Spectrum Pharmaceuticals, Inc.
Q3 2021 Earnings Call Transcript

Published: 10 Nov 2021

[Operator:]

Good afternoon everyone and welcome to the Spectrum Pharmaceuticals Third 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. Kurt Gustafson, Spectrum's Chief Financial Officer.

[Kurt Gustafson:]

Thank you, operator and good afternoon to everyone. Thank you for joining us today for our Third Quarter 2021 financial results conference call. Our third quarter financial results press release was sent out earlier this afternoon and is available on our website at www.sppirx.com. Joining me on the call today from Spectrum Pharmaceuticals will be Joe Turgeon, President and CEO, and Dr. Francois Lebel, our Chief Medical Officer. Before we get started, I would like to reference the notice regarding forward-looking statements included in today's press release. This notice emphasizes the major uncertainties and risks inherent in these forward-looking statements that we will make this afternoon. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. With that, let me hand the call over to Joe Turgeon, CEO of Spectrum.

[Joseph Turgeon:]

Thank you, Kurt. Good afternoon, and thank you for joining us on the call today. I really appreciate your interest in Spectrum. As we start to close in on the end of the year, we remain focused on our key corporate priorities; first, to submit the poziotinib NDA and second to correct the manufacturing issues identified by the FDA in ROLONTIS CRL. Let me start with an update on ROLONTIS, our drug for the treatment of neutropenia in patients receiving myelosuppressive anti-cancer drugs. Last month we had a Type A meeting with the FDA to better understand the issues that were identified in the CRL. The CRL cited issues at the fill finish facility and the drug substance facility. At that meeting, we gained clarity that the deficiencies at the fill finish site had been adequately addressed and are no longer a gating item for resubmission. Regarding the drug substance facility, as of today we believe that Hanmi has addressed all the deficiencies cited in the CRL with the exception of one, and we expect the remediation to be completed by the end of the year. Pending successful completion, we would expect to re-file shortly thereafter. Our Type A meeting also clarified that the FDA will be conducting an onsite inspection as part of the resubmission process. We'd expect a six-month review once we submit. While Hanmi is working to resolve the issues associated with the CRL, we are continually monitoring the long-term, long-acting GCSF market and we'll be prepared to adjust our business plans as the market evolves. Now let me shift over to poziotinib, the other large late stage asset we have in our pipeline. The submission of the NDA remains our top focused priority, which we expect to file shortly. In addition, Spectrum's poziotinib clinical program has continued to make solid progress this quarter with data presented in treatment naive lung cancer patients as well as preclinical data on pozi in combination with KRASG12C inhibitors. Now to get a more detailed update on our clinical development progress, I'm going to turn the call over to Dr. Francois Lebel, our CMO. Dr. Francois take it away.

[Francois Lebel:]

