Clovis Oncology, Inc.
Q4 2021 Earnings Call Transcript

Published: 23 Feb 2022

[Operator:]

Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Clovis Oncology Fourth Quarter and Year End 2021 Operating Results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Thank you, Anna Sussman, Vice President of Investor Relations and Corporate Communications, you may begin.

[Anna Sussman:]

Thank you, Chris. Good morning, everyone. And welcome to the Clovis Oncology fourth quarter and full year 2021 conference call. Thank you for joining us. You have likely seen this morning's news release and if not, it's available on our website. As a reminder, this conference call is being recorded and webcast. Remarks may be accessed live on our website during the call and will be available on our archive for the next several weeks. Today's agenda includes the following

[Patrick Mahaffy:]

Thanks, Anna. Excuse me. Good morning. Welcome everybody. Appreciate your time today. As usual, I'll start, today's call with a review of Rubraca sales for the quarter. Sales in Q4 2021 were $36 million, 5% lower than the prior quarter and 17% lower year-over-year compared to Q4 2020. As seen over the previous quarters, this year-over-year decline is primarily due to fewer diagnoses and fewer patient starts in the U.S. and Europe, primarily caused by the ongoing COVID-19 pandemic. Despite the continuing impact of COVID-19 we believe we have maintained our U.S. market share for Rubraca in the second line maintenance ovarian cancer setting. We do expect that as patient visits begin to rise, diagnoses increase, and the urgent need to more actively manage this often-fatal disease grow maintenance treatment of ovarian cancer patients will increase including the use Rubraca for women with advanced disease. Perhaps even more importantly, we see a significant opportunity to move into earlier lines of therapy with Rubraca in both the U.S. and Europe. We anticipate three Phase 3 read-outs this year. ATHENA-MONO as monotherapy in the first-line ovarian cancer maintenance treatment setting now expected in Q2 based on a slower than expected pace of progression-free survival events or PFS events, and ATHENA-COMBO in combination with Opdivo in the first-line ovarian cancer maintenance treatment setting in the Q4, and TRITON3 in the second-line prostate cancer treatment setting for selected patients in Q2. These trials potentially allow Rubraca to address larger patient populations in earlier lines of therapy for both ovarian and prostate cancer and could drive growth in Rubraca sales in both the U.S. and Europe. Lindsay will provide an update on these clinical programs. For F2286 the Phase 1 portion of LuMIERE continues to enroll, and we are committed to maintaining our lead in the clinical development of an FAP targeted radionuclide therapeutic candidate. We and our investigators remain extremely enthusiastic about this program and look forward to presenting data at nuclear medicine meetings during 2022 and initiating the Phase 2 portion of the LuMIERE study later this year. Tom and Lindsay will speak in more detail to developments about the FAP 2026 program. In fact, to that end, I'll turn the call over to Tom, our Thomas Harding, sorry, Tom, our Chief Scientific Officer, to discuss the FAP-2286 in targeted radionuclide therapeutic development programs. Tom?

[Thomas Harding:]

