Earnings Transcript for CTIC - Q3 Fiscal Year 2020

Operator: Good day, ladies and gentlemen and thank you for standing by. Welcome to CTI BioPharma’s Third Quarter 2020 Earnings Call. During today’s presentation, all parties will be in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] This conference is being recorded today, November 10, 2020. I would now like to turn the conference over to Dr. Adam Craig, Chief Executive Officer. Please go ahead.

Adam Craig: Thank you and welcome to this afternoon’s call. Joining me today are David Kirske, Chief Financial Officer and Bruce Seeley, Chief Operating Officer. After providing an update on our recent progress, David will provide a summary of third quarter financials. Following formal remarks, the conference call will be open for questions. Before we begin, please note that during this call, we will be making forward-looking statements based on current expectations. Such forward-looking statements represents our views only as of the date of this call, are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those anticipated by the forward-looking statements. Additional information concerning these risks and uncertainties, are contained in today’s press release. For further description of these uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements as well as risks related to our business, please see our periodic reports filed with the SEC. This past quarter was one of remarkable progress for CTI, and more importantly, for myelofibrosis patients with severe thrombocytopenia as we advanced our pacritinib development program. Last month, we announced the initiation of our rolling NDA submission for pacritinib in myelofibrosis patients with severe thrombocytopenia, which is defined as platelet counts less than 50,000 per microliter, with the expectation that we will complete our submission in the first quarter of 2021, with a commercial launch subject to FDA prior to review and approval later in 2021. This development is a result of 3 years of constructive dialogue with the FDA on how pacritinib could address recruitment could address the unmet medical need of myelofibrosis patients with severe thrombocytopenia, a patient group that experiences poor treatment outcomes primarily due to the significant limitations of approved therapies. Our discussion with the agency focus on the safety outcomes from the PAC203 study and the available data from the completed PERSIST-1 and PERSIST-2 Phase 3 studies. At our pre-NDA meeting, our proposal for an NDA submission based on the available data from these studies was accepted. The NDA submission will focus on the severe thrombocytopenia patients involved in these standards and will include data from both frontline treatment naïve patients and patients with prior exposure to JAK2 inhibitors. Our ongoing Phase 3 PACIFICA trial is now expected to be completed as the post-approval confirmatory study. With regards to this trial, as we have previously announced, we continue to enroll patients, but the enrollment rate is currently slower than planned due to the ongoing COVID-19 pandemic and at present we anticipate the primary analysis data in 2022. To ensure that we are prepared for the potential commercial launch of pacritinib in 2021, we have begun to execute on key pre-commercial activities, including market access and make growth goals and have hired our Head of Marketing. As previously announced, we are also investigating pacritinib in COVID-19 patients through PRE-VENT, our randomized double-blind, placebo-controlled multi-centered Phase 3 clinical study of pacritinib in hospital patients with severe COVID-19. PRE-VENT compares pacritinib plus standard of care versus placebo in standard of care in hospitalized patients with severe COVID-19. The primary endpoints of the trial will set the proportion of patients who progress to invasive mechanical ventilation and/or extracorporeal membrane oxygenation or die at the age 28. We look forward to providing an update on our Phase 3 PRE-VENT at the interim analysis of 200 patients with data expected in the first half of 2021. With that, I will let David provide a review on the quarterly financials. David?

David Kirske: Thank you, Adam. We ended the quarter with cash and cash equivalents totaling $57.4 million compared to $33.7 million as of December 31, 2019. We currently expect our cash position will enable us to fund our operations into the fourth quarter of 2021. And as we progress through the regulatory process and engage in additional pre-commercial activities, we anticipate our spending to increase and thus we will provide updated guidance as we move further into the pre-launch phase. Operating loss was $11 million and $33 million for the 3 and 9 months ended September 30, 2020 respectively compared to an operating loss of $9.7 million and $31.2 million for the respective periods in 2019. Net loss for the 3 months ended September 30, 2020 was $11.3 million or $0.15 per basic and diluted loss per share compared to net loss of $10 million and/or $0.17 per basic and diluted loss per share for the same period in 2019. Net loss for the 9 months ended September 30, 2020 was $37.4 million or $0.54 per share basic and diluted loss per share compared to a net loss of $31.8 million or $0.55 per basic and diluted loss per share for the same period in 2019. As Adam mentioned, pre-commercialization activities for pacritinib are underway and we are taking steps to build out our commercial team. With cash runway through the end of next year we are in a strong financial position to focus our number one priority and that is the completion of our rolling NDA submission for pacritinib, however, in tandem, progressing our PACIFICA and PRE-VENT clinical trials. So with that, I will now hand it back to Adam.

Adam Craig: Thank you, David. In summary, we are delighted to have begun the submission of an NDA that may lead to the approval of pacritinib for the treatment of myelofibrosis patients with severe thrombocytopenia, the very important area of unmet medical need. We look forward to completing the submission in the first quarter of next year with a potential commercial launch subject to regulatory approval thereafter in 2021. This concludes our prepared remarks. Operator, please open the call for questions.

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Reni Benjamin with JMP securities. Your line is open.

Reni Benjamin: Hey, good afternoon, guys. Thanks for taking the questions. I have a couple maybe just starting off with the commercialization plan and I know that you have hired a Head of Marketing. Can you give us a sense how big is the sales force potentially going to be and what kind of remains to be done between now and potential launch in the second half of last year?

Adam Craig: Yes, I will answer the first component, sales force – and by the way, thank you for your question that. So, our sales force will be very much in keeping with the size of other companies that have launched small niche indications in the hematology oncology approximately somewhere between 16 and 18 reps. I will hand over the second part of the question to Bruce who is working on this actively as we speak. Bruce?

