Q2 2022 Aveo Pharmaceuticals Inc Earnings Call

August 4, 2022

[music].

Good afternoon, and welcome to the Aviall oncology second quarter 2022 financial results conference call.

At this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation.

If anyone wishes.

Requires any assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

I will now turn the call over to Mr. Hans.

With Oh lifestyle advisors. Please go ahead Sir.

Thank you operator, good afternoon, and thank you all for joining us on today's conference call to discuss <unk> second quarter 2022 financial results.

I'm joined today by Michael Bailey, Chief Executive Officer, Mike <unk>, Chief Commercial Officer, Eric Lee, Sarah Chief Financial Officer, and Jab Labelle, Chief operating 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 1095.

These forward looking statements are subject to important risks and uncertainties, including those that are detailed in today's press release and in the risk factor summary, and risk factors section of our most 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 required by law with that I will now.

Now turn the call over to <unk>, President and Chief Executive Officer, Michael Bayley Michael.

Thank you Hans and thank you to everyone for joining us on today's call.

I am pleased to report that this quarter, our commercial team continued to build on the success of the <unk> launch and steadily increased market adoption as we kicked off the second year of commercial sales for <unk>.

This positive momentum is reflected in both the number of prescriptions filled which increased to 18% in the second quarter compared with the first quarter of 2022, and the U S. <unk> net product revenue, which was $25 million for the second quarter, a 24% increase compared to the first quarter of 'twenty.

'twenty two.

While several factors helped drive our success, we believe the most important one is that for tinder is fulfilling a significant unmet need by providing an evidenced space effective and well tolerated treatment option for RCC patients, who have relapse or become refractory to two or more prior therapies.

This fact was further recognized on June 17th of 2022, when the National comprehensive cancer network or N cen elevated <unk> to category one status for <unk> is now the only treatment with category one in that setting of RCC patients who have received two or more prior therapy.

Please.

As background <unk> clinical practice guidelines are recognized standard for clinical policy in cancer care and are developed through review of evidence and recommendations from physicians and oncology researchers the.

The current end CCN RCC guidelines make treatment recommendations for first line or subsequent therapy options for RCC patients and are referenced in the development of all other clinical pathways and formularies.

Importantly category one has the highest category recommendation offered by the CCN and reflects positive clinical evidence and perception of the product in Miami expert MCC and panel members. In addition, the <unk>.

The launch was recently recognized by <unk> associates as an over performing launch in its analysis of U S emerging pharma and biotech companies with first time launches and finally aveo and our PR agency were recognized during the 28th annual Communicator Awards for excellence in our multi media and PR.

Our campaigns like fair RSO will discuss this external recognition in more depth in a moment.

With the strong sales trend demonstrated in the first two quarters of 2022 and the recent N. CCM status elevation, we continue to be confident in our $100 million to $110 million guidance for Protiviti U S. Net product revenue for fiscal year 2022.

Furthermore, with growing recognition of our commercial acumen and supported by the strong trajectory of positive to launch we believe that there is an opportunity to leverage our commercial capabilities by identifying additional assets to potentially add to our commercial stage portfolio. We recently enhanced this effort and look forward to.

Providing future updates on our progress.

Turning to our clinical trial activity, we continue to align our R&D investments with our overall corporate strategy of focusing on the U S market opportunity for our portfolio, while leveraging partnerships outside of North America to provide R&D funding for our development assets consistent.

Consistent with this strategy, we are working to expand the commercial opportunity of <unk> for the treatment of RCC and our focus our pipeline R&D spend exclusively on development initiatives that get our antibody assets to key partnership inflection points.

We believe this strategy will create partnering opportunities that can advance these assets with minimal investment from a day.

During the second quarter, we sold to further refine this focused strategy by streamlining our planned R&D spend for the second half of the year, which resulted in a $10 million to $20 million reduction in our full year 2022, R&D guidance, Eric will provide updated opex detail.

And guidance for the full year of 2022 in a moment.

With that as an update on our broader strategy, let me offer a quick overview for each program in our pipeline.

During the second quarter at the <unk> annual meeting in June of 2022, we presented two posters with new clinical data for devote isn't it.

One poster featured updated data from our long term and conditional overall survival analysis of Tivo three both of which show improvements in overall survival relative to Sorafenib, a nonselective veg F PKI.

Second poster at <unk> included data from a subgroup analysis of patients with non clear cell renal cell carcinoma, who had no prior VEGF targeted treatment.

This comes from our previously published Phase II randomized discontinuation trial. The analysis concluded that <unk> demonstrated activity and a favorable safety profile in patients with non clear cell RCC on the clinical front the phase III <unk> trial, which is evaluating the combination of <unk>.

