TG Therapeutics Inc (TGTX) 2018 Q1 法說會逐字稿

Greetings, and welcome to TG Therapeutics Q1 2018 Earnings Conference Call. (Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jenna Bosco, Senior Vice President of Corporate Communications. Thank you. You may begin.

Thank you. Good morning, and welcome to our conference call regarding TG Therapeutics' first quarter 2018 financial results and business update. I'm Jenna Bosco, TG's SVP of Corporate Communications, and I welcome you to our conference call today.

Following our safe harbor statement, Sean Power, TG's Chief Financial Officer, will provide a overview of our financial results, and then turn the call over to Michael Weiss, the company's Executive Chairman and Chief Executive Officer, who will provide an update on the ongoing development of our novel glycoengineered anti-CD20 monoclonal antibody, ublituximab; our novel once-daily PI3K delta inhibitor, umbralisib, as well as a review of our free clinical programs and overall company standing.

Before we begin, I would to remind everyone that various remarks that we make about our future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. TG cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated. Factors that may affect TG Therapeutics' operations include various risk sectors and uncertainties that can be found in our SEC filings. This conference call is being recorded for audio rebroadcast on TG's website, www.tgtherapeutics.com, where it will be available for the next 30 days. (Operator Instructions)

Now I would like to turn the call our to Sean Power, our Chief Financial Officer, to briefly discuss the financial results for the first quarter of 2018 as well as the company's overall financial condition.

Thank you, Jenna, and thanks, everyone, for joining us. As you may be aware, our financial results were released this morning and can be viewed on the investors and media section of our website at tgtherapeutics.com.

I'll begin with our cash position. At March 31, we had cash, cash equivalents, investment securities and interest receivable of $109.2 million. Our pro forma cash position as of March 31, 2018, is approximately $123.3 million when including $14.1 million of net proceeds from the utilization of our ATM sales facility during the second quarter of 2018.

Our net loss for the first quarter of 2018, excluding noncash items, was approximately $33.2 million, including $9.6 million of manufacturing and CMC expenses for Phase III clinical trials and in preparation for potential commercialization. The GAAP net loss for the first quarter of 2018, inclusive of noncash items, was $41.5 million or $0.59 per share compared to a net loss of $27.7 million or $0.52 per share during the comparable quarter in 2017.

In the first quarter of 2018, we utilized cash of approximately $28 million to fund our ongoing operating activities in large part driven by stronger-than-anticipated enrollment into our Phase III MS program. Our clinical expenses are expected to slow a bit toward the end of this year and into the first half of next year, while we could have increased BLA and NDA filing expenses and precommercial expenses filling the gap.

Accordingly, we expect our cash burn should remain relatively stable over the remainder of 2018. To ensure that we remain well positioned to deliver on our goals, during the first and second quarter, we added approximately $66 million to the balance sheet through the use of our ATM. Our average price during this campaign is $13.53, and total shares issued were approximately $5 million. Inclusive of the capital raise during the first and second quarters, we believe our current cash position will be sufficient to fund our operations well into 2019.

With that, I will now turn the call over to Mike Weiss, our Executive Chairman and CEO.

Thank you, Sean and Jenna, and thanks, everyone, for joining us this morning. 2018 is off to a great start with the expansion of our preclinical pipeline to include our own BTK inhibitor, plus various updates for our clinical programs. 2018 is setting up to be a highly impactful year as we look forward to the announcement of topline response rate data from the UNITY-CLL Phase III trial, completion of enrollment into the current cohorts of the UNITY-NHL study, final MS Phase II data, significant enrollment in our MS Phase III program as well as filing decisions and potential filings of the company's first BLA and NDA later in the year.

Before reviewing our current development programs as well as the key milestones for 2018, I'd like to kick this call off by recapping some of the recent accomplishments we've already achieved in 2018. In January, we entered into a license agreement with the Chinese Pharma company Hengrui for the rights to develop their BTK inhibitor program. In February, we announced the publication of The Lancet Oncology, our results from the first Phase I first-in-human study of umbralisib formally referred to as TGR-1202, our novel once-daily PI3k delta inhibitor.

