Q1 2022 Spectrum Pharmaceuticals Inc Earnings Call

Thank you for standing by.

And welcome to the spectrum Pharmaceuticals first quarter 2022 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any.

Further assistance. Please press star Zero I would now like to hand, the conference over to Mr. Michael <unk>, Vice senior Vice President of corporate strategy and operations. Please go ahead Sir.

Thank you operator, good afternoon to everyone.

Thank you for joining us today for spectrum Pharmaceuticals first quarter 2022 financial results Conference call. Our first quarter financial results press release was sent out earlier. This afternoon and is available on our website at Www Dot S. P P. Iraq Dot com joining.

Joining me on the call today from spectrum Pharmaceuticals will be Tom Riga, President and CEO and Dr. Francois Labelle, Chief Medical Officer.

Before we get started I would like to reference to the notice regarding forward looking statements included in today's press release.

This notice emphasizes the major uncertainties and risks inherent in the forward looking statements we will make this afternoon.

These statements are not guarantees of future performance and undue reliance should not be placed on them such forward looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in the future periods to differ materially from any projections of future performance or results expressed or implied by it.

Such forward looking statements with that let me hand, the call over to Tom Riga C E O spectrum.

Good afternoon, and thank you for joining us on the call today. The year is off to a strong start as we anticipate FDA approvals later this year for our late stage assets cozy at nib and airflow the grasp them.

Both are under active review with the agency.

The first in the first quarter, we continued to make progress on our core business objectives, which are one gaining FDA approvals and further advancing our two late stage assets.

To streamlining our company and optimizing our cash burn.

And three ensuring we are prepared to successfully launch both products.

Let me provide some highlights starting with pose yaniv.

Our NDA is under active review and the agency has set a <unk> date of November 24th 2022.

With the initial indication for the treatment of patients with previously treated locally advanced or metastatic non small cell lung cancer harboring her two exon 20 insertion mutations.

This product is a fast track designation and there are currently no approved treatments for this indication.

In the first quarter, we initiated a global confirmatory study in support of our application. This is an important and required step in the approval process.

Additionally, we presented positive for frontline data at the ACR meeting, which is our second successful cohort in their her two exon 20 insertion mutation space.

Finally, we announced today that the FDA plans to host an old deck meeting in connection with its review of Deposi R&M NDA.

We are preparing for this advisory meeting and look forward to the opportunity to highlight the role that pose the aten can play in addressing an important unmet medical need in the treatment of previously treated patients with her two exon 20 insertion mutations.

Paul O DAC meeting is scheduled for September 22nd and 23rd we will share the specific date and time for the Posey Aten of discussion when it becomes available.

Now, let me shift to the grass to them in the quarter. The FDA accepted our resubmitted DLA and assigned a <unk> date of September 9th 2022.

This is a significant step forward in bringing this novel therapy to patients. We are actively working with our partner hanmi to prepare for the upcoming preapproval inspection of the drug substance facility.

Furthermore, we have kicked off our commercial readiness efforts and our enthusiasm to enter this market remains high.

Our commercial leadership infrastructure is in place and ready to engage key customers group purchasing organizations and third party payers to ensure we optimize the launch trajectory if approved.

The long acting G CSF market remains a competitive yet substantial market and we are looking forward to the opportunity to compete.

We will share our detailed commercial plans as we move closer to launch.

Moving to our operations, we began the strategic restructure of the organization in January and we continue to evaluate ways to optimize our cash burn and streamline our operations, while investing in our future success.

The initial results of those efforts can be seen in our Q1 financials.

We also strengthened our partnership with Harmony Pharmaceuticals.

This included a $20 million equity investment by harmony and amendments to the licensing and supply agreements for both Posey at nib and epilogue progressed them.

The amendments will allow us to maximize our near term cash flows and provide improvements to our cost of goods.

Our strong partnership with Hanmi is critically important to spectrum as our late stage assets stemmed from their research engine.

The spectrum Hanmi relationship and partnership dynamics have never been stronger than they are today.

We welcomed Ms. Zhu young Lynn to our board of directors in the first quarter.

MS. Lim currently serves as the president of global strategy and planning at Hanmi Pharmaceuticals.

Young has been an exceptional advocate for our partnership and she's having an immediate impact on our board.

Additionally, we announced last week that Ms. Brittany, Brad Rick has also joined our board of directors and will serve as our audit chair as of the second quarter.

