try to, I assume, have a explorative to see if they could reduce the rate of pneumonitis. Pneumonitis has been an issue with that particular drug a bit. It's not the case with our drug. We have seen 0% to 1% rate of pneumonitis, and they were in the mid-teens with their drug. So that's the one for HER2. On the EGFR front, it's -- there's J&J that have announced a bi-specific and that they are filing. So obviously that could be -- they could get to market certainly sooner than us, but we'll see how thinks evolve, as I've just mentioned, our more recent data is certainly very encouraging. So it's too early to tell.

Great. And then on the -- again lifecycle management for ROLONTIS, same day is good, but as you know the -- there are alternative drug classes that are being tested on top of GCSF, to move the needle further on neutropenia, and also certain other benefits you don't get with monotherapies. Any color on your thinking, as obviously you think about this as a novel branded biologic?

Sure. I'll start, Mayank. First of all, when you look at one of the products to the on spring product, really when you look at the BTD that's been granted for that, it's really in combination with GCSF, so that's adding another drug along with the GCSF. My only question would be there, what patient population is in need for a payor to pay for 2 drugs to get this done, who are the patients who are -- it's not working on? Because GCSF works pretty darn good, for patients who are taking myelosuppressive agents today. So that's that. There is -- sure there is another product that is early, early stages. It will be a different approach, but that's early on. So right now, I think GCSF is the way to go, and maybe there'll be a combination with it, but most patients do very, very well with GCSF on its own. And I don't see the unmet need beyond that, but it may be there's certain patient types that benefit from that.

Got it. And final question was, you definitely have a ton of ROLONTIS stockpiled. Could we just understand, as we think about this May meeting on the other side of it, how soon can -- the product can actually be available for patients and what sort of that stockpile looks like? Is it a month worth of or is it a 6 month worth of? Could you give some color there?

Sure. Tom, why don't you comment on that?

Sure. We are still hoping for the potential of getting ROLONTIS approved, and demand generation will begin almost instantaneously, as the leadership team has already been hired. We have the vast majority of the customer-facing representatives that will be hired. And if you think about approval plus what happens to get drug in channel, we have plenty of commercial supply stateside, and when plenty, getting to your question directly, we want to make sure based on our expectation of the uptake of the product, we will have ample supply, and we believe we have that first year covered. I think customary with the approval of a biologic, you can expect printing of labeling, promotional materials, final packaging of syringes. I think the way to think about that is in the 4 to 8 week time period. So I would guess between 1 and 2 months post approval. The actual drug would hit the channel and we would begin selling it, but our demand generation, contract rollout, payer strategy, all of the commercial infrastructure efforts would begin instantaneously post approval.

And we have a follow-up from Reni Benjamin from JMP Securities.

I must have actually goofed in my to boost in my modeling of this quarter, because I was off on the SG&A thinking that you're still ramping up on the sales force and the like. I'd just like to get some thoughts as to the current SG&A level. Do we still expect it to materially go up or have a lot of the sales force and those involved with sales been hired? And if not, how should we be thinking about it going into, I'm guessing, closer to the third quarter or the fourth quarter?

Kurt, you want to answer that?

Yes. Reni, the SG&A has been running around that $15 million, $14 million, $15 million run rate for the last few quarters. I think as we talked about in some previous calls, we've got about half of the commercial organization on board. Tom indicated we've identified the people that we plan to provide offers to and hire, but they have not come on board yet. So that's why that cost isn't there yet, and we will -- that will happen as we gain some additional clarity here in the coming weeks, I guess. When you ask about whether it goes up materially, right? We're talking about -- I think we've said the entire commercial organization is, say 60 year or so folks, so we're only talking about adding an additional 30. Not a giant incremental spend but that there are -- there are various launch activities and marketing materials that will be prepared for that. So I do expect it to go up. Material is a -- not sure how -- what number you would define as material but you will notice--you will notice an increase in SG&A, once we hire those folks and launch the product.

Yes. I didn't know -- I know from previous calls you had--had half. I didn't know if you're slowly bringing those people on board, if they were just going to come in as a bonus once approval takes place. But that confirms it.

Just the only thing I'd add there, is the reason that you haven't seen that number increase of customer-facing representatives is, we deliberately gated that post-PAI. So I think as you derisk the program and get closer and closer to approval, we wanted to make sure that we had enough time to hire, train and execute, but didn't want too much time prior to having clear visibility to the path of approval. So that's the reason.

I am showing no further questions at this time. I would now like to turn the conference back to Mr. Joe Turgeon, Chief Executive Officer.

Thank you, operator. I really appreciate it. And I'd like to thank everybody for their participation on the call today that I'd like to thank everybody for their interest in Spectrum Pharmaceuticals. I really appreciate it. I want to wish everybody a great evening and we'll talk to you soon. Thank you, operator.

You're very much welcome. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may all disconnect.