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spk01: Thank you, Operator, and good afternoon to everyone.
spk06: Thank you for joining us today for Spectrum Pharmaceuticals' fourth quarter and full year 2021 financial results conference call. Our fourth quarter and full year financial results press release was sent out earlier this afternoon and is available on our website at www.sptirx.com. Joining me on the call today from Spectrum Pharmaceuticals will be Tom Riga, 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 Tom Riga, CEO of Spectrum.
spk05: Good afternoon, and thank you for joining us on today's call. It is a pleasure to address this audience for the first time as the President and CEO of Spectrum. The responsibility of representing our employees, investors, and corporate partners is both a privilege and a responsibility I take with great pride. I accepted this position with the full understanding of the past realities and the future opportunities of the company. I believe the company is at a pivotal moment in its history, and I expect to provide a disciplined, pragmatic, and objective leadership approach to capitalize on the opportunities in front of us. It has been helpful to engage, listen, and communicate with many of our investors, analysts, and stakeholders. I've appreciated the open, candid, and productive discussions thus far and intend for those engagements to continue as we chart our path forward. The first two months of the role have been fast-paced, productive, and focused on advancing our late-stage program. Let me provide the highlights. In January, we made a strategic decision to restructure and streamline our operations to focus on our late-stage product opportunities with the ultimate goal of gaining two FDA approvals this year. The restructuring was an opportunity to take a hard look at the organization and to right-size the company to meet the core business objectives while also optimizing our cash runway. We reduced our staff by approximately 30% and expect to see a reduction in our operating cash burn by 20% to 25%. When making decisions that impact staff, it is never easy, but in this case, necessary. We also strengthened our partnership with Homney Pharmaceuticals, which included a $20 million equity investment and amendments to the licensing and supply agreements for both Poseyotinib and Effla-Pograstim. The amendments will allow us to maximize our near-term cash flows and provide improvements to our cost of goods. Furthermore, we recently announced the addition of Joo Young Lim to the Board of Directors. Joo Young currently serves as the President of Global Strategy and Planning at Homni Pharmaceuticals. We look forward to her leadership and input on our Board as we seek to achieve our shared goal of bringing both products to market in the U.S. A sound partnership with HOMNI is critically important to Spectrum, as our late-stage assets stem from their development pipeline, and FDA approvals will allow them to advance their position in the U.S. At this point, the partnership dynamics between our companies has never been stronger. As it relates to our late-stage assets, let me start with Poseidonis. On February 11th, we announced the FDA accepted our NDA and assigned a PDUFA date of November 24th with the initial indication for the treatment of patients with previously treated locally advanced or metastatic non-small cell lung cancer harboring HER2 exon 20 mutations. This product has a fast track designation, and there are currently no approved treatments for this indication. We believe that posiotinib could have first mover advantage in this area of high unmet medical need. Our team is actively working with the agency as they conduct their review of posiotinib. Gaining FDA approval for this indication is a top priority. Since filing, we announced additional positive data at the ESMO TAT meeting for the first-line treatment-naive lung cancer patients harboring HER2 exon 20 insertion mutations. Francois will cover this in more detail in his remarks. As we think about the broader strategy for posiotomy, we will focus our resources in areas of significant unmet medical need and high patient prevalence. This strategy is shaped by the clinical data that we observe from our own studies, the competitive landscape, relative risk, and cost of the investment required. For example, beyond HER2, there was interesting preclinical data presented at the AACR triple meeting showing synergy between posiotinib and KRAS G12C inhibitors. This combination would fit our strategic intent, as the unmet medical need is real and the target patient population is significant. Equally as important to our strategy is defining where we will not spend our resources going forward. To date, our studies in EGFR axon 20 insertion mutations have not met their primary endpoints, despite demonstrating strong clinical activity. In addition, there are now two drugs approved in this space. As