Miss Brad Ric is a seasoned executive with 25 years of experience in lifestyle in the life sciences sector, including M&A investment banking finance strategy and corporate development.

She currently serves as the Chief financial Officer at Neurologists.

Just yesterday, we announced the appointment of MS. Nora Brennan as the new CFO of spectrum.

Nora has been on the board of directors and serving as the audit chair to the company.

Our intimate knowledge of the company and familiarity with the team will allow her to hit the ground running in her new role I'm thrilled to welcome Nora to our senior leadership team and she will officially joined the company on May 25th.

Given this I would like to review our financials for the quarter.

Total research and development expenses were $4 2 million for the first quarter of 2022 as compared to $19 4 million in the same period of 2021.

The favorability is primarily related to the noncash reversal of an $11.2 million aflow congrats to them drug substance accrual that was no longer payable to harmony pharmaceuticals.

SG&A expenses were $9 9 million in the quarter compared to $14 3 million in the same period of 2021.

And by our recent restructuring.

The net loss for the quarter was $15 4 million or nine cents per share compared to net loss of $35 7 million or 25 cents per share in the comparable period in 2021.

On a non-GAAP basis, the net loss was $9 6 million or six cents per share compared to a non-GAAP net loss of $29 4 million or <unk> 20 per share in the comparable period in 2020 one.

We ended the first quarter with approximately $89 2 million in cash plus marketable securities compared to 100, and 100.6 million at December 31st of 2021.

As previously reported we received a strategic equity investment from harmony in January of $20 million, which is included in the ending balance.

Our operating cash burn was approximately $30 3 million as compared to $34 5 million.

In the prior period and was elevated due to one time restructuring costs. The cash combined with the restructuring announced in January will extend the companys runway into 2023.

With that I will now turn the call over to Doctor Labelle for a more detailed update on our clinical development progress.

Good afternoon, everyone.

Glad to be with you on today's call I'm pleased to report on our latest achievements.

Yeah.

It's currently under active review at the FDA.

This is a major step.

Toward advancing treatment for patients with her two exon 20 mutation.

Small cell lung cancer.

The filing is based on our positive data from cohort two of the.

Xena 20 clinical trial, which consisted of patients with locally advanced or metastatic non small cell lung cancer are bearing her two exon 20 and <unk>.

Search and mutation, which feels pretty good.

R&D team is actively supporting the FDA review and already preparing for the meeting in September .

We believe.

The potential to be the first to market.

For this specific indication an area of great unmet medical need.

We'd now.

Initiate a randomized confirmatory study following discussion with the FDA.

And our operator with a great summer.

Sure.

Steady.

Pause real one or pinnacle is designed to enroll 268 patients with previously treated non small cell lung cancer harboring her two exon 20 mutation patients are being randomized to.

One into the global Multicenter study to receive eight milligram of cozy administered.

D versus 75 milligram per meter square.

<unk> Seatbacks, though.

Ministers IV every three weeks.

<unk> will be evaluated at week, six and every six weeks thereafter.

Following progression on the backfill patient will be a lot to crossover into the posey are.

Primary endpoint will be progression free survival with overall survival.

Jakob response rate duration of response disease control rate and safety at secondary objectives.

This design.

We'll provide a power of 95%.

To test the hypothesis that <unk> is superior to Darcy Dassault for a hazard ratio of <unk>.

Equal or smaller again 0.58, using a two sided log rank test.

A futility analysis conducted by an independent data monitoring committee to evaluate PFS rate.

Will be used to validate the size of the study.

Separately I would like.

Z clinical probe.

Now achieved two positive cohorts as demonstrated more recently by the positive result of cohort four and first line patients that were presented in March at the ESMO Congress by doctors Sun from the British Columbia Cancer Center.

This data from these into 'twenty study included a total of 70 patients who received 16 milligram per day of oil.

First 48 patient cohort received 16 milligram once daily and then an additional 22 patients receive eight milligram.

The primary endpoint was evaluated centrally.

Dependent image review committee using resist one one criteria.

<unk> met the primary endpoint in fees.

Frontline patient would have no R. R a 41%, including one complete response.

And then the valuable patient or are 50%.

Safety profile was consistent with the TK I glad.

Notably on target at Bruce you ban will reduce would be IV dosing.

Treatment related grade three or higher adverse.

Adverse events were as expected.

Rash stomatitis diarrhea, paronychia being the most common DN.

