CTIC (2022 - Q1)

Good afternoon. Thank you for standing by. Welcome to the CTI BioPharma's First Quarter 2022 Earnings Call. During today’s presentation all parties will be in listen-only mode. After the speakers presentation there’ll be a question-and-answer session. [Operator Instructions]. This conference is being recorded today, May 12, 2022. I'd now like to turn the conference over to Dr. Adam Craig, CEO and President of CTI BioPharma. Please go ahead. Adam Cra

Thank you, Victor, and welcome to this afternoon's conference call. Joining me today are David Kirske, Chief Financial Officer; Bruce Seeley, Chief Operating Officer; and Jim Fong, Chief Commercial Officer. Following formal remarks, the conference call will be open for questions. Before we begin, please note that during this call, we will be making forward-looking statements based on current expectations. Such statements are within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including, but not limited to, the types of statements identified as forward-looking in our 2021 annual report on Form 10-K that was filed on March 31, 2021, and our subsequent periodic reports filed with the SEC, which are available on our website in the Investors section. Such forward-looking statements, which are indicated by terms such as expect, intend and seek, represent our views as of the date of this call, are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those anticipated by the forward-looking statements, includes -- including many that are beyond our control. These statements include our expectations regarding cash runway, market adoption of VONJO and the future success of our product launch. For a further description of these and other risks and uncertainties that will cause actual results to differ materially from those expressed in the forward-looking statements as well as risks related to our business, please see our periodic reports filed with the SEC. So the first quarter 2022 was transformational for CTI as we work towards becoming the market leader in the treatment of cytopenic myelofibrosis following the recent FDA accelerated approval of VONJO or pacritinib for the treatment of adults with myelofibrosis with a platelet count below 50 times 10 to 9 per liter. This approval was based on the Phase III PERSIST-2 trial, a study that enrolled myelofibrosis patients with platelet counts less than or equal to 100 times 10 to 9 per liter, making it the only randomized controlled study specifically designed to recruit the cytopenic myelofibrosis population, that is patients with thrombocytopenia and anemia. In the U.S., there are approximately 21,000 people with myelofibrosis. Two-thirds of these patients have cytopenia, resulting either from disease or accompanied from the toxicity of other approved therapies. Severe thrombocytopenia, defined as a blood platelet count below 50 times 10 to 9 per liter, occurs in one-third of the overall MF population and has a particularly poor prognosis with a median overall survival of just 15 months. On approval, our VONJO sale team were fully trained on the plant label, and we're able to commercially launch VONJO within 10 days of FDA approval. The market has responded very well to launch primarily due to the fact that VONJO is highly differentiated when compared to other therapies. We are extremely proud of our progress thus far, having exceeded our internal projections with $2.5 million in net product sales in just a few weeks. In addition, we were recently pleased to announce that VONJO is now included as a recommended treatment in the latest National Comprehensive Cancer Network or NCCN Clinical Practice Guidelines in Oncology for Myeloproliferative Neoplasms, increasing the treatment options for patients. VONJO is now recommended within the guidelines as a frontline treatment for high-risk patients with myelofibrosis with platelet counts less than 50 times 10 to 9 per liter. And there's a second-line treatment for lower and high-risk patients with myelofibrosis in platelet counts equal to or greater than 50 times 10 to 9 per liter. VONJO is the only approved JAK inhibitor recommended by the NCCN for myelofibrosis patients regardless of platelet counts. I'll now pass the call over to Jim Fong, our Chief Commercial Officer.

