Q3 2021 Clovis Oncology Inc Earnings Call
Good morning, My name is Julie and I will be your conference operator today.
At this time I would like to welcome everyone to Clovis oncology Q3, 2021 operating results webcast and conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question. Please press star one again thank you.
Anna Sussman, Vice President Investor Relations Corporate Communications, you May begin your conference.
Thank you Julia and good morning, everyone welcome to the equivalence oncology third quarter 2021.
For joining us.
You have likely seen this morning's news release and if not available on our website as a reminder.
Under this conference call is being recorded and webcast.
Remarks may be accessed live on our website during the call will be available in our archives for the next several weeks.
The agenda includes the following.
Our president and CEO.
The highlights of today's corporate update and Dr. Tom Harding, our Chief Scientific Officer, who will present, an update on our F. A teacher to eight six and targeted radionuclide therapy development programs.
Andy Ross, our Chief Medical Officer will discuss the anticipated upcoming clinical milestones for Broadcom as a teacher to reach it.
And Daniel our Chief Financial Officer, who will cover the quarter's financial results in greater detail.
Patrick will then make it well then make a few closing remarks, and then we'll open the call for Q&A during which time and Tom and then he will 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 and expected business plans.
All these statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements.
Our actual results could differ materially due to a number of factors.
The extended duration of the effects of the COVID-19, pandemic and the timing and extent of recovery from it.
Please refer to our recent filings with the SEC for a full review of the risks and uncertainties associated with our business.
Forward looking statements speak only as of the date on which they are made and Clovis 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 measures during today's conference call.
Required disclosures related to this starting today's news release, which can be found on our website.
Now I'll turn the call over to Patrick Mahaffy.
Thanks, and good morning, everybody and welcome.
You've taken the time to hear us today.
Sales in Q3, 2021 were $37 $9 million, an increase of 3% over the prior quarter and 2% lower year over year compared to Q3 2020.
Okay.
Your club and primarily due to fewer patients being diagnosed.
Host and treated for ovarian cancer during the pandemic in the United States.
Our experience is consistent with that is another part mark.
On their quarterly call them.
As a walgreens.
Our 16% growth in 2019 monthly averages prior to the pandemic.
Despite the continuing impact of COVID-19 based on the data available to US. We believe we have maintained our U S market share for Rebecca and the second line maintenance ovarian cancer setting.
We continue to be with our European performance.
We do believe when patients begin to rise and the urgent need to manage this often fatal disease grows the second line maintenance treatment of ovarian cancer will increase as well the use of pre Brexit.
Importantly, we see a larger potential Peru black in first line maintenance treatment of ovarian cancer and we've continued to make significant progress in the advancement of our clinical trial program.
Three phase III data Readouts for <unk> are anticipated in 2020 to athene.
Athena mono therapy in first line maintenance treatment of ovarian cancer in Q1, 2022.
Triton three monotherapy in second line metastatic castration resistant prostate cancer.
'twenty two.
<unk> combination with Opdivo in first line maintenance treatment of ovarian cancer in the second half of 2022.
These trials by the opportunity for Rebecca to address larger patient populations and earlier lines of therapy for both ovarian and prostate cancer and potentially cooking, Rebecca title symbol and states and Europe.
Lindsay will provide an update on these clinical trials.
Right.
In addition, an important we continued to advance our targeted radionuclide therapy pipeline as we seek to assert ourselves as the leader in some emerging field of oncology development.
F 22, 86, our lead asset <unk> program, the first peptide targeted radionuclide therapeutic.
Excuse me to enter clinical development and we continue to anticipate the 2022 will be transformational for this program.
During 2020 to the first presentations of phase one data from the illuminate study are expected at medical meetings.
Following identification of a recommended phase two dose of F. 22, 86, we also expect to initiate lumiere phase II expansion cohorts.
And Lindsay will speak in more detail on this development and the F 22 86 program.
Lastly, I'm pleased to announce that in addition to retiring the remaining $64 1 billion in principal amount of the 2021 notes in September.
In the third quarter, we also raised 41 and a half million dollars in net proceeds through our at the market equity offering program.
We now have no convertible debt due for almost three years in August 2024.
Dan will speak to our financials in greater detail shortly and now I'll turn the call over to Dr. Thomas Hurting our chief Scientific officer to discuss the F 22, 86 in targeted radionuclide therapeutic development programs.
Thanks, Pat Hello, it's a pleasure to speak to you today.
As we've discussed on prior calls emerging as a leader in targeted radionuclide therapy as a key strategy for Clovis.
