BeyondSpring Inc.
Q4 2020 Earnings Call Transcript

Published: 1 May 2021

[Operator:]

Good morning, and welcome to BeyondSpring's Fourth Quarter and Full Year 2020 Financial Results Conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a brief question-and-answer session. As a reminder, this call is being recorded today, April 30, 2021. I would now like to turn the conference over to Andrew Ericsson, Investor Relations. Please go ahead.

[Andrew Ericsson:]

Thank you, everyone, for joining today's call. I'd like to advise listeners that comments made on today's call may reflect forward-looking statements that are related to such matters as BeyondSpring's clinical and preclinical research and development activities and results, regulatory and commercial plans, industry trends, market potential, collaborative initiatives and financial projections, among others.

[Dr. Lan Huang:]

Well, thank you, Andrew. Hello, everyone, and thank you for joining today's call. I'm very pleased to be here with an update of the tremendous progress we have made in 2020 and to provide an update on our upcoming milestones for 2021. 2020 was a truly momentous year in setting us up for future value creation. Specifically, we had key accomplishments in building clinical evidence for our lead asset, plinabulin. Filing NDA for our lead program in two major global markets, U.S. and China, building our pipeline, adding key scientific and business leadership and bolstering our balance sheet to execute on our vision. Let me briefly share with you our three key areas for value creation. First, we continue to develop plinabulin as a pipeline in the drug, not only as an agent to prevent chemotherapy-induced neutropenia, or CIN, but also as an immune anti-cancer agent for potential durable anticancer benefit. For our lead program in the CIN prevention indication, plinabulin and G-CSF combination regime was granted breakthrough destination from both U.S. and China FDA in September 2020. We're excited about this destination as this signal the severe unmet medical needs in CIN and that our regime could be superior to standard of care. For the last five years, we have worked closely with regulatory agencies to advance plinabulin in combination with G-CSF for the prevention of CIN. We are also grateful to have the support of Dr. Blayney and Dr. Crawford, U.S. CIN NCCN guideline funding member and former Chairman, who have guided us for trial design and quality. Overall, we had over 1,200 patients in one pivotal trial, which is protected, too and F5 supportive clinical studies, demonstrating plinabulin's consistent early outset of action in protecting neutrophils in various chemo and various cancers in week 1, where over 75% of clinical consequences occur or the neutropenia vulnerability gap, but recognized severe unmet medical need.

[Dr. Ramon Mohanlal:]

Thank you, Lan. First, I would like to provide an overview of the results of our registrational trials of plinabulin for the prevention of CIN. Over the last five years, we have advanced our program. And as Lan indicated, it has culminated in our recent filing of an NDA to the U.S. FDA and China NMPA. We are very confident and optimistic about the success of our filings after lengthy, extensive interactions with regulatory agencies, who have proactively contributed to our study designs, and we filled all protocols prior to enrollment. Filing has been a many months long preparation and includes data from the pivotal trial, PROTECTIVE-2, as well as other supportive trials such as PROTECTIVE-1, Study 101 and DUBLIN-3. We have collected data in more than 1,200 patients, of which more than 700 patients had been dosed with plinabulin. We believe this represents sufficient data needed to satisfy the efficacy and safety requirements as well as other sections as required by the NDA. We believe this collective data set provides very strong sport for adding plinabulin to pegfilgrastim. By combining plinabulin with pegfilgrastim, we not only demonstrated superior CIN efficacy, but also superior safety and quality of life versus pegfilgrastim. Plinabulin has a complementary mechanism of action to G-CSF and protects against CIN in the first week of the chemotherapy cycle. It has been well-established that G-CSF is not very effective in the first week of the cycle, which represents a treatment gap with significant unmet medical need. With the use of G-CSF, more than 75% of all CIN-related complications occur during the first week of the cycle. G-CSF, such as pegfilgrastim, however, is very effective in the second week of the cycle. Therefore, it makes sense to add plinabulin to pegfilgrastim in order to fill the first week void with use of pegfilgrastim alone. In recognition of the unmet medical need that still exists with pegfilgrastim alone. The FDA granted the breakthrough designation to the plinabulin pegfilgrastim combination, with which we are targeting all chemotherapies in all nonmyeloid cancers. Most recently, we presented topline data from our Phase III study, PROTECTIVE-2, Study 106 with the plinabulin pegfilgrastim combination in breast cancer patients at the San Antonio Breast Cancer in Pulse. The study met the primary and all key secondary objectives, demonstrating superior efficacy and safety of the plinabulin pegfilgrastim combination. We also demonstrated a significant benefit with profound neutropenia, a well-known risk factor for increased rates of infection, febrile neutropenia and hospitalization, with specifically a 53% reduction in the incidence of profound neutropenia.

