Q2 2020 Clovis Oncology Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to be Clovis oncology second quarter 2020 financial results webcast conference call.
This time, all participants are any listen only mode. After the speakers presentation, there will be a question and answer session.
Good question during the session you'll need to press star one on your telephone.
If your car any further systems. Please press star Zero I would now like to hand, the conference over to your speaker today and assessment VP of Investor Relations. Thank you. Please go ahead.
Thank you Gerry good afternoon, everyone and welcome to the Clovis oncology second quarter 2020 conference call and thank you for joining.
He was likely seen after news release economic available on our website.
As a reminder, this comes call is being recorded webcast.
Remarks may be accessed lives on our website during the call and will be available in archive for the next several weeks.
Today's agenda includes the following a patent happy our President and CEO review the highlights of today's corporate update then Daniel our Chief Executive Financial Officer will cover the quarter's financial results in greater detail that will make a few closing remarks, and then well open the call for acumen high during which time than zero.
Chief Medical Officer will also be available to answer questions.
Before we begin please note that during today's conference call. We may make forward looking statements within the meaning of the federal securities laws, including statements concerning our financial outlook unexpected business plans.
All these statements are subject to risks and uncertainties that could cause actual results could differ materially from those described in forward looking statements.
Actual results could differ materially due to a number of factors, including me extension duration of the effects of the Clovis thing called [laughter], sorry cover 19 pandemic [laughter]. Please refer to our recent filings that you see for a full review of the risks and uncertainties associated with their business forward looking statements speak only as of the date on which they are made.
<unk> undertakes no obligation to update or revise any forward looking statements.
Additionally, please note that we'll be discussing cash burn a non-GAAP financial measure during today's conference call acquired disclosures related to this or in today's news release, which can be found on our website now I'll turn the call over the past.
Greetings and welcome everybody appreciate your time.
All that was new and I'm familiar with the time of unless coal has now become too familiar to most of this as we continue to try to adjust to the new enrollment.
But all the on the coal or webcast are seeking well.
I'll also note that we are each of US doing this from home and you may well hear adult bark. According to some of the trial can become the looks out my window of understood. So I apologize in advance for that.
We remain committed to grateful to the health care professionals on the front lines at this global pandemic.
I also want to acknowledge the tremendous up are being made by our investigators and prescribers to maintain and woman and safely manage ongoing patients in our clinical trials and for the reference to continue to prescribing managed to back a commercial patients during the significant oh people to their clinics and practices during the second quarter due to cope with 90.
And I'll begin with the quarters commercial update for Rebecca.
Last quarter I described the advantages of in Braca isn't all oncology treatment and the covert Nike era, which we believe provides benefit for patients and practices.
Our global net revenue for the second quarter of 2020 was 39.9 billion. This represents a 21% increase from Q2 29 team and fill up slightly over Q4 2018.
In the second quarter. However, it was evident that Tobin 19, Edwin negatively affected revenues largely related to reduce new patient starts due to fewer diagnoses and office visits as oncology practices in patients suggested to the impact to the virus in the United States.
Or sales reps begin their virtual efforts beginning in mid March in the United States and we continue to adapt our marketing efforts in activities in order to engage with U.S. positions. During this period.
With resurgence of cases occurring across several large U.S. market.
It is unclear how long access me would mean restricted at least regionally.
It is important to note that in many territories a richer beginning to make some in office visits.
And while we hope this becomes more of a trend.
Predicting the course of this virus of course remains very difficult.
In Europe access to hospitals and clinics was trending throughout the second quarter, maybe so today.
Although certain countries are permitting more access.
When we look at the impact of Koeppen Latina U.S. paid new patient starts we saw nuclear printer through may, but we saw meaningful decline in June.
In July we saw a recovery back towards the previous levels either of course by prostate new patient starts.
We're also seeing positive progress you, including our best sales performance in the EU coming in the month of July this year.
