Q3 2020 Athenex Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the third quarter 2020 at the next earnings Conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded I.
I would now like to hand, the conference over to Mr., Steve Rubis of Athenax. Sir. Please go ahead.
Good morning, and thank you for joining our conference call today, we will provide an update on Phoenix This business as well as a review of financial results for the third quarter of 2020.
The news release detailing the results crossed the wire earlier. This morning and is available on the company's website. A replay of this call will also be archived on the company website during.
During the conference call the company will make projections or forward looking statements regarding future events, including statements about financial business in clinical milestones anticipated in fiscal year 2020 and beyond.
We encourage you to review the company's past and future filings with the FCC, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward looking statements.
You can find our FCC filings in the Edgar database at Www Dot FCC dot Gov or in the Investor Relations section of our website at Www Dot.
See you next dot Com. This morning, we're joined by Dr. Johnston <unk>, Chief Executive Officer, Mr., Jeff Jordan, Chief Operating Officer, Dr., Rudolph Clark, Chief Medical Officer, Mr., Randall Z. Chief Financial Officer.
Mr. Timothy Cook Senior Vice President Global commercial oncology.
I will now turn the call over to son for introductory comments.
Thank you Steve.
Oh cool you highlighted.
It will be lumpy progress, even if you didn't get caught up in.
Our future opportunities before turning the call over to Dr. <unk> want to discuss you Nicole programs.
In September the Ft, Oh in de <unk> oral paclitaxel under par PV view, what's the target action date I'll start reach an age 2021.
The assumption so I could talk so Steve you could see Phoenix in a strong position.
Moving to India is under review.
At the same time.
The next would probably make this year is that we had no closer to our goal of becoming a leading commercial stage oncology company.
Within the context of my team.
Medical and patient communities continue excusing looked at the bar for oral therapy options.
You couldn't be for old chemotherapy Hardie makes the body.
I mean, just a rough oral formulations.
Let's discuss on today's call recent NCCN guidelines encourage.
Switching patients from infusion based therapies to an oral formulation when an equivalent is available.
Additionally, the ft appears supportive of therapies that can help keep patients on therapy in the current pace dynamic environment.
In addition to our clinical outcome.
Our commercial team is now completely focused on putting.
She kinda much increase was successful OPEC an excellent launch.
This is Jeff Gordon and Mr. Timothy equal, we will walk through the details on the appeal of our infrastructure and commercial initiatives.
The market opportunity in Mississippi breast cancer that is significant.
Market research shows that I could talk so will initially be smart, mostly for breast cancer patients who have been positive.
Her two negative.
Oh cool triple negative.
These settings represent roughly 70000 patients annually in the U.S.
Central Parkways exist to expand the total addressable market.
These expansion opportunities he could additional combination trials.
Well I would pick and pack, so look a sensitive area and additional cancer indications.
For example, the I spy two trial evaluating all take a pixel you early stage breast cancer.
If successful in these areas the total addressable markets and expenses to point to more than half a million patients.
We also continue to work with our partners to get the Rick Whats your strategy in place for China, Yes.
You know, it's not a high.
Hi, Daniel geographic areas.
[laughter] honestly this is our first product due until after they leave you.
The don't put date, what do you view of tepid nibbling on them and its December 30 Twentytwenty.
Andrew It's Oh, Pablo full visibility the U.S. and European markets.
And we are working closely with them on launch preparation.
In September you Phoenix, which is another important milestone for all parties [laughter] I, indeed, a separate by the U.S.F.D.A.
The agency a lot of the <unk> application for Tcl, you. So 80 to 80 C.L.T. cell therapy.
Boxing and why you saw the one positive solid tumors.
The technology is developed by excess therapeutics, a joint venture they should be Phoenix, and Acentia Lifesize limited.
The existing commercial business continues to perform well and expectations.
Product sales revenue totaled <unk> million in the quarter.
I put a 9% year over year.
As a result, we are raising our full year sales guidance from between two low twentys.
