Q3 2021 Aveo Pharmaceuticals Inc Earnings Call

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Ladies and gentlemen, todays conference is scheduled to begin shortly please continue to standby and thank you for your patience.

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Good day and thank you for standby welcome to advanced third quarter 2021 financial results and business update at this time all participants are in listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star. One can you tell us if you require any further assistance. Please press star zero and as a reminder, this conference call is being recorded I would now like to turn the call over to Mr. Eric with Sara.

<unk> Financial Officer. Please go ahead.

Good afternoon, and thank you all for joining us on today's call to discuss <unk> third quarter 2021 financial results and business update I'm.

Im joined today by Michael Bailey, Chief Executive Officer, Mike <unk>, Chief Commercial Officer, and Dr. Michael Neal Chief Medical Officer.

Before we begin today's call. Let me remind you that during this discussion we will be making forward looking statements within the meaning of the private Securities Litigation Reform Act of $19 95.

<unk> looking statements are subject to important risks and uncertainties, including those that are detailed in today's press release and in the risk factors section of our <unk>.

Recent quarterly report on Form 10-Q, which is on file with the SEC that may cause actual results to differ materially from those results expressed in such statements. Furthermore, we caution you that these forward looking statements represent our views only as of today and we do not assume any obligation to update these statements whether as a result.

Of new information future events or otherwise, except as may be required by law with that I will now turn the call over to our President and Chief Executive Officer, Michael Bayley Michael.

Thank you Eric and thank you to everyone for joining us on today's call. The third quarter marked our second full quarter as a commercial stage company and we are excited to share with you. The continued progress we have made since the launch of the <unk>.

<unk> our first commercial.

Marshall product as well as the progress we've made with the rest of our pipeline and our financial results for the quarter.

We are pleased to report our second full quarter of <unk> sales, which reflect a strong commercial uptake compared to the second quarter 2021, and since <unk> was launched on March 22nd.

To note, we saw a 113% increase in net product revenue and 119% increase in prescriptions filled in the third quarter as compared to the second quarter.

So Tim just commercial performance validates its potential to serve as a standard of care for relapsed refractory RCC patients.

As many of you already know <unk> is an oral once a day VEGF our TK I approved in the U S for the treatment of adults with relapsed or refractory advanced renal cell carcinoma or RCC.

Following two or more prior systemic therapies.

This approval was based on the phase III Tivo three study the first positive RCC phase III study in this highly refractory setting and the first phase III RCC study to incorporate a pre defined subpopulation of patients who had received prior immunotherapy, which reflects the new standard of care.

Earlier lines of treatment.

It is important to note that prior to the therapy.

<unk> therapies used in these settings, where often chosen based on extrapolation of clinical data from treatment in earlier line settings as well as from clinical data that did not include a pre defined subpopulation of patients who received prior immunotherapy.

Furthermore, due to a lack of data in this refractory setting coupled with tolerability concerns of other available treatment options, we know that a large percentage of patients historically opted out of continuing onto later line therapy.

Turning to our pipeline in the third quarter, we achieved an important milestone with the start of enrollment of our pivotal phase III <unk> two trial of <unk> and Opdivo in patients who previously received Io therapy.

We will now be able to assess <unk> potential in a registration directed study in earlier lines of therapy and in the immunotherapy combination setting.

For <unk>, we made great progress over the quarter with fast track designation granted by the U S. FDA for a potential registration study, which we expect to start in the first half of 2023.

We believe these recent developments further support the belief that FICO Chisholm them has the opportunity to address serious unmet need and serve as an important treatment option for patients with HPV negative head and neck cancer patient population, whose prognosis is very challenging.

I would like to turn the call over to Mike for RSO now to walk us through a more detailed commercial update including third quarter metrics Mike.

Thank you Michael.

As Michael mentioned, we are very encouraged with the launch to date and I'm excited to share with you results from our second full quarter of sales.

For the third quarter of 2021 U S. Net product revenue was $14 3 million, which reflects 113% increase from last quarter.

Since launching <unk> in late March year to date U S. Net product revenue is $22 1 million.

Of note Q3 sales were representative of true end user demand.

We estimate that is the end of the third quarter. There was approximately two weeks of inventory available in the channel underscoring that our net revenue total was achieved with a lean inventory level.

Finally during the third quarter, we recorded a total of 619 commercial prescriptions, reflecting a 119% increase compared to the second quarter.

Since launch approximately 260 accounts have ordered as of September 30th at.

At 90% increase compared to 137 accounts, having ordered as of June 30th.

As we expand our prescriber base, we are seeing decreased need for launch patient experienced samples and we're scaling back the program as planned with 75 patient kits distributed in Q3 compared to 180 in the second quarter.

Let me take a minute to discuss the commercial team that is helping drive. These results. Our team is comprised of individuals who are deeply experienced in oncology with a proven track record and reaching an impacting customers both in person and when required remotely.

