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spk01: Good day and thank you for standing by. Welcome to the Spectrum Pharmaceutical second quarter 2021 earnings 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 on your telephone keypad. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Kirk Gustafson, Chief Financial Officer. Please go ahead.
spk07: Thank you, Operator, and good afternoon to everyone. Thank you for joining us today for Spectrum Pharmaceutical's second quarter 2021 financial results conference call. Our second quarter financial results press release was sent out earlier this afternoon and is available on our website at www.stpirx.com. Joining me on the call today from Spectrum Pharmaceuticals will be Joe Turgeon, President and CEO, and Dr. Francois Lebel, Chief Medical Officer. Before we get started, I would like to reference the notice regarding forward-looking statements included in today's press release. This notice emphasizes the major uncertainties and risks inherent in the forward-looking statements that we will make this afternoon. These statements are not guarantees of future performance, and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. With that, let me hand the call over to Joe Turgeon, CEO of Spectrum.
spk05: Thank you, Kurt. Good afternoon, everyone, and thank you for joining us, and thank you for your interest in Spectrum. As most of you are aware, Spectrum received a complete response letter from the FDA last week regarding the BLA for Rolantis, seeking an indication for the treatment of neutropenia in patients receiving myelosuppressive anti-cancer drugs. The entire company is greatly disappointed by the CRL. However, I can assure you that our team is already working closely with our partners to resolve the CRL. The CRL cited deficiencies related to manufacturing at the bulk manufacturing facility in which will need to be remediated and indicated that re-inspection will be necessary. The CRL also cited deficiencies at the fill and finish facility, which will need to be remediated. We are in communication with our CMOs, and the remediation work is already underway. The company is seeking further clarification from the FDA regarding the remediation timelines and the plans to meet with the agency as soon as possible. The CRL did not cite any need for a new clinical trial. We look forward to providing an update following this engagement with the FDA. Now let me shift to Poseyotinib, our other late-stage pipeline asset. Spectra's Poseyotinib program has continued to make great progress in 2021, and we are advancing to a very important milestone, the submission of the MDA. The MDA for Poseyotinib will be based on the positive data from Cohort 2 of the Zena 20 study. The cohort evaluated previously treated patients with non-small cell lung cancer with HER2 exon 20 insertion mutations and met the pre-specified primary endpoint in these patients. Poseyatinib has fast-track designation, an indicator of the medical need that this drug may be able to alleviate for patients with this terrible disease for which there is no approved therapy. An additional advantage of fast-track designations is the ability to have more frequent interactions with the agency. During the second quarter, we took advantage of this designation to meet with the agency, and Dr. Francois will update you further. We remain on track to submit the POSI-NDA later this year. Our recent data presentations at ESMOTAT, AACR, and ASCO shows that twice-daily dosing data appears to provide a significant improvement in both efficacy and tolerability. And with that, I'm going to turn the call over to Dr. Francois Labelle, our CMO, for an update on our clinical development progress for posiatinib. Dr. Labelle.
