Welcome to the Oncopeptides Q4 Report for 2019. Throughout the call, all participants will be in listen-only mode, and afterwards, there will be a question-and-answer session. Today, I'm pleased to present the CEO, Jakob Lindberg, and the CFO, Anders Martin-Löf. Please begin your meeting.
Thank you very much. Warm welcome everyone to our Q4 Report for 2019. As you all know, as a biotech company, sometimes the Q4 reports or the quarterly reports can be rather thin in information since we rarely report clinical data in these reports, and that is also the case today. We will present a brief overview of where we are, a little bit about the data that was presented in December, and finally, of course, the financials, where we stand, as well as the news flow in the coming year. We will allow for questions and answers before finishing the call. Thank you. Please turn to slide number three. Thank you. Recent highlights. In summary, we are on track with all the activities that we are pursuing.
The light chain amyloidosis study, as you might be aware, the first study in an indication outside of multiple myeloma has been initiated, but we've still had a few screen failures on the patient side, a bit unlucky, and the first patient should be dosed any moment now. When it comes to the phase III study, OCEAN, as you know, we have said that the last patient in in that study will come end of Q1 2020, and we are on track for that. Could potentially be a few days into April, but basically, we are on track with the recruitment plan as presented last year when we updated that one. The LIGHTHOUSE study, we have had a slight delay, I would argue. As you know, we waited to get all the papers ready for the drug supply of that study with J&J and Johnson in December.
Once the ink had dried on all that paperwork, we could then start the work to actually initiate the study. We thought we would be done by end of Q1. It will most likely be a bit into Q2, but nothing major. The study will start more or less according to plan as well. As to the submission for HORIZON, we are targeting the end of Q2 2020, just like we said when we updated everything after the pre-NDA meeting that we had with the FDA on December 3rd. Just a little bit of recap then what we presented in December. We presented updated data on HORIZON, the study for the accelerated approval submission, and as you know, it had a 29% overall response rate and 24% in triple-class refractory myeloma patients, which is the target population for the submission.
This is a very good result. We will come back to that. We also presented combination data with our drug melflufen together with daratumumab, where we actually had 14.3 months in median progression-free survival, which once again, given the context with single to double class refractory patients with a combination should be somewhere looking at historical controls between seven and a half and 11.5 Months. 14.3 is a very good result. Going back to the pre-NDA meeting that we had with the FDA on December 3rd, we had a small update to our submission plans there since the FDA wanted us to include all 157 patients. That means that the database cut for the submission will be January 14th. We are currently cleaning all the data and preparing all that information.
I will come back to the news flow regarding that because that will most likely introduce a new news item during the spring since that is the full study that we're going to sit on the results on within short. Of course, the application will be submitted end of Q2 2020. We also recruited in December our U.S. President, Joseph Horvat, and he has been hard at work to create the commercial organization and the infrastructure so that we are ready to launch the drug on U.S. soil at the end of the year. Next slide, please. Slide number four. Most of you are probably familiar with this slide, as noted, we are in the middle of the program now of all the four trials here in myeloma.
We will also initiate the LIGHTHOUSE trial in combination with daratumumab since it's not ongoing yet, it's not on this slide. We also have several other small trials in myeloma actually that we will report on during the spring, especially an early access program in the U.S., which is sort of a pre-submission program given the medical need in this patient population that will be initiated during the year in the U.S. I mentioned most of these studies on the general update, we can go straight to slide number five. Thank you. Slide number five actually describes the label strategy that we have for myeloma. First you see the orange boxes. This is basically the target patient population for the HORIZON study and the accelerated approval, and hence our initial label in the U.S.
The label will focus on triple-class refractory patients as depicted in the first box, roughly a 20,000 patient population in the U.S. on an annual basis. Then, as we have mentioned before, we have really good data in myeloma patients with metastatic disease, so-called extramedullary disease patients. We don't know exactly what can be and cannot or will not be included in the label regarding this, we hope to have some type of text. We don't know how the FDA will respond to this. That would actually expand the patient population quite significantly, compared to just the triple-class refractory patient population alone on a standalone basis. This would be an upside scenario. Of course, we won't really know until late this year if we can include some language regarding this patient group or not.
