Q2 2022 CTI Biopharma Corp Earnings Call

Today we are delighted to report 12.3 million in net product revenue for the second quarter, driven by significant growth in Bonjour awareness among healthcare providers in both the community and academic settings, and an oval share of voice that exceeds that of our competitors.

CTI continues to produce new data from our proclitinib program, reinforcing Von Joe's clinical value as a safe, simple and effective therapy in cytopenic MF.

At ASCO and EHA earlier this year, our scientific presentations highlighted Von Joe's place as a product that is differentiated from older JAK inhibitors.

Our risk-adjusted analysis showed that the safety profile for Pecritinib, 200 milligrams twice a day, was comparable to best available therapy, including ruxolitinib, and that Pecritinib, 200 milligrams twice a day, could be given as a full dose for patients with myelofibrosis, including those with severe thrombocytopenia. Additionally, full dose Pecritinib achieved high response rates and a similar manageable safety profile compared to the lower dose ruxolitinib.

patients with mild fibrosis who have moderate or severe thrombocytopenia.

Looking ahead, starting this fall, we expect to share new data international medical meetings that demonstrate procritinib activity as a potent ACVR1-ALK2 inhibitor, as well as data on procritinib's important benefit, anemia benefit, in myelofibrosis.

Inhibition of ACVR1, which mediates hepcidin production, has been postulated as a mechanism for the improvement of anemia in MS.

Finally, I'm pleased to announce that we have filed a patent term extension application for our U.S. composition of matter pattern 8153632 with the requested five years of extension, which if granted would extend the expiration of this orange book listed patent from January 29 to January 2034.

I'll now turn the call over to our Chief Commercial Officer, Jim Fong, to highlight our Vonjo launch achievements. Jim. Make our launch morninglaftiBoBoom

Thank you, Adam. As Adam just discussed, we are delighted to announce 12.3 million in net product revenue for Vonjo this quarter. This impressive start to our launch is a direct reflection for our commercial team's execution as well as the demand that exists among NF patients and their healthcare providers, that is HCPs, who are in need of a safe, simple, and effective treatment option that is Vonjo.

As previously mentioned, our experienced field team has been focusing on delivering against our three core Vonjil launch objectives. One, build Vonjil awareness among myelohybrosis ACPs. Two, drive adoption and utilization within our top accounts and high potential prescribers. And three, ensure optimal patient access via securing effective payer coverage as well as our patient support services called CTI access.

Regarding awareness, we are pleased that our promotional efforts and activities are resulting in significant growth in BONJO awareness among our target HCP audiences in both the community and academic settings with higher than expected BONJO product awareness after just a few months following launch.

Our sales results also indicate we are making significant headway with HCP adoption and utilization. We believe that this stems from our team's commitment to comprehensively educating the HCPs through their sales call activities, in-service meetings, and implementation of numerous peer-to-peer educational initiatives that help identify appropriate Bon Jovi patients.

Our peer-to-peer educational programs have been very well received, as evidenced by the high number of attendees, the vast majority of which are in person, illustrating that HCPs are very interested in myelofibrosis and the value proposition that Bonjour offers.

In addition, I am pleased to report that recent market research conducted at the end of May shows that Vonjo's promotional share of voice has already surpassed that of both ruxolitinib and fadratinib among high MF treaters.

Our commercial execution is resulting in continued strong growth in new prescriptions and new subscribers in both academic and community settings.

We are seeing early signals of strong refills occurring and few early discontinuations due to adverse events.

We believe the overall adoption is indicative of the unmet need in the marketplace, including dissatisfaction with low-dose ruxolipinib, and the potential to optimally treat patients with a full dose of Bonjour safely and effectively.

Our research indicates ATPs have prescribed Vonjo as a first and second line therapy in molliparbrosis patients.

A catalyst for this utilization can be attributed to the latest NPN National Comprehensive Cancer Network or NCCN guidelines.

As we have previously highlighted, VONDO is the only approved JAK inhibitor recommended by NCCN regardless of platelet count. This includes as a first line and second line treatment for high risk patients with mollifibrosis with platelet counts less than 50,000 who are not candidates for transplant. And as a second line treatment for lower risk and higher risk patients with mollifibrosis with platelet counts equal to or greater than 50,000 who are not candidates for transplant.

