CTI BioPharma Corp.
Q4 2017 Earnings Call Transcript

Published: 8 Mar 2018

[Operator:]

Good day and welcome to the CTI BioPharma Fourth Quarter and Full-Year 2017 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tricia Truehart from Solebury Trout. Please go ahead.

[Tricia Truehart:]

Thank you, and welcome to CTI BioPharma’s fourth quarter and full-year 2017 financial results conference call. Following formal remarks by management, the conference call will be opened for questions. Joining me today are Adam Craig, President and Chief Executive Officer; David Kirske, Chief Financial Officer; Bruce Seeley, Chief Operating Officer; and Jack Singer, 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 fourth quarter and full-year, the Risk Factor section of the Company's Quarterly Report on the Form 10-K for the year and quarter ended December 31, 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 Dr. Adam Craig.

[Adam Craig:]

Thank you, Tricia, and good afternoon. This year, CTI has continued to build on the progress made during 2017 that has led us to be a lean focused company, and we believe we are now well financed to achieve our goals. We recently completed an oversubscribed public offering of our common stock and now have sufficient cash to carry us through preclinical and regulatory milestones over the next two years. Next quarter we anticipate two important clinical milestones, including the interim data analysis for the PAC203 study of pacritinib in patients with myelofibrosis. And the topline results of the PIX306 Phase III trial of PIXUVRI in patience with NHL. I will now provide a more detailed update on the development status of the pacritinib and PIXUVRI programs as well as the brief corporate update before turning the call over to David for presentation of the financials. Pacritinib, our lead development candidate is a second generation JAK2 inhibitor, which we are developing to address the unmet medical need of myelofibrosis patients who have received prior ruxolitinib treatment and/or have thrombocytopenia. After successfully working with the FDA to have the clinical hold removed in January 2017, we initiated the PAC203 trial, a study designed to evaluate the dose response relationship of pacritinib. This trial is enrolling well with the interim data analysis expected next quarter, and the topline results expected in the first quarter 2019. This dose exploration trial is expected to enroll up to approximately 105 patients with primary and secondary myelofibrosis all of them who have failed prior ruxolitinib therapy. Expected to evaluate the safety and the dose response relationship for efficacy at three dose levels; 100 milligram once a day, 100 milligrams twice a day, BID dosing, and 200 milligrams BID. The 200 milligram BID dose regimen was used in the Phase III PERSIST trial of pacritinib in patients with myelofibrosis and is the dose that we believe has the most favorable risk benefit profile. Once the interim analysis has been completed, we plan to request a meeting with the FDA to discuss the further development of pacritinib in the second line treatment setting. Last July, our marketing authorization application or MAA for pacritinib for the treatment of patients with myelofibrosis who have thrombocytopenia that is platelet counts less than 100,000 for microliter was validated by the EMA, initiating the review process by CHMP. Subsequently, we received the Day 120 List of Questions from CHMP in November, and just last month, we were granted an extension for submitting our responses in order to provide new pharmacokinetic analyses that include data from the ongoing Phase II PAC203 study. We expect to submit our responses to the Day 120 List of Questions in May with the CHMP opinion expected in the third quarter. Turning to PIXUVRI, which was granted conditional approval in Europe in 2012 for the treatment of third and fourth line aggressive B-cell non-Hodgkin lymphoma, we completely enrollment to the Phase III post-marketing commitments in August last year and now look forward to topline results in the second quarter 2018. This study is comparing PIXUVRI and rituximab with gemcitabine and rituximab in patients with aggressive B-cell NHL of Follicular Grade 3 Lymphoma and it's being conducted as a post authorization requirement of a conditional marketing authorization. If positive, the trial could potentially support a second line label extension. In April 2017 CTI and Servier announced the expansion of our licensing and collaboration agreement regarding PIXUVRI, the new agreement provides Servier with rights in all markets except the U.S., where CTI will change the commercial rights. I’d just like to take a minute or two to discuss some of the leadership and corporate change the CTI BioPharma has made over the last 12 months. As most of you know, I began working with the Company as a Consultant in late 2016 and was asked by the Board of Directors to join as CEO in March, 2017. Our CFO, David Kirske also joined as a Consultant and was appointed to CFO in September, 2017. Bruce Seeley had served as the Company's Chief Commercial & Administrative Officer and Secretary since 2015 and was promoted to Chief Operating Officer in 2017. Importantly, over the last year, we have added three new Independent Directors on our Board, including our Chairman, Laurent Fischer as well as Michael Metzger and Dr. David Parkinson. All three Directors bring with them many years of management experience in the biotech space. Throughout the year, we have strengthened our balance sheet and significantly reduced our cost to better focus the Company on the clinical development of pacritinib. In February 2018, we closed oversubscribed underwritten public offering of stock with gross proceeds of $69 million 6with participation from existing and numerous new high quality life science investors. In addition, over the last year, we have received two $10 million milestone payments from Teva as part of our TRISENOX still the first in June 20, 2017 was a milestone payment related to sales. The second of February 2018 was a milestone payment related to the front-line approval, a TRISENOX in the U.S. I will now ask David to provide financial updates.