Next, we presented the first preclinical data on TG-1601, our novel BET inhibitor, at the American Association for Cancer Research annual meeting. And most recently, we presented updated clinical and MRI data from our Phase II MS trial of ublituximab, formerly referred to as TG-1101 at the American Academy of Neurology annual meeting.

We've had a busy start to the year, but this is just the beginning. And we look forward to the momentum continuing to build throughout the year. With that, let me give a high-level overview of our ongoing Phase III and pivotal programs, and we'll try to keep it brief today as our last quarterly conference call was not that long ago.

Let's begin with the UNITY-CLL Phase III program, which is a randomized study of ublituximab in combination with umbralisib or, U2 as we refer to the combination, compared to an active control arm of obinutuzumab plus chlorambucil in patients with both treatment naive and relapsed or refractory chronic lymphocytic leukemia.

As a reminder, this trial is being conducted under Special Protocol Assessment with the FDA and is a large global trial, including over 600 patients. Enrollment into this trial exceeded our expectations, and the trial enrolled nearly 9 months ahead of schedule. Approximately 60% of the patients enrolled were front line, and approximately 40% were relapsed or refractory.

We are still targeting top line overall response rate data from this trial in the second quarter of this year. However, as mentioned on our last quarterly conference call, we may opt to wait for slightly longer follow-up on the patients, and if we choose to do this, we'd expect the announcement of top line results to still occur before the end of the summer.

To remind everyone, we are targeting a 15% absolute improvement in overall response rate, which if successful, we plan to seek to file for accelerated approval in the fourth quarter of 2018. It is also worth reminding everyone that the primary endpoint for this study is progression-free survival to support full approval of the U2 combination and ideally support a very broad label for the treatment of CLL.

With that, I'll give a quick update on the GENUINE trial. As a reminder, GENUINE is a randomized Phase III trial of ublituximab plus ibrutinib compared to ibrutinib monotherapy in patients with high-risk relapsed or refractory chronic lymphocytic leukemia. We are currently working closely with CLL experts to finalize our risk-benefit assessment, which we believe supports the position that ublituximab plus ibrutinib provides meaningful benefit over all available therapy, including venetoclax-based therapy.

In parallel, we're moving forward with preparations of our BLA through potential filing in the third quarter of this year, knowing this preparation will also be critical in supporting the potential BLA/NDA filing, which should be based on the results of the UNITY-CLL overall response rate data.

Next, I'll give a short update on our UNITY-NHL trial. As you may be aware, this is a multifaceted program evaluating single-agent umbralisib and building towards evaluating U2 doublet combination and potentially triplet combinations using U2 as a backbone across various subtypes of non-Hodgkin's lymphoma or NHL.

The UNITY-NHL trial currently has 3 distinct cohorts, evaluating the different subtypes of NHL. So let's first start with the follicular lymphoma cohort. In this cohort, we are currently enrolling relapsed or refractory follicular patients into a single arm of umbralisib monotherapy. Our goal is to enroll approximately 100 patients and plan to achieve this by mid-2018. As a reminder, copanalisib was recently approved with data from a similarly designed and sized study.

Next, the marginal zone cohort. Similar to follicular, we're also currently enrolling relapsed or refractory patients into a single arm of umbralisib monotherapy. Our goal here is to enroll about 60 patients, and we plan to achieve this in the fourth quarter 2018. Again, as a reminder, here we are following the ibrutinib -- the recent ibrutinib approval, which is based on a similarly designed and sized study.

Lastly, within the UNITY-NHL trial, we are evaluating a cohort of patients with relapsed or refractory diffused large B-cell lymphoma. This is a more aggressive form of lymphoma, and we're now enrolling into a single arm of U2 plus bendamustine. We are targeting complete enrollment into the U2 plus Benda cohort also by midyear.