That said it's real.
During the quarter, we sort of stands on the on the partnerships with a stress [laughter].
So equity financing in September.
Raising net proceeds of $190 million.
This one's funds, but what I will say that we sold just expand and strengthen our commercial infrastructure.
He will also allow us to undertake label expansion initiatives or paclitaxel and sort of event Oh pipeline.
Do you plan to commercially launch Oh pixel phone.
Non.
And since we recently announced with key it's a got healthcare royalty partners.
Which for why a combined total of 275 million.
I would now turn the call back to our Chief Medical officer to help them with Ocwen to Paul what an overview of our clinical programs with us.
Good morning, everyone.
During the quarter there were two important developments regarding oral profit that so.
So the end date for oral Creight stack, so what's the percepta by D.F.D. and I find it appeared to have a target action date I'll separate trying to eight ton teach on day one.
Ongoing dialogue with the FDA is encouraging and we are pleased with our progress to date.
Second.
The company announced all profit that Philly inclusion as a thought.
The drop in the I spy two trial.
The I spy two trial provides the opportunity to demonstrate the benefit of oral paclitaxel in early stage breast cancer in combination with GSK they'll start at MEP and anti PD one.
The objective what I spy, two if pocketing a killer for breast cancer.
The stuff the ops inclusion of oral paclitaxel.
But he says that opportunity for it to become the backbone text of choice for combination treatment approaches.
The child the site.
That's the <unk> there is a good chance for the combination to work if I leave Pac attack. So in combination with Pembrolizumab, which is also an anti PD. One drought has already been shown to be efficacious in this setting.
Hi, sorry activity dosing patients with the study trial.
Regarding timing.
Oh, the I spy trial half read out off that roughly 18 months.
Which suggests that the.
The possibility of a data written how within this time frame.
I spy two represents an important clinical trial in the context of the brought the oncology arena.
Quantum leap I spy clinical trials have been around for several years and several agents you worried that in the trial you actually went on to receive approval.
The inclusion of oral architects Elk and I spy two added waste the credibility off I'll poke rap.
I feel like it's exciting to collaborate with quantum they've had T.S.K.
We have four oral paclitaxel abstracts accepted for poster presentation at the thing Antonio breast cancer Burchill Symposium, taking place December eight to 11.
These abstract include a PFS and overall EPS update from our pivotal phase three trial in metastatic breast cancer.
Which will be pretty sad that in the spotlight poster discussion.
The PFS and OS update presentation will be embargo until actual presentation time.
They also post us on neuropathy and under management up T. I saw you effect.
A third that poster will pretty sad updated data from all all Rhopressa, Texas added Joe sarcoma trial for the subset of patients who develop angiosarcoma often breast.
Cutler currently the primary focus for the company is on the pending approval of oral prac attack silk and topping up appointment.
Our life cycle management strategy for oral crack attack. So it's our next important focus around late <unk> expenses studies.
But nation therapies and Neil indications.
Our goal is to provide additional updates about our pipeline in the coming months.
Yes, he reveal of cup inhibiting alignment remains on track and we expect to receive a response from the F.D. by the December that T. F. The adult go date.
And the real well be commercializing the product in the U.S. and you upon approval.
I'll now turn the call over to Tim called for the commercial update.
Thank you Rudolph.
The final stages of commercial planning for all Paclitaxel are underway.
The company is prepared to launch immediately upon the FDA action date of February 28, 2021 for earlier.
Let me recap our progress.
Our medical Science liaison team is in place and is engaging in scientific discussions with key opinion leaders.
Our nurse oncology educators are on board and will provide information on dosing and managing side effects to the oncology treatment teams upon launch.
In the meantime, the team will begin profiling its local territories and start having unbranded discussions around the disease state and patient care.
We have hired two national account directors to engage with the payer community during the third quarter.
Based on the pre approval information Exchange Act for PPI.
Your account managers may target payers, establishing policy at a national level I head of drug approval.