We have two set of studies that will expand the label in two steps. We have the OCEAN trial, where we report the study results end of the summer this year. That's at least the plan. That will allow us to treat patients that are single to double-class refractory patients, so an earlier patient population, that currently is treated with one drug plus minus steroid. We would address that patient population based on a positive OCEAN outcome. That is also the label extension we would get. We have the LIGHTHOUSE trial that would expand this label even further by allowing single and double-class refractory patients to now be treated with melflufen plus daratumumab, so a combination agent.
As you can see, we have a pretty aggressive strategy in making sure that we capture all relevant segments of patients with relapsed refractory multiple myeloma. Of course, all of this will then roll out during roughly a 24 to 30-month period if you include the LIGHTHOUSE result, that of course will come the last. Both HORIZON and OCEAN will come in this year in terms of results and will be rolled out as labels then roughly within, in terms of HORIZON, at the end of the year is the plan at market authorization date. For OCEAN, it will be late 2020. Going to the next slide, please. Slide number six. These were the results that we presented at the American Society of Hematology meeting in Orlando. As mentioned early on, we had a response rate of 29% in the overall population.
That is the bar to the far left. In the middle group, the triple-class refractory patients, we had a response rate or an ORR of 24%. In patients with metastatic disease, that is extramedullary disease, we had a response rate of 24%. First of all, the 24% in triple-class refractory is really good, and it was a clear improvement from earlier reported data from us. The fact that we uphold this response rate in extramedullary disease patients is actually unique. This is a really good result. Once again, we will try from a regulatory point of view to translate this into label language, but we need to wait and see how much of this we can get in. Next slide, please. Slide number seven. How does our data compare? On this slide, you have three columns.
You have melflufen from 93 patients to the far left, you have selinexor data, that is a drug from Karyopharm, with 122 patients, and then you have belantamab, that is the drug from GlaxoSmithKline, an anti-BCMA antibody, with 97 patients. There are a lot of numbers in this slide. If we start by looking at the first line, that is the amount of tumor burden reduction seen in these patients, you can see that the numbers are 24/37, 25/39, 31/34. Basically, these drugs more or less reduce the tumor burden in the same way in this patient group. It's the same amount of tumor burden reduction, which is the objective measure you look at to understand how much you push back the tumor to try to treat the patient. They are similar.
If you look at the second line, that is the line that says mDOR or median durational response. Here, the drugs start to diverge from each other. We reported a seven and a half months median durational response. This is what I would argue is a standard result in multiple myeloma, i.e., it's very good. You should be between six and eight months. 7.5 Is in the higher end. This is in line with other drugs such as daratumumab, pomalidomide, et cetera, in less ill patients. 7.5 Is a really solid number. Selinexor, however, have a bit of a durability issue with 4.4 months. Belantamab, that is GlaxoSmithKline's antibody-drug conjugate, didn't report this number but showed the curve, and it seemingly caps between 7 and 8 months.
At this point in the comparison, melflufen and belantamab look very equal in terms of tumor burden reduction and the durability of that tumor burden reduction, while selinexor has a slightly worse durability. From an efficacy point of view, there is a clear differentiation, the anti-BCMA agent and melflufen look similar. When you look at non-hematologic toxicity, however, there is a difference. This is now looking at Grade 3, Grade 4 non-hematologic toxicity occurring in more than 5% of patients. That is the standard FDA cut, this is the bottom box. All these three drugs are good drugs when it comes to the infection rate. You see pneumonia for melflufen 8.4, pneumonia 8.9 for selinexor, 6.3 for belantamab. There are other infectious diseases that also might come in here. Basically, they're all good.
They're all in the low spectrum because myeloma patients do get infections. They are all good here. This is nothing remarkable. That is high single-digit or low double-digit numbers. If you go beyond that, you will notice that melflufen after the background noise from infections is empty in this box. selinexor, unfortunately, have a rather long list of metabolic-like side effects. This is a real quality-of-life issue for these patients. It is the only option out there. As a patient, you obviously want to try it because the alternative is death. This is a tricky one to give and to maintain the dose with based on the side effect profile, and that is an Achilles heel. belantamab, you see the first line, keratopathy blurred vision.