Now let's review of multiple sclerosis program, starting with the updated Phase II data of ublituximab and MS, which was most recently presented at the American Academy of Neurology annual meeting. The updated data now include safety data from all 48 patients through 24 weeks enrolled in a Phase II and as previously presented, ublituximab remained well-tolerated across all patients, including those receiving rapid infusions as low as 1 hour for the 400 milligram dose -- 450 milligram dose, which is the dose we chose for our Phase III program.

With all patients now through 24 weeks of treatment, the data also continues to affirm the efficacy of ublituximab with sustained B cell depletion, 100% reduction in T1 Gd-enhancing lesions and, most importantly, an annualized relapse rate that remains below the ARR observed with ocrelizumab, the only approved anti-CD20 monoclonal antibody in MS.

We are extremely pleased and look forward to presenting the final Phase II data, which will include 48-week data on all patients enrolled at a major medical meeting later this year. This data supports our ongoing Phase III program in multiple sclerosis known as the ULTIMATE trials. As a reminder, we are running 2 identical Phase III trials under Special Protocol Assessment with the FDA evaluating ublituximab in relapsing forms of MS. The trials are currently enrolling in both the United States and Europe, and we're targeting complete enrollment of approximately 850 patients across the 2 trials by the first quarter of 2019. With ocrelizumab, the only approved CD20 for MS, tracking to generate approximately $1 billion in sales in its first year, we believe this represents a major opportunity for us where we can compete on price and convenience.

With that, I'd like to turn the call over to the conference operator to begin the Q&A session, following which, I will return and provide some concluding remarks as well as a review our remaining milestones for 2018.

(Operator Instructions) Our first question is coming from Yatin Suneja of SunTrust Robinson Humphrey.

Mike, could you just comment on the feedback you are getting from experts on when to unblind it? When would you make that decision? Are you able to look at the blinded data? I'm not sure the blinded data will tell you much, but just trying to understand the basis of your decision and when might that come.

Yes. I'd say in terms of expert guidance on the timing of that is not as important. I think we have enough data from our prior clinical trials to know that it's likely that moving from 6 and 9 to 12 months (inaudible) partnership a little over 11 months. It has been a -- going to amount to a few more responses. It's not a major -- it will not be a large number, I mean, the vast majority -- substantially all responses will be seen by 6 and 9 months. Like I said, 9 months is already built into the 2Q estimate. So I don't think there's really any expert advice, and I think more of the advice has come from our shareholders who reached out to us since we had this conversation last quarter and almost universally reached out and said just wait the extra 30, 45 days and pick up those extra few responders. So I think we're certainly leaning in that direction, and we haven't made a decision yet. I think our final decision will be sometime probably in the next several weeks or so. We're getting close to making that decision, but we haven't made it yet. We'll still keeping our options open. Again, because it's not a -- it won't be material either way, but for sure, though, there'll be a few -- a handful of responses that will occur between 9 and 12 cycles.

Okay, got it. And this phenomenon of deeper responses over time, that is probably less likely to occur on the chemo immunotherapy control arm, correct?

Yes. So that's the other side of the coin, right. It's a very good point. So the control arm since the patients are treated for 6 months and stopped. The optimum response would be basically at the time that the patients are stopped dosing, so that 6-month response. So carrying it forward and following those patients for 6 or 9 and 12 months is not likely -- you're not likely to see a late onset responder in the treatment group. The other thing that would be important, too, is we'll have additional follow-up on those patients, so it'll be, again, particularly for the patients in the control arm, but all patients for sure but mostly in the control arm. If you recall with the GENUINE study, we did open up a little bit earlier, and we noted that there were still some confirmation responses that needed to be verified. In this case, we would have for the most part I'd say 100% of the control arm responses confirmed or not confirmed, and you know it's possible that some of those responses will not be able to be confirmed. So I think the longer putting aside of whether we open it at 9 cycles or 12 cycles, fairly long -- the longer we go, it is to our advantage because we do know that we see late-onset responders with these types of drugs, not just our drug combination, but BCR antagonists alone and with CD20s, we see later on set responses. And with chemo-based combinations, the responses are typically shorter lived. Obviously, it's about progression-free survival if those types of regimens are shorter -- typically shorter than those BCR antagonists. So again I think, the whole gestalt of it is the longer we go, it's probably incrementally better, but again, it's around the margins once you start pushing out too far.

