Earnings Transcript for CTIC - Q4 Fiscal Year 2020

Operator: Ladies and gentlemen, thank you for standing by. And welcome to Q4 2020 CTI BioPharma Corporation Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Dr. Adam Craig. Thank you. Please go ahead, sir.

Adam Craig: Thank you, Gigi. And welcome to this afternoon's conference call. Joining me today are David Kirske, Chief Financial Officer; and Bruce Seeley, Chief Operating Officer. 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 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. This quarter CTI executed on critical activities with further advanced pacritinib towards a U.S. approval and commercial launch. Our rolling NDA submission for the use of pacritinib in myelofibrosis patients with severe thrombocytopenia touches the platelet count of less than 50,000 per liter is nearly complete. We remain on-track to finish the submission by the end of this month. As we have previously discussed, the format of the NDA was agreed with the FDA and will consist of a submission package based upon available data from the completed Phase 3 PERSIST-1 and PERSIST-2 studies, and the Phase 2 PAC203 [ph] study with a focus on the severely thrombocytopenia patients enrolled in these studies, including frontline treatment naive patients, and patients with prior exposure to JAK2 inhibitors. In PERSIST-2 in patients with severe thrombocytopenia who were treated with pacritinib 200 milligrams twice a day; 29% of patients had a reduction in spleen [ph] volume of at least 35% compared to 3% of patients receiving best available therapy, a statistically significant finding. In the same population, pacritinib was well tolerated with reversible and manageable side-effects. If the FDA accepts the NDA and grants priority review, we should receive an accelerated approval for pacritinib by the end of 2021. At that point, the ongoing Phase 3 PACIFICA study is expected to be completed as opposed to approval confirmatory study. Enrollment in this trial has recently improved, in part due to the abatement of the COVID-19 pandemic, and we continue to expect to report topline primary efficacy data in 2023. Our preparations for the commercial launch of pacritinib are progressing well. Over a third of the existing myelofibrosis population had severe thrombocytopenia, approximately 7,000 patients. To address this unmet medical need, we have now hired key leadership in marketing, sales, medical affairs and market access. Over the coming months we'll focus on our disease awareness campaign, market access, customer engagement, and the deployment of our field force. Last year, we launched the study of pacritinib in severe COVID-19 patients in response to the pandemic. This study PRE-VENT is randomized double-blind, placebo-controlled multi-centered Phase 3 study of pacritinib in hospitalized patients with severe COVID-19 comparing pacritinib plus standard-of-care versus placebo plus standard-of-care in hospitalized patients. The primary endpoints of the trial will assess the proportion of patients who progress to invasive mechanical ventilation and/or extracorporeal membrane oxygenation or die by the age 28 [ph]. We expect to report an interim analysis from this study in mid-2021. Before I turn the call over to David to review our financials, I want to touch on an additional indication that we have been investigating; that is the use of pacritinib in the prevention of acute graft versus host disease or GVHD. At ASH, The American Society of Hematology meeting in December, data was presented from an investigator sponsored Phase 1/2 study showing that adding pacritinib to the standard prophylaxis of sirolimus and low dose tacrolimus resulted in a significant reduction in the expected acute graft versus host rates in patients within the first 100 days of therapy as compared to historical data without compromising transplantation outcomes and without any new safety concerns. The Phase 2 component of this study is now enrolling, CTI is interest in this indication remains high, and we look forward to providing an update on the progress of the Phase 2 trial later in the year. With that, I'll now turn the call over to David to review our quarterly financials. David?

David Kirske: Thank you, Adam. As of December 31, 2020, our cash and cash equivalents totaled $52.5 million compared to $33.7 million as of December 31, 2019. We expect current cash and cash equivalents enable us to fund our operations into the second quarter of this year. Operating loss was $14.8 million and $47.8 million for the three months and year-ended December 31, 2020, respectively, compared to an operating loss of $9.5 million and $40.7 million for the respective periods in 2019. No revenues were reported for the three months and year-ended December 31, 2020, as well as for the three months ended December 31, 2019, while revenues of $3.3 million were recognized for the year-ended December 31, 2019. Net loss for the three months ended December 31, 2020 was $15 million, or $0.20 for basic and diluted loss per share compared to a net loss of $8.2 million or $0.14 for basic and diluted loss per share for the same period in 2019. Net loss for the year-ended December 31, 2020 was $52.5 million, or $0.74 for basic and diluted loss per share compared to a net loss of $40 million or $0.69 for basic and diluted loss per share for the same period in 2019. So with that, I will hand it back to you Adam.

Adam Craig: Thank you, David. So in summary, we're delighted to be here to be close to the completion of the NDA submission, and for the potential for an accelerated approval of pacritinib by the end of the year. For use in patients with severe myelofibrosis with severe thrombocytopenia are currently underserved patient group. This concludes our formal remarks. Operator, please open the call for questions.