[Richard Daly:]

Thanks, Ramon. Congratulations, Ramon, to your team for filing NDAs for plinabulin in both U.S. and China, a tremendous pair of accomplishments. This is a very exciting time for not only BeyondSpring, but also our future customers and their patients. We are thrilled to be turning our attention to the market and the opportunity to tell the story of unmet medical need in the CIN space.

[Elizabeth Czerepak:]

Thank you, Rich. I will now briefly discuss our fourth quarter and full year 2020 financial results. For greater detail related to these results, I refer you to our press release issued this morning and to our 20-F filing, both of which can be accessed under the Investors section of our website. With that said, I will now highlight some of the key financial results. Research and development expenses in the fourth quarter of 2020 were $8.4 million compared to $12.6 million in the same period last year. The decrease of $4.2 million was primarily due to a decrease of preclinical and clinical trial expenses. General and administrative expenses were $10.4 million in the fourth quarter of 2020 compared to $2.7 million for the same quarter of 2019. The $7.7 million increase was primarily due to an increase of $3 million in employee salaries and benefits, including new hires and onetime bonuses relating to a transaction, an increase of $2.6 million in pre-commercialization expenses, an increase of $1.8 million in noncash share-based compensation and an increase in legal and other costs related to the Seed subsidiary. Net loss attributable to BeyondSpring Inc. in the fourth quarter of 2020 were $17.6 million compared to $14.1 million for the same period last year. R&D expenses were $41.8 million for the year ended December 31, 2020, compared to $31.3 million for the year ended December 31, 2019. The $10.5 million increase was mainly due to an increase of $3.8 million in clinical trial expenses, an increase of $3.5 million in noncash share-based compensation and an increase of $2.7 million, mainly due to amounts paid to consultants and others to support the NDA filing. G&A expenses were $22.6 million for the year ended December 31, 2020, compared to $9.0 million for the year ended December 31, 2019. The $13.6 million increase was primarily due to an increase of $5.6 million in pre-commercialization expenses, an increase of $4.5 million in salaries and benefits for commercial and executive personnel and onetime performance bonuses related to the closing of the transaction, an increase of $2.6 million in noncash share-based compensation and an increase of $0.9 million in consulting and other professional services. Net loss attributable to BeyondSpring Inc. was $61.0 million for the year ended December 31, 2020, compared to $38.1 million for the year ended December 31, 2019. As of December 31, 2020, we had cash and cash equivalents of $109.5 million on hand. The Company believes it has sufficient cash to support its ongoing clinical programs over the next year, including its immuno-oncology pipeline and to prepare for a potential launch of plinabulin in 2022. With that, I will now turn the call back over to Lan to conclude. Lan?

[Dr. Lan Huang:]

Thank you, Elizabeth. We are very proud of the accomplishments we had in our extremely productive 2020 to set us up well for value generation in 2021. We're well positioned for the future with our pipeline in drug, plinabulin, already filed NDA in CIN prevention indication with anticipated near-term potential anticancer efficacy data from a Phase III DUBLIN-3 study, measuring overall survival in non-small cell lung cancer patients, and from early trials in several I/O regimes in checkpoint inhibitor naive or failed patients. After the successful completion of our equity financing in the fourth quarter, we have strengthened our balance sheet as we head into our upcoming milestones. Here, I would like to thank the patients, our dedicated team, our shareholders and our partners for their continued support as we work towards improving the current standard of care for cancer patients worldwide. I will now ask operator to open the call for question-and-answer session. Operator?

[Operator:]

Thank you. We will now begin the question-and-answer session. Our first question comes from Maury Raycroft of Jefferies. Please go ahead.

[Maury Raycroft:]

Congrats on the progress. First one is just a quick one on the DUBLIN data readout expected mid '21. Just wondering if you can say if you submitted a placeholder for a late-breaking abstract at ASCO? Or could we expect to see a press release around ASCO?

[Dr. Lan Huang:]

Thanks, Maury. This is Lan. Thanks for your continued support. Yes, so we don't have the DUBLIN-3 data yet. So -- and the breaking the finish time was March -- at end of March. So the answer is, you will not see any data from DUBLIN-3 in the ASCO meeting. We're guiding the market is midyear.

