G1 Therapeutics, Inc.
Q1 2021 Earnings Call Transcript

Published: 5 May 2021

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the G1 Therapeutics 2021 First Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session I would now like to hand the conference over to your speaker today, Mr. Will Roberts. Please go ahead.

[Will Roberts:]

Thank you Jilian. Good afternoon everyone and welcome to the G1 conference call to discuss our first quarter 2021 financial results and business update. The press release on these financial results was issued after market close this afternoon and can be found in the News section of our corporate website G1therapeutics.com.

[Jack Bailey:]

Thanks Will. Good afternoon everyone and thank you for joining us on the call today. We certainly hope that you and your families are healthy and well. Today's headline is one progress toward our mission via continued execution by the G1 team on both our launch efforts for COSELA in extensive-stage small cell lung cancer and in our clinical efforts as we execute on our robust development plan. As many of you know, G1 was founded in 2008 by Dr. Norman Ned Sharpless, the current Director of the National Cancer Institute to discover novel therapeutics that target protein kinases that help mediate cell division. His mission even then was to improve the experience of chemotherapy and to improve and extend the lives of people living with cancer. And I'm happy to say that our mission has not changed as the company has evolved. The development, approval and launch of COSELA in extensive-stage small cell lung cancer isa one example of how we were actively advancing that mission. Another is our tumor-agnostic clinical program with the late stage clinical trials ongoing or soon to be initiated in multiple tumor types. Soma will share that the early indicators are suggestive of a drug that is being well received by oncologists in oncology nurses and is well covered by payers.

[Soma Gupta:]

Thanks, Jack, and good afternoon everyone and thanks for joining us on the call. These are exciting and very busy times as we are launching COSELA. And though, we are very early in the launch cycle, the indicators to date have been positive and suggest a high-level interest in adopting COSELA and the potential for strong coverage from payers. I'm very proud of the great work we have seen from this combined G1 and VI team. Thanks to their efforts, we booked approximately $600,000 in net sales as of March 31st in COSELA's first four weeks of availability. We're off to a solid start and I'm optimistic that we can sustain this early momentum moving forward. Launching a drug during a pandemic is new territory for all of us and the team has performed well. As we discussed in our last call, our sales training was completed in the week of February 26 and the team was in field the following week to coincide with availability of drug on on March 2nd. G1 and BI made good early progress even though drug was available for only the last four weeks of the quarter. So a few highlights.

[Raj Malik:]

Thanks Soma and good afternoon everyone. I'm going to cover three topics. First, I'll highlight some of our medical efforts during the quarter, including COSELA's addition to the NCCN guidelines and how our interactions with HCPs are progressing. Second, I will describe some compelling budget impact model data that were recently presented at the Academy of Managed Care Pharmacy or AMCP meeting in April. Finally, I'll provide an overview of our recently initiated pivotal trial in triple-negative breast cancer or TNBC.

[Jennifer Moses:]

Thanks Raj and good afternoon everyone. As Will mentioned, full financial results for the first quarter of 2020 are available in our press release and 10-Q. Today, I'd like to focus on a few key points from our disclosures. Our total revenue for the first quarter of 2021 was $14.2 million comprised of net product revenue of $0.6 million and license revenue of $13.6 million. We recognized product revenue upon delivery of COSELA to our specialty distributors. First quarter product revenue includes net product sales from our first shipments in March, following FDA approval. Our license revenue was primarily related to development milestone payments from our license agreement with Simcere, which provides them with development and commercialization rights for trilaciclib across all indications in Greater China and revenue from EQRX with whom we have a license agreement for lerociclib. The revenue from EQRX relates to delivery of clinical drug supply and manufacturing services and reimbursement of clinical trial costs. In addition, we recognized revenue related to achievement of the development milestone by Genor. It's worth noting that while we do expect to continue to receive modest expense reimbursements and payments under our supply agreements from our partners, we do not expect to receive this amount of license revenue in any one quarter for the remainder of this year. Cost of goods sold for the three months ended March 31st, 2021 was minimal as the majority of the manufacturing costs related to the first quarter of COSELA sales were incurred prior to FDA approval and therefore were recorded as R&D expense in prior periods. The prior expensing of these costs will continue to impact presentation of cost of goods sold in future periods until the initial pre-launch inventory is depleted and additional inventory is manufactured as a result. G1's research and development expenses for the first quarter of 2021 was $16.5 million compared to $20.4 million for the first quarter of 2020. The decrease was primarily due to a decrease in costs for manufacture of active pharmaceutical ingredient drug product to support clinical trials as well as decrease in external costs related to discovery and preclinical development. Our selling, general and administrative expenses for the first quarter of 2021 were $23 million compared to $11.4 million for the first quarter of 2020. The increase was largely due to an increase in compensation costs due to increased head count and increased commercialization activity. We ended the first quarter with cash and cash equivalents of $279 million, which included the $86.4 million in net proceeds from our at-the-market offering with Cowen. As a reminder, this activity utilized all remaining capacity under the sales agreement, so this ATM offering is now closed. We also drew an additional $10 million under debt financing facility with Hercules Capital and entered into an amendment to the agreement, which provided slightly lower interest charges and additional covenant relief on a future tranche of debt. There is currently $70 million of capacity remaining on the Hercules facility. 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. Jack?