With respect to patient access, our payer team continues to successfully expand coverage for Bonjot with both commercial and Medicare plans. For example, Caremark CVS, the largest PVM, is now covering Bonjot consistent with our label and NCCN guidelines.

CTI-AXIS, our patient services team, has been able to minimize coverage denials and affordability issues and provide Bonjour Bridge Therapy for those patients waiting for coverage.

In summary, I am very pleased with the large progress and growth of Vonjo in our first full quarter where we recorded $12.3 million in net revenue. These results could not have happened without the tremendous contributions from our entire organization, including a special group of highly skilled, passionate, and dedicated people representing market access, marketing, and sales who are all committed to one common mission, identifying and helping M&T patients who can benefit from Vonjo.

I will now turn the call over to David to review our quarterly financials. David.

Thank you, Jim. Moving on to our financial statements.

As of June 30, 2022, cash and cash equivalents totaled $95.9 million as compared to $65.4 million as of December 31, 2021.

The increase in cash and cash equivalents was primarily attributed to the proceeds received from our at the market offering.

facility. This strengthens our financial position and extends our cash runway over the next 12 months.

Net product sales were $12.3 million and $14.6 million for the three and six months ended June 30, 2022, respectively.

Operating loss was $18.9 million and $19.5 million for the three months ended June 30, 2022 and 2021 respectively. And $54 million and $36.6 million for the six months ended June 30, 2022 and 2021 respectively.

Net loss for the three months ended June 30, 2022 was $22.7 million or $0.21 for basic and diluted loss per share, compared to a net loss of $19.7 million or $0.21 for basic and diluted loss per share for the same period in 2021.

Net loss for the six months ended June 30, 2022 was $59.8 million or $0.57 for basic and diluted loss per share, compared to a net loss of $36.9 million or $0.44 for basic and diluted loss per share for the same period in 2021.

From an SEC reporting perspective, when assessing our cash runway, the accounting standards requires us to exclude a portion of future sales from our forecast since we have a limited sales history. As such, in our 10-2 filing, we report that our financial resources will enable us to

to fund operations for at least one year. However, as management, we believe that we have sufficient cash to meet our financial obligations through 2023 and beyond, subject to us meeting our sales forecast.

It is important to differentiate this liquidity disclosure within our SEC filings for management's assessment of its cash runway.

So with that, I will now turn the call back to Adam.

Thank you, David. So in closing, we're very pleased with our progress following the commercial launch of Vonjo earlier this year, and we continue to work hard to make CTI the market leader in the treatment of cytopenic myelofibrosis.

WANDA is a simple, safe and effective therapy and importantly it is seen as differentiated from other older therapies by healthcare prescribers.

We look forward to ending this year with presentations demonstrating Procrutinib activity as a potent ACVR1 inhibitor as well as data on Procrutinib's important anemia benefit in MS.

This concludes our formal remarks. Keith, please open the call for questions.

Yes, thank you. At this time we will begin the question and answer session. To ask a question you may press star then 1 on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

To throw your question, please press star then 2. At this time we will pause momentarily to assemble the roster.

And today's first question comes from Boris Peker with Cowan.

Good afternoon and congratulations on excellent results.

Thank you.

So my first question is, do you have an estimate of how many patients may be on the sidelines because they couldn't tolerate 5 mg dose of Jackify, but are maybe potential patients foroud Development?

Thanks, Boris, for your question. Jim, would you like to answer it?

Yeah, sure. We estimate that there are a few thousand patients on low dose of Lexolipinib that are currently out there in various states of response or tolerability.

No, but I meant the ones that are not on Ruck's that maybe couldn't even tolerate the 5 mg dose and maybe awaiting something alternative.

Yeah, we do not have those numbers, but we would expect that the first quarter we've seen here, a lot of those patients have been prescribed Bonjour.

And my second question is, you've mentioned in your preparing remarks that about a third of the myelofibrosis patients have severe thrombocytopenia. I'm curious if you have any estimates on the fraction of patients that have severe anemia or perhaps both anemia and thrombocytopenia.

Yeah, we would expect that we've seen similar to what we saw in our PRESIST-2 study, about two-thirds of patients who have thrombocytopenia will also have accompanying anemia. So they kind of go hand in hand.

