Q1 2021 Sesen Bio Inc Earnings Call
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Good day, and thank you for standing by and welcome to the session bio quarter, one 2021 business update call at this time all participants are in listen only mode.
After the speaker presentations, there will be a question and answer session to ask a question. During this session you will need to press Star and then the number one on your telephone keypad. If you require any further assistance. Please press star Zero I would now like to hand, the conference over to your Speaker, Mr. Gary Clark, Vice President of corporate strategy and Investor.
Relations. Please go ahead.
Thank you and good morning, everyone welcome to our first quarter business update call on today's call. We will discuss our operating results for the first quarter ended March 31, 2021 as well as an update on the commercial readiness progress to date ahead of our target producer date of August 18 2021.
Joining me on today's call are Dr. Thomas Cannell, President and Chief Executive Officer, Dr. Chang to skew executive director of supply chain and Monica Forbes, our Chief Financial Officer.
Earlier. This morning, we issued a press release outlining some of the highlights that will be covered on the call today.
Yes at least on the slides for which we both are are available on the investors section of the company's website assessing bio dot com.
I would like to remind you that today's discussion will include forward looking statements related to the company's current plans and expectations, which are subject to risks and uncertainties actual results may differ materially due to various factors, including those described in <unk> Bio's. Most recent annual report on form 10-K quarterly report on form 10-Q and a.
Other SEC filings. These statements represent first in bio views as of this call and should not be relied upon as of any future day.
That's in bio undertakes no obligation to publicly update these forward looking statements.
With that I will turn the call over to Tom Tom.
Thank you Aaron and good morning, everyone. Thank you so much for calling in and participating in our business update today.
Please turn to slide three which is the summary of the three key takeaways for our call today first the Senium has a unique and compelling value proposition, especially when it comes to its potential to improve patient outcomes, while reducing overall health care costs.
We believe we have a clear regulatory path forward with potential approval on the U S. In August of this year and in Europe in early 2022, and finally, given the substantial unmet need in bladder cancer and the highly differentiated clinical profile of if any of them. We project a significant global commercial opportunity.
Please turn to slide four.
If you've been following us for a long time like many of you have you know we always start our presentation with the patient journey to make sure. We are focused on realizing our mission to save and improve the lives of patients.
It is important to understand the unmet medical need in bladder cancer through this loans not only to understand why there is such a significant patient need for a product like this any of them, but also to understand why we believe prescribing physicians will prefer virginium vs available agents.
An important takeaway from this slide is that urologists play a key role guiding the patient through their journey, most medical decisions, including treatment choice will be decided by the patient on the urologists and we'll talk about why that is important in a few minutes.
Please turn to slide five.
This shows our anticipated regulatory timeline for our four biggest global markets.
We continue to make progress across each of these key regions in the U S. The team is laser focused on responding to information requests site inspections and preparing for the late cycle meeting with the FDA in July we continue to be encouraged by what we have found to be an engaging and collaborative review process.
As you may recall at the late cycle meeting was originally scheduled in June but due to delays scheduling site visits outside the U S caused by the pandemic. We're now planning for that meeting in mid July.
You can see we remain on track for our target producer date of August 18th in our current plans are to begin promotion to physicians and patients upon potential approval in August with commercial product supply available in neurology clinics by the fourth quarter.
Given the market dynamics in this market, we would expect signs of early commercial success by mid 2022.
In Europe, we achieved an important milestone with the conditional acceptance of our proprietary brand named the sending them.
In addition, the EMA notified us that the MAA submission was found to be valid and that the review procedure has officially started with potential approval in early 2022.
Next in China. The IMD was approved by the Cte which triggers a milestone payment from our partner <unk> pharmaceutical. It also enables Chile to conduct the proposed clinical trial to assess the efficacy and safety of the syndrome in patients in China, and we expect the first patient to be dose from that trial next month.
Finally in the Mena region, we continue to work closely with our partner Hikma Pharmaceuticals.
