CTI BioPharma Corp.
Q2 2013 Earnings Call Transcript

Published: 1 Aug 2013

[Operator:]

Good afternoon, good evening, ladies and gentlemen. Thank you for standing by. Welcome to the Cell Therapeutics Second Quarter Financial Results Conference Call. [Operator Instructions] This conference is being recorded today, July 31, 2013. I would now like to turn the conference over to our host, Ms. Monique Greer, Senior Vice President Corporate Communications Investor Relations. Please go ahead, ma'am.

[Monique M. Greer:]

Thank you, operator. Good afternoon, everyone, and thank you for joining us today for our second quarter 2013 financial results conference call. Following formal remarks by management, the conference call will be open for questions. With me today are Jim Bianco, President and Chief Executive Officer; Matt Plunkett, Executive Vice President of Corporate Development; and Lou Bianco, Executive Vice President of Finance and Administration. Our press release was issued after market close today, a copy of which can be found on the Homepage and in the Investor section of our website at celltherapeutics.com. Before we begin, please note that during the course of this call, we will be making 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 Risk Factor section of our quarterly report on Form 10-Q for the quarter ended June 30, 2013, and in the company's other periodic reports and filings with the Securities and Exchange Commission. I will now turn the call over to Jim.

[James A. Bianco:]

Thank you, Monique, and good afternoon, everyone. The second quarter 2013 was marked by continued overall progress on 3 value drivers for CTI that we outlined for you last quarter, and they are

[Operator:]

[Operator Instructions] And our first question comes from the line of Bert Hazlett with Roth Capital.

[Robert Cummins Hazlett:]

First, on PIXUVRI. The -- could you -- regarding the United Kingdom reimbursement, could you talk about the potential steps that could occur in September 2013? And then with regard to Italy, I believe you noted you would be launching the product in the fourth quarter officially. Could you talk a little bit more about the effort there? And maybe the traction or whether we should expect some more material sales for the therapy in 2014 rather than in the fourth quarter?

[James A. Bianco:]

Good questions, Bert. So let me start with the NICE appraisal process. What we did, which was a little bit different than what most companies do is, in parallel, while NICE was reviewing the cost effectiveness of the PIXUVRI data, we entered into discussions and subsequently negotiated a patient access scheme with the Ministry of Health. The Ministry of Health then takes that information and usually shares it with NICE. And then NICE, in their appraisal process, now looks at the cost effective ratio differently because it takes into account the patient access scheme information. And so NICE had published their draft final appraisal document but we essentially asked for an exceptional circumstance. We did that through the CEO of NICE and it was granted. And as you saw, they removed the draft -- FAD, as it's called -- from their website and then set up a meeting in September, where they'll now take into consideration the information in the patient access scheme that was agreed to by the Ministry of Health. So in September, they will review that. We think that it will drop our so-called incremental cost-effectiveness ratio to a level that, we hope, certainly within the threshold limits that NICE typically looks for to make it, to essentially deem it cost-effective with that scheme. So we are cautiously optimistic that the next announcement coming from the NICE committee will be that they determine that it is cost-effective. With respect to Italy, and I think we'd want to put this in context for the full year, which is why we have really did not state guidance for where we thought sales would be. Because it is so tied to, first, the reimbursement decisions. And then as I mentioned in the call, NICE is a very -- positive recommendation from NICE will influence our discussions with the GKV, the Statutory Health Funds in Germany, to help us complete those. It will influence what's happening in the Nordics. And we have already worked with the group, hold-on group in the Netherlands. We will be listed in their guidelines, which will also help in terms of central funding. So that's the first thing that we really needed to get behind us and we've made really solid progress in doing that before you can start to see more generalizable up-take. Because even though the drug is available through this "free market access countries", other than Germany, most of the other countries are essentially restricted through their hospital budgets, which have already been set from the prior year, which is the next phase of what we now would do, for example, in Italy and then in France, where you essentially go and negotiate with the hospitals what your price is and they do that through essentially group buying or group purchasing companies, if you will. And we hope to have that completed, as well as to start to build interest and demand in both in Italy and then, early next year, in France. So the effort in Italy would be limited to 2 to 3 "quintile" employees, which are oncology account specialists and medical science liaisons. They would come on likely in September. As you know, we have kind of a homegrown advantage in Italy, which we certainly want to be able to -- I don't want to say exploit -- take advantage of in a positive, in terms of getting the word out that the drug will be available essentially through the hospital systems in the latter part of the year and, certainly, in 2014. So we're really trying to do is tee up, get everything in alignment, so that in 2014, we could start to see some meaningful revenue. By meaningful revenue, we're talking about revenue that could have a net product margin contribution to the overall development organization. Second quarter was a little softer than what we would have anticipated. We did have a good bump in new patient starts in July, which was encouraging. Most of that softness in the second quarter was related to the health funds, when the AMNOG, when the G-BA decision came down in May, the health funds go out to the sites that essentially say, that after the end of the year, it's not going to be paid for anymore. And that spooks people, if you will. So we had a good programmatic effort to get out to the pharmacies and the hospitals and remind them what the law is, that the drug is reimbursable through the end of the year and that we're making progress in not just other major market countries, certainly, with the discussions with the statutory funds, and we're confident that we will come to negotiations with the funds on an equitable price and it will be made available -- continue to be made available in Germany in 2014. So that's kind of where we're at with regards to PIXUVRI. And as you might imagine, and Matt could comment on this, with respect to other partnerships to expand PIXUVRI commercialization outside of the territories that we're interested in, a lot of that tees off, again, off of the pricing and reimbursement decision. The good news is, 2 reference countries, France and Italy, will have essentially, a reference price, which is our go-to-market price. That will be true for the U.K. as well. So that obviously is very important in terms of the rest of the EU when they look at how they reference for reimbursement on pricing.

