G1 Therapeutics, Inc.

Good day and thank you for standing by. Welcome to the G1 second quarter financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to the speaker today, Will Roberts, please go ahead.

Thanks, Jada. Good morning, everyone, and welcome to the G1 conference call to discuss our second quarter 2023 financial results and business update. The press release on these financial results was issued this morning and can be found in the news section of our corporate website, g1therapeutics.com. On this morning's call, the team will provide a business overview of the second quarter of 2023, including an update on our clinical programs and our commercial progress in that period with COSELLA, which is approved and commercially available to decrease the incidence of chemotherapy-induced myelosuppression in adult patients when administered prior to a platinum atoposide-containing regimen or atopotecan-containing regimen for extensive stage small cell lung cancer, or ESSCLC. A question and answer session will follow the prepared remarks. Before we begin, I want to remind you that today's webcast contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Such statements represent management's judgment as of today and may involve risk and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. For more information on such risk and uncertainties, please refer to our filings with the Securities and Exchange Commission, which are available from the SEC or on our corporate website. Any forward-looking statements represent our views as of today, August 2, 2023. Joining on the call today are Jack Bailey, our Chief Executive Officer, Andrew Perry, our Chief Commercial Officer, Raj Malek, our Chief Medical Officer, and John Umstead, our Chief Financial Officer. With that, I'll turn the call over to Jack Bailey.

Thanks, Will. Good morning, everyone, and thank you for joining us on the call today. As of mid-year, our goals for 2023 remain unchanged. First, to drive depth of COSELLA usage and adoption especially amongst the top 100 organizations who treat half of all extensive-stage small cell lung cancer patients in the country, second, to prepare for important clinical readouts early next year, and finally, to efficiently manage our cash runway. Regarding the first goal, our objective was to continue to drive quarter-over-quarter COSELLA volume growth by broadening the number of deeply adopting customer organizations and driving depth. particularly amongst our top 100. As you'll hear from Andrew, we did this successfully in the most recent quarter while seeking to navigate a national platinum-based chemotherapy shortage. Despite that headwind, net sales grew 6 percent quarter-over-quarter to 11.1 million, enabling us to reiterate our guidance of 50 to 60 million in CoSALA net sales in 2023. though as a result of the platinum shortage, we will potentially be toward the lower end of that range. It's worth reminding our investors that assuming we continue to hit our internal forecasts, we expect Cosella to drive us to cash flow positivity and profitability in the next few years. Regarding the second goal, this is a particularly exciting time for G1. We presented important new data throughout the quarter from our phase two trials, including that trilocycline can improve the tolerability of an ADC. Importantly, we expect the survival results from our pivotal phase three triple negative breast cancer trial, as well as from two phase two trials in the first quarter of 2024. If the interim phase three TMBC results are positive, we expect to meet with the FDA to discuss filing a potential supplemental NDA shortly after that. Finally, we make good progress during the quarter in strategically managing our finances. First, by obtaining payment from Sincere for relief of future royalty payments on the sales of Cosella in mainland China, and then by amending our debt agreement with Hercules and paying down a portion of our debt to provide additional financial flexibility. Now, we will discuss each of these topics in order. Andrew will cover our recent commercial efforts and results. Raj will then provide an update on our clinical pipeline. And John will provide financial results for the quarter. Finally, I'll be back for some concluding comments. With that, I'll now turn the call over to Andrew. Thank you, Jack.

