Q2 2023 G1 Therapeutics Inc Earnings Call

He an automated message advising that your hand is raised to withdraw your question. Please press sorry, one one again please be advised that today's conference is being recorded I went down like to hand, the confidence over to the speaker today will Roberts. Please go ahead.

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Good morning, everyone and welcome to the G. One conference call to discuss our second quarter of 2023 financial results on business update.

First of all it's only financial results was issued this morning and can be found in the new section of our corporate website <unk> Dot com.

On the phone is called the team will provide a business overview of the second quarter of 2023, including an update on our clinical programs and our commercial progress in that period with Priscilla, which is approved and commercially available to decrease the incidence of chemotherapy and just mindless oppression in adult patients with administered prior to a plan besides containing regimen or.

I took the chicken containing regimen for obsessive stay small cell lung cancer or your associates.

A question and answer session will follow the prepared remarks before.

Before we begin I want to remind you that today's webcast contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Such statements represent management's judgment as of today.

Involve risk and uncertainty that could cause actual results to differ materially from those expressed or.

<unk> by the statements for more information on such risks and uncertainties. Please refer to our filings with the Securities and Exchange Commission, which were available from the S. A C or on our corporate website.

Any forward looking statements represent our views as of today August 2nd 2023.

Turning on the call today or Jack Bailey, our Chief Executive Officer, Andrew Perry, Our Chief Commercial Officer, Raj Malik, our Chief Medical Officer, and John upset our Chief Financial Officer.

With that I'll turn the call over to Jack failing thanks.

Thanks, well good morning, everyone and thank you for joining us on the call today.

As of nuclear our goals for 2023 remained unchanged first two tribes depth of course solid usage and adoption, especially amongst the top 100 organizations, who treat half of all expensive stage small cell lung cancer patients from the country second to prepare for important clinical rebounds.

Early next year.

Finally to efficiently manage our cash onward.

Regarding the first goal or objective was to continue to drive quarter over quarter, a solid volume growth.

By broadening the number of deeply adopting customer organizations and driving depth, particularly amongst our top 100.

As you'll hear from Andrew we did this successfully and the most recent quarter by sleep, while speaking to navigate a national platen based chemotherapy shortage.

<unk> Edwin net sales grew 6% quarter over quarter to 11.1 million, enabling us to reiterate our guidance.

Of $50 million to $60 million into solid net sales in 2023.

So as a result of the platinum shortage, we will potentially be toward the lower end of that range.

It's worth reminding our investors that assuming we continued to hit our internal forecasts, we expect <unk> to drive us to cash flow positivity and profitability in the next few years.

Regarding the second goal. This is a particularly exciting time for G. One we presented important new data throughout the quarter from our phase two trials, including the <unk> glib and improve the tolerability of an AVC.

Importantly, we expect to survival results from our pivotal phase three triple negative breast cancer trial as well as from two phase two trials in the first quarter of 2024.

If the interim phase III TBC results are positive we expect to meet with the FDA to discuss filing a potential supplemental NDA shortly after that.

Finally, we made good progress during the quarter and strategically managing our finances first by obtaining payment from sincere for relief of future royalty payments on the sales of to sell it in mainland China and then by amending our that agreement with Hercules and paint on a portion of our debt to provide a.

Additional financial flexibility.

Now we will discuss each of these topics in order Andrew will cover our recent commercial efforts and results Raj will then provide an update on our clinical pipeline and John will provide financial results for the quarter. Finally, I'll be back for some concluding comments with that I will now turn the call over to Andrew.

Thank you Jack I'm hard to be much needed today to provide an update on our second cloth or 2093 sales performance on the progress was made in our commercial execution over recent months despite facing some external challenges.

Our goal in the second quarter was to extend our quarter over quarter growth by continuing to build a broader platform of more deeply adults and customer organizations with.

We delivered on this call in Q1, and we've continued to delivering Q2, despite some marketplace challenges and I'll discuss some of the factors underlying outperformance today.

Beginning with sales results as Jack mentioned, we ended the quarter with $11.1 million net sales wholesaler, representing 4% file volume growth and 6% sales growth compared with coupons.

We have previously stated that our growth in the extensive stay small cell lung cancer market complexity due to the two to three months duration of therapy for parceling patients.

<unk>, we also face the challenge of well publicized national shortages of both Carboplatin on <unk>, which are the backbone of platinum based chemotherapy and small cell lung cancer.

Cause considerable disruption with customers as patients and current those interruptions and discontinuations are switches and regiments.

