SPPI
#Good afternoon, ladies and gentlemen, and welcome to the Spectrum Pharmaceuticals First Quarter 2016 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.
(Operator Instructions) As a reminder, this conference call is being recorded.
I would now like to turn the conference over to your host, <UNK> S.
<UNK>, Vice President of Strategic Planning and Investor Relations.
Thanks.
Good afternoon, and thank you for joining us today for Spectrum's first quarter 2016 financial results conference call.
I'm <UNK> <UNK>, Vice President of Strategic Planning and Investor Relations for Spectrum Pharmaceuticals.
With me today are Dr.
<UNK> <UNK>, Chairman and CEO; <UNK> <UNK>, President and Chief Operating Officer; <UNK> <UNK>, Chief Financial Officer; <UNK> <UNK>, Chief Commercial Officer; and other senior members of Spectrum's management team.
Here's an outline of today's call.
First, Dr.
<UNK> <UNK> will provide you with the highlights of the first quarter and discuss our overall direction and strategy.
<UNK> will then provide a summary of our first quarter financial performance.
Following this, <UNK> will review the company's operations, and clinical update.
We will then open up the call to questions.
Before I pass the call to Dr.
<UNK>, I would 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 risks 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 date of this conference call, May 5, 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 at www.sppirx.com.
I would now like to hand the call over to Dr.
<UNK>.
Thank you, <UNK>, and thank you everyone for joining us this afternoon.
These are exciting times for the Spectrum.
I am pleased to share with you five major accomplishments in the first quarter of this year.
First, our product sales were up compared to last quarter driven by strong demand for our PTCL franchise.
Second, we started enrolling patients in the registrational Phase 3 trial for SPI-2012, which is our most exciting drug in late-stage of development.
Third, we initiated a Phase 2 trial with Poziotinib in breast cancer patients.
Fourth, we signed a strategic partnership with Servier Canada to develop and commercialize four or our drugs in Canada.
Finally, we launched EVOMELA soon after its approval.
We now have six anti-cancer drugs on the US market.
The revenue from these drugs pays for most of our drug development costs.
We are now focused on developing three anti-cancer drugs that target large indications such as breast cancer and bladder cancer.
If any of these drugs are successful, I believe it could transform Spectrum.
This year our highest priority continues to be SPI-2012, a novel long-acting G-CSF, which recently entered Phase 3 trials.
We are pleased to see strong clinical interest in SPI-2012, approximately 60 US sites are now opened for enrollment.
We believe this drug by itself can change the pace of the company because our drug has excellent clinical profile, it targets a multi-billion dollar market and we have deep knowledge and understanding of this space.
Another drug that can be transformative for the company is poziotinib a pan-HER inhibitor.
This is a multi-targeted oncology drug that has shown the potential to be best-in-class.
We have started a Phase 2 trial assessing poziotinib's potential in breast cancer patients.
Thirdly, I am very excited about our recent approval of EVOMELA.
I am personally very proud of our team at Spectrum as we have worked swiftly to launch the product and EVOMELA is now available to treat patients.
Already signs from the recent launch are encouraging.
This weekend the Annual American Urology Association meeting is taking place in San Diego.
The clinical data on apaziquone in bladder cancer will be presented at an oral session.
As you know, we are expecting an advisory panel and an FDA decision on our apaziquone NDA for treating bladder cancer by December 11 of this year.
Overall, you can see why we believe that 2016 is going to be such an exciting year in Spectrum.
We are laser focused on advancing these three drugs; SPI-2012, poziotinib and apaziquone.
We now market sixth FDA approved anti-cancer drug in the United States and the revenue from these drugs helps us to invest in the development and potential expansion of our portfolio targeting larger markets.
Now, I will have <UNK> provide you more details about our financials and after that <UNK> will talk more about our operations and clinical update.
Now let me hand over the call to our CFO, Mr.
<UNK> <UNK>.
<UNK>.
Thank you, <UNK>.
Good afternoon to everyone on the call.