I'm glad to be with you today to provide an update on our second quarter 2023 sales performance and the progress we've made in our commercial execution over recent months despite facing some external challenges. Our goal in the second quarter was to extend our quarter-over-quarter growth by continuing to build a broader platform of more deeply adopting customer organizations. We delivered on this goal in Q1, and we've continued to deliver in Q2 despite some marketplace challenges, and I'll discuss some of the factors underlying our performance today. Beginning with sales results, as Jack mentioned, we ended the quarter with $11.1 million in net sales for Cosella, representing 4% file volume growth and 6% sales growth compared with Q1. We've previously stated that our growth in the extensive-stage small-cell lung cancer market can fluctuate due to the two- to three-month duration of therapy for first-line patients. However, in this quarter, we also faced the challenge of well-publicized national shortages of both carboplatin and cisplatin which are the backbone of platinum-based chemotherapy in small cell lung cancer. This caused considerable disruption with customers as patients incurred dose interruptions and discontinuations or switches in regimens. Although this situation remains in flux, we anticipate an improved outlook in the second half of the year. In terms of the effect on our CoSella business, we estimate that this impacted our May and June performance, and particularly in community clinics and hospitals, which may have had less capacity to maintain stock of carboplatin and cisplatin. For example, closella volume in top 100 customers, which see around half of extensive-stage small cell lung cancer nationally, grew 20% in the quarter, while non-top 100 customers declined 11%, and this may have been due to being more affected by platinum shortages than larger customers. We saw a similar dichotomy when looking at all academic institution customers, who grew 25% in the quarter, compared with minus 2% for all community customers. And again, this may be due to their purchasing power in the market and ability to maintain stock. Taking into account some of these underlying performance trends, we anticipate that without the platinum shortage, our volume growth in Q2 may have been closer to our Q1 growth rate of 20% than the actual growth of 4% we're reporting today. Despite the challenges, we saw a number of indicators that our Cosella business continued to build a stronger base of deep adoption during the quarter. Not only did we see the growth in top 100 customers and in academic institutions I referenced earlier, but we also saw an increased number of deep adopting customers. Last quarter, I highlighted an increase in customers purchasing more than 100 files per quarter, from 17 in Q4 2022 to 19 customers in Q1 2023, And in Q2, 25 customer organizations purchased more than 100 vials. In the second quarter, we brought on board 58 new accounts, including one new top 100 organization, meaning 73 of the top 100 have ordered Cosella launch to date. We saw orders from 56 of the top 100 organizations, which was up from last quarter. Despite the challenges in the community setting, we continue to support community oncology through education around optimal EMR placement, and through volume-based contract agreements. In Q2 2023, customers who elected to place Cosella in a default position as their standard of care demonstrated three times the debt of utilization compared with customers who simply left Cosella as an option. We added two new community contract customers in Q2, and we estimate roughly 30% of our business is with customers who have a volume agreement. Our estimate of Cosella patient share continues to grow, And although claims data for Q2 are not fully available, we estimate patient share in the 10% range in the first-line market, which represents the majority of our use. We saw 74% of volume in the quarter come through community clinics and hospitals, and 26% of volume from academic centers. 98% of our volume in the quarter was in commercial supply, with 2% provided through our patient assistance program. Moving on to Q3. We have been encouraged to see community customers most affected by the platinum shortages begin to reorder at more normal rates, and we've shown that there remains growth potential in the academic segment. We continue to see the benefits of the strategic shifts we've made over the last several quarters despite marketplace challenges. As always, we'll continue to evolve our commercial model as necessary to achieve our ambitions for Cosella. I'll now turn the call over to Raj for a pipeline update.