Operator: [Operator Instructions] Our first question comes from the line of Ren Benjamin from JMP Securities. Your line is now open. Ren Benjamin from JMP Securities, your line is now open. Please check your mute, Ren.

Reni Benjamin: Hey, good afternoon, guys. Can you hear me, okay?

Adam Craig: Yes, we can. Hi, Ren.

Reni Benjamin: Hey, thanks for taking the questions, and congrats on all the progress. Maybe just starting off with the application; can -- you know, you mentioned that it will be completed by the end of this month. Have there been any sort of further discussions with the regulatory agency on the way to completion of this application, Adam? Or is it pretty much all in -- ball is in your court at this point? And then, as you -- as the application gets reviewed, do you anticipate sort of back and forth, and ultimately -- I think I've asked you this in the past but I want to know if there is any -- any changes? Do you anticipate any sort of a panel discussions potentially coming out from it? And ultimately, by the end of the year, assuming an approval; can you just remind us what sort of -- how we should be thinking about the commercial opportunity as you -- as you build it out? I know you're doing the disease awareness campaigns and there is a lot of things happening right now, which I'd love to get some more color on. But ultimately when you're launching, how does that launch look for you guys?

Adam Craig: Yes, certainly. I'll go through the questions. Thanks for all those, Ren. The -- to start with about the application, the FDA was very clear; we had a very good pre-NDA meeting. And it's very clear to us what was required of us. There was a great deal of clarity during that meeting, they specifically wanted us to focus on presenting data around the 200 milligram [ph] twice a day dosing of pacritinib in severely thrombocytopenic patients. That has been the sense and the focus of the NDA and will be the focus of the draft label that we'll submit very shortly. There has been some correspondence with the FDA, but really mainly during the review process, clarification of points. There hasn't been any major dialogue with them with regard to the NDA because I think, as I said, they were extremely clear to us as to what was expected of us and I believe we addressed all their concerns in an application that is very solid and complete [ph]. With respect to the panel, currently, I think the data shows that it's very similar to the other drugs in the disease area and other targeting kinase inhibitors with respect to our safety profile and our efficacy data we think is pretty clear with a 29 versus 3%, SVR rate that I just referred to. So at the moment, we don't see there being a panel, however, by aid of the discretion of the FDA, and we will prepare for that eventuality until we hear otherwise from the FDA. Currently, if we file by the end of the month, we should hear from them by the end of May, whether they've accepted the filing and at that point, they should indicate whether they believe there should be a panel or not. And then the commercial opportunity, I'd rather not go into too much detail about the commercial opportunity at the moment, because Bruce Seeley who's with me is still working on that. At the moment, were suffice to say we have hired the key leadership in sales, marketing, medical affairs and market access and we have done a considerable amount of work, identifying out where the patients are, so we understand how we can deploy our full force over the coming months. But at this point, I'd rather not go into too much detail on that and just leave it at that.

Reni Benjamin: Okay, yes. Fair enough. As long as you don't mind, I'll probably ask that the next conference call as you get more clarity. I guess, just leaving, one last question for me regarding GVHD, you mentioned updated data later this year. Is it fair to assume by ASH of this year? Is that how we should be thinking about it? And then maybe related to that, we see how pacritinib threads the needle in MF, but the landscape is changing quite a bit in GVHD. Can you talk a little bit about how you envision pacritinib threading the needle in GVHD?

Adam Craig: Well, as I said in the opening remarks, we're very interested in the graft versus host data. The publication for that data is going to come out very shortly and I think it's an exciting opportunity for us to expand the use, potentially expand the label of pacritinib. The data of the study has been conducted by the University of Minnesota and the Moffitt Center and they've indicated that enrollment of the Phase 2 study is going well. And I would expect there to be some data by ASH to answer your question. With respect to the broader use of acute graft versus host, I think at least the proof of concept of using pacritinib in this setting has been very positive and we are as a team expanding other ways of using the drug in graft versus host, but our main focus at the moment is the acute graft versus host syndication.

Reni Benjamin: Perfect. Thanks very much for taking the questions.

Adam Craig: Thank you, Reni.

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

Chad Messer: Okay, thanks. Good evening. Thanks for taking my question and congrats on being so close to completing a potential filing. You have mentioned labeling. I'm just wondering whatever is appropriate that can be discussed at this point, given where you are about your thoughts on labeling. I know in the past, this was discussed as a way of addressing past safety concerns. I just want to make sure we have your latest thoughts on that.

