CTI BioPharma Corp. (NASDAQ:CTIC) Q2 2022 Earnings Conference Call August 8, 2022 4:30 PM ET
Company Participants
Adam Craig – Chief Executive Officer & President
Jim Fong – Chief Commercial Officer
David Kirske – Chief Financial Officer
Bruce Seeley – Chief Operating Officer
Conference Call Participants
Boris Peaker – Cowen
Reni Benjamin – JMP Securities
Ben Burnett – Stifel
Thomas Flaten – Lake Street Capital
Gil Blum – Needham & Company.
Operator
Hello and welcome to the CTI BioPharma Corporation 2Q 2022 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today’s event is being recorded today August 8, 2022.
I’d now like to turn the conference over to Dr. Adam Craig, CEO and President of CTI BioPharma. Please go ahead.
Adam Craig
Thank you, Keith and welcome to this afternoon’s conference call. Joining me today 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, 2022 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 market adoption of VONJO and the future success of our product launch.
For a further description of these and other risk factors 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.
In February of this year, our lead product VONJO or pacritinib was FDA approved for the treatment of adults with myelofibrosis with a platelet count below 50 times 10 to nine per liter. In the United States of the approximate 21,000 patients with myelofibrosis two-thirds of cytopenias that is thrombocytopenia and/or anemia resulting from either disease progression or commonly from the toxicities of other approved therapies such as ruxolitinib. Severe thrombocytopenia defined as a blood platelet count below 50 times 10 to nine per liter occurs in one-third of the overall MF population and has a particularly poor prognosis.
In the second quarter of 2022, we continued to make substantial progress with the commercial launch of VONJO in the United States. Today, we are delighted to report $12.3 million in net product revenue for the second quarter, driven by significant growth in VONJO awareness among health care providers in both the community and academic settings and an overall share of voice that exceeds that of our competitors.
CTI continues to produce new data from our pacritinib program reinforcing VONJO’s clinical value as a safe simple and effective therapy in cytopenic MF. At ASCO and EHA earlier this year, our scientific presentations highlighted VONJO’s place as a product that is differentiated from older JAK inhibitors.
Our risk adjusted analysis showed that the safety profile pacritinib, 200 milligrams twice a day was comparable to best available therapy including ruxolitinib and that pacritinib 200 milligrams twice a day could be given as a full dose for patients with myelofibrosis including those with severe thrombocytopenia.
Additionally, full dose pacritinib achieved high response rates and a similar manageable safety profile, compared to the lower dose ruxolitinib, in patients with myelofibrosis, who have moderate or severe thrombocytopenia.
Looking ahead, starting this fall, we expect to share new data at international medical meetings that demonstrates pacritinib’s activity, as a potent ACVR1 ALK-2 inhibitor, as well as data on pacritinib’s important benefit — anemia benefit in myelofibrosis. Inhibition of ACVR1, which mediates hepcidin production, has been postulated as a mechanism for the improvement of anemia in MF.
Finally, I’m pleased to announce, that we have filed the patent term extension application, for our US composition of matter patent 8-153-632, with a requested five years of extension, which if granted would extend the expiration of this Orange Book listed patent from January 29 to January 2034.
I’ll now turn the call over to our Chief Commercial Officer, Jim Fong, to highlight our VONJO launch achievements. Jim?
Jim Fong
Thank you, Adam. As Adam just discussed, we are delighted to announce $12.3 million in net product revenue for VONJO this quarter. This impressive start to our launch is a direct reflection of our commercial team’s execution, as well as the demand that exists among MF patients and their health care providers that is HCPs, who are in need of a safe, simple and effective treatment option that is VONJO.
As previously mentioned, our experienced field team has been focusing on delivering against our three core VONJO launch objectives. One, build VONJO awareness among myelofibrosis HCPs; two, drive adoption and utilization in our top accounts and high-potential prescribers; and three, ensure optimal patient access via securing effective payer coverage, as well as our patient support services called CTI Access.
Regarding awareness, we are pleased that our promotional efforts and activities are resulting in significant growth in VONJO awareness, among our target HCP audiences in both the community and academic settings, with higher-than-expected VONJO product awareness after just a few months following launch.
Our sales results, also indicate we are making significant headway with HCV adoption and utilization. We believe that this stems from our team’s commitment to comprehensively educating the HCPs via their sales call activities, in-service meetings and implementation of numerous peer-to-peer educational initiatives that help identify appropriate VONJO patients.
Our peer-to-peer educational programs have been very well received, as evidenced by the high number of attendees, the vast majority of which are in person, illustrating that HCPs are very interested in myelofibrosis and the value proposition that VONJO offers.
In addition, I am pleased to report, that recent market research conducted at the end of May, shows that VONJO’s promotional share of voice has already surpassed that of both ruxolitinib and fedratinib, among high MF treaters.