Bruce Seeley: Yes, thanks for the question. We have been focused right now on a couple of things. One is bringing in the key leadership positions. So as you heard we have hired an accomplished leader for our marketing effort and we currently have openings for medical affairs, market access and some other marketing support roles that will be part of our first initial bolus of hires. We don’t expect to get into the more significant hiring of the commercial organization until later next year as we approach launch. And as far as the activities that we have got underway, we are doing extensive market research right now. We have several market research efforts that are ongoing presently and those are working on demand research, to be able to firm up the forecast. We also have activities that are more landscaping to be able to help us understand the marketplace, today, the marketplace at time of launch and to be able to help us set our positioning.

Reni Benjamin: Got it. And my next question is to do with maybe ex-U.S. activity, I don’t know if I have asked this before in the past, Adam, but how are you thinking about the ex-U.S. opportunity, is that something that you won’t see really you are just going to focus in the U.S.?

Adam Craig: I will say, Reni, it’s within the U.S. that’s the – the team that is leading and operationally we are more adept to the U.S. For pacritinib to be approved in Europe, we would need to complete PACIFICA. We met with the PMA I think over a year ago that I made it clear they wanted another trial. So, once PACIFICA is complete, we then have the option without [indiscernible] or partnering to Europe and given our skill set, I suspect partnering would be a better option for us.

Reni Benjamin: Got it. And the final one for me is the upcoming ASH presentation, we have the potential for pacritinib in acute GVHD, can you talk to us a little bit submitted about what exactly you would have us focus on and do you have a sense if already if maybe you removed this from the IST that you are going to see a more corporate fixed program going forward?

Adam Craig: Yes. So, that’s certainly now of interest for us. We are very excited by the IST work has come out of the Mayo Clinic and Moffitt. What it’s showing is in the early parts of study, very, very good response to the therapy, including pacritinib for tacrolimus and sirolimus and showing a significant reduction in the acute graft-versus-host rates in patients within the first 100 days of therapy compared to historical controls. So, that’s very encouraging to us. And we believe it’s a proof of concept. That trial currently is expanding into a Phase 2 that’s being conducted as an IST. And from that data, if the data continues to show promise, then we would consider taking almost a company expensive activity and conducting a company-sponsored trial in acute graft-versus-host. So, I will repair that case with the data, I am glad you brought it up today and we are very encouraged and we do see it as an opportunity to develop the drug in new indications.

Reni Benjamin: Perfect. Thank you very much and good luck going forward.

Adam Craig: Thank you, Reni.

Operator: Thank you. Our next question comes from the line of Chad Messer with Needham & Company. Your line is open.

Gill Bloom: Hi, everyone. This is Gill on for Chad and thank you for taking my questions. Unfortunately, my aGVHD question was taken. So just if you could remind us a little bit about the mechanism of action for pacritinib and COVID, I remember it has something to do with also having some interaction with IRAK and how have JAK inhibitors fared in COVID patients so far?

Adam Craig: Yes, thank you. It’s an important question. I think the fair answer here is the use of pacritinib in COVID makes sense particularly the cytokine storm setting, because it has multi-kinase activity. It has potential down-regulation of interleukin-1 and 6 through its activity on JAK2 and IRAK1 and it also shows activity on CSF1R has the potential to down-regulate the macrophage activation that can be part of the cytokine storm. So that’s why we thought it was an attractive proposition. And obviously, it was the right thing for us to do that thing for the company to do to respond to the public health crisis and conduct a trial in that setting. We – recent pre-clinically we compare favorably to the JAK2 inhibitors, because of the multi-kinase effect. We don’t specifically have one kinase that we welcome, for example, just JAK2, we had other kinases and as you alluded to obviously the IRAK1 activity we think it’s very important in this setting.

Gill Bloom: Alright. Thank you very much and congratulations on all the progress and we will be keeping an eye up on PDUFA date.

Adam Craig: Thank you for that. I appreciate it.

Operator: Thank you. Our next question comes from the line of Thomas Flaten with Lake Street Capital Markets. Your line is open.

Thomas Flaten: Hey, thanks and thanks for taking the questions. Adam, just a quick question on the COVID study, I heard you said that you would be doing interim analysis based on 200 patients. If it was going to be served, there was a different preliminary endpoint maybe 150 or so patients with [indiscernible] – can you explain maybe I got that wrong, but could you just keep bring that to speed on that?

Adam Craig: Yes, the standard. Yes, we are trying this on the 150 to 200, which we are expecting more than 200 patients in the first quarter, but next year in fact we had a quite significant increase enrollment of the last few weeks and as the COVID pandemic in the U.S. has increased. We increased the sample size, because the standard of care had changed between them [indiscernible] study in April and from when we started it and now. So we thought to make a good decision, a more precise decision about the interim, we needed a larger sample size. So that’s the reason why. The main change instead is that the care has been a change in practice in the use of ventilators. And so therefore, to be conservative, as we always are with all our estimations to be more conservative to increase the sample size.

Thomas Flaten: Got it. And then if you complete the submission of the NDA in the first quarter what the earliest you might expect to hear on the priority – due to priority review decision by FDA?

Adam Craig: We should hear within 2 months. The FDA has two months to review the application and make sure it’s complete before accepting the filing. And we should hear at that time whether we get priority review. We do expect to get priority review, but we have the right application for that and we don’t have unmet medical need in a small indication. So, we do expect there to be priority review and as was the case it would give us an opportunity to have approval before the end of 2021.

Thomas Flaten: Fantastic, great. Thanks for taking the questions.

Adam Craig: Thank you. Thomas.

Operator: Thank you. I am not showing any further questions in the queue. I would now like to turn the call back over to Adam for closing remarks.

Adam Craig: Well, thank you Amanda and thank you everyone for joining the call today. We look forward to further conversations over the coming weeks.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.