TG Therapeutics, Inc.
Q3 2018 Earnings Call Transcript

Published: 9 Nov 2018

[Operator:]

Good morning, everyone, and welcome to the TG Therapeutics Third Quarter 2018 Earnings Call. Today’s call is being recorded. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. At this time for opening remarks and introduction, I’d like to turn the conference over to Ms. Jenna Bosco, Senior Vice President of Corporate Communications. Ms. Bosco, please proceed.

[Jenna Bosco:]

Thank you. Good afternoon, and welcome to our conference call regarding TG Therapeutics’ third quarter 2018 financial results and business update. I’m Jenna Bosco, TG’s Senior Vice President of Corporate Communications, and I welcome you to our conference call today. Following our Safe Harbor statement, Sean Power, TG’s Chief Financial Officer, will provide a brief overview of our financial results and then turn the call over to Michael Weiss, the Company’s Executive Chairman and Chief Executive Officer, who’ll provide an update on the ongoing development of our novel glycoengineered anti-CD20 monoclonal antibody, ublituximab; our novel once-daily PI3K delta inhibitor, umbralisib; as well as a review of our current clinical programs and overall company standing. Before we begin, I would like to remind everyone that various remarks that we make about our future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. TG cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated. Factors that may affect TG Therapeutics’ operations include various risk factors and uncertainties that can be found in our SEC filings. This conference call is being recorded for audio rebroadcast on TG’s website, www.tgtherapeutics.com, where it will be available for the next 30 days. All participants on this call will be on a listen-only mode. Now I would like to turn the call over to Sean Power, our Chief Financial Officer, to briefly discuss the financial results for the third quarter of 2018 as well as the Company’s overall financial condition.

[Sean Power:]

Thank you, Jenna, and thanks, everyone, for joining us. As you may be aware, our financial results were released this morning and can be viewed on the Investors & Media section of our website at www.tgtherapeutics.com. I’ll begin with our cash position. At September 30, we had cash, cash equivalents, investment securities and interest receivable of $97.8 million compared to $126.3 million at the end of the second quarter. Following our UNITY-CLL announcement in September, we undertook an effort to streamline our spending and focus resources on our critical clinical programs. In addition, all of our registration-directed clinical programs have now completed enrollment and they’re in a follow-up period. And accordingly, the associated expenses related to those programs will continue to decrease. As a result of these factors, we believe our current cash position will be sufficient to fund our operations through the end of 2019. Turning now to our financial results for the period. Our net loss for the third quarter of 2018, excluding non-cash items, was approximately $34.1 million, which included an increase in clinical trial expenses of approximately $4.4 million over the comparable period in 2017, which was primarily attributable to our registration-directed trials in both oncology and MS. The GAAP net loss for the third quarter of 2018, inclusive of non-cash items, was $34 million or $0.43 per share compared to a net loss of $31.5 million or $0.48 per share during the comparable quarter in 2017. Our net loss for the nine months ended September 30, 2018, excluding non-cash items, was approximately $104.2 million, which included an increase in clinical trial expenses of approximately $20.1 million over the comparable period in 2017, primarily attributable to our registration-directed trials in both MS and oncology. Also included in the nine months ended September 30, 2018 are $16.4 million of manufacturing and CMC expenses for Phase 3 clinical trials and in preparation for commercialization. The GAAP net loss for the nine months ended September 30, 2018, inclusive of non-cash items, was $119.6 million, or $1.61 per share, compared to a net loss of $87.6 million, or $1.45 per share, for the nine months ended September 30, 2017. With that, I will now turn the call over to Mike Weiss, our Executive Chairman and CEO.

[Michael Weiss:]

Thank you, Sean and Jenna, and thanks, everyone, for joining us today. I thought I’d start this call by reminding everyone of our corporate mission. We started this company to develop the best possible combination treatments for patients with B-cell diseases. Multimodality therapy is necessary for best outcomes, but can be very expensive when drugs are being combined from different companies. So we undertook the challenging task of creating homegrown combinations. Over the last seven years, we’ve built a robust portfolio of B-cell target agents and have built an incredible engine for developing these novel medicines. We know we have set our sights high, but we also know our goals are within reach. We have five Phase 3 or registration-directed trials fully enrolled across the three major indications of interest

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Ren Benjamin with Raymond James. Please proceed with your question.