Thank you, Adam. As Adam just mentioned, we are thrilled to report the $2.3 million in net product revenue for VONJO generated from just 19 selling days. The impressive sales results reflect the strong demand due to the significant unmet need for cytopenic MF patients and VONJO's differentiated clinical profile compared to existing MF treatments. It's important to note that we intentionally kept initial launch inventories low. And as a result, our specialty pharmacies and distributors have already reordered VONJO multiple times in March. Initial utilization of VONJO has been both as first-line and second-line therapy in patients with platelet counts less than 50,000 as well as spontaneously in patients with platelet counts above 50,000. While early adoption has been robust in the academic accounts, I'm particularly pleased to report that the uptick in the community setting has been higher than we expected potentially driven by the level of dissatisfaction to the suboptimal therapy of low-dose ruxolitinib and the potential to optimally treat cytopenic patients with an effective full dose of VONJO. As we move forward into the quarter, our MF target audience continues to show great excitement for VONJO with significant growth in new patient starts, first-time prescribers and high refill rates week over week. Looking forward, as we proceed with the execution of the commercial launch of VONJO, we will remain focused on our 3 main launch objectives and are expected to build a strong foundation for success. First, we continue to build awareness among MF treaters as to the clinical significance and prevalence of cytopenic myelofibrosis, the specific challenges these patients face and the limitations of existing therapies to adequately treat these patients. Second, we will continue driving adoption and utilization across our high-potential prescribers and accounts. In response to the needs of our customers, we are investing in a mix of both in-person and virtual promotional resources to support our experienced field team while also leveraging peer-to-peer programs, digital marketing and medical conferences to ensure maximal HCP coverage and appropriate education. While COVID-19 still presents challenges for our field team, we have had higher-than-expected number of in-person meetings following our FDA approval. To this end, I am proud to inform you that our sales and marketing teams executed a highly successful VONJO national launch broadcast across 35 cities at the end of March that was attended by over 500 health care professionals, the majority participating in person. Third, we are focused on ensuring optimal patient access to VONJO. As previously reported, on approval, we immediately launched CTI Access, our comprehensive patient support program. CTI Access, staffed by highly skilled oncology case managers with deep experience in access and reimbursement, offers patients high-touch support throughout the reimbursement process. CTI Access will provide robust financial assistance program for eligible patients, including co-pay assistance, rapid start and coverage interruption programs and where appropriate, a program that will provide VONJO at no cost to eligible patients who do not have insurance nor whose insurance does not cover VONJO. During the first quarter, our patient services team has been able to minimize coverage denials and affordability issues and provide VONJO bridge therapy for those patients waiting for coverage approval. Lastly, among the many new patient starts in March, none have required enrollment into our patient assistance program. In conclusion, I firmly believe VONJO will continue to make a meaningful difference in the lives of patients with cytopenic myelofibrosis who have platelet counts below 50,000 in the coming months and years ahead. And based on the feedback we have received from our customers, they believe this as well. I will now turn the call over to David to review our quarterly financials. David?

Thanks, Jim. As of March 31, 2022, cash and cash equivalents totaled $96.9 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 of $60 million received from DRI Healthcare Trust under the terms of the royalty agreement. Net product sales were $2.3 million for the 3 months ended March 31, 2022, and no revenue was reported for the 3 months ended March 31, 2021. Operating loss was $35.1 million and $17.1 million for the 3 months ended March 31, 2022, and 2021, respectively. Net loss for the 3 months ended March 31, 2022, was $37.2 million or $0.37 per basic and diluted loss per share compared to a net loss of $17.3 million or $0.23 per basic and diluted loss per share for the same period in 2021. We expect our present financial resources, including cash receipts from receivables arising from historical net product sales of VONJO but excluding any proceeds of future net product sales of VONJO, will enable us to fund our operations into the first quarter of 2023. Until we have a more established history of sales, the GAAP accounting standards do not permit future net product sales of VONJO to be included in the calculation of our estimated cash runway. And it's important to note that we've recently received proceeds from our at-the-market offering, the ATM facility. These proceeds strengthen our financial position and extends our cash runway. For further details of the ATM, please refer to our Q1 2022 Form 10-Q. So with that, I will now turn the call back to Adam.

Thank you, David. So today, we are delighted to report a strong initial VONJO launch that has exceeded our expectations. VONJO is a safe and effective therapy that is highly differentiated in the marketplace. Our goal is to become the market leader in cytopenic myelofibrosis. And to that end, we are working hard to establish VONJO as a standard of care for patients with low platelet counts in both the community and academic settings. We look forward to keeping you appraised of our progress over the coming months. That concludes our formal remarks. Victor, please open the call for questions.

[Operator Instructions] Our first question comes from the line of Bert Hazlett from BTIG.

Thanks for taking the questions. And congratulations on the approval. And congratulations on the robust sales straight out of the gate, very impressive. Just a couple of questions for me. First off, in terms of early patient prescriptions for VONJO, can you say whether there -- these are largely newly diagnosed patients? Or are they switches from those patients previously on JAK inhibitors? And then I have another question or two.