[David Kirske:]

Thank you, Adam. I will now briefly review our financials for the fourth quarter and 12 months of 2017. Please refer to our press release issued today for complete details. Total revenues for the third quarter and nine months ended September 30, were $460,000 and $25.1 million respectively, compared to $9.1 million and $57.4 million for the respective periods in 2016. The decrease in total revenues for 2017 is primarily due to the recognition of $32 million in milestone revenue related to pacritinib in the first quarter of 2016. Net product sales of PIXUVRI for the fourth quarter and 12 months ended December 31, 2017, were zero and $900,000 respectively, compared to $1 million and $4.1 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 PIXUVRI agreement with Servier under which they have rights in all markets except in the United States. As Adam mentioned, we took significant steps to reduce our costs through 2017, including a decrease in pacritinib development and manufacturing costs and lower personal costs. As such, our operating loss for the fourth quarter and 12 months ended December 31, 2017 was $13.7 million compared to $39.5 million respectively, compared to GAAP operating loss of $5.6 million and $49.2 million respective periods in 2016. Some of the benefits of the actions taken to reduce costs that were implemented are expected to continue to impact subsequent quarters in the near-term. The net loss for the fourth quarter 2017 was $14.3 million or $0.33 per share, compared to a net loss of $6.4 million, or $0.23 per share for the same period in 2016. The net loss for the 12 months ended December 31, 2017 was $45 million or $1.24 per share, compared to a net loss of $52 million or $1.86 per share for the same period in 2016. Turning to the balance sheet, as of December 31, 2017, cash and cash equivalents totaled $43.2 million compared to $44 million at December 31, 2016. But again as Adam mentioned, we recently completed a successful fundraising bringing in over $69 million in gross proceeds. Importantly, our balance sheet has been greatly strengthened over the past 12 months through successful fundraisings and partnership milestones totaling a $124 million. I would also like to mention that in January 2018, a merger agreement was approved by the shareholders, which changed the incorporation of CTI BioPharma Corp from the State of Washington to the State of Delaware. And this triggered an automatic delisting of CTI’s common stock from the Borsa Italiana MTA exchange. NASDAQ is now the sole listing of our common stock. So with that, I will now turn the call back to Adam.

[Adam Craig:]

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

[Operator:]

Thank you. [Operator Instructions] Our first question will come from Mike King with JMP Securities.

[Michael King:]

Hey guys. Good afternoon. Thanks for taking the question, and I'm pleased to be joining you guys for the first time. I just wanted to see if you could talk a little bit of the PAC203, Adam and just the upcoming interim in the second quarter, just what the possible outcome are if in fact there [indiscernible] that has dropped. What happened to those patients in the arm and how will you account for them from a statistic point of view?

[Adam Craig:]

Yes. Certainly, so to remind people the – thank you for your question, Mike. To remind people, the study has three treatment arms, each of which are different parts, each of which were three doses, which are different parts of the dose response curve. And the purpose of the interim analysis is to identify an arm that is [Fetal] with 12-week spleen volume data together with the safety data at that time. So we have an independent data safety launch committee will make an assessment. [Indiscernible] the interim analysis is conducted at a minimum of six patients per arms and as we said during the written remarks, we plan to conduct that in the next quarter. [Indiscernible] survives the interim analysis and continues up to 35 patients per arm can be enrolled in the arm, if the IDMC recommends the closure of an arm then the arm will be closed and no more patients will be treated at that dose levels.

[Michael King:]

So they will then just [go off] study?

[Adam Craig:]

Correct. That’s how the [indiscernible] because the treatment at dose levels will have been considered to be fetal.