Good afternoon everyone. I'm glad to be with you on today's call. Let's start with our top priority. The submission of our poziotinib NDA under Fast Track Designation is planned for the coming weeks. It will be based on our positive data with q.d. dosing from cohort 2 of the ZENITH20 clinical trial. Our submission will be seeking an indication for use in patients with previously treated locally advanced or metastatic non-small cell lung cancer with HER2 exon 20 insertion mutations. We believe poziotinib has the potential to be the first to market for this indication, an area of great unmet medical need. We were also very pleased that cohort 4 was awarded a late breaking presentation at the recent ESMO Conference in Paris, Dr. Cornelissen from the Erasmus Cancer Institute in Rotterdam delivered an oral presentation on the efficacy and safety of pozi in treatment naïve non-small cell lung cancer patient harboring HER2 exon 20 insertion mutations. This was data from our cohort 4 of the ZENITH20 study that included the first 48 patients that received 16 mg q.d. oral starting dose of poziotinib. The primary endpoint in this multicenter study was the ORR evaluated centrally by an independent image review committee using RECIST criteria 1.1. The results were observed, were quite strong with an ORR of 44% and a 95% confidence interval lower bound of 29.5%. The disease control rate was 75%. Median duration of response was 5.4 months and ranged from 2.8 to 19.1 months, including a complete response patient with 14 months of during. Median progression-free survival was 5.6 months. The most common treatment related adverse events were typical of tyrosine kinase inhibitor as was seen in prior studies. Grade 3 AE were rash, stomatitis, diarrhea, and paronychia. Importantly, grade 3 pneumonitis was only seen in one patient with no grade 4 or 5. The safety profile was predictable and manageable. Following these first 48 patients we've been dosing patients at the 8 mg b.i.d. dosing schedule. At the AACR NCI EORTC triple meeting in October, MD Anderson presented preclinical data demonstrating the synergistic impact of pozi when combined with KRAS inhibitors in KRASG12C mutant specific cell line. The preclinical data showed that inhibition of EGFR, HER2, HER3, and HER4 signaling was synergistic when combined with KRASG12C inhibitors. These results highlight the importance of a potent pan inhibitor of the Erb family of proteins. We continue to make solid progress on our programs and will keep you posted as we achieve key milestones through the balance of the year. I will now turn it over to Kurt for a discussion of our third quarter financials.

[Kurt Gustafson:]

Thank you, Francois. Our SG&A expense for the third quarter of 2021 was $12.2 million versus $15.1 million in the previous year as we've looked to more tightly control these expenses. R&D expense was $20.9 million versus $24.5 million a year ago due to lower ROLONTIS related development activities. Our net loss for the quarter was $33.1 million or $0.21 per share versus $48.5 million or $0.37 per share in the comparable period of 2020. On a non-GAAP basis, which primarily backs out stock compensation costs and the change in value of our equity securities, our loss for the quarter was $25.8 million or $0.16 per share, versus a loss of $35.2 million or $0.27 per share in the prior year period. We ended the third quarter with approximately $134 million in cash plus marketable securities compared to $159 million at June 30, 2021. Operating cash burn for the quarter was $25 million. This is lower than prior quarters as we've looked to manage cash more closely. With that, let me now hand the call back over to Joe.

[Joseph Turgeon:]

Thank you, Doctor Francois, and thank you Kurt. As you can all see, we are working diligently to push our programs forward. We are making great progress on our remediation efforts for resubmission of ROLONTIS tracking well towards our goal of poziotinib NDA submission shortly. With that, Operator, I’d like to open the call up to questions, if you could please do that, I'd appreciate it.

[Operator:]

And first question comes from the line of Alethia Young of Cantor Fitzgerald. Alethia, your line is now open.

[Alethia Young:]

Hi, this is Emily on for Alethia. Thanks for taking our question. I guess the first question is, do you think there is any risk of COVID but during the re-inspection in person, and has the updated kind of guided to how quickly they could do the re-inspection after you submit the CMC requirements? And then may be also if you can comment on when we can see b.i.d. data for cohort 4 for poziotinib? Thank you.

[Joseph Turgeon:]

Sure. Thank you, Emily, good to hear from you. First of all, at post COVID, obviously, I don't know the answer to what’s going to happen in the future. As I stated earlier, we should have everything remediated by the end of the year, which would mean early first quarter we could resubmit. The FDA did say they want to do an on-site inspection. What I can tell you though is today as an example, you can travel to Korea, we have people going there, actively, so I'm not sure what will happen to COVID in the future, but certainly right now, you can travel to Korea. So, we’re doing it as we speak, so that's the first part of the question. So, we don't know exactly when they would send the Inspector. I can tell you that it would be a six months review. It doesn’t mean it would take six months. So, any time after we file, they could send an Inspector back to do a re-inspection. Now, as far as cohort 4 question, Francois why don’t you take that?