a result, we will no longer be pursuing posiotinib as a standalone therapy for EGFR patients. In summary, we have an NDA under review with an action date in November. Additionally, we see a clear development strategy for this asset that will be guided by clinical data and analytics to optimize our resources and help patients in need. Now let me shift to EFLA progressive. Today we announced that the VLA has been resubmitted to the FDA for review. This is a significant step forward in bringing this novel therapy to patients. We would expect this to be a class two review, with a 30-day acceptance and a six-month review cycle. The resubmission followed the remediation of manufacturing deficiencies at our drug substance facility. At our type A meeting with the FDA, they have indicated that an in-person re-inspection of the facility in South Korea will be required. We look forward to working with the FDA through their review process. Moving forward, we will be referring to the product as EFLA and no longer calling it Rolantis. We were informed by the FDA that our conditionally approved name would no longer be valid as there is now a potential conflict with another product which is currently under review. We have proposed a new name for the agency with the resubmission, but until that new name is approved, we will revert to the scientific name. As you can see, we are working diligently on our two key programs with a strong sense of urgency and excitement. we are focused on gaining two FDA approvals later this year. Over the past few months, we have made substantial progress on these programs, streamlined our operations, elevated our corporate partnerships, and are executing on our core business objectives. Finally, I'd like to take a moment to thank Kurt for his years of service to Spectrum and the valuable insight he has provided as his time of CFO. He played an important role in the company and we all wish him well in his future endeavors. We have an active search underway to replace the CFO role, and we'll keep you posted as we make progress. With that, I will now turn the call over to Dr. LaBelle for a more detailed update on our clinical development programs.
spk06: Good afternoon, everyone. I am glad to be with you on today's call. Let's start with our top achievement, the acceptance of our POSI NDA, for our initial indication is a major step towards advancing the treatment for patients with PER2 exon 20 mutation in non-small-cell lung cancer. The filing is based on our positive data from Core 2 of the ZENIT-20 clinical trial, which consisted of patients with locally advanced or metastatic non-small-cell lung cancer arboring HER2 exon 20 insertion mutation, who had failed previous treatment. We believe POSI has the potential to be the first to market for this specific indication, an area of great unmet medical need. We were encouraged by the positive results presented at the recent ESMO TAC Congress by Dr. Sun, from the British Columbia Cancer Agency in an oral presentation. We now have two positive cohorts from our POSI program. This data from the Xena 20 study that included a total of 70 patients who received 16 milligrams per day of oral posiotinib. The first 48 patients in the cohort received 16 milligrams once daily, with an additional 22-patient dose at 8 mg twice daily. The primary endpoint was an ORR evaluated centrally by an independent image review committee. POSI met the primary endpoint in the 70 frontline patients with an ORR of 41% and an evaluable patient ORR of 50%. The lower bound of 30% exceeded the required pre-specified criteria of 20%. The mean duration of response was 5.7 months with one patient on drug for 19 months. The 8-milligram DID dosing allowed better tolerance and nearly 20% lower dose reductions. Treatment-related grade 3 or higher adverse events were as expected with rash, stomatitis, diarrhea, and perinephia being the most common. Importantly, the incidence of grade 3 or iron pneumonitis continues to be low at 3% or two patients only and no drug-related deaths. The ORR for 16 mg QD and 8 mg BID dosing schedule was 44% and 36%, respectively, and were not statistically different. The duration of response and PFS were similar between the two groups. We are pleased with these positive results, as this is the second successful HER2 cohort of Xena 20. Our main priority is to gain an approval as soon as possible to address the unmet medical needs, there have been questions on whether we could seek a first-line indication based on positive COVID-4 data with the same Hedufa date of November 24th. The short answer is no. The bar for approval in the treatment-naive population is often higher than in the relapse settings. The range of possibility could include a full Phase III program, or perhaps something less, given the unmet medical need. We plan to meet with the FDA to align on the regulatory strategy for the first-line setting. Now, let me shift to some other positive