G1 Therapeutics, Inc.
Q2 2021 Earnings Call Transcript

Published: 4 Aug 2021

[Operator:]

Good day. Thank you for standing by, and welcome to the G1 Therapeutics Second Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. . I would now like to turn the conference over to your host, Mr. Will Roberts. Please go ahead, sir.

[William Roberts:]

Thank you, Sarah. Good afternoon, everyone, and welcome to the G1 conference call to discuss our second quarter 2021 financial results and business update. The press release on these financial results was issued after market closed this afternoon and can be found in the News section of our corporate website, G1therapeutics.com. On this call, the team will provide a business overview of the second quarter of 2021, including an update on our launch progress in that period with COSELA which was approved by the U.S. Food and Drug Administration on February 12, 2021, to decrease the incidence of chemotherapy-induced myelosuppression in adult patients when administered prior to a platinum/etoposide-containing regimen or topotecan-containing regimen for extensive-stage small cell lung cancer or ES-SCLC and became available in the channel in early March of 2021. A question-and-answer session will follow the prepared remarks. Before we begin, I want to remind you that today's webcast contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. For more information on such risks and uncertainties, please refer to our filings with the Securities and Exchange Commission, which are available from the SEC or on our corporate website. Any forward-looking statements represent our views as of today, August 4, 2021. Joining me on the call today are Jack Bailey, our Chief Executive Officer; Jen Moses, our Chief Financial Officer; and Raj Malik, our Chief Medical Officer. With that, I'll turn the call over to Jack. Jack?

[John Bailey:]

Thanks, Will. Good afternoon, everyone, and thank you for joining us on the call today. Today's headline from the second quarter is one of a continued focus on execution, both as it relates to our early readout of our ongoing commercial launch of COSELA and as it relates to our clinical programs. Now I joined G1 because of our shared commitment to improve the lives of people impacted by cancer. This core mission is tangible at G1, and I am confident in the G1 team as we seek to help as many people with cancer as we can and drive long-term value for our shareholders. We believe COSELA is a paradigm-changing drug. It is the first and only multilineage myeloprotection therapy to offer proactive protection against the dangerous impacts of myelosuppression when treating small cell lung cancer patients with certain chemotherapy regimens. It allows oncologists treating small cell lung cancer patients to move away from treating significant myelosuppressive side effects individually with different drugs after the damage has been done, to instead, enabling them to help decrease or prevent the occurrence of these side effects altogether with the proactive use of a single therapy. And during the second quarter, we continued to lay the groundwork for broad commercial access to COSELA as we made progress toward our long-term goal of ensuring the availability of this important drug. But we also remain equally focused on COSELA's next indications. During the second quarter, we initiated 3 new clinical trials with COSELA, including a registrational trial in metastatic triple-negative breast cancer and 2 Phase II trials in patients with non-small cell lung and bladder cancer. This is in addition to the pivotal trial in colorectal cancer dosing for which was initiated in the first quarter. So in total, we now have 2 Phase III registrational trials and 3 Phase II trials ongoing with multiple readouts starting in the second half of 2022. Now we have a lot of important content to cover today. I will cover our commercial efforts for the second quarter of 2021, the first full quarter of COSELA sales, and also provide an update on the leading and lagging indicators of COSELA access and uptake that we introduced on the last call. Raj will then provide an update on some of our medical efforts and clinical milestones during the second quarter. He will also touch on the upcoming trial that we expect to initiate in the fourth quarter of this year designed to further define the immune-based anti-tumor mechanism of action of COSELA. Finally, Jen will provide the financial results for the quarter. Then I'll be back for some concluding comments. Now before we discuss our results for the quarter, you likely saw that on Monday, we announced that Soma Gupta left the organization for personal and professional reasons. We appreciate her contributions to the planning and the launch of COSELA and certainly wish her the best going forward. We also announced at the same time that we have hired a new Chief Commercial Officer; Andrew Perry, the former Vice President, U.S. Marketing at ViiV Healthcare North America, a joint venture majority-owned by GlaxoSmithKline. He is a proven leader and strategist with a history of driving consistent performance and commercial success and has tremendous commercial experience across a wide variety of specialties, including oncology, especially in areas including commercial launch strategy, execution, and co-promotion management. Andrew starts on August 16, and I really look forward to having all of you meet him on our next business update. Now turning to our attention first to the commercial update. The launch efforts of the combined G1 and Boehringer Ingelheim commercial team during the quarter resulted in us booking $2.5 million in net sales of COSELA for the quarter ending June 30. Much of the last 3 months was spent with various community practices and hospital systems to gain inclusion on formulary and order sets. And this will remain a key focus for the coming months as well. For those not familiar with the process of formulary inclusion, it's multistep requiring doctor advocacy in a practicer institution, having a successful P&T scheduled and decision taken, and then where they exist incorporation into EHR order sets. It's worth noting that this year, primarily due to the slow open of the country, we have seen a number of these planned P&T meetings postponed, which can affect the speed of update. On our last call, we set out a variety of leading and lagging indicators to help you follow our progress quarter-over-quarter, which I will now cover. I'll focus in on 4 key areas