[Francois Lebel:]

Sure, Alethia, and thank you for the questions. So, as you know the b.i.d. dosing is ongoing for all our open cohorts right now, including cohort 4, which continues to enrol. And we need to let the data mature further, and as you, I'm sure you can understand the team is really focused on the NDA now, so once we get the NDA in we will analyse some of the additional data as it matures and we'll keep you posted, but we don't have a date immediately.

[Alethia Young:]

Great, thank you.

[Joseph Turgeon:]

Thanks, Emily.

[Operator:]

Next question comes from the line of Maury Raycroft of Jefferies. Maury, your line is now open.

[Joseph Turgeon:]

Hi Maury.

[Maury Raycroft:]

Hi, Joe, hi everyone. Thanks for taking my questions and congrats on the progress. First question just on the NDA filing, if you could just talk a little bit more about what you’re going to include in the poziotinib HER2 exon 20 filing for second line patients? And are there any more specific gating factors that need to be completed before you submit this filing?

[Joseph Turgeon:]

Yes. Francois, why don’t you take that?

[Francois Lebel:]

Sure, so we’re in good shape. Obviously, all hands on deck here, and as I indicated we expect to be able to file this in next couple of weeks. The data as we indicated before is -- the core data, is the cohort 2. We communicated before, that following discussion with the Agency they have allowed us to add some of the preliminary data in the b.i.d. dosing from cohort 5 among others and so obviously that will go in. Although the NDA is based on cohort 2, there's a large body of data here. It’s like we had over 21 studies that we had to summarize, integrate. So, that’s part of the activity that's going on here, but I hope that answers your question. So, it’s q.d. data from cohort 2 and there will be some b.i.d. data in that submission as well.

[Maury Raycroft:]

Got it, and for the data, is the follow up being cut off, or are you still waiting for a final cut-off, for data maturing or are you primarily just working on getting the filing together, maybe if you can clarify on that point?

[Joseph Turgeon:]

Yes, so whenever you do this, we haven't yet disclosed the data cut-off. But there was a data cut-off in the past, because you have to analyse all the data, get the data in from around the world, remember there was a global study here and multiple other studies. So, there is a definite data cut-off that’s in there. What happens though, and that's standard, usually what happens is that 120 days after submission, you provide an update on the data that you have accumulated, since the filing, to the agency and certainly we will do that as well.

[Maury Raycroft:]

Got it, okay, and then just last question from me, just on the data that you showed recently on HER2 treatment naïve patients at ESMO, and the late breaker with a 16 mg q.d. dose, can you just talk more about what the bar for success is in this setting? And if you can comment on if there's a -- what the pre-specified endpoint is?

[Francois Lebel:]

Sure. So, as you know, originally we -- the original submission or the original agreement with the FDA, was on 70 patients in cohort 4 and we had to meet pre-specified endpoint, in a lower bound of 20, and clearly things are trending very well right now, and I'm going to leave it at that, because obviously the study is continuing to enrol. So, we're tracking quite well and that's why we're more enthusiastic with the ESMO presentation.

[Maury Raycroft:]

Okay and can we expect a follow up on this at some point or are you guys...?

[Francois Lebel:]

Well, yes definitely. We will want to release data once it matures a little more, we just have not given a date yet, but for sure, you will see some of that data as it matures.

[Maury Raycroft:]

Okay, okay, thanks for taking my questions.

[Francois Lebel:]

Sure.

[Joseph Turgeon:]

Thanks, Maury.

[Operator:]

Next question comes from the line of Ed White of H.C. Wainwright. Ed, your line is now open.

[Joseph Turgeon:]

Hey, Ed.

[Ed White:]

Hi, Joe. Thanks for taking my question. So I do have a couple of them. First on, cohort 4, you have the 48 patients presented ESMO. Can you just remind us, are these 48 patients going to be the only ones at the 16 mg and then the other 22 will be at the BID dosing or would it be less b.i.d. dosing and 22 patients out of the 70?