Got it. Maybe just one more question on the UNITY enrollment criteria. So I think our understanding is that the trial is open to all lines, and you're not screening for any particular mutation, so maybe could you just help us understand were you able to enroll high-risk patients. If that's the case, what percent that might be in your assumption for how the control arm might perform in those high-risk patients?

Yes. So the trial was an all comer's, really what I would describe, I think most people would describe as a real-world experience trial. So it was primarily in the community, and it was take pretty much anyone who shows up at the door, and in that setting, we would expect that we'd have sort of a normal distribution of high-risk patients and ordinary-risk patients, and I think what we learned from our GENUINE trial was that probably somewhere between 30% and 35% of the patients ought to be in some high-risk category. We've done a screening protocol. Pretty sure that's where it came out, about 30%, 35% of the patients screened in relapsed refractory setting had high-risk features. In the front line setting, I don't have the published data, but I think it's -- probably between 5% and 20% would qualify as "high risk." That would include 17 Ps (inaudible) and the 11 Qs. So yes, the expectations -- the sign of the expectations for the performance of chemo-based treatments in high-risk patients is lower than in ordinary-risk patients. It's certainly not 0, but it's been a comedown quite a bit. So we refer to the HELIOS trial where patients were randomized to ibrutinib BR versus BR alone. In that particular case, the 17 Ps were specifically excluded and the overall response rate was I think [68%] there. So I think in this setting, chemo plus CD20, we would expect a lower response rate from those patients.

Got it. Just following up, I promise last question. So the split that you said about high-risk category both in relapsed refractory and front line, is it similar across community and academic center? And also for UNITY-CLL, could you tell us what sort of a split was in terms of overall enrollment economy? Or what percent it might be community and academics?

Yes, and just in terms of overall enrollment, I think in the U.S., there was a clear advantage to the community-based centers. I don't have the exact -- unfortunately, exact percentages of patients that came in and what the distribution was based on community versus academic, but certainly, we had a very large community participation in the trial, and again, I don't know if it had any reflection on front line versus relapsed refractory.

Our next question is coming from Matt Kaplan of Ladenburg Thalmann.

Just to focus a little bit more on UNITY-CLL. Help us understand in terms of the timing for the PFS endpoint. Obviously, that's your primary endpoint for the study. When should we expect that to read out?

Yes. so that's a good question, Matt. If I had a crystal ball, I'd be able to give you a really good answer. Unfortunately, I don't. So our best guess today we've been saying is what we think put a normal distribution curve over 2019, put a little of the bell into the latter part of 2018 and put the tail to 2020. And I'd say that's our best guesstimate today of the probabilities of when that PFS will read out. But I think as we move toward the end part of this year, we'll certainly have a much better sense of where we are. We'll have a good sense of how the events are coming in, what the rate of events coming in, so hopefully sometime around the end of the year, perhaps in association with our ASH analyst meeting that we have, we could possibly provide some guidance of a little bit more clarity on when we think that PFS will read out.

Very good. Okay. And then shifting to the pipeline a little bit after all discussion on UNITY-CLL, can you give us a sense in terms of the time line for moving your BTK inhibitor into the clinic?

Yes. My fingers are crossed and hopefully clinic in the next few months here. The teams have been working extremely hard. The clinical trial started in China. So certainly, the first-in-man has occurred, so that's the good news. Our own first-in-man will start, like I said, hopefully in the next few months. We're getting pretty close. There's no real issues other than just putting all the logistics together, you know, and every time you take over a program, particularly this kind where we're translating the Chinese IND to U.S., and foreign potential filings, it just takes a little bit of time, and obviously, we have resources that have been primarily dedicated to UNITY and BLA preparations for GENUINE, but it's coming on, I think we should have it done first-in-man in the first -- in the next 2, 3 months.

Our next question is coming from Reni Benjamin of Raymond James.

