CTI BioPharma Corp.
Q3 2018 Earnings Call Transcript

Published: 2 Nov 2018

[Operator:]

Good day and welcome to the CTI BioPharma third quarter 2018 financial results conference call. Today’s conference is being recorded. At this time, I would like to turn the conference call over to Ms. Julia Balanova. Ma’am, please go ahead.

[Julia Balanova:]

Thank you and welcome to CTI BioPharma third quarter financial results conference call. Following formal remarks by management, the conference call will be open for questions. Joining me today are Adam Craig, President and Chief Executive Officer; David Kirske, Chief Financial Officer; Bruce Seeley, Chief Operating Officer. Before we begin, please note that, during the course of this call, we will make forward-looking statements based on current expectations, including statements about the timing of interactions with and without from meetings with regulatory agencies, the initiation of future clinical trials, the efficacy of our clinical trial design and anticipated enrollment, the potential efficacy, safety profile, future development plans, regulatory success and commercial potential of our and our collaborators’ product candidates, and the timing of and results from ongoing clinical trials, the plans of our collaboration partners. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those anticipated by the forward-looking statements. Additional information concerning these risks and uncertainties is contained in the press release reporting our financial results for the third quarter, the Risk Factors section of the company’s quarterly report on Form 10-Q for the quarter ended September 30, 2018 and in the company’s other periodic reports and filings with the Securities and Exchange Commission. I will now turn the call over to Adam.

[Adam Craig:]

Thank you, Julia. And good afternoon, everyone. We’re pleased to report that we have continued to make progress over the last quarter in the development of our lead product candidate, pacritinib. We continue to enroll patients on the PAC203 study and have an ongoing dialog with regulatory agencies both in US and in Europe to bring this treatment to patients – myelofibrosis patients in need of new treatment options. Pacritinib is a second generation JAK2 inhibitor, which we are developing to address the unmet medical needs of myelofibrosis patients, particularly those with severe thrombocytopenia and patients who have received prior therapy with ruxolitinib. We recently announced that following a planned second interim review by an independent data monitoring committee, the PAC203 study will continue without modification. Importantly, the IDMC did not identify any significant drug or dose-related safety concerns and specifically did not identify any concerns on hemorrhagic or cardiac toxicity. The full data set from PAC203 will now be used to determine the optimal dose of pacritinib for future development, as requested by the FDA, and the study continues to remain on track to complete this objective. We look forward to completing enrollment by the end of 2018. The next interim safety review is planned to be conducted in the first quarter 2019, with the top line data study expected in the second quarter of 2019. We recently scheduled a Type C meeting with the FDA, which will take place before the end of the year for the purposes of discussing the design of a new registrational Phase III study of pacritinib. Following the identification of the optimal dose of pacritinib in PAC203, we expect to begin the Phase III patient recruitment mid-year 2019. We have also made progress with the marketing authorization application for pacritinib in Europe. We recently submitted comprehensive responses to the Day 180 List of Outstanding Issues from the European Medicines Agency, which included new data from PAC203. And we expect the CHMP opinion on the application by year-end. I’d like to briefly address our pixantrone program, marketed in Europe by our partner Servier as PIXUVRI under conditional approval for specific populations of patients with B cell lymphoma. We continue to carefully evaluate the clinical data for pixantrone and we are not currently planning any further clinical studies. Our partner, Servier, is evaluating the next steps for pixantrone in Europe. So, to conclude, we continue to see potential for pacritinib in addressing the needs of specific, well-defined populations of patients with myelofibrosis, and we are working diligently to bring this option to those in need. Our efforts in the development of pacritinib represent our primary goal as a company, which is to develop new novel target therapies for blood cancer patients that offer them unique benefits and provide benefit for their healthcare providers. I will now ask David to provide the financial updates.

[David Kirske:]

Thank you, Adam. As of September 30, 2018, cash and cash equivalents and short-term investments totaled $80.9 million compared to $43.2 million as of December 31, 2017. We are pleased with our cash position. However, we frequently evaluate financing tools as we advance our product pipeline to clinical development. As a matter of good corporate housekeeping, today, we announced the entry into an aftermarket equity offering program with Cowen and Company. The ATM facility provides us with flexibility as we control if and when our shares are sold. Total revenues for the third quarter and nine months ended September 30, 2018 were $700,000 and $11.8 million respectively compared to $1.7 million and $24.7 million for the respective periods in 2017. The decrease in total revenues for the third quarter in 2018 compared to the same period of 2017 is primarily due to the recognition of license and contract revenue in 2017 related to the achievement of regulatory milestone under the license collaboration agreement for PIXUVRI with Servier. Decrease in total revenues for the nine months ended September 30, 2018 compared to the same period in 2017 is primarily due to license and contract revenue that included the recognition of payments received from the expansion of the license and collaboration agreement for PIXUVRI with Servier in 2017. GAAP operating loss was $14.8 million and $33.1 million for the third quarter and nine months ended September 30, 2018 respectively compared to GAAP operating loss of $11.8 million and $25.8 million for the respective periods in 2017. Non-cash operating loss, which excludes non-cash share-based compensation expense for the third quarter and nine months ended September 30, 2018, is $12.2 million and $28.2 million respectively compared to non-GAAP operating loss of $10.4 million and $21.5 million for the respective periods in 2017. Non-cash share-based compensation expense for the third quarter and nine months ended September 30, 2018 was $2.5 million and $4.9 million respectively compared to $1.4 million and $4.3 million for the respective periods in 2017. Operating loss in the third quarter of 2018 as compared to the same period in 2017 resulted primarily from the decrease in license and contract revenue, as I mentioned above, and a decrease in selling, general and administrative expenses. Operating loss for the nine months ended September 30, 2018 compared to same period of 2017 resulted primarily from the decrease in license and contract revenue mentioned above and an increase in research and development expenses. For more information on CTI's use of non-GAAP operating loss and a reconciliation of such measure to GAAP operating loss, please see the section in our press release titled Non-GAAP Financial Measures. Net loss for the third quarter of 2018 was $14.8 million or $0.26 per share compared to $12 million or $0.28 per share for the same period of 2017. Net loss for the nine months ended September 30, 2018 was $30.2 million or $0.55 per share compared to a net loss of $30.8 million or $0.90 per share for the same period of 2017. So, with that, I will now turn the call back to Adam.