Although this situation remains in flux, we anticipate an improved outlook and the second half of the year.

In terms of the effect on our post cell of business. We estimate that that's impacted our may and June performance and particularly in community clinic, Compostable, which may have had less capacity to maintain stock of carboplatin and supply.

Foreign example, hotel, a volume and pump 100 customers, which see around half of extensive today small cell lung cancer nationally.

90% in the corner, while non top 100 customers declined 11% and this may have been due to being more affected by platinum shortages and larger customers.

We saw similar dichotomy when looking at all academic institution customers grew to 25% in the quarter compared with minus 2% for all community customers and again this may be due to their parts as in power in the market and ability to maintain stock.

Taking into kind of some of these underlying performance trance, we anticipate that with both the platinum shortage or volume growth in Q2 may end up being closer to R Q1 growth rates implanted percent than the actual growth of 4% were reporting today.

Despite the challenges we saw a number of indicators of the <unk> business continued to build a stronger base of deep adoption during the <unk>.

Only that we see the growth and top 100 customers and then academic institutions are referenced earlier, but we also saw an increased number of deep adult adult and customers.

Last quarter I highlighted an increase in customers purchasing more than 100 miles per quarter from 17 in queue for <unk> to 19 customers in Q1, 2093, and and Q2 25 customer organizations purchased more than 100 bottles.

And the second quarter, we brought onboard 58 <unk>.

Including one new top 100 organization, meaning 73 of the top 100 article salad lunch today, we saw orders from 56 of the top 100 organizations, which was up from last Clark.

Despite the challenges and the community thing, we continue to support community oncology through education around ultimately EMR placement and through volume based contract agreements in.

Q2, 2093 customers, who elected laced wholesale on a default possession of our standard of care demonstrated three times the debt of utilization compared with customers, who simply left for sale of an option.

We added two new community contract customers and kids and we estimate roughly 50% of our business as with customers who have a volume agreement.

Alright intimate of wholesale a patient share continues to grow and although claims data for Q2 are not fully available we estimate patient sharing the 10% range and the first one market, which represents the majority of our youth.

We saw 74% of volume in the cloth or come through the community clinics and hospitals and 26 per cent of the volume from academic centers, 98% of our volume in the quantity and commercial supply with 2% provided through our patient assistance program.

Moving into Q3, we have been encouraged to see community customers. Most effected by the platinum shortages began to reorder more normal rates and we've shown that there remains growth potential in the academic segment.

We continued to see the benefits of the strategic shifts we've made over the last several kilometers despite marketplace challenges as always will continue to have all of our commercial model if necessary to achieve our ambitions for cosell.

I will now turn the call over to rush for a pipeline updates thanks, Andrew and good morning, everyone.

I will review progress with our clinical pipeline, including recent results you expected timelines for overall survival results from the ongoing trials and provide an update on our work to understand the phase III colorectal cancer results.

First and foremost based on data generated to date and to optimize the opportunity ahead.

We plan to focus primarily on two core development paths with Tyler cycle.

The first and metastatic TBC settings, where we have already shown a survival advantage in the trial cycled loans in a phase two trial and secondly, an ADC combinations, including an additional tumor types.

We let the bladder cancer survival data determine next steps in this setting if any.

Will now review the clinical results, we presented during the second quarter.

I'll start with our May as more breast presentation of trial cyclists in combination with Gilead ADC substitute <unk>.

Adc's have changed the treatment landscape and thus far we have convincing data showing that cyclists and improve tolerability substitute the Max.

While the cycle administered prior to the ADC was associated with clinically meaningful reductions of over 50% and the rates of multiple adverse events compared to the single agents safety profile assessor to the mat, including neutropenia anemia and diarrhea.

We believe that having a healthier bone marrow and immune system function metallicize lift treatment may help patients live longer and we're looking forward to the overall survival results, which are expected in the first quarter of 2024.

Then at Osco in June we presented new results from our phase two mechanism of action trial, showing the ability of fellow cyclists to enhance long term immune surveillance by increasing T cell function and generation of certain memory T cells and gene expression profiles that may be associated with improved.

Clinical outcome.

This will be expected to produce a greater effect on overall survival compared to earlier efficacy measures such as overall response rate ntfs consistent with other immunotherapies.

Next regarding our pivotal first line to MVC phase III trial, we continue to expect that the one term overall survival analysis will occur in the first quarter of 2024.

This trial largely replicates the design of the phase two trial that showed a statistically significant overall survival advantage and both arms or participants receiving <unk> prior to standard of care compared to standard of care alone.