Thanks Pat. Hello, it's a pleasure to speak with you again today. As we discussed in strategy for Clovis is to be a leader in targeted radionuclide therapy. FAP-2286, our lead targeted radiotherapeutic compound licensed as part of our ongoing collaboration with 3B Pharmaceuticals, is a first peptide targeted radiotherapy candidate or PTRT targeting fibroblast activation proteins also known as FAP in clinical development. And as Pat mentioned, in 2022, we will report the first Phase 1 clinical data for the program and plan to advance the program into Phase 2 expansion cohorts. FAP is highly expressed on cancer-associated fibroblasts or CAFs, which represent one of the most abundant cell components in tumors, found in the majority of solid tumor types. CAFs play critical role in tumor initiation, progression, metastasis and therapeutic resistance. For example, recent studies have demonstrated FAP expressing CAFs exhibit a potent immunosuppressive activity that can promote tumor progression and confirm resistance to immune based therapies, such as PD-1 and PD-L1 blockade. As we highlighted last quarter, we have presented nonclinical data describing a high expression level of FAP across nine of 16 solid tumor types screened using immunohistochemistry. High FAP expression was observed in pancreatic ductal adenocarcinoma, cancers of unknown primary, salivary gland, mesothelioma, colon, bladder, sarcoma, squamous non–small cell lung, as well as squamous head and neck cancers. In these tumor types high FAP expression was detected in both primary and metastatic tumor samples and was independent of tumor stage or grade. The analysis also demonstrated that in most tumor types, FAP expression, which predominantly localized to cancer associated fibroblast surrounding the tumor cells and integrated into the tumor microenvironment. In addition, in cancers of mesenchymal origin, including sarcoma and mesothelioma FAP expression was observed in tumor cells in addition to CAF population. These data support the investigation of FAP-2286 in multiple tumor types in the planned Phase 2 expansion cohorts of LuMIERE. Additional presentations of nonclinical data anticipated at medical oncology and nuclearmedicine meetings over the next few quarters. As interest in FAP as a target increases and the field grows larger, we are pleased to be in the first mover position with FAP-2286 to be the first peptide-targeted radionuclide therapeutic targeting FAP to enter into the clinic. Clinically, we are focused on FAP-2286 monotherapy development in our ongoing LuMIERE study. However, pre-clinically we are evaluating a number of FAP-2286 drug combinations. Given the role of FAP expressing CAS in mediating resistance to immune-based therapies, such as PD-1 and PD-L1 blockade, combinations with these agents will be a priority. We are evaluating in nonclinical studies, the efficacy and mechanism of action of FAP-2286 and a PD-1 monoclonal antibody in syngeneic mouse tumor models. In addition to immune check point inhibitors there are a number of publications supporting non-clinical data to support the combination targeted regular therapy with PARP inhibitors efficacies. This makes sense therapies work by causing DNA damage via radioactive admission. If this damage is not repaired, the cell will eventually die. When the critical proteins for pairing radiation induced damage is PARP and it's an inhibition augments efficacy in combination with multiple targeted radiotherapy agents. We are currently pre-clinically evaluating combination of FAP-2286 with our own PARP inhibitor with group in multiple tumor models. Lastly, radiation is known to synergize with a number of agents that are currently approved as a standard of care in specific – sorry, in specific cancer indications. For example, gemcitabine used as a first-line chemotherapy in pancreatic cancer and other carcinomas is a well-known radiosensitizer and could have utility in combination with FAP-2286. We are currently performing a high throughput screen of approved oncology drugs in combination of radiations to identify promising combinations for FAP-2286 development. We look forward to reporting the results of this preclinical work upcoming scientific meetings. To support our commitment to this emerging field, we’ve created educational materials about targeted radiotherapy. The first of these materials are a microsite and an introductory video that provide more information about targeted radiotherapy FAP-2286 in Clovis targeted radionuclide development program. To learn more, please visit targetedradiotherapy.com. Lastly, we are collaborating with three new pharmaceuticals on a discovery program directed at three additional targets to targeted radio therapeutic development, to which we have global rights. And now with that, I'll turn the call over to Lindsey Rolfe for a clinical update.

[Lindsey Rolfe:]

