Q2 2019 Earnings Call

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press Star then zero on your Touchtone telephone.

As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference Mr., Shiv Kapoor, Vice President of strategic planning and Investor Relations Mr. Kapoor, you may begin.

Thanks.

Good afternoon to everyone. Thank you for joining us today for Spectrum's second quarter 2019 financial results Conference call.

Our press release is available on our website at Www Dot S.P.T. I'll wrap dot com.

Joe Turgeon, our CEO and President will start the call and provide an overview.

I would buy a financial update from our CFO Kurt Gustafson.

And a discussion of our clinical development progress from our CMO Dr. Franz well above.

Before we get started I would like everyone to please refer to the notice regarding forward looking statements included in today's press release. This notice emphasizes the major uncertainties and risks inherent in the forward looking statements that we will.

Be making this our printer.

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

Nike sheds and Hello to everybody on the call I. Appreciate your interest in spectrum I'm I'm really excited to talk to you today.

We made significant progress in the first half of this year as we strategically shifted from small niche products.

The higher value targets, our focus is on our late stage oncology assets, Oh, Gee I know Ben Rwanda's, both of which have major milestones in the next few months.

Suppose you had them, we completed enrollment of both cohort one and cohort two.

Either which could be used as pivotal pivotal studies in a regulatory filing.

We are looking forward to the topline results of cohort one in the fourth quarter of this year.

Results from cohort two are expected by mid 2020.

We haven't mutation strategy propose yet and then a new scientific information is guiding the expansion of the polls Yatin program.

Based on preclinical data, we expanded our mutation strategy beyond exon 20.

And then to the treatment of certain of failures, an atypical mutations.

There were significant unmet medical need in those areas impose yet and the baby uniquely suited to offer patients much needed solutions.

We're letting the science guide our development program.

In entering these new areas in exploring further the role of Posey in these difficult to treat mutations.

Regarding the losses are late stage assets using chemotherapy induced neutropenia.

We recently had a productive meeting with the FDA and plan to submit the BLE in the fourth quarter.

I want to remind you that we have very strong efficacy and safety data coming out of two large phase three trials.

If approved this product would compete in a multi billion dollar market yet I in many members of our management team have a deep expertise and we look forward to successful submission and its ultimate approval.

In Q2, we also completed the acquisition of fusion in a pure on technology platform or fit.

Which places us in any in the immuno oncology space. This deal is consistent with our commitment to focus on innovative oncology products in areas of high unmet medical need.

Overall spectrum is in a great position.

Run the cutting edge of science.

We have a promising growing pipeline with significant near term milestones.

We are well capitalized and we have a strong team.

We are focused on delivering on the goals, we set and I look forward to continuing the momentum into the second half of the year.

With that im going to turn over the call to our CFO , Kurt Gustafson to go over the financials.

Thanks, Joe.

[noise] Oh I'll begin with some comments on continuing operations.

Orest DNA expense for the second quarter of 2009 of 2019 was $17.2 million in R&D expense was 17 million.

R&D expense included a one time charge for the licensing of immune genes fit technology of 2.8 million.

Our net loss from continuing operations was 28.8 million.

However, on a non-GAAP basis, which primarily backs out stock compensation costs as well as the licensing fee paid to immune gene or loss was 25.2 million.

The income from discontinued operations was 388000 and represents various items recorded in the second quarter that are related to the commercial business that was sold to Aker tap on March onest.

As we look towards the second half of the year I would expect that our SGN expenses would stay similar to current levels. However, we do expect R&D expenses to increase as we expand the posey out in the clinical development program.

And invest in our commercial manufacturing for both Posiet nut and relaunch.

We ended the quarter with 282 million in cash plus marketable securities.

Based on our increased cash balance we started investing in certain short term debt securities, which is why you'll see our marketable securities has grown this quarter.

That total of 160 million in marketable securities represents these debt instruments as well as our equity position in Kathy.

The sale of our commercial business brought in a significant amount of cash to the company and with 282 million and total liquidity, we have plenty of runway to continue the development and commercialization of our late stage assets.

With that let me now hand, the call over to francoise to cover updates on our clinical programs.

Thanks Kurt.

Hi, everyone I'm going to start by providing an update on our late stage asset poziotinib.