Thanks, Andrew, and good morning, everyone. I will review progress with our clinical pipeline, including recent results, the expected timelines for overall survival results from the ongoing trials, and provide an update on our work to understand the Phase III colorectal cancer results. First and foremost, based on data generated to date and to optimize the opportunity ahead, we plan to focus primarily on two core development paths for trilocyclic. The first, in metastatic TMBC settings, where we have already shown a survival advantage in the trilocyclic arms in a Phase II trial, and secondly, in ADC combinations, including in additional tumor types. We let the bladder cancer survival data determine next steps in this setting, if any. I will now review the clinical results we presented during the second quarter. I'll start with our May esmo-breast presentation of trilocyclic in combination with Gilead's ADC, sasituzumab-govitecan. ADCs have changed the treatment landscape, and thus far, we have convincing data showing that Trilocyclib can improve tolerability of sasituzumab. Trilocyclib administered prior to the ADC was associated with clinically meaningful reductions of over 50% in the rates of multiple adverse events compared to the single-agent safety profile of sasituzumab, including neutropenia, anemia, and diarrhea. We believe that having a healthier bone marrow and immune system function with Trelacyclib treatment may help patients live longer, and we're looking forward to the overall survival results, which are expected in the first quarter of 2024. Then, at ASCO in June, we presented new results from our Phase II Mechanism of Action Trial, showing the ability of Trelacyclib to enhance long-term immune surveillance by increasing T cell function and generation of certain memory T cells and gene expression profiles that may be associated with improved clinical outcome. This would be expected to produce a greater effect on overall survival compared to earlier efficacy measures such as overall response rate and PFS consistent with other immunotherapies. Next, regarding our pivotal first-line TMBC Phase III trial, we continue to expect that the interim overall survival analysis will occur in the first quarter of 2024. This trial largely replicates the design of the phase two trial that showed a statistically significant overall survival advantage in both arms for participants receiving Trilocyclic prior to standard of care compared to standard of care alone. As a reminder, if the trial meets the interim analysis stopping rule, it will be unblinded and G1 will report the top line results. In addition, we will meet with FDA to discuss filing a potential supplemental NDA as quickly as possible in 2024. If the trial does not meet the interim analysis stopping rule, it will continue to the final analysis. Turning to our phase two bladder cancer study, we expect that the overall survival results anticipated early next year would be the most meaningful to evaluate trial acyclic in this setting. In our January press release, we announced that early response rate data in the bladder cancer trial numerically favored patients who received gemcitabine, platinum, and avelumab over patients who received trilocyclic prior to the combination. Despite the differences in response rate, as of the most recent data cut, the PFS is similar between the two arms, with a median of six months in the trilocyclic arm and 6.1 months in the control, with a hazard ratio of 1.07. Further, median PFS was similar across arms in both tumor PD-L1 subsets. Median duration of response favored the trilocyclic arm overall with seven months versus six months and in both tumor PD-L1 subsets. We expect to reach the final OAS endpoint for this trial in the first quarter of 2024, which will determine whether additional late-stage studies in this tumor type are warranted. Next, I want to provide an update on our work to understand the confounding Phase III colorectal cancer trial results. We explored a number of hypotheses, including potential inhibition of transporters involved in 5FU uptake into the tumor, and effect of CDK4-6 dependency off the tumor. Following comprehensive analyses, our efforts did not identify any specific causal factors explaining the unexpected results. Considering data from all of our clinical trials, we believe that the CRC results are likely attributable to this specific regimen and this specific tumor type. We have not seen any similar adverse antitumor efficacy outcomes in our studies in extensive stage small cell lung cancer or triple negative breast cancer. In fact, we saw improved survival in TMBC. As I said earlier, protecting the bone marrow and making the immune system function better could improve long-term tumor efficacy outcomes, such as overall survival. In that regard, based on the occurrence of events, we look forward to meaningful OS data readouts across our trials in the first quarter of 2024. I'll turn the call over to John for the financial results. John?

Thanks, Raj, and good morning, everyone. As Will mentioned, full financial results for the second quarter of 2023 are available in this morning's press release and will be in the 10Q, which we expect to file today after market closed. Our total revenue for the second quarter of 2023 was $42.4 million, comprised of net Cosella revenue of $11.1 million and license revenue of $31.3 million. For the same period in 2022, total revenue was $10.6 million, including $8.7 million of net product revenue. The license revenue from the current quarter is primarily related to Sincere, for the relief of future royalty payments for sales in extensive-stage small-cell lung cancer in mainland China. The remaining license revenue related to supply and manufacturing services with Sincere and clinical trial reimbursements from Sincere and EQRx. On the topic of EQRx, yesterday we received formal notice of their intent to terminate the Laracyclib license agreement and revert the product rights back to us as part of their proposed acquisition by Revolution Medicine. We are currently assessing next steps and would not expect to receive any additional milestone payments from them. Cost of goods sold for the three months ended June 30, 2023 was $1.4 million compared to $1 million for the same period in 2022. We mentioned on the last call that we expected our 2023 operating expenses to be 20% to 30% lower than that of 2022. As an update, we now expect our 2023 operating expenses to be closer to 30% lower than that of 2022. Our research and development expenses for the second quarter of 2023 were $12 million compared to $20.8 million for the second quarter of 2022. Our selling, general, and administrative expenses for the second quarter of 2023 were $17.4 million compared to $25.7 million for the second quarter of 2022. This reduction is primarily related to decreases in expenses associated with commercialization activities, personnel costs, and professional fees. Regarding our cash position, we ended the second quarter with cash, cash equivalents, and liquid securities of $104.2 million compared to $145.1 million as of December 31, 2022. While on the topic of our cash position, as Jack mentioned, we strengthened our balance sheet even further and added financial flexibility during the quarter. First, we received net proceeds of $27 million after Chinese withholdings for relief of future royalty payments from Sincere for the extensive stage small cell lung cancer indication. G1 has the potential to receive an additional $18 million pending positive data from our ongoing pivotal TNBC Phase III trial, of which we would receive $5 million on some serious filing of an NDA in mainland China and $13 million on their approval. Then, on June 6, 2023, we amended our loan agreement with Hercules Capital. The amendment modified certain tranche advances and lowered the required minimum cash covenant. In addition, the amendment removed the existing minimum revenue covenant and now provides for a conditional borrowing-based limit. Upon closing of the amendment, G1 paid down the loan $25 million, resulting in a total loan amount outstanding of $50 million as of June 30, 2023. Our cash position as of the end of June is reflective of those strategic transactions, and as a result, we believe we have additional financial flexibility and takes our cash runway well into 2024 beyond the readouts of our clinical trials that Raj discussed. Finally, regarding revenue and cash runway guidance for 2023, we reiterated our net product revenue guidance for 2023 of a range between $50 and $60 million, though because of the platinum-based chemotherapy shortage, we may be on the lower end of that range. There is no change to our 2023 gross to net expense percentage estimates, and based on the foregoing, we anticipate a year-end cash, cash equivalents, and marketable securities balance of approximately $70 to $80 million. With that, I'll turn the call back over to Jack for some closing comments.