With the increase of the Delta variant in the third quarter Covid restrictions have of course posed a continuing challenge for gaining in person access to treating oncologists.

That said our teams are executing well and we're seeing steady progress toward reaching all of our key customers in person or using technology to engage them remotely.

As I mentioned, we have received orders from over 260 unique accounts to date, which just scratches the surface of our 3000 plus targeted accounts.

In addition to the field sales team, we have supplemented their efforts with extensive marketing outreach spanning a wide variety of formats in order to increase awareness and areas facing access restrictions we.

We continue to invest in new opportunities to enhance our awareness from traditional print advertising to social media and other digital formats.

As reported by <unk>, we continue to have a leading share of voice in the relapsed refractory RCC setting and this is great evidence of the effectiveness of our efforts.

But timna is broadly available through a limited network of specialty pharmacies and specialty distributors.

By limiting our distribution network. We believe we are able to improve the customer experience for those receiving <unk> at home through our specialty pharmacy partners as well as for those who receive for <unk> directly from their treatment facility.

We have designed our network to allow oncology practices, who dispense directly to their patients to do so not only for the first month of treatment, but for the duration of treatment. We believe our model is unique within the RCC space.

Our comprehensive support services provided through the Aveo access centre of excellence also known as the Ace patient support hub helps to support prompt access to Protiviti for on label patients. We continue to be very successful in securing coverage with minimal payer issues.

We are pleased with the significant progress that our commercial team has made since launch and the encouraging reception Protiviti has received from oncologists and patients as well as the broader medical community.

We look forward to updating you on our continued progress over the coming quarters.

With that I would now like to turn the call over to Dr. Mike needle to review the clinical opportunities within our pipeline.

Thank you Mike beyond the launch we.

We are pleased with the progress we have made this past quarter in the clinic.

Starting with <unk> immunotherapy combination programs in.

In the third quarter enrollment open for the pivotal phase III <unk> trial of Tivo in combination with the volume Mab or Opdivo, Bristol Myers Squibb's anti PD, one therapy in patients with advanced relapsed refractory RCC.

Following prior immunotherapy.

The pivotal trial is being conducted under our clinical trial in collaboration agreement with Bristol Myers Squibb.

Bristol Myers Squibb will be providing the volume of clinical drug supply for the study and we will serve as the study sponsor and will be responsible for cost associated with trial execution.

The pivotal trial is following up on the positive results previously reported from the Phase <unk> trial with the combination of <unk> and the volume have demonstrated a high objective response rate and disease control rate long progression free survival and a favorable tolerability profile.

Treatment naive and previously treated patients with advanced RCC.

With the introduction of immunotherapy combinations as the new standard of care for first line RCC.

There's an increased need to establish optimal sequencing and treatment options in the second line setting following prior immunotherapy.

We believe that the combination of <unk> and the volume of conserve as a meaningful therapeutic option in this growing patient population and we look forward to updating you on the progress of this trial.

Moving on to <unk>, our HTS CNET IGD, one antibody and <unk>.

September the U S food and drug administration, or FDA granted <unk> fast track designation for the treatment of patients with relapsed or refractory recurrent head and neck squamous cell carcinoma.

We're pleased to received fast track designation from the FDA as their decision further underscores the potential for <unk> to address a serious unmet need and serve as a meaningful therapeutic option for patients with HPV negative relapsed or recurrent head and neck squamous cell.

Ill.

In regard to timing for the start of the <unk> Registrational trial in human Papilloma virus, HPV negative head and neck squamous cell carcinoma, we expect to commence manufacturing of <unk> clinical supply.

In the second quarter of 2022 subject to availability of key raw materials and manufacturing also used in the COVID-19 vaccine manufacturing.

The initiation of the Registrational trial now anticipated in the first half of 2023.

With the receipt of fast track designation, we believe <unk> has the potential to advance as an important new treatment option for patients with head and neck squamous cell carcinoma.

Continuing our discussions with the FDA to identify.

Optimal registration trial design for the program as well as speaking with potential partners as we look forward to providing further updates on our progress.

I'll now turn the call over to Eric to discuss third quarter 2021 financial results.

Sure.

Thank you Mike total revenue for the third quarter of 2021 was $15 $2 million in U S. Net product revenue for the third quarter of 2021 was $14 3 million.

Selling general and administrative expense for the third quarter of 2021 was $15 1 million level consistent with the prior two quarters and as compared with $5 8 million in Q3 of 2020, we continue to expect that our total G&A spend for the year will be approximately $20 million and that our total commercial spend for.

The year will be approximately $40 million for a total spend of $60 million.

We continue to expect gross margins to be in the mid to high 80 percentile.

Search and development expense for the third quarter of 2021 was $7 5 million compared with $5 9 million in the third quarter of 2020, we continue to expect R&D expense to be approximately $30 million for the year.