[Rajesh Malik:]

Thanks, Jack, and good afternoon, everyone. I'm going to cover 3 topics. First, I will provide a brief update on a few of our medical affairs efforts during the quarter. I'll then provide an overview of the 2 Phase II trials we initiated in the second quarter, and I'll introduce a new trial that we intend to initiate before the end of this year designed to further define the mechanism of action of COSELA. It's a small study of one that we expect to generate a tremendous amount of important data. From a medical affairs perspective, we continue to execute on our medical communications plan during the second quarter, which includes ensuring broad visibility of our data among the medical community and identifying avenues for scientific dialogue. For example, during the quarter, we presented data and had a presence at virtual and live meetings, including the International Society for Pharmacoeconomics and Outcomes Research, or ISPOR meeting and ASCO. At ISPOR, we presented 2 posters describing the estimated economic impact of treating myelosuppression among patients with extensive-stage small cell lung cancer. Our particular interest during the meeting was our poster that provided a cost-benefit model, estimating the economic value of using COSELA prior to chemotherapy in extensive-stage small cell lung cancer from a U.S. commercial payer perspective. The projected estimated total cost savings per patient is approximately $15,000 based on a projected reduction in myelosuppressive adverse events and their associated treatment costs with on-label use. Overall, the model indicates that COSELA is an economically favorable innovation when addressing the incidence of myelosuppression in patients with extensive-stage small cell lung cancer. We were also very active at ASCO, presenting posters, interacting with key opinion leaders in oncology via our virtual booth, and sponsoring our peer view CME program called long-awaited treatment advances give cause for optimism in small cell lung cancer. Finally, as I mentioned on the last call, since the approval of COSELA, we've had marked interest in our scientific platform and real-world evidence generation. We've been pleased in the interest in our investigator-initiated study program and some of these studies will start later this year. Additionally, we are working with oncology centers so that they can assess the burden of chemotherapy-induced myelosuppression in their own practice. Switching now to clinical trial progress. Our colorectal trial is ongoing, and we initiated 3 new trials during the second quarter. We discussed the Phase III triple-negative breast cancer trial on our last call, so I'll discuss the 2 Phase IIs today. In May, we initiated Preserve 4, a multicenter, randomized, double-blind, placebo-controlled Phase II study of COSELA administered prior to docetaxel in approximately 146 patients with metastatic non-small cell lung cancer in the second and third-line setting who have previously been treated with a checkpoint inhibitor and chemotherapy. Non-small cell lung cancer is the most common type of lung cancer accounting for 84% of the nearly 240,000 lung cancer diagnoses in the United States. For people diagnosed with metastatic disease, the 5-year survival rate is only 7%. And unfortunately, despite improvements in therapy for metastatic non-small cell lung cancer, including the use of PD-1 or PD-L1 inhibitors, the majority of patients ultimately progress during or after treatment with immunotherapy and chemotherapy. The primary endpoint of the trial is to evaluate the effect of COSELA on overall survival compared to placebo. Secondary endpoints will evaluate anti-tumor efficacy and the multi-lineage myeloprotection benefit of COSELA compared to placebo as in our other trials and will also assess safety. We expect to see interim data in the first half of 2023. Next, in June, we initiated PRESERVE 3, a Phase II randomized open-label study of COSELA administered with first-line platinum-based chemotherapy and the immune checkpoint inhibitor, avelumab as maintenance therapy in approximately 90 patients with untreated locally advanced or metastatic urothelial or bladder carcinoma. There are approximately 84,000 new cases of bladder cancer every year. And unfortunately, the overall 5-year survival rate for metastatic bladder cancer is under 6%, a number that has not improved in the past 25 years. Patients are being randomly assigned 1

[Jennifer Moses:]

