SPPI
#Thanks.
Good afternoon, and thank you for joining us today for Spectrum's second quarter 2016 financial results conference call.
I hope you have all had a chance to review the press release we issued earlier today.
If not, it is available at our website at www.sppirx.com.
I'd like to remind everyone that during this call we will be making forward-looking statements regarding future events of Spectrum Pharmaceuticals, including statements about the product sales, profits and losses, the safety, efficacy, development, timeline, and clinical results of our drug products and drug candidates that involve risks and uncertainties that could cause actual results to differ materially.
These results are described in further detail in our reports filed with the Securities and Exchange Commission.
These forward-looking statements represent the Company's judgment as of the day of this conference call, August 9, 2016, and the Company disclaims any intent or obligation to update these forward-looking statements.
However, we may choose to update them, and if we do so, we will disseminate updates to the investing public.
For copies of today's press release, historical press releases, 10-Ks, 10-Qs, 8-Ks and other SEC filings and other important information, please visit our website.
Dr.
<UNK> <UNK>, our chairman and CEO, will start the call today and provide you with the highlights of the second quarter and our overall strategy.
<UNK> <UNK>, our chief financial officer, will then provide a summary of our second quarter financial performance.
Following this, <UNK> <UNK>, our president and chief operating officer, will review the Company's commercial and research operations.
We will then open the call up for questions.
<UNK>.
Thank you, <UNK>, and thank you everyone for joining us this afternoon.
I am pleased to report that we had strong quarter, and we made solid progress on our pipeline drugs.
We have been executing on a growth strategy that is focused on developing a variety of novel, patented, proprietary drugs that would help a large number of patients and address multi-billion-dollar markets.
Let me share with you what makes me most excited.
A top priority is SPI-2012, which is a novel, long-acting, granulocyte-colony stimulating factor, or G-CSF, which entered registrational Phase 3 trials earlier this year after we received a special protocol assessment, or SPA, with the FDA.
I am pleased to report that enrollment is on track with 84 sites that are now open in the US for patient enrollment.
We continue to stay strong clinical interest in SPA-2012.
Our goal is to file BLA on the registrational application in 2018.
If approved by the FDA, we will be well positioned to compete in this multi-billion-dollar market.
The second high priority drug, [poziotinib], is in Phase 2 trials and enrolling breast cancer patients who have failed other HER2-directed therapies.
This is a multi-targeted oncology drug that has shown the potential to be best-in-class.
A third drug, Qapzola, is being studied in non-muscle invasive bladder cancer.
A new drug application is under active review by the FDA.
We look forward to making a presentation to the FDA advisory committee next month.
The FDA has established a decision date of December 11.
I am pleased with our sales this quarter.
We operate in a dynamic and competitive environment and are demonstrating our commercial strength.
This gives me high confidence in our ability to execute.
We have recently launched a sixth drug, Evomela, for multiple myeloma.
This is the first drug to win FDA approval of the high-dose conditioning indication in multiple myeloma.
Evomela is devoid of propylene glycol, a solvent that is present in both competing drugs and is considered [toxic].
In addition, our drug has the advantage of being more stable than the competition.
Our drug is also sold as a single vial and has an additional indication on the liver.
Customers are recognizing the operational benefits of Evomela, the more efficiently administered treatment to their patients.
We are pleased that we can offer this new option to patients and physicians.
In a nutshell, with multiple advanced Stage I oncology programs in development, the launch of Evomela in the US and a strong balance sheet, I am enthusiastic about the future of Spectrum.
We are focused on developing three drugs that target large indications such as chemotherapy-induced neutropenia, a multi-billion-dollar market; breast cancer and bladder cancer, both large markets.
The success of any of these would benefit both patients and shareholders and (inaudible) from our company.
We remain a highly diversified company not dependent on any one technology or any one drug.
In a few minutes, <UNK> <UNK>, our president and chief operating officer, will provide you more details about the operations later in the call.
But before that, let me hand over the call to our executive vice president and chief financial officer, Mr.