Our commercial execution has resulted in continued strong growth in new prescriptions and new prescribers, in both academic and community settings. We are seeing early signals of strong refills occurring, and few early discontinuations due to adverse events. We believe the overall adoption, is indicative of the unmet need in the marketplace, including dissatisfaction with low-dose ruxolitinib and the potential to optimally treat patients with a full dose of VONJO safely and effectively.
Our research indicates HCPs have prescribed VONJO as a first and second-line therapy in myelofibrosis patients. A catalyst for this utilization can be attributed to the latest NPN National Comprehensive Cancer Network or NCCN guidelines. As we have previously highlighted, VONJO is the only approved JAK inhibitor recommended by NCCN regardless of platelet count. This includes as a first-line and second-line treatment for high-risk patients with myelofibrosis with platelet counts less than 50,000 who are not candidates for transplant and as a second-line treatment for lower risk and high-risk patients with myelofibrosis with platelet counts equal to or greater than 50,000 who are not candidates for transplant.
With respect to patient access our payer team continues to successfully expand coverage for VONJO with both commercial and Medicare plans. For example Caremark CVS the largest PBM is now covering VONJO consistent with our label and NCCN guidelines.
CTI Access 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.
In summary, I am very pleased with the launch progress and growth of VONJO in our first full quarter where we recorded $12.3 million in net revenue. These results could not have happened without the tremendous contributions from our entire organization including a special group of highly skilled passionate and dedicated people representing market access marketing and sales were all committed to one common mission identifying and helping MF patients who can benefit from VONJO.
I will now turn the call over to David to review our quarterly financials. David?
David Kirske
Thank you, Jim. Moving on to our financial statements. As of June 30th, 2022, cash and cash equivalents totaled $95.9 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 received from our at-the-market offering facility. This strengthens our financial position and extends our cash runway over the next 12 months.
Net product sales were $12.3 million and $14.6 million for the three and six months ended June 30th, 2022 respectively. Operating loss was $18.9 million and $19.5 million for the three months ended June 30th, 2022 and 2021 respectively and $54 million and $36.6 million for the six months ended June 30th, 2022 and 2021 respectively.
Net loss for the three months ended June 30th, 2022 was $22.7 million or $0.21 for basic and diluted loss per share compared to a net loss of $19.7 million or $0.21 per basic and diluted loss per share for the same period in 2021.
Net loss for the six months ended June 30th, 2022 was $59.8 million or $0.57 for basic and diluted loss per share compared to a net loss of $36.9 million or $0.44 for basic and diluted loss per share for the same period in 2021.
From an SEC reporting perspective, when assessing our cash runway, the accounting standards requires us to exclude a portion of future sales from our forecast since we have a limited sales history. As such, in our 10-Q filing, we report that our financial resources will enable us to fund operations for at least one year.
However as management, we believe that we have sufficient cash to meet our financial obligations through 2023 and beyond, subject to us meeting our sales forecast. It is important to differentiate this liquidity disclosure within our SEC filings from management’s assessment of its cash runway.
So with that, I will now turn the call back to Adam.
Adam Craig
Thank you, David. So in closing, we’re very pleased with our progress following commercial launch of VONJO earlier this year. And we continue to work hard to make CTI the market leader in the treatment of cytopenic myelofibrosis.
VONJO is a simple safe and effective therapy and importantly, it is seen as differentiated from other older therapies by health care prescribers. We look forward to ending this year with presentations demonstrating pacritinib’s activity as a potent ACVR1 inhibitor as well as data on pacritinib’s important anemia benefit in MF.
This concludes our formal remarks. Keith, please open the call for questions.
Question-and-Answer Session
Operator
Yes. Thank you. At this time, we will begin the question-and-answer session. [Operator Instructions] And today’s first question comes from Boris Peaker with Cowen.
Boris Peaker
Good afternoon and congratulations on excellent results.
Adam Craig
Thank you.
Boris Peaker
So my first question is do you have an estimate of how many patients may be have in the sidelines, because they couldn’t tolerate five mg dose of JAKAFI, but are maybe potential patients for VONJO.
Adam Craig
Yeah. Thanks Boris for your question. Jim, would you like to answer it?
James Fong
Yeah. Sure. We estimate that there are a few thousand patients on low-dose of ruxolitinib that are currently out there in various states of response or tolerability.
Boris Peaker
But I meant the ones that are not on rux that maybe couldn’t even tolerate the five mg dose and maybe awaiting something alternative.
James Fong
Yeah. We do not have those numbers, but we would expect that the first quarter we’ve seen here a lot of those patients have been prescribed VONJO.