<unk> and Opdivo versus <unk> monotherapy for the treatment of RCC patients progressing on a prior I O therapy continues to enroll patients we expect to be fully enrolled in the second quarter of 2023.

If successful the data from this trial has the potential to support an FDA approval of <unk> in combination with notable mab or opdivo in relapsed refractory RCC and this would expand the market opportunity for <unk> into the larger second line relapsed refractory RCC setting.

And the deductive trial evaluating <unk> in HCC earlier this year, we announced encouraging data from the first line cohort given the strength of this data and consistent with our focus R&D spend initiatives, we and Astrazeneca have decided to focus our evaluation on the first line pop.

<unk> and closed down further enrollment for the second line cohort of the study which to date has enrolled five of 20 planned patients.

<unk> is committed to providing to those in a drug supplies should astrazeneca pursue a registrational study in the first line, but aveo does not intend to fund further development for <unk> in HCC or liver cancer.

Turning to <unk>. We believe this asset is well positioned to potentially address a significant unmet need that exists for patients with HPV negative recurrent or metastatic head and neck cancer.

Ah patient population as the prognosis is very challenging.

After being granted fast track designation by the FDA in the fourth quarter of 2021, we have announced two clinical trial collaboration and supply agreements one with Merck <unk> Darmstadt, Germany in January and one with Eli Lilly that we announced this quarter.

These collaborations not only offset clinical trial caused by providing <unk> marketed as <unk> for the potential phase III study, but we believe they also serve as validation of the strength of the data supporting the combination of <unk> and Cetuximab.

Also of note. We recently completed full scale drug substance manufacturing for FICO twos map, which we believe strongly positions <unk> as a potential phase III ready partnering opportunity. We plan on continuing to discuss trial designs with the FDA and to continue to seek a strategic partner.

To help initiate and fund a potential registration trial in the first half of 2023.

For <unk>, we remain on track to initiate a phase <unk> clinical trial in <unk> expressing cancer patients during the second half of this year, where we hope to generate additional data supporting the dosing safety and the anti <unk> activity of <unk> 380 in cancer patients.

We believe this phase one b data in hand, we will be in a strong position to find a partner for this potential blockbuster asset.

All in all we are pleased with our continued progress in particular, we are pleased with the success to date with the <unk> launch and the external recognition rehab received which highlights the strength of our commercial capabilities and we believe creates the potential to leverage our commercial organization as a strategic asset in the future.

To attract additional potential commercial opportunities.

I would like to turn the call over to Mike <unk> to walk us through more detailed commercial update including second quarter 2022 metrics Mike.

Thank you Michael as.

As Michael mentioned, we are pleased with the continued success of <unk> in the second quarter of 2022, our commercial team continues to raise awareness of <unk> as the first and only treatment option with phase III data for third line kidney cancer patients.

As some of you may have already seen the success of our commercial launch of <unk> was included in our market analysis conducted by global management consulting and technology firms Es Associates, which was published in June .

In this report <unk> associates analyzed first launches by emerging pharmaceutical and biotech companies over the last three years ranking the launches has underperformed met expectations or over performed.

<unk> reported that <unk> launch was one of just three launches in 2021 that over performed compared to prelaunch expectations. While the majority of the 2014 products launched in 2021 and included in the analysis underperformed.

We believe that this recognition not only validates the success we've had to date, but also speaks to the quality of our commercial team and their ability to execute even in the challenging COVID-19 access environment.

Our commercial capabilities. We're also commended by the Distinguished Excellence Award we received at the 28th annual Communicator Awards competition sponsored by Academy of Interactive and visual Arts.

And our agency JFK Communications received this award for our multimedia PR campaign around the FDA approval and commercial launch of <unk>.

The Communicator awards as a leading international Creative Awards program honoring creative excellence and advertising corporate communications and public relations, which is an acknowledgment of the multichannel marketing approach we've taken to successfully launch <unk> in the Covid environment.

Let me now turn to the sales results for the second quarter to start this was the fifth consecutive quarter of growth for <unk> with U S. Net product revenue of $25 million, which reflects a 24% increase in revenues from the first quarter and a 271% increase over the second quarter of last year.

<unk>.

Further during the second quarter, we recorded a total of 1157 commercial prescriptions, reflecting an 18% increase in prescriptions compared to the first quarter and a 309% increase over Q2 last year.

As we look ahead there are several opportunities that we believe will help drive continued growth.

For example in June we announced that the National comprehensive cancer network, where end CCN had elevated <unk> and the latest kidney cancer treatment guidelines to category one status as a subsequent therapy for kidney cancer patients, who have received two or more prior therapies.

This is the highest category recommendation offered by the end CCN, which is based on strong clinical evidence and perception of the product among the NCC and panel members.