<UNK> <UNK>, to talk about the financials.
<UNK>.
Thank you, <UNK>, and good afternoon, everyone on the call today.
Let me just highlight a few areas.
First, total revenues for the quarter were $33.9 million.
Of this, product sales were $30.9 million, and licensing revenue was $3.1 million.
The sales of our PTCL franchise this quarter were $14.7 million, driven by continued strong demand for this franchise.
Fusilev sales were $10.5 million.
We continue to expect Fusilev sales to drop significantly based on the generic competition in the marketplace.
As we look ahead to the third quarter, we are seeing a much deeper drop in ASP, or average selling price, than we've seen in previous quarters, which will result in a much lower realized price to us.
We reported Evomela sales of just under $1 million.
Given that this is a new launch, we are recognizing sales based on pull-through sales to end users.
Our focus has been on gaining formulary access for Evomela in the leading US institutions.
We are pleased with the progress we are making here and we expect sales to grow in the second half of this year.
Moving on to expenses.
Our GAAP SG&A expenses were $27.6 million, but included the one-time legal costs.
Non-GAAP SG&A expenses were $16.1 million, which exclude these one-time expenses, were lower than last year's non-GAAP expenses of $19.7 million.
R&D expenses ramped up slightly in the second quarter relative to the first quarter excluding one-time milestones.
This is consistent with our expectation that these costs would increase based on the enrollment of our clinical stage asset.
The Company raised $45.1 million in the second quarter and an additional $28.8 million in the third quarter, for a total of $74 million, using an at-the-market securities offering.
With that, let me now hand the call over to <UNK>.
Thank you, <UNK>, thank you <UNK>, and thank you, Dr.
<UNK>, and thanks to everybody on the call.
Much progress has been made by our team in recent months.
Let me give you an update on the key programs that we have ongoing here at Spectrum.
SPI-2012, our novel long-acting G-CSF is our highest priority.
The drug has shown an excellent clinical profile and it targets a blockbuster market.
Our Phase 2 data demonstrated that SPI-2012 was not inferior to pegfilgrastim at the mid-dose tested and statistically superior in terms of duration of severe neutropenia at the highest dose tested.
We started enrolling our Phase 3 study in the first quarter.
This is a randomized controlled trial which will evaluate SPI-2012 in the management of chemotherapy-induced neutropenia in 580 breast cancer patients.
We now have 84 centers actively recruiting patients into the trial.
I am excited by the interest in our drug from leading clinicians, and I am pleased to report that our early enrollment is on track and this trajectory gives me confidence of achieving our goal with filing SPI-2012 BLA by 2018.
I am especially enthusiastic about this opportunity because our team has broad experience in the white blood cell factor growth market and oncology wherewithal to make this novel biologic a success.
I believe this drug has the potential to change the face of our Company.
Regarding Evomela, we are very pleased with the progress of the launch.
Customers are recognizing the advantages of Evomela's added stability, the absence of propylene glycol, the convenience of a one-vial system, and the additional indication on the label.
As a reminder, over 90% of this market is concentrated in just over 100 accounts across the US.
Furthermore, over half of the business is concentrated in the top 20 transplant centers.
These large institutions can take six months or longer to evaluate, accept and operationalize any new product.
We are encouraged by the fact that several top-tier transplant centers have committed to adopting Evomela.
As a result, we expect an inflection in sales going forward.
Moving on to poziotinib, our novel pan-HER inhibitor.
Poziotinib is being studied currently in a US Phase 2 study involving breast cancer patients who have received prior HER2 regimens.
We believe poziotinib has the potential to be a best-in-class pan-HER inhibitor.
Poziotinib has shown a 60% response rate in Phase 1 patients with breast cancer who had previously failed multiple lines of treatment, including HER2-directed therapies.
Our Korean partner, Hanmi, is studying this drug in Korea in many midstage studies in several tumor types, including breast cancer, non-small cell lung cancer, and gastric cancer.
We are focusing our efforts in breast cancer because of the exciting data we have seen from this compound.