Activities focused on educating these customers about health care economic information pertaining to world Paclitaxel in order to facilitate coverage decisions and budget allocations.
Phoenix is in the process of hiring five corporate account directors to cover smaller regional payers and large integrated delivery networks like Kaiser.
Our last step involves onboarding our sales representatives in the December January timeframe ahead of our expected launch.
In parallel we are wrapping up our work on the value proposition of oral paclitaxel to the payer community and finalizing our pricing and contracting strategy.
Feedback has been overwhelmingly positive as payers view, our drug as innovative which is in line with our prior pricing assumptions.
Contracts are in place with all key distributors and specialty pharmacies and our distribution model is finalized.
Developing patient outreach initiatives remain a key focus.
Our patient support programs near completion.
An additional point of contact is created in the specialty pharmacy hub.
Manageable treatment and reimbursement as well as to provide a financial assistance system for patients.
October was breast cancer awareness month.
<unk> has been very active and focused on amplifying its share of voice and visibility around breast cancer through the months.
Company launch a guy could facing metastatic breast cancer on October 9th and held at virtual Media tour, featuring Dr. Beth degree, which consisted of TV and radio interviews accompanied by social media posts across multiple platforms.
Core marketing messages to be used by our sales force are in the final stages of development.
Our market research shows that our messages are about the efficacy and the first oral taxane resonate well.
Physicians are responding positively to the safety language around neuropathy, no need to pre Medicaid patients and a lack of infusion reactions.
We will have a presence at the San Antonio breast cancer Symposium.
In addition to the four abstracts at Rudolph mentioned, we will also have a virtual exhibit.
Lastly, we finalized the brand campaign for all Paclitaxel that will roll out after launch.
To summarize we are ready to launch oral paclitaxel upon approval payer.
Payer outreach has begun and we have prepared initiatives targeting physicians office staff and patients.
Additionally, we are planning several virtual physician outreach events that can be rapidly deployed upon approval to promote the drug.
Now I'll turn the call over to Jeff Gordon our COO.
Thank you Tim.
Our strategy of the Cynics focuses on building a company for the clinical regulatory sales and marketing and manufacturing functions are vertically integrated and.
And having all these elements in place well ahead of the planned commercial launch.
Doing so provides the ability to hit the ground running once we have our first approval.
It also means we can capture value across the entire supply chain.
In terms of production.
Current apiay facility injunction is ready to supply brother for launch as well as for planned clinical trials.
A leading manufacturer in Europe is in place as a second source of high quality supply for our launch.
The expectation remains the polycom as the new China based Apiay facility will be operational later this year.
I couldn't begin commercial production in the second half of 2021.
Construction of our facility in Dunkirk, New York is almost complete.
That's all interior and exterior work is nearly finished.
The essential equipment for the Dunkirk facility is on order.
Which should be delivered in 12 to 14 months.
Facility is large.
With more than 400000 square feet.
Which will serve our commercial needs and those are the specialty pharmaceutical business as well.
The plan is dedicated portion of the facility.
Manufacturing by both Reburied profit as.
Well its injectable products and eventually manufacture our proprietary products as well.
H.P.D. currently markets 30 progress.
And 54 skews.
And he asks markets its products.
18 screens.
I will now turn the call over to Randall.
To discuss the financials.
Thank you John.
Revenues from product sales totaled 24.8.
For the second quarter.
Pitching 19.2 million a year ago.
An increase of 29%.
Growth was primarily driven by specialty products out there.
The impact of the global how bad that led to increased demand for coal, but night can be laid it dropped.
We think about itself.
Revenue from the specialty pharmaceutical business for the quarter totaled 24.5 million, which once again beat our forecast the.
The increase was partially offset by a decline in <unk> and five boats maybe caught it.
Thank you Ben good conduction of compression batches at our <unk> facility and the continued lease up.
And the third quarter.
In 2019, Shotshell license agreement and our licensing agreement with all my friendship.
Correct, Mike Mike on 4 million in license revenue.