We believe that this elevated rating can benefit our team's efforts in getting physicians to adopt <unk>. As these guidelines are recognized and followed by both academic and community oncologists when selecting appropriate therapeutic options for their kidney cancer patients.

For example, our most recent market research conducted with Cardinal health showed that 80% of the respondents said the category one for Tim to upgrade would positively impact their prescribing decisions.

In addition, we've seen a significant increase in our field team's ability to secure in person meetings as COVID-19 restrictions are lifted.

We believe this increase customer access will help us continue to broaden our base of prescribers, particularly in the community setting where the majority of kidney cancer treatment occurs.

We're also seeing <unk> to improve the average treatment duration in the third and fourth line kidney cancer setting versus the reported benchmarks for other therapy options.

The <unk> real world data from the patients initiating treatment in 2021, which provides a minimum of six months of follow up is currently four seven months and is expected to increase is 21% of patients are still ongoing with active treatment.

The benchmark for treatment duration in this setting is three eight months. So we're already seeing an improvement in this early snapshot. We are very pleased to see an impact on duration and expect the averages to further improve with time.

In closing we continue to be pleased with the momentum that our commercial team has generated since launch and the encouraging reception of activity that we've heard from oncologists patients and the broader medical community.

We believe there continues to be tremendous potential for <unk> to under the current label and that our commercial capabilities and infrastructure are well positioned to support a potential second line for tiv to label expansion, if approved and possible future launches from our pipeline.

I look forward to updating you on our continued progress over the coming quarters I will now turn the call over to Eric with Sarah to discuss second quarter 2022 financial results Eric.

Thank you Mike total net revenue for the second quarter of 2022 was $25 3 million driven.

Driven by U S net product revenue of $25 million selling general and administrative expenses for the second quarter of 2022 was $17 1 million a level consistent with the prior four quarters and as compared with $14 9 million in the second quarter of 2021.

Research and development expense for the second quarter of 2022 was $12 3 million compared with $6 9 million in the second quarter of 2021.

While we're not yet in the position of paying income taxes. Many have asked about the status of our Nols.

During the second quarter, our company in conjunction with our outside advisors performed as section 382 analysis of our Nols based.

Based on that analysis, we believe that most of the $613 million of Nols could potentially be used to offset taxable income in the coming years.

Looking to our full year guidance for 2022, we continue to expect our commercial spending levels to remain relatively constant during the year.

Specifically, we continue to expect commercial spend for 2022 to increase slightly over last year to approximately $50 million, reflecting the full year expenses of the commercial launch as compared to only three quarters in 2021.

Gross margins are expected to remain in the mid to high 80 percentile in 2022.

In addition, we expect general and administrative expense to remain flat at approximately $20 million for the year in.

In terms of our research and development expense, we now expect it to be $50 million for 2022 versus the prior range of $60 million to $70 million in 2022.

As Michael Bayley mentioned earlier, we have reconfirmed our revenue guidance for <unk> U S net revenue of $100 million to $110 million.

We ended the second quarter of 2022 with cash cash equivalents and marketable equity securities of $77 $2 million compared with 79 million at March 31, 2022, and <unk> $87 3 million at December 31, 2021.

We believe our existing cash cash equivalence and marketable securities as of June 32022, along with expected U S. Net product revenues from sales of <unk> will enable us to maintain our current operations for a period of at least 12 months. Following the filing of Form 10-Q for the quarter ended June 32022.

A full overview of the results for the second quarter of 2022 is available on our quarterly report on Form 10-Q, I will now turn the call back over to Michael Bayley Michael.

Eric to close we are excited by the sustained growth of <unk> commercial sales and remain confident in our ability to meet the revenue guidance of $100 million to $110 million for the full year 2022.

As we look at the longer term with the category one endorsement of CCN and as treating oncologists continue to gain experience with the benefits of <unk>, we see a direct path for <unk> to be established as the standard of care for third line RCC patients I am very proud of the work our entire team has done.

To get us to this point and look forward to reporting future successes opt.

Operator.

Yeah.

Thank you.

Ladies and gentlemen at this time, we will be conducting a question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Keith.

One moment, please while we poll for questions.

Our first question comes from the line of Stephen Willey from Stifel. Please go ahead.

Yes. Good afternoon. Thanks for taking the questions I guess, maybe just a couple of commercial.

Commercial loans.

He provided the data point with respect to the proportion of prescribers that.

I guess be more willing to use the product.

As a function of the.

CCN upgrade, but just kind of curious as you look at your data internally.

I guess over the course of the last near two months since that upgrade occurred is there anything that youre seeing in the trajectory of scrip trends that would suggest.

That survey data is kind of playing out right now in the real world.

And then I.

I guess second to that if you also just have the gross to net for <unk> that would be helpful.