I think Pete 2000 to 86, our lead targeted Radiotherapeutic compound license as part of our ongoing collaboration with <unk> Pharmaceuticals is the first peptide targeted radiotherapy candidate or P. T. R. T targeting fibroblast activation protein also known as <unk> in clinical development.
And as Pat mentioned 2022 has the potential to be transformational for this program.
F. P is highly expressed on cancer associated fibroblasts forecasts, which represent one of the most abundant cell components in tumors that are found in the majority of cancer types.
Cash play a critical role in tumor initiation progression metastasis and therapeutic resistance.
For example, recent non clinical studies have demonstrated F. A P expression Cass is a potent immuno suppressive activity that can promote tumor progression and confirmed resistance to immune based therapies, such as PD, one or PDL one blockade.
But the recent ACR NCI AOR TC conference in October.
We're pleased to present non clinical data confirmed the high expression levels of <unk> across multiple solid tumor types screens, using and munis to chemistry.
Hi, P expression was observed in pancreatic ductal adenocarcinoma slurry gland means just in Myanmar, colon bladder sarcoma squamous non small cell lung and squamous head and neck cancers is one of those cancers of our non primary.
In these tumor types high I think the expression of MS detection, both primary and metastatic tumor samples and was independent of tumor stage Oh great.
The analysis also demonstrated the most tumor types S&P expression is predominantly localized cast surrounding tumor cells and integrated in the tumor microenvironment.
In addition, in Kansas, and Missouri, Oregon, including Sarcoma Mesothelioma, I think the expression was observed in human cells. In addition to the cancer associated fibroblast.
These data support the investigation of F 2026 in multiple tumor types in the planned phase two expansion cohorts of <unk> yeah.
As interesting.
Is it target increases in the field grows larger we're pleased to be the first mover position with 22006, the first peptide targeted radionuclide therapeutic talking to enter the clinic in Ireland patients as Lindsay will describe in greater detail.
Clinically we are focused on 2026 monotherapy development ongoing Lumia study.
Pre clinically we are evaluating a number of 22 86 drug combinations.
Given the role of FEP expressing cast immediate resistance to immune based therapy, such as PD, one or PD lone blockade combination with these agents will be a priority.
We are currently evaluating non clinical studies, the efficacy mechanism of action of <unk>.
2026, and the PD, one monoclonal antibody and Shen Syngenta mouse tumor models.
In addition to immune checkpoint inhibitors. There are a number of publications reporting non clinical data for the combination of targeted radiotherapy with PARP inhibitors to efficacy.
This makes sense since previous therapies work by causing DNA damage.
Radioactive admission.
If this damages not repaired the cell will eventually die.
One of the critical proteins for repairing radiation induced damage is pop and its inhibition augments efficacy in combination with multiple targeted radiotherapy agents.
We are currently evaluating the combination of F.
22, 86 without pop inhibitor recaptured each human models.
Lastly, radiation is known to synergize with a number of agents currently approved standard of care in specific tenders in certain indications.
For example, Jim side to being used as a first line chemotherapy in pancreatic cancer and that the cost numbers is a well known radio sensitized to it and could have utility in combination with <unk> 2026.
We are currently performing a high throughput screen of approved oncology drugs in combination with radiation to identify promising combinations to 2286 development.
We look forward to reporting the results of this preclinical work upcoming scientific meetings.
To support our commitment to this emerging field created educational materials about targeted radiotherapy.
The first of these materials are a micro site and an introductory video to provide more information about targeted radiotherapy.
F 22, 86 in clubs you targeted radionuclide development program.
To learn more please visit targeted radiotherapy dot com.
I also want to quickly note that we've recently completed a clinical supply agreement with ICM to provides clovis with items therapeutic radioisotope no carrier added lutetium 177, and the Lucent Dita.
For use in the clinical development of F 2026 for the next five years.
Ensuring supply is integral to.
The success of this program and we are pleased to have this agreement in place.
Lastly, we are collaborating with <unk> pharmaceuticals on a discovery program directed at three additional targets photography, radionuclide therapeutic development to which we have global rights.
We currently expect to file an IND for a second candidate from this program in the second half of 2022.
Now ill.
Turn the call over to Lindsay for a clinical update.
Thanks, Tom Good morning, everyone.
I'm really glad to be here with you today to discuss the clinical programs and key clinical milestones across the portfolio.
Through breakup, we're expecting topline clinical data from Athena monotherapy arm in the first quarter of 2022 based on current event based projections.