The grade three or higher pneumonitis continue to be low.

Less than 3% or two out of 70 patients with no drug related deaths.

Now, let me shift to our presentation at the recent ACR meeting in New Orleans, a few weeks ago.

Preliminary reads. It all suggests that decrease in plasma circulating tumor DNA during pose the therapy correlate with clinical response in patients with her two exon 20 insertion mutation in non small cell lung cancer.

Additional data from this study has been accepted for presentation at the upcoming Ash annual meeting in June .

These new data will provide further abbott.

The correlation between a decline and CTD anything with a clinical response to pose the treatment and cover a longer observation period.

So stay tuned.

As you can see we continued to make solid progress on our two late stage development programs.

Regulatory strategy, we will keep you posted as we achieve.

Additional key milestones.

That concludes our prime prepared remarks.

I'd like to open the call for questions operator.

Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press the pound key please standby, while we compile the Q&A roster.

First question comes from Maury Raycroft with Jefferies. Your line is now open.

Hi, everyone. Congrats on the progress and thanks for taking my questions and I'll start off with the Phase III program.

Just wondering if you can talk about your your view for the bar for Docetaxel and in that group and how confident are you that you can be substantially enrolled by the Paducah date and on November .

Sure.

<unk> talked about this so the.

You know, obviously, where we're quite confident that we can be the docetaxel.

The extent of the.

Establishing that superiority.

You know just given to you by.

A patient.

Parameters that I've declared.

I'm not going to go beyond that but the literature right now does not add.

I'll, let data its a true medical need there is no prior controlled study and there's small retrospective study.

The average P F.

The order of four months or less and we think we could definitely be.

Further on that.

I can't recall there was another aspect to your question I believe yes.

Yes, yes, just if you can talk about enrollment timeline expectations and if you can being substantially enrolled in this study by the time of the <unk> and November .

Sure. So you know obviously the language.

Fully enrolled it does not actually Abbott definition.

So it's a matter.

We built two demonstrate that we have made meaningful progress. It's a rare disease and we will be able to demonstrate that we have made a very strong effort to recruit patients.

We are anticipating having potentially in excess of 100 sites globally and we are actively engaged in opening the site as we speak. So we think we will be able to you know.

Demonstrate by the climate.

We have made a tremendous.

<unk> progress to bringing a new drug with <unk>.

The benefit for patients, who currently have no drug who rely on.

Got it that's helpful. And then I'll just ask one other question on the Phase III study can you just talk more about the types of patients that you're anticipating enrolling into the study will you allow prior inherit two or other targeted therapies. Prior to you going out of the study for <unk>.

So this is the second line or more study and.

It will be essentially platinum base.

Core initially when they fail and plus or minus checkpoint.

Bidder, because there is depending on which country, you're talking about and what in your words practices differ.

And we will allow potential other with a proper washout period additional type of therapy, including experimental therapy, we really are.

We are trying here to address the medical team.

Got it all makes sense. Thanks for taking my questions and I'll hop back in the queue.

Pleasure. Thank you.

Our next question comes from Ed White with H C. Wainwright Your line is open.

Hey, Ed.

Hey, Tom Thanks for taking my question.

So maybe just switching to.

F <unk>.

The grass them.

We've talked many times in the past about the changing market and the G. CSF.

Just wondering now if there are any recent updates as far as.

And Eric penetration goes.

What do you think the hurdles will be to launch <unk>.

And when you you had mentioned that you had the leadership for the sales team in place when do you expect hiring the sales people.

Yes. So thanks for the question Ed Let me, let me take the first one regarding the market. We are still very enthusiastic to enter this market. It still sits today over a $2 billion market.

The Biosimilar penetration really is concentrated in two of them are.

Overall share of Biosimilars versus the innovator products sits at 40% today really with two lead drivers of that of that penetration.

We really believe today that having a novel agent that is not a biosimilar that we can bring customers payers and patients a solution that is not a restrictive to some of the inherent realities of the reimbursement dynamics as well as some of the patient offerings, we can be.

<unk> puts us in a position to be competitive I mean, ultimately we need to get the product approved which that is our that is our internal focus but when we think about this commercially we remain enthusiastic and we believe that the core leadership infrastructure that we've kept even post our restructuring.

<unk> carries.

A lot of a lot of the industry's best talent and we think that that is scalable should we need it but I think when you look at sales force sizing today in oncology, there's a lot of consolidation in the business as well as some post COVID-19 realities from access standpoint that we believe we could get done.