Okay. Thank you, Bert, for your kind words. I'll hand the question over to Jim Fong.

Essentially, yes, we've seen both newly JAK-naive patient starts as well as second-line patients as well. So we've seen both in our launch.

And are these patients -- you spoke about patients that have platelets below 50,000 as well as patients with platelets above 50,000. Do you have any breakdown of that now? And are there any trends? I know it's very, very early days, but are there any trends that you're seeing in the breakdown of those types of patients?

Yes. First off, I just want to reiterate, we are promoting within our label of less than 50,000. And -- but despite that, we are seeing spontaneous use above 50,000 as physicians have their own -- used their own judgment. But we have limited data, Bert, based on our visibility to the platelet counts that come into the specialty pharmacies. So we really can't give an accurate depiction of that.

And Bert, if I can add, with the NCCN guideline update is only a few weeks old. And within that, as I said, we have guide -- there are recommendations that allow for patients -- well, that recommend patients VONJO therapy in patients with platelet count less -- greater than 50,000. Those recommendations are pretty new, and it will take a little bit of time for those to be established in the marketplace before we have a clear idea of what the split is.

Terrific. And I know you -- and just one more for me. I know you mentioned this in your prepared remarks, but just to say it maybe a little different way. The cash guidance that you've given into the first quarter of '23 excludes any future VONJO product sales during '22? That's correct? Is that the way to think about it?

Yes. Yes. Bert, thanks for bringing that up. That's absolutely correct. The accounting guidance currently does not allow us to incorporate revenue into our cash forecast process. Therefore, what you're seeing in our disclosures in 2Q 2023 excludes revenue with the exception of what we've recognized in Q1.

Look forward to more growth and look forward to more updates. Thank you.

Our next question comes from the line of Ben Burnett from Stifel.

I'll add my congrats to the initial progress. I wanted to ask just a question on just -- you mentioned you're having some initial conversations with health care professionals. I realize it's early days, but where are you seeing kind of initial demand come from specifically just community versus like more academic institutions?

Yes. So certainly, in our remarks, it's -- we had -- we're surprised by the amount of interest we've had in the community. It's been more than we expected. Jim, would you like to elaborate on that?

Yes. As Adam said, we're surprised the academic centers certainly jumped on early, but we were surprised -- because they have experience from the clinical trials. But the large academic centers, the large community oncology practices and even some of the smaller ones have adopted as well. And that's kind of where we're surprised by this. So we've had similar number of accounts order from the community as well as the academic. So we're seeing a really nice balance that way, which is surprising.

Okay. Excellent. That's great. And can I also ask, is there -- do you have a sense at this point sort of the time it takes to go from script to a patient getting a drug like just the prior auth process and everything?

Yes. Yes, exactly. Right now, it's averaging about 7.3 days from prescription to fill.

Excellent. And this may be too early, but do you have a sense as to where that could track sort of long term?

Say that one more time?

Do you have a sense as to where that could track long term? Or is that -- like could that number change?

Could that number change? What we've seen historically is 5 to 7 days for most commercial products.

Okay, excellent. Thank you very much and appreciated.

And our next question will come from the line of Gil Blum from Needham.

Let me add my congratulations on a strong launch here. So maybe a quick one around commentary that you made. What kind of physician feedback that you've been getting, if any? I mean, it was interesting that you noted that physicians are excited about this process, that is no longer giving low-dose rux, if you can elaborate on that a little bit?

Yes, I'll answer that first, and I'll let Jim answer if there's any additional comments. The physician -- the frustration of physicians, as we've said previously, is the dissatisfaction with low-dose rux. It's very common, particularly in the community practice because dose -- the dose has to be altered based on the toxicities seen, and it's -- it can be a complicated management scenario. What the feedback -- some of the feedback we've got from physicians has been the attractiveness of VONJO is that the drug can be given at full dose without the need for large numbers of dose modifications. And that's very attractive to them together with the safety profile. The safety profile is extremely important. Again, it helps in the management. And we were very pleased with this -- the data that ended up in the product label, and it has been very well received in the community. Jim?

