CTI BioPharma Corp.
Q3 2017 Earnings Call Transcript

Published: 6 Nov 2017

[Operator:]

Good day and welcome to the CTI BioPharma Third Quarter 2017 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ed Bell, Investor Relations. Please go ahead, sir.

[Ed Bell:]

Thanks, and welcome to our third quarter financial results conference call. The press release reporting our financial results can be found on the homepage and in the Investors section of our corporate website at ctibiopharma.com. Following formal remarks by management, the conference call will be opened for questions. Joining me today are Adam Craig, President and CEO; David Kirske, Chief Financial Officer; Bruce Seeley, Chief Operating Officer; and Jack Singer, our Chief Scientific Officer. Before we begin, please note that during the course of this call, we will make forward-looking statements based on current expectations. 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, 2017, 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, Ed, and good afternoon. Over the last six months, we've made significant progress in becoming a smaller, more focused company with a clear clinical and regulatory strategy, a streamlined organization and robust leadership both at the executive and at the Board level. I’ll first discuss the clinical and regulatory progress, and then I’ll turn the call over to David for the financials. Earlier this year, we submitted to the EMA, a Marketing Authorization Application for pacritinib to treat myelofibrosis patients with thrombocytopenia. The application is currently under review with the CHMP opinion expected in June of next year. Given the approval of pacritinib and the unmet medical need in myelofibrosis, we believe that the market opportunity for pacritinib is significant, including patients who have had prior therapy with ruxolitinib and those with either disease-related or treatment-related thrombocytopenia. As previously announced, we have initiated the PAC203 trial, a study designed to evaluate the dose response relationship of pacritinib, including the 200 milligram BID dosage used in the PERSIST-2 trial. PAC203 was requested by the FDA at the time of the clinical hold, an interim data analysis is planned for early 2018. Moving on to PIXUVRI, earlier in the quarter, we announced the completion of enrollment of the PIX306 trial. This trial was comparing PIXUVRI and rituximab with gemcitabine and rituximab in the setting of aggressive B-cell NHL and is being conducted as a post-authorization requirement of a conditional marketing authorization. If positive, the trial data could potentially support broader indications. Topline results have been driven and are expected in the first half of 2018. Before I turn the call over to David for a review of the financials, I would like to give him a short introduction. David joined CTI over the summer, first as a consultant, and was recently promoted to CFO. As a consulting CFO, David has provided financial management services to public and private companies, primarily in biotechnology as well as in technology and manufacturing. Since joining the Company, David has been instrumental in reducing costs and making sure we have the resources to meet our near-term objectives. With that, I turn the call over to David.

[David Kirske:]

Thank you, Adam. I will now briefly review our financials for the third quarter and the nine months 2017. Please refer to our press release issued today for complete details. Total revenues for the third quarter and nine months ended September 30, 2017 were $1.7 million and $24.7 million, respectively, compared to $4.4 million and $48.3 million for the respective periods in 2016. The decrease in total revenues for the nine months of 2017 is primarily due to recognition of $32 million in milestone revenue related to pacritinib in the first quarter of 2016. Net product sales of PIXUVRI for the third quarter and nine months ended September 30, 2017, were zero and $0.9 million, respectively, compared to $0.9 million and $3.1 million for the respective periods in 2016. The decrease in net product sales for the periods in 2017 compared to 2016 is primarily related to the April 2017 expansion of the PXUVRI agreement with Servier under which they have rights in all markets, except in the United States. Operating losses for the third quarter and nine months ended September 30, 2017, was $11.8 million and $25.8 million, respectively, compared to GAAP operating loss of $28.7 million and $43.6 million for the respective periods in 2016. The decrease in operating losses for the periods in 2017 was due to the reduction in research and development costs, and selling, general and administrative expenses. This is primarily related to the decrease in pacritinib development and manufacturing costs as well as lowering personnel costs. Some of the benefits of the actions taken to reduce costs that were implemented earlier are expected to continue to impact subsequent quarters in the near term. Net loss for the third quarter of 2017 was 27 point million, (sic) [$12.0 million] or $0.28 per share, compared to a net loss of $29.2 million, or $1.04 per share for the same period in 2016. Net loss for the nine months ended September 30, 2017 was $30.8 million or $0.90 per share, compared to a net loss of $45.6 million or $1.63 per share for the same period in 2016. Turning to the balance sheet. As of September 30, 2017, cash and cash equivalents totaled $52.8 million. With that, I will now turn it back to Adam.

[Adam Craig:]

Thank you, David. That concludes our formal remarks. Operator, please open the call for questions.

[Operator:]

[Operator Instructions]We’ll take our first question from Matthew Andrews with Jefferies.

[Matthew Andrews:]

Hey, good afternoon. Adam, a couple of questions. First of all, can you update us on the pace and the status of enrollment for the initial 45 patients in the PAC203?

[Adam Craig:]

Good afternoon, Matt. So, we’re not going to give specific enrollment details on this call, Matt. But, we should say that as we’ve announced, the study opened in June. We continue to enroll patients. And we’re still in the activation phase. We’ve opened a significant number of sites but we will continue to open sites for the rest of the year. Our sites are based not only around the PERSIST-2 trial but also new sites. But, we’re not going to provide specific enrollment update on this call.