[Maury Raycroft:]

Okay. Okay. And then for the ASCO titles that posted and the data you're going to have there. Just wondering if you can elaborate on what additional analyses you'll show beyond the topline PROTECTIVE-2 Phase III CIN data?

[Dr. Lan Huang:]

Thanks for the great question. So for the PROTECTIVE-2, everyone would love to see the clinical meaningful endpoint correlation with the AMC-based endpoint, which we show very high statistical significance. So in the ASCO coming out presentation, we are going to show additional reduction in FN and hospitalization, those type of meaningful endpoint for the PROTECTIVE-2 for our combination treatment versus pegfilgrastim alone.

[Maury Raycroft:]

Got it. And will there be anything on bone pain, dose intensity or quality of life?

[Dr. Lan Huang:]

So probably, I should give this to Ramon on the bone pain and other quality for life standpoint. Ramon?

[Dr. Ramon Mohanlal:]

Yes. Yes, we have. Yes. Thank you for the question. Yes, we have an abstract accepted on quality of life as well with the combination plinabulin plus pegfilgrastim versus pegfilgrastim alone. And yes, we have other overall safety that includes bone pain as well. That's correct.

[Maury Raycroft:]

Got it. Okay. And just a last question on -- just wondering what the latest is that you're hearing from payers regarding launch price in light of the positive Phase III CIN data alone or launch price that can also be supported by positive DUBLIN Phase III data showing the anticancer benefits. I guess, how do you think about those two situations from the value of having the two different modalities translating to price of the drug?

[Dr. Lan Huang:]

Well, thanks for this fantastic question, Maury. I think this question -- the best answer is from Rich. Rich?

[Richard Daly:]

Thanks, Maury. So our market research continues to show that on its own, the CIN benefit in combination with G-CSF, as I said on the call, is robust. They like the profile. They like the opportunity to reduce the neutropenia and the potential for reduced febrile neutropenia, emergency room visits, hospitalization, et cetera, and keep the patients on their chemotherapy. So they like that on its own. The response to the potential for improvement in cancer outcome in and of itself, I think, is an additive. They're looking for -- we think we would have improved pricing power with that. So we see a really strong response, a favorable response on price because of the profile of the product in and of itself with CIN. And then obviously, should the data bear out with DUBLIN-3, we think we have an opportunity for greater value creation for patients, for payers and obviously, for providers. So we'd love to be able to bring that forward.

[Operator:]

Our next question comes from Jason Gerberry of Bank of America. Please go ahead.

[Jason Gerberry:]

I guess first one for me is just trying to think about how are you thinking about launch readiness, particularly in a scenario where you get accelerated review and could be in a position to launch in the second half of this year? And thinking about that versus the cash and cash burn commentary, obviously, I can appreciate that it's a fluid situation. But just kind of curious, how you're approaching things given cash considerations? And are you hiring reps on a contingency basis? And then as we think kind of longer term, with the rollout, is it fair to look at sort of standalone, one product cancer biotech companies like Exelixis? Is it good comparable for SG&A build-out for you guys and your story?

[Dr. Lan Huang:]

Well, thanks, Jason. Yes, this is a very key question. As we finish the successful NDA filing, it is an indication also based on the breakthrough definition of the regime. So potentially, the NDA approval is coming soon. So that is a key question on the commercial readiness for us. So Rich and his team has been working tirelessly on these efforts. So I'm going to turn it over to Rich to answer your great question.

[Richard Daly:]

Yes. This is a fundamental question for us. And we look at the timing of the approval, and we also look at what we want to do and be judicious with our resources. So to your question about, are you hiring on a contingency basis. So we want to be sure that we have an approval. We want to be sure that we can go forward, and then we want to integrate that with the structure of the P&L. So we believe, going back to Maury's question, we believe that we're going to have a favorable price. We love the structure of this P&L because again, as I said on the call, we think that this can be a highly targeted launch. We know exactly where the accounts are. We know who the physicians are, who like G-CSF profile and want more control. So we think it can be really targeted in our approach to the market. The question of timing is a really interesting one. Launching a product late in the year when you get into the holidays is always a dicey proposition. If you look at Coherus, as an example, they got approval in September and waited to launch into January. I think that's probably a wise decision because going into the holidays is never a good thing. And the 10 or 12 launches I've done, you never really want to be launching late in the fourth quarter. You just can't get anybody's attention, and you really want that attention in the first 13 to 20 weeks of launch. So the timing of it really matters. On a contingency basis, we think we want to be sure we have the launch. So we're going to hire -- we will be out interviewing. We will be ready to pull the trigger. When we get the approval, so we will have identified all the sales representatives we want. We will make the offer on approval, we will bring them on board. So we will not be carrying those costs at risk. We think that's important. But as we work our way down the P&L, we think we'll get a very, very solid price based on the value we'll be delivering to the marketplace. The cost of goods are very, very small here because this is a small molecule, three-step synthesis. And the cost of sales, again, very lean. So we think that this is a really solid model, and we think it can -- the Company can move forward appropriately aggressively with one molecule in its bag and be very successful. So we're really excited about that. So we think there are other models out there that you can look at and say, yes, this is a good one to peg off of and build a P&L for BeyondSpring.