Thanks Tom. Good morning, everybody. I'm glad to be here with you today to highlight the key clinical milestones expected for Rubraca and FAP-2286 in 2022. For Rubraca, based on a slower than expected PFS event planned we are now expecting ATHENA-MONO in the second quarter of 2022. from the ATHENA combo the combination of Rubraca plus Opdivo versus monotherapy are expected in the fourth quarter of 2022. As a reminder, ATHENA is a Phase 3, 1000-patient study in first-line, newly diagnosed, advanced ovarian cancer maintenance. With ATHENA, we believe we are uniquely positioned to evaluate Rubraca in terms of two independent outcomes, monotherapy versus placebo in the first-line maintenance setting, as well as any potential advantage of the combination of Rubraca and Opdivo over Rubraca alone in the same first-line maintenance setting. We believe this study offers an opportunity to truly differentiate new Rubraca in the first line maintenance setting. Once top line monotherapy results are available and should the data be supportive, we plan to file a sNDA and a variation to the European MAA shortly thereafter. Continuing with near-term milestones for Rubraca, top line data from the TRITON3 trial are expected in the second quarter of 2022. TRITON3 is a Phase 3 study evaluating Rubraca versus physician's choice of chemotherapy or second-line androgen deprivation therapy in patients with mCRPC with BRCA and ATM mutations. This trial is expected to serve as the confirmatory study for Rubraca's approval in the prostate indication, as well as a potential second-line label expansion, and we plan to file a sNDA shortly after results are available. These three ATHENA-MONO, ATHENA-COMBO, and TRITON3 provide the potential to reach larger patient populations in early lines of therapy for both ovarian and prostate cancers. Beyond the opportunity for Rubraca in first-line ovarian cancer, the ATHENA-COMBO study represents the potential to introduce an anti-PD-1 containing regimen for the first time to a broad population of ovarian cancer patients. As a reminder, the timing that each data read-out is contingent upon the occurrence of the protocol-specified progression free survival events. I'd like to discuss our FAP-2286 program next. Tom will provide an overview of the non-clinical work and now our review of the clinical work underway. In our ongoing Phase 1/2 LuMIERE study FAP-2286 is used as both an imaging agent and a therapeutic agent, a concept often described as thermostatic. For the imaging agent FAB-2286 is attached the isotope gallium-68 to allow positron emission tomography or PET imaging and selection of patients for inclusion in the study. For the therapeutic agent, FAP-2286 is attached to the isotope lutetium-177, an emitter beta particle ionizing radiation that causes DNA damage and cell death. The Phase 1 portion of the LuMIERE study continues to enrolling patients, when a second dose cohort is currently enrolling patents. As a reminder for this first inline study, this is a dose escalation study with each of the five dose cohorts being enroll sequentially with a six-week safety follow-up period after the last patient in each cohort has enrolled to ensure its safe to move to the next dose cohort. While this six-week period is longer than in Phase 1 trials of other oncology agents, it is standard for targeted radio therapies. Following the Phase 1 evaluation of the safety of FAP-2286 and determination of a recommended Phase 2 dose, expansion cohorts are planned in multiple two genotypes and are expected to begin in 2020. In addition to our own program, a separate investigative sponsored imaging study with FAP-2286 is underwear UCSF and being led by Dr. Thomas Harding, who is also the principal investigator of the LuMIERE study. The imaging only study is evaluating FAP expression in multiple tumor types and is current enrolling patients. Results from this study along with the pre-clinical data we are generating are expected to help inform selection of genotypes for our Phase 2 expansion cohorts. We look forward to Dr. presentation of his initial imaging data from this study at the upcoming virtual SNNMI Mid-Winter Meeting later this week. In addition to initiating LuMIERE Phase 2 expansion cohorts during 2020, we anticipate several key milestones for the program including the first presentations of Phase 1 data from LuMIERE and nuclear medicine-focused meetings, the launch of our combination study program to explore FAP-2286 in combination with other oncology compounds, given the role of FAP expressing types in mediating immunosuppression, exploring the combination with PD-1 or PDL-1 blockade is a priority. As noted by Tom, we are exploring multiple combination studies in preclinical animal models to lymphoma choice of combinations for clinical development. Finally, a potential IND filing of FAP-2286 linked to an alpha-emitter isotope in 2023. I'd like to recognize again the dedicated efforts of the teams involved in our clinical trials, both employees and investigators and the patient participants as our clinical programs advance. And with that, I'll turn the call over to Dan to discuss fourth quarter financial results.

[Dan Muehl:]