[Robert Cummins Hazlett:]

So that's usually helpful. So just -- but in terms of the specific timing beyond the meeting, is there a 30-day window that they will respond to you, post the meeting in September? Or what's the specific response and the timetable of it in the U.K.?

[James A. Bianco:]

Good point, Bert. It didn't mention that. It's typically 30 days. The company typically will see their next draft about a week or 10 days before they put it up on their website when they make it public. So we'll know -- again, we'll know by mid-October -- so will you, in terms of what the outcome of that meeting is. It's also important to mention that, while NICE may find you cost-effective, let's say, in October, the statutory -- the health funds in the U.K. have 90 days before they put it on formulary. And they typically will take their time, obviously, because it's cost savings before doing that. So once again, U.K. sales wouldn't be meaningful in 2013. But coming into 2014, we think that they'll be -- they will be meaningful.

[Robert Cummins Hazlett:]

Got it. And then just shifting to pacritinib. In terms of the PERSIST-2 trial, I want to make sure I understand it, if there's a link or maybe not. If the PERSIST-2 trials start, dependent upon a partnership for either different geographies for pacritinib or, potentially, for PIXUVRI, as you just mentioned? Or is it independent and will start, regardless of the partnership discussions?

[James A. Bianco:]

Right now, we have it pegged to the partnership coming together. And right now -- so I'll give you a little color. For example, the development plan that was submitted for scientific advice to the medicinal products committee of the EMA, they wrote back to us essentially that we didn't need to meet the development plan and the proposals that were made for clinical endpoints, et cetera, were all within acceptance. They actually had some very good feedback. And so we are right on track with 325, we are right on track with what we have conceptually for 326 "on the drawing board." We're waiting for some feedback from the FDA on a little tweak in the 326 program, which we'll get later in about a month. But it's very clear in our partnering discussions that the regulatory risk for the product has essentially been mitigated. Mitigated, meaning that you will have consistent guidance built into the protocol, the fine endpoints, and measurements from both the EMA and from the FDA. And that's an important -- that was obviously an important feature to get behind us because that's an important regulatory box, especially for an ex-U.S.-only type deal. Needless to say, for the one party that's looking at a larger collaboration, having both FDA and EMA in agreement with each other and what we need to do to go forward and win can be very helpful.

[Operator:]

[Operator Instructions] And I am showing no further questions. Please continue.

[James A. Bianco:]

Okay. Thank you, operator. So just in closing, as we said, we're focused on delivering on our commitment to patients through the acquisition, the development, commercialization of less toxic, more effective ways to treat and cure cancer. That's been our mission from the beginning. We're excited about our near-term prospects for helping patients and clearly for building shareholder value. As always, we thank you for your support of our mission and we wish you a good evening.

[Operator:]

Thank you. Ladies and gentlemen, this concludes the Cell Therapeutics Second Quarter Financial Results Conference Call. If you would like to listen to a replay of today's conference call, please dial 1 [phone] or [phone], and enter access code 4632014, followed by the pound sign. We'd like to thank you for your participation and you may now disconnect.