Obviously, the cope with my team situation remains quite fluid and it is still too early to declare any trend and I did the United States.
In addition to sitting back as the maintenance treatment options choice and we're calling ovarian cancer. We also look forward to establishing go back in the U.S. and advance you can break it apart cancer prostate cancer, which brings us to the third a new syndication through broker in the prostate cancer setting.
On may 15th the FDA approved Rebecca as monotherapy treatment for patients with Braca, one to recurring metastatic castrate resistant prostate cancer.
The approval was based on data from the Triton two clinical program in advanced prostate cancer and addresses the approximately 12% of men with metastatic CRP seem to have a mutation was back in the tumor.
We commenced an old virtual U.S. launch upon the receipt of this approval.
As noted earlier.
Access to oncology clinics and position has been challenging.
In a different Noncovered 19 environment for commercial team would be eating in person and engaging with the primary clinicians in prostate focused oncology in urology practice.
That obviously is not possible today.
Historically bracket testing has not been common in the prostate cancer treatments.
Recent PARP inhibitor approvals and related disease education efforts should ultimately result in greater awareness of the importance of testing and its potential benefits for patients.
One issue affecting our prostate cancer marketing is that our partner Foundation medicine has not yet received FDA approval for the companion plasma based diagnostic for Rebecca.
Well other parties will be test things are available we cannot actively promote them.
We're not in a position to remark on the confidential discussions ongoing between that they might have today.
But our understanding is that if somebody's into later stages of the review process and they are prepared to lunch foundation, one liquid cdx. So that it will be available to physicians and patients promptly upon FDA approval.
It was very encouraging to see the rapid update of the clinical practice guidelines that oncology for prostate cancer by NCCN shortly after approval.
Which now include Rebecca as a category to a recommendation for patients with Bracken tumors.
You can see RPC under second line and subsequent therapy.
Now I'll briefly discuss our clinical pipeline for Rebecca shipments.
As well as our plans for EFI P 22 86.
On the development front the effects of cold would like to you in a clinical trial enrollment has been minimal.
We of course adhere to the regulatory guidance of 58 and other agencies have provided regarding clinical trial conduct during cold It makes <unk>.
And we are grateful to our clinical teams and investigators who worked tirelessly to assure the safety of trial participants on investigators, while maintaining compliance with good clinical practice and minimize risk.
To the integrity of our trials.
We successfully completed target enrollment in Athena our phase three 1000 patients study in frontline newly diagnosed advanced ovarian cancer treatments in June.
Total enrollment of 1000 patients was achieved in less than two years.
And we could not have achieved this milestone without the active involvement of the gynecological oncology.
Well GLG.
And the European network for Gynecological oncology oncological trials for English.
Two of the largest cooperative groups in the U.S. and Europe dedicated to the treatment of gynecological cancers and to them we are grateful.
The looks sort of study or phase two pan tumor study to evaluate lubricant and I'm always its accommodation repaired, including braca across tumor types continues to enroll patients.
The study will evaluate were back in patients with recall in solid tumors associated with a deleterious homologous recombination repair or each quarter or gene mutation.
Based on Oh directions of Ft, a the study maybe registration enabling for a targeted gene and tumor agnostic label and we could potentially filed for approval in the United States for this indication next year.
The newest phase three clinical trial for Rebecca is the Kasper study, which is sponsored by the alliance for clinical trials in oncology, which itself is a part of the National Cancer Institute.
Kasper is a phase three study comparing enzalutamide braca two enzalutamide in placebo as a novel therapy, and all Comer front line metastatic CR P.C.
The study, which is expected to begin enrolling in September will enroll approximately 1000 patients.
Next I'll briefly highlight or a combination studies with Bristol Myers Squibb for both Rebecca and use it.
And then discuss our newest compound at 80 22 86.
We remain enthusiastic about our ongoing clinical collaboration with Bristol Myers Squibb.