Our strategy is to first seek FDA approval for this drug in breast cancer patients who have failed prior therapies and who therefore have few options left, and then continue to develop it for larger indications in combination with other therapies.
Lastly, let me talk about Qapzola, also known as apaziquone, our potent tumor-activated drug for bladder cancer.
This Phase 3 data from Qapzola was presented at an oral presentation at the 2016 Annual AUA meeting in May.
There are a couple of important milestones for this drug later this year.
First, we have an FDA advisory panel on September 14, and we are currently preparing for that advisory panel meeting.
We have engaged with experts in the field of urology to assist us in this important endeavor.
The FDA is expected to make a decision on the approval of this drug by the PDUFA date of December 11, 2016.
These are exciting times at Spectrum and we are well prepared for both the challenges and the opportunities of the future.
We are focusing on executing our strategy of delivering multiple advanced stage drugs that target large indications such as breast cancer or bladder cancer.
If any of these drugs are successful, it could transform Spectrum as we know it today.
We remain focused on the goals ahead and look forward to updating you on our progress.
With that, I'd like to turn the call back over to Dr.
<UNK>.
Thank you, <UNK>.
When progress has made in cancer prevention, detection and treatment over the past two decades, according to the American Cancer Society, cancer-related deaths are expected to increase from 8 million to 13 million worldwide.
We have three advanced stage assets that target large cancer markets that can have a profound impact on cancer patients, which is inspired by the opportunity to address the growing needs of patients suffering with cancer.
We are encouraged by the positive clinical results to date from our advanced stage drugs and are motivated to be the best that could transform the Company within the next five years.
With that, let's open the call for questions.
Operator.
To the best of my knowledge and understanding, it appears the decision will be based on the application that we have filed, NDA, rather than the ongoing study.
Does that answer your question.
That's a good question.
Patients should have failed two therapies, the HER2 therapies.
I'm not sure about (inaudible) treatments may not be allowed because FDA and the researchers don't look favorably that the patients go from one clinical trial to a second clinical trial.
However, I don't think that this is specially mentioned in the protocol that patients should not have participated in another trial.
What they say is patients should not have participated in any trial with poziotinib.
That's it.
So, to answer your question, patients should have failed two treatments.
No.
In fact, we have an agreement that we will share all the data with them, and they will share all the data with us in a free-flowing manner.
So, I expect a full cooperation from them, and as soon as the data is ready, which could be by the end of this year or early next year, we will have access to that data.
So, I'd just like to say that we have aggressive programs underway.
We are developing three drugs at the same time ---+ one in Phase 3 and one Phase 2.
We want to expand on these trials, so we want to make sure that we are well capitalized to run these trials in a very efficient manner.
So, at this time all 84 sites are in the United States.
We have just received approval from the Canadian HPB to start opening sites in Canada, and we expect over the next six months there will be some ---+ more sites will be added from Canada.
Let me have chief commercial officer, <UNK> <UNK>, take this question.
So, <UNK>, just to give you color from a physician's point of view, you have a drug that for the first time has an indication for high dose intensity for multiple myeloma that patients use bone marrow transplant centers.
The first time you have a drug that is not only highly active, but for the first time it does not have propylene glycol, which is a big concern.
And, of course, a third concern was that the shelf life of the existing drugs, the shelf life is 30 minutes to 60 minutes.
We have a shelf life of four hours.
So, I think these are advantages that I personally think and the physician who knows these benefits, why would they use another drug.
I have no idea.
Why would they use it, especially if there is no price differential.
So, I am persuaded by the argument that we have a superior product and it should ---+ as soon as the contractual issues and all these problems are solved, there should be an adoption in the clinics.
And this is premature.
All I can say is that we are not in the final stages of signing any agreement at this time, but as I say, it's premature.
There are always indications.
We have a number of companies we are talking to and they're talking to us, but we're not signing any agreement at this time.
I want to thank all of our listeners today for your interest in Spectrum.
We look forward to updating you in the near future on the progress that continues.
Thank you.