spk09: Yeah, good afternoon, everyone. I'm glad to be with you on today's call. Joe has provided you the update on Rolantis, so I will focus on posiatinib. The submission for our NDA under FAST-DRAG designation is well underway and planned for later this year. It will be based on our positive data with QD dosing from cohort two of the Zena 20 clinical trial. We recently had a type C meeting with the FDA to agree on the data package to be provided in the submissions. The submission will be aiming for an indication in the treatment of patients with HER2 exon 20 insertion mutation in non-small cell lung cancer. And we believe posiotinib has the potential to be first to market for this indication in an area of great unmet medical need. As part of our type C meeting, I am pleased that the FDA agreed that we can include our recent data on BID doses. At the ASCO meeting in June, we presented data on patients with brain metastasis. This analysis looked at the results for 284 patients from Cords 1, 2, and 3, of which 36 patients had brain metastasis at baseline. Three of these patients 8% achieve intracranial complete responses. Brain metastasis occurs frequently in non-small cell lung cancer and in up to 25% of patients and is associated with short survival. The patient in this analysis received POSI at a dose of 16 mg once daily. These data show clinically meaningful CNS activity for POSI treated non-small cell lung cancer patients with CNS metastasis with either EGFR or ER2 exon 20 insertion mutation. In April, we presented data at AACR from cohort 5 of the Xena 20 trial. These results have provided further support of our hypothesis around BID dosing for the 38 patients who received 16 milligram per day and randomized to either POSI 16 milligram QD or eight milligram BID in cohort five, improved response were observed in the BID arm with 31.6% of patients reaching a partial response, which represents near doubling of the response rate. Other arms to refine the minimum effective starting dose demonstrated activity, but the eight milligram BID performed best. A clinically meaningful improvement in tolerability was also observed. The grade three or higher related adverse events were reduced by approximately 60% with BID dosing. Dosing at 8 mg twice a day also allows for an improved rate of dose reduction and interruption. As a result, in Chord 5, we are dosing patients exclusively at 8 mg BID. Chord 4 of the Xena 20 clinical trial is continuing to enroll well at 8 mg BID in first-line treatment. During the balance of the year, we expect to meet our key regulatory milestones and have additional data readouts. We plan to provide you with updates on our progress in the coming months. I will now turn it over to Kurt for a discussion of our second quarter financials.
spk07: Thank you, Francois. Our SG&A expense for the second quarter of 2021 was $15 million versus $14.7 million in the previous year. We have continued to delay additional investments in our commercial infrastructure until we gain clarity on the Rolantis approval. R&D expense was $29.1 million versus $21.7 million due to increased program costs primarily associated with posiotinib as well as slightly higher personnel-related costs. Our net loss for the quarter from continuing operations was $49.9 million, or $0.32 per share, versus $32.2 million, or $0.29 per share in the comparable period of 2020. On a non-GAAP basis, which primarily backs out stop compensation costs and the change in the value of our equity securities, our loss for the quarter was $39.3 million, or $0.25 per share, versus $31.8 million, or $0.28 per share in the prior year period. We ended the second quarter with approximately $159 million in cash plus marketable securities compared to $163 million last quarter. Operating cash burned for the quarter was $29.7 million, which is consistent with where we have been the last few quarters. During the quarter, we received net proceeds of approximately $31 million from equity issued off of our ATM agreement. With that, let me now hand the call back over to Joe.
spk05: Thank you, Dr. Francois, and thank you, Kurt. While I'm disappointed in the latest decision of Rolantis, we're committed to working with our partners and the FDA to resolve these issues as soon as possible. I'm pleased that the strong and steady progress Spectrum continues to make on our posiotinib development program. We are actively preparing on-day submission for POSI, and we're planning to share additional results from our ongoing cohorts in the Zena 20 clinical trials later this year. And with that, Operator, I'd like to open up the call to questions.
spk01: Yes, sir. As a reminder, to ask a question, you will need to press star 1 on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question comes from the line of Maury Raycroft from Jeffries. Your line is open.
spk04: Hey, Maury. Hi, everyone. Hi. Hi, Joe. Hi, Maury. Iker, hi, thanks for taking my questions. Maybe first question on Rolandis. Just wondering if you can provide a little bit more clarity on what next steps could look like there. If it's possible for FDA to answer some of their questions by reviewing documents from Hanmi or potentially doing additional follow-up virtually, or would they have to go back to the site? If you can provide any more clarity there.
spk05: Yeah, listen, I love your question because they're all important things, obviously, Maury. But first of all, the next step, you're asking what the next step is, is we're preparing the questions, sending them to the agency, requesting the meeting. Because the most important next step to answer everything you're asking is having that meeting with the agency. And because when we have a chance to clarify everything that you asked with the FDA and you know, the extent of how we, the deficiencies, how we answer those, how quickly. The timeline is the most important thing. Once we meet with them, we'll be able to clarify all the manufacturing deficiencies, the estimated timelines. And as far as asking, you know, could we do it a different way than a physical inspection, don't know the answer to that. That's certainly one of the questions we'd be asking when we're with the agency. Great questions.
spk04: Got it. And it sounds like at base case, they would not request you to do an additional study. And maybe if you can just talk more about your confidence to getting this issue resolved. And also, one of the other questions we had, too, is just on communicating with Hanmi. I guess, what has Hanmi said about the situation? Have they provided any additional clarity on what FDA could be looking for on their end.