As a reminder, at the trial meets the interim analysis stopping little April the unblinded and <unk> one of the report the top line results and.

In addition, we will meet with FDA to discuss filing a potential supplemental NDA as quickly as possible in 2024.

The trial does not meet the interim analysis stopping rule. It will continue to the final analysis.

Turning to our phase two bladder cancer study, we expect that the overall survival results anticipated early next year would be the most meaningful to evaluate Charles cyclists in the study.

And our January press release, we announced that earlier response rate data in the bladder cancer trial numerically favorite patients who receive jumps side of being platinum at Avelumab over patients who received fellow cyclists prior to the combination.

Despite the differences in response rate the.

The most recent data.

<unk> a similar between the two arms with a median of six months of the trial cyclists arm and $6 one months in the control.

The hazard ratio of 1.07.

Further median PFS was similar across arms and both tumor PDL lunch subsets.

Median duration of response favored the trial cyclists are overall with seven months versus six months and in both tumor PDL on subsets.

We expect to reach the final verse endpoint for this trial in the first quarter of 2024, which will determine whether additional late stage studies in this tumor type are warranted.

Next I want to provide an update on our work to understand the confounding phase III colorectal cancer trial results.

We explored a number of hypotheses, including potential inhibition of transporters involved in five a few uptake into the tumor.

And in fact of CDK four six dependency off the tumor <unk>.

Following comprehensive analyses our efforts did not identify any specific causal factors explaining the unexpected results.

Considering data from all of our clinical trials we.

We believe that the <unk> results are likely attributable to this specific regimen. This specific tumor site.

We have not seen any similar adverse antitumor efficacy outcomes in our studies inexpensive stays small cell lung cancer or triple negative breast cancer. In fact, we saw improved survival empty NBC.

As I said earlier protecting the bone marrow and making the immune system function better could improve long term tumor efficacy outcomes such as overall survival.

In that regard based on the occurrence of events, we look forward to meaningful August data readouts across our trials and the first quarter of 2024.

Or turn the call over to John for the financial results John .

Thanks, Raj and good morning, everyone as well mentioned full financial results from the second quarter of 2023 are available in this morning's press release and will be in the 10-Q, which we expect to file today aftermarket clothes.

Our total revenue for the second quarter of 2023 was $42.4 million comprised of net for seller revenue of $11.1 million and license revenue of $31.3 million.

For the same period in 2022 total revenue was $10.6 million, including eight $7 million of net product revenue.

The license revenue from the current quarter is primarily related to some here for the relief of future royalty payments for sales and extensive stage small cell lung cancer in mainland China.

The remaining license revenue related to supply and manufacturing services with some sphere and clinical trial reimbursements from some severe and each your eggs.

On the topic of each your eggs yesterday, we received formal notice of their intent to terminate the layer cycle of license agreement and revert the product right back to us as part of their proposed acquisition by Revolution medicines we.

We are currently assessing next steps and would not expect to receive any additional milestone payments from them.

Cost of goods sold for the three months ended June 32023 was one $4 million compared to $1 million for the same period in 2022.

We mentioned on the last call that we expect that our 2023 operating expenses, 20% to 30% lower than that of 2022.

As an update we now expect our 2023 operating expenses to be closer to 30% lower than that of 2022.

A research and development expenses for the second quarter of 2023 were $12 million compared to $28 million for the second quarter of 2022.

Are selling general and administrative expenses for the second quarter of 2023, where $17.4 million compared to $25 $7 million for the second quarter of 2022.

This reduction is primarily related to decreases in expenses associated with commercialization activities personnel costs and professional fees.

Regarding our cash position and in the second quarter with cash cash equivalents in liquid securities of $104 $2 million compared to $145.1 million as of December 31, 2022.

While on the topic of our cash position as Jack mentioned, we have strengthened our balance sheet, even further and added financial flexibility during the quarter.

First we received net proceeds of $27 million after Chinese withholdings for relief of future royalty payments from some sphere for the extensive stage small cell lung cancer indication.

<unk> has the potential to receive an additional $18 million pending positive data from our ongoing pivotal CNBC phase III trial of which we received $5 million on some seniors filing of an NDA in mainland China and $13 million on their approval.

Then on June 6th 2023, we amended our line agreement with Hercules capital.

<unk> modified certain tranche advances and lowered the required minimum cash covenant.

In addition, the amendment removed the existing minimum revenue covenant and now provides for a conditional borrowing base limit.