Yeah, Hey, Thanks, Steve for the question I'm going to turn this over to Mike <unk>.

Keep them ourselves.

Hey, Stephen Thanks for the question. So the we're really excited by the upgrade from the CCN and it puts us in a really strong position and as we mentioned in the in the call. We did a recent market research and 80% of surveyed kidney cancer treating physicians said this upgrade will have a positive impact on their pre.

Scribing now that said, we just got this upgrade in the back half of June and it takes a little while to get that into a promotional materials. So we're not reporting anything for Q3 results at this point, but we think it will have a significant impact for us going forward, yes, one of the specific details NCC and does require to a review of.

Any materials referencing there.

Organization.

Okay, and then just gross to net for the quarter you have that available.

The gross to net was $17 eight for the quarter.

Got it.

And then maybe just.

A bigger picture question.

Made the comment.

Perhaps.

Looking to leverage your commercial organization is a strategic asset in the future.

I guess just kind of curious.

Not looking for specific time of your guidance, obviously, but.

When do you think you might be in a position.

Maybe start to look at other commercial opportunities that you can funnel through the infrastructure. That's already built out do you need to get to sustainable profitability do you need to have another year under your belt is it just a function of.

But the opportunism.

I think any.

Any commentary there would be helpful.

Yes, Steve This is Michael I think the simple answer is all of the above.

As we mentioned in the call.

We're ramping this up we've got <unk> built a business development function in the organization.

So we are actively looking for those kind of assets.

It is hard to do.

Put a timeline on that the other aspect of it as a financial one.

I want to just turn that over to Eric talk about that.

Steve Great question obviously.

Our most important asset is our commercial organization in the.

The ability to bring in another product after a year year and a half on the market, where we feel very confident.

And what we have is important but in terms of financing it.

How would we do it obviously theres three ways. One is cash from operations. Yeah. There is that and the other is equity and most important thing is to make sure that it's an accretive transaction.

Second to that is we have no interest in selling equity at these levels. So.

We are on the hunt.

Open for business and I'll, just add one more color commentary on it.

General rule of thumb with regard to launches you want to give 100% focused to those and we are currently 100% focused on launching <unk>.

You get to that 18 month point and beyond then that's when really the capacity opens up and we think we can bring on additional strategic assets. So that would probably be the earliest.

And then can you just say whether or not you're also looking at.

Opportunities kind of outside of the of the GFS space, who are you still.

Yes in that area.

So we kind of think about this in a target. So <unk> would be the center of the target moving further out solid tumors would would be acceptable potential targets moving out outside of that would be <unk> and then on the outside of our oncology target zone would probably be supportive care.

Sure.

Directly associated with cancer treatment. So there is a broad opportunity here and I think one of the other things that makes this concentric circles work is that as Mike has said, we're basically covering right.

Right now consensus for the GE use space, 70% of the prescribing is in the community. So we've got a very broad footprint in the community and as with any other successful oncology organization will have a 100% coverage over the major institutions. It will be a matter. If you went out to the heme space.

Looking at a different door not go into a different institution.

Okay. That's very helpful. Thanks for taking my questions and congrats.

Thanks, Steve.

Thank you.

Next question comes from the line of choline coffee from Baird. Please go ahead.

Great. Good afternoon, and thank you for your questions.

Congrats on the quarter I'm curious if you saw any persist the impact from Covid bleeding into Q2, and if we should keep in mind any additional COVID-19 impact in the second half of this year.

Hey, Kelly and thanks for the question I'll again turn that over to Mike sure. Thanks, Colleen. So the Covid situation is always evolving we are really pleased that probably starting in the middle of the first quarter and then even more significantly in the second quarter, we're seeing a big increase in our ability to access customers in <unk>.

<unk>.

And we're very optimistic and hopeful that trend will continue that's all signs right now, but again, we're really pleased with the organization and the infrastructure. We've built we've proven we can be effective when we're under the tightest of Covid restrictions and can impact our customers who are our multichannel efforts. So.

It opens up the better for us and again, we're really optimistic that trend will continue.

Yeah, and I'll, just add one more thing Colin.

We're very proud of this external recognition.

Between the <unk>.

<unk> associates as well as the Communicator award because it really shows our adaptability and our ability to step up to the challenges and overcome them. So we were always.

Thinking about what the dynamic nature of the market is and what we need to do to satisfy so we will continue to do that.

Great makes sense, thank you and in the past you've spoken about some of the metrics around patients coming back who would've maybe foregone treatment before approvals do you have any sense of what that number is now and how much higher that penetration could go and then any any sort of efforts you are.

They continue to increase that number.

Yeah, again, I'll turn that over to Mike.

Sure. So we looked at externally reported benchmarks for this that report the what percent of eligible third and fourth line patients go on to active treatment. So just as a reminder, prior to our approval that number was at 50% it was updated.