First, I'm pleased to announce that total revenues for the quarter were $43.9 million.
Of this, product sales were $35.2 million, which is slightly higher than last quarter.
Licensing revenue was $8.6 million.
And this was comprised of $6 million in licensing revenue from Servier in Canada and in addition to the Servier deal, we had licensing revenue of $1.9 million associated with our co-promotion deal with Eagle Pharmaceuticals, which kicked off in the first quarter.
Our business development efforts are infusing non-dilutive cash into the company to assist with our development objectives and this remains a high priority for the company.
Let me just say a few additional things about our sales this quarter.
We had a strong start to the year from our PTCL franchise.
The combined sales of FOLOTYN and BELEODAQ this quarter were $16.3 million, 35% higher than the $12.1 million in the first quarter last year driven by strong demand.
FUSILEV sales were $15.2 million, compared to $20.2 million last year.
Of the $15.2 million in recorded sales, $9.1 million was from actual shipments in the quarter while the remaining $6.1 million came from the recognition of previously deferred revenue.
We continue to expect FUSILEV sales to drop significantly based on increasing generic competition in the marketplace.
Moving on to expenses, I just want to point out that the new cost of service revenue line item in our income statement represents the cost of our sales team that is working on the Eagle co-promotion deal.
These costs would have otherwise been reported in the SG&A line.
With that, let me hand the call over to <UNK>.
Thank you <UNK>, thank you Dr.
<UNK>, and thank you <UNK>.
Most of all thank you everybody who is on the call today.
We developed several drugs that have the potential to improve the treatment of fatal disease.
We believe that success even in one or two areas will transfer the company into a relatively short period.
Several achievements are behind us and even more milestones are ahead of us.
I am extremely proud of our team and the dedication I have seen across multiple departments that has brought us to where we today.
That said, there is much more to do to transform our company.
Let me talk about the progress that we made over this quarter.
We recently received approval of EVOMELA two months earlier than expected.
Our team is now on the ground pursuing a focused strategy that we have laid out for this product.
They are well trained, laser focused on targeting high volume customers.
The Melphalan market is around $100 million and has concentrated in just over a 100 transplant centers across the country.
The Top 20 centers represent over 50% of the business.
Reality of the hospital market will require some runway in terms of revenue.
E&T committees, clinical alignments and contract negotiations are all critical components in these major institutions.
While it' very early in the launch, we're seeing positive signs.
I want to highlight the fact that we received approval for use in two indications, not one.
First, uses of high-dose conditioning treatment prior to stem cell therapy in patients who have multiple myeloma and second, for the payload of treatment of patients with multiple myeloma for whom oral therapy is not appropriate.
This is the only product that the FDA approved for the high-dose conditioning indication in multiple myeloma.
We are now a company that markets six FDA approved drugs and a revenue from those products are fueling development of our promising pipeline.
The highest priority in the company is SPI-2012.
This novel long-acting GCSF or Granulocyte Stimulating Factor targets a multi-billion dollar market.
Our Phase 2 data demonstrates that SPI-2012 was non-inferior to pegfilgrastim at the mid dose tested, and statistically superior in terms of duration of severe neutropenia at the highest dose tested.
We obtained special protocol assessment from the FDA and started enrolling the Phase 3 study recently.
This is a randomized, controlled trial, which will evaluate SPI-2012 as a treatment for chemotherapy induced neutropenia in around 580 breast cancer patients.
It's early in the enrolment cycle, but I am pleased with our progress to date.
In a short period, we now have approximately 60 centers opened for enrollment.
With this as our top development priority, it's important to remember that this registrational trial, unlike many oncology trials, has a relatively short endpoint, assessed by blood testing of absolute neutrophil counts over the course of a couple of weeks.
Our plan is to rapidly enroll this important study within approximately 18 months, quickly analyze the data and then expeditiously file the BLA.
Moving on to another high priority in the company, poziotinib, our novel pan-HER inhibitor.
We believe poziotinib has the potential to be a best-in-class drug.