data that was presented at the AACR triple meeting late last year. Dr. John Hamack groups at MD Anderson presented interesting preclinical data demonstrating the synergistic activity of POSI when combined with KRAS inhibitors in KRAS G12C mutant-specific cell lines. The preclinical data showed that inhibition of EGFR HER2, HER3 inhibitors and ERF4 signaling was necessary to demonstrate synergy when combining POSI and a KRAS G12C inhibitor. These results highlight the importance of a potent and pan inhibitor of the ERB family of proteins. This combination of POSI and G12C inhibitor warrants further investigations. We continue to make solid progress on our clinical development programs and regulatory strategy for both of our late stage products. We will keep you posted as we achieve additional key milestones through the balance of the year. I will now turn it over to Kurt for a discussion of our fourth quarter financials. Thank you, Francois. Let me begin with the fourth quarter figures. Total research and development expenses were $18 million in the quarter, as compared to $47.2 million in the same period of 2020. The favorability is primarily related to the charge we took in the fourth quarter last year to discontinue the development of our second manufacturing site for Eplica Braston. SG&A expense was $18.9 million in the quarter, compared to $15.7 million in the same period of 2020. SG&A expenses were higher in this quarter as we recorded a $4.9 million severance expense for our former CEO. Approximately half of that expense is non-cash and was associated with the acceleration of equity compensation. The net loss for the quarter was $39.8 million or $0.26 per share compared to a net loss of $49.9 million or $0.36 per share in the comparable period of 2020. On a non-GAAP basis, the net loss is $26.4 million, or 17 cents per share, compared to a non-GAAP net loss of $28.9 million, or 20 cents per share, in the comparable period of 2020. I won't cover the 12-month numbers in detail, but on a non-GAAP basis, the figures for SG&A, R&D, and operating income were very similar year over year, with slight reductions to SG&A and slight increases in R&D in 2021 relative to 2020. You'll find all of these figures in the press release that was just distributed. We ended the fourth quarter with approximately $101 million cash plus marketable securities compared to $134 million at September 30th, 2021. As Tom mentioned, we received a strategic equity investment from Hanmi in January of $20 million. So a pro forma cash balance, including the equity investment from Hyundai, is $121 million. Cash burn in the fourth quarter was $33 million, and operating cash burn was approximately $30 million. The primary difference is related to the unrealized losses on equity securities. The pro forma cash, combined with the restructuring announced in January, that will reduce operating cash burn by 20% to 25%, is expected to extend the company's cash runway into 2023. That concludes our prepared remarks, and I'd like to open the call for questions. Operator?
spk01: Certainly. Ladies and gentlemen, once again, if you have a question, please press star then 1. Our first question comes from the line of Maury Raycroft from Jefferies. Your question, please.
spk03: Hi, this is Kevin Strang on for Maury. Just want to say congrats, Kurt, and good luck in the future. Um, and also thank you for taking my questions. Um, thanks. And just wanted to first ask about, um, the status of your confirmatory trial. Um, what do you think the FDA means by substantially enrolled and what is your confidence that you'll be able to reach that goal by your PDUFA date?
spk05: Yeah, I'll take that one, Kevin.
spk06: Sure. So we plan to give you an update on the PMR at a later date. Our practice has been that we make announcement about design and details of a trial once we enroll the first patient. So what I can tell you today is that actually we have initiated the confirmatory study. We secured our first central IRB approval. And we are operating with a great sense of urgency to the point you're making. We're very aware that we need to show significant enrollment. The FDA does not define what they mean. And I think we think that being able to demonstrate good momentum is critical. And that's why we are proceeding and the whole team is proceeding with great urgency as we speak.
spk03: Great, thanks. And then just for my follow-up question, for cohort five, so you said you're not going to pursue EGFR. Is it possible that you leave this study open for HER2 patients to support a possible dosing update to the label or for additional info for the FDA, or do you plan on shutting down that cohort?
spk05: Yeah, good question, Kevin. We plan on keeping the HER2 component of that open and allowing that to continue to enroll for a number of reasons. Dosing is one of them, but also to capture additional data. But the EGFR components of that will be closed down.