Almost a year into our launch 258% and so it is already improving and then to your question about how far could it go we look at the benchmarks for the second line setting, which is an $80 to 85% kind of range and we think with really viable tolerable treatments with phase III data in cat one support from the CCN.

<unk>.

S. Aspiration goal is to get those treatment rates similar to the second line setting.

Great. Thank you.

Thanks, Kevin.

Thank you.

Ladies and gentlemen, if you would like to ask a question. Please press star one.

Our next question is from the line of <unk>.

From H C. Wainwright. Please go ahead.

Hey, good afternoon guys.

Waiting for a kidney thanks for taking my question.

I'm just curious regarding your third party market Research survey.

For those 20% respond.

You didn't show positive impact prescription decision.

Did you guys.

Digging out whats the reason they give a hesitation to quit.

Okay with that.

Yes, thanks for the question I'll turn that over to Mike.

It's a great question. So what was done as we showed the update to treating physicians and we asked them to rate the impact. So the the 80% said it would be a significant or moderate impact. The other 20% was broken out of low impact so increase but low increase and then no impact was.

8% so.

The vast majority you said, it's going to have an impact and others, maybe they have already adopted it and are already using it or.

He never went 100% of the time, but this is really impressive in a market research setting to see this kind of response.

Oh, thanks for that Michael and.

Regarding the pipeline.

I just wonder is there any.

Two.

The data from the deductible.

Cohort b.

Yeah.

<unk> is there any plan on presenting data at the conference or you could release data by yourself. Thank you.

Yes, Thanks are there I'll try to tackle that.

Remember there is only five patients were enrolled in it. So it's basically an anecdote and this is purely a strategic decision in order to conserve resources.

For the organization.

The second line because of the first time cohort data was so encouraging and our discussions with Astrazeneca. They basically said this would be something that will evaluate I think what we agreed collectively was given the strength of the first line data. There is really no need to continue to waive patient resources as well as our own.

<unk> resources and.

And continuing that study.

Jeb I don't know if you want to add anything else.

I think that very very well covers it.

Oh. Thank you thank you not reporting it.

Suspect, we will probably reported at some upcoming scientific meeting is possibly.

In concert with some additional analysis long term follow up that we would have for the first line cohort.

Great. Thanks, Thanks for that and then kind of.

One last thing.

100% certainty there was no.

Adverse effects that we saw that were unexpected in that population. This was truly an purely a business decision.

Got you got you thanks for that additional color and congratulations on the strong quarter. Okay. Thanks.

Thanks, Adam.

Ladies and gentlemen, we have reached the end of the question and answer session.

And now I would like to turn the call back to the management 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 wish you all a great second half of the summer. Thank you.

Thank you the conference of Aviall oncology has now concluded. Thank you for your participation you may now disconnect your lines.

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Good afternoon, and welcome to the <unk> oncology second quarter 2022 financial results Conference call.

At this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation.

If anyone wishes.

All require any assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

I will now turn the call over to Mr. Hans <unk> of <unk>.

<unk> advisors. Please go ahead Sir.

Thank you operator, good afternoon, and thank you all for joining us on today's conference call to discuss <unk> second quarter 2022 financial results I'm joined today by Michael Bailey, Chief Executive Officer, Mike <unk>, Chief Commercial Officer, Eric Lee, Sarah Chief Financial Officer, and Jab Labelle.

Chief operating 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 1095.

These forward looking statements are subject to important risks and uncertainties, including those that are detailed in today's press release and in the risk factors summary, and risk factors section of our most 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.

Now turn the call over to <unk>, President and Chief Executive Officer, Michael Bayley Michael.

Michael.

Thank you Hans and thank you to everyone for joining us on today's call.

This positive momentum is reflected in both the number of prescriptions filled which increased to 18% in the second quarter compared with the first quarter of 2022, and the U S. <unk> net product revenue, which was $25 million for the second quarter at 24% increase compared to the first quarter of 2022.

<unk>.

While several factors helped drive our success, we believe the most important one is that <unk> is fulfilling a significant unmet need by providing an evidenced space effective and well tolerated treatment option for RCC patients, who have relapse or become refractory to two or more prior therapies.

This fact was further recognized on June 17th of 2022, when the National comprehensive cancer network or end CCN elevated <unk> to category one status for <unk>.

It is now the only treatment with category one in that setting of RCC patients, who have received two or more prior therapies.

As background the NCC in clinical practice guidelines are recognized standard for clinical policy in cancer care and are developed through a review of evidence and recommendations from physicians and oncology researchers the.