Thanks Lindsey and hello everyone. We reported net product revenues for Rubraca of $36 million for Q4 2021, which included U.S. product revenues of $27.6 million and ex-U.S. product revenues of $8.4 million respectively. This represents a sequential 5% decrease from Q3 2021 and a 17% decrease year-over-year compared to Q4 2020 net product revenues of $43.3 million, which included U.S. product revenues of $36.4 million and ex-U.S. net product revenues of $6.9 million. We reported net product revenue for Rubraca of $148.8 million for the full year ended December 31, 2021, which included $115.7 million in U.S. and $33.1 million in ex-U.S. product revenues, respectively. This represents a 10% decrease compared to 2020 net product revenues of $164.5 million, which included $146.3 million in the U.S. and ex-U.S. net product revenues of $18.2 million. Gross net adjustments totaled 30.6% globally in Q4 2021 compared to 27% in Q3 2021, increasing GTN, ex-U.S. and public health service discounts in the U.S. were the main drivers. This metric fluctuates quarter-to-quarter and is difficult to estimate on future revenues but the high-20% to low-30% level seems likely depending on the revenue and distribution mix for the U.S. and Europe. As previously discussed as European revenues increase in proportion to the U.S. global GTN will increase correspondingly. Research and development expenses totaled $41.8 million for Q4 2021, and $186.6 million for fiscal year 2021, down 26% and 28% respectively compared to $56.7 million and $257.7 million for the comparable period in 2020. Research and development expenses decreased in the quarter and the year compared to the same periods in prior year primarily due to lower spending on Rubraca clinical trials. Selling, general and administrative expenses totaled $33.3 million for Q4 2021 and $128.4 million for fiscal year 2021, down 18% and 22% respectively compared to $40.8 million and $163.9 million for the comparable period in 2020. Selling, general and administrative expenses decreased during the quarter and the year compared to the prior periods, the same periods in the prior year was savings due to the COVID-19 situation globally and overall cost reduction efforts. We reported a net loss for Q4 2021 is $64.4 million or $0.50 per share, and a net loss of $264.5 million or $2.29 per share for fiscal year 2021. Net loss for Q4 2020 was $99 million or $1.02 per share, and $369.2 million or a net loss of $4.38 per share for fiscal year 2020. Turning now to a discussion of cash and debt, Clovis had $143.4 million in cash and cash equivalents as of December 31, 2021. During Q4 2021, we raised $3 million in net proceeds, and in Q1 2022 so far have raised $27.2 million in net proceeds through our previously established at-the-market equity offering program. We have capacity to issue additional shares of common stock under this ATM program. In addition, we paid off our 2.50% convertible senior notes due in 2021 at full-maturity. Our next convertible debt maturity is August 1, 2024 and has a conversion price of $7.29 for a portion, and a conversion price of $6.24 for the remainder. As of December 31, 2021, we had drawn $147.2 million under the Sixth Street Partners with ATHENA clinical trial financing, and had up to $27.8 million available to draw under the agreement to fund the expenses of the ATHENA trial. The first royalty payment to Sixth Street Partners will be in Q4 of this year after determination of Q3 2022 revenues subject to the applicable payment caps in the agreement. Net cash used in operating activities was $41.3 million for 4Q 2021, down from $56.1 million reported in 4Q 2020. Cash burn in Q4 2021 was $31.6 million, down 23% from the Q4 2020 quarter cash burn of $40.9 million. Similarly net cash used in operating activities for full year 2021 was $196.1 million compared with $252.7 million for the full year 2020. Cash burn for the full year was $148.6 million, down 24% from the prior year cash burn of $195.6 million. We have and will continue to manage expenses carefully and we currently expect R&D and SG&A expenses in 2022 to be generally consistent with 2021. We remain focused on our liquidity position and recognize that will need to raise additional capital in the near term to fund our operating plan for the next 12 months and beyond. Now I'll turn the call back to Pat.

[Patrick Mahaffy:]

Thanks Dan. In summary, we've set the stage for a very important year. We're on track to announce top-line data from three phase three Rubraca data readouts, ATHENA-MONO, ATHENA-COMBO and the TRITON3 study that offer the potential for label expansions in ovarian and prostate cancers. This includes the ATHENA-COMBO readout that should definitively inform whether adding an anti-PD-1 Rubraca monotherapy in the first-line maintenance treatment ovarian cancer setting extends Rubraca's progression-free survival. In addition, our commitment to targeted radiotherapy is significant and offers the potential to be transformational in 2022. When we present data from the Phase 1 LuMIERE study of FAP-2286, the first peptide-targeted radionuclide therapy targeting FAP to enter clinical development. We intend to maintain our lead as we advance LuMIERE in the Phase 2 and begin our combination development program. These anticipated pipeline events and our commitment to improving our balance sheet support our efforts to execute our three core strategies. Expand the Rubraca label to drive revenue growth, emerge as a leader in targeted radionuclide therapy and achieve long-term financial stability. With that we're happy to answer any questions you may have.

[Operator:]

Our first question is from Paul Choi with Goldman Sachs. Your line is open.

[Charlie Ferranti:]

Good morning, everyone. This is Charlie on for Paul. Thank you so much for taking our questions. I just had a question on the FAP-2286 opportunity. It's exciting that we'll be seeing this data this year, and as we start to think about what the potential market opportunity is for this product, we're just wondering, are there any nuances in terms of considering the commercial potential for the imaging modality versus the therapeutic modality? Is there anything we should be considering there in terms of differences and how that might be priced or the potential patient populations that would be up for either the imaging or the therapeutic modality? Thank you very much.