Can you remind me, Mike. Is UNITY under an SPA, and if it is, does changing -- I imagine that there's a clear-cut stats plan that is usually filed with the FDA, and I imagine that it is all based on number of events even with responses and does pushing that in any way impact the SPA?

Right. So we do have an SPA. That is correct. So PFS is event driven, so numbers of patients actually don't matter in a PFS analysis, so as long as you get to the events, you've satisfied the SPA. With respect to the overall response, this -- [get] to announce this plan essentially says I think 6 months or greater follow-up on the patients, and we could open up. So again, we think we have some flexibility. We're certainly being cautious and careful and will be checking -- checking out to make sure that everything we do is okay with the FDA. So -- but I don't -- certainly from the PFS and the event-driven stuff, there's no effect, and so the overall response, not being event driven, it is patient driven. We certainly would want to be cautious, and when we open that up, and how we do it, and where we are doing that.

Got it. And just from a DSMB perspective, can you remind us, is the DSMB meeting every 3 months-or-so, or is it every 6 months? And even after you -- I guess, taken your first look for the responses, is there any sort of a statistical penalty that needs to be paid?

No statistical penalty. We again, the ORR was allocated alpha from the very beginning. So it's part of the statistical analysis plan. So we did allocate some alpha to that analysis, and what we've said is that, with that allocated alpha, we still have a 90% power to show -- again, power for that 15% of difference in overall response.

And then just the DSMB meetings?

DSMB meetings. I have to check with the [clean] ops team, but I think it's every 6 to 9 months-or-so. My guess is that at this point the plan is probably to do the next DSMB as part of the overall response analysis, and when that occurs, we'll do the next DSMB I assume. I'll double check that, though.

Got it. And, I guess, just one final one from me, with the BTK inhibitor, can you talk a little bit about how you think -- well, so how you feel this BTK inhibitor is different than all the others that are being developed and kind of where it might fit ideally in the landscape? Or does it kind of just become another option that's out there that could compete primarily in price?

So I think the latter is certainly true to a certain extent. So we could be out there just competing in price, but for us it's more about building combinations. So we've seen some really strong data of U2 plus ibrutinib across multiple disease areas. So I think it's not about developing the next BTK and competing as a head-to-head (inaudible) if the preclinical profile comes to fruition in the clinic, it should be a very attractive option for patients, but that's -- there'll be 3 or 4 BTKs approved at that time. The real excitement is how do we package it into a combination with U2 or other potential combinations out there or that we may acquire going forward. So we're obviously -- we still believe that owning every mechanism is important and so to the extent we have the [van] with resources, we certainly have the desire to continue to build out the pipeline. So we do think that there's opportunities, whether it's U2 plus the BTK or the BTK plus perhaps PD-L1 or even a quad combination of U2 BTK PD-L1, they've got lots of room to be creative with an active BTK in the portfolio and certainly as part of that creativity of how do we price it in a way that makes sense for patients. That's -- continues to be our focus is making sure we can figure out ways to -- through these combinations, come up with better pricing options. But again, I don't think the plan is just to sort float it out there as a single-agent BTK and see what happens. I think we've got on integrated strategy that we've always had. I was just building these combinations.

Our next question is coming from Madhu Kumar of B. Riley FBR.

So thinking about the ORR readout. Are there any aspects of the UNITY-CLL besides picking up additional responders that are kind of key considerations for the timing of the ORR readout?

I don't think so. I mean, that's really -- I think it's overall -- so overall, having more follow-up is a good thing. We've had multiple meetings with the FDA, in multiple settings, not just around UNITY-CLL, but around all of our programs, and they are pushing for additional follow-ups, which for them, gives better information on duration of response and gives better information on long-term tolerability. So certainly, those are factors, and we're weighing in that -- we believe that it's a better piece of information when it's all done to have longer follow-up across the board. So it's not just about providing potentially some pretty modest incremental events in overall response, which again, is a good thing. I mean, why not. If it's 30, 45 days, take advantage of that, but it is also the concept of more follow-up is just better overall. It provides, like I said, duration of response information and long-term tolerability and better information.