Jack? Thank you, John, Raj, Andrew, and Will. And as always, I want to thank the people living with cancer for your continued inspiration. We know the difference our drug makes to people living with this disease. In small cell lung cancer, our first indication, the patient benefit is clear due to its ability to protect the bone marrow from the harmful effects of chemotherapy. And as you just heard from Andrew, we remain confident in the potential of COSELLA in small cell lung cancer and are making strides in expanding the depth and rate of adoption. Importantly, we accomplished this in the face of a platinum-based chemotherapy shortage that impacted our business in the second quarter. Beyond the sales line, we are convinced that Trilocyclic has potential to meaningfully improve efficacy by protecting the bone marrow and making the immune system function better. We have a lot to look forward to in the first quarter of next year in that regard as we await survival data from our pivotal phase three trial in TMBC and from two phase two trials. If successful there, our next step is to prepare for a supplemental NDA filing as soon as possible. I'll finish with a reminder that we are one of the very few companies in our sector in market cap that have an approved drug that provides clear benefit and is expected to drive profitability in the next few years, along with pivotal data expected in the first quarter of 2024 and the cash position to get us through those and other results. Thank you for your time this morning. We will speak again in this format on the third quarter 2023 call in November, and we'll see many of you at the fall investor conferences. With that, I'll close the call and turn it over to Q&A. Operator, would you please remind our listeners how to ask a question?

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile our Q&A roster. Our first question comes from Gil Blum of Needham & Company. Please go ahead.

Good morning, everyone, and thanks for taking our questions. So just maybe a good place to start is with the platinum shortage. Given the relatively short duration of therapy in small cell lung cancer, should we expect much of a bolus of patients in the second half of 23 due to this shortage? Thank you.

Thanks, Gil. I would not anticipate a bolus of patients. So as you know, this is a very rapid, aggressive process. In many cases, I believe those patients were being dealt with by dose rounding down or extending doses out, so creating more space between the cycles. But in some cases, patients were discontinued or were not able to be offered the platinum-based chemotherapy and were given some other choice instead. So I don't think we'll see a situation where those patients are waiting in the wings.

Okay. Okay. And maybe a broader question on the effects of trisocyclib in cancer, even more broadly. I know you guys took a closer look at the colorectal cancer population and really didn't come back with anything specific. But, you know, given the kind of immunological landscape here, I mean, it looks like a lot of these data are trending towards a survival benefit, which is pretty typical for IO agents. I'm just curious if you think this is a class effect and whether you should spend more time on immunological tumors. Thank you.

Hey, Gil. This is Raj. Yeah, we completely agree with you. And, you know, hence our focus going forward on TMBC, where we saw very strong Phase II data, you know, and in the ADC landscape. And, you know, also other data where we saw, you know, greater, at least suggestions of greater efficacy in the PD-L1 positive subsets. So, yeah, we completely agree with you that as we learn more about Trila and where it could help patients, that's really where we're going to be focusing going forward.

All right, Paola, thank you for taking our questions.

Thank you. One moment for our next questions. Our next question comes from Kaveri Pullman of BTIG. Please go ahead.

Hi, good morning. Thanks for taking my question. So for the ADC study, I was just wondering if you can provide any insight on any comments from the physicians, how they are seeing whether Tredelvy used or the duration of administration is more biased in this trial. You know, the approval trial for Tredelvy showed a median duration of administration of 4.4 months. And I was hoping to kind of like get some insight there because TNBC, the previous trial also showed higher chemo administration. So I just want to get some insight there.