spk03: Okay, great. Thanks, and I'll pop back in the queue.
spk01: Thanks. Thank you. Our next question comes from the line of Ed White from HC Wainwright. Your question, please.
spk07: Hi, Ed. Hi, Tom. Thanks for taking my questions. And, Kurt, it's been a real pleasure working with you this past 10 years. I really appreciate all of your help over the years.
spk06: Thanks, Ed. Appreciate that.
spk07: So maybe just a first question on something Francois just said. about the first-line patients. In the past, you had said that cohort four was a potential pivotal study, and now I believe he said that you could need a phase three, but you have to talk to the FDA first. I'm just curious as to what might have changed over the years to give you that thought that you might have to run another phase three study.
spk05: Yeah, and thanks for the question. I think that's ultimately something that I've made the call on because, you know, we just got the data. We need to speak to the agency. And there's been a lot of questions about can we simply include that data with our current file or how should we think about it? And I think the reality here is until we have a formal type A meeting with the agency to share this particular data, against how they're thinking about the frontline indication. I don't want to leave with an expectation that this is going to either be included with the existing indication that's submitted or even that of an SMDA. Certainly could be. I mean, accelerated approval, there is a big unmet medical need, but there is a range of possibilities. And until we have that formal engagement, which we will have, We wanted to make sure that we were clear on how we were seeing it.
spk06: And I would add to that that, you know, what I said is actually quite consistent to what we've said before. As you know, the first four cohorts were what we call registration level in terms of how they were executed. They had pre-specified endpoints. They had a central IRB. not IRB, but Data Safety Monitoring Board and review process. So we've met the primary endpoint, so obviously that positions us quite well. But we've also said in the past that, you know, there would have to be a judgment about durability of a response, the safety profile, and whatever other product would be on the market at the time that this would happen. So all these factors are going to be called into question here or, you know, we will have to discuss with the agency. So there's no setback here. It's purely that we have to go and present all the data to the agency and see where they're going. You probably know as well that in first line, it's always the bar is a little higher than in second line. So those are some of the other elements that are part of our uh, decision and, uh, what's coming for.
spk07: Okay. Thanks Francois. And how should we be thinking about a potential label in second line? Um, is there the possibility of getting the eight milligram BID dosing or, um, are you thinking it has to be 16 milligram to start?
spk05: Yeah, that's a great question. So you know that the cohort two was dosed at 16 milligrams QD, and through cohort five and a number of the work that we've done have produced a pretty healthy body of evidence in the BID setting. So we'll wait and see until the label negotiation part of the discussion with the agency occurs. But, you know, we are seeing that 16QD is certainly a safe and effective dose. And I think over time we have learned to optimize some of the tolerability and abate some of the AEs here with the BID dosing. So I think that will be a key topic when we get to label negotiations with the agency and we're simply not at that shortly.
spk07: Thanks, Tom. And perhaps a last question for Kurt. With the restructuring and then also with the potential launch of two products by year end, how should we be thinking about the progression of SG&A and R&D expenses over the course of the year? Where are you as far as the commercial team is and how we should be thinking about additions over the course of the year.
spk06: Yeah, no, thanks, Ed. You know, the specific guidance that we gave, you know, related to cash burn. So operating cash burn, you know, it fluctuates a little bit, but over the course of 2021 was roughly around $30 million a quarter. And, you know, we said post the restructuring, we expect that number to be down 20% to 25%. I'm not going to get into specifics around how to break things down between SG&A and R&D. Just, you know, kind of cash is probably the most relevant number to be thinking about here for us. I guess the caveat to this is obviously the restructuring happened in the first quarter. So, and Q1 is always traditionally our higher burn quarter. So, Q1 is going to have some extra costs associated with the restructuring. And so the realization of that really is something that starts in Q2 and kind of goes on from there. As it relates to commercial team, Tom, do you want to?