So following from that, when you speak to experts in the CLL space, is duration of response a key consideration for them in terms of drug choice?

Yes. I think anytime you're looking at overall response rate, you want to see 1 of 2 things, right. You want to see -- if your comparing it to something, you either want to see comparable duration response or greater duration response. And it's kind of a little bit of a balancing act, which is if you have a modest or relatively modest improvement in overall response, you're going to want to see a longer improvement duration of response. If you have any more -- a larger magnitude of increase in overall response, then a comparable duration of response is just fine. I would say, if you follow the logic there, it's -- if you can take twice as many people and give them the same duration response, you're going to improve PFS. Likewise, if you only improve the response by a modest amount, but you doubled duration of response, you're also going improve PFS, and I think in between is sort of the balance of how people look at the data, but I don't think there's any particular expert opinion other than that concept applies universally to how you might see a benefit in progression free survival.

(Operator Instructions) Our next question is coming from Matthew Andrews of Jefferies.

Just a follow-up on your questions related to the statistical spend for ORR with UNITY-CLL. I know you can't go into specifics, but can you just walk us through the thought process on how you allocated that alpha to response versus PFS, bearing in mind the ultimate primary endpoint is PFS and that's what you need to get full approval in the U.S. Can you just talk through the thought process because UNITY-CLL is such a unique study?

Yes. So look, we've been pretty candid about this. We've allocated most of the alpha to progression-free survival. That's going to be the most important endpoint for the FDA. That's going to be the most important endpoint for subscribers and to be kind of that's the most important endpoint for patients. They want to know that they're going to live longer. So clearly, we wanted to make sure that we allocated the appropriate amount of alpha to that endpoint because it is obviously the most important, but again, in the context of this setting, we have a [4] with respect to the overall response because we have so many patients involved, to get to a 90% power in a binary outcome study, we have a lot of patients that do that. So again, I think the net effect is we've allocated the bulk of the alpha to the PFS endpoint. We've left enough alpha given the number of patients that we have just go maintain that 90% power for that 50% overall response level.

Okay, thank you. And then where are discussions with the [CH MPs], assuming a statistically significant and clinically meaningful improvement in response. In UNITY-CLL, do you think there's the option that you could file based on response rate in Europe?

Sure, thanks, Matt. Yes, so we certainly think there's the possibility to file in Europe. I think once we get the data, we'll certainly start working on that. We haven't spent a lot of time working on that today. We spate most of our time with its time in this trial with the FDA and working closer with the FDA on it. So we think that -- let's get the data in hand, and we'll think about the global filings on top of the U.S. filing.

Thank you. At this time, I'd like to turn the floor back over to Mr. Weiss for any additional or closing comments.

Great, thank you. And thanks, everyone, for joining today. I'd just like to wrap up today's call by reviewing again, once again, our key goals and objectives for the remainder of 2018. Obviously, based on the Q&A, everyone is aware that the big one for us will be coming up on the presentation of our top line overall response rate data from the UNITY-CLL Phase 3 trial. Again, this is U2, it's ublituximab versus umbralisib in front line and relapsed refractory chronic lymphocytic leukemia. We also, as you mentioned in the prepared remarks, are finding and preparing to file the company's first BLA and NDA before the end of this year. So again, we're pushing forward with that. We look forward to completing enrollment in the current arms of the unity NHL trial, again, focusing on the follicular margin zone and [fusilage BCell] so cohorts that we're currently enrolling, and finally we present -- we plan to present updated clinical data from our ongoing oncology studies, and the final results from the Phase II trial rituximab and MS later this year, which again, I think is something that I'm looking forward to see. We found all results. We'll be able to compare those results to the final Phase II results for okra. So that would be exciting and interesting as well. So again, just on behalf of all of us at TG, we'd like to thank all of the investigators who've worked closely with us, particularly their patients who have joined our trials, and thank our shareholders who have been very supportive of us.

So again, thanks everyone for joining us and have a great day.