[Matthew Andrews:]

Okay. Fair enough. As it relates to communication of the interim data SVR 12 sometime in Q1, what is the thought process around how you may update investors on those data as well as interactions with -- potential interaction with FDA?

[Adam Craig:]

Well, I think, as a minimum, we will certainly announce whether one of the arms is -- one or more of the arms has been shut as a result of the recommendations of the IDMC, that’s a study is designed to test three different dose levels and there is -- we do expect the lower dose level in particular to be dropped at the interim. But obviously that’s subject to the data. So, with respect to the overall data, it really depends how -- what it shows. If the data is clear and have no other information that we need, there is a possibility we will go and we’ll discuss it with the FDA. And obviously, the objective, eventually with the FDA is to identify an approval pathway. However, if there are more data points that are needed, we’ll hold back on meeting or discussing it with the FDA. So, the answer really depends -- the answer to your question, it depends on the data, but we do as a minimum expect to say what the IDMC recommendations were, with respect to the different dosing levels.

[Matthew Andrews:]

And then, transitioning over to Europe with the MAA. When do you expect to get clarity relative to CHMP’s view on whether this would -- pacritinib would be potentially approved under the conditional pathway like PIXUVRI was or full approval? Would that be a day-120, day-180, when would that occur, if at all?

[Adam Craig:]

Well, there’s two time points in the review process where we will get reports back, one is day-120, which is expected later this month and the other one is day-180, which is expected around April of next year. And both these reports at this time will have an indication of how well we’re during in the review process. Certainly, conditional approval has always been something we've considered because of the history of the drug and the way the data set evolved at the clinical hold in the U.S. But today, we’ve not had a detail conversation with the co-rapporteur or rapporteur with respect to national approval. I would be surprised if we have it later on. But I should caution, it's not something we're necessarily going to announce. During the review process, a lot of the discussions are very fluid, and we do not intend to make any announcements with respect to the day-120 or day-180 moving forward. Because, as I said, it’s a very fluid process and we need the opportunity to have discussions with rapporteur and co-rapporteur and in that now -- as we’re very far and reporting…

[Matthew Andrews:]

Okay. And then just lastly, can you talk about any potential licensing discussions you may be having relative to ex-U.S .rights or maybe global rights for pacritinib now that you're off clinical hold, you have some timelines relative to EU and potentially U.S. FDA interactions?

[Adam Craig:]

We continue to explore this, Matthew. We haven’t made a final decision on partnering or licensing in Europe. It certainly would bring operational reinvestment expertise to pacritinib. This is something that is of interest and we continue to evaluate the best strategy for Europe, which may include a potential partnership. And as time moves on, we’ll able to report any activity in this area, if we do start a partnership. For the moment, we are just -- we are exploring our options and we haven’t made a final decision.

[Operator:]

Thank you. We will take a question from Bert Hazlett with BTIG.

[Bert Hazlett:]

Thank you. Thanks for taking the questions. With regard to expense management, there seems to be a significant amount of reduction, not only year-over-year but quarter-over-quarter as well. Could you discuss a little bit, I guess David, with a little more granularity as to what’s happening, where that’s coming from? And again, you pointed to it being continuing throughout the year. How long should we think of this process continuing?

[David Kirske:]

Thank you, Bert. Well, we made significant progress in managing our costs this year by reducing personnel costs as well as just our overall corporate footprint. We anticipate that that will continue in near-term quarters. But, at this point, we are in the budget process. So, we are still trying to anticipate what our expenses will be, going forward. But, the trend that we are noticing and seeing now, will continue.

[Bert Hazlett:]

Okay. Thank you for that. I guess then just a bigger picture question. If there’s an ability to comment on how important -- and the impact that the recent changes and appointments in the Board and management that we’ve just been talking about are to the Company, going forward? There have been some material ones at the Chairman levels and at other levels. And if there’s an ability to comment on what that might mean to the Company going forward that would be helpful as well.

[Adam Craig:]

Yes, thank you. I think the changes -- thank you for highlighting the importance of the Board changes. I think they are quite significant. We have a new Chairman, Laurent Fischer who is -- who joined us who’s an Independent Director of Tobira and Allergan. A experienced biotech professional has joined the Board and he is now our Chairman, which brings true independence to the role and has obviously a lot of expertise. In addition to that, we have Michael Metzger on the Board from Syndax and we have the clinical and Board expertise of David Parkinson. With that, three of the older Board members have stepped down. So, the Board has significant input of independent directors and has a lot of expertise, both in clinical development and operations. So, I think as you highlighted, it’s a very, very important change in the Company and reinforces our ability to operate to very high standards of corporate governance.

[Operator:]

That concludes today’s question-and-answer session. I will turn the conference back to Adam Craig for any additional or closing remarks.

[Adam Craig:]

Thank you. In summary, we continue to move pacritinib forward, both on regulatory and clinical fronts as we believe it can be a very important therapy for myelofibrosis patients who have limited treatment options. Thank you for joining the call today.