There is another pure blurred vision line that actually comes in at roughly 4% below this, so below the 5% cut as well. If the safety reporting is done properly, this should be added to the 27.4% to almost then 32% blurred vision in total. Here it's important to understand what blurred vision Grade 3 means. Grade 3 means you have problem with macro movements such as navigating a room, brushing your teeth, eating food. Very basic daily tasks that require motor function. Grade 4 means blind. This also means, of course, that Grade 2 is pretty serious as well. Grade 2 means you can't read and write. You can't drive a car. You can't watch the telly properly. The fact that almost a third of the patients have Grade 3, Grade 4 blurred vision is a real concern.
The duration of these, for a lot of patients, it's short, but for a subset of patients, that is a significant number, these actually last for a long time or might not even have resolution before death occurs. This is a really tricky one. At this stage, looking at these data sets, we firmly believe that we actually have the best safety and efficacy in combination of the three drugs in this segment. That is also, of course, something that we will present to the FDA, and we have presented to the FDA in our dialogue with them. Net, we feel that we are in a very good position with this data set. Then, of course, we will fully report for all 157 patients later this spring, and I will come back to that. Next slide, please. Slide number eight.
We talked about the combination trial LIGHTHOUSE to expand the label so that single and double-class refractory myeloma patients can be treated with melflufen in combination. This is a fully randomized trial, pivotal, and can also act as a confirmatory trial on a standalone basis as well, just like the OCEAN trial for the accelerated approval. Planning is full steam ahead, and we will initiate this during the spring. Next slide, please. We have initiated the light chain amyloidosis trial. This is our new indication, so this is not myeloma. Just to make it simple, this is actually not a cancer. This means that the antibodies that the body produce, they misfold, and they precipitate. They fall out and form particular matter in the blood. This is a pretty sticky matter.
It's hard to say exactly how you would describe it, but I would probably describe it as highly viscous honey or something like that, but very small. Since that flows around and in the bloodstream, it ends up where the blood goes. That means it ends up in the liver, in the heart, in the spleen. Every organ with blood flow, it will stick to the walls of that. What normally gets these patients is that you get almost stalactite-like structures on the inside of the heart. As you can see on the survival data in the third paragraph on this slide, the median overall survival is very poor for these patients. The only treatment option we have is to kill off normal functioning B cells to lower antibody production and hence lower the amount of precipitation occurring in these patients.
That is why anti-myeloma drugs that, of course, attack the B cells are basically the standard of care here, and also why we then look at the efficacy of melflufen in these patients. We presented preclinical data at ASH that were highly promising, very different than what is seen with other escalating agents, which has highlights that this is really a different drug as well, to the surprise of many investigators regarding that. We feel fairly confident that we will be able to produce good results in this study. Next slide, please. Slide number 10. Here I leave the word to Anders, the CFO. Thank you.
Thank you, Jakob. As you can see on this slide, the operating loss for the year increased to SEK 739 million from SEK 411 million the year before. For the fourth quarter, the operating loss was SEK 244 million. That's more than double the loss in 2018. That was SEK 111.9 million. Of course, as you see, this is mostly driven by increased R&D costs, where it went from SEK 313.7 million to SEK 548.3 million, primarily driven then by the larger clinical trials.
The OCEAN trial is our biggest trial, and we spent roughly SEK 211.8 million on that. Well, not doubling from the year before, but up from SEK 132 million. HORIZON, there is more than a doubling from the year before. It went from SEK 28.5 million to SEK 70.9 million. That's because this trial has become much bigger than originally anticipated as it has become a pivotal trial for us.
We have had significant extra costs for that. It's a very good investment since it will give us accelerated approval if everything goes well. We also increased the cost significantly in the ANCHOR trial. You can also see that the marketing and sales costs went from SEK 51.1 million to SEK 127.4 million for the full year. Of the SEK 127 million, roughly half was spent in the fourth quarter. For the fourth quarter, the sales and marketing was SEK 56.2 million for this year, up from SEK 16 million last year. It's a significant increase. We're now up and running full speed, preparing for the commercialization later this year. Cash flow was negative SEK 690 million for the year. That's also a big increase from SEK 333.7. For the fourth quarter, the negative cash flow was SEK 216.9 million. Burn rate is roughly SEK 72 million per month currently.