Poziotinib has demonstrated strong Phase 1 clinical data in breast cancer patients with a response rate of 60% in patients who had already failed other HER2-targeted treatments.
Our Korean partner Hanmi is studying this drug in Korea in several mid-stage studies in different tumor types, including breast cancer, non-small cell lung cancer and gastric cancer.
Our Phase 2 trial is an open label study that will enroll approximately 70 patients with HER2 positive metastatic breast cancer, who have failed at least two prior HER2 directed therapies.
We are focusing our efforts in breast cancer because of the exciting data we have seen from this compound.
Our strategy is to first get this drug approved in patients who have failed prior therapies and who therefore have few options left and then continue to develop them from larger indications in combination with other therapies.
Lastly, let me talk about apaziquone, our potent tumor-activated drug for bladder cancer.
In the first quarter, the FDA accepted our NDA filing and provided us with a PDUFA date of December 11, 2016.
The FDA also indicated that it plans to hold an advisory committee meeting regarding the NDA.
Our team is already preparing for that advisory committee meeting.
Overall the first quarter has been productive and we keep progressing our late-stage pipeline.
We are focused on developing three drugs that target large indications such as breast cancer and bladder cancer.
I am really enthusiastic about our portfolio of late-stage drugs.
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 to Dr.
<UNK>.
Thank you, <UNK>.
In conclusion, I would like to reiterate our belief that Spectrum is poised for transformation within next few years based on the fact that the three drugs in Phase 3 and Phase 2 clinical development address significantly larger markets and even if only one of these drugs was to be successful it could make a huge difference for the Spectrum.
In addition of course, this year we have added one more drug adding to the revenue that we will bring to the company that pays for the development of most of our drugs.
I want to thank you for your interest in Spectrum and with that let's open the call for questions.
Operator.
(Operator Instructions) <UNK> <UNK>.
Nice quarter again.
First on the SPI-2012, could you talk a bit about how enrollment is progressing.
And then secondly, CMS seems particularly focused on Part B drugs.
How do you see the environment affecting 2012 when it is marketed if at all.
Thanks.
In SPI-2012 we just started the trials in the first quarter and we have been very busy lining up investigational sites.
We now have nearly 60 sites opened for enrollment in the United States and we are expanding these trials into Canada.
HPV has just ---+ we have been approached, I don't think we have been approved yet, but we are about to be approved.
In fact, I have visited Toronto myself and met several investigators who are very excited about starting to work with SPI-2012.
Today we are not going to give you any update on the number of patients enrolled.
However, I'll ask <UNK> or <UNK> to talk about the CMS Part B question of yours.
<UNK>, this is <UNK>, how are you.
Regarding the CMS reimbursements proposed legislation were watching that very closely.
As we've said in the past, what's exciting about SPI-2012 being a novel agent it will enable us to see the reimbursement landscape once that Phase 3 trial and of course assuming successful approval from the agency we will be able to access the market landscape and adjust our strategy accordingly.
But this was something that we had seen coming and are monitoring closely.
Okay, thanks.
So in terms of any reimbursement changes, do you expect it to have market impacts or is that needs to be determined.
I think that's going to be to be determined.
I think there is a common period now and we have to see what actually comes to fruition as it relates to that and then seeing (inaudible) actual ability to see the impact of that as the market progresses.
Hey <UNK>, this is <UNK>.
I'll just simply add to that, even in the proposal what they proposed was potentially going to two regions of the country and trying it there even as a test.
So we don't know what is going to happen with (inaudible) but I will say what the legislation does say today as far as reimbursement.
Remember we will not be tethered to the innovative product, that's another good position to be in.
I want to stress that.
Hey, thanks and then if I can get a follow-up on poziotinib, understandably it's an interesting target.
How do you see it fitting in vis-a-vis just the changes in the breast cancer landscape and especially versus other pan-HER2 inhibitors that are in development.
As you know, in oncology all of the improvements that have taken place in last 60 years have been in the smallest steps.