Well take a moment to review certain of our combination studies for both Rebecca and Lucitanib with Nivolumab.
I'll begin with Rebecca.
As I mentioned in highlights for the quarter, we successfully completed target enrollment in the coldest sponsored study.
Phase three 1000 patients study in frontline newly diagnosed advanced ovarian cancer maintenance in June.
With a feel we believe we're uniquely positioned to evaluate we bracket in terms of two outcomes.
First as monotherapy versus placebo in the frontline maintenance setting in the HR depopulation inclusive of Black Huh.
And in the all comers or intend to treat population.
Well, if any potential advantage to the combination of Rebecca and diesel in the same patient populations.
The thing is the first front lines, which maintenance study designed to show both monotherapy and Port PD, one combination therapy in one study design.
Well take a moment to remind everybody have a statistical analysis plan.
First expected in the second half of next year, we will see the results of Rebecca monotherapy versus placebo in old study populations.
And then probably a younger more later, we will see the results of record plus hope vivo versus Rebecca you know study population.
In each of these analyses, we will first evaluate outcomes in the HR depopulation, including Braca.
Then stepped down to the entire intend to treat population.
We believe this study therefore offers opportunity to truly differentiate rebecca in the frontline setting.
Beyond Athena Flexion C. D. C is a Bristol Myers Squibb sponsored mill play on Phase two study evaluating the combinations of each oh people and Yervoy with Rebecca.
As well as vivo Yervoy and Rebecca in combination for the treatment of advanced gastric cancer.
This is the first sponsored study to explore this triplet combination.
Now I'll turn to Lucitanib.
The signal of course is our investigational inhibitor of tourism kinases, including bed, Jeff receptor is one through three PDGF receptor alpha and beta and FGF receptors one through three.
In addition to the Rebecca and Abidal combos being evaluated our clinical collaboration with Bristol Myers Squibb includes both ongoing and planned combinations of Opdivo, which was sitting there.
The Clovis sponsored Leo study is a phase one be two study evaluating the sitting in combination with Abidal.
As we announced earlier this week the phase two portion of the Leos. One study in gynecological cancers is now open for enrollment in the first patient in the trial has been treated.
I'm pleased to say the two abstracts related to legal one were accepted as posters for the upcoming ESMO virtual meeting next month.
During the initial data from the phase one be portion of the study.
As well as a trial in progress post through for the Phase two study.
As you May know where mean for from the name the trial in progress poster does not contain study data I described study designed to build awareness for clinicians in support of study enrollment.
It has long been our objective to present. These initial clinical data at a full 2020 medical meetings and I'm grateful to the patients clinicians in the suddenly team for their continued enthusiasm for this study during this challenging time.
We remain very enthusiastic about our peptide targeted radiopharmaceutical therapy program.
And in particular, our lead program or compound ebay P 22 86.
At the P is highly expressed in cancer associated fibroblasts for tests, which are found in the majority of cancer types potentially making it a suitable target across a wide array of solid tumors.
It's highly expressed in many appeal, you'll cancers, including more than 90% of breast lung colorectal and pancreatic carcinomas.
We believe that recent preclinical data for Epay P. 22, 86, an animal models, which will be the subject of a poster at the upcoming ASML virtual meeting is very encouraging and we look forward to sharing with you next month.
In addition, we in freebie p. or partner or collaborating on a discovery program director to three additional targets for radian quite therapy, which we have global rights.
We were gone to this program for many reasons, including of course, the opportunity to be a leader in the emerging field of targeted radio therapy for the treatment of solid tumors.
In this case, we have the opportunity to be the first to clinically develop an S&P targeted radionuclides.
And we are also enthusiastic about the targets that are the subject of our ongoing discovery collaboration.
Corpus currently plans to submit to why in these applications for ebay P 22 86.
Relatively close succession during the fourth quarter of 2020.
To evaluate Epay P 22, 86 for use as both imaging and treatment agent prospective.