Yeah, Kaveri, this is Raj. As we reported, the combining trial with Tredelvi improves the tolerability. Our previous data that we reported was still a relatively short median follow-up of around five and a half months, and patients were still ongoing on therapy. So clearly this is something that we're following, and we'll report more as we report the OS data early next year.

All right, that's fair. And then for bladder cancer, are you thinking about Tredelvi combination since it's approved? And given that PADSEV has now moved to frontline, Tredelvi could get higher market share. Just your thoughts.

Yeah, you know, absolutely that's a possibility. The landscape in that first-line setting is going to change a lot next year with readouts of PADSEV and other trials as well. So we'll have to really evaluate the data at the end of the day and the OS data in TMBC, but that certainly could be a potential path as well because we'll be interested in looking at developing ADCs more broadly than just TMBC.

Got it. And maybe a last one again on the bladder cancer study, the results that you reported today. Can you tell us how the DOR and TFS from the control arm compared to the historical results? And then for the OS readout, what do you expect from the control arm and how much difference between the arms would be meaningful?

Yeah, you know, as you know, this trial, actually there isn't a good comparator because in the Javelin 100 regimen, the all of the data is from the Evalumab maintenance. And so patients who did not make it into maintenance were obviously not part of that data set. So this is really new data, if you will. I mean, some of the trials that we'll be reading out next year, such as the EV302 and others, where you have treatment right from the beginning, could also help. So this is why we run controlled trials, right? Because patients are randomized and there's really no difference in PFS And I think the same applies for OS, really. We'll really be generating the control arm data for this particular combination because that doesn't really exist right now. And again, it's a controlled trial, so we'll be looking to see whether the addition of Trila improves survival relative to the control arm. Generally, across trials, if you see at least about a two-month improvement in OAS, generally that's considered clinically meaningful, but we'll have to look at what the data shows.

That's fair. Thanks for taking my question. Sure. Thank you. One moment for our next question. Our next question comes from Anupam Rama from JPM. Please go ahead.

Hey, guys. Thanks so much for taking the question. I had a quick clarification question on the operating expenses being down closer to 30% versus 20% here over a year. Sorry if I missed this, but what is driving that more specifically? Thanks so much.

Thanks, Anupam. Really what's driving that, if you recall, at the beginning of the year, we did cost restructuring following the CRC readout, where we said we recognize or realize a lot more of those cost savings on the back half of the year. That, in addition to a lot of these Phase II trials winding down, as well as the colorectal we expect ending by the end of the year being wound down, that's what's driving it.

Great. Thanks so much for taking our questions.

Thank you. One moment for our next question. Our next question comes from Troy Langford of TD Cohen. Please go ahead.

Hi. Congrats on all the progress this quarter and thanks for taking our question. Just on the Trudeau V combination data, just given that data that you all saw and then with consideration for the patient population enrolled in that study, I guess, what OS number in the first quarter of next year would really excite you all? And then just as a follow-up to that, would you still take the COSELL combination with TRIDELV forward if you saw kind of similar OS measures in that readout next year but significantly improved safety?

Hey, Troy.

Yeah, Raj here.

Those are great questions. I mean, as you pointed out, and as we also mentioned in our ESMO breast poster, the population is different. A more heavily pretreated patient population with more prior PD-L1 exposure. And if you look at the Tredelvi data, both the response rate as well as the efficacy is a little bit lower. So we would really want to be looking... more closely at how our data compares to sort of maybe more of the heavily pre-treated assent patient population. If you look at the overall assent population, it's, you know, around a little under a year or so. So, again, we would want to see, you know, some meaningful improvement over that. It's not a controlled trial, and we're thinking about, you know, other ways to look at the data in some, in quotes, controlled fashion. But, you know, certainly greater than 12 months and the longer the better, I would say. Your second question about would tolerability alone be sufficient to take the drug forward, you know, I think this could certainly be probably more important in earlier stage settings where, you know, patients... maybe less able to or willing to tolerate greater toxicity. So I think those are probably some settings where better tolerability and OS that seems in the same ballpark could be areas to explore. Not to say that we wouldn't also consider exploring in the metastatic setting, but that's sort of how we're thinking right now.

Great. Thanks for all the color.

Thank you. As a reminder, To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. There seem to be no further questions. I would now like to turn it back to Jack Bailey for closing remarks.

Thank you, operator. As always, we look forward to keeping you updated on our progress, and certainly thank you for joining us today. We look forward to being in touch later this year. Thank you.

This conference is now over. You may now disconnect. Thank you.