[Michael King:]

Okay. So just a follow-up on that. Can you speak to from a regulatory prospective from FDA point of view, if PAC203 will be sort of the final request from FDA as far as demonstrating risk and benefits from pacritinib? Or to your knowledge is there any other requirements that you might have to satisfy the FDAs guidance or requirements?

[Adam Craig:]

Yes, certainly. So we haven't met with the FDA yet. We have said that we will meet with the FDA once we have the interim analysis data. One of the requirements following the clinical hold was that we designed a study to identify minimally effective dose, and we believe the PAC203 trial is designed to do that, and the interim data should bear to provide data on what is the minimally effective dose. Once we have that, we will go back to the FDA and discuss within the findings of the interim, that’s the first thing. At that meeting, we then hope to have the opportunity to discuss the further developments of the program. And where we are interested in the moment is looking at second line indication and second line approval for the drug. We already have second line data on the PERSIST-2 trial. We will have additional, as you know the PERSIST – the PAC203 trial is purely second line. So we will have data from two trials at that point and we would like to have a discussion with the FDA about potential NDA pathway. But as we said, we haven't had that discussion yet, we hope to have it once we have the interim data in house, we will request the meeting and will no more as we progress into the summer.

[Michael King:]

Thanks for taking the questions and I’ll jump back in the queue.

[Adam Craig:]

Thank you, Mike.

[Operator:]

Our next question will come from Matthew Andrews with Jefferies.

[Matthew Andrews:]

Hey, good afternoon. Thanks for the chance to ask a couple questions. Adam, I noticed in your most recent presentation from earlier this year that you've changed the sizing of the interim analysis from up to potentially 45 to 6 per arm, so 18. What's changed between now or when you made the protocol amendment and when you design this with the FDA? And then second has the agency officially agreed to the sizing of the interim?

[Adam Craig:]

What changed when I joined the company formally as a CEO rather than as a consultant, I took a look at many aspects of the way we develop the drug and we looked at the pacritinib program in a lot detail. And it became obvious that the 45 patient interim that you referred to was over – made the study over [part]. There were too many patients who could potentially receive without sample size. Too many patients who could potentially receive a dose that wasn't working before the interim analysis was conducted. So we went back to the Biometrics Group to our statistician and ask them whether that number could be adjusted because what we don't want to do to as a company is run a trial where patients aren’t benefiting from one of the treatment arm. So the motivation around it was we just really – we just questioned, when I joined we questioned everything and we were looking to see whether we reduce it adjust to improve to look at some time point without over enrolling and overpowering the interim analysis. So we're very comfortable with six. It's actually going to be more than six, Matthew because enrollments has gone quite briskly recently, it will be more than six, but we think it's adequately powered to answer the question about what is the minimally effective dose. And then the second question is we did submit our protocol amendment to the FDA. We did not receive any comments back from the FDA when we submitted the amendment that included the change in sample size for the interim.

[Matthew Andrews:]

So it's more of a safety issue than anything if patients aren’t responding to one or two of the arms. No need to expose them to potential risks. So you could get the efficacy answer with the smaller, and is that the right way to think about it?

[Adam Craig:]

Yes. We do not want to because the way the trial is designed there has to be, one, the doses have different path to the dose response curve. And if one of those dose levels is identified it is having poor efficacy then I think it’s important that would stop that arms as quickly as possible and allow patients to – future patients to enroll in arms where there's been some benefit.

[Matthew Andrews:]

Okay, thank you and one more. As it relates to the interim analysis, how could you potentially leverage this as part of your Day 180 – response to the EMAs Day 180 questions that you'll receive over the summer? Thanks.

[Adam Craig:]

Thank you, Matthew. We haven't had any direct questions regarding the interim from the European reviewers. However, they are interested in the study. And I think the importance of the interim is the – it will be the first time we report data and we see data since the clinical hold was lifted. So that nearly 15, 18 months ago. So I think it will be the first time we see that and I think it's important to show – we have to show the Europeans that we are back on track. We’re able to run the trial in a population that we understand and that we can move forward. So we will share the results with them, but they haven't formally asked for them.

[Matthew Andrews:]

Okay, great. Thank you.

[Operator:]

Next, we’ll take a question from Chad Messer with Needham & Company.

