CTI BioPharma Corp. (NASDAQ:CTIC) Q3 2022 Results Earnings Conference Call November 8, 2022 4:30 PM ET
Company Participants
Adam Craig – President, Chief Executive Officer and Interim Chief Medical Officer
James Fong – Executive Vice President and Chief Commercial Officer
David Kirske – Executive Vice President and Chief Financial Officer
Conference Call Participants
Kelly Shi – Jefferies
Kenneth Shields – SVB Securities
Bert Hazlett – BTIG
Benjamin Burnett – Stifel
Reni Benjamin – JMP Securities
Gil Blum – Needham & Company
Thomas Flaten – Lake Street Capital Markets
Operator
Good afternoon. Thank you for standing by. Welcome to CTI BioPharma Third Quarter 2022 Earnings Call. During today’s presentation, all parties will be in listen-only mode. This conference is being recorded today, November 7, 2022. [Operator Instructions].
I’d now like to turn the conference over to Dr. Adam Craig, CEO and President of CTI BioPharma.
Adam Craig
Thank you, Liz. And welcome to this afternoon’s conference call. Joining me today are David Kirske, Chief Financial 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 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.
Today, I’m delighted to share our accomplishments with the launch of VONJO as we work towards becoming the market leader in cytopenia myelofibrosis by offering a safe, simple and effective therapy for patients with an important medical need.
As a reminder, the FDA approved VONJO, pacritinib, in February for the treatment of adults with myelofibrosis with a platelet count below 50 × 109/L. In the United States, of the approximately 21,000 patients with myelofibrosis, two-thirds of cytopenias that is thrombocytopenia and/or anemia resulting either from disease or commonly from toxicity of other approved therapies such as ruxolitinib.
Severe thrombocytopenia, defined as a blood platelet count below 50 × 109/L, occurs in one-third of the overall MF population and has a particularly poor prognosis with an overall median survival just 15 months.
The commercial launch of VONJO in United States continues to exceed our internal projections. Today, we are pleased to report $18.2 million in net product revenue for the third quarter, reflecting a 48% increase in sales compared to the second quarter. VONJO is being actively prescribed to patients with platelet counts less than 50 × 109/L and we understand that VONJO is also being used spontaneously in patients with higher platelet counts.
The growth in the uptake of VONJO has occurred both in the community and academic settings, reflecting growing awareness among healthcare providers that VONJO is differentiated from existing MF therapies and that it can be considered a new standard of care for the treatment of cytopenia MF.
The inclusion of VONJO in the NCCN clinical practice guidelines in oncology for myeloproliferative neoplasms earlier this year has further reinforced VONJO’s meaningful role in the treatment of MF. Our medical affairs team continues to educate health care providers on these guidelines where VONJO is the only approved JAK inhibitor recommended by the NCCN regardless of platelet counts.
Over the last six months, we’ve continued to learn more about the potential mechanisms of action of VONJO in cytopenic MF. In September, at SOHO 2022, we presented new data that showed pacritinib to be a highly potent inhibitor of ACVR1. ACVR1 mediates hepcidin production and its inhibition is thought to lead to improvements in transfusion independence and anemia in MF patients. Our analysis demonstrate that treatment with VONJO at the approved dose of 200 milligrams twice daily led to improvements in transfusion independence and anemia when compared to best available therapy in evaluable patients treated on the Phase 3 PERSIST-2 study.
We’ve heard from healthcare providers that a clinically meaningful anemia benefit could be an important factor in the decision making with respect to the treatment of cytopenic myelofibrosis.
As our understanding of this benefit expands, we look forward to presenting additional data on this topic during an oral presentation at ASH 2022 next month.
I’ll now turn the call over to our Chief Commercial Officer, Jim Fong, to discuss the highlights of our VONJO launch. Jim?
James Fong
Thank you, Adam. As Adam just mentioned, we are pleased to announce $18.2 million in net product revenue from VONJO this quarter, a 48% growth compared to the second quarter. We were very pleased by the robust uptake of VONJO here in just our second full quarter of launch and are confident in our ability to deliver strong growth over the coming quarters.
VONJO is a simple, safe and effective new treatment option that addresses the urgent need of existing MF patients. Our ongoing launch momentum stems from the effective execution of the VONJO launch plan by our sales, marketing, market access and medical affairs teams who are deeply committed to making VONJO the market leader in cytopenic myelofibrosis.
Our commercial strategy continues to focus on our three core VONJO launch objectives. One, build VONJO awareness among myelofibrosis healthcare providers. Two, drive adoption and utilization with 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.