spk05: Yeah. Let me start with the confidence. I'm confident that, I think you're asking, are these things fixable? And we believe that all the deficiencies and the items can be remediated. There's no question I'm confident they can be remediated. But I obviously want to gain additional clarity with the agency. I've got to keep going back to that until we do meet. And, you know, normally that meeting, once you submit, it takes within 30 days. the agency will meet with you. So I am confident that we can fix these remediations. Now, you asked about meeting with Omni. Of course, we've already met with Omni. It's ongoing. We're working together very closely. I can even tell you, as I said earlier, a remediation process has already started. So, you know, we're already well into working with Omni on the remediations, but we want to clarify everything and give you those timelines you're looking for.
spk04: Got it. It's very helpful. Thanks for taking my questions. I'll hop back and meet you.
spk05: Thank you, Mark.
spk01: Your next question comes from the line of Alethea Young from Cantor. Your line is open.
spk02: Hey, guys. Thanks for taking my questions. Maybe just a couple. One, just can you talk to, like, more specifics on the FDA's comfort with the clinical data package that you provided? Like, was there anything in the complete response letter that indicated that, you know, that part of it was at least crossed off or any color you can provide from that. And then the second question is, you know, isn't posiattinib made in the same facility? So I guess, you know, how should we do it? I guess if you resolve these issues for Rolantis, is it helpful for posi or how do we think about that? Thank you.
spk05: Yeah, hey, Alicia. First of all, on the FDA clinical, what I can tell you is they did not request an additional clinical trial. I think anytime you resubmit any new safety data or anything you had, you would put into there, but there was no, the CRL focused, the remediations are focused around manufacturing. Now, as far as POSI, you're asking the question, we did license POSI from Hanmei, and I'll remind you it's a small molecule, so it's a different manufacturing process, but that's actually manufactured at another South Korean company.
spk02: Okay, and just As a follow-up to that, I guess on the first part, like, how do you know that, like, I guess, like, you know, there was, like, a year that passed, I guess is the best way to put it. And was it just maybe lack of communication with Hanmi or were they not, you know, the FDA didn't communicate? Like, I guess I'm trying to figure out. There was, like, an ample amount of time with them just not being able to get over there to review it. Was that the factor or were they just not communicative? Thanks.
spk05: You know, Alicia, I don't know if communication along the way is because they don't really communicating. You know, this was actually, you're right, it was actually over a year for the actual, when originally they were going to inspect a plant. Now, during a year, we didn't sit still, I can assure you. We had outside experts in there. We did several mock inspections. We, you know, I thought we were going to get approved. You know, I'm not going to lie to you. I expect it to pass. However, the reality is they found some deficiencies they want to be fixed, and we're going to work real hard and real quickly to get those fixed as quickly as possible. I do think they are fixable.
spk02: Okay, great. Thank you.
spk05: Thank you, Alicia.
spk01: Our next question comes from the line of Michael Smich from Guggenheim Securities. Your line is open.
spk06: Hi, Michael. Hey, guys. This is actually Charles from Michael. Thanks for taking the questions, and sorry to hear about the recent Rolantis news. But I guess my first question on POSI, so it does sound like cohort two MDAs is still on track for this year. Could you provide a little bit more color, perhaps, around how – I think enrollment for Cohort 4 has yet to be completed. I guess, where are you guys with that, and how should we think about near-term timelines? Thanks.
spk05: First of all, why don't you take that?
spk09: Sure. So, Charles, thanks for the question. We've communicated before that, you know, we were pleased with the enrollment in Cohort 4. We've also indicated that we had 49 patients enrolled in 16 milligram once daily. And as you know, we are now enrolling with BID dosing, 8 milligram BID dosing. I think importantly, you know, as indicated in our formal parts of the presentation here, is that one of the key questions we had on type C meeting was whether or not the FDA would accept that we provide them with some of the information about BID dosing. As I'm sure you appreciate, given the positive signal we had seen with BID dosing, we felt that it would be good to be able to incorporate some of that information in the filings. And we've indicated today that's new information that the FDA agreed that we can provide this information. Now, critically, that doesn't mean necessarily that it's going to find its way in the labels, but it certainly gives us a chance to present the data and the improvement and efficacy and the safety profile. So, we think that's an important one. And, you know, it's going to obviously be subject to the agency reviewing this data, et cetera, and we'll see where they come out. But that's where we are right now. I assume I've answered your question, but maybe you want to come back with further questioning.