Upon activation of the eye in these by the FDA, we intend to initiate a phase one study to determine the dose and tolerability of yet the p. targeting therapeutic agent.
With expansion cohorts planned in multiple tumor types as part of a global development program.
Yes, they p. targeted targeting imaging agent will be utilized to identify tumors that can be the campaign. That's a P for treatment in the phase one study.
This fall, we also expect a leading U.S. academic institution to sponsor and initiate a separate imaging only study with ebay P 22 86.
To evaluate I think the expression and multiple tumor types.
Results from this study along with other preclinical data we are generating will help direct our phase two expansion cohorts to tumors with high if they'd be expression.
And with that I'll turn the call over to Dan to discuss second quarter financial results.
Thanks, Pat and Hello, everyone.
We reported net product revenue for refractive 39.9 million for Q2, 2020, which included U.S. net product revenue of 36.7 million, an ex us net product revenue of 3.2 million.
This includes a modest amount of net revenues from our new prostate indication in the U.S., but the six weeks following the May 15 approval.
Second quarter 2020, net revenue represents a 21% increase over Q2, 2019, and which we reported net revenue of 33 million, including net product revenues in the U.S. at 32.7 million annex U.S. of point 3 million.
Second quarter 2019 represented the first quarter ever bracket sales outside the U.S.
For the first half of 2020, we reported net product revenue for bracket of 82.5 million compared to 66.1 million in the first half of 2019, an increase of 25%.
Click revenue decreased 6% sequentially from Q1, Q2, 2020, and we attribute this to the effects of cobot 19 during the quarter principally due to reduced paid us new patient starts as a result, a fewer diagnoses and office visits the effects of Kogan banking on our business and operating results are different.
So to assess where predict in particular, given the increase in cases in major markets in the U.S.. We may continue to see an impact on revenues related to cope with my team for the remainder of 2020.
Gross to net adjustments totaled 19.4% in Q2, 220, 20 compared to 22.6% in Q1 2020.
The sequential decrease in gross to net adjustments reflects primarily a decrease in activity in the U.S. contracting that government related programs. We expect gross to net adjustments to remain in the low 20% range, depending on revenue and distribution mix, the U.S. and Europe.
The decrease in gross to net adjustments was mostly offset by an increase in our free goods percentage, which increased from 12.4% in Q1 to 16.2% in Q2 or 7.1 million in commercial value.
Tributary inventory was only slightly higher at the end of Q2 versus Q1, indicating minimal change and distributor inventory as a reaction to covert 19.
We currently have no issues with the the drug supply or distribution of drug to the patient. We have described product supply crosses a meaningful part of our cash spend over the last couple of years as we transition to a new manufacturing facility and have significant supply available.
Turning now to a discussion of cash as of June 30, we had 261.4 million in cash and equivalents. This includes the 82.8 million and net proceeds raised and then equity offering of 11.1 million shares of common stock in May 2000, each morning.
Through the end of the second quarter, we have reduced our total outstanding convertible debt by 145.1 million and outstanding principal amount.
And as of June 30, we had drawn approximately 68 million under the TPG Athena clinical trial financing and had up to 107 million available to draw under the agreement to fund the expenses of the Athena trial through Q3 2022.
Based on the company's anticipated revenues spending available sources financing sources and existing cash and cash equivalents. We believe we have sufficient cash and cash equivalents to fund our operations into early 2022.
Putting any cash repayment and must refinanced earlier of the remaining 64.4 million in aggregate principal amount of the 2.5% convertible notes that their maturity in September 2021.
Net cash used in operating activities were significantly lower at 59.9 million for Q2, 220, 20 compared to 98 million for Q2 2019. Similarly, net cash used in operating activities for the first half of 2020 was 142.4 million compared with 196.5 million so to say.
Same period in 2019.
Borrowings under the TPG Athena financing provided 17.7 million in cash in Q2, 2020, and we paid a milestone payment to Pfizer of 8 million for the U.S. MCR PC approval.