[Jason Gerberry:]

Great. And then just -- obviously, the next big topic for you guys, DUBLIN trial and topline. Will we get ORR and PFS data as well with the topline update? And the reason I ask is, we've seen some data for second line I/O TKI agents. And obviously, the markets are going to want to compare your results to those approaches that we've seen some data in. And we don't have OS data for those approaches yet. So just wondering what we'll have at our disposal to start to make those cross-shop comparisons.

[Dr. Lan Huang:]

Yes. Thanks for this great question. So DUBLIN-3, we don't have the data yet, right? So as the data is coming, then we will decide how to present this data at the right time, but I do see your point. For comparison purpose, probably it is also very important to show ORR and PFS. But of course, we have to make sure the data is clean before we show it.

[Jason Gerberry:]

Sure. Sure. Okay. Yes. Just I guess as a commentary for us, at least in the markets, how we're going to start to look at that data? And then I guess last one for me. Just ahead of ASCO, can you just remind me the rationale -- I know this was an investigator-sponsored trial, but the rationale for small cell lung? I think PD-1, a CTLA-4 combo had failed in the setting before. So I know that there's sort of a broad-based I/O combination strategy here, but your thoughts and rationale for small cell would be helpful.

[Dr. Lan Huang:]

Yes. Thank you. So I think I should turn this question to Ramon to start. Ramon, I think you have instrumentally started this small cell lung cancer study based on plinabulin's benefit.

[Dr. Ramon Mohanlal:]

Yes. Thank you, Lan. So the rationale for adding plinabulin to nivolumab and ipilimumab in small cell lung cancer is that for small lung cancer was indicated for nivo and ipi on the NCCN guideline for a very long time. So it -- so doctors use that combination. We are interested in adding plinabulin to existing I/O residents to demonstrate that plinabulin would bring tremendous benefit on top of those I/O regimens. So that combo being available through the NCCN guidelines of small lung cancer was sort of the vehicle to add plinabulin to that. The objective clearly for us to show that we have additional survival benefit with adding plinabulin, but also that plinabulin will present the use related adverse effects. You will be aware that with immunotherapy, especially with combination PD-1 and CTLA-4 inhibitors, one of the biggest reason -- not one of the reasons, but the biggest reason for treatment is continuation is immune-related at versus more than 30% of the patients. So -- and plinabulin through this regimen, we hope to see not only survival benefit, but also a reduction in immune-related adverse effect. So that collectivity became the rationale.

[Dr. Lan Huang:]

Just to -- Yes. So actually, I just want to add one more item to Ramon's thinking. So why is this triple I/O combo not only we're looking into the safety benefit, the immune AEs, but also the efficacy benefit, which is the response rate in addition. But as you see, for the second and third-line small cell lung cancer treated with checkpoint inhibitor, its response rate is between 12% to 18%. So if we can see better ORR than that, that definitely is going to speak for plinabulin immune benefit. But very importantly, for the study, we also enroll patients who failed check contributor, right? So if we can re-sensitize the system with plinabulin adding to this checkpoint inhibitor combination, that's going to answer and a lot of the unmet medical needs for the checkpoint inhibitor failed patients. So this is a very important presentations. I hope you guys will stay tuned and look for this abstract and also the presentation later in June.

[Operator:]

Our next question comes from Andy Hsieh of William Blair. Please go ahead.

[Andy Hsieh:]

Congratulations on all of the progress, especially a very stellar 2020. So I have a question for Rich. Actually, I'm happy to report to Rich that cinrise.com had actually showed up on my personal Twitter. So congratulations on a very successful outreach campaign. So the first question is kind of, Rich, if you think about the CIN indication, how would you characterize as kind of the breakdown between commercial pay and medicare, medicaid paid? And also, I'm curious to know about your perspective as you think about reimbursement discussions with the hospital. How would you use the cost of end point that's going to be presented at ASCO to kind of leverage your strategic positioning?