Yes. To further on what Adam was saying, that's the whole point. Physicians don't like to dose modify. They'll do it because they have to. But to have one dose they can use at the full dose, 3 patients who have cytopenic myelofibrosis who have a worse prognosis by the fact that they've got low counts is -- has been such a big compromise to them all these years. It's all they've had to do, but they have to compromise on patients who have the poorest prognosis yet use the smallest dose of ruxolitinib. Now they don't have to compromise anymore. And that's the beauty of it from a clinical perspective and also the simplicity is also what's so attractive as well, just one dose for everybody.

That is very helpful. And maybe another one. I know you guys already mentioned that you've seen a split of both front line and second line. Will we be given some granularity on this at some point?

It will be tough to really provide granularity on that only because again, we have limited data that comes into our specialty -- through our hub and our specialty pharmacies. About 50% of our prescripts right now go directly to the accounts. So we don't have that visibility to give that type of granularity.

Okay. That does make sense. And maybe a last one, considering your -- you mentioned you're making progress on visibility. Should we expect a boost from you guys at ASCO?

Yes, you will.

There we go. And ASCO is very important to us, Gil, because there's a lot of community he monks who attend it. And that's why our presence is very important.

Yes, there will be some several very interesting presentation in ASCO in the space. So I look forward to it.

[Operator Instructions] Our next question will come from the line of Boris Peaker from Cowen.

I'd like to add my congratulations to the progress and a great launch. Maybe let's just probe into the first partial quarter launch. Of the $2.3 million in sales, do you have a sense of how much of that is maybe inventory build versus end-user demand?

Yes, it's a very small inventory level. Jim? Thank you, Boris. Jim?

The majority of that is demand.

Got it. And can you also comment on the split between academic versus community centers for VONJO? And how do you expect that to evolve over time?

Yes. Right now, again, in terms of the number of accounts that have ordered VONJO and prescribed VONJO, the accounts were almost 50-50 split in terms of a little bit more academic versus community. But I would expect it would have been like 70-30 or 80-20. But as we go on with the evolution of the VONJO, the VONJO volume, I believe, will start to exceed more use in the community than the academic centers.

Got it. And my last question, and then along these lines, I was expecting it to also be in the community setting. What is the marketing strategy to the community docs for such a drug?

Yes. That's a really important sector for us. We have deliberately wanted to make a very community oncology friendly marketing program, where we have limited distribution. And so the in-office dispensing community practices can keep their prescriptions. And so that's very attractive. And obviously, this product is very simple for the community oncologists to use, and they don't necessarily have to then refer these patients to the academics when their accounts get low. Now they can maintain these patients within their own practice and then keep the prescriptions within their own facilities.

Great. Congratulations again.

Thank you, Boris.

Our next question will come from the line of Thomas Flaten from Lake Street Capital.

Let me add my congrats as well. To the discussion about community versus academic, has that -- are there any learnings from that with respect to the commercial footprint targeting, et cetera, that you've taken on board? And any changes you feel the need to make this early?

No. I think we've always looked at that as such a big opportunity with the growth and explosion in oral oncology. So we knew that the community piece was going to play a major role. So we've aligned our field team and our ancillary functions to address that population. So we don't need to see any changes in the near future.

And then with respect to Medicare versus commercial, any thoughts on how that's breaking down?

Yes. Right now, no surprise, right, with these patients are older. We're seeing about 70% Medicare and 30% commercial.

And Jim, in the future, where do you expect that to track?

It may come down a little bit closer to more of an even split. But right now, it's about 70-30.

Got it. Appreciate that. And then with respect to -- and I don't want to beat the community versus academic to death, but within the community, is it more stand-alone? Or are you thinking larger practices, TOPA, Florida Cancer, et cetera?

It's interesting, we're seeing both adoption within large practices and even the stand-alones. So we've been surprised by some of these smaller practices have already ordered a bunch -- a few times already. So it's been both.

Great. I appreciate.

And I'm not showing any further questions in the queue. I'd like to turn the call back over to Dr. Adam Craig for any closing remarks.

Thank you, Victor, and thank you, everyone, for joining the call today. We appreciate your questions and interest in VONJO. We look forward to further conversations over the coming weeks and months.

And this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.