I suppose the development program is focused on investigating the treatment of exon 20.

Insertion mutation in non small cell lung cancer.

Exon 20 mutations are among the most difficult to treat and currently have no FDA approved therapies.

These patients and their physicians are in need of effective treatment options.

As Joe mentioned, we expect the topline results from cohorts one in the fourth quarter.

Discourse is evaluating patients with previously treated EG fr exon 20 insertion mutations.

Core too, which is evaluating posey in previously treated or two patients reach full enrollment in Q2. This was an exciting milestone as it happened six months ahead of schedule and speak to the clear unmet medical need.

We are pleased with the enrollment in cohort three and four looking at first line treatment and boat EG fr and heard two patient with Exxon 20 insertion mutation.

We recently announced three additional cohorts and the Zenith 20 trial that are actively recruiting patients.

Courts five include.

Includes previously treated.

Or treatment naive non small cell lung cancer patient with EG fr or early two exon 20 insertion mutation.

We opened this call words, because they've been there's been numerous requests to enter our fully enrolled cohorts one and two the scoreboard helps us address these requests while continuing to generate useful data.

Cored six include includes non small cell lung cancer patients, whose tumor progress while on treatment with first line all the merchant and develop new EG fr mutation.

Recent preclinical data suggest that Paul Johnston in may be active against many of these Egypt far dependent resistant mechanism.

Core seven.

Includes non small cell lung cancer patients with a variety of the less common mutation in EG got far and there are two Exxon 18 to 21 or the extra cellular or transmission trans membrane domains for which there is no effective therapy.

And we have strong in vitro evidence of well Jonathan Im activity.

By the way you will see the preclinical data supporting cohorts six and seven at the upcoming more along.

Meeting in Barcelona presented by Dr. Amax group from MD Anderson.

All three new cohorts are actively recruiting.

Now shifting to relaunch it I'd ask all we presented a poster integrating the data from both of our pivotal phase three relaunches clinical trials, which included a total of 643 patients.

The integrated analysis of the FICC has seen safety was consistent with results from the individual study demonstrating that roll off this was non inferior to pegfilgrastim in the reduction of duration of severe neutropenia.

Regarding our B.L.A. <unk>.

We recently had a productive meeting with the FDA to further discuss their expectation around module three which is the modules focus on manufacturing.

Based on the outcome of that meeting we expect to submit the BLE in the fourth quarter of this year.

Now, let me shift to the work on the newly acquired fit platform.

This is a welcome addition to our pipeline as we enter the immuno oncology space an area that I know well the fit platform creates a new class of biotherapeutics engineered by fusing interferon alpha what a monoclonal antibody targeting is specific and validated tumor antigen interferon.

Our very potent cytokine that are well established as cancer therapeutics.

But I have historically been associated with significant systemic side effects.

Preclinical data suggest that the fit technology has the potential to maintain efficiency.

And minimize toxicity.

As you can see we have a growing and well balanced pipeline.

The team is executing on our goals and energized about our path forward.

Now I'll turn it back to Joe.

Thank you Dr Francoise.

We've made a lot of progress in the second quarter.

We have a growing oncology pipeline, what's important near term milestones for both those yet to enroll onto us.

And we have a promising novel immuno oncology platform.

We look forward a major catalyst in the coming months and with that I'd like to open up the lines to operator for questions.

Thank you ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key on your Touchtone telephone.

If your question has been answered or you wish to remove yourself from the queue. Please press the pound key again, that's star then one to ask a question.

To prevent any background noise, we ask that you. Please place your line on mute. Once your question has been stated.

Our first question comes from Alexia Young with Cantor Fitzgerald. Your line is now open.

Hi, This is <unk> on for at least for the new expansion cohort five could you just walk us through the dosing regimen and whether there are any differences between cohorts one and two.

Yeah, Hey, I'm, a what do we have Doug first of all I walk you through that.

So.

The main core one of the two or five <unk> and five <unk> yeah.

So of course by the the primary reason why we are core to five.

Is as I've indicated we have received numerous requests for a compassionate use.

Words investigators that patient with exon 20 mutations and they want to enroll them in cohort, one and two and dose <unk> those studies or cohorts are close so we had to have a mechanism to provide.