<unk>.

Our launch in a very lean and efficient manner, and we may have some nominal ads as needed, but our base commercial infrastructure will be our first line of defense as we engage both group purchasing organizations and large customers out of the gate to to get to get the product off the ground should it.

Get approved.

Thanks, Tom.

And just a question on the restructuring.

You had mentioned the.

Yeah.

I guess the charge back to omni.

<unk>.

Can you just review why that happened and then.

What the run rate is we think going forward are the cuts that you have made going to be more.

Predominantly seen in the back half of this year.

So let me take the $11.2 million noncash reversal first that as I mentioned in my prepared remarks, not only did we solidify and equity investment from harmony, but there were also changes to the licensing and the supply agreement and this is.

At least some of the fruits of those agreements.

Which enables us to free up near term cash flows from a from just the supply standpoint, so that that reversal I think is the first you're seeing of some of the fruits of the second half of that statement on the licensing and the supply agreement. So that is a that is a one time noncash reversal.

As it relates to run rate. So I think if you think about the first quarter.

It's usually our highest burn corner right. So if you look period over period. It was 34 and a half million dollars or so a year ago and today, we announced 30.3 million that has one time charges in it so the number is lower.

By $4 million to $5 million, but there are some other restructuring costs that are built in there. So the impact of the FTE change I think we will continue to show itself in subsequent quarters, but I also think as we get to our action dates and we start launching these products, you'll see a rise in the back half of the year.

And in the SG&A line, just to prepare and execute on those on those launches.

Okay.

Okay. Thanks, Tom and perhaps the last question just regarding the <unk> meeting.

Just wanted to get your thoughts on maybe.

Okay.

No.

What preparations are you doing what are you expecting the.

Advisory Committee to ask.

So here's how we're thinking about it where we're looking forward to the opportunity to bring this to an advisory committee and really share the full benefit that posey could bring in this this high area of unmet need. So if you think about even at the acceptance. We had made some statements that the FDA had.

Questions about the status of the confirmatory study as well as questions on the dose and today, we announced the political study, which has a dose of eight milligrams b I D, which is different than the 16 milligram QD registrational data so it's for us.

It's very it makes a lot of sense its very logical that the FDA could have additional questions on dosing and wanting to hear from.

Industry experts on how to how to bring that issue to resolution.

But that's that's us looking at where we've been and what the discussions have been with the agency.

Or two of the issues that certainly could be discussed at <unk>, but you know as the date gets closer we will gain more clarity from FDA and obviously be prepared to.

Represent the full NDA so our preparation efforts are.

The last half of your question there under there are actively underway.

We think we've got the right.

<unk> got the right team in place to prepare and are looking forward to the opportunity.

Okay, great. Thanks, Tom.

Thank you.

Next question comes from Mike <unk> with B Riley Securities. Your line is now open.

Hey, Mike.

Hi, good afternoon. Thanks for taking my question and congrats on that.

I guess on regulatory filings. So maybe just following up on the trial.

Ill comment though.

It makes the IV dose.

I was just curious between now and Oh dog.

How much we will problem with ongoing studies on what might be done.

The data you are able to put that into the battle on the.

The eight ball game.

How do you how do you will you can cycle.

You know a full approval in a bathroom doors.

I saw the approval with the <unk>.

But from the schedule.

My final question was on the pod.

First line approval.

Given you have some data there.

The idea though.

Yeah, So what does the path look like in frontline.

You've got in mind.

No.

Mike you've got a couple of questions in there Francois and I'll tag team. This one.

Let me start with your first question so the red the Registrational. The filing is based on cohort two as you mentioned is 16 milligrams, given Q D and the Pmiers at eight milligrams B I D. So both are 16 milligrams per day, we believe.

At 16 milligrams QD demonstrated a safe and effective dose for a patient population that needs a solution I think the subsequent data has given an indication that there could be a more optimal way to reduce some of the on target toxicities. So I think that that conundrum that you mentioned is likely.

A topic that F D. A we'd like to hear from industry experts at at the Odette panel.

But we believe that that 16, QD is safe and effective dose in obviously aligned with FDA on the confirmatory study two to go with the eight milligram B I D.

Francois.

Sure.

Yeah, so exactly.

The NDA is based on cohort 216 milligram and taken one per day add during the early phase of discussion with the agency.