Thanks, Raj, and good afternoon, everyone. As Will mentioned, full financial results for the second quarter of 2021 are available in our press release and 10-Q. Today, I will focus on a few key points from our disclosures. Our total revenue for the second quarter of 2021 was $6.6 million, comprised of net product revenue of $2.5 million and license revenue of $4.1 million. For net product revenue, we realized a gross to net percentage in the mid-teens and expect to realize a gross to net percentage in the mid- to high teens going forward. The main driver of variability in our gross-to-net adjustment is our percentage of sales to PHS organization. Our license revenue was primarily related to a $3 million development milestone payment from our license agreement with Simcere, specifically related to the initiation of the bridging study of trilaciclib in first-line and second and third-line extensive-stage small cell lung cancer. We benefit from this SImcere partnership in a variety of ways. Of course, this includes financial benefits such as current and future milestones and royalties, but we have also discussed their ability to participate in our clinical trials. Simcere is participating in both our CRC and TNBC studies, which we believe will help not only control cash burn on these studies, but also provide additional sites to help us continue to enroll this trial at an appropriate pace. Cost of goods sold for the 3 months ended June 30, 2021, was $0.8 million. As a reminder, the majority of the manufacturing costs related to COSELA sales were incurred prior to FDA approval and therefore, were recorded as R&D expense in prior periods. These previously expense costs will continue to impact the presentation of cost of goods sold in future periods until initial prelaunch inventory is depleted and additional inventory is manufactured and sold. G1's research and development expenses for the second quarter of 2021 were $18.8 million compared to $18.5 million for the second quarter of 2020. The increase in R&D expenses was primarily due to an increase in clinical trial spend, which is offset by a decrease in costs associated with the manufacturing of active pharmaceutical ingredients and drug product to support clinical trials as well as a decrease in external costs related to discovery and preclinical development. Our selling, general and administrative expenses for the second quarter of 2021 were $25.2 million compared to $14.4 million for the second quarter of 2020. The increase in SG&A expense was largely due to an increase in commercialization activities and increase in compensation due to increases in headcount and increased spend on information technology, professional services and other administrative costs. We ended the second quarter with cash and cash equivalents of $244 million, and we expect our current financial position to be sufficient to fund operations into 2023. With that, I'll turn the call back over to Jack for some closing comments. Jack?

[John Bailey:]

Thank you, Jen, Raj as well. Now before we close the call, I want to, as always, thank the people living with cancer for their inspiration. As we know, we're only a couple of days past the World Lung Cancer Day, I'd like to specifically acknowledge those families who have experienced the impact of lung cancer, past, and present, and the important work that thoracic oncologists, oncology nurses, and their staff due to care for people living with it. We are well aware of the importance of the work we are doing at G1 for patients with lung cancer and that there is a great need for this first and only proactive multilineage myeloprotection drug. Now before we move to Q&A, let me just recap what you've heard today. The combined commercial team is heavily focused on executing the plan in the second quarter and took early steps forward getting COSELA widely tried and adopted over the long term. We have no issues with reimbursement. We continue to hold the majority of our sales calls virtually. We do expect that to change over time, however, as the U.S. continues to open up, but we will monitor the impact of COVID barriers. In instances where our target organization stay virtual, we will continue to adapt to ensure that we are reaching them as effectively as possible. We initiated 3 new trials in the second quarter, a Phase III registrational trial in metastatic triple-negative breast cancer and 2 Phase II trials in patients with non-small cell lung and bladder cancer. We also expect to initiate a new Phase II trial late this year to further define the anti-tumor mechanism of action of COSELA. As a result, we expect to have numerous data readouts starting in the second half of next year. We've recently received Fast Track Designation for COSELA in triple-negative breast cancer, which is a regulatory pathway used to give important new drugs to the patient earlier by providing regulatory support and other benefits. And finally, our cash runway guidance is unchanged from our last set of guidance, taking us into 2023. I thank you for your time this afternoon. We will speak again in this format on the November call, though I'm sure we'll see many of you before then during the late summer and fall slate of virtual healthcare conferences and non-deal roadshows. Hopefully, we can see many of you in person in due time as well. With that, I'll close the call and turn it over to Q&A. Operator, would you please remind our listeners how to ask a question.

[Operator:]

. Your first question comes from the line of Chad Messer from Needham & Company.

[Chad Messer:]

And congrats on the solid quarter or early in a lot of milestones being met. I'm wondering if you could educate us a little bit further on the importance of the NTAP decision that you reported this morning, if there was an actual amount that's sort of a maximum reimbursement amount that was given? This is my own naivety, but maybe you can put some perspective on that. And maybe talk about that importance as well as if there's any more you can say about to see in J codes, which are also recently granted? Obviously, at this point in launch, getting reimbursed is a -- it's a pretty major factor to uptake.