Access under control condition and that is exactly the main reason why we're doing that so it will give us additional data.

That is always useful for any draw when you go to market. The more data you add the better it.

[noise].

I guess, specifically on the dosing is the dosing regimen the same.

As cohorts, one and sorry, sorry, so the dosing regimen and we are exploring three dose level, we are going to be randomizing patients to 10 milligram 12 milligram and 60 milligram per day.

And we are allowing patients.

That would be started on lower dose to potentially escalate if ever there would be signs of progress.

Thanks, that's helpful.

Thank you and our next question comes from Wyoming craft with Jefferies. Your line is now open.

Hi, everyone, good afternoon, and Uh huh.

Congrats on the progress and thanks for taking my questions. So my first question is on a rwanda's I'm. Just wondering if you can comment on any gating factors remaining prior to submitting the BLA.

Yes, Hi, Morey, how you doing this is Joe.

Hey, listen.

Well.

Good good to hear from you that listen we are aligned with the FDA. We at our meeting we got aligned we're being a thorough are being deliberate.

And we plan on filing in the fourth quarter as we as we said this was.

The questions that we add that we had to answer we're in a module three which is in the CMC section only and again, we're being like I said thorough and deliberate and plan on filing this in the fourth quarter.

Got it okay.

And then.

And then I was wondering for cohorts six and seven are that were added to the Posey study I'm. Just wondering if those are independently powered similarly, two cohorts one through four and do you have any thoughts on whether a court six and seven could have an accelerated development path.

Yes. Good question. So we have we have not.

Fully powered those studies that the core at five six and seven our exploratory in nature that gives us a little more flexibility and there was no target endpoint that is defining and we're trying to translate.

Exciting data that we've seen preclinically as I mentioned and we want to see if it translate clinically if it does obviously we would.

Potentially modify those cohort those do additional studies, but we need to first confirm whether or not we can you know, let's see the same signal and patients.

Got it understood.

Thanks for taking my questions I'll hop back in the queue.

Thanks, a lot more.

Thank you and our next question comes from Ed White with H.C. Wainwright.

Yeah, how open.

Hi, guys. Thanks for taking my question.

They address the question.

Hey, Joe So just a question on cohort five.

Since this is.

Similar to cohorts, one and two.

Does this slow down the launch timeline do you think the FDA is going to want to look at this data before.

Looking at the cohorts, one and two for approval or it has no impact.

Sure Ed. So the answer is the short answer is no. We don't think its going to delay us at all if anything you know this is ER will be helpful. So remember the court one to four actually 1234, our cohort one and two are fully enrolled three and four are very nicely enrolling and one day complete then these patient.

Could also go in core five or so it's just the additional data that were gathering here there is no.

Requirement, if you know in in any kind of way they are independent of the.

Pivotal trials that were cohort one to four.

So this would be simply additional data that you know would provide additional safety information et cetera, it's not.

It's not part of the of a request to the FDA, we're doing this on our own.

Okay, great. Thanks Francois.

And now there is a question you know.

Post the TKK 78 data at ASCO.

I just wanted to get your thoughts on what that data versus the Posey data you know if both of them hold up you know what this could mean for the market. So maybe this is for Tom.

And also you know.

What the market too.

I was going to look like and then any thoughts on the.

The Discontinuations of 70 days due to.

Adverse events, which was was higher than cause yet.

Hey, Matt its Tom we've obviously looked at the data in detail I think it's pretty early it looks like that study is starting I think our position we feel really strong about what the data readout in Q4 and is well add in the development lifecycle. It post beyond that so we'll have to see what that market looks like I think what it really says is that there is real unmet need for this patient population as more and more compounds come into the full I think it speaks to the solutions that patient need and we're pleased to be at the forefront of that.

Great. Thanks, Tom.

And then perhaps just the the last question just for I.

A question on the basket study.

Can you give us any any update there as for the.

Maybe the number of indications that you're looking for which indications that the size of the study or how are you going to focus on second or third line or any other information and give us would be helpful. Thank you.

Right I think the old Unfortunately, the only information I can give you is that we absolutely intend to have a basket study the second half of the year and we are currently working communicating with the FDA as to the exact nature of the basket.

But I I can't today give you more information obviously, we'll give you more information when.