Cash burn in Q2, 2020 was 50.1 million a 25% decline from the Q1 2020 cash burn of 66.9 million.
We continue to manage cash carefully to extend our runway into 2022, and we expect cash Burns a decrease in the second half of 2020 compared to the first half of 2020 and for the full year 2021 compared to 20 Twond.
We reported a net loss of Q2 work you to 2020 of 92.2 million or $1.15 cents per share compared to a net loss for the second quarter 2019 of 120.4 million or $2.27 per share we reported a net loss for the first half of 2020 of 191.6 million.
There are $2.52 per share compared to a net loss of 206.9 million, where $3 a 91 cents per share in the comparable period in 2019.
Net loss for the second quarter in the first half of 2020 included share based compensation at 13.3 million and 26.3 million compared to 14.1 million and 27.8 million, but the same periods in 2019.
Research and development expenses totaled 69.9 million for Q2, 2020, compared to 70.7 million for the second quarter 229 team.
R&D first Affleck 2020 totaled 138.1 million compared 132.8 million in the first half of 29 team.
We expect research and development expenses to be lower and the full year 2021 compared to 2020.
Selling general administrative expenses totaled 41.9 million for Q2 2020 compared to 48 million for Q2 2019.
Thats DNA for the first half of 2020 was 84.85 million.
84.5 million compared to 95.8 million for the first half of 29 team.
Selling general administrative expenses decreased during the second quarter in the first half of 2020, probably resulting from savings due to the cobot 19 situation globally and overall cost reduction efforts, we continue to expect savings and central selling general and administrative expenses as a result of the cobot 19 situation globally.
As noted we expect to R&D expenses to decrease in 2021 compared to 2020 SGN expenses should continue approximately at this lower Q2 2020 level during the upcoming quarters you're 2021.
These factors along with brain revenues should contribute to a reduction of quarterly cash burn into through 2021.
Turning to call back over to Pat.
Thanks, Dan.
Where do we made progress in a difficult quarter. Despite the near term headwinds that cobot 19 present.
We believe that Rebecca offer significant advantages as a maintenance therapy of choice for recurrent ovarian cancer patients.
As a new therapeutic option for Bracken recurrent.
Static castrate resistant patients in the evolving chronic cobot 19 environment, that's physicians continue to seek to reduce patient visits there clinics.
As access remains challenging we will continue to adapt our efforts to engage with clinicians. During this period, which of course may be extended as resurgence as of the virus continue in the U.S. in Europe.
I'm very pleased that we've competed target enrollment in the Athena study, which is the first frontline Twitch maintenance study designed to evaluate part monotherapy and part PD one combination therapy in one study design for which we anticipate initial monotherapy data in the second half for 2021.
Organizations looking forward to next month's ESMO virtual Congress, which data for all three of our commercial or development stage products will be presented.
We also remain focused on continuing to manage our net cash utilized in operations.
As an example of this commitment even with a modest decline in sales compared to Q1, we reduced our cash burned by 25% in Q2 compared to Q1.
And as Dan described we believe we have sufficient resources to date to fund our operations in the early 2022.
With that I'll be happy to answer any questions you may have.
As a reminder to ask a question you want me to press Star one on your telephone to withdraw your question press the pound or hash key.
Please standby, while we compile the kuni roster.
Our first question comes on line of Kennen Mackay.
Of RBC capital markets. Please go ahead your line is open.
Hi, Thanks, so much for taking my question maybe.
For the two commercial questions.
Very good wondering your.
From your perspective, you do think things are beginning to come back to normal now that sort of the national.
Locked down has been used even if it is a little bit of sort of a voluntary rolling locked down in various geographies across the country.
Second in prostate first off congrats on the NCCN.
Category to a listing wondering if you can help us understand the current prescribing reimbursement dynamic what.