Thank you from the combination of Nebraska, plus Opdivo versus monotherapy are expected in the second half of 2022 based on a protocol defined assumptions.
As a reminder, Athena is a phase III 1000 patient study in frontline newly diagnosed advanced ovarian cancer maintenance.
With Athena, we believe we're uniquely positioned to evaluate Rebecca in terms of two independent outcomes.
Monotherapy versus placebo in the first line maintenance setting.
Well as any potential advantage of the combination of Nebraska, and Opdivo overdue back rolling in the same first line maintenance setting.
We believe this study also has an opportunity to truly differentiate with bracket in the first line maintenance setting.
Once top line monotherapy results are available we plan to file an NDA and a variation to the European MAA shortly thereafter.
Continuing with near term milestones Rebecca topline data from the <unk> three trial and now expected in the second quarter of 2022.
<unk> three is a phase III study evaluating the packer.
As physicians choice chemotherapy with second line androgen deprivation therapy and patients with Mcl P C with BRCA or ATM mutations.
This trial is expected to serve as a confirmatory study for the practice court approval and the prostate indication as well as the potential second line label expansion and we plan to file an S. NDA. Shortly after the results are available.
These three anticipated data Readouts senior monotherapy, Athena combination and Triton three.
The potential to be larger patient populations in earlier lines of therapy.
And prostate cancers for which we bracket is currently approved in late line indications.
As a reminder, the timing for each day to read that is contingent upon the occurrence of protocol specified progression free survival events.
Lastly, farooq wrapped up the Lodestar study our phase II punchy Ms study to evaluate the response to the cracker in patients with various solid tumors with DNA repair mutations.
Based on initial results from the ongoing study, we see encouraging evidence that typically in patients with a binding tumor mutation or double hit Becker or other homologous recombination repair target genes.
Importantly, the DUC can you take to breast pancreatic and certain other tumor types. The majority of achievements have biallelic loss.
We are continuing to evaluate potential development timeline and regulatory path and will provide an update as we know more.
Let me briefly discuss the near one combination study of you're sitting at and.
Tivo in gynecological cancers.
It was sufficient responses in stage one of each of the cervical endometrial in clear cell cancer cohorts to advance to stage two.
Stage two enrollment continues in the cervical cohorts and we are evaluating potential path forward for lucidness supported by the encouraging <unk> data set.
Look forward to presenting these data at future medical meetings.
Yeah.
I'd like to discuss our 2026 program next.
Thomas provided an overview of the non clinical work undertaken to support it.
Now I'll review the clinical work underway.
In our ongoing phase <unk> study I think 2026, it is both as an imaging agent and a therapeutic agent.
<unk> often described as that fair enough stick.
So the imaging agent I think Pete wants to add two six is attached to the ice. The ice took gallium 68 to allow positron emission tomography or pet imaging and selection of patients for inclusion in the study.
Does the therapeutic agents <unk> 286 is attached the isotype lutetium 177, and admits of pizza possible ionizing radiation the causes DNA damage and cell death.
The phase one portion of the linear study continues to enroll patients and the second dose cohort is anticipated to begin enrolling this quarter.
As a reminder for this first in man study. This is a dose escalation study with each of the five dose cohorts being enrolled sequentially with a six week safety follow up period. After the last patient in each cohort has enrolled to ensure it's safe to move to the next dose cohort.
Well the six week period is longer than in phase one trials of other classes of oncology agent. It is standard targeted graduate that cause.
Following the phase one evaluation of the safety of FY 'twenty, two as you sakes and determination of the recommended phase two dose expansion cohorts planned in multiple tumor types and are expected to begin in 2022.
In addition to our own program a separate investigator sponsored imaging study with S. A pay 22 86 is underway at UCSF to evaluate it.
Suppression in multiple tumor types and is currently rolling patients.
So this study along with the preclinical data which are.
I would expect it to help inform our selection of tumor types for a phase two expansion cohorts.
While we do not control the timing of data disclosure for this study we understand that UCSF will submit initial imaging data for presentation at a medical meeting in the next few quarters.
In addition to initiating Loopnet phase two expansion cohorts during 2022.
We anticipate several key milestones for the program, including.
The first presentation of phase one data from linear at medical oncology and nuclear medicine meetings.
The launch of our combination study program to explore.
Two six in combination with other oncology compounds.
Given the low.
You're expressing paths in mediating immuno suppression exploring the combination with PD, one or PDL, one blockade is a priority.
I've met by Tom we are exploring multiple combination studies in preclinical animal models to inform our choice of combinations with clinical development.