Our promotional efforts and activities are driving growth in VONJO brand awareness among our target HCP audiences. Recent market research studies indicates we have already achieved brand awareness that’s equal to or exceeding Inrebic, which has been on the market for several years.
We continue to invest heavily in peer to peer programs that are designed to educate our HCPs about VONJO, identify the appropriate patients and ultimately support VONJO demand. Our field teams have executed approximately 160 peer to peer programs through the end of the third quarter, program centered reached more than 1,800 HCPs. This strong HCP participation underscores broad interest in cytopenic myelofibrosis, and more specifically, in VONJO’s differentiated clinical value proposition to address the unique needs of these patients.
We are also seeing steady growth in new prescribers, new patients, new prescriptions and refills across all lines of therapy in both community and academic settings. Approximately 80% of our accounts have reordered VONJO multiple times. Feedback from the field and market research indicate that future prescription growth will result from the early identification of second line cytopenic myelofibrosis patients.
With respect to patient access, our payer team continues to successfully optimize coverage decisions with payers for VONJO as both commercial and Medicare plans now have approximately 70% and 90% coverage, respectively. In addition, our patient services team has effectively minimized coverage denials and affordability issues and provided VONJO bridge therapy for those patients waiting for coverage. Thus, the vast majority of patients who are prescribed VONJO receive it.
In summary, I’m very pleased with the VONJO’s launch progress and growth in the third quarter when we recorded $18.2 million in net revenue, a reflection of the clear unmet need that exists for cytopenic MF, our customers’ excitement for VONJO’s differentiated clinical profile and our team’s strong execution in the field.
I will now turn the call over to David to review our quarterly financials. David?
David Kirske
Thank you, Jim. Moving on to financial highlights. As of September 30 2022, cash and cash equivalents totaled at $81.6 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 and the $60 million payment received from DRI Healthcare Trust that we received upon approval. This increase strengthens our financial position and extends our cash runway through at least the next 12 months.
Net product sales were $18.2 million and $32.9 million for the three and nine months ended September 30, 2022, respectively.
Operating loss was $12.2 million and $23.4 million for the three months ended September 30, 2022 and 2021, respectively, and $66.2 million and $60 million for the nine months ended September 30, 2022 and 2021, respectively.
Net loss for the three months ended September 30, 2022 was $15.7 million or $0.13 for basic and diluted loss per share compared to a loss of $24.2 million or $0.26 per basic and diluted loss per share for the same period in 2021.
Net loss for the nine months ended September 30, 2022 was $75 million or $0.69 per basic and diluted loss per share compared to a net loss of $60.1 million or $0.70 per basic and diluted loss per share for the same period in 2021.
So with that, I will now turn it back to Adam.
Adam Craig
Thank you, David. And thank you, Jim. So in summary, we’re making strong progress with the commercial launch of VONJO. VONJO is a safe, simple and effective therapy that is differentiated from existing older therapies. VONJO’s role as a potent ACVR1 inhibitor and its clinical benefits on anemia continues to be studied, and we look forward to presenting new data in oral presentation at ASH next month.
As our market penetration increases, we are successfully moving towards our goal of becoming the market leader in the treatment of cytopenic MF.
That concludes our formal remarks. Liz, please open the call for questions.
Question-and-Answer Session
Operator
[Operator Instructions]. First question will come from Boris Peaker with Cowen.
Unidentified Participant
This is [indiscernible] calling for Boris Peaker. Congrats for the strong quarter again. Can you comment on the anemia data presented at SOHO and in comparison to the update you’re going to present at ASH? What additional data will you get in the meeting compared to the abstract? And how should we think about the difference between pacritinib and momelotinib?
Adam Craig
The most important component of this data is we’ve shown pacritinib to be an ACVR1 inhibitor. Previously that had not been demonstrated. And in fact, the data that will come out at ASH shows quite conclusively that we’re the most potent ACVR1 inhibitor amongst the JAK inhibitors that are approved and we are – we will show at ASH – four times more potent than momelotinib. So, that mechanism then allows us to understand something we’ve known for a while, which is that pacritinib does have an anemia benefit. We published data on this in the John Mascarenhas manuscript that came out in the PERSIST-2 trial.
But what we’ve looked at recently is the impact of transfusion independence because that’s a very important outcome, and that’s the outcome that Sierra Oncology used to assess the effects of momelotinib.