[Adam Craig:]

Thank you, David. This concludes our formal remarks. Chelsea, would you please open the call for questions?

[Operator:]

[Operator Instructions]. All right. Our first question will come from Konstantinos Aprilakis with JMP Securities.

[Konstantinos Aprilakis:]

So, it will be helpful if you could provide some color on what we should anticipate from your Type C meeting with the FDA. Do you expect the agency to comment on anything beyond safety during that meeting and will efficacy thresholds be discussed or used to shape the design of the new Phase III for pacritinib? And then, how do you intend to report the outcome of that meeting to investors? Thanks.

[Adam Craig:]

So, the main objective of the Type C meeting, Konstantinos, is discuss the new Phase III protocol. We designed the patient population, entry criteria and all the aspects of the protocol. Part of that is the dose selection which will – the optimal dose will come from the PAC203 study. Part of that discussion will be to discuss with the FDA the early dose-response and exposure response data from 203 and reach an alignment with them on the methodologies that we’re using to define the dose. And then, the other part of the meeting, as I said, will be on the actual design of the protocol. I should say, we would also require input from the Europeans on the process from EMA on the protocol. So, once we’re in a position to have – and we’ve had feedback from both the US and the European regulatory authorities, then we will be able to say – give more information on the protocol. And I do not expect that to be in 2019. I'm not, at this point, anticipating us announcing anything around the Type C meeting that will occur before the end of the year because we won’t have spoken to the Europeans at that time.

[Konstantinos Aprilakis:]

Okay, perfect. Thanks so much, guys.

[Operator:]

Thank you. [Operator Instructions]. And our next question comes from Chad Messer with Needham & Company.

[Chad Messer:]

Great. Good evening. And thanks for taking my questions. Maybe just a couple on the ongoing process in Europe. Is it possible for you to characterize the quantity and type of data from PAC203 that will make it into their review?

[Adam Craig:]

We submitted to entire interim data set that was reviewed by the IDMC. We submitted all the available data. We had a meeting just around the time of day 180 questions. And it became clear to us that we could address some of their concerns around safety by submitting the entire data set, which is what we did. Certainly, we have – I've said this before, we have found on 203 study that the safety profile of pacritinib has improved with careful patient selection and revised dose modification criteria. And that was something we were able to communicate to the Europeans when we met with them face-to-face. And as a result of that, they requested for us to submit the fuller data set, which we did, and that's why there was a delay in the day 180 by two months. We asked for the two-month extension. So, that gave us time to submit a full data set to them. But I would say the trial data is, obviously, interim and we continue to collect data as the trial hasn't finished enrollment or treating patients.

[Chad Messer:]

Okay, thanks. Helpful. Can you discuss any potential differences in labeling you might expect between US and Europe?

[Adam Craig:]

We’re not really in a position to do that at the moment because we’re still in fairly – we’re still under review in Europe. So, it’s hard to comment on Europe at the moment. The application was around, obviously, the PERSIST-2 data, which is the low platelet count population. That’s something that we – an area where we believe pacritinib is strong and that's an area, obviously, the Europeans have taken an interest. With respect to the FDA, they advised us, if we did conduct a Phase III trial, they pointed us in the direction of two areas – patients who have severe thrombocytopenia, they accounts for less than 50,000; and patients who’ve had prior treatment with ruxolitinib. Our current preference for the Phase III is to conduct the study in the less than 50,000 patient population. And the reason for that really is because we’ve just got a lot of data from PERSIST-1 and PERSIST-2 that shows what we believe is clinical benefit in that specific population. So, the design concept we’re taking to the FDA at the Type C meeting is for the less than 50,000 population.

[Chad Messer:]

Okay, understood. Helpful. When you say you're trying to narrow in on the optimal doses, are you fairly certain that will be a single dose or two doses in Phase III a possibility?

[Adam Craig:]

No, I don't think there's any evidence. Well, the interim data is tracking and we currently believe the 200 mg BID dose, which is one of the doses from the PERSIST-2 trial, we believe that will be the optimal dose. But, obviously, we need to complete the trial before we can confirm that. And if that's the case, then that will be the dose [indiscernible] used in the Phase III.

[Chad Messer:]

All right. Great. Thanks for taking my questions.

[Operator:]

All right, thank you. [Operator Instructions]. And there are current no further questions in the queue at this time.

[Adam Craig:]

Okay. Well, thank you, Chelsea. So, in summary, we continue to make progress with pacritinib and we look forward to providing additional updates over the coming months. Thank you for joining the call today.

[Operator:]

Thank you, ladies and gentlemen. This concludes today’s teleconference and you may now disconnect.