Marketing authorization applications in 2021 in key markets with the first wave of potential country approvals for <unk> in the Mena region as early as 2022.
Turning to slide six just a reminder, that while our while our planned trade names in the U S and Europe will be spelled slightly differently. They will both be pronounced the same the syndrome.
We would expect most countries outside the U S and Europe to utilize one of these two spellings.
Turning to our brand strategy. We believe we are positioned to launch a best in class therapeutic that will improve patient outcomes, while reducing overall health care costs, given the differentiated value proposition of <unk>. We expect that the same day will become the market leader in the non muscle invasive bladder cancer market in late 2022 on a path to realized.
Global peak sales of $1 3 billion.
Okay.
Turning to slide seven you can see a high level view of our customer engagement strategy.
First we have identified about 300 national and regional key opinion leaders or Kols.
We're a very high level of engagement is warranted for these customers will deploy medical science liaisons with the full support of our Medical Affairs Department. We will also engage some of those kols as speakers at a variety of company sponsored an independent conferences and programs.
Next I want to mention our reimbursement support strategy. The same is going to be a buy and bill product and we will be selling directly into the urology clinic given that it is critical that we have the right support to ensure clinics are reimbursed for vicinity and.
And that we provide helpful resources to patients as they go through the reimbursement process.
Next from a sales force perspective, Thereabout 2000 high prescribing physicians, our sales force will target, we recently announced a partnership with the leading contract sales organization, <unk>, who will provide logistical support and hiring and deployment of the sales force.
The sales force will include 35 representatives across four geographic regions. This will enable reps to see each target on average a couple of times a month with a very reasonable investment in terms of operating expense.
Finally, there are also some high prescribing physicians, who are located in more rural locations and are harder to see but it still makes sense to interact with them virtually for targets located these sites will use inside sales reps to efficiently reach these prescribers.
Overall, we are confident in our customer engagement strategy bladder cancer is a highly concentrated market and we believe we have developed an approach, which will lead to strong product uptake and sustainable growth.
Please turn to slide eight which highlights the results of our market research of the <unk> relative to Keytruda.
When we show high prescribers of bladder cancer, the profile for <unk> and for Keytruda, They say that they would choose to send them over 80% of the time, because they view, but seemed to have an advantage in terms of safety ease of integration into their clinical practice and overall physician interest in using the product.
Physicians have a very favorable brand image of Keytruda and therefore, when physicians choose the cenaeum over keytruda, 80% of the time that strongly positions us for a successful launch.
With that I'll hand, the call over to Chad.
Thanks, Tom if everyone can please turn to slide nine given the complexity of manufacturing biologics, we purpose built a very reliable and robust supply chain with world class manufacturing partners.
Current supplier for drug substances, Fuji film and for drug product Baxter.
So these cmos are industry leaders with a long history of manufacturing excellence and a strong regulatory track record with the FDA and other regulatory agencies.
To strengthen our existing supply chain. We are currently transferring the cenaeum manufacturing process to chew pharmaceuticals, our partner in the greater China region to add them as an additional source of drug substance and drug product supply in the future.
<unk> has a very large and experienced manufacturing team and already supplies commercial products to the U S. So we feel very good about bringing him on board.
For third party logistics and specialty distribution services, we are working with Cardinal health in the U S.
Cardinal is one of the most well respected and capable players in this industry. They have significant expertise in cold chain logistics and deep relationships with the euro oncology community. So we feel very confident we can leverage the experience of our supply chain partners to support a world class launch of a syndrome.
Turning to slide 10.
And the manufacturing process for <unk>, which has produced via E coli fermentation.
The general approach of using microbial fermentation to manufacture recombinant proteins was pioneered by genentech in the 19 seventies with insulin and continues to be widely used to manufacture peptides on small proteins such as antibody fragrance. This system is very well understood and well characterized the specific process you see here is the proposed commercial <unk>.
And it was developed by assessing bio throughout clinical development, and then transfer it to Fujifilm and Baxter.