[Patrick Mahaffy:]

I'll take a shot at that, Tom, and then you may want or Tom or Lindsey may want to add in. It's really interesting and timely question for us. We have up to now primarily thought of the imaging opportunity with 2286 to be limited to its potential and necessity as a companion diagnostic that is as we seek to develop 2286 is a therapeutic, we would simultaneously be developing for a given indication, the same peptide labeled with gallium to a – as an imaging modality for patient selection. We have been evaluating at the guidance and quest of the clinical community with whom we interact the nuclear medicine community, whether or not FAP-2286 could be seen on its own as an imaging modality particularly in tumor types where standard imaging for instance FDG PET are not as effective. And as we have evaluated this, and we've looked at the reimbursement for a standalone imaging agent, it clearly has emerged as a potential opportunity. Haven't made a firm commitment yet to entering into this field, but we're getting there. The workup we've done suggests it's a pretty interesting opportunity financially. The cost of development is markedly lower than the cost of development for a therapeutic. And it is an early year and quicker path to market for us as an opportunity to generate revenue for 2286 prior to when we would expect to see an accelerated approval for any given therapeutic opportunity. So interested more to come on this, we'll probably be able to provide an update on our next quarterly call. Tom or Lindsay anything you'd add to that?

[Thomas Harding:]

Anything I've mentioned is to completely support what you're saying. There is some preliminary data that will be presented at the SNMMI Mid-Week Winter meeting later this week from Thomas Hope. So take a look at that data.

[Charlie Ferranti:]

Thank you very much. That's very helpful.

[Operator:]

Our next question is from Cory Kasimov with JPMorgan. Your line is open.

[Gavin Scott:]

Thank you. This is Gavin on for Cory. Just I had a question on ATHENA, then a follow-up to the previous question. I guess, starting there just curious about the process for the gallium-68 in-patient selection, how efficient is that process and how long does it – does it take, and then just you mentioned some tumor types where the standard is unable to meet the needs, what tumor types are those?

[Patrick Mahaffy:]

Lindsey or Tom, do you want to talk about kind of the logistical side? We have not yet determined exactly which tumors we would initially approach, we have a list. I probably don't want to share that yet, but again, I will update on specific programs in the upcoming quarterly calls. On the logistics, Tom or Lindsey.

[Lindsey Rolfe:]

So…

[Thomas Harding:]

So I’ll make – go ahead Lindsey. Lindsey, I think we'll – go ahead, Lindsey.

[Lindsey Rolfe:]

So, regarding the gallium scans, the gallium scanning, because gallium has a very short half-life and the sites manufacture the imaging product on site, on the day, that it's used for the imaging. Our Phase 1 sites are all highly experienced in this kind of process. And so, it's bread and butter for them again, a new standing agent set up. Does that answer your question?

[Gavin Scott:]

Great. Yes, thank you. And then just quickly on the ATHENA combo study, just in your conversations with the community, is it possible to quantify how much you need to extend PFS for utilization in that setting?

[Lindsey Rolfe:]

So that's…

[Thomas Harding:]

Lindsey, you go ahead and then then I'll answer.

[Lindsey Rolfe:]

That's obviously a difficult question to answer ahead of time. But we always expect the results to be clinically significant as well as statistically significant in order to drive uptake. Given there are multiple options available now in frontline maintenance, I would expect the combination of Rubraca and Opdivo to be useful if the advantage over Rubraca is substantial either in the whole population or in a subgroup.

[Thomas Harding:]

I might add to that. The anticipation is growing now for that result. There's a great amount of interest in it, and I think it speaks to the fact that as is true for every tumor type now hardly any patient fails to ask the question, can I get immunotherapy it's on commercials, it's in the news. People are aware of it. And as you're probably aware, there are no immunotherapies approved today in ovarian, except in a very, very small subset. So, I agree with Lindsey, obviously we have to show a benefit, it has to be statistically significant. I think the demand and from the patient and from the prescribing community will be high, in particular Lindsey said in subgroup populations. And that's true. But I'd also add as is true for a lot of IO if the difference at the median is perhaps not substantial, but obviously needs to be statistically significant, but the tail for the combo looks to be providing significant benefit in a hard to identify subset, I think, the demand for the combination would be quite high.

[Gavin Scott:]

Okay, great. That's very helpful. Thank you very much.

[Thomas Harding:]

You bet.

[Operator:]

We have no further questions at this time. I'll turn the call back over to Ms. Sussman for any closing remarks.

[Anna Sussman:]

Thank you, Chris. Thanks everyone for your interest in Clovis Oncology today. If you have any follow-up questions, please call me at [phone] or Breanna Burkart at [phone]. This call can be accessed via a replay of our webcast at clovisoncology.com beginning about an hour and will be available for 30 days. We appreciate your interest and time. Thank you. And have a good day.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. And you may now disconnect.