The launch was recently recognized by ZFS associates as an over performing launch in its analysis of U S emerging pharma and biotech companies with first time launches and finally aveo and our PR agency were recognized during the 28th annual Communicator Awards for excellence in our multi media and PR.

Our campaigns, Mike carrier RSO will discuss this external recognition in more depth in a moment.

With the strong sales trend demonstrated in the first two quarters of 2022 and the recent NCC and status elevation, we continue to be confident in our $100 million to $110 million guidance for Protiviti U S. Net product revenue for fiscal year 2022.

Providing future updates on our progress.

We believe this strategy will create partnering opportunities that can advance these assets with minimal investment from <unk>.

<unk> for the full year 2022 in a moment.

With that as an update on our broader strategy, let me offer a quick overview for each program in our pipeline.

During the second quarter at the <unk> annual meeting in June of 2022, we presented two posters with new clinical data for <unk>.

The second poster at <unk> included data from a subgroup analysis of patients with non clear cell renal cell carcinoma, who had no prior VEGF targeted treatment.

On the clinical front, the phase III <unk> trial, which is evaluating the combination of <unk> and opdivo versus <unk> monotherapy for the treatment of RCC patients progressing on a prior I O therapy continues to enroll patients we expect to be fully enrolled in the <unk>.

Quarter of 2023.

If successful the data from this trial has the potential to support an FDA approval of <unk> in combination with <unk> or opdivo in relapsed refractory RCC and this would expand the market opportunity for <unk> into the larger second line relapsed refractory RCC setting.

And Astrazeneca have decided to focus our evaluation on the first line population and closed down further enrollment for the second line cohort of the study which to date has enrolled five of 20 planned patients.

Aveo is committed to providing to those that have drug supply should astrazeneca pursue a registrational study in the first line, but aveo does not intend to fund further development for <unk> in HCC or liver cancer.

Turning to <unk>. We believe this asset is well positioned to potentially address a significant unmet need that exists for patients with HPV negative recurrent or metastatic head and neck cancer.

Ah patient population as the prognosis is very challenging.

These collaborations not only offset clinical trial caused by providing cetuximab marketed as <unk> for the potential phase III study, but we believe they also serve as validation of the strength of the data supporting the combination of <unk> and Cetuximab.

Also of note. We recently completed full scale drug substance manufacturing from <unk>, which we believe strongly positions <unk> as a potential phase III ready partnering opportunity. We plan on continuing to discuss trial designs with the FDA and to continue to seek a strategic partner.

To help initiate and fund a potential registration trial in the first half of 2023.

For every $3 80, we remain on track to initiate a phase <unk> clinical trial in <unk> expressing cancer patients during the second half of this year, where we hope to generate additional data supporting the dosing safety and anti <unk> activity of <unk> 380 in cancer patients we believe.

This phase one b data in hand, we will be in a strong position to find a partner for this potential blockbuster asset.

To attract additional potential commercial opportunities.

I would like to turn the call over to Mike <unk> to walk us through more detailed commercial uptake, including second quarter 2022 metrics Mike.

Thank you Michael as.

In this report <unk> associates analyzed first launches by emerging pharmaceutical and biotech companies over the last three years ranking the launches as underperformed met expectations or over performed.

<unk> reported that <unk> launch was one of just three launches in 2021 that over performed compared to prelaunch expectations. While the majority of the 14 products launched in 2021 and included in the analysis underperformed.

Our agency JFK Communications received this award for our multimedia PR campaign around the FDA approval and commercial launch of <unk>. The Communicator Awards as a leading international Creative Awards program honoring creative excellence and advertising corporate communications and public relations, which is in.

Knowledge of the multichannel marketing approach, we've taken to successfully launch <unk> in the Covid environment.

As we look ahead there are several opportunities that we believe will help drive continued growth for.

This is the highest category recommendation offered by the end CCN, which is based on strong clinical evidence and perception of the product among the NCC and panel members.

In addition, we've seen a significant increase in our field team's ability to secure in person meetings as COVID-19 restrictions are lifted.

We believe this increased customer access will help us continue to broaden our base of prescribers, particularly in the community setting where the majority of kidney cancer treatment occurs.

We're also seeing for <unk> to improve the average treatment duration in the third and fourth line kidney cancer setting versus the reported benchmark for other therapy options.

The <unk> real world data from the patients initiating treatment in 2021, which provides a minimum of six months of follow up is currently four seven months and is expected to increase as 21% of patients are still ongoing with active treatment.

We believe there continues to be tremendous potential for <unk> to under the current label and that our commercial capabilities and infrastructure are well positioned to support a potential second line for active to label expansion, if approved and possible future launches from our pipeline.

I look forward to updating you on our continued progress over the coming quarters I will now turn the call over to Eric with Sarah to discuss second quarter 2022 financial results Eric.