Would you feel manufacturers the drug substance so that is all the steps up to and including bulk drug substance formulation.
This materials on incentive Baxter for drug product manufacturing, which is just to fill finish and they will also do the labeling secondary packaging and sterilization of the product.
On slide 11, we highlighted what we see as some of the key advantages of the manufacturing process for vis cenaeum in comparison to other biologics and gene therapies. We're using microbial fermentation are well understood system that has and continues to be used to manufacture many recombinant proteins.
The liability of this system reduces the risk of manufacturing issues that can lead to supply shortages and then non muscle invasive bladder cancer space is very sensitive to supply issues given the ongoing BCG shortage in manufacturing problems with past products such as Alastair.
Because microbial processes tend to be shorter and less complex than mammalian systems and since we do not have any process intermediates or conjugation steps as you have with antibody drug conjugates.
Expect to achieve a competitive cost of goods.
Finally, having such strong manufacturing partners leads to a reliable and robust supply chain to support the launch of the Cenaeum.
With that I'll turn the call over to Monica.
Thank you Chad please.
Please turn to slide 12 for a few financial highlights.
We significantly strengthened our cash position in the first quarter ending with approximately $110 million in cash and cash equivalents. We also saw a strong increase in stock price and market cap versus year end 2020.
With a strong balance sheet. We believe we are well positioned to continue to build for a successful launch ahead of the potential approval of the Cenaeum in August of this year.
Turning to slide 13 as we.
We prepare for commercial readiness in the U S. We continue to manage our balance sheet through stage gated investments, which are focused on our highest priority initiatives such as supporting the regulatory process in the U S and Europe and the commercial launch of <unk> in the U S illustrated by the dark blue bars.
We also continue to strategically raise capital to strengthen our cash position as shown on the dark purple bars.
I will remind you that given our strong cash position as of April 1st we shut down our ATM for April and May we will reactivate the facility no sooner than June and will continue to operate it on a periodic basis consistent with our historical practice with the goal of minimizing dilution and decreasing the need to do a large dilutive financing event with that.
I will turn the call back to Tom Tom.
Thank you Monica. So please turn to slide 14, which is a summary of the three key takeaways from our call today.
First <unk> has a unique and compelling value proposition, especially when it comes to its potential to improve patient outcomes, while reducing overall health care costs.
Second we believe we have a clear regulatory path forward in both the U S and Europe, we continue to work closely with the regulatory agencies as we approach upcoming milestones and finally, given the substantial unmet need in bladder cancer and the highly differentiated clinical profile of the Cenaeum, we projected significant global commercial opportunity.
With that we will open up for questions Ruby.
Thank you.
To ask a question you need to press Star and then the number one on your telephone keypad again that starts and then the number one on your telephone keypad. If you want to withdraw your question. Please press the pound key please.
Please standby, while we compile the question and answer on.
Your first question comes from the line of Brian.
And then from Canaccord. Your line is open you can ask your question.
Yeah.
John.
You might have us on mute on.
Hi can you hear me.
Yes, I can hear you hi, Tom I'm, sorry about that.
Good morning, and thanks for all the updates so Tom.
I was just wondering if you could comment a bit on the design of the phase III studies that were on for <unk> syndrome and <unk>.
The reason I'm asking is whether you would expect.
Full approval or accelerated approval given that.
When I look back at the guidance it seemed to me at least like the design for your studies I think was consistent with full approval, obviously that'll be up to the FDA, but just curious if you could comment there.
Yeah. Thanks, Thanks, John It's a great question, obviously, it's very topical because last week. The FDA had owed GAAP meetings, our advisory Committee meeting discussing the exciting.
Approval pathway. So so you are right in the February 2018 guidance. The FDA says that for carcinoma. In situ you can conduct a single arm trial and that that you would be eligible for either full or accelerator approval and they said well, we'll make that call during the review process.