When things are finalized.

Okay no problem. Thanks principal.

Sure.

Pleasure.

Thank you thanks Ed.

And our next question comes from Michael Schmidt with Guggenheim Securities. Your line is now open.

Hey, guys. This is Charles Zhu on for Michael Schmidt, Thanks for taking the questions and congrats on all the progress.

Hey, Jon first on your Hello.

First on the Zenith 20, how would you characterize.

The enrollment timeline of cohorts three and four I can we expect similar timelines are dynamics that as we've seen with cohorts, one and two and one angle I'm coming from is if you look at some of these other trials in lung cancer evaluating teekay.

Even as they get to the more frontline setting we're still seeing a lot of patients who come off of platinum based chemotherapy. Thanks.

Right. So yeah, I can't give you a large amount of detail there other than to say its recruiting nicely according to our expectation.

You know I I agree with you that we're aware that.

You know a first line or studies like that or might be slightly more difficult to recruit but.

So far it's not been an issue and I'm we're progressing.

Well as expected so I. Unfortunately, I can't really tell you much more than that.

So I think you hit your request timeline or.

Yes, yes, yes.

Yes.

Charles I don't know all the thing we say that we're very pleased with the enrollment and to date and we continue to enroll as what I can tell you.

Okay got it and I think this was partially voiced over before so apologies in advance of I'm, asking you to repeat yourself, but.

Regarding cohort slide that makes sense that you are providing pulled the access for patients that.

You know like would normally have enrolled in cohorts, one and two but can no longer do do so what are the potential implications for cohorts three and four is there is there any kind of potential where like.

You know a a piece of that would have been on three Michael on slide now instead and would that have any like potential delay for three and four or would you be able to supplement.

Oh like dataset from three and four with like a partial data set from from five.

Yes. It is no conflict at all so we asked to fill finish enrolling cohort three and four and one just like for a go on cohort one and two when they are fully enroll then the patient will be eligible for core inphi. So they're not competing at all with one another.

Got it that makes sense and then last question from me regarding will want to just general questions. How do you see the the dynamics or the market size shifting fourg CSS as Neulasta Biosimilar continued uptake. Thank you.

Yeah, I'm going let Tom give you some some color on that what I will tell you is this charles.

In all of our modeling, we fully expect anything expected and modeled having multiple biosimilars on the market. When we came to market. So this is not surprising to us or anything new I'll tell you that but Tom why don't you speak to the market.

Yeah, Charles we're seeing rational pricing in the marketplace its not behaving like a typical generic marketplaces, we as we would have predicted and as we look at the dynamics in seeing how it's playing out it makes us more excited too to compete in this space, we think having a novel solution entering the marketplace with the backgrounds of our leadership team, we will be able to compete in that in that market. We're looking forward to getting this filing here in the fourth quarter and having the opportunity to add to that range.

Sounds good and thanks again for taking the questions and for for your time today.

Thank you John .

Thank you.

And our next question comes from how she had a Polish Eddie with B. Riley FBR.

Hey, they are data.

Hey, yeah.

Congrats on the progress and thank you for taking my question.

I guess I wanted to ask about posey in other tumor types I guess I'd already touched asked with regard to the basket study and I know you are not able to provide color on trial size and our patient populations.

But correct me if my if I'm wrong, but you're also looking at combinations right are you able to provide any color on how we are thinking about potential combinations.

Yeah.

You are correct, we plan to do a start.

The combo study in the second half as well.

The only thing I can tell you in terms of the choice of the drugs, they're going to be combined is that it's going to be a rational combination not a word that where you would expect that to have either preclinical data supporting the combination or that you have reason to believe that mechanistically.

Those two drugs would work well together the other thing is that you always have to look for him.

And combining drug you want that as much as possible not to have overlapping toxicity. So we're careful in our choice, but we're still on track to to move forward with that.

Right, Yes that makes sense. Thank you for the color.

Sure.

Hey, guys.

Thank you.

I'm not showing any further questions at this time I would now like to turn the call back over to Joe Turgeon for any closing remarks.

Yes. Thank you operator, I appreciate everybodys interest and.

Have a good day everyone.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude todays program and you may now disconnect.

Everyone have a wonderful day.