Thank you Mike total net revenue for the second quarter of 2022 was $25 3 million driven by U S net product revenue of $25 million.

Selling general and administrative expenses for the second quarter of 2022 was $17 1 million a level consistent with the prior four quarters and as compared with $14 9 million in the second quarter of 2021.

Research and development expense for the second quarter of 2022 was $12 3 million compared with $6 9 million in the second quarter of 2021.

We're not yet in a position of paying income taxes. Many have asked about the status of our Nols during.

During the second quarter, our company in conjunction with our outside advisors performed a section 382 analysis of our Nols base.

Based on that analysis, we believe that most of the $613 million of Nols could potentially be used to offset taxable income in the coming years.

Looking to our full year guidance for 2022, we continue to expect our commercial spending levels to remain relatively constant during the year.

Gross margins are expected to remain in the mid to high 80 percentile in 2022.

In addition, we expect general and administrative expense to remain flat at approximately $20 million for the year in.

In terms of our research and development expense, we now expect it to be $50 million for 2022 versus the prior range of $60 million to $70 million in 2022.

As Michael Bayley mentioned earlier, we have reconfirmed our revenue guidance for <unk> U S net revenue of $100 million to $110 million.

We ended the second quarter of 2022 with cash cash equivalents and marketable equity securities of $77 2 million compared with 79 million at March 31, 2022, and $87 3 million at December 31 2021.

A full overview of the results for the second quarter 2022 is available on our quarterly report on Form 10-Q, I will now turn the call back over to Michael Bayley Michael.

Eric to close we are excited by the sustained growth of <unk> commercial sales and remain confident in our ability to meet the revenue guidance of $100 million to $110 million for the full year 2022.

As we look at the longer term with the category one endorsement of CCN and Thats treating oncologists continue to gain experience with the benefits of <unk>, we see a direct path for <unk> to be established as the standard of care for third line RCC patients I am very proud of the work our entire team has done.

To get us to this point and look forward to reporting future successes.

Operator.

Thank you.

Ladies and gentlemen at this time, we will be conducting a question and answer session.

I would like to ask a question. Please press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Keith.

One moment, please while we poll for questions.

Our first question comes from the line of Stephen Willey from Stifel. Please go ahead.

Yes. Good afternoon. Thanks for taking the questions I guess, maybe just a couple of.

Commercial ones.

He provided the data point with respect to the proportion of prescribers.

I guess be more willing to use the product.

As a function of the.

And CCN upgrade, but just kind of curious as you look at your data internally.

I guess over the course of the last near two months since that upgrade occurred is there anything that youre seeing in the trajectory of scrip trends that would suggest.

That survey data is kind of playing out right now in the real world.

And then I.

I guess second to that if you also just have the.

Gross to net for <unk> that would be helpful.

Yes, Hey, thanks, Steve for the question I'm going to turn this over to Mike <unk>, Our Chief commercial officer.

Hey, Stephen Thanks for the question so the.

We're really excited by the upgrade from the CCN and it puts us in a really strong position and as we mentioned in the in the call. We did a recent market research and 80% of surveyed kidney cancer treating physician said this upgrade will have a positive impact on their prescribing.

That said, we just got this upgrade in the back half of June and it takes a little while to get that into a promotional materials. So we're not reporting anything for Q3 results at this point, but we think it will have a significant impact for us going forward, yes, one of the specific details NCC and does require to a review of any materials referenced.

They're there.

Organization.

Okay, and then just gross to net for the quarter. If you have that available.

The gross to net was $17 eight for the quarter.

Got it.

And then maybe just.

A bigger picture question.

The comment of.

Perhaps.

Looking to leverage your commercial organization is a strategic asset in the future.

I guess just kind of curious.

Not looking for specific timing guidance, obviously, but.

When do you think you might be in it.

Position.

Maybe start to look at other commercial opportunities that you can funnel through the infrastructure that you've already built out do you need to get to sustainable profitability do you need to have another year under your belt is it just a function.

Of opportunism.

I think any.

Any commentary there would be helpful. Yes.

Yes, Steve This is Michael I think the simple answer is all of the above.

As we mentioned in the call.

We're ramping this up we've got <unk> built a business development function in the organization.

So we are actively looking for those kind of assets.

It is hard to do.

Put a timeline on that the other aspect of it as a financial one.

I Wonder just turn that over to Eric to talk about that.

Steve Great question obviously.

Our most important asset is our commercial organization in the.

The ability to bring in another product after a year year and a half on the market, where we feel very confident.

And what we have is important but in terms of financing it.

How would we do it obviously theres three ways. One is cash from operations. Yeah. There is that and the other is equity and most important thing is to make sure that it's an accretive transaction.

Second to that is we have no interest in selling equity at these levels. So.

We are on the hunt.