The cash position was SEK 926 million for the end of the year. That was a significant increase, of course, because of the two rights or share issues that were performed during the year. I think that's it for the numbers. I'll leave it back to Jakob.
Thank you, Anders Martin-Löf. Next slide, please. Slide number 11. It is a very intense year for us in terms of news flow. We will go through it quarter by quarter. Now in quarter one, we will have the first patient in the amyloidosis trial. We will have last patient in in OCEAN, and we will have a first patient in in LIGHTHOUSE. Potentially, LIGHTHOUSE will be a little bit later, as I mentioned before, but we are fundamentally on track. In quarter two, we will then have last patient in in the study BRIDGE. We didn't mention that today, but as you know, most drugs in myeloma have a problem with patients with renal impairment that occurs in roughly a third of the patients. It's a big problem to actually treat this effectively, and we seemingly have much less of an issue with poor renal function.
We want to show that in the study to get that a good label as possible. We're going to have the last patient in in quarter two in that study. The next one, new data and updates at EHA. We haven't fully decided exactly what to present at EHA. We will obviously be present and present a lot of data. The big one is actually when and how do we present the final data set from the HORIZON trial. As I stated before, on January 14th, that's the database lock date. We're doing database clean right now. We have decided that when we actually have that data mid-spring here, we will present that either as a press release or as a journal article in addition to something at EHA.
We will come back to that. That information is really key since that underpins the whole submission to the FDA. We need to say something. That is actually a news item that will be coming up mid-spring. On top of that, we will also then have the NDA submission to the FDA at the end of the second quarter. Once again, just the upcoming here, four and a half months are really intense from a news flow point of view. In quarter three, we will report the top-line results from the OCEAN trial. Once again, there's a little bit of uncertainty around that one. The uncertainty is actually how long time the database clean takes once we can lock the data, as well as exactly when we can lock the data, because it's driven by when patients get progressive events in the trial.
When enough patients have progression, we can cap it and start the database clean. After the last patient in here in quarter one, we basically have to wait for a certain amount of progressions to occur, we can start the database lock process with the database clean. This is a bit of a fluidic target, but this is our best guess right now based on the numbers that we have been running. We have also last patient in in ANCHOR. That is the trial where we combined with bortezomib. We already have had the last patient in in the daratumumab arm, we are still recruiting to the bortezomib arm. In the fourth quarter, potential accelerated approval in the U.S. Once again, there's some uncertainty here.
This is based on the fact that the average time from submission to approval in oncology the last few years has been five and a half months, meaning that it should occur in Q4 according to that. There is obviously some standard deviation around that. Of course, with the approval also comes the launch in the U.S. at the same time. Very intense 2024 for us with plenty of milestones and news flow items. We are happy to take on any questions you might have at this point. Next slide number 12. Thank you.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Lucy Codrington of Jefferies. Please go ahead. Your line is now open.
Hi there. Thank you for taking my questions. Just a couple for me. I was wondering if you could give us some rough guidance on cash burn for 2020 or how we might think about cash burn relative to 4Q going forward. Secondly, you mentioned about being unlucky in the screening failures for the amyloidosis trial. Could you give us any more detail as to what?
Is there a common denominator as to why the patients are failing the screening? Finally, if you could just give us an update as to what stage you are in terms of the commercial preparations for ahead of potential approval around the end of the year. Thank you.
Absolutely. We'll start with the first question, which is the cash burn. Anders?
Yes. We have previously guided that we will run out of cash in Q4 of this year. We still maintain that. When that happens, sort of the cash out date depends a little bit on the activities that we perform during the year. Currently, we don't give any more detailed forecast on that. We stick to our Q4 timeline.
Thank you, Anders. Just as a comment to that of course includes a lot of the launch costs in terms of promotion material, et cetera. That is significant amount of money plus scaling up the commercial organization before launch as well. Going to your second question regarding amyloidosis. You are indeed right. There is a common denominator, that is actually an inclusion criteria that we are currently amending because it was unnecessarily strict. To what extent that was a mistake to make it that strict or not is up to interpretation. We are currently amending it because we don't see that as necessary. Now when we look at the patients that come in, we are just lowering the requirement regarding that parameter.