spk05: Yeah. And I think the guidance that we've given with the cash runway is assuming that that those launches are funded. And as I think about the commercial team, we intend to do this with a competitive and lean group. Even despite the restructuring, we believe we've kept some world-class commercial talent. And the oncology ecosystem, even in a post-COVID environment, one, continues to consolidate, and two, Access continues to be a challenge, and I don't see that changing. So I think having a lean infrastructure is the right approach, and I think we have the right team in place to get these products off the ground successfully.
spk07: Okay, great. Thanks for taking my questions. Thanks, Ed.
spk01: Thanks, Ed. Thank you. Our next question comes from the line of Rennie Benjamin from JMP Securities. Your question, please.
spk04: Hey, good afternoon, guys. Let me add, Tom, my congratulations. And, Kurt, you know, it's hard to see you go, but best of luck in the new position. It was great interacting with you, of course. Thank you. You bet. So just maybe a quick question on POSI in terms of the review, right? Tom, you mentioned you had FastTrack. This is a single-arm study. And I was a little bit, I couldn't figure out why the FDA would grant you guys a standard review instead of a priority review, unless I made my calculations wrong. Can you just talk to us a little bit about, you know, the review process and, you know, why it appears to be a standard review?
spk05: Yeah, that's a great question, Ren. So you're right. We do have an accelerated approval with a phase two single arm study, and it does have fast track. I think what you're referring to is we were not given a priority review, we were given a standard review. So I try not to get into the mind of the FDA if they're thinking on that. I do know that we're thrilled to have a PDUPA day in November, and The pace of the interactions with the agency and how we're progressing through the regulatory process, we are pleased with thus far. And we're going to make sure that we're ready to rock and roll here so that we can address this unmet need here in November.
spk04: Got it. Okay. And then just in regards to the exploratory cohorts, I think it's five through seven, Can you just give us an update as to what's happening there? Are they, you know, since they were exploratory to begin with and you guys are making headcount reductions and, you know, reevaluating the programs, could those also potentially be closed?
spk05: Yeah. So what I was trying to accomplish in my prepared remarks with our strategies, we're going to look at unmet need, prevalence, and investment. And when I look at What would be left would be the cohort five for the frontline HER2 population, which we will certainly keep for a number of strategic reasons. And then I think when you start looking at six and seven, and you look at the need, the prevalence, and the cost of keeping a large Zenith 20 study open, I think it really calls into question if those are going to stay open. We will make that decision here very shortly. We haven't, you know, we haven't finally aligned on it. But as I'm thinking about the lens of strategy of how we need to expel our resources and focus our energies, there are other avenues that I think present higher unmet need and a greater opportunity for POSI to be successful.
spk04: Got it. Okay. That makes sense. And then just switching gears to energy. I'll just shorten it as EFLA, if you don't mind, the EFLA BLA. Thank you. You know, it's six months. You know, within 30 days, you're going to know whether they've accepted it. I thought that the majority of the issues, the large majority of the issues or deficiencies all had to do with the manufacturing plant, right? I could be wrong on that, but it seems like they would have to go right away and start doing an in-person inspection. Am I thinking about that correctly, or is this something that, I don't know, there's a lot of work that needs to be done during the initial part of the review. The inspection winds up getting done towards the tail end, and then I just worry about things like delays in the inspection like we ran into the first time. I just wanted to kind of get your thoughts as to how this process kind of maps itself out.
spk05: Yeah, let's unpack that. So the CRL focused really on two things. It identified manufacturing challenges both at the drug product facility and the drug substance facility. Subsequently, we had a type A meeting with the FDA where the issue at the drug product facility, which had nothing to do with Rolantis, was cleared. It was not a gating item to resubmission. So really the sole challenge from the CRL was the remediation efforts at the drug substance facility in Korea. Now, we have worked very closely with our partner on the remediation and CAPA plan that resulted from that initial inspection and ultimately announced today that we resubmitted. So a Class 2 resubmission is what I was articulating at a 30-day acceptance and a six-month clock. So that date would put you around September. And I think you're right in that the gating item, as far as we know, is the reinspection of that facility. And typically that would happen at some point after the acceptance when they can get to Korea. Now, will there be challenges with them traveling to Korea given the COVID realities of what we had in the past? I don't have a crystal ball, but I do know that the FDA is conducting international inspections today. We don't see it as a barrier today, but we're going to keep an eye on it, and we're looking forward to them scheduling that date and getting to Korea to conduct the inspection.