[Francois Lebel:]

So, as you know we presented the first 48 patients giving efficacy and safety, we provided a little bit of additional data on some of the BID patients. So, once the data matures, and we’re continuing to enrol right now, and once we do analysis and add some discussion with the agency, we’ll decide how much data we have, how much we need to potentially go for registration. We just don’t have any additional guidance to give you today.

[Ed White:]

Okay, Francois. Well, maybe we could talk about another product in the pipeline, the FIT platform you haven’t really discussed that. I was just curious if you can give us any update on the ING002 and refractory non-Hodgkin’s lymphoma, is there any update there? And then also, as far as the pozi and KRAS preclinical data go, as you look at that data are you thinking of running a company sponsored trial in the clinic in that patient population or with KRAS product or maybe perhaps an IST, something like that?

[Joseph Turgeon:]

Sure. So, let me start with FIT. So, as we've indicated that before, when you do a first in man dose escalation study, you don't have efficacy data. And what has happened is during the worst part of the COVID pandemic, this study got caught into that, it clearly was impacted negatively in terms of accrual. And if has performed clearly slower than we wanted. So we're reviewing that asset and making sure that we want to, what we want to do with the asset, it's currently open and recruiting, and we will assess this following a review given how long it's been going. So we'll update you on this. Clearly, the priority is pozi, ROLONTIS, rather than these very early stage program. So that's the first answer. The next one for the KRAS, so we're quite excited. I mean, will grant you that is, this is preclinical data, but nonetheless, it really shows the, KRAS inhibitor, one of which Amgen has been approved, but there is relatively rapid development of resistance. And companies and investigators realize that they're going to have to combine drug. And the question is, which one do you combine to get the best outcome for patient. And this in vitro data is really encouraging, because it shows that you don't need just a TKI here, but you really, there's an advantage, at least in vitro, to have a true pan-HER inhibitor, and to our knowledge the most potent one is poziotinib. So we're clearly very interested in pursuing this further. We have not at this stage decided if it's going to be with an ISS or a company sponsored study, but we'll update you I'm sure in the near future.

[Ed White:]

Thanks. And may be finally just a question to Kurt. I was just wondering, you're doing a great job with your cost cutting. Can you give us any guidance on cash runway or maybe, directionally what we can be seeing in G&A and R&D, as you're looking forward to the -- responding to the CRL and also submitting pozi for approval? Thanks.

[Kurt Gustafson:]

Sure, Ed. Yes, I mean, so we ended the quarter with $134 million in cash and marketable securities. This should be sufficient cash balance to kind of fund operations late into 2022, which obviously takes us through a time where we could potentially see approvals for these two late stage assets. Now, in terms of guidance, we don't give any specific guidance, we as I mentioned on the call, we have been looking to control and manage expenses given the recent CRL. And so, you did see G&A expenses or SG&A expenses be a little bit lower this quarter. So we will look to continue to go do that, but obviously we want to invest to make these assets successful. So, we are going to continue to put money into the brands for poziotinib and ROLONTIS, but we'll look to cut kind of areas that are non-critical to moving those assets forward here in the next few quarters.

[Ed White:]

Okay, great. Thanks, Kurt.

[Kurt Gustafson:]

Sure.

[Joseph Turgeon:]

Thanks, Ed.

[Operator:]

Next question comes from the line of Michael Schmidt of Guggenheim. Michael, your line is now open.

[Joseph Turgeon:]

Hey, Michael.

[Unidentified Analyst:]

Hey, this is Paul on for Michael. Thanks for taking our question. Just one from us on poziotinib and the NDA submission, I wanted to confirm your thoughts on the approval hurdle for previously treated non-small cell patients, given the potentially higher bar we've seen for recent approvals, like . Thanks.