We ended the third quarter of 2021 with cash cash equivalents and marketable securities of $94 million compared with $102 9 million at the end of the second quarter.

As we expect our spending levels to remain relatively constant for the fourth quarter. We also anticipate net cash burn to continue to decline as we expect revenues to increase.

We believe that our existing cash cash equivalents and marketable securities as of September 32021, along with expected net product revenues from the commercial launch of <unk> in the United States will enable us to maintain our current operations for a period of at least 12 months. Following the filing of our quarterly report on Form 10-Q for the third quarter.

Our fall ill review of our results for the third quarter of 2021 and is available in our quarterly report on Form 10-Q, and I will now turn the call back over to Michael Bayley Michael.

Thank you Eric to close we believe we are well positioned for continued success with the commercial launch of <unk> here in the U S. As well as the continued advancement of the balance of our pipeline programs. We look forward to providing updates on our progress in the coming quarters as we continue on our mission of improving the <unk>.

Lives of patients with cancer.

We will now open the line to Q&A operator.

Thank you Sir as a reminder, if you have a question at this time. Please press star one on your telephone keypad and wait for your name to be announced if your question has been answered or you wish to leave yourself from the queue press the pound key we'll pause for just a moment to compile the Q&A roster again Thats star one to ask a quick.

<unk>.

Your first question comes from the line Steepen Willey with Stifel. Please go ahead.

Yes, good afternoon, thanks for taking the questions.

Maybe you can speak a little bit too.

Some of the patients that you are seeing being prescribed the drug.

Terms of Gist.

Most recently failed therapy, if theres any kind of patterns that appear to be emerging with respect to the specific type of patient who used to be.

Prescribed tivo.

Was also wondering if you've seen any evidence.

Patients receiving <unk> as a second line therapy, just given the fact that the label does.

Presumptive, we allow for second line use in the.

Context.

Frontline combination regimen.

Thanks for the question Steve.

Pass this over to Mike <unk>.

Great. Thanks, Steve So.

We don't always have visibility into the patient types. So it's going to take some more time for our datasets to get more robust.

Greater granularity, but the data we do get we're certainly seeing a mix of patients.

So we're getting a mix from those as you described coming off of frontline combination.

Those who are.

A typical third line patient. We're also seeing later line patients, who would've likely opted out of treatment or gone onto hospice. So we're seeing a broad mix and again, we don't have full visibility yet, but we will continue to build a more robust data set going forward and be able to provide more granularity in the future.

Okay.

Did you say previously that your target number of accounts was 3000.

Youre correct that we have over 3000 target accounts, we've penetrated to this point about $260. So we see a tremendous amount of opportunity to continue to expand our prescriber base and grow our business.

Okay, and I guess, how do you think about the kinetics of closing that gap between the.

Number targeted in.

The target number and is this something that you think you can achieve over.

Over the course of the next 123 quarters.

Go ahead Mike.

Yes, it's a great question, Steve I think the biggest challenging question for anyone launching a drug right now is COVID-19 and the way it's impacting our access.

We're very pleased that we grew our prescriber account base by 90% quarter over quarter, we continue to make penetration to new accounts and expand our reach it certainly is more challenging with COVID-19 and we think ultimately it certainly will take us longer to reach everyone and reach our full penetration than if we were in.

Our non Covid era, but again the team is executing well and we're really pleased with the quarter on quarter progress that we've made.

Okay and then just lastly, do you have any data points on just the proportion of.

Ordering accounts that are that have reorder.

I guess specifically those in between.

Sure.

Specifically, those who had ordered as of the end of <unk> and whether or not you saw a high reorder rate amongst those accounts in the third quarter.

Okay.

Yes, so I don't have specific metrics on that but we certainly are really pleased with.

The growth, we're seeing both new prescriptions and refills and.

I think as we look at the <unk> III study, we had 18% of patients progression free at two years. So we think it's going to take quite a while for us to truly know what our real world long term refill rate and duration of treatment is going to be but we're pleased with what we're seeing so far.

Alright, thanks for taking my questions.

Thanks, Steve.

Thank you. Your next question comes from the line of Cowen.

Casey with Baird. Please go ahead.

Great. Thanks, Thanks for taking my question and congrats on the quarter.

Piggybacking on Steve's last question do you have any insight into the refill rate.

Patients are getting how many of these cells.

Yes, Mike you want to talk about that.

Sure Colin Yes. It is challenging so as I was sharing we don't have that visibility into all of our business, we get it in a small subset so as our data gets more robust over time.

Better and better accuracy and get a comfort level, where we have updates we can provide in the future. So we're pleased so far we're certainly seeing a good mix of refills and new patient starts.

Again, we're really pleased with the new account growth and we'll continue to track these things as.