[John Bailey:]

Yes. Thanks, Chad. Appreciate the questions. When you look at both the NTAP, the C Code, and the J Code, I mean, it all speaks to, frankly, what we would view as a very positive reimbursement environment. All of those, of course, are via CMS. We also have the commercial market, which, as we mentioned, every payer is allowing claims for COSELA to flow through according to label, and several had written formal policies. So I think it all speaks to your point, what is normally one of the biggest concerns certainly in a product launch is coverage and reimbursement. We feel very, very good. My personal experience says this is as good as I've seen it in probably a decade or 1.5 decades for a new product, whether it's commercial or Medicare patients. Now in terms of the NTAP itself, it's more specific for those -- a minority of patients that will be started in the inpatient setting. So that is a very small percentage of COSELA patients based upon our market research. But when you couple that with the C Code and in the J Code, basically, you've got the entire waterfront covered. So that's why I'm sharing the NTAP. It's helpful. But it's really when you look at it in the totality, it's really just an extremely positive coverage and reimbursement environment.

[Chad Messer:]

Very helpful and congrats again.

[Operator:]

And your next question comes from the line of Joseph Thome from Cowen & Company.

[Joseph Thome:]

Maybe the first one, it was indicated that some areas seem to be outperforming and maybe others are underperforming. Are there any specific reasons why that might be happening, is it based on geography, or maybe some sites are just better at using sort of supportive care agents or some more clinical trial sites? Any sort of additional information on that would be helpful. And then maybe on to TNBC. Obviously, we're expanding development of COSELA that upcoming study. Will you then be looking to kind of pair COSELA with other maybe approved agents in the space like an ADC? I know Trodelvy was approved last year, was the reasonable step forward?

[John Bailey:]

Sure. I'll handle the first one, and then I'll flip it over to Raj on the second one. This is really -- it's more on the execution side, Joe. It -- certainly, there's no geographic boundaries when it comes to small cell lung cancer. So at things, then this is really -- is execution. We're aligned with our partner on that. We know what the issues are. Some of it requires training. Some of it's more attention. But the bottom line is, it is solvable, and we are working forward to making sure we solve that across the country. In terms of the TNBC study, potential Boston, let me turn that to Raj.

[Rajesh Malik:]

Yes. Joe, yes, so that MOA TNBC study, we are very excited about to further define the mechanism. There's a lot of data on the effect of COSELA on Tregs in particular, on CD8-to-Treg ratio. So that will be our focus. And we'll talk more about that as we near initiation of the study. Regarding ADC, yes, we're definitely interested in exploring that study as well since this is a class of drugs that's clearly becoming entrenched in a number of spaces, including TNBC.

[Operator:]

And your next question comes from the line of Tom Shrader from BTIG.

[Thomas Shrader:]

Congratulations. Not an easy time to launch a drug. So I had a couple of questions on the clinical trials you announced. What is your sense about how many trials you're going to have to run if you show myelopreservation in second line, third line non-small cell lung cancer, do you think you would get an approval for first line as well? Or is there just no way to know? Just to your sense how many trials you have to do?

[John Bailey:]

Yes. It's a fair question, Tom. We appreciate it. And I think a lot of folks have tried to figure this one now. I don't think we have a great answer for you beyond -- we're going to -- we really have a tumor-agnostic vision for COSELA and so we're going to continue to execute on these studies to try and build up that repository of proof across an array of different regimens and tumor types. So whether or not at some point, regulators choose to give it a broader label, it's tough to predict. What I would say is a lot of the payers in the compendia listings, they'll take a different perspective and begin to reimburse. So I think we have to separate the 2 sort of a pan formal regulatory label change after so many studies versus getting reimbursement with the broader label. So -- but we're going to continue to execute on these. And again, we're encouraged with things like the Fast Track Designation where we can continue to engage with the regulatory bodies now to make sure we can get COSELA across the market for these broader indications.

[Thomas Shrader:]

Great. And a second question on the urothelial trial. So you're maintaining COSELA during the avelumab maintenance only? What's going on there? Is there enough COSELA to have efficacy is? Or CDK4/6 is active here? Or just a thought on extending the COSELA use.