And a potential IND filing, but I'd say 22 86 linked to an ultra mixing ICD code is planned for 2023.
I would like to emphasize again the dedicated efforts of the teams involved in our clinical trials both employees investigators.
On the patient participants as our clinical programs with bonds.
And with that I'll turn the call over to Tom to discuss our third quarter financial results.
Thanks, Lindsay and Hello, everyone, we reported net product revenues for.
Of $37 9 million Q3, 2021 which included U S net product revenues of $28 7 million and <unk>.
U S net product revenues of $9 2 million third.
Third quarter 2021, net revenues represent an increase of 3% over Q2, 2021, and a 2% decrease compared to Q3 2020.
In which we reported net revenues of $38 8 million, including net product revenues in the U S of $33 9 million and ex U S $4 9 million.
Clovis reported net product revenue for a breakout of $112 8 million for the nine months ended September 32021, which included U S product revenue of $88 1 million and ex U S product revenue of $24 7 million compared to net product revenue for the same period in 2020 of $121 2 million.
Which included U S net product revenue of $109 8 million and ex U S. Net product revenue of 11 4 million for.
Gross to net adjustments totaled 27% globally in Q3 2021 compared to 28, 6% in Q2 2021.
Decreased discounts in the U S were the main drivers.
This metric fluctuates quarter to quarter, and it's difficult to estimate our future revenues, but the high 20% level seems likely depending on the revenue and distribution mix with the U S and Europe.
As previously discussed European revenues increase in proportion to the U S Global GTS will increase correspondingly.
Research and development expenses totaled $46 2 million for Q3 2021 down.
27% compared to $62 9 million for the comparable period in 2020.
Primarily due to lower spending Abu bracket clinical trials, we expect research and development expenses to be lower than the full year of 2021 compared with full year 2020.
Selling general and administrative expenses totaled $32 2 million for Q3 2021.
17% compared to $38 6 million for the comparable period in 2020 due to a decrease in personnel costs and share based compensation expense due to the reduction in size of our U S. Commercial organization during the fourth quarter of 2020, and a decrease in legal expenses.
Further we expect SG&A expenses to decrease in 2020, one compared to 2020.
We reported a net loss for Q3 of $67 4 million or <unk> 56 per share compared to a net loss for the third quarter of 2020 of $78 7 million or <unk> 89 per share.
Turning now to a discussion of cash and debt as of September 30, we had $171 9 million in cash and equivalents during the quarter, we raised $41 5 million in net proceeds through our aftermarket equity offering program.
Which has a capacity of $125 million of shares of common stock.
We also paid off in full at maturity the remaining $64 4 million in principal amount outstanding of our two 5% convertible notes due in 2021. Our next convertible debt is not due for almost three years with a maturity of August one 2024 and conversion prices of $7 29 per portion and $6 in 2000.
For.
The remainder.
As of September 30, we had drawn approximately $137 5 million under the sixth Street partners LLC, Athena clinical trial financing and had up to $37 $5 million available to draw under the agreement to fund the expenses of the Athena trial, we expect this $37 5 million to be mostly drawn down between Q4.
It's running one in Q4 of 2022.
Net cash used in operating activities was $46 1 million for Q3, 2021 down 15% or $8 3 million from the $54 3 million reported in Q3 2020 cash burn in Q3, 2021 was $35 5 million down 6% from $37 7 million in Q3.
2020.
Reduce both R&D and SG&A expenses considerably compared to prior years.
The reduced R&D and SG&A expense by $23 1 million or 23%.
As you can see we have aggressively reduced expenses and cash burn over the last year and we will continue to have a strong focus on this moving forward.
At this time it is will be disclosed in our Form 10-Q for the period ending September 30 based on our current revenue estimates, we have sufficient cash and available liquidity under our Athena financing agreement to fund our current operating plan for at least the next 12 months, however, mostly related to the continuing impact of Covid on ovarian cancer diagnoses, we cannot predict.
Revenues with sufficient accuracy to provide cash guidance beyond that.
Consistent with what we stated last quarter and as noted we maintain our focus on cost controls and balance sheet management to mitigate the cash impact of records unpredictable revenue situation in this challenging environment.
We believe there is adequate flexibility within our operating plan to adjust variations in our expected Rebecca revenues and the availability and timing of potential sources of financing.
Now I will turn the call back to Pat.
Thanks, Dan.
Fight these challenging times, we have set the stage for a very important year to come.
During 'twenty two we're on track to announce top line data for three phase III <unk> studies that offer the potential full expansion in ovarian prostate cancers.
