CTI BioPharma Q4 2022 Earnings Call Transcript

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March 6, 2023

There are 10 speakers on the call.

Operator

Good morning, and welcome to the CTI BioPharma 4th Quarter and Year End 2022 Financial Results and Corporate Update Conference Call. As a reminder, this conference call is being recorded. I would now like to introduce your host, Remi Bernata, CTI Investor Relations. Please go ahead.

Speaker 1

Good morning, everyone, and thank you for joining us on the call today. 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 most recent annual report on Form 10 ks 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, including many that are beyond our control. These statements include our expectations regarding cash runway, timing to profitability, market adoption of Bonjour and the future success of our product launch.

Speaker 1

In addition, any forward looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward looking statements in the future, we specifically disclaim any intent to do so even if our views change. For a further description of these and other risks and uncertainties that may 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. On today's call, we have Doctor. Adam Pray, our President, Chief Executive Officer and Interim Chief Medical Officer David Kirschke, our Chief Financial Officer and Jim Fong, our Chief Commercial Officer.

Speaker 1

After our formal remarks, we will open the call for your questions. I would now like to turn the call over to Adam.

Speaker 2

Thank you, Ramin. Good morning. We appreciate everyone joining us earlier than planned so that we can provide a timely update following the recent release of portfolio revenue by our royalty financing partner. I want to start the call today by reflecting on the achievements we have made over the past year as we transform from a research and development organization to a fully integrated biopharma with a strong commercial presence. In the Q1 of last year, We received accelerated approval from the FDA for vongjo pacritinib for the treatment of adults with myelofibrosis With the platelet count below 50x10 to the 9 per liter.

Speaker 2

This approval launched our commercialization efforts, and we are extremely pleased with our progress to date. We generated $54,000,000 in net sales in just the first 9 months of commercialization, exceeding our internal year end revenue goal and in the process treated over 1,000 patients with Vondra in 2022, a meaningful achievement for rare disease such as MF. Jim Fong will elaborate on our commercial success in just a moment. But I'd like to spend a little time talking about the new data presented in December at the ASH Annual Meeting in New Orleans by Doctor. Stephen Oh of Washington University.

Speaker 2

In his Our presentation, it was shown that pacritinib is a potent act of in A receptor type 1 or ACVR1 inhibitor that has potential to provide a significant anemia benefit in patients with cytopenic myelofibrosis. ACVR1 mediates hepcidin production and its inhibition is thought to lead to improvements in transfusion independence and anemia in myelofibrosis patients. Anemia is common in MF, both at diagnosis and during therapy, and it's a poor prognostic factor. Almost all MF patients will develop anemia over the course of their disease due to disease progression and or drug from other approved JAK inhibitors. Doctor.

Speaker 2

O's presentation highlighted several key findings related to pacritinib. In vitro data demonstrated that pacritinib inhibits ACVR1 at 4x greater potency compared to momelotinib with 24 hour inhibition of the target. It was shown in vitro to reduce hepcidin levels. The clinical data demonstrated the treatment with Vonjo at the approved dose of 200 milligrams twice daily led to improvements in transfusion independence anemia when compared to best available therapy, which included ruxolitinib, in invaluable patients treated on the Phase 3 to study. Over the last year, we have worked hard to establish the Vonjo franchise in the commercial space.

Speaker 2

To this end, we have filed for a patent term extension for our main composition of matter patent that if granted would extend this by 5 years with an expected expiration date of 2,034. And last month, Fonjo was granted 7 years of orphan drug As we enter our 2nd year of commercialization for Vonjo, we are focused on generating quarter over quarter product sales, while providing the best care to patients with cytopenic myelofibrosis. With that, I'll now hand the call over to Jim.