[Ren Benjamin:]

Hey, good morning, guys. Thanks for taking the questions. I guess maybe just starting off, and then Sean had mentioned that with registration programs completing enrollment, that expense should slowly decrease. But I’m kind of thinking in 2019 how you guys will be developing some of those additional programs that you have, including the BET inhibitor the bispecific and the BTK inhibitors.

[Michael Weiss:]

Yes. So just – is that a cost base question, Ren? Or just a overall development question?

[Ren Benjamin:]

So it’s both, right? I mean, in terms of development, how are you guys are moving that – all those programs forward? And then should we really be seeing a decrease in expenses? Or at least more just a flat lining as expenses just get reshuffled?

[Michael Weiss:]

Yes. So the larger trials, the MS study and the UNITY-CLL trial are large. I mean, we’ve got 600 patients in one and almost 1,000 patients in the other program. The comparison to that is we’re talking about across all the new agents, including, I think, we have three PD-L1, BTK and anti-CD47/anti-CD19, which will be in the clinic some time during the course of 2019. I mean, collectively, if we get to 100 patients in those trials, that would be pretty darn good. From logistics, we’ve got dose escalation to do. I mean, it’s nowhere near the magnitude of what we have incurred and what we’ve built in terms of clinical studies over the last 20 years in these larger trials. So it has to come down. The clinical costs are coming down. We’ve defrayed a lot of the larger manufacturing costs into 2020. So yes, we’ve done a lot to re-shift things around to get us out to its onset certainly to the end of 2019. And that shouldn’t impact our ability to refer these other programs. Again, when you’re in dose escalation, they need to expansion cohorts, there’s only so many patients you can enroll and they are all usually the studies are capped. Even when you get there, they’re capped let say, 60 or 80 patients, even in expansion. And like I said, the expansions will take – once you finish dose escalation, expansions will take usually close to a year or so. It will be spread out, risk will go down in terms of numbers of enrolled patients in 2019, newly enroll patients in 2019 will naturally be down dramatically from 2018.

[Ren Benjamin:]

Got it. And so just to be clear though, all these other topline products should be in the clinic in 2019?

[Michael Weiss:]

PD-L1, BTK and anti-CD47/anti-CD19 should be in the clinic in 2019.

[Ren Benjamin:]

Got it. And then just to touch base very quickly on UNITY-CLL. Has the DSMB met since the last meeting? And as you guys kind of mall over the study, have you – have there been any new revelations in regarding the analysis that was done? Or is it pretty much, at this point, hands off kind of wait for the quarterly DSMB meetings and wait for the PFS?

[Michael Weiss:]

The latter. Yes, so it’s hands up. We haven’t had another meeting yet. And we’re obviously, as we’ve said multiple times, we’re still super confident that we’ll have a positive read out in PFS based on everything we know about the drug, everything we know about other studies that have been conducted in this area. And we feel like we’re in very good shape.

[Ren Benjamin:]

Got it. And then just one final one for me in the UNITY-NHL studies. Its complete enrollment, I think in the past, we’ve been targeting sort of the middle of 2019 for readouts from these studies, all three studies. Is that still correct? Or do you have maybe some updated guidance you can tell us for when we might expect the results?

[Michael Weiss:]

So right now, the guidance is mid-2019. Obviously, if there’s any chance for us to get anything out earlier, we’ll do whatever we can to get things out earlier. But as it stands, the guidance is 2019.

[Ren Benjamin:]

Right. Thanks for taking the questions.

[Michael Weiss:]

Yes. Thanks, Ren.

[Operator:]

Our next question comes from Pete Lawson with SunTrust Robinson Humphrey. Please proceed with your question.

[Pete Lawson:]

Hey Mike, thanks for taking the question. Just a follow up on the question on timing of date. So for NHL and MS, when should we see the dates? What format will we see in kind of top line data? Or would it be held for a conference?

[Michael Weiss:]

So on the UNITY-NHL, I think it all the trials, I think when we have availability, we’ll try to get top line data out in the PR if that’s possible. Otherwise, certainly, the real data will always be presented at a conference, and that goes for UNITY-NHL, UNITY-CLL and for the MS trials. So it’s typical. If we can get something out in the PR in the top line way, we would try to do that, but always have been full data and proper data is always reserved for the conferences.

[Pete Lawson:]

Got you, thank you. And then just on the MS data, I guess the last update, we kind of saw a slight drop in NEDA numbers from 77 to 74. When would we likely see a kind of update around that number and kind of your thoughts around where that number kind of moves to eventually?