Boris Peaker
Got it. And my second question is, you’ve mentioned in your prepared remarks that it’s about 1/3 of the myelofibrosis patients have severe thrombocytopenia. I’m curious, if you have any estimates on the fraction of patients that have severe anemia or perhaps both anemia and thrombocytopenia.
James Fong
Yeah. We would expect that we’ve seen similar to what we saw in our PERSIST-2 study about two-thirds of patients who have thrombocytopenia will also have accompanying anemia, so they kind of go hand-in-hand.
Boris Peaker
Great. Congratulations again and thank you for taking my questions.
James Fong
Thank you, Boris.
Operator
Thank you. And the next question comes from Reni Benjamin with JMP Securities.
Reni Benjamin
Hey good afternoon guys. Congratulations on a great quarter. A couple of questions for me maybe just some of the basics, as we look at the patients that are being treated.
Can you give us maybe a little bit more granularity, how many might be naive patients versus both JAKAFI? How many are switching from let’s say even five mg or 10 mg JAKAFI versus those that are getting prescribed new? And can you give us a sense as to the amount of refills that are kind of taking place right now?
Jim Fong
Yes Reni. So first off, we have limited visibility as I mentioned before to exact lines of therapy platelet counts things like that, but some of the market research we have done and EMR audits we have done where we get a snapshot, we see about half our patients are within the label less than 50,000 across first line, second line, third line. And the other half of the patients above 50000 platelet count that’s being prescribed spontaneously is typically in the second and third line.
Reni Benjamin
Got it. And can you give us a sense as to in terms of academic versus community what that ratio is looking like?
Jim Fong
Yes Reni. Essentially right now, in terms of the volume right now it’s about 60% is coming out of the academic standards and about 40% of our volumes coming out of the community. However, when you look at a number of accounts it’s about 50:50 academic versus community that have ordered and prescribed VONJO.
Reni Benjamin
Excellent. Okay. And then as we think about net revenues there are royalties that need to be accounted for. Can you just remind us, is the royalties being accounted for in the net revenues or is that something that’s expensed?
David Kirske
Ren those are expense below the line. So, royalties are not incorporated as part of the gross to net calculation.
Reni Benjamin
Okay. Okay. And then finally the SG&A was a little bit higher than our expectations. Is that kind of the new norm that we should be thinking about, or were there more kind of like one-off costs associated with this quarter?
David Kirske
It has been consistent through the quarter. So, I don’t anticipate any change from Q2 most of the costs of course associated with commercialization have already been incurred. So, any increases would be associated with increased marketing effort.
Reni Benjamin
Excellent. Thank you guys very much and congrats again.
David Kirske
Thank you, Reni.
Operator
Thank you. And the next question comes from Ben Burnett with Stifel.
Ben Burnett
Hey, thank you very much and congrats on the quarter. Want to ask just a question about inventory build. Can you talk about the level of inventory build that you’re seeing?
Adam Craig
Yes, certainly thanks for your question, Ben. Jim?
Jim Fong
Yes. Essentially our inventory build is reflective of demand. We purposefully kept our inventory levels low. So, it is truly reflective of the demand going out there in the marketplace.
Ben Burnett
Okay. Excellent. And then I wanted to ask a question regarding the patent extension that you were talking about filing for. What is the timeframe for gaining clarity here? And I guess can you talk about the considerations to go into seeing a patent extension be granted like this?
Adam Craig
Yes. So the timeframe unfortunately can be several years. The patent council has told us it can take quite a time for the extension to occur. But the application is based on the formula and we — our calculations based on the work that we’ve previously done with pacritinib shows that we easily exceed the five years extension the maximum that’s allowed. So, we’re highly confident that we will get five years. We — it would be unusual for a company to have an issue, given that the application is based on a formula, based on how much work you’ve done over the years.
Ben Burnett
Okay. Excellent. Thank you very much.
Adam Craig
Thank you, Ben.
Operator
Thank you. The next question comes from Thomas Flaten with Lake Street Capital.
Thomas Flaten
Hey, guys. Congrats on the quarter. I appreciate you taking my question. Given the, kind of, maybe not a surprise but unanticipated awareness and use in the community setting. I’m curious if that has caused you guys to maybe modulate your commercial plans at all given that there was a better base of understanding there and certainly better demand. I’m just curious if you guys had to make any positive changes if I can call it that.
Adam Craig
I’ll answer it first and then I’ll hand over to Jim. Certainly, we saw right from the start that the number of community accounts as Jim alluded to was higher who were engaged with us it was higher than we expected. So we certainly have had to in a positive way adapt our marketing and our sales activities to respond to the community and that’s been a good thing. Jim?
Jim Fong
Yes. And really all we’ve done really is probably accelerate our programs our promotional programs as I mentioned earlier to include a lot more community positions early on because they already hear about this. And so — and I think the other thing too is because previously those patients who had severe thrombocytopenia were often referred to the academic centers because there was nothing to FDA approved there. Now they have a product where they can keep and maintain the patients within their own practice so that has become a great advantage for them and they feel secure now in treating these patients and maintaining them in their practice.