We've indicated to them that we add gathering additional data in cohort five and that we had explored and it was an exploratory we had looked at different dose different frequency et cetera, and you know basically.

Asked them, if they would be interested in seeing the data or not and you know it's always Barry.

Because once you seek an indication you don't Wanna add additional data unless the SaaS by the FCA otherwise you modify them to do so.

The agency probably out of concern or interest for patient felt okay. Please send us the additional data and that's led to multiple discussion obviously is too.

You know is b I E, those saying better worse or was and and that's why I think Tom was.

Highlighting to you or to previously that you know that may be a topic for discussion throw that essentially you know we have provided.

<unk> provided them the data and during the 120 day update as well. We you know we provided all the update it's pretty clear that when you give don't thing would be I E. We can improve the safety profile, which is obviously of great interest to physicians and their patients and the FDA.

For that matter, so that's fundamentally what's going on here.

You know 16 milligram at summit that it's safe and effective.

On the basis of what we have submitted the NDA, but the agency may be interested in getting the opinion of various.

Academic and.

The industry et cetera at the ODM.

I think your other question Mike was related to cohort four we're obviously thrilled with the second cohort specific to her two exon 20 insertion mutations.

Demonstrating positive results.

Our strategy with that is to take this in a stepwise fashion for a number of reasons to initially solidify the first approval for the product, but our aspiration for the asset extends both beyond just the initial indication, but also beyond even the frontline in her.

To.

Evaluating rational combinations and others, but those discussions as it relates to cohort four specifically with the agency would occur after.

We get through here the September <unk> meeting and subsequently the Thanksgiving Paducah.

Thank you for the detailed.

Ratification of it and then actually the question I had was also on the ACI.

B.

Good luck.

Can you just.

Doctor the relevance of that and sort of commercially.

Commercialization setting in.

What are you trying to get out of that with the use of a biomarker like that.

Yeah. It would be helpful. How you see that.

But all it close to your commercialization.

I can take you off the top.

So the C T DNA for us.

Exploratory in nature.

So in other words, it does add no direct impact on the NDA review here, but this is this is data that you.

It's been accumulated in the scientific literature that you can use or possibly can you.

A biomarker that is easy on the patient, meaning it's the peripheral blood sample as opposed to invade the tissue diagnostics more biopsy.

And you can actually or potentially a monitor of Turkey and the first thing you have to establish it.

Do they correlate that the impact of tariff the modified T DNA level and that's kind of what we have shown at ACR and.

We will add data.

<unk> go and the issue becomes.

Can that be early.

You know biomarker prior to having imaging or con from it to or imaging can you predict the outcome of the patient in terms of positive outcome meeting respond.

In terms of if the patient gets an escape and progression can you predict and that could become a very important tool for us as we go further in development program, especially in combination therapy, you want it you want to move very fast because you are when you do.

And you have a lot of dosing question.

No. Other matters, you got resolved and any early biomarker that gives you indication of activity is always very helpful. So its explored you at this time, but nonetheless can become very important.

And I totally appreciate your I. Appreciate your question there I think it really speaks to how we're thinking about the asset. So the IP of this drug goes well into the 20th thirties, and our aspiration for development extends well beyond the initial indication and I think C. T. DNA is the direction that oncology is going.

And I think the the sooner we get we get a body of evidence in that regard I think it helps position the direction, we want to take this as we look forward.

I actually just maybe a follow up on.

That reminds me of the Doctor handouts presentation from last year.

Any progress.

To work with.

Can I just sneak mechanism.

Do I see kind of God.

Which can be good combination partner, then you could evaluate use of biomarker like this to offense.

We had responders.

Yeah. So there's been a there has been progress and when we have something formal to to announce we certainly will but.

<unk> combinations is something that grabs a lot of our interest in our internal research committee meetings as well as our business development outreach. So when we have something formal to announce we will certainly we'll certainly do that.

Yes.

Thanks for taking our questions.

Appreciate it thank you.

And I'm currently showing no further questions in the queue at this time I'd like to hand, the conference back over to Mr. Tom Riga for any closing remarks.

No. Thank you. Thank you for all of the participation on the call and for your interest in spectrum as in all of your questions. We will be participating at the H C. Wainwright Conference. Later this month, we'll also be attending Jefferies and JMP in New York and we look forward to speaking to many of you then and if theres any other questions in the meantime.

Always feel free to reach out thank.

Thank you everybody have a good night.

This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

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