And what we found is, whilst the data is not collected and analyzed in exactly identical ways, we’re really shown that we are as good as momelotinib with respect to anemia benefit. And that’s very important because many of the patients in which we treat who have thrombocytopenia also have anemia.
So, we see the data is very important in leveling the playing field with momelotinib. And given the fact that we have much better data in the cytopenic MF setting across the board with SVR and TSS rates. We continue to believe that we are and should be the treatment of choice for patients with cytopenic MF.
Operator
The next question is from Kelly Shi with Jefferies.
Kelly Shi
Congrats on a great quarter. Firstly, can you comment on VONJO’s new patient starts in Q3 and how does it compare to Q2? I also have follow-up.
Adam Craig
Jim is not going to give specific answers. But he can give general answers there. Jim?
James Fong
We’re really encouraged and really pleased with the growth in new patient starts. And we continue to see that as we move on into even this quarter. So, we’re really excited about that, as physicians gain more experience and confidence with our asset.
Kelly Shi
How many days in Q3 were impacted by the recent 10% drug price increase? And entering Q4, do you expect the seasonality effect due to holidays that could have boosted sales from overstocking?
Adam Craig
I’ll answer the first bit. So, the price increases came in early August. As you mentioned, seasonality, we should say there was some seasonality in this quarter. And I think that’s important to say. The majority of companies that are oncolytics do experience seasonality over the summer months, and we did like everyone else. Jim, your thoughts on seasonality for the rest of the year?
James Fong
Yeah. No doubt that the holidays certainly impact some of the demand as patients don’t simply want to go in to see their oncologists. But we believe that the strong growth in new starts and new prescriptions leading up into the fourth quarter here should carry us through to another strong fourth quarter.
Adam Craig
Of course, Kelly, we also have ASH, which is a great forum where we can meet with many of our prescribers and interact with them and share with them our thoughts on the anemia data through the medical affairs team.
Operator
The next question comes from Ken Shields with SVB Securities.
Kenneth Shields
Congrats on a great quarter. I was just wondering if you guys had any color on, I guess, the degree of off label usage that could be – being used spontaneously, as well as maybe any color generally on breakdown between first line, second line or potentially third line settings?
Adam Craig
As I said, I think I’ve said to you and others, the majority of our patients have platelet counts less than 50,000. But it’s a very significant minority. It’s not a small number of patients at all. It’s a considerable number of patients who are treated spontaneously at the discretion of the treating physician. And obviously we cannot promote in that area.
With respect to first line, second line, where we are we thought we would be with respect to first line, the first line population is an incident population. So it takes some time for that group of patients to grow in our patient mix. Where we’re getting the majority of our patients at the moment, as Jim said, it’s a very important area of growth for us, is in the second line setting because they’re prevalent patients and there continues to be a very high degree of dissatisfaction with ruxolitinib, particularly low dose ruxolitinib. And that’s an opportunity for us to grow the market in that area.
James Fong
Ken, I’ll just add other color to as well. Well, the NCCN guidelines, obviously, give us a two way recommendation in the second line above 50,000. And so, what we’ve heard anecdotally in the field as well as in market research that physicians are certainly leveraging the NCCN guidelines in that second line above 50,000, choose our product based on their medical judgment spontaneously.
Operator
The next question comes from Bert Hazlett with BTIG.
Bert Hazlett
My first line, second line question was just asked. I’d like to know how you think about the sales force infrastructure and whether it’s right-sized not only for today, but for the arrival of potential additional competition in the MF space.
James Fong
Obviously, this is a rare disease and a pretty well defined disease state because of Incyte’s work. We know that there’s approximately 4,700 HCPs that treat about over 80% of the patients and about 1,200 accounts. And so, we have sized our field force to adequately cover that alignment. So we’re very comfortable with where we are. And certainly, adding more people doesn’t – given the finite number of HCPs and accounts really doesn’t make a lot of sense.
In addition, we will be the only company solely focused on one asset that sells in the myelofibrosis space. So that will be 100% of our commitment and our investment of our resources, unlike other players in this space.
Adam Craig
And it’s important to mention that, with respect to our costs over the coming year, we don’t expect a large increase in our costs for sales and marketing because we think the headcount will remain very stable. There may be a small increase or an increase for inflation, but we’re not anticipating a large increase in sales and marketing costs.
Operator
The next question comes from Ben Burnett with Stifel.