Thomas Flaten
Great. And with respect to — and I know you’ve alluded to this a couple of times you have this great commercial infrastructure now and there was some talk about maybe looking for products to add in to shoulder part of the burden of that commercial cost. Do you have an update on BD activities, or is it just too soon at this point?
Adam Craig
We — as I’ve said previously Thomas we continue to look for products that are opportunities development opportunities that fit in with our skill set both on the development side and on the commercial side. And if we identify an opportunity we look forward to sharing it with the Street at the appropriate time.
Thomas Flaten
And then one final one. With respect to Pacific given that you’ve kind of refocused that outside the U.S. any updates or are things proceeding relative to plan there?
Adam Craig
Like everyone we’ve had the ups and downs because of COVID and the war in Ukraine but most recently over the last month Pacific has done very well. So we’re very encouraged. We are looking at adding some additional sites to maintain the level of enrollment. But over the last four weeks we’ve had some really strong enrollment in multiple countries which is a good sign probably some of the best enrollment we’ve had for some time.
Thomas Flaten
Great. Congrats again on the quarter. Thank you.
Adam Craig
Thank you.
Operator
Thank you. [Operator Instructions] And the next question comes from Gil Blum with Needham & Company.
Gil Blum
Good afternoon. And allow me to also add congratulations on the strong quarter. So just a couple from us. First of all, did you expect to have a bit of a bolus of patients? Kind of what are — what do you think the patient dynamics here? Are there like a lot of thrombocytopenic myelofibrosis patients that are just off treatment right now?
Adam Craig
Yes. Gil this is a very common question. Did we have a large bolus of very sick patients at the start of the launch. And, of course, we did have some. We did like in any drug launch they’re always very sick individuals who are waiting for new therapy to come along. But that — those patients have not been the bulk of our growth over time.
Recently we are getting new patients and the patients we’ve already had on board we’re having refills. We’re having good refill rates. So overall, the message here is our launch is not dominated by a large number of quite sick advanced patients, who came on at the beginning, this is the patients that we are providing drug to a much broader range of disease, as Jim said, first, second, third line patients who are treated on label below 50,000 and patients who are treated spontaneously above 50,000 platelet count.
Gil Blum
That’s very helpful. And maybe a bit of a mechanistic question on the ACVR1, ALK2 inhibition data. So would you – what would be the significance of this sort of activity especially from the hepcidin perspective would we expect improved quality of life for patients here or if you give us some guidance?
Adam Craig
Well, we’re going to present more data at medical conferences towards the end of the year. And in that, you’ll see, what we believe is an important benefit of pacritinib on anemia. Previously, we’ve – as reported in the PERSIST-2 trial, we have shown an anemia benefit but we didn’t have a mechanism of action to explain it, we recently did some work that demonstrated that pacritinib is a very potent ACVR1 inhibitor. And that’s all of the link between the clinical findings and the mechanistic findings.
So, now we’re able to put a hold of the two together, and we have a more complete story. And we’ve shared it confidentially with some of our opinion leaders. And I’m really, really pleased at how well it’s been received the offers of some of the abstracts that we’ve submitted for publication. So I think prescribers are going to be very interested in this data as we progress further into the year.
Gil Blum
Maybe a bit of a provocative question, you mentioned usually in the second-line setting thrombocytopenia goes pretty much hand-in-hand with anemia. When you look at the data from momelotinib there wasn’t that many patients who were both thrombocytopenic and anemic in the second line setting, it’s a little odd. Do you have any comments?
Adam Craig
Yeah. I – there are a number of aspects of that trial, but we can’t really explain. The population isn’t quite what we’ve seen previously. And remember, we’ve conducted two Phase IIIs and we’re into our third at the moment. So we’ve got a lot of data on this. We’re waiting to see the full publication, and then we can make a better assessment of that. But I do agree with you, there are some findings on that trial that don’t quite fit in with what others have seen.
Gil Blum
And maybe a last one, is there at any point that you guys are expecting to give guidance on sales, or should we wait for next year?
Adam Craig
Certainly, we don’t plan to this year. Well, David and I will keep looking at it over time, but it’s not something we plan to do at the moment.
Gil Blum
All right. Thank you so much for taking our questions. And again, my congratulations.
Adam Craig
Thank you, Gil.
Operator
And this concludes the question-and-answer session. Now, I’d like to turn the floor to Dr. Adam Craig for any closing comments.
Adam Craig
Well, just thank you, Keith, and thank you everyone for joining the call today. We very much look forward to further conversations over the coming months. Thank you.
Operator
The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.
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