Adam Craig: Yes. Thank you, Chad. It's nice to speak to you again. We spent an awful lot of time in the labeling and we've gone through the safety data -- the entire data safety data set, primarily the data from the less than 50,000 population, which is what the FDA is most interested in. And we think in the labeling, we can address previous safety concerns of the FDA in the warnings and precautions section, particularly around any bleeding or any cardiac events. After reviewing the data in a great deal of detail, we do not think there is a justification for black box warning. So we have in our proposal draft label to the FDA, we're not going to include a black box warning for hemorrhage. But obviously, this will be a negotiation once the FDA started to review the data. But overall, when we looked at the integrated data, all the data together, I was very encouraged and very pleased to see that the side effect profile of pacritinib was very manageable and very predictable and we think we can address the concerns with normal label language as others have within the warnings and precautions section of the label.

Chad Messer: Okay, great. Thank you. Very helpful and very encouraging. We've touched base on this before but I'm just wondering here on the on the eve of filing with FDA if you've had any further thoughts on just a general the EU strategy?

Adam Craig: Well, the EU has indicated previously that they would like the Pacifica Phase 3 trial to be complete before we submit. We're continuing to review our position on that and obviously with the UK breaking away from Europe, the UK is now a separate entity. The focus to be honest with you, given the size of our company, the focus over the last six months has been the NDA. But once the NDA is in place, myself and my regulatory colleagues, we will take some time and look at reassess our regulatory strategies in other territories.

Chad Messer: Okay, fair enough. And then just -- I'd like to get your thoughts here on cash position, obviously in the Q2 is not super enviable. But if just looking back at my notes from the last quarter, that runway appears to have shortened. I'm just wondering if there's a particular reason for that. Anything you can say about the options you're considering to address?

Adam Craig: Yes, we're not going to comment on that today, except for the numbers that David has already presented, Chad, but thank you for your question.

David Kirske: Just one point, Chad. In terms of our accelerating costs, that's associated with commercialization as we build that infrastructure.

Chad Messer: All right. Great. I think it's fair enough. Thank you guys.

Operator: Thank you.

Adam Craig: Thank you, Chad.

Operator: [Operator Instructions] Our next question comes from the line of Thomas Flaten from Lake Street Capital. Your line is now open.

Thomas Flaten: Hey, guys. Let me add my congrats, too. Just a couple of housekeeping on PRE-VENT and GVHD. On the PRE-VENT study, Adam, I think you had increased the interim patient group up to 200 patients. Is that still the right number we should be thinking about?

Adam Craig: Yes, that's correct, Thomas.

Thomas Flaten: Okay. And then could you remind us with the study going on in GVHD, what your options are? Do you have full access to all the data that's being generated by the U of M and Moffitt team? Or can you just remind us what your relationship is with that team doing that research?

Adam Craig: It's a good relationship. We do have access -- well, we don't have currently, we don't have access on the Phase 2, but we will be when the data is mature. We will be able to look at it. That's in the agreement with the Moffitt and Minnesota whoa are good partners here. They want to move this forward as much as we do. So we'll be able to look at the data and then the options for us is at that point, the drug will have reached the end of Phase 2. We're going to look at the data set and we're going to see if there is a potential approval pathway for acute graft versus host with pacritinib and that may be based on the current Phase 2 data, it may be based on us generating additional data. We won't know until we have a discussion with the FDA.

Thomas Flaten: Got it. And then just a couple on the run up to a potential launch here by the year end. As we're thinking about spending, what's your trigger for kind of mass hiring of sales reps and junior marketing folks that I'm sure there's going to be a bolus of people coming into the company? Is that going to be once you have an acceptance to file at the end of May [ph].

Adam Craig: The bulk of the hiring is after we have acceptance for hire. I'll let Bruce comment on that briefly.

Bruce Seeley: Hey, Thomas, you're right. The gate predominantly, the validation of the filing, as Adam mentioned at the end of May. And then as far as the sales force is concerned, we're going to bring them on closer to the PDUFA date [ph].

Thomas Flaten: And just on that, have you guys settled on a final number of sales reps that you need to know if you've completed that that exercise with ZS or whoever you're using?

Bruce Seeley: No, we have not finalized that. It's in process now.

Thomas Flaten: And then just one final one for me. With respect to drug supply, how do we stand with that?

Adam Craig: Manufacturing has always been a very well established, very strong component of the company. We had plenty of drug products actually, already manufactured some years ago and we have no concerns about manufacturing. We have plenty of drug supply patients within the first year and then as things for the first year of commercialization and things progress, we'll start manufacturing additional drug.

Thomas Flaten: Excellent. I appreciate you taking the questions and congrats again. Thanks.

Adam Craig: Thank you, Thomas.

Operator: Thank you at this time, I'm showing no further questions. I would like to turn the call back over to Dr. Adam Craig for closing remarks.

Adam Craig: Thank you, Gigi. I just like to thank everyone for joining the call today. We look forward to further conversations over the coming months.

Operator: Ladies and gentlemen, this concludes today's conference call. Thanks for participating. You may now disconnect.