Benjamin Burnett
Congrats on the quarter. If I can, I’d like to ask two questions. One around the anemia data, burgeoning anemia data that you put out there, especially at Houston a few months ago. Can you talk about what you think it will take for this data to percolate within the medical community broadly? How do you get physicians to sort of broadly recognize VONJO’s anemia benefits? Or is this already happening?
Adam Craig
Yes, we cannot promote anemia data. But we can educate and share it through our medical affairs team, which is what we’re doing very actively, I had the opportunity to sit in on an advisory panel just a week ago, where the ASH anemia data was shared confidentially to a group and the reaction was very positive and people are talking about it.
We should say, Ben, people in the field have reported since launched anemia benefit with this drug. We hear anecdotally, again and again. So, when we share the analysis in PERSIST-2 and the kinase profile data on ACVR1, many of the people we see it just saw – it’s the missing link, the missing piece of the puzzle. When they see it, it will make sense. So it’s very well received universally, very well received.
And as I said in remarks, I do think it will become part of the decision making process of treating physicians. But obviously, we cannot promote, we can only educate around the anemia data.
James Fong
Ben, the other thing I’ll just add to that is the original PERSIST-2 manuscript does outline anemia data with pacritinib. And so, our field force right now is able to share that currently from the PERSIST-2 manuscript. The additional analysis from SOHO and upcoming ASH is what Adam is talking about. But just so you know, our field force is actually out there educating physicians about the anemia benefits that was published in the original PERSIST-2 manuscript.
Benjamin Burnett
Actually, Jim, if I could also ask you another question. I think you mentioned earlier that in terms of payer access, or getting access to drug basically anyone who gets prescribed it gets that drug, but maybe just feedback with regards to patients that have platelets above 50,000 at baseline, is there any color you can provide there in terms of the access that those patients are getting?
James Fong
As I mentioned earlier, the NCCN guidelines have been very, very beneficial for healthcare providers who choose to spontaneously use pacritinib in that setting above 50,000, particularly in the second line. And so, again, what we’ve heard anecdotally from the physicians is that the NCCN guidelines have been very effective and getting prioritizations and letters of medical necessity approved to the payers and getting coverage for VONJO above 50,000 platelet counts.
Operator
The next question is from Reni Benjamin with JMP.
Reni Benjamin
Congratulations on a great quarter. Maybe I can just start off. How many accounts have you grown or reached compared to the last quarter, coming to the third and kind of where do you want to be by the end by the end of the year? I think Jim mentioned in his prepared remarks as well that there’s like 1,200 accounts total and you’ve reached about 1,800 HCPs. I’m kind of trying to follow the trajectory as to where we might be by the end of this year?
Adam Craig
I’ll let Jim answer. Again, as I said earlier, we’re not going to give specific numbers today except for revenue. The most important thing for us is to grow quarter-on-quarter. And I believe that’s what we’re doing and that’s what we continue to do for next year. Healthy growth quarter-on-quarter. I don’t think we’ve even began to tap the potential of this drug. I think we’ve had a good start. We’re very happy to exceed our own internal projections. But growth is what we’re aiming for.
I’ll let Jim answer your question. But I don’t think he’s going to give you any specifics.
James Fong
Sorry, Reni. But just know that we’re really pleased with both the new prescriber and new accounts that are part of that target population, where I just mentioned that have really adopted the product. And as I mentioned before, the good news that we’re seeing multiple orders from 80% of them. And so, that shows you that there’s repeat usage as well as refills happening. So those are all good signs that we look for successful launch.
Reni Benjamin
Just sticking with this for a second, are there accounts that are not coming on board? And if they’re not coming on board, what are some of the reasons and how do you overcome?
James Fong
Actually, we’re not seeing that as a big issue. All of our key accounts have ordered the product. It’s just a matter of, like we said before, having the ability to educate them and then gain the experience and then having [indiscernible] to reorder the product. That’s not a big issue for us. We’re not concerned about that.
Reni Benjamin
I guess, just finally, for me as we, as we look at kind of the real world application and usage of pacritinib, how’s it tracking compared to clinical trials not just from a perspective of duration or response, but maybe also from a safety perspective because that was something that we had always thought about?
Adam Craig
Yeah, let me answer that. So we don’t have all the data on how it’s tracking because we’re only six months really, seven months into the launch. But that is something we’re looking.
I am in my role as interim chief medical officer able to see the safety data, the pharmacovigilance data, and I’m pleased to say the drug is well tolerated. We’ve not identified any new signals or any areas of concern. The data is reviewed regularly with the team. It was reviewed a couple of weeks ago. And so far very pleased. In the real world, I would say the drug is tolerated better than we found in the clinical trials. That’s probably a reflection of a broader range of patients. Our clinical trials were pretty specific in who we enrolled. In a broader population, very happy. Very happy with how the drug is being tolerated and the safety profile to date.