[Joseph Turgeon:]

Sure, it's so I mean, we're going for, it's Cohort 2 data. So it's patient to add at least one line of treatment for HER2 exon 20 and it's really pure exon 20 insertion mutation. So there is no approved drug there. And, given the timeline that we think we're going to meet here, we really have the potential to be the first to market. And in our eyes, there's a number of other drug in development. But they -- when it looked, they looked at, if you look at their data for true exon 20 insertion mutation HER2, we think we have very good data at this point.

[Unidentified Analyst:]

Got it. Okay, thank you.

[Joseph Turgeon:]

Sure.

[Operator:]

Next question comes from the line of Mayank Mamtani of B. Riley Securities. Mayank, your line is now open.

[Joseph Turgeon:]

Hey, Mayank.

[Mayank Mamtani:]

Hey good afternoon. Thanks for taking our questions and congrats also on the progress. So at the highest level Francois, if I may just ask you your latest thinking on the path for registration for the b.i.d. dose, is it just getting more patients treated, high sample size, longer followup across cohort 5 and cohort 4? And then the specific question I had was, as part of your NDA filing, what confirmatory study are you committing to in terms of design? Because obviously, you need to do that as part of the rate approval?

[Joseph Turgeon:]

Yes, two very good questions. So the b.i.d. data we've got is an important win in some of the discussion we've had with the agency so far, that they allowed us to include some b.i.d. data on top of the q.d. data from cohort 2. So I can't give you an exact final answer if you want as to our latest thinking about b.i.d., because I think it's going to really depend on how the FDA will interpret the b.i.d. data that we have put in the NDA as it goes in. So we'll have to Judge how they feel about the b.i.d. data. Clearly, we have shown that there was some very good activity that was maintained, as well as a side effect profile that appeared certainly in the early patient that we have seen, to be favorable to q.d. So that's going to go in there. We're going to have some discussion during I imagined the NDA review, and we'll see where we go from there. So that's the first question, I think, sorry, can you remind me of your second question?

[Mayank Mamtani:]

Yes, the confirmatory study to get the full approval.

[Joseph Turgeon:]

Yes, absolutely. So I would say we're in discussion with the agency regarding this. And we clearly have developed a PMR. And, when you file the NDA, you have to have PMR, essentially underway and so we absolutely intend to do that. But obviously, we want to make sure we are in complete agreement if you want as to the nature of the PMR. So I'm not going to go any further on that, but it's probably a randomized controlled study that takes the so called, what clinician use because there is no approved standard of care or approved drug for the HER2 patient. There are multiple guidance from various groups, but those are not, they don't have the same strength as a prior approvals. So right now, it's some form of chemotherapy, as I'm sure you know, and plus or minus some checkpoints. And we'll need to define that with the agency and probably quite soon you will be able to see what we're doing.

[Mayank Mamtani:]

Understood. And my final question on just remind us where we are with cohort 6, just trying to understand the osimertinib failures. Like, kind of what the end market there is, and how are you maybe enrolling there with the new dose atinib ?

[Joseph Turgeon:]

Yes, so, we certainly -- they are continuing cohort 6 and 7 are continuing to enroll. There is some restriction of where we need genetic profiling of the tumor at time of relapse, if you want and that obviously gets in the way a little bit of accrual, but they're accruing. And, obviously, that's not our focus, primary focus, we're focused on the NDA. But at some point we will certainly announce the result of cohort 6 and 7. I just don't have a date for you quite yet.

[Mayank Mamtani:]

Thanks so much for taking our questions.

[Joseph Turgeon:]

Sure, thank you, Mayank.

[Operator:]

Next question comes from the line of Reni Benjamin of JMP Securities. Reni, your line is now open.

[Joseph Turgeon:]

Hi Reni.

[Reni Benjamin:]

Good afternoon. Hey, Joe, how are you? I apologize, my phone dropped, so you may have answered this already. But as I think about the b.i.d. data and the q.d. data, and the fact that you'll be submitting this NDA and have the option to obviously update it, I guess, with the b.i.d. data. You know, do you think that you could in this iteration of the NDA, wind up getting a label that includes both? Or do you? Or do you feel that you know what, we'd likely need to file this as a separate sort of SNDA when it comes to b.i.d. dosing, and just related to that, how many patients total do we have that have been that have been treated with b.i.d.?