Gnostic is currently being used to prescriber dr. there. Thanks, so much.
Yes on.
So.
Returning to normal.
In ovarian.
Kevin I'd say, it's it's.
At a patients are being made in a new normal.
You know patient visits and diagnoses were down considerably in Q2 can compare to Q1, but but we do see evidence that.
And its regional.
But it is getting better on.
But I wouldn't say, it's we're not in our opinion.
At sort of December January levels, yet and the clinics are managing the patients for differently than they did before things you may have done another machine and other therapeutic areas.
Patients waiting in their cars getting a text to come in doing their best to get them out of the clinic as fast as they can so I I wouldn't call it returning to normal and definitely normal would require.
Hi, good amount of sales rep access.
And while territory by territory region by region, we do see some clinics.
Open.
Two.
So this type of participation I'm actually going to.
One of our sales leaders territories next week, and I will be making some office visits so there will be some.
Regions territories were office visits are occurring but as you read the paper everyday there are parts of this contributor.
I really struggling and in most of those locations.
There has not been a return to normal and there is not a good amount of access.
With regard to prostate reimbursement still problem.
But it's early days and only so many patients so far but we have not had do not anticipate.
And issue with reimbursement.
There are germline tests commercially available.
That can be used that are blood test, but that that would would only capture about half a percent of our target.
Population to remind you about half of our frac of prostate cancer patients. However, our germline mutation about half have a synthetic usage.
And there are sort of CLIA lab like tests available, including from foundation and including from.
The company called Garden also very good company, but but we can promote to them and so it's it's not the easiest dialogue to have it has to be physicians who have experience.
With either of those organizations the met on community, who is treating prostate is more likely to have done so.
The urology community will not have had any experience with either garden core report foundation. So there it's a little.
With urologist right now.
Got it thanks, Todd maybe just to expand on that can you just remind us.
And your current metastatic.
Solution post chemo metastatic indication what percent of targeted prescribers are urologists versus medical oncologist. Thanks for them.
It's probably around 20% are our urologists and about 80% are met on tree could be more like 25% urologist, but right now we would say about 20% colleges.
Okay.
Thank you and our next question comes on line of Michael Schmidt of Guggenheim. Please go ahead. Your line is open.
Again, Michael Schmidt Your line is open.
Michael you may be on mute.
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Yes.
Okay, Tony Michael is not there.
I know, it's a busy call day today.
So why do we take one more question and then we'll wrap up and lets people get on all the other costs certainly in our next question comes on line of Cory Kasimov of Jpmorgan. Please go ahead. Your line is open.
Hi, This is galvanize the Corey Thanks for taking my question I just had one on the legal one study.
Cancer Medicine to the design of a phase one dose escalation I know it started with six milligrams, but I'm just I'm trying to find the sense, where the state the recommended phase two dose fall in that.
Specifically in the context of prior studies I think he ran a monotherapy breast cancer study.
Utilizing 10 milligrams 15 milligram, so any any color on the dosing would be great. Thank you.
Let's see how about on.
But I turn it over to you.
Okay.
So we.
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Through the phase one.
Study quite late.
Could attend the doses actually that we tested.
We have gone with the.
Skied, good actually Inc.
It does type type two patients do well in the first cycle.
Then the investigators have the flexibility to penetrate Doug.
On the recommended phase two starting dose that we put the six milligram.
Does that answer your question.
Is there is there any additional commentary on how high you went up or is that just a wait and see and tell you present asthma.
We went up to 10 milligrams, which will.
Maximum dose that we patents to go to enterprise.
We have no Q4.
Okay, great. Thank you.
[laughter].
Well thanks, everyone.
I.
Thank you for your interest in Clovis today, if you have any follow up question. Please call me three or 365 cycled through to our beyond that it's really 365 five oaktree tree.
The webcast replay should be available or about an hour and will be available for their todays for 30 days again. We appreciate your interest in time, yeah. Thank you and have a good day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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