Upon closing of the amendment <unk> pay down the loan $25 million, resulting in a total line amount outstanding of $50 million as of June 32023.

Our cash position as of the end of June is reflective of both strategic transactions and as a result, we believe we have additional financial flexibility and takes our cash runaway well into 2024 beyond the readouts of our clinical trials Raj discussed.

Finally regarding revenue in cash runaway guidance for 2023.

We reiterated our net product revenue guidance for 2023 of a range between 50 and $60 million.

Because of the platinum based chemotherapy shortage, we may be on the lower end of that range.

There is no change to our 2023 gross to net expense percentage estimates and based on the foregoing, we anticipate a year in cash cash equivalents marketable securities balance of approximately $70 million to $80 million.

With that I'll turn the call back over to Jack for some closing comments. Thank.

Thank you John Raj, Andrew and will and as always I want to thank the people living with cancer for your continued inspiration.

We know the difference or drug moves to people living with this disease.

Small cell lung cancer or first invitation sufficient benefit is clear due to its ability to protect the bone marrow from the harmful effects of chemotherapy.

And as you just heard from Andrew we remain confident and the potential of cosell and small cell lung cancer and are making strides in expanding the depth and rate of adoption.

Importantly, we accomplish this in the face of appointment base chemotherapy shortage that impacted our business in the second quarter.

Beyond the sales line, we are convinced <unk> potential to meaningfully improve efficacy by protecting the bone marrow and making your immune system function better we.

We have a lot to look forward to in the first quarter of next year in that regard as we awaited survival data from our pivotal phase III trial MTBC.

From two phase two trials if successful there are next step is to prepare for a supplemental NDA filing as soon as possible.

All finished with a reminder, that we are one of the very few companies in our sector in market cap that have an approved drug that provides clear benefit and is expected to drive profitability in the next few years, along with pivotal data is expected in the first quarter of 2024, and the cash position to get us through those and other <unk>.

Results.

Thank you for your time. This morning, we will speak again in this format on the third quarter of 2023 call in November and we will see many of you at the ball investor conferences with that I'll close the call and turn it over to Q1, operator would you. Please remind our listeners auto ask a question.

Thank you.

And then we will conduct a question.

And you'll need depressed.

New telephone anyway.

The Guy your question please.

Again please.

1999.

My first question comes from the Downpour.

Company.

Please go ahead.

Good morning, everyone and thanks for taking our questions.

So just maybe a good place to start is with a lot of them.

Uhm forwarded.

Given the relatively short duration.

Therapy, and small cell lung cancer should we expect much of a bullet patience in the second half according to.

This.

Thank you.

Thanks scale M I would not anticipate or all of those patients. So as you know this is a very rough at the grandkids.

These and many cases I believe those patients were being dealt with by the.

Those surrounding town are expanding doses.

<unk> and more space between the cycles, but in some cases patients were just continues or we're not able to be all sorts of platinum base.

Yep.

Some other choice instead, so I thought the bank.

You'll see a situation where those patients are waiting in the wings.

Okay.

And maybe a broader question on.

The effects of <unk>.

Sir.

More broadly I know you guys took a closer look at the.

Colorectal cancer.

Population.

It really does come back with with anything specific.

But you know.

Given the kind of immunological landscape here I mean, it looks like a lot of these data are trending towards.

Survival benefit, which is pretty typical for for I O agents I'm. Just curious if this is this is a class effect then whether you should spend more time on the immunological humor's. Thank you.

Hey, this is Raj yeah, I completely agree with you.

Hence our focus going forward on CNBC, where we saw a very strong phase II data.

And and and the AGC landscape.

And also other data where we saw.

Greater.

Any suggestions of greater efficacy and the peer one positive substeps. So yeah. We're completely agree with you that as we learn more about Tryline Omega Palpations.

Really where are we going to be focusing going forward.

Alright, Thank you for taking my questions.

Thank you one moment my next question.

Our next question comes from.

Can any Pullman P T I T.

I have.

Hi, good morning, Thanks for taking my question.

For the agency study I was just wondering if you can provide any insight on any comments from the physician how the iced tea <unk>.

For the duration of administration is more biased in this trial you know the approval trial, so that'll be a medium.

Administration of 4.4 months and I'm, hoping.

I'm, hoping to like get some inside advocate T M D C.

His trial also showed higher chemo administration, and so I just want to get some insight there.

Yeah can you hear me this was Raj as it as you reported.

Combining trilogue with fidelity improves the tolerability.