[Chad Messer:]

Thanks. Good evening and thanks for taking my question. On the ongoing Phase II trial of pacritinib, I know we're hoping that the 200 milligram BID doses has the best risk-benefit profile. But I’m interested in what you think the way forward might look like, if it turns out that a dose lower than that indeed has a better risk-benefit. If you think you have enough patients to discuss a path forward with the FDA and if you think that would affect any EMAs thoughts about the registration?

[Adam Craig:]

Well, I certainly – if we has the 100 milligram BID dosing level was the strongest dosing level of the interim. That something we would discuss with the FDA and I would imagine – I would expect that we would expand the arm to enroll more patients and to get more data. As we've been saying over the last few weeks during our recent road show, we've been very aggressive in the number of sites we've recruited for the trial and we expect to be up to around 80 sites by the summer. And so if we do need to increase a sample size of one of the treatment arms we can do as quickly as possible. So from the U.S. point of view, I think a discussion for the FDA and potentially – the potential for increased sample size, which is something we planned for. With respect to Europe, and that's a very difficult question to ask as I've not had a discussion with the European regulators about 100 milligram dosing schedule. The application was around the 200 BID and that's where they focused by review. That would be something we would have to discuss with them along the way. I can't comment and I haven’t had that conversation with them.

[Chad Messer:]

Great, and then just on obviously a potential difference between the labels in the EU and U.S. based on having different data sets that they’re evaluating, assuming things go well, first pass with both agencies? Would you plan to go back to the EU and try to discuss a RUX failure label? Is that something that makes sense or is it that unnecessary?

[Adam Craig:]

We’ve considered and really is going to depend on the label. One of the things that is pretty clear and I'll let Bruce Seeley to comment on this. In the second line patients, many of the patients actually have thrombocytopenia, so there's a substantial overlap between the second line patients in thrombocytopenia population. So they're very, very similar. Bruce, would you like to comment?

[Bruce Seeley:]

The only thing I could add is that the relative market sizes are the same, I mean physician tell us that it's rare to get a patient with second line disease that isn't thrombocytopenia. And so we don’t feel that there is going to be a big difference between the two.

[Adam Craig:]

Thank you, Bruce.

[Chad Messer:]

Okay. So maybe unnecessary to even to go through that step. I’d appreciate your answers to my questions. Thank you.

[Adam Craig:]

Thank you, Chad.

[Operator:]

[Operator Instructions] Next, we will take a follow-up from Mike King from JMP Securities.

[Michael King:]

Hey guys. Thanks for taking the follow-up. Maybe further to the previous two questions, just wondering if you could say anything about the demographics or baseline characteristics of the patients in the PAC203 study and whether they're kind of meeting your expectations in terms of length of prior RUX treatment, platelet counts, et cetera or has there been any shift in that patient population?

[Adam Craig:]

No they are very much meeting our expectations. Typically we will have a patient who has a low platelet counts, who has had six months to a year or two of ruxolitinib and will have often developed thrombocytopenia on ruxolitinib therapy. And over time, we'll see that the dose is being reduced and it's not uncommon on our trials to have patients on the ruxolitinib doses of 5 milligrams with thrombocytopenia that’s been associated with ruxolitinib therapy, and at that time they will have an increase in spleen size and symptoms from MF. Obviously there's a – that we have a lot of patients on study and old patients for the same. For this patent our patient is receiving – having received RUX with dose reductions in thrombocytopenia is very common. The other thing I've noticed on trials, we have a lot of patients now who have anemia and who also have a blood transfusion requirements as well. So this is very, very much in keeping with what our advisors, our clinicians tell us to an advisory board that there are patients out there who have now lower doses in ruxolitinib originally prescribed and who have symptoms, a high symptom, [indiscernible] spleen and anemia and thrombocytopenia. So the study is recruiting very much. To answer your question directly, the study is very much recruiting the kind of patients we expected. And it's recruiting well because it would appear there are a lot of patients out there who fit this second line setting. Anything else, Mike? Okay, operator I think we should…

[Michael King:]

That will do.

[Adam Craig:]

Okay. Thank you, Mike. Melissa? End of Q&A

[Operator:]

At this time, we will conclude our question-and-answer session. I will now turn it back to management for any additional or closing remarks.

[Adam Craig:]

Okay. Well thank you, Melissa. In summary, we are pleased with the changes that CTI has undergone over the last year. We look forward to updating you with additional progress for the pacritinib and PIXUVRI programs over the coming months and through year end. Thank you for joining the call today.

[Operator:]

That does conclude our conference for today. Thank you for your participation. You may now disconnect.