[Michael Weiss:]

Yes. So the Phase 2 study is over. It was a one-year study. So those – for now, those netted numbers are locked in. So I don’t think we’d expect to see any – I mean, I can’t call offhand what the netted number was for OPERA, but I think it was in the 40%s. That’s a two-year study with more patients. So I mean, obviously, there’s probably be some expectation that over time, you’re going to pick up more relapses and more disability progression, that’s all impacting data number, but I think, there’s a one-year netted number in the mid-70s is pretty darn good. And even if we had it some degrade from that, it would still be pretty darn good.

[Pete Lawson:]

Got you, okay. Thanks so much. I’ll get back into the queue.

[Michael Weiss:]

Yes.

[Operator:]

Our next question comes from Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

[Matt Kaplan:]

Hey guys.

[Michael Weiss:]

Hey Matt.

[Matt Kaplan:]

Thanks. Just wanted to focus on UNITY-NHL a little bit in terms of should we expect the data from each of the three cohorts in that study at all the same time? Or they’re going to be – are you going to hold those – or are they going to be announced separately at different times?

[Michael Weiss:]

I don’t know that we have a clear desire to do it one way or another. I think we are – we’ll be hopefully as data sets mature and they may mature at different rates. Certainly, again, if we can get something out earlier, rather than later, I think we’d be inclined to do so.

[Matt Kaplan:]

Helpful, thank you. And then just focusing on the DLBCL cohort. You mentioned in your prepared remarks that there’s not a clearly defined regulatory pathway. What are your thoughts right now in kind of the moving parts there from a regulatory point of view? And when you think you’ll have greater visibility? Is it after you report data and have a chance to speak to the FDA? Or were there conversations ongoing with FDA now?

[Michael Weiss:]

So we don’t have any ongoing dialogue necessarily about that – the hurdles associated with that. I think it’s – we’ve had some discussions in the past. We have a sense of what’s involved, but we don’t have any clarity on that, so I think the answer is, we got to get the data out. The data has got to look compelling first. Data is not compelling, it’s really not a conversations we’re going to have with the FDA anyway. And if it is compelling, then we’ll have the conversation and try to understand if we’re there, if we’re not there, if we’re not there, what else – what do we need to do, but I just think that’s an area we’ve deemphasized because of the clarity issues. And again, we found over time, that people like to focus on things that have more linear possibilities, and we certainly think margins on follicular have more linear possibilities as those obviously the PFS in the MSO diffuse large B-cell necessarily has to take backstage, and those things at this point.

[Matt Kaplan:]

Sounds good. And then in terms of UNITY-CLL. Can you go over for us in terms of why you’re very confident for the PFS primary endpoint given the study design and the indication in terms of both first line and relapsed/refractory CLL patients?

[Michael Weiss:]

Yes, sure. So I guess the reason why we’ve always been confident in the PFS, we’ve always maintained that, that’s highest level of confidence in an outcome is because we’ve – when we have – we believe, enough early data to show that our drug works quite well in these patient in terms of inducing responses as well as maintaining those responses, and part of maintaining responses having a drug that both active and tolerable. So if you can’t continue to take these kinds of drugs, you can’t continue to maintain those responses, and that’s been a drag on the class for years. So we certainly believe, based on what we’ve seen thus far, that we have a good durability of response in CLL with our agent and particularly, in combination also with ublituximab. And the study is designed to prove that if you could stay on the drug and continue to get benefit, you’re going to have an outsized improvement in progression free survival. We’ve seen that now with the Helios trial where ibrutinib plus bendamustine rituxan was again modestly improved overall response, but dramatically improved PFS over 400%. Same thing for MURANO, venetoclax plus rituxan over bendamustine rituxan relatively modest changes in overall response, but they’ve had dramatic changes over 400% improvement in PFS. And then just recently, for anyone who’s been following the frontline space, the Phase 3 eliminate data was just at least presented in abstract form for this coming ASH. So that’s a frontline trial really interesting trial of ibrutinib plus obinutuzumab versus, again, GAZYVA and chlorambucil here. So here’s the first readout of this new generation that is in the model at least of our UNITY-CLL trial. And there, again, pretty modest change in overall response. The difference between ibrutinib GAZYVA to GC was exactly a 15% change in overall response. And that was after 30 months of follow-up. As you guys know, our follow-up is only about – median follow-up is about 12 or 15 months for our trial when we were thinking of doing that first look at the overall response. So quite a big difference again. Historically, ibrutinib will have late onset responders. So I would expect that, that 30 months of follow up was important there to get the 15% delta that they achieved. But, anyway, that delta of 15% led to over a 300% improvement in progression free survival. So all the hazard ratios for these trials are anywhere from 0.19 to 0.23. So again, are we – do we believe we have a drug that acts in a similar fashion in terms of improving progression free survival? Yes. And so if we believe that, then we have to believe we’re going to have a relatively dramatic improvement in Progression Free Survival.