At that point 6 million be a cheap and 1 million in license revenue respectively.
Cost of sales totaled 24.5 million.
Compared to 17.1 million a year ago.
Especially caught us out increased in line with revenue.
We continue to incur costs decreased production at our <unk> and <unk>.
How does the 24.5 million called themselves.
Maybe 2.4 million was attributable to the license fees payable to <unk>.
In relation to the license revenue recognized.
They did with the 2019 juncture license agreement.
R&D expenses totaled 18.4 million compared to 19.6 million a year ago.
<unk> and R&D expenses were the result of all phase three studies winding down.
As well as decreases in truck licensing call Secretary caught.
Great cooperation.
Christ R&D expenses were partially offset by an increase in medical affairs, and EPS I'd be bottom called income.
And compensation expenses.
SGN expenses totaled 22.2 million compared to 16.3 million a year ago coming.
Commercial preparation stay seated without the pottery truck drove the increase.
Operating loss for the quarter was 29.
Compared to 33.6 million a year ago.
Oh no no.
Below the EBITDA line, we recognized a three minute law related to define a portion of the senior secured loan from Oaktree, calling back just to back off we.
We did not incur expenses.
The mother nature in the same period last year.
As a result.
Net loss attributable to Phoenix was 36.8 million 40.
44 cents per diluted share in Q3 2020.
Compared with 34.8 million or 45 cents per share.
Q3 2019.
Excluding the onetime extinguishment expenses upstream.
Not a lot actually beautiful Phoenix excuse me 2020, what they call the.
40 cents per diluted share.
In terms of outside of South Guy, we are raising our guidance again for the full year 2020.
We now expect a year over year growth rate at least the low twentys.
This is a mid teen percentage drop that we communicate it all.
It takes into car, it's outperforming your date as well as our outlook for the remainder of the year.
Oh pardon me continues to increase caught up they're used to treat koger patient.
No we do not beauties revenue that's recurring in nature.
As a reminder, our guidance on that you could call. It that don't provide guidance on partnership revenue for multiple payment.
As of September Thirtyth 2020.
Cash and cash equivalents 143.8 million restricted cash of 13.8 million.
Chuck Chime in Batman <unk> 84.8.
The tender Munich competed and their recent public offering 10 million shares of common stock price as well.
Haven't dollar per ship.
The company granted underwriters, a 30 day option to purchase up to an additional 1.5 million shares which was exercised and <unk>.
Net proceeds were 118.7 million.
Based on our current upgrading right.
Hi, we ask that you eat keep to one question and one follow up.
Our first question comes from the line of Robbins Karnofsky US with tourists Securities. Please proceed with your question.
Hi, guys. Thank you. So I just had a question regarding all packed and checkpoint inhibitor colombo's. So for Icewind too I just want to clarify on what type of 18 months that we're still on track for a year and 21 or could it go into 2022, and then the fault would be for oral the oral path.
Mm Mayo trial depend though trial and you walk us through you know what you think your time lines are and how we should think about data coming out from that trial and the reason I spied stupid essentially.
Or or maybe just a bigger picture opportunity for your drugs from that trial next year. Thank you.
Thanks for the question with Us.
Hi, Robyn deep I spy too is.
One of the combination studies, we are conducting so shouldn't that's setting it was a combination with the T. S. K they'll stylo map in Neil Etchison, setting Mesozoic breast cancer.
The right now as we kept saying is based on really will be based on the enrollment September moment is thought and it's moving along very well, but we cannot pro check the the timing just looking at the previous timeline from I Spike pork ribs, the Reed Oh January all cursory.
Wrong 18 months off that they stopped so that's the timeline that we have been using essay guidance I'm not really projection everything [noise].
Will depend on the actual enrollment right and we will know a lot more as we progress.
We do have and other anti P. D. One poll grabs already on the way the study old 11.
With Pembroke this a map is progressing well and we will be.
Talking about it when when the timing is right.