We had our first pre BLA meeting in June 2019, and again there was a lot of good news there we had a clear regulatory path forward and the FDA gave two pieces of guidance. They said, we expect that Youll need an advisory Committee meeting and we will expect that youre on an accelerated not a full approval pathway, which means you'll need a confirmatory trials. So that's.
How we've been kind of planning things and that was the guidance. We gave at that time, obviously, we feel like this is we've had to come together. It just keeps looking better and better and so it was really good news in February of this year when the FDA said Oh. It appears that at an AD com will not be required and we don't have one scheduled.
What they haven't weighed in on yet and we probably won't learn until right around the <unk> date right around August 18th is whether they will require.
Celebrated approval, which means a confirmatory trial, which was their previous guidance or whether they're prepared to get full approval. So still our guidance is the same based on what the FDA told us during the pre BLA meeting our guidance is that we expect to accelerate approval and we are ready we have a protocol written we're ready for a confirmatory trial if that's their decision.
On.
And that would be great news that would be a great event for us is to get that accelerated approval in August but there is the chance of the upside scenario, where we actually get full approval on so that's something we'll just be watching for as we approach they have to do per date.
Could you have a follow up question John.
I did actually so.
It's interesting.
Just wondering just in your view.
What will change.
In terms of the views on the company once I assume hits the market just curious as to what investors might learn over time.
When by Cenaeum or if ice cream is approved in the market that to sort of.
In your opinion kind of changed your views on the trajectory of assessing.
Yeah. It is.
Good question and we get that we get that a lot I will on since this is all about forward looking statements remind everyone of flight to especially the risks and uncertainties, but.
We've guided that we believe based on the comprehensive Monte Carlo simulation that there was an 80% probability of the Cenaeum, having peak sales of $1 to $3 billion.
You can use whatever p/e ratios you want but if we're right. The company value has the potential to be much higher than our current market cap right and so if that happens. John then then I think the market will have learned and really come to understand three things.
First of all I'd say, it's the it's the powerful role a virologist, which I alluded to talking about the patient journey and then the clear understanding of the three key drivers that motivate them all of which play in the favor I think of the sending them. So first urologists make decisions based on medical drivers and especially the benefit.
<unk> profile, they're looking for a product that delivers the best efficacy with the lease safety risk and we believe we are the clear winner versus Keytruda in that regard because we have comparable efficacy and a much better safety profile.
Second of all urologists make decisions on emotional drivers, it's well understood. They are very loyal and committed to their patient. They do not want to refer to another doctor like medical oncology, because theyre concerned that other specialties did not adequately understand bladder cancer.
And if they were all urologists chooses the Cenaeum day get to keep treating the patient if they choose keytruda someone else probably treat their patients. So we think the emotional drivers are a big factor that the market will come to understand and then finally, it's the business drivers.
It's important to understand urology clinics make their money through treatment rooms and diagnostic tests.
If that if that urologists chooses the cine on their urology clinic gets to keep treating the patient and running diagnostic tests every three months, including cytology cystoscopy biopsy.
And so.
On the other hand, if they choose keytruda, the active and dynamic medical center, the medical oncology practice derived that business been a benefit and again to this point.
I believe that urologists are always going to do the best thing for the patient and I always make the decision based on medicine first but if you can choose the best product for the patient the treatment adoption will be accelerated if that is a more profitable approach from the clinic and the doctor. So so I think theres a lot for the market to understand about the urologists.
Medical emotional and business drivers that we think will really shape.
The treatment of non muscle invasive bladder cancer.
The second thing John I think is and we've talked about this because it is a good backup slide on this as the virtuous cycle that is created when you have the advocacy of all three customer segments patients payers and physicians.
This is pretty rare for new product launches that have advocacy from all three segments and here's why that's important.
The stronger the advocacy from patients and their families and the more they ask for a new product the more likely the doctors to prescribe that product that phenomenon has been well documented the stronger the efficacy of physicians and key opinion leaders the more likely that payers will add the product to formulary on reimburse the product fully remember its most.