We expect a much, much lower screen failure rate going forward once that amendment has been put in place. That has been resolved at the moment. As to the commercial plans, it's a very good question. We are currently expanding the U.S. organization at almost a doubling of the organization on a quarterly basis, which is of course, a significant growth. We have two offices, one in Boston, one in San Francisco. I would argue that the most hardest task for us is not to find people. There are plenty of talented people around that wants to work with us. It's actually to form the team and get it to work as one team, including the processes and controls in the background. We are currently implementing all the relevant IT systems from a quality and compliance point of view. We are building up the safety desk.
We have a full pharmacovigilance function in Stockholm. All of this is actually on plan, and we have, of course, an internal ready date that is way ahead of the actual estimated launch date of the drug. We are doing mock inspections, et cetera, just for the pre-approval FDA inspection that absolutely will come in the second half of this year. Plenty of activities, and we feel that we are in a good spot.
Thank you.
Thank you.
Our next question comes from the line of Boris Peaker of Cowen and Company. Please go ahead. Your line is open.
Hello. Thanks for taking my questions. The first one, I'm just curious, have you discussed extramedullary disease inclusion in the label with the FDA specifically? I'm curious if the agency gave you any comments. The second question is just curious in the HORIZON study, I believe that most patients failed two IMiD, two proteasome inhibitors in addition to daratumumab. I'm just curious, how does this 5-drug failure patient differ from the triple-class refractory definition? Lastly, on amyloidosis, I'm just curious what we should kind of expect in the study, kind of what the line in the sand is for response or any other outcome.
Thank you. The first question is, the FDA never comments on the exact label. What we have done though is that we have presented the label that we look for, and we are not aiming right now to get EMD in the indication of use statement. We have included extramedullary disease patients as a subgroup, so it's equivalent to the triple-class refractory group in every efficacy and safety table throughout the draft submission. We have presented that to the FDA, and they didn't react on that. Now, the only thing you can draw from that from a conclusion point of view is they had a golden opportunity to shoot it down, and they didn't do it.
That doesn't mean they will accept it in the end, but it meant we sort of gave it to them on a plate, and they didn't shoot it down, which was, I think, a very positive moment in terms of how regulatory interactions goes because their job is basically to say no to a lot of things. Ultimately, we won't know until we have actually filed the submission and heard their responses to that. You're absolutely right. The vast majority of HORIZON patients had failed two IMiD, two proteasome inhibitors plus, at a minimum, daratumumab. We also have a lot of BCMA failures and other experimental therapy failures in that study. Now, when you have to fail two proteasome inhibitors, the majority of them have received then carfilzomib. Carfilzomib, as you know, this is a technical discussion, requires the patient to not have any cardiovascular comorbidities.
When you actually demand that the patient has gotten carfilzomib, you get the better patient population because the patients with cardiovascular comorbidities are those patients that perform the worst. It's a bit counterintuitive, you basically enrich your patients for a patient group that will perform better in your study than otherwise. When you don't have that requirement, you will get all the patients with cardiovascular comorbidities included. As to your third one, we haven't prepared that, but we will prepare a slide where we say exactly the endpoints, et cetera, for amyloidosis, so we can present it to you in terms of the endpoint, what our expectation is, and the exact study design. I just don't want to take that freestyle on this call. I think that's very good feedback, and we'll take that in, Boris.
Great. Thank you very much for taking my questions.
Our next question comes from the line of Viktor Sundberg of ABG Sundal Collier. Please go ahead. Your line is open.
Hi, thank you for taking my questions. My first one is on the OCEAN study. I think you have answered this on a previous call, could you just confirm the median time from lenalidomide treatment to pomalidomide in the pomalidomide arm in the OCEAN study? Also I have a follow-on question.
I should be careful to say the median time, but the majority of the patients or at very close to the majority of, I don't want to say the exact median now, because obviously we don't look at all the data yet, is actually less than 60 days. We also allow patients up to 18 months, which is in line with the data where the lenalidomide resistance actually hits through and makes pomalidomide less efficacious. As you know, in the clinical practice, pomalidomide is used straight after lenalidomide failure. This is basically in line with the standard clinical practice.
Yeah. Are you closer to the 18 months or closer to straight after? Could you give any comment on?
Closer to straight after.