Previous data that we reported was was still a relatively short median follow up of around five and a half months.

Patients was still ongoing on therapy. So clearly this is something that we're following and we'll report more as we report the data early next year.

Alright, that's fair and then.

Bladder cancer are you thinking about her that'll be combination since it's approved and given that.

Frontline because that'll be could get higher marketshare.

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Yeah.

Absolutely that's a possibility the.

The landscape and that first line setting is going to change the laws next year with readouts of pets, and other and other trials as well.

So we will have to really evaluate the data at the end of the day and the data from an TWC.

But that certainly could be a.

Potential path as well because it will be interested in looking at developing ADC is more broadly than just the MPC.

Got it and maybe last one again on the bladder cancer.

<unk>. Thank you report today can you tell us.

From the control arm compared to the historical resolved and then for the O at $3. What do you expect from the control arm and how much difference between the arms would be meaningful.

Yeah.

As you know this trial actually there isn't a good comparator because.

And the javelin 100 regimen.

All of the data is from the valley about maintenance and so patients who did not make it into maintenance. We're obviously not part of that data set. So this is really new data. If you will I mean, some of the trials that will be reading out next year as such as the easy 302 and others were.

Where you have treatment right from the beginning could also help but so this is why we run controlled trials right because patients are randomized and there's really no difference in PFS.

So I think the same applies for for <unk>, we'll have to really be generating.

The control of our data for this particular combination because that doesn't really exist right now and again, it's a it's a control the trial. So we'll be looking to see whether the addition of trilogue improves survival relative to the control arm.

Generally across trials, if you see it at least about a two month improvement until last generally that's considered a meaningful though would have to look at what the data shows.

Alright.

Hi, Thanks for taking my question.

Sure.

Thank you one moment, Sir next question.

Our next question comes home.

Some J P. M. Please go ahead.

Hey, guys. Thanks, so much for taking the question.

I had a quick clarification question on the operating expenses being down closer to 30% versus 20 per cent year over year sorry.

Sorry, if I missed it but what is driving that more specifically.

Thanks, and a bomb really what's driving that if you recall at the beginning of the year. We did a cost restructuring following the CRC read out where we said we recognize or realize a lot more of those cost savings on the back half of the year that in addition to a lot of these phase two trials.

Winding down as well as a cola rectal, we expect anybody at the end of the year being wound down that's what's driving it.

Great. Thank you so much for taking my question.

Thank you one moment.

Okay.

Our next question comes from trailing for you S. T. D. Cummings. Please go ahead.

Hi, I've got someone practices square and thanks for taking my question.

Just on the Turtle V combination data.

Just given that that data that you will fall and then.

With consideration for the patient population enrolled in that study I guess, what number in the first part of next year would would really excite you all and then just as a follow up to that would you still take that because that'll combination with trudeau be forward. If you saw that similar alas measures in that in that read out next year, but significantly improved safety.

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Hey.

Rochester.

Those are those are great questions I mean, as you pointed out and we as we also mentioned and R. As both breasts.

Most of the population is different.

Ah more heavily.

Appreciated patient population with more prior PDL one exposure.

And if you look at the <unk> that'll be data.

<unk>.

Both the response rate as well as the efficacy is a little bit lower so we would really want to be looking for.

More closely at how our data compares to setup, maybe more of them heavily pre treated us has the patient population.

If you look at the overall us at population.

Around the block or a year or so so again.

We would want to see.

Some meaningful improvement over that it's not a controlled trial and we're thinking about other ways to look at the data and some.

Quotes controlled fashion, but.

But you know certainly greater than 12 months and the better the longer the better I would say.

Your second question about wood.

Tolerability alone.

Be sufficient to take the drug forward.

I think this could certainly be probably more important than earlier stage settings, where.

Patients may be less able to are willing to tolerate greater toxicity. So.

So I think those are probably some settings, where better tolerability in Alaska. It seems in the same ballpark could be areas to explore not to say that we wouldn't also consider exploring in the metastatic setting, but that's sort of how we are thinking right now.

Alright, great. Thanks for all the color.

Thank you.

I remember to ask a question.

You want me to best thyroid one on your telephone and retraining to be announced.

Question. Please press 911 again.

It's going to be no further questions I would now like to turn it back to Jack theories and closing at Max.

Thank you operator.

We look forward to keeping you updated on our progress and certainly thank you for joining US today, we look forward to being in touch later this year. Thank you.

If confidence is now okay. You may now disconnect. Thank you.

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