Open for business and I'll, just add one more color commentary on it.

General rule of thumb with regard to launches you want to give 100% focus at <unk> and we are currently 100% focus on launching <unk>.

You get to that 18 month point and beyond then that's when really the capacity opens up and we think we can bring on additional strategic assets. So that would probably be the earliest.

And then can you just say whether or not you are.

Also looking at.

Opportunities kind of outside of the of the GE <unk> space, who are you still.

Yes in that area.

Sure.

Right now consensus for the <unk> space, 70% of the prescribing is in the community. So we've got a very broad footprint in the community and as with any other successful oncology organization, we will have a 100% coverage over the major institutions. It will be a matter of you went out to the heme space.

Knocking on a different door not going too.

Current institution.

Okay. That's very helpful. Thanks for taking my questions and congrats.

Thanks, Steve.

Thank you.

Our next question comes from the line of choline coffee from Baird. Please go ahead.

Great. Good afternoon, and thank you for your questions.

Congrats on the quarter I'm curious if you saw any persisting impact from Covid bleeding into <unk> and if we should keep in mind any additional COVID-19 impact in the second half of this year.

Hey, Kelly and thanks for the question I'll again turn that over to Mike sure. Thanks, Colin So the Covid situation is always evolving we are really pleased that probably starting in the middle of the first quarter and then even more significantly in the second quarter, we're seeing a big increase in our ability to access customers in.

Person and we're very optimistic and hopeful that trend will continue that's all signs right now, but again, we're really pleased with the organization and the infrastructure. We've built we've proven we can be effective when we are under the tightest of COVID-19 restrictions and can impact our customers who are our multichannel efforts. So the more it opens up the better for us and again.

We're really optimistic that trend will continue.

Yeah, and I'll, just add one more thing Colin.

We're very proud of this external recognition.

Between the <unk> associates as well as the Communicator award because it really shows our adaptability and our ability to step up to the challenges and overcome them. So we were always.

Thinking about what the dynamic nature of the market is and what we need to do to satisfy so we'll continue to do that.

Great makes sense, thank you and in the past you've spoken about some of the metrics around patients coming back who would have maybe foregone treatment.

Before approvals do you have any sense.

What the number is now and how much higher that penetration could go and then any any sort of efforts, you're making to continue to increase that number.

Yeah, again, I'll turn that over to Mike.

Our us aspiration goal is to get those treatment rate similar to the second line setting.

Great. Thank you.

Thanks, Kevin.

Thank you.

Ladies and gentlemen, if you would like to ask a question. Please press star one.

Our next question is from the line of.

From H C. Wainwright. Please go ahead.

Hey, good afternoon guys.

Waiting for Archie Thanks for taking my question.

Just curious regarding your third party market Research survey.

For those 20% respond.

You didn't show positive impact in the prescription decision.

Did you guys.

Further digging out whats the reason they give a hesitation to quit.

Okay with that.

Yes, thanks for the question I'll turn that over to Mike.

At 8% so.

The vast majority you said, it's going to have an impact and others, maybe they have already adopted it and are already using it or.

He never went 100% of the time, but this is really impressive in a market research setting to see this kind of response.

Oh, thanks for that Michael.

Regarding the pipeline.

I just wonder is there any are you.

Train two.

The data from the deductive.

Cohort b.

<unk> is there any plan on presenting data at the conference or are you going to release the data by yourself. Thank you.

Yes, Thanks are there I'll try to tackle that.

Remember there is only five patients were enrolled in it. So it's basically an anecdote and this is purely a strategic decision in order to conserve resources.

For the organization.

The second line, but because of the first line cohort data was so encouraging and our discussions with Astrazeneca. They basically said this would be something that will evaluate I think what we agreed collectively was given the strength of the first line data. There is really no need to continue to waive patient resources as well as our own.

<unk> resources and.

And continuing that steady Jeb.

<unk> I don't know if you want to add anything else I think that I think that.

Very very well covered there.

Thank you. Thank you are reporting it.

Suspect, we will probably reported at some upcoming scientific meeting is possibly in.

Concert with some additional analysis long term follow up that we would have for the first line cohort.

Great. Thanks, Thanks for that and then.

One last thing to just 100% certainty there was no <unk>.

Adverse effects that we saw that were unexpected in that population. This was truly purely a business decision.

Got you got you thanks for the additional color and congratulations on the strong quarter.

Thanks, Adam.

Ladies and gentlemen, we have reached the end of the question and answer session.

And now I would like to turn the call back to the management 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 we wish you all a great second half of the summer. Thank you.

Thank you.

Conference of Aviall oncology has now concluded. Thank you for your participation you may now disconnect your lines.

Q2 2022 Aveo Pharmaceuticals Inc Earnings Call

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