[Matt Kaplan:]

That’s very helpful. Thank you, Mike. And thanks for taking the question.

[Operator:]

[Operator Instructions] Our next question comes from Madhu Kumar with B. Riley FBR. Please proceed with your question.

[Harshita Polishetty:]

Hi, good morning, guys. This is Harshita on for Madhu. Most of my questions have been answered. Just one quick one for me. Are there any plans to pursue U2 plus a PD-1 or PD-L1 inhibitor in a randomized controlled study in CLL? And if so, would it be with your internal PD-L1 drug?

[Michael Weiss:]

So, the randomized portion we have not yet decided what that would look like. So we are going to open up. Dr. Mato has led the U2 plus pembro study. And our plan is to replace pembro with PD-L1 as soon as possible and then we’d generate enough Phase 1b data from that trial to make a decision on what a randomized trial might look like in CLL. But it’s certainly something that we’re interested in for the future, but I think we need to see more patients. The data that has so far merged for U2 alone and with pembro in the very hard to treat patients like Richter’s Transformation patients and ibrutinib refractory patients. Certainly some early signals of very interesting activity, but we really need to enhance that, the number of patients to determine what that real signal looks like. So randomized trial is yet for our PD-L1 plus U2. We do not have a specific plan yet, but certainly, the triple will be in patients in United States, hopefully in the coming months.

[Harshita Polishetty:]

Great. That’s it for me. Thank you.

[Michael Weiss:]

Thank you.

[Operator:]

Thank you. At this time, I would like to turn the conference back over to Michael Weiss for closing remarks.

[Michael Weiss:]

Great, thank you. So I just like to wrap up today’s call by reviewing some of our key goals and objectives for the remainder of 2018 as well as some highlights to come in 2019. So we’re certainly, in the next few weeks, we’re going to be at ASH. We’re looking forward to the full data set for the two triple therapy combinations mentioned earlier. We’re excited by Dr. Mato’s oral presentation on the U2 plus pembro triplet. I think it’s certainly, as far as I know, the first time ever a PI3K delta has been mixed with a PD-1, PD-L1 compound in B-cell malignancies so excited to see that data. And then we also, at ASH, we’re excited we have a great Investor and Analyst Event coming up. That will take place Sunday night. So for those of you who are on site at ASH, we do encourage you to come by. We’ll have select group of external clinical investigators who’ll come in. It’s always been a nice event to get to try a little bit and answer some questions. So those of you who can attend, you should come by. And those of you who cannot attend, then the program will be webcast. So everyone will have access to it. It should be very, very nice. 2019, we start rolling out some, what we believe will be exciting and value-creating data sets. We’ve got the UNITY-NHL, like we said, targeting mid-2019. But obviously, if we see dataset that matures early enough that we can get it out, certainly we’ll try to do that if we can. And then targeting ideally the UNITY-CLL PFS sometime in the second half of 2019. Again, it is event-driven so a little bit hard to predict when that will end. But I will anecdotally mention that the GC arm in the ILLUMINATE trial. For those of you, again, who are following that study and that area, the median PFS for the GC arm, I think, was in the 19-month time frame. So the – we had originally predicted something closer to 27-ish months from CLL 11, which was the PRECEDENT trial. So in this particular new trial, it was down to 19 months. So that could potentially accelerate the events certainly from the control arm. And finally, we should hopefully have more of our Phase 1 and 2 trials published in medical journals during the course of 2019. So some more data to come in a little bit more detail. So that hopefully will help investors understand even better about our drugs and their capabilities. So on behalf of all of us at TG, I’d like to thank our investigators and the patients, of course, for participating on our trials and, of course, as well as our loyal shareholders for their continued support and, of course, all the employees here at TG who are working hard every day to make it – make these combinations successful. Thanks again, for everyone for joining us. And have a great day.