Earnings Call: Q4 2019

Apr 28, 2020

Welcome to the OncoPeptides Q4 Report for 2019. Today, I'm pleased to present the CEO, Jacob Lindbergh and the CFO, Anders Martin Moe. 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 on these in these reports, 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. And then 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 study outside the first study in indication outside of multiple myeloma has been initiated, but we 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 it will be the last patient in, in that study will come end of Q1 twenty twenty. And we are on track for that. It could potentially be a few days into April, but basically, 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, would argue. As you know, we waited to get all the papers ready for the drug supply of that study with J and J and Johnson in December. And once the ink had dried and all that paperwork where 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. But the study will start more or less according to plan as well. As to this mission for Horizon, we are targeting the end of Q2 twenty twenty, just like we said when we updated everything after the pre NDA meeting that we had with the FDA on December 3. Just a little bit of recap then what we presented in December. So we presented updated data on Horizon, the study for the accelerated approval submission. And as you know, it had a twenty nine percent 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 and we will come back to that. We also presented combination data where with our drug Nosufen together with daratumumab, where we actually had fourteen point three 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 point five and 11 point five months, so fourteen point three is a very good result. Going back to the pre NDA meeting that we had with the FDA on December 3, 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 14. And we are currently cleaning all the data and preparing all that information. I would come back to the news flow regarding that because that will most likely introduce a new item during the spring. But since that is the full study that we're to sit on the results on within short. And of course, the application will be submitted end of Q2 twenty twenty. We also recruited in December our U. S. President, Joseph Horvath. 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. And as noted, we are in the middle of the program now of all the four trials here in myeloma. We will then 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, so we can go straight to Slide number five. Thank you. Slide number five, it actually describes the label strategy that we have for myeloma. So 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. So the label will focus on triple trans refractory patients as depicted in the first box, roughly twenty thousand patient population in The U. S. On an annual basis. And 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, but we hope to have some type of text. But we don't know how the FDA respond to this. But that would actually expand the patient population quite significantly compared to just the triple chest refractory patient population So this would be an upside scenario. And of course, we won't really know until late this year if we can include some language regarding this patient group or not. Then we have two set of studies that will expand the label in two steps. First, we have the OCEAN trial, where we report the study results end of the summer this year. That's at least the plan. And 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 plusminus steroid. We would address that patient population based on a positive Ocean outcome. And that is also the label extension we would get. Then we have the Lighthouse trial that would expand this label even further by allowing single and double trans refractory patients to now be treated with nosufen plus beratumumab, so a combination agent. So as you can see, we have a pretty aggressive strategy in making sure that we captures all relevant segments of patients with relapsedrefractory multiple myeloma. And of course, all of this will then roll out during roughly a twenty four to thirty month period if you include the Lighthouse result that of course will come the last. But 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 planned market authorization date. And for Ocean, it will be late twenty twenty. Going to the next slide, please, Slide number six. So these were the results that we presented at the American Society of Hematology Meeting in Orlando. And 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 twenty four percent. And in patients with metastatic disease, that is extramedullary disease, we had a response rate of twenty four percent. So first of all, the twenty four percent in triple cross refractory is really good, and it was a clear improvement from earlier reported data from us. And then the fact that we uphold this response rate in extramedullary disease patients is actually unique. So this is a really good result. But 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 there. Next slide, please, Slide seven. So how does our data compare? On this slide, you have three columns. You have pelsulosin from ninety three patients to the far left. You have selinexor data that is a drug from Karyopharm with one hundred and twenty two patients. And then you have belantamab that is the drug from Blaxosmidikline, an anti BCMA antibody with ninety seven patients. So there are a lot of numbers in this slide. But 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 twenty four-thirty seven, twenty five-thirty nine, thirty one-thirty four. 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. So they are similar. Now if you look at the second line, that is the line that says MdOR or median durational response. Here, there is here the drugs start to diverge from each other. We reported a seven point five months median duration of 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. Seven point five is in the higher end. This is in line with other drugs such as daratumumab, pomalidomide, etcetera, in less ill patients. So seven point five is a really solid number. Selinexor, however, had a bit of a durability issue with four point four months. So this is less good. And then belantamab, that is GlaxoSmithKline antibody drug conjugate didn't report this number, but showed the curve and it seemingly cuts between seven and eight months. So at this point in the comparison, nalsufin and belantamab looks very equal in terms of tumor burden reduction and the durability of that tumor burden reduction, while selinexor has a slightly worse durability. Now, going from an efficacy point of view, there is a clear differentiation, but the anti BCMA agent and the Rasulfan look similar. But then when you look at non hematologic toxicity, however, there is a difference. This is now looking at the grade three, grade four non hematologic toxicity occurring in more than five percent of patients. That is the standard FDA cut. And this is the bottom box. All these three drugs are good drugs when it comes to the infection rate. You see pneumonia for mexilin 8.4, pneumonia eight point nine for selinexor, six point three for