Speaker 3

Thank you, Adam, and good morning, everyone. As I look back on 2022, I'm extremely proud of My commercial team and our medical affairs colleagues have led a successful launch for VONGO, a novel JAK2 ACVAR1, IRAK1 inhibitor. We achieved many accomplishments over the 1st 9 months of launch highlighted by the team exceeding our internal revenue goals and reaching the milestone of treating over 1,000 myelofibrosis patients. Looking ahead, we are very encouraged by the continued double digit sales growth of our team is producing. Today, I will provide a bit more context on these numbers as well as provide a snapshot of what we are seeing

Speaker 4

so far in

Speaker 3

2023. We completed a strong sales performance with a 16% quarterly sales increase in Q4 and continue to show strong launch momentum in the quarter across several key metrics including Consistent growth in new patient starts, substantial increase in the number of active patients on Vonjo, significant growth in new MF prescribers and accounts, A strong and expanding refill order rate and increased awareness and interest in VONGO's hematologic safety profile for anemia and thrombocytopenia. To maintain this trend, we continue to focus on educating our existing and new prescribers on the benefits of Vonjo. Throughout 2022, we have conducted approximately 200 peer to peer education programs, reaching more than 2,300 healthcare professionals. Due to these efforts, physicians are becoming increasingly aware of VANJO as an important treatment option for MF.

Speaker 3

The scientific and clinical rationale for VONGO is resonating with providers and they are recognizing siopenic MF as a different disease that requires a different therapy such as Vonjo. As a result, the number of Vonjo new prescription accounts continues to grow and a high proportion have become repeat users. Although my commercial team can only promote use consistent with the FDA approved label, we are seeing utilization the utilization of Vonjo evolve. In Q4, market research indicates approximately 50% of current Vonjo use is in patients with platelet counts atorabove50,000 per microliter compared to only 33% in Q3 with the majority of use coming from second line patients. This change is likely related to the increasing awareness of the NCCN recommendations for Vonjo.

Speaker 3

In addition, we are seeing growth of VONJU as a first line treatment as well as an overall increase in duration of therapy. As previously mentioned, our physician user base continues to expand with broader adoption and penetration. The success of our market penetration is evidenced by the fact that the number of community physicians prescribing Bonjo has now exceeded physicians in the academic setting. As we all recognize, adoption of new treatments is typically much slower in the community versus the academic centers. With the growing number of prescribers coming from the community, I believe this will translate into increased sales potential for Bonjour over time.

Speaker 3

Our sales momentum has carried nicely into 2023. We have seen consistent sales demand to start the year and I look forward to updating you in May on our Q1 results. In summary, physician adoption is growing due to the increased recognition of Vonjo's differentiated mechanism of action and hematologic safety profile for cytopenic MF patients. Notably, we also continue to garner increased acceptance from the entire NPN community as a whole with Vonjo becoming top of mind as evidenced by our continued strong brand awareness among our audience. We expect our highly effective commercial came to continue their progress in 2023, leveraging our robust promotional and educational efforts and maintaining a significant presence at major medical meetings.

Speaker 3

I will now turn the call over to David to discuss our financial results.

Speaker 5

Thanks, Jim. Our financial results for the Q4 year end 2022 were published this morning in our press release and are available on our website. Therefore, I will summarize our current financial status. As Adam mentioned, we continued to increase our product sales quarter over quarter. For 2022, I'm pleased to report that we generated $21,100,000 in net revenue in the 4th quarter and $53,900,000 for the 9 months of commercialization exceeding our revenue goals.

Speaker 5

All revenue was entirely attributable to the sales of Vonjo. As expected, Towards the end of the year, we observed some holiday seasonality with our product sales, which is common for most oncology drugs. Bonjour product sales also provided meaningful reductions in our overall operating loss in the Q4 and full year, while we continue investment in SG and A related to marketing and commercialization of the product. Our cash, cash equivalents and short term investments as of December 31, 2022 totaled $79,900,000 Subsequent to the end of the quarter, we received $6,500,000 in additional funding from our royalty agreement with DRI Healthcare Trust in January of 2023. Based on our current revenue projections and expenses, our objective is to be cash flow positive by the end of 2023.

Speaker 5

However, any meaningful changes to our clinical development plans or other transactions would impact this forecast. We have an active investment conference schedule over the next several months. We will be presenting on Wednesday, March 8 at the 43rd Annual TD Cowen Healthcare Conference, and we will also be participating in the Needham Healthcare virtual conference and Stifel Oncology Days in April. We look forward to these interactions and keeping you updated on our progress. I will now turn it back to Adam for closing remarks.