[Joseph Turgeon:]

So the first question, I did answer it a little earlier, but let me give you the clips now there. So, we were very pleased the agency has allowed us to include the b.i.d., some of the b.i.d. data that we had in the NDA, which as you know is q.d. dosing. So we'll get a chance to discuss with the agency that b.i.d. data. And obviously that, is that body of data is increasing all the time. So we have b.i.d. dosing, if you look at non-small cells, we're in cohort 5, we have some in cohorts 4 and 6 and 7 as well. So we have not disclosed the exact number of patients. And we have so far, you know that we have more than 22. And let's just say that there is, were in excess of 100 patients and when you combine all the cohorts where we're using b.i.d..

[Reni Benjamin:]

Got it, thanks for answering that. And again, apologies since you had to answer it twice. Did you also answer before if I guess the other question I have is, do you think there might be an ODAC panel for this application?

[Joseph Turgeon:]

Yes, I don't know. Right now, I don't think it's, often or the ODACs are for when there is, controversial issue that the agency wants to get input from the oncology expert community. So far, it's there's no to our knowledge, there is no major controversy here. We have met the primary endpoint as agreed with the agency some time ago, and we believe that we have a safety profile that is really predictable, very much in line with other TKI. There's no kind of idiosyncratic reactions. So we obviously, we can't predict what the FDA will want to do eventually, but right now we have no any -- we don't have any indication that that will be necessary.

[Reni Benjamin:]

Got it, and then just switching gears to ROLONTIS, Joe you guys did a great job in addressing a lot of these deficiencies at least a lot quicker than I would have thought. Could you maybe give us just a little bit of color? And I mean it seemed like there were pretty small boxes to check, just given how quickly they were remediated. But can you give us a sense and in both the facilities, what really needed to be corrected? Or and I think, this last remaining gating item at Hanmi, which you hope will be completed by the end of the year, whether we know, when you had your meeting with the FDA, you were able to show them documentation that that said that it was it was taken care of or they kind of just take your word for it, it's more just like a free flowing dialogue. And they'll ultimately just, you know, come in and re-inspect everything and go with their own decision?

[Joseph Turgeon:]

No, I wish it was that easy. What it is, is you go in, we went in, we had the Class A meeting, as you said, and we clarified, we wanted to make sure okay, exactly what it is that we need to remediate? We immediately started once a CRL happened back in August, immediately Hanmi went to work on remediation, because you get, they tell you what it is. And so, we immediately got that. There was one gating item that, as you pointed out, we feel pretty confident it's going to be done by the end of the year. That's why we say we could file shortly after that. Now they still have to have someone come in and inspect the plan. They still have to go through all the campus what part of the remediation if you do campus, so they'll still go through all those but, where we -- what we've done is put the remediations into play, put the caps in place, and that will all be part of the final inspection and decision in the end.

[Reni Benjamin:]

Got it, great. Thanks for taking the questions.

[Joseph Turgeon:]

Thank you, Reni.

[Operator:]

There are no further questions at this time. I would now turn it back to Joe Turgeon.

[Joseph Turgeon:]

Thank you, Operator. First of all I'd like to thank all of you who are on the call listening and for your participation on the call today. I really appreciate all your interest in Spectrum. Just to let you know we'll be participating virtually in the Jefferies Healthcare Investor Conference later this month and also at the JMP Hematology and Oncology Summit, which is in early December. So we look forward to talking to many of you at those events also in the not too distant future. Again, everybody, thank you for your interest and have a great evening. Thank you, Operator.

[Operator:]

You're very welcome. And thank you so much for presenters and to everyone who participated. This concludes today's conference call. You may now disconnect. Have a great day.