Repositions that sit on these managed care PMT committee, so that position via really matters and then the better the reimbursement is from payer the lower the out of pocket cost per patient on from the better the patient access to therapy, and and I think when all three groups are advocating the stronger the feedback loop is and that can drive I think very.
Early on sustainable uptake.
So that's the second phenomenon I think as the interplay and the virtuous cycle between the different customer segments, and I think thats fairly unique in our situation.
Finally, I think I think something that people arent completely paying attention to yet.
Just how lucky we are to have keytruda as our primary competitor.
Keytruda is arguably the most important oncology product in the modern era.
Well, John they grew 30% last year with sales last year of $14 4 billion in many I haven't seen your projections, but many analysts projected to surpass 20 billion and become the best selling pharmaceutical product of all time in.
I believe it has right now the best brand image of any oncology products. So keytruda is indicated for 19 types of cancer and in one of those <unk>. We believe we are better than them. We believe we will surpass keytruda become the market leader in <unk>.
B C.
And I.
I think as you know on real strength of our company I think is the commercial and marketing expertise and when you beat the dominant market leader in one single area. It has a transformation transformational effect on your brand image and the value of your company. So from a commercial marketing ex perspective, it's a very important.
[noise] phenomenon. So so anyway, we think we've got the best situation for a new product launch to be positioned against one of the most important oncology product from all time and I believe by the time, we potentially launch our next indication for potentially for head and neck cancer that that'll be a whole different ballgame. So so.
Basically what should investors be watching for I think watch the role of urologists on what motivates them watch the virtuous cycle between physicians payers and patients and watch the market share battle between Keytruda and <unk> obviously.
After August we will structure, our presentations, so thats easy to follow.
Any follow up on that John.
No that's great. Thank you Tom.
Thanks, John.
Thank you. Your next question comes from the line of Roger.
<unk> from Jefferies. Your line is open you can ask your question.
Great. Thank you Tom I'm, taking the question maybe just a quick follow up on John's question earlier.
So obviously, if you can get a full approval in August.
Ah, Yes August share will be a real can upset but just tell us a little bit about the logistics because it.
I know I think from the last guidance you may need to spar confirmatory study studied before the day or maybe just to finalize the protocol.
But are you already get some additional kind of guidance from FDA, if you need a confirmatory study.
And obviously, you're having kind of back unfortunately, the FDA right now to tell us on a debate on what shall we expect.
What kind of happened before the approval decision in terms of the confirmatory study.
Inspection and the late cycle meeting.
Yes, that's a great question and I think as I've said before it's definitely the Fda's preference that you launch your confirmatory trial right around the time of approval. So we we had a type C meeting with the FDA. We agreed on the protocol synopsis on the overall approach as we've talked about we plan on targeting the less than adequate <unk>.
<unk> population that is patients that have had only 1% to six installations.
And.
So we will be ready to go we have a team to put together a clinical trial oversight team and as we move through the process. If it seems increasingly likely that its excited approval, we'll be ready in the third quarter to launch a study.
I will say, even if they don't require a confirmatory trial. It is something I want to do any way is to do that clinical trial on the lesson adequate BCG population, we have data to suggest that you see names even more effective in that.
And patients that have had less exposure to BCG. It also puts us on a path toward hopefully someday first line therapy with or without combination therapy, depending on how we design. The trials. So so even if we don't need the confirmatory trial, we do intend to do a study in that patient population. So that's kind of.
The thinking right now Roger and then what I would say is if we learn more at the late cycle meeting, which is mid July then obviously, we'll disclose that and might even will come out and make sure that investors know what the update is there.
Did you have a follow up right now.
Yes, I do have one follow up so yeah. So first of all thanks for the color. Thanks.
My next question as it related to the financials.
Standing your contracting CSL.
And in the due to sales to just tell us a little bit about what is the level of the ramp up in terms of SG&A and what is the pace and in that.
Since you are you, having kind of $10 million in the bank and what is the current cash you're on when you will pay day.