Okay. Yeah, sure. Also for OCEAN, that trial will read out in the middle of your accelerated approval process. If that trial reads out positively, could you get full approval very soon after you get accelerated approval in Q4? If that trial reads out negative, could that interfere with the accelerated approval process in any way? Thank you.
It's two totally different labels, right? It's actually two applications, and will be looked upon it that way. Let's say that OCEAN fails due to that we don't meet the endpoint in terms of efficacy. That will not affect the accelerated approval process, because it's two different patient populations, et cetera. Then we will need to look at LIGHTHOUSE as the confirmatory trial for the accelerated approval application. Let's assume that it's major safety event. That will obviously affect the accelerated approval process because then it's not label-specific. It depends on how you fail the trial.
If you look at it from a commercial point of view, I would argue that both the superiority result and the non-inferiority result is basically equivalent because if you have a non-inferiority result, our progression-free survival curve will look better, even though it's not statistically significant with a P value less than 0.05 than for pomalidomide. From a commercial point of view, that doesn't touch HORIZON. Assume that we would be inferior to pomalidomide, then that would affect the commercial potential that we can get out from the HORIZON trial from an accelerated approval point of view.
Okay. Thank you very much.
Thank you.
Thank you. Our next question comes from the line of Christopher Uhde of SEB. Please go ahead. Your line is open.
Hi there. I might have missed this because I got cut off for a minute. Marketing and distribution costs and administrative expenses. Should we expect them to, well, first for marketing distribution to increase more, and can you give some kind of guide to that? Related, I guess also on R&D, do you have any guidance for what LIGHTHOUSE will cost? Administrative expenses came down. Should we expect them to stay at that level or go back up?
Okay. For marketing and sales costs, they will increase. I will not guide you specifically, but if we go fully in and everything goes according to plan and we plan to launch towards the end of the year, we will have a sales force up and running of roughly 50 sales reps. We have some nurse educators and medical affairs organization. That's currently zero in terms of sales reps. Of course, it will increase towards the end of the year. You'll see a ramp up that will sort of look like an exponential curve during the year. As for administrative costs, well, they go up and down quite a bit with our stock option costs. I don't think you'll see a big increase there during the next year. As for R&D, you should not expect neither a big saving or a big increase.
The cost for the HORIZON trial will go down and OCEAN as well. Lighthouse will come on and we may start other trials as well. I think it's fair to assume a slight increase in R&D costs.
Great. All right. Thanks very much.
Thank you.
Just wondered, are you planning a trial in solid tumors at all just to kind of start at some point in the coming year or two?
Not for 2020, but absolutely for 2021. As you know, we have. Basically, our best preclinical data with this drug is in triple-negative breast cancer, for example. We have just not had the bandwidth from an organizational point of view to even run such a trial. I think it's a shame for the patients, for example, because they have nothing, and we look really good. Yes, for 2021, but not in 2020. We will focus on the trials that we have depicted here, plus some extra trials such as, depending on how you look upon it, but an early access like program for myeloma, et cetera.
Okay, great.
2021. Yes. Thank you.
Terrific.
Just to remind everyone, if you would like to ask a question, please press zero one on your telephone keypads. We have a question from the line of Fredrik Eklind of Redeye. Please go ahead. Your line is open.
A quick question. Do you have any plans to list the stock on the U.S. Exchanges either directly or as an ADR?
Sorry, I didn't get the question.
Does the company have any plans to list the stock on U.S. Stock Exchanges?
Yes. We are, of course, considering that in light of the expansion that we're doing. The way we view it from a strategic point of view is that we need to create the full optionality for that during the year to make sure that we have that tool, because we think we would benefit from it because the footprint of the company becomes much more American this year. We will have more staff at the end of the year in the U.S. than in Europe, if we deliver on this plan, and that is the biggest pharmaceutical market in the world as well. The answer is yes, and that will be exactly how this plays out.
Thank you.
Thank you.
We have no further questions on the line. Please go ahead, speakers.
Thank you very much. Always a pleasure to talk to the shareholders and the market. Do not hesitate to contact our IR function or myself, if you have any further questions. We will, of course, be present at SG Cowen Conference in Boston a little more than a week from now. Once again, any questions, just direct them to us and we'll do our best to answer them. Thank you very much, everyone. Thank you.