spk04: Terrific. Great, guys. Thanks very much for taking the questions.
spk01: Thank you. Our next question comes from the line of Mayank Menti from B. Reilly Securities. Your question, please.
spk02: Hey, Mayank. Hi, team. Thanks for taking our questions, and congrats on kicking off the year with nice progress on regulatory front. Actually, first question, if I may ask, on Dr. Hamak's data recently presented. Have you approached or have been approached by any of the KRAS G12C companies to start doing some initial dose finding work for the two combination product?
spk05: Yeah, great question, Mayak. You know, as you know, KRAS mutations in lung cancer have long been thought to be undruggable, and now we find ourselves with one product on the market, another under active review, and several others in in development, and I think each of them have a number of combination work ultimately trying to enhance the race and differentiate them. I think the work that was presented at the triple meeting is certainly interesting, and we are in conversations with a number of them and tend to act on it. You know, it fits really the strategic ethos of where we want to take this asset in that there is a big unmet need and the patient population there is certainly prevalent. So more to follow.
spk02: Okay, great. And then on the frontline phase three study that you guys are thinking about, could you just give me a little bit of color, what could be the comparator arm there, and what sort of response rate or PFS kind of endpoint you might be looking at And I'm going to assume this is going to be 8-MIG BID. Cozy, you're going to look at in that setting?
spk05: Well, let me clarify that one, Maya. So a Phase III program is really conditional on us having a conversation with the FDA. So we try to provide just a broad range of outcomes of what could happen to But we believe we have a successful cohort. And we'll mention, we'll talk about the PMR at a later date. But I think we need to go sit with the FDA and talk specifically about the frontline indication. And I think that would ultimately refine the regulatory strategy. And at that point, we would come back to you and say, here is the path, which could range from Here's a phase three program is necessary, and here's the comparator. Likely, chemotherapy, double it, plus or minus IL. Or if there's an accelerated approval, a different path. So we're simply saying we want to go sit with the FDA, have this conversation, and then update the regulatory strategy post that meeting.
spk02: So maybe just following up on that, should we just assume that there's going to be a spend around one phase three study this year, which is the study that FDA has required for allowing for accelerated approval and has to be enrolled to a certain extent? Is that fair? That's absolutely fair. Okay. And have you, just in terms of your data updates for the rest of the year, When should we expect to hear more on the cohort 4 8-MIC BID and then also some other data from cohort 5 on the lower dose but more frequent dosing?
spk06: So obviously we, as I indicated I think in my answer a little earlier, so we're going to update you on the PMR and you know, answering a lot of the questions you raised there. But at a later date, we're just not going to go there today. As to, you know, the other cohorts and arm and the dosing work that we've done, there is a number of communication that we will do in the future. I'm just not ready today to give you the exact time. But we're working, obviously. Usually we present all our data at the appropriate scientific venue, and especially now that some of them are reopening for in-person, we certainly look forward to add to the body of evidence supporting the safety and efficacy of both.
spk02: Yeah, thanks for taking my question. I look forward to definitely seeing you in person at one of these conferences. And, Kurt, you'll be very much best. And I'm wishing you all the best for your next chapter.
spk01: Thank you. Thank you, Mayan.
spk02: Thanks, Mayan.
spk01: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Tom Regan for any further remarks.
spk05: Thank you all for your participation on today's call and your interest in the spectrum. If you have any further questions, please feel free to reach out at any time. Have a great day.
spk01: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
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