[Jack Bailey:]

Thank you, Jen, Raj, Soma and Will. Before we conclude this portion of the call and go to Q&A, I want to thank the people living with cancer and their healthcare professionals for their inspiration. In particular given that May is oncology nurse month, I'd like to personally thank these nursing professionals for their incredible work they do. You are truly the front line of care for people living with cancer and walk with them every step of the way from diagnosis onward. We appreciate the opportunity to be part of and help support your community. I would also like to thank the G1 team for your continued dedication to improving the lives of cancer patients as we execute on our clinical and commercial programs we will have the opportunity to impact a lot of lives, your dedication and drive matters. Now as I mentioned on the last call, the first quarter of 2021 was transformational for G1 and I'm happy to report that we are well along in turning the corner on becoming a commercial organization without losing focus on our clinical endeavors. We will keep you up to date as possible on our commercial rollout of COSELA through these leading of the way indicators of both interest and uptake, which we intend to provide every quarter, along with our revenue results. However, on this call we described some patient numbers to help you understand our early trajectory. We do not intend to provide them every quarter as we start to get into our revenue generation. Again before we move to Q&A, let me just recap what you heard today. The combined sales team is executing on its launch program and achieving good early metrics of engagement and adoption of COSELA. We see no issues in coverage and expect to hear about our permanent J C and NTAP codes in the second half of this year. Our medical affairs team has held over 350 medical-to-medical engagements across the MSL team since FDA approval, driving education on Cosela and interest in the G1 scientific platform. We have a strong publications program on which the medical team is executing, including the recent presentation of data showing that the net financial impact of COSELA is estimated to be cost savings from a budget standpoint. COSELA was added to two different NCCN guidelines in late March, which we expect to facilitate timely payer reimbursement and ongoing patient access. We recently initiated our pivotal trial in TNBC with data expected in 2023. We also expect to initiate our Phase II programs in non-small cell lung cancer and bladder cancer later this quarter giving us five ongoing late stage trials and numerous readouts coming over the next 24 months. And finally, we have cash runway that takes us into 2023 with options to extend that further. Thank you for your time this afternoon. We will speak again in this format in the August call for Q2 earnings, but between now and then, we look forward to connecting with many of you at the upcoming virtual healthcare conferences and roadshows in the weeks ahead. 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:]

Our first question comes from the line of Mr. Tom Shrader from BTIG. Please go ahead.

[Unidentified Analyst:]

Hi, this is for Tom. Thanks for taking our question. I just have one on the oral SERD. With all the updates from the other SERD programs like the Sanofi's and Genentech's, has the bar for what has to be seen for rintodestrant changed?

[Jack Bailey:]

Yes, thanks for the question. Really appreciate it. I would say our internal measure that we communicated of CBR24 for between 60% and 65% really remains. To your point, as more data comes out in the SERD class, both on the efficacy and the tolerability and side effect standpoint, we'll continue to monitor that. But we believe that we can match the safety profile and strong tolerability and hit a CBR in that range we'll consider this a good result.

[Unidentified Analyst:]

Great, thank you and congrats on the progress.

[Jack Bailey:]

Thank you very much, I appreciate it.

[Operator:]

Our next question comes from the line of Anthony Butler from ROTH Capital. Please go ahead.