And we do have plans in our lifecycle management to include check bonding hip the or even though therapy combination.
Important area.
I hope that your question.
HM HM HM.
Thinking our next crashing comes from the line of Kennedy Mackay with Army C capital markets. Please proceed with your question.
Alright. Thanks, so much for taking my question and congrats on a very impressive year of execution. So far despite the COVID-19 send them.
First one one quick question on manufacturing and then I got another question on the combination of Iraq's all with checkpoints that I was hoping Johnson Rudy to speak to.
So first for manufacturing a turbulent I'm a rock salt after is obviously very busy these days, maybe see they're more southern Sudan, but wondering if you could inform us as to whether the lamps. The manufacturing plants had done inspect the body yeah yeah.
Or whether this heartburn.
Bush and Blair you initially planned to manufacture commercial drug supply for each product and then the second question on the Iraq checkpoint combo maybe.
Maybe I was hoping you could talk a little bit to some of the data that we've seen so far around paclitaxel and checkpoints specifically impressed at the number for it to be and passion 131, and 130 trials and some of the differences that were.
Being there between boxing plus a checkpoint versus I'd be <unk> paclitaxel plus a checkpoint obviously, that's some of the biggest differences between the need for steroid pretreatment, obviously somebody immunologic the tech Sir thanks, so much and figure out to them.
Thank you Okay for the first question on manufacturing, Jeff do you want to make a comment.
Yes.
First of all can in the oral paclitaxel is being developed by a partner.
Who has been inspected on a regular basis. So that facility is is ready to go.
Where are we make the the <unk> ointment in Clarence we have had several inspections with very very good results. So the the quick answer is there's no issue with F. D inspections that will not a slow down anything.
<unk>, we're ready to go.
Just to give you more Kenneth <unk> communicate before that for the tip of an Ottoman manufacturing in our <unk>. The <unk> you know like the three citations basically no issue at all that was it got you. Your second question on the couples.
Therapy with I O and also in particular the study 132 110 contrast between eight maxing. It also be Ivy Paclitaxel what else do you want to address this question.
Absolutely.
It's interesting observation I think poverty a lot of question will have to be.
Address before when Kennedy fitness tip, they understand that difference, but on the surface clearly the difference between to start to study S. U suggest a practicing.
Not use C L I N D I V.
<unk>. Please similarly, you'll see right before each dose so that is one difference.
The.
Our auto Preska textural combination is very interesting. So first of all it's different from the Arab too isn't it being ora, okay and along the way, we certainly light apex in to not be steroid no antihistamine.
And I'll P. K profile is interesting because there's a lot of talk about what in the combination setting what kind of dosing Rachaman Ah.
Will be the best dosing regimen in combination with even though therapy and that question has not been that dress followed it yet. So there is obviously without PK profile showing benefits in neuropathy and efficacy would be very interesting to look into so we eagerly await our.
Data of home all the study to to see whether we can differentiate even better in the arena off combination.
Paclitaxel versus with the checkpoint inhibitor, so Ken and I Hope I answer your question.
Alright, thank you.
Very much so.
Yeah can into a there'll be more color is that we remember that all I would take a textual because of the chemical using formulation. After the second useful see why we should notice that you can suppress it Asia and anti Histamines. It will publications that in the literature, suggesting histamine on his <unk> is also very important E D coordination of the.
You said you knew response I <unk>. So therefore, if your wife wanted to get it and assuming that is observation can you confirm it <unk> I mean, then a combination of both so sofa P medications with I would pick a texel because of criminal will not be present like boxing and they'll put that awful.
Okay perfect. So we do not <unk> <unk> an antihistamine.
<unk> <unk>.
P medications just want to harder to you this interesting observation.
Beth.
Further please send the data analysis and to disrupt the sand and new data cut from deal.
Last presentation in San Antonio a year ago. So certainly I would encourage you to follow that presentation. The data is embargo. So I cannot talk about more about that the poster presentation. The P. S 13, or five is on the treatment of cutaneous angiosarcoma.