Congratulations again and thank you for taking my questions.

Thank you very much.

Thank you. The next question comes from Benjamin with JMP Securities.

Hey, good afternoon, guys. Congratulations on a great quarter. A couple of questions for me, maybe just some of the basics. As we look at the patients that are being treated, can you give us maybe a little bit more granularity? How many might be naive patients versus post-Jackify? How many are switching from, let's say, even 5-meg or 10-meg Jackify versus those that are getting prescribed new? Can you...

give us a sense as to the amount of refills that are kind of taking place right now? Yeah, Ren, so first off, we have limited visibility, as I mentioned before, to exact lines of therapy, platelet counts, things like that, but some of the market research we have done and EMR audits we have done, where we get a snapshot, we see about half our patients are within the label, less than 50,000 across first line, second line, third line, and the other half of patients above 50,000 blood counts that's being prescribed spontaneously.

is typically in the second and third line.

Got it. And can you give us a sense as to in terms of academic versus community what that what that ratio is looking like?

Yeah, Rand, essentially right now in terms of the volume, right now it's about 60 percent is coming out of the academic standards and about 40 percent of our volume is coming out of the community. However, when you look at number of accounts, it's about 50-50 academic versus community that have ordered and prescribed Bonzo.

Excellent, okay. And then, you know, as we think about net revenues, there are royalties that need to be accounted for. Can you just remind us, you know, is the royalties being accounted for in the net revenues or is that something that's expensed?

Ren, those are expense below the line.

Royalties are not incorporated as part of the Gross-Dennet calculation.

Okay, okay. And then finally, the SG&A was a little bit higher than our expectations. Is that kind of the new norm that we should be thinking about, or were there more kind of like one-off costs associated with this quarter? It has been consistent through the quarter, so I don't anticipate any change from Q2. Most of the costs, of course, are from Q1.

associated with commercialization have already been incurred. So any increases would be associated with increased marketing effort.

Excellent. Thank you guys very much and congrats again.

Thank you.

Thank you. And the next question comes from Ben Burnett with Steve Hall.

Hey, thank you very much and congrats on the quarter.

I want to ask you just a question about inventory build. Can you talk about the level of inventory build that you're seeing?

Yes, certainly. Thanks for your question, Ben. Jim?

Yeah, essentially our inventory build is reflective of demand. We purposely kept our inventory levels low, so it is truly reflective of the demand going out there in the marketplace.

Okay, excellent. And then I wanted to ask a question regarding the patent extension that you were talking about filing for. What is the timeframe for gaining clarity here? And I guess can you talk about the considerations that go into seeing a patent extension be granted like this?

Yes, so the time frame unfortunately can be several years. The Patent Council has told us it can take quite a time for the extension to occur. But the application is based on a formula and we, our calculations based on the work that we've previously done with Progrythniib shows that we easily exceed the five years extension, the maximum that's allowed.

So we're highly confident that we will get five years. It would be unusual for a company to have an issue given that the application is based on a formula based on how much work you've done over the years.

Okay, excellent. All right, well, thank you very much.

Thank you Ben.

Thank you. The next question is from Thomas Fratton with Lake Street Capital.

Hey guys, congrats on the quarter. I appreciate you taking the questions. Given the kind of, maybe not surprised, but unanticipated awareness and use in the community setting, I'm curious if that has caused you guys to maybe modulate your commercial plans at all, given that there was a better base of understanding there and certainly better demand. I'm just curious if you guys have to make any positive changes, if I can call it that.

I'll answer it first and then I'll hand over to Jim. Certainly we saw right from the start that the number of community accounts, as Jim alluded to, was higher, who were engaged with us, was higher than we expected. So we certainly have had to, in a positive way, adapt our marketing and our sales activities to respond to the community. And that's been a good thing. Jim? Yes.

Yeah, and really all we've done really is probably accelerate our programs, our promotional programs I mentioned earlier, to include a lot more community physicians early on, because they're ready to hear about this. And so, and I think the other thing too is because previously those patients who had severe thrombocytopenia were often referred to the academic centers because there was nothing to FDA approved there. Now they have a product where they can keep and maintain the patients within their own practice. So, I think that's a really important part of our program.