We had first pan-HER inhibitor was lapatinib.
And then neratinib has been making lot of noise, has been making lot of progress in their clinical trials and we believe that our drug has the potential of being best in class.
And breast cancer, mind you, breast cancer continues to be a challenge.
In spite of the fact that almost 700 patients are newly diagnosed each day in the United States alone with breast cancer and 110 patients die each day, there is hardly anything that has made the difference in survival of these patients.
Yet still this is one of the largest ---+ one of the single biggest killer of women in the United States.
So I believe that if the drug offers efficacy that we have seen ---+ we saw 60% response rates in Phase 1 trials.
And we have seen ---+ we are watching carefully both the efficacy and the safety of this drug and we are quite excited the way our partner Hanmi has been developing this drug in Korea.
In fact Hanmi has multiple tumor targets that they are developing in addition to breast cancer trial.
They have trials going on in other indications including gastric, colorectal cancers.
So we are quite excited about this molecule.
RK, HC Wainwright & Co.
I have a couple of questions.
The first one is on the EVOMELA launch.
Could you give us a little bit of a color as to how it's progressing and what kind of headway has been made in the Top 20 centers that you referred to which makes up the 50% of the market.
RK, I will just add, please keep in mind that this is the first time after nearly three decades that we have melphalan, which is our most active drug in multiple myeloma that we can supply it without propylene-glycol, which is toxic, number one, and number two, this is the first time that we give to these centers a drug that has long shelf life.
They don't have to run to give this drug within 30 to 60 minutes.
In fact, they have several hours of window of opportunity here.
So I would be very surprised if every single clinician does not find value in our product as compared to the genetic melphalan hydrochloride.
Yes, this is the safety and efficacy data from our trials that were completed in the past and that data is being presented at an oral session this Sunday in San Diego at the American Urological Association meeting.
And I'll be there.
If you are there, we will be pleased to share with you.
Well, clearly we are very excited about the data we have submitted to the FDA.
It is because of our excitement.
It is because we have convinced the drug is safe and effective that we have put together the NDA and we are very pleased that the FDA has accepted it for review and have now given us a PDUFA date.
So these are all exiting times, exciting signs for the drug; however, much will depend on the PDUFA date and I have no idea how the PDUFA, I mean the ODAC panel will.
One of my concerns has always been that the ODAC panel consists of oncologists.
However, apaziquone is a drug that is to be used by urologists and urologists are the ones who treat bladder cancer.
So time will tell.
I am hoping that the ODAC panel will see what we are seeing that the drug is safe and effective and there is unmet medical need.
Don't forget in the last 40 years no drug has been approved for non-muscle invasive bladder cancer.
There is definite unmet medical need.
So we are being quite excited about the data and about the upcoming ODAC panel and PDUFA date.
<UNK>.
Yes, not in the first quarter, mind you, we got approval on March 10 and all the ---+
To date, the answer is yes.
My preference would be to stay within the US and Canada.
This is a very important study for us and no matter what the people say that you can do trials all over the world, yes you can.
My preference is to stick to North American sites.
However, if you saw the enrollment wasn't picking up at the rate that we wanted it to be, then we are prepared to go to one or two countries where we have worked in the past and we can be sure of the quality of the data.
Right now the focus is on the United States and Canada.
And just to give you an idea, yes we are planning to open 100, 150 sites, that's correct.
Opening a site requires that our people, clinical people and the QA/QC people visit the sites physically, meet with the clinical investigator and the coordinator and sign off on their site to start enrolling patients.
And that's what I meant while the 60 sites have been qualified and they are opened for business.
However, there are several other sites that are in the process.
So in other words right now we don't have 100, 150 sites open, but I am hoping that in the next several months we will have more sites added and qualified to start recruiting patients.
Not yet, we haven't yet decided.
We haven't heard as to what the date would be, but (inaudible) the PDUFA date in December, I think the date will have to be sometime in September or October time frame.
Well, thank you once again.
We look forward to updating you in the near future on the progress that continues.
Thank you.