Including a study that should definitively inform whether adding a checkpoint inhibitor to Rebecca monotherapy in the first line maintenance treatment of ovarian cancer setting.
<unk> is progression free survival benefit.
In addition to targeted radiotherapy is significant in 2022 may be transformational for the program will be present initial data from the phase one linear study of F. 22, 86, the first peptide targeted radionuclide therapy targeting <unk>.
To enter clinical development.
We intend to maintain our lead as we advance our phase one two study and begin our combination development program.
These anticipated pipeline events and our continued progress on improving our balance sheet support our efforts to execute club has three core strategies expand the record label to drive revenue growth emerge as a leader in targeted radionuclide therapy and achieve long term financial stability and with that we'll be happy to answer any questions. You may have.
Sorry to ask a question. Please press star followed by the number one on your telephone keypad, if you'd like to withdraw your question. Please press star one again.
Your first question comes from Cory <unk> from Jpmorgan. Please go ahead. Your line is open.
Hi, This is gavin on for Cory Thanks for taking my questions. This morning.
Just a higher level one on the radionuclide program interested to get your perspective on others, joining the field and your thoughts on the strategy to get ahead and differentiate.
<unk> hundred 86.
Yeah.
I'll take a first shot at that and then Tom.
Common Lindsey may jump in too.
If any company has learned the benefits of being first in the disadvantages of being third it's us.
Given our experience being third to market with <unk>, which all of you have endured.
As a consequence, we're really informed by this and are actively pursuing an aggressive development program for <unk> six but.
But not only keeps us first.
It keeps us first in multiple tumor types and keeps us first with the potential comp.
Combinations that may add to the monotherapy benefit of $20 86.
We don't know everything we need to know yet about this drug.
But we know a couple of things for sure.
It gets to the tumor.
We know what stays in the tumor.
And those are the two most important ingredients for an effective targeted radionuclide. So as a consequence, we are optimistic.
About the importance of the target and the potential for our drug to address that target hopefully with a significant and meaningful.
Anti tumor effect.
Tom do you want to talk about others in the field and what else is happening what would you add to that.
Yes sure.
As Pat mentioned a core constituent.
<unk> targeted radionuclide therapy is the ability to stay in the tumor.
So the radioactive emissions can occur and cause cell death.
We're aware of 15 plus different agents in development targeting <unk>.
But the major limitation of all of these trucks.
Have a very low tumor attention time based upon the way in which they talk talk.
We are using a fundamentally different approach for 2026, which is a constraint peptide bring riches expertise through be pharmaceuticals, which gives us a differentiated preclinical profile in terms of tumor attention most of tumor antitumor efficacy compared to small molecule based radio choices.
So to begin with we have a differentiated agent on top of that what Pat said about trying to move first and maintaining our position as one of our core drivers.
Anything else in addition, Lindsay.
Well, let's just say.
We're quite uniquely positioned.
A small agile biotech company, but.
But we've been around for a while.
<unk>.
Development clinical teams.
Stable.
<unk> experience.
We are in a really good.
Good question.
Execute the clinical trials efficiently.
Amtrust.
Alright, Thank you I appreciate the color.
Yes. Thanks.
One.
Is that to evaluate safety. So we look at the broad population and we don't limit the number of tumor types. However, all patients must have a tumor that does.
Express some S IP.
The phase II portion of the study the expansion cohorts, absolutely we will use the information that Tom's group is covered.
Died selection of the tumor cohort as well as.
All other available data points from the literature and other.
Mmm <unk> maniac, although as we noted in the cold we didn't expect to stuffed enrolling in face to buy.
By the end of 2022.
Okay. Thank you for that and then just quickly on list sitting there I guess you indicated that you are still evaluating uhm populations here, but is there a view that you had potentially present, the Leo one endometrial cohorts by by year end or will that be something to expect in 2022. Thank you very much.
Mm Okay cool thanks.
Based on physical.
I think it will be.
2022, Robinson Uhm Michelle.
The presentation from there and it makes it moving and to make sure.
Thank you.
We have no further questions in queue I would like to turn the call back over to an assessment for closing remarks.
Great. Thank you.
We thank everyone for your interest in <unk>. If you have any follow up questions. Please contact me at three O 365, five O two two or beyond of our current at three O 36255123.
This call from the access via replay on our webcast at <unk> Dot com, they're getting in about an hour and it will be available for 30 days again, we appreciate your interest in time. This morning, Thank you and have a good day.
This concludes today's conference call. Thank you for your participation you may not disconnect.
[music].