[Anthony Butler:]

Thanks very much. Soma, I appreciate the presentation and the color. But I have to ask, can you describe any payers that had a push back, but importantly how did -- how are the field agents able to actually deal with that push back? I think it's important as a lesson to be learned. And then the second question involves around in discussions that you've been having with payers, who has yet to sign contracts or incorporate COSELA within their reimbursement, again can you discuss where are the -- any rate-limiting steps that may be occurring at least to date? Thanks very much.

[Soma Gupta:]

Yes, sure Tony. Nice to hear from you. So on both points, so as I said in my comments, we have had very little pushback from payers at this stage. And so at this point, what's happening is physicians are choosing to write it. They're putting it in and they're not having issues. In fact, as you know, we have this, one-to-one service. So, the cases that have come through there, same thing, no problems. I think at this stage, it's PA to label. And so, to answer your second question -- the second question around the policies is that the processes, those presentations that are given, we've done those presentations that cover about 80% of lives at this stage. They are well underway and then they all take their time to review the data, understand the data understand the benefit, and then incorp and then write the policy. And so as I said, we got the first policy from Anthem at the end of March. So we were very happy about that. I think different insurance company basically handle about in different ways and take time on different timelines. So we feel that might take anywhere between -- it could take six months for all of them to come on board write their individual policies. Some of them came on, Anthem came on very early in the -- on the progress. But I would say overall, this is not an area with the payers, where we're seeing a lot of pushback on an issue. And so even to answer your question about how the reps are handling it, the reps aren't really having to handle it, because it hasn't really present much of an issue to-date. Again, we think we're fairly priced fit. We think people understand multi-lineage that they're getting, the benefit of not just what they got with others, but they're cutting the other pieces and I think that goes a long way in terms of the value proposition on COSELA, but we've very encouraged by the progress on the payer front today.

[Anthony Butler:]

Thank you very much.

[Operator:]

Our next question comes from the line of Mr. Chad Messer Junior from Needham. Please go ahead.

[Chad Messer:]

Great, thanks for taking my question and thanks to the whole team for all the added color today and like my predecessor analyst, a special thanks to Soma for all of her color. Soma, I may need to replay parts of your prepared remarks today at two-third speed so I can absorb it all. And our ability to process information clearly slower in years, but if we could just dive into a couple of things, I'm trying to get a hold on. So -- and I get it so we're talking about the very earliest days. It's a very flash time point than the launch. Things do sound like they're going well, but $600,000 in sales through that very end of March. I believe if I have my notes down correct, you guys are estimating that's about 30 patients that you've treated maybe some context on that number. I know it's a month's of early data but like are we 2%, 20%, 40%. And then you also, I believe, again, I've got to read my own piece of written notes, but 60-40 on the community academic breakdown and 60-30-10 on the net D the commercial and government breakdown like, can you give us some context on where those are and where we think they need to be, like I mean again, right. So, it's just the first few weeks, we're all going to over analyze it. That's what we do, but sort of where are we on those, if you could give us some?

[Soma Gupta:]

Yes, absolutely. So yes, I tend to be a fast talking orator as you may now. So, appreciate that, so -- but interestingly you've got all the numbers correct. So that's the first thing. So on the 30-patient so what I can tell you about the 30 patient is it is an estimate. It has the way that the data comes into us as we see different accounts. We first of all, we see accounts and so accounts will order and will be able to see. Okay that person, they ordered five vials, that's probably a second line patients; that person may they ordered 6 vials, that's probably as our first line patients. So we're doing a little bit of math to get it our best estimate around the patient, but we just think it was important to be able to get a perspective on how many patients we think went on drug and we think it's about 30. Of that 30, we think about half of those are definitely first line patients. We think about 25% of those might be second line and then about 25% of them we're just not sure based on the way the order and came in. So that's a little bit of coloring, at least on the patient piece and in terms of where we think that is we think that's very positive. We think directionally 30 patients was great for four weeks. This is a disease when you think about it, there is only 30,000 patients are present in a given year. Out of those 17,000 to 18,000 are first line, about 10,000 are second line and the kind of the remainder are thereby decisions don't really make it through multiple lines of therapy. So, when you think about that on a -- so you take that number and you kind of do it on a monthly basis, the number of patients walking in every month is not that big. And so for us we thought 30 patients with a good number for the first month of launch. That's the first thing. The other number that you mentioned the 60-40 can be in any split, we actually think that's going to move closer to 70-30 over time. We think that what might have happened in this instance, is that the community -- sometimes the community institutions are larger practices. They have longer processes to kind of pull it through and the whole process I talked through about cutting TNT and opening it up from the top, sometimes that talks us a little bit longer and some . And then, some of the academic accounts that just goes faster, because they can get access to the things they need to, that might be why it weights little bit heavier on academic than what we've-- I think what we expect to see in steady state, which in my mind would be more or less 70-30. But on the payer mix of 60-30-10, that's actually what we expect to see. So that was actually right in line with our -- exactly how we expected to come in. Again these patients the average age is 65. So, we know that the heavily Medicare population. So, it would seem to us about 60% is reasonable, 30% commercial and then 10% kind of VA, DoD and others. So in general, we think this is actually the patient count again it's an estimate, but we feel very good about the patient count is and where we we're able to get to in the first month. And as I said, the other two metrics I deal are very in line with what we thought we would start.