Speaker 2

Thank you, David. We are delighted to share our accomplishments on the commercialization of Vonjo with you today. CTI is now established as a market leader in the treatment of cytopenic MF as we offer simple, safe and effective therapy for patients with an important medical condition. For 2023, We are focused on expanding the use of Vonjo with the aim of driving quarter over quarter revenue growth. We also continue to explore ways to increase the long term potential for Vonjo through additional indications.

Speaker 2

This concludes our formal remarks. I'd now like to ask Shannon to open the line for questions.

Operator

Thank Please stand by while we compile the Q and A roster. Our first question comes from the line of Ken Shields with SVB Securities, your line is now open.

Speaker 6

Thank you and congrats on the great quarter. So you mentioned seasonality impacts for 4Q. I'm wondering if you can provide some additional color on this. And then additionally, You've mentioned the 50 to 50 on label versus off label population. Wondering if you have any color on how many of these patients We're potentially or the off label patients were potentially anemic myelofibrosis patients who have had higher platelets counts.

Speaker 6

Thank you.

Speaker 2

Thank you, Ken. I'll answer both those questions. First of all, we don't have that level of detail on the on whether the patients who are treated off label have anemia. That's not something we have. With regards to seasonality, the seasonality is really very much what we expected.

Speaker 2

The last quarter is a busy quarter for holidays. That's also the American Society Hematology meeting. So there's a lot going on that takes doctors out of the office and we experience seasonality in the same way as many, many companies do for in the oncology space.

Speaker 6

Okay. Thank you. And then just one more if I can. So you guys obviously got the milestone from DRI.

Speaker 7

Do you

Speaker 6

have any color on what that threshold was? Was that $50,000,000 and or additional milestones expected this year, any color there? And does that factor into the cash flow positivity guidance by end of 2023? Thank you.

Speaker 5

Thanks, Ken. This is David here. We don't disclose the details of that milestone payment. It is incorporated into Our guidance with respect to our cash forecast.

Speaker 6

Okay, thanks.

Operator

Thank you. Our next question comes from the line of Ben Burnett with Stifel. Your line is now open.

Speaker 8

Hey, thank you very much. I guess I want to ask just two quick questions. First, I guess, where do you see the most ground to be gained kind of over the near term in terms of the Bonjour launch? Is it about getting deeper into the community or are there other aspects of the launch that's a bigger focus?

Speaker 3

Hi, Ben.

Speaker 2

Jim, please.

Speaker 3

Yes. Hey, Ben. This is Jim. Yes. So essentially, yes, we see the growth really coming from the community and continue to expand there.

Speaker 3

So no doubt that that's the observation we're looking for. In addition, obviously, we're looking to get continue to get better prognosis patients in the queue for us as well.

Speaker 8

Okay. Excellent. I guess on that last point, so what are you seeing in terms of duration of treatment? Do you expect this Change over time? So like, I guess, in other words, does the initial bolus of patients taking BONGO, is that representative of sort of kind of what you expect The average patient, the duration of treatment from that average patient to be?

Speaker 3

Yes. Ben, obviously, we've only had 9 months into our launch. So it's tough to really prognosticate on the durations. However, to your point, Like any new drug launch, the initial patients are going to be the probably the poor prognosis patients. And so the durations typically are parallel to that.

Speaker 3

However, as we mentioned before, the evolution of the use of VONGO is towards better prognosis patients and we're seeing the durations parallel that.

Operator

Thank you. Our next question comes from the line of Gil Blum with Needham. Your line is now open.

Speaker 7

Good morning, everyone, and congratulations on the progress. Maybe you could remind us how many Patients are cytopenic on diagnosis.

Speaker 3

Jim? Yes. So essentially, at you said at diagnosis, right, Gil? Yes.

Speaker 7

Yes.

Speaker 3

So at diagnosis, Approximately, a third of patients will have platelet count less than 100,000 and at diagnosis, probably about 40% of patients will have anemia without form of Saudi Pena.

Speaker 7

Got you. And over time that generally increases because of disease progression?