Yeah, Yeah, that's great well I'll talk I'll, just talk about the ramp up the contract sales organization I'll, let Monica speak to kind of what we think the cask is on.
Per annum for a contract sales organization of that size. So we've said publicly its 35 representatives and up to 10 reimbursement specialist we are.
We've got the National sales director hired as well as the VP of sales we are in the process and close to finalizing all the regional sales directors and then we're getting ready to go with the representatives of interviews and then training so all of that will happen throughout the.
Throughout the spring and getting those represents to be ready to be out there in August.
Same thing with the reimbursement specialists on the Concierge call center that will set up to support patients through the process. So so.
We have a lot of experience with sending us I've worked with them in the past. This is really their area of expertise that they can find talent.
Have a very expeditious recruiting process and then train those representatives and they're going to be ready to go. So that's kind of how we're thinking about the rollout of the contract sales organization monarch I'll, just let you talk about kind of opex in regard to that.
Sure. Thanks, Tom Hey, Roger So we haven't guided specifically on what our cash burn will be once we kind of stand up the sales force and build the FERC full commercial team, but we have said with regards to the CSO and the number of representatives that we will hire we expect roughly $10 million to $15 million on.
On an annual basis.
For that part of the from that part of the commercial team and then I think you also referred to our cash balance and just with regards to the cash balance of $110 million at the end of the first quarter, we do expect that.
Again, although we're not guiding on on cash burn, we do expect the $110 million to be sufficient to fund operations through the fourth quarter of this year.
Yeah.
Great Awesome. Thank you that's up on me.
Thanks Roger.
Thank you. Your next question comes from the line of Arthur <unk> from H C. Wainwright.
Your line is open you can ask your question.
Hey, good morning, everyone.
Thanks for taking my questions is Arthur for RK.
I just had one question regarding the manufacturing.
Manufacturing part so as we know there's a industrial wind backlog for FDA.
Conducted on site inspection.
Just wonder.
So these that such kind of on site inspection also required for the approval for.
The senior and.
The communication between you guys and the agents regarding that issue.
Yes, I'll just answer that at a high level and then I'll check with Chad to see if he wants to add anything on top of it. So again as you know is the FDA prepares for the mid <unk> for the late cycle meeting in mid July obviously, theyre doing their clinical and their manufacturing site inspections and as we mentioned because of the pandemic, which again there was just.
Something in the pink sheets that theres been delays kind of across the board in the FDA getting out, but we do feel confident that they will have all of those wrapped up in time. So that we can have a good really productive later.
Late cycle meeting in July on still on a pathway for potential approval in August of this year and and again you can imagine the most important of those site inspections would be at Fuji, which is our bulk.
Drug substance manufacturer and that's we're probably 90% of the overall complexity on the work is around manufacturing and we feel very confident Fuji was with us when we had the type b meeting with the FDA in terms of demonstrating analytical comparability and they're a world class manufacturer with a real good track.
Record with the FDA and from a regulatory perspective, so we feel good for us about how that's going recognizing these site inspections have been a real challenge for the agency since the pandemic hit.
Chad anything you want to add to that.
No Tom I think you answered that very well.
Great. Thanks, RK did you have another question or a follow up.
Thank you. Thank you for the color on things.
Thanks RK.
Yeah.
Thank you.
At this time there are no further question on queue I would now like to hand, the conference over to our President and CEO Dr. Thomas Gad.
Thank you Ruby and thank you everyone for your good questions today and your interest in <unk> and bio I'd also like to take this time to thank our employees. We only have roughly 30 employees and they're just doing herculean work in bringing this product to market and being prepared for.
During its supply chain and all the commercial prep that's underway and so just want to thank the team for everything they're doing their test.
Just an outstanding effort and they are working so well you will be hearing again from us soon.
Thank you again to all of our investors for your interest and please stay safe and have a good week. So with that that concludes our call for today. Thank you all very much and Ruby I'll hand, it back to you.
Thank you. This concludes today's conference call you may now disconnect.
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