[Rajesh Malik:]

Yes. Tom, this is Raj. So sorry if I was not clear in my remarks. The design is patients get up to 6 cycles actually of gem/platinum. And then if the disease has not progressed, they will receive avelumab as maintenance. So that is the control arm. We're going to give COSELA with gemcitabine platinum as well as avelumab maintenance. So it's throughout the duration of treatment in terms of COSELA. There's actually we have data preclinically and all of our mechanism of action data suggests that there's a good rationale for combining it with a checkpoint inhibitor, both alone as well as in combination with chemo and checkpoints. So that's the rationale for the design.

[Operator:]

And your next question comes from the line of David Nierengarten from Wedbush Securities.

[David Nierengarten:]

Maybe if I could, a little bit more detail on the NTAP payment. Specifically, where does that place you relative on the physicians' reimbursement relative to other Neulasta or other white cell support agents? And then a second question on the bladder cancer study. Are there -- I mean, obviously, you'll be watching for myelosuppression in there. Is there a plan or a scenario where if you don't necessarily see a static benefit on progression-free survival, is there a mechanism to maybe expand the study or to look at a myelopreservation endpoint to Tom's point, you'll accelerate the process of getting a broader approval in multiple tumor types for at least myelopreservation?

[John Bailey:]

Yes, I'll take the first one on the NTAP, and then I'll have Raj speak a little bit more on the bladder. Yes, on the NTAP, I mean, first of all, if you look at the economics, especially for the inpatient setting where, again, the NTAP is more applicable whether you look from a net cost recovery or from an administration fee, the economics are very favorable for COSELA. The NTAP really avoids and the whole intent of it when it started years ago was to not penalize in that DRG setting where there's one set payment and new innovation comes in, and the healthcare system may avoid using it even if it's got the potential to improve patient outcomes, et cetera. So from our standpoint, I would say it just continues to have -- provide COSELA with favorable economics in that inpatient setting. But again, I would just go back to the broader issue with coverage and reimbursement is really the key takeaway. We've got, frankly, a really optimal scenario here, whether it's for those Medicare patients or for those commercial patients. So -- but in terms of the bladder, let me have Raj speak to that.

[Rajesh Malik:]

David. Yes, so this is, 2 comments I'd make. The first is this is an open-label study. So obviously, we would be looking at the data. And if there is a strong myelo signal, I think that is certainly a possibility. The second is that in our experience to date, when there is a myelo signal, it's apparent in relatively small numbers of patients, and this is 90 patients, 45 per arm. So this size of study could be sufficient to actually pick that up as well.

[David Nierengarten:]

Yes, it's the part of that was what is the kind of background rate on myelosuppression in bladder patients. So I assume it's sufficient to see a delta then, as you mentioned, in a short order or with fewer patients?

[Rajesh Malik:]

Yes. So this is really both -- it includes both gemcitabine, cisplatin, and carbo. So cis the preferred, but in cis ineligible, we get carbo. And they're both obviously myelosuppressive. So yes, I think it's a reasonable number of patients to get a read on that.

[Operator:]

. And your next question comes from the line of Tony Butler from Roth Castle.

[Tony Butler:]

Just really two questions, and they're on the clinical trials, which are enrolling and ongoing. I noticed Raj in clinical trials start or that PRESERVE 3 in bladder cancer currently has only one side enrolling patients, and I wondered if you would speak to that. And then also with respect to PRESERVE 4 in NSCLC, there are 4 sites. It seems that there's a tremendous amount of activity going on, certainly in PRESERVE 1 and PRESERVE 2. So I just wanted -- and I realize they're new, and I know having 4 trials ongoing can be cumbersome for a small company, but I appreciate your thoughts on the site enrollment.

[Rajesh Malik:]

Tony. So yes, no, we're -- both studies the one initiated in May, the other one in June. So we're very much in the site activation part of the study. And the other point actually is that there are more sites that are currently visible on clinicaltrials.gov. It always takes a couple of days for them to be updated and that's a continuous process. So yes, but patients are being enrolled. We've enrolled patients on the non-small cell lung cancer study, and we expect the same to happen in bladder soon.

[Operator:]

I'm showing no further question at this time. I would now like to turn the conference back to Mr. Jack Bailey. Please go ahead, sir.

[John Bailey:]

Thank you, operator. We are actively bringing COSELA to patients with extensive-stage small cell lung cancer and conducting these intelligently designed clinical trials to maximize the future value and applicability of this unique drug in a variety of cancers. As always, I look forward to keeping you updated as we move forward. Thank you for joining us today. Have a good afternoon.

[Operator:]

And this concludes today's conference call. Thank you all for your participation, and have a wonderful day. You may all disconnect.