Speaker 3

Absolutely, absolutely, yes. In fact, you'll see over time when you look at prevalence data, about 2 thirds of patients Well, our fleet with comps less than $100,000

Speaker 7

My second question is regarding Guidance, and I know it wasn't provided in this quarter, but I'm curious as to what Gates' decision about providing guidance? Thank you.

Speaker 2

Thank you, Gil. We're not going to provide guidance at this time. We when we're ready to provide guidance, We will let you know. One of the factors we're looking at is gross to net at the moment. And as we've spoken about Publicly, the gross to net is still somewhat bearable.

Speaker 2

Until it stabilizes, we'll refrain from providing guidance.

Speaker 7

Thank you. That's very helpful.

Operator

Thank you. Our next question comes from the line of Rene Benjamin with JMP Securities, your line is now open.

Speaker 7

Hey, good morning guys. Thanks for taking the questions and congratulations on the quarter. Adam, I guess I'd like to stick with the ACVR-one data that was reported at ASH. I'm kind of curious as to What are the next steps, right, for the company? Is there any way to Like what would be required to get this into the label?

Speaker 7

And how do you see this data ultimately being utilized from a commercialization effort?

Speaker 2

Yes. Well, first of all, the anemia data is a post hoc analysis. So it's unlikely that the clinical data would get into the label. However, the mechanistic data, the ACBL-1R and the pharmacodynamic and pharmacokinetic data around that It may be possible to get that label and that's something the team is working on. Moving Forward, it's an important component of our scientific education of physicians through our medical science liaisons.

Speaker 2

It's not a data set that we Jim's team can But we can discuss it scientifically. And in 2023, we are expanding the number of medical Science liaisons we have in the field, so that we can continue the conversation around the ACBR1 data. After ASH, we had a lot of inbound interest and a lot of requests to discuss the data with us. And that's why we've increased the Number of people who are able to do that, that is the medical science liaisons.

Speaker 7

Can you just provide some additional color? How much would you tell us the increase will be for MSLs? And Just kind of reading in between kind of what you said, I just want to confirm, you won't be starting some sort of A larger study, let's say, to evaluate the anemia benefit going forward, it would really just be based on the data that's been generated to date?

Speaker 2

Well, the anemia benefit will be assessed in the PACIFICA trial. As with respect to how much, I don't have a number to give you there. Post ASH, we have had a significant amount of interest in the anemia data. It was a very successful ASH for us, and we've come out of that into this quarter with a lot of questions and activity and discussions around the data. So it was very productive for us scientifically.

Speaker 7

Got it. And then just my final question, can you just talk a little bit about how you're thinking about Price increases and how we should be thinking about the Q1, only because other companies that we follow tend to have increased gross to net right in the Q1 as they Trial health patients with the resetting of the co pays and the like. Can you give us maybe a sense as to how we should be thinking about The revenues for this quarter?

Speaker 2

We had a price increase at the end of the year. We haven't we're not going to comment on price Increases for the rest of the year because there are a number of factors that we have to take consider. And as the year progresses, we may or may not do an additional price increase. It's not a decision we've made at the moment.

Speaker 7

Sorry, I just wanted to know about the first

Speaker 2

I'm sorry, Ram, I think you asked about the Q1. We're encouraged. We've had a good start to the year, and we're progressing very well. But We will be reporting our Q1 results in about 8 weeks' time.

Speaker 7

Thanks for taking the

Speaker 3

question. Wren, I'm sorry, did you ask about the Q1 in terms of price increase or I'm sorry?

Speaker 7

Yes, I was more just trying to get a sense like we Typically see a decrease in revenues in the Q1 because there's an increase in gross to net with other drugs like ruxolitinib As companies try to help cover the donut hole with patients, there's a delay to fill scripts. There's just some interesting dynamics that happened in the Q1 just because of the reset that takes place. And so from an insurance perspective and I just wanted to get your guys thoughts on How that might impact, bonjour?

Speaker 2

Yes. Ram, we'll be happy to talk about that during the Q1 report call. We can't talk about that today.

Speaker 7

You got it. Thank you guys very much.

Speaker 2

Thank you.