[Richard Daly:]

So Andy, great question. So when we think about -- when we look back on historic norms for G-CSF utilization. So again, we're partnered with a G-CSF to elevate the standard of care. So we look at how G-CSFs are used, and this is a fundamental question for us. So everybody talks about, are you going to be covered? What's your pay coverage and all that. So J-code become really important, temporary J-codes. Today, about 50% of G-CSF use is covered by Medicare and Medicaid. And that's the most recent data, which is about 2018 and roughly about 2018. So this is predominantly an elderly population, which makes sense. Cancer predominantly over the age of 65, that totally makes sense, right? So when we look at that, we're going to have coverage from day one. By law, we'll have coverage. So we're excited about that, and then it becomes the question of driving the opportunity. And this is when we get into the three things we talked about on the call was driving that neutropenia vulnerability gap, making -- helping people understand that unmet medical need, talking about the positioning for the product and then a key account activation. And key accounts, not only are the community oncologists, but also the hospitals that you talked about. So looking at the split between those as well, and predominantly, the use of G-CSF -- and we're talking about PEGylated G-CSF because one dose equals one cycle. Non-PEGylated sometimes one dose. Obviously, those are daily. You get one. You get 4. You get 7. You get 10. It's hard to equilibrate the dose. So predominantly, non-PEGylated are hospital used. It's the hospital use dose, if you will. So you see the predominant use of the PEGylated in the community opportunity. So we're really focused our efforts there and in helping those physicians understand how to avoid that hospitalization, right? Because, again, we're elevating that standard of care, and you can keep that patient away from profound neutropenia, keeping him away from that febrile neutropenia and out of the emergency room, we're going to be focused on cost reduction and keeping that patient on their therapy and then avoiding the dose changes for chemotherapy and improving that standard of care. o we're looking at -- our focus is where we can make a difference. Obviously, we think we can make a difference in the hospital setting as well, but we think that might be a little bit further down the line. So we're going to really be targeted in our effort, again, where we can drive that difference. Is that helpful?

[Andy Hsieh:]

Yes, that's very helpful. I look forward to that discussion in the future. So I guess this is a question for the team. I think if I remember correctly, I think Elizabeth kind of provided the guidance that the likely happen in 2022. So I just wanted to make sure that, Rich, I think you kind of said that even in the event of approval, you might want to kind of wait until the early part of next year to launch. Is that correct? I'm just kind of asking that from a modeling perspective.

[Richard Daly:]

I think it all depends on the timing of the approval. So I gave the Coherus example only to give a framing for it because if we're going to wait to hire our folks, so we don't have to give them the offer. They have to accept. They have to give notice, et cetera. We have to train them. So you're talking about a month or maybe more before they can actually get on board. And then you're into -- depending on when we get the approval, so it all depends. And so we're just trying to help everybody understand how we're thinking about it. We don't want to take on that untoward risk of hiring a full team and then waiting. We don't think that's appropriate to do. So -- but we also don't think it's appropriate to launch just prior to Thanksgiving, that just wouldn't be effective. It just wouldn't work. In my experience, those are very difficult times to get anybody's attention in any marketplace. So if -- I hate to play the NDA here, but it all depends on when we get the approval. Given that we filed at the end of the first quarter or we submit at the end of the first quarter, and we're looking for the submission to be accepted, right? 60 days later, it's just you start thinking about the timing of when that 6-month, if it was a priority review, when that might come. We start talking about if we were to get that prior year view, you start talking about -- you're right on the bubble there. So again, we're just trying to set that expectation that it's probably a 2022 opportunity. So does that make sense?

[Andy Hsieh:]

Yes. Yes, for sure. And then I guess, lastly for Lan.

[Dr. Lan Huang:]

Your question is cutting out.

[Richard Daly:]

And Andy, are you there?

[Operator:]

This concludes the question-and-answer session. I would now like to turn the call over to Dr. Huang for any closing remarks.

[Dr. Lan Huang:]

Thank you again for everyone to participate in today's call and thank you for your insights and a great question and also your continuous support. So we look forward to keeping you updated on our significant milestones to come this year and beyond. Thank you. Have a nice day.

[Operator:]

This concludes today's conference call. You may disconnect your lines thank you for participating and have a pleasant day.