And debt.
Tennis Angiosarcoma, one common group subgroup is breast cancer patients, who had surgery and radiation and years later.
Present with.
And to sarcoma, and that's a very difficult to treat patient population and certainly we see very encouraging results coming up those data and that poster will be presented.
With data.
Then the PS 30, no six is a lower rates of neuropathy with oral tuck attack. So and then second though and again, we'll further please sen.
[music].
Data focusing on the neuropathy.
P. S 13, 11, oral practice, so and separate or.
In the management of GI side effects, we will present additional data regarding how those are managed in study or one and how to find access.
Pre medication has a positive influence in how we manage that.
So I think those are the four posters that.
I encourage you really to attack the the virtual symposium and see the data yourself.
Great. Thank you and just one more can you provide a progress update on your other oral chemotherapy is and when we might see data for those programs.
Certainly there I can provide that.
In in a nutshell, we have been very BC focusing on two submissions so.
So the whole team when you have got to Ante review with the FDA, and especially with the or upsell being a party reveal the interaction with the FDA really very constant and interactive and really focusing on nailing down those two approvals from our perspective and certainly also the call.
At night in environment to slow down the sites enrolling patients.
But we don't we haven't lost any focus on that our team is continue to look at that and we are BCD developing.
When we do a lifecycle management is not only the oral paclitaxel, but all the other program that includes even as you can see the PCL T. I M. P approval recently, all Testament that hold those will be moving along but certainly cough at night in did slow down.
Enrollment in some of the program. So we will communicate that as soon as we can and then we are thinking of our communication. Once we have decisions on a two part of it takes some time in 20.
21.
Thank you and congrats on the update.
Thank you. Our next question comes from the line of Kevin Degeeter with Oppenheimer and company. Please proceed with your question.
Hey, guys. Thanks for taking my questions, maybe just following up on San Antonio.
In regard to the Angiosarcoma update you should we expect.
Dave on.
Duration of benefit crossing roll cover or should we think about this update is being.
More narrowly construed to the breast cancer parked.
Population.
Right and just more generally on angiosarcoma can you provide us an update on how you're thinking about.
Hi, Good story strategies and next steps for that program. It is a smaller indication which has shown some really interesting data.
How does angiosarcoma fit into the overall.
Expansion of the addressable market for us or Paclitaxel. Thanks.
Yes sure.
It's very very interesting indication is this more indication, but it is generating very intriguing data as we're pretty send some already the angiosarcoma.
A program what we will be presenting is really the subset of the I think I believe there's seven patients in the angiosarcoma.
Of the breadth and the TD study is progressing really well and we do have a go.
Orphan drug designation from the FDA and we do intend to.
Explore the.
Approval in the us.
Yes, we I see with the clinical oncologist already now with regard to the marketing strategy and whether that has said the market. So.
Contribution to our launch if you want to make a comment.
Sure happy to Johnson. Thank you.
I think the importance of angio sarcoma is really twofold number one.
It really improves the overall perception of oral paclitaxel is in the sector of drug this is a difficult disease to treat it.
We see it rising and falling.
The.
The hospital patients with coated.
We saw a significant decline.
Now in the last week or two we've seen an uptick again so.
Overall, I think that we will have a a quarter that will at least be on track.
Something payers are very interested and we will also be publishing in the near future and managed care focused journals. So while we don't have anything on or Paclitaxel. Yet. It is planned but we have done significant pharmacoeconomics looking at it again the difference between IB infusion and oral at home and the overall cost of neuropathy.
To society.
Okay, Great again, congrats on the progress.
Thank you.
Thank you ladies and gentlemen. This concludes our question and answer session I will turn the floor back to Dr. allow for any final comments.
Thank you everyone for joining us today.
This is an exciting time for your Phoenix and we appreciate your interest.
By the time, we have our full year results call in late February 20 to the one we will hopefully have evolved into a commercial stage biotech company with high Street drugs approved and the King. Thank you for your time.