As I said, it's probably going to take quite a while until we can really say what our real world duration of treatment is just because there was such a significant tail of patients on the drug in a very long time in a clinical trial setting and we have to see how that translates into the real world setting so.

Again, we'll keep tracking and then we get robust enough data, we'll be happy to share that in the future.

Makes sense.

And what are the sampling program.

Would you expect that to go.

To increase again as youre continuing to expand into the remaining 2000 ish accounts, how do you think about that yet.

The sampling program.

Thanks Kelly.

That one too.

Sure.

So yes, our sampling program, we've always planned it to be launched sampling program or patient experience program.

So we've already seen a significant drop from 180 samples are distributed in the second quarter to <unk> 75 in the third quarter. We don't have any plans to shut it down at this point because as we've discussed there are still a lot of accounts to access and it still is a can be a powerful tool, but I will say you wouldn't.

Expect all 3000 accounts to take a sample theres many treatment settings that are not allowed to take a sample.

Those that do any dispensing themselves and other institutions don't they prohibited so it's not a program that's for everyone. So I think we'll continue to see it.

Decreasing over time, but we're not shutting it down just yet because we think they are still our accounts, who would benefit from a sample that we've been able to access and reach.

Okay. Thanks, that's helpful and can you at least steady.

Maybe if you can talk about expectations for enrollment there kind of how many centers are targeting.

Covid, what kind of impact putting us up online.

Yes, Thanks, Kelly Dr. Mike do you want to answer them.

Okay.

Heartbeat here could you please repeat your question.

Yes, sorry.

With two study.

You could just talk about what your expectations are for enrollment there how many centers.

Would you expect the Covid impact will be I think in the centers.

Centers online.

Sure.

We are targeting.

Close to 200 centers.

It's hard to Covid did its such a moving target you think it's getting better and then there is a setback and it's obviously different.

And in different parts of the world at different times.

No.

It is.

It's very difficult for us to predict.

I'm not sure what else I can say.

Yes, I'll add one thing Mike I mean, as Mike said.

200 site, so it's not too dissimilar from <unk> three.

It's early in.

The opening in the enrollment process.

Keeping a close eye on it but just as a benchmark tivo three enrolled at about 15 to 18 months from about a similar number of patients, but recognize also as Mike pointed out.

That was not during COVID-19 and so that's why we wanted to just kind of let's see how things go as mostly how things go with Covid.

How that ultimately impacts the.

Initial uptake on enrollment and we'll keep you posted.

Great that makes sense.

Taking my question.

Great. Thanks Kelly.

Thank you. Your next question comes from the line up RK <unk> with H C. Wainwright. Please go ahead.

Thank you good afternoon.

Michael.

Mike.

Alright.

And just couple of quick questions.

Okay.

You said.

Youre trying to target 2000.

Accounts and right now you've got <unk>.

From 267, so how many accounts have you.

Interacted with out of which 260 <unk> have been successful.

Yes, great question or Mike do you want to talk a little bit about reach.

Yes. Thanks for the question RK. So we haven't put that metric out, but I'll give you a sense of what the world is like out there in general right now as reported by <unk> in others.

There is probably somewhere between 25, and 30% maybe 35% of oncology accounts that are open to engage with industry right now that are allowing sales reps to get in there. So.

That's maybe helpful insight certainly theres other ways, we tried to engage but the in person interactions are certainly the most impactful unusually it takes a few visits a few meetings with the customer to walk them through the drug.

How you get access to it gives me comfort with reimbursement and all of the things they need to know to start a new therapy. So it's going to take us a while because youre access is restricted in how often you can get into other frequency also gets restricted so we're continuing to make great progress again, we're really pleased to grow our account base, 90% quarter on quarter. Despite the.

Access challenges that we have and.

It's difficult to predict where COVID-19 is going but were hopeful that the delta variance seems to be settling down and that our access trends may start to once again improve and open up that make it easier for us to expand our reach.

Thank you. Thank you very much.

So you.

You said you had about 619 scripts in the third quarter. So obviously the third quarter.

Quite well.

<unk> already well actually so how should.

Any commentary at all that you can give us regarding what you have been seeing in the last 35 days since this quarter started.

Especially on the back of the comments that.

It seems to be.

Regressing a bit.

Yes, Okay. Good question, we are going to be providing going forward is that.

<unk>.

Launch matures. It is really just kind of sticking to a quarterly update. So we had provided with the first quarter and that extra month, but we've shifted to quarterly updates and we'll be looking forward to giving those to you at future calls.

Perfect. Thank you. Thank you gentlemen, thanks for taking my questions.

Thanks, Okay.

Thank you and that concludes our question and answer session for today I will now turn the call call up it back to Mr. Michael Bailey for closing remarks.

Well. Thank you all for joining US today. We appreciate your continued support and look forward to updating you on further progress in the coming quarters.

And ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.

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