Operator

Thank you. Our next Question comes from the line of Thomas Flaten with Lake Street Capital Markets. Your line is now open.

Speaker 9

Hey, good morning. Thanks for taking the questions. Jim, you mentioned that The number of community prescribers had exceeded the number of academic prescribers. I was wondering if you could characterize patient starts or total patients Along those lines as well, has that is that the same dynamic or are you still waiting for more patients in the community today?

Speaker 3

Yes. So that is the dynamic, correct. So we are seeing the new patient starts growing and that growth is exceeding in the community of those in the academic center. So we're really pleased about that because like we said, it's a really good Mark are for penetration adoption and uptake of a new product launch.

Speaker 9

Great. And then any Comment on lower dose VONGO prescribing in patients that might be challenged with the adverse events?

Speaker 3

Yes, we are seeing some of that, no doubt. If there are patients who are frail, that is up to the discretion of the physician. But by and large, the vast majority of VONGO prescriptions are at the proper dose of 200 BID.

Speaker 9

Got it. And then one quick one for David. There was a Pretty significant uptick sequentially in R and D and SG and A. Was that end of the year, David, or is that

Speaker 7

a new baseline we should use going forward?

Speaker 5

I mean that is reflective of our concurrent investment in SG and A. So it's as revenue continues to drive forward that benefit, We are using to invest in commercialization, as well as marketing.

Speaker 7

Great. Appreciate it. Thanks, guys.

Operator

Thank you. Our next question comes from the line of Robert Hazlett with BTIG. Your line is now open.

Speaker 4

Thanks. Congrats on the progress and I have a couple for me. Just I know you are not forecasting any price increase This is Adam. But what was the price increase around year end? Sorry, how could you say how much that was?

Speaker 3

Yes. Hi, Bert. This is Jim Fong. Yes, it was approximately at 9.9% on January 3rd.

Speaker 4

Okay, great. Thank you. And then just with regard to the anemia data, is there kind of a broader strategy with regard to NCCN guidelines or additional publication that we should be thinking about as we think about kind of the evolution of Bonjo?

Speaker 2

Yes, certainly. We've already submitted some anemia data to the NCCN. It's actually under review. But the final data set from Stephen Oh's work will be submitted once the latest versions are We're waiting for publication based on data we submitted last year. Once it's published, We can then submit the additional data.

Speaker 2

And we do expect there to be a modification of the guidelines sometime around midyear with the potential approval of mamilosinib.

Speaker 4

Okay. Terrific. Is there additional IP that's available With regard to anemia for Vonjo?

Speaker 2

I doubt it. The composition of matter The IP is pretty robust and with the 5 year patent term extension that will take us 2,034. I doubt the anemia data will be will provide anything. It would have for additional patent Protection or patent filing, we'd have to have something that was novel and it's probably wouldn't be considered as such.

Speaker 4

Okay, terrific. Just one more for me. There's a material jump in prescriptions and in various metrics. I know that is a hugely blunt instruments, especially with regard to products like Vonjo, but we saw a jump in the January data. Are there is there anything behind that?

Speaker 4

Just would like to maybe know a little bit more or is that the anemia data kicking in or other things at work there? Thanks.

Speaker 3

Bert, what are you what data are you referring to? Do you have a different syndicated report?

Speaker 4

The Symphony data, there is various prescription data, manufacturing, benchmark sales, different data metrics like that that show a Pretty material jump and I just want to make sure I understand some of the elements behind that.

Speaker 3

Yes, Bert, as you've seen, obviously, the momentum that was created in Q4 ahead of Q1 is really continuing. And I think the So we had already again seen robust momentum already started by the end of the year as the messages started to really penetrate our target audience. But I think the oral presentation at ASH, no doubt, continued to fuel that momentum that we're seeing today in Q1.

Speaker 4

Okay. Thanks very much.

Speaker 3

Thank you, Bert.

Operator

Thank you. This concludes the question and answer session. I'd now like to hand the conference back over to Adam Craig for closing remarks.

Speaker 2

Thank you, Shannon, and thank you, everyone, for joining the call today. We appreciate your continued interest in CTI, and we look forward to keeping you updated on our progress. Shannon, that now concludes the call.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

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