James Fong
I was just going to say, to that point, we are not seeing those early discontinuations that happen when the drug is not tolerated that happens in the first few weeks of therapy. We’re not seeing that. When they discontinue, it’s typically due to progressive disease because these patients were such poor prognosis patients. So that’s a great sign for us.
Reni Benjamin
And congrats.
Operator
The next question comes from Gil Blum with Needham.
Gil Blum
Let me add my congratulations for a strong quarter. At what point do you think you guys are going to start providing us with guidance for sales? We have a couple of quarters in now.
Adam Craig
I think as we move into next year, we will be able to start providing guidance. We’re only six months into the launch, Gil. And as we’ve spoken about with you and with others, there’s a lot of variability at the beginning of the launch, particularly with respect to the GTM. We are finding the gross-to-net number is now stabilizing. I think once it stabilizes and Jim is on a clear trajectory, then we can provide some guidance next year. I don’t think we will be providing guidance for the remaining of this year, but certainly in 2023, I think we will, particularly if the GTNs continues to be stable. I think that’s the biggest variable that we encounter on a weekly basis.
Gil Blum
Maybe a quick housekeeping question. As you have already noted, the SG&A is going to go up maybe a little bit, then stabilize. Should we expect a continuation of drop in R&D expenses.
David Kirske
Gil, I think what we’re seeing is a stabilizing of the expense run rate in those areas. And as we’ve talked about in the past, it took a while to build up the commercial infrastructure, including marketing, but it’s starting to stable. And as we are entering into our budget process, there’s no need to expand. There will be some costs associated with inflation, but that’s the extent of it.
Operator
The next question is from Thomas Flaten with Lake Street.
Thomas Flaten
Congrats, Adam, just with momelotinib coming and the strength of the anemia data that you have in hand, have you guys considered and perhaps rubbished a labeling strategy for that, maybe even elevating one of the tertiary endpoints in PACIFICA to a secondary endpoint, something like that?
Adam Craig
Yeah, we are looking at how we can use the PACIFICA data to generate anemia benefit data. But that’s still going to be several years away to us.
The other area we may be able to get it in will be the NCCN guidelines. The NCCN is revising their guidelines. Now we expect them to come out with version 4 the early part of next year. And then if there is an opportunity during 2023 to include some anemia data, we’ll submit it and see if it can be included. I think there’s two strategies. I think the NCCN approach is the one that’s most likely to be successful in the shorter term.
Thomas Flaten
Perhaps only anecdotally, but for those low dose rux patients that are being switched over to pacritinib, is there any consistency in theme? Is it side effect driven? Is it efficacy driven? Or are they just so overwhelmed by the availability of pacritinib, they’re taking patients off of low dose rux even if they’re not having any particular issues with it? I’m just curious if you could color in some of that.
James Fong
What we’re seeing is it’s across the board, whether it’s the progression of the disease on low dose rux because certainly it’s not a proper dose or the spleen is still a problem or symptom is still a problem with a breaking through. That’s when they’re switching over. There’s tolerability despite them being on low dose rux. We still see counts going down after a while. And so, largely, it’s progressive disease because the drug is not effective at that dose and/or tolerability. But we are starting to see some physicians who are taking people off because they believe they can get a better response on pacritinib than what they’re getting now.
Thomas Flaten
And then just one final one, if I may. This idea of cytopenic myelofibrosis and the co-occurrence of thrombocytopenia and anemia, I get that that’s probably well recognized in the academic centers. Is that well recognized in the community? Do you have to do a lot of education just around that co-occurrence? Or do people recognize that kind of just intrinsically?
Adam Craig
You’re right, Thomas. That term and all that has really been a big driver for us to try to get across. And that’s why I mentioned 160 programs we’ve already done through the third quarter largely in the community setting with over 1,800. ACPs where we have introduced and educated on cytopenic myelofibrosis. So you’re right. It’s largely already accepted within the academic setting, but we’re continuing to educate the community providers on this specific part of the disease data. It’s really segmenting the population that’s ideal for pacritinib.
Operator
At this time, I would like to turn it back to Dr. Craig for closing remarks.
Adam Craig
Thank you, everyone, for your questions. Thank you for joining us today. We look forward to conversations over the coming days, weeks and months.
Operator
Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.
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