[Chad Messer:]

All right, well, really color and please accept my permission to take a breath. Thank you.

[Operator:]

Our next question comes from the line of Mr. Joe Thome from Cowen and Company. Please go ahead.

[Joe Thome:]

Hi there. Thank you for taking my questions. First one, just on the P&T approval process given kind of the COVID pandemic time frame, what's the average time from sort of initial presentation to the hospital for it to get through the P&T committee? And then second, is it possible to use COSELA concomitantly with other GM-CSF products in clinical practice? I know in clinical study, we saw obviously reduced need, but is it still reimbursable after launch? Thank you.

[Jack Bailey:]

Thanks. Thanks, Joe. I'll quickly address the first one and then I'll put the second one over to Raj. In terms of what your typical P&T timeline. To Soma's point, this is really very individualized that's on an account by account basis depending on either the institutional or top-co institution versus a large community practice. So, a team is monitoring this. We've got a good sense for a lot of them when they will occur. But to be honest the duration of when they start and how long take really does vary account by account. But the team is heads down executing on this and making sure they have the information they need to be able to, hope we move to their processes as quickly as possible. Raj, you want to take the second question?

[Raj Malik:]

Yes, happy to. So in our trials we allowed the use of G-CSF and what we actually found was a substantial decrease in the need for G-CSF when when COSELA, but there were no safety issues with giving both COSELA and G CSF. So we think in practice because of the proactive approach with COSELA, prescribers will initially use COSELA and also having the multi-lineage benefit and could have the option of using G-CSF if needed down the road.

[Joe Thome:]

Okay, perfect. Thank you very much.

[Jack Bailey:]

Thanks, Joe.

[Operator:]

Our last question comes from the line of Mr. Ed White from HC Wainwright. Please go ahead.

[Ed White:]

Good evening. Thanks for taking my questions. Thanks for the update on rinto. Just wondering if you can briefly review your strategy there again? And has there been interest from partners for that product? And then a quick question for Jen, just that the cash runway into 2023, does that include the 70 million left from the Hercules deal? Thanks.

[Jack Bailey:]

Good to hear from you Ed. I'll answer the first one and flip it over to Jen to hit your second question. In terms of rintodestrant, we are still on the same path that we communicated last year, we believe, given the competitive nature of the class, the cost of the Phase III development programs, let alone the significant investment to commercialize, we think the best use of shareholder capital is to partner that. To your point, we have had interest in it and have had discussions, obviously as we released the data at ASCO that will be the next in the logical milestone here will follow-up, a lot of those discussions, but we're still on path to be able to partner there and really fully deploy our capital behind trying to development plan. Jen you want to take the second one?

[Jennifer Moses:]

Sure. So how -- when we're giving guidance we run it a number of different ways that's for early stages of revenue looking at a bunch of different options, but we are not utilizing the full $70 million to get to 2023. So, hope that answers your question.

[Ed White:]

That does. Yes. Thank you.

[Jack Bailey:]

Thanks Ed. Okay that's looks like it's the last question, so let me just conclude by saying we are very excited to be bringing COSELA to patients with extensive-stage small cell lung cancer and through our clinical teams to many more patients with a variety of different cancers as always I look forward to keeping you all updated as we move forward and certainly we will continue to be as transparent and proactive as possible in this regard. So to everyone listening, thank you for joining us today to please stay healthy, and well, we look forward to talking soon. Thank you.

[Operator:]

This concludes today's conference. You may now disconnect.