And so that has become a great advantage for them, and they feel secure now in treating these patients and maintaining them in their practice.

Great. And with respect to, and I know you've alluded to this a couple times, you have this great commercial infrastructure now and there was some talk about maybe looking for products to add in to shoulder part of the burden of that commercial cost. Do you have an update on BD activities or is it just too soon at this point?

As I've said previously, Thomas, we continue to look for products and opportunities, development opportunities that fit in with our skill set, both on the development side and on the commercial side. And if we identify an opportunity, we look forward to sharing it with the street at the appropriate time.

And then one final one, with respect to Pacifica, given that you've kind of refocused that outside the US, any updates or things proceeding relative to plan there?

Like everyone, we've had the ups and downs because of COVID and the war in Ukraine. But most recently, over the last month, Pacifica has done very well. So we're very encouraged. We are looking at adding some additional sites to maintain the level of enrolment. But, you know, the last four weeks, we've had some really strong enrolment in multiple countries, which is a good sign. Probably some of the best enrolment we've had for some time.

Great. Congrats again on the quarter. Thank you.

Thank you.

Thank you and once again as a reminder please press star then 1 if you would like to ask a question.

And the next question comes from Gil Bloom with Nito & Company.

Good afternoon, and allow me to also add my congratulations on the strong quarter. So just a couple from us. First of all, did you expect to have a bit of a bolus of patients? What do you think the patient dynamics here? Are there like a lot of thrombocytopenic myelofibrosis patients that are just off treatment right now?

Yeah, this is a very common question. Did we have a large bolus of very sick patients at the start of the launch? And of course we did have some, we did. Like any drug launch, there are always very sick individuals who are waiting for new therapy to come along. But those patients have not been the bulk of our growth over time. Recently we are...

getting new patients and the patients we've already had on board we're having refills, we're having good refill rates.

So overall, the message here is our launch is not dominated by a large number of quite sick advanced patients who came on at the beginning. This is the patients that we are providing drug to in a much broader range of disease. As Jim said, first, second, third line, patients who are treated on label below 50,000 and patients who are treated spontaneously above 50,000 plate account.

That's very helpful. Maybe a bit of a mechanistic question on the ACDR1, ALK2 inhibition data. So, what would be the significance of this sort of activity, especially from the HPSA routine perspective? Would we expect improved quality of life for patients here, or could you give us some guidance?

Well, we're going to present more data, hopefully, at medical conferences towards the end of the year. And in that, you'll see what we believe is an important benefit of procrutinib on anemia. Previously, as reported in the PASIS-2 trial, we have shown an anemia benefit, but we didn't have a mechanism of action to explain it. We recently did some work that demonstrated that procrutinib is a very potent ACV-1R.

And that's sort of the link between the clinical findings and the mechanistic findings. So now we're able to put the two together and we have a more complete story. And we've shared it confidentially with some of our opinion leaders and I'm really, really pleased at how well it's been received, the authors of some of the abstracts that we've submitted for publication. So I think prescribers are going to be very interested in this data as we progress further into the year. Thank you.

That may be a bit of a provocative question. You mentioned that usually in the second line setting thrombocytopenia goes pretty much hand-in-hand with anemia. When you look at the data from Momolitinib, there wasn't that many patients who were both thrombocytopenic and anemic in the second line setting. It's a little odd. Do you have any comments?

Yeah, there are a number of aspects of that trial, but we can't really explain. The population isn't quite what we've seen previously. And remember, we've conducted two phase threes and we're into our third at the moment. So we've got a lot of data on this. We're waiting to see the full publication and then we can we can make a better assessment of that. But I do agree with you, there are some findings on that.

that don't quite fit in with what others have seen.

Maybe a last one. Is there at any point you guys are expecting to give guidance on sales or should we wait for next year?

Certainly, we don't plan to this year. David and I will keep looking at it over time, but it's not something we plan to do at the moment.

All right, thank you so much for taking our questions, and again, I'll add my congratulations.

Thank you, Gil.

Thank you. This concludes the question and answer session. Now I would like to turn it over to Adam Craig for any closing comments.

Well, just thank you Keith and thank you everyone for joining the call today. We very much look forward to further conversations over the coming months. Thank you.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.