spk06: Got it. All right, yeah, thanks for that. And I guess, you know, like my second question, back to Rolandis, and as a bit of a follow-up to Alethea's prior question, I'm kind of, you know, wondering, you know, some of the deficiencies that the FDA had mentioned and that you guys are aggressively addressing right now. Could you provide some color as to, you know, are those deficiencies something that's, I guess, specific to the facility itself, or is it something that you know, it kind of pertains to how one would manufacture or fill, finish a biologic versus a small molecule. And I guess as a bit of a check-the-box follow-up to that, could you also remind us, was the prior BLA withdrawal back in 2019, I believe, was that a process where the inspection had already taken place, or were you guys with that, I guess, you know, coming into this particular inspection? Thanks.
spk05: Yeah, well, I mean, firstly, I'm not going to go into the specifics of the deficiencies until we meet with the FDA so we can provide you with clear information on timeline, mostly timelines, but also exactly what we have to do to remediate. But you are correct, as you said and as we reported, we have started working on those deficiencies or the remediations of such. Now, you asked about the prior BLA. If you recall, when we first submitted the original BLA, what had happened is it was during the government shutdown. You probably don't recall that, so it sat. And then they had 60 days to get back to us. And what they did is when they went through the BLA, they hadn't started the actual review yet. They hadn't accepted the file yet. So what they did is they contacted us and said, look, We want some additional information. It was more information that they wanted on the manufacturing site. It was manufactured, but it was information at the time that they were looking for, and we had to go and get that information for them. So basically what they told us, they said, look, if you just leave it as is, and by the way, they wanted some translations from Korean in a different way and some other tables, things like that. So they told us, look, in this form we wouldn't accept it, so you can wait. for us to not accept it or you could voluntarily fix this stuff and resubmit. And that's what happened. So no, there was never an inspection prior to that because the file wasn't accepted at the time.
spk06: Understood. Thanks for providing that clarification and thanks again for taking the questions.
spk05: Well, thank you, Josh.
spk01: Our next question comes from the line of Ren Benjamin from JMP Securities. Your line is open.
spk08: Hey, good afternoon, guys. Thanks for taking the questions. I guess just sticking with Relantis here, Joe, can you give us a sense, you know, how many issues are we kind of talking about here? You know, is it just like a handful? And is there any way to kind of bookend, you know, how long this could take? And I guess just related to that, you mentioned, you know, that you had outside experts, you had mock, you know, inspections that were ongoing, right? were these issues identified during, you know, the mock inspections, or were they completely out of the blue, or was it like the FDA raised the bar, you know, on what you thought might have passed? I don't know. It just didn't for whatever reason.
spk05: No, all fair questions, Ren. And first of all, on the amount and everything, let us meet with the agency. I want to be as transparent as we can and get all, because we want to know what we have, you know, exactly what needs to be remedied and how long it's going to take. Again, do I think they're all fixable? Yes. I'll say this, you know, We're all trying to do the clock. A resubmission normally is a six-month clock, but I'll remind you there's not a requirement that has to take that long either. So let us get that. We'll provide you with more information, and then we'll ultimately know more about the timelines, et cetera. Now, as far as the outside experts, yes, we had great experts working there. It was a long time over a year. We did several mock inspections. I think everybody was confident. that we were going to pass. But, you know, you never know until they do the inspection. And they came in, found a few deficiencies. What normally happens is they, after the inspection, they give the manufacturer their observations. You have 15 days to get back to them on those observations, which they did with a lot of help of us and the outside experts. And so... I guess that's where my surprise is, but the bottom line is now after I got angry and emotional, I said, okay, let's put our head down and fix this thing as quickly as possible and get this drug approved.
spk08: Got it. And did I hear right in your prepared remarks that there were deficiencies in South Korea as well as the PhilFinish manufacturing, which I thought from our prior conversations was actually in California? Can you just correct me if I'm wrong on that?
spk05: No, you are correct. There's deficiencies at both that are being remediated.
spk08: Okay, so it's both manufacturing plants that are being remediated. Okay, and then how long will it take to prepare the questions that you have for the FDA and submit it?
spk05: Well, obviously, we're doing our best. We're preparing it right now. Obviously, as we speak, we're getting the our CMOs with us to make sure we're asking all the right questions and get those timelines. So all I can tell you is that we're going to right now, we want to get it as quickly as possible. As I said earlier, within 30 days they should meet with us, and then we'll have a lot of answers. So we'll get it in as soon as possible, as quickly as possible.
spk08: Got it. Thank you very much.
spk05: I want to make sure we're asking all the right questions. Good luck. Apply that in advance.
spk01: As a reminder, everyone, if you would like to ask a question, you will need to press bar one on your telephone keypad. Our next question comes from the line of Mayank Mumtani from New Riley Securities. Your line is open.
spk03: Good afternoon. Hey, Joe. Thanks for taking our questions. So high level, Joe, you know, as you war game the situation going into FDA meetings, Can you just give us a flavor of, you know, how the spectrum of NPV for Relant is, you know, from all the way back from 2019 to, you know, where we are in late 2021 and externally, obviously things have also evolved. Like, where does it get to a point where, you know, you may consider doing something, you know, disruptive and it could be as minimal as, you know, you work with a different, you know, manufacturing partner as Hanmei Or, you know, you really just focus exclusively on, you know, POSI and the earlier stage programs? I just want to get a, you know, pulse of how you guys are thinking about this. And then I have a POSI-Artena question.
spk05: Yeah, great. You know, Mike, you're getting right into what we do for a living, right, is strategy. And I understand why you're asking it. I'm kind of glad you're asking that question because obviously strategically, We have decisions to make, but it's way too early for me to give you that strategy. I like the way you're thinking of, hey, based on what happens, which path do you take? Obviously, let us get with the agency and get these timelines down first before I make any strategy decisions. But obviously, those are the kind of decisions you have to make to make the right decisions as you go forward for the company, for shareholders, et cetera. So let us get all the information. and then strategically we're always going to, you know, strive to make the right decisions. I hope that answers your question.
spk03: Okay. No, thank you for the color. And then on POSI, I was just curious, you know, there are a couple of conferences before the end of the year, so any color on, you know, depending on where we are with abstracts for each of these and where you might be with cohort four and five, you know, what might we see at some of these medical conferences, if you don't mind commenting?
spk05: Yeah, first of all, why don't you take that?
spk09: Sure. Maya, you're correct. There's a number of conferences upcoming. The only thing I'll say is that, you know, we have a significant amount of data here that's accumulating. Some of the data that's quite interesting and maturing is the QD dosing parts in cohort four. So that data is maturing. So there's a couple of venues that potentially could be used to communicate that. The BID dosing data is a little less mature, but nonetheless quite interesting. And also the other thing that we have not really talked about, but probably should mention, is that there's some interesting data that is emerging right now in combining with some KRAS inhibitor. So we'll, you know, we'll, I don't want to give you a specific until, you know, we have full confirmation, but just to mention a few meetings. You know, there's ESMO coming up. There's the triple meeting there, ACR and CIURTC. And so, again, we'll update you later, but let's just say for now, the next couple of months, we hope to be able to share data with you guys.
spk03: Great. Thanks for the call, and I look forward to some of these medical conferences. Thanks so much. Sure.
spk05: Thank you, Mike.
spk01: And there are no further questions at this time. Let me turn the call back to Mr. Joseph Juergen for closing comments.
spk05: Thank you, operator, and I really appreciate everybody's questions, everybody's interest in the company, and I look forward to updating you more about Rolantis after our FDA meeting. We appreciate everybody's time on the call. With that, operator, we're going to go ahead and shut down.
spk01: Yes, sir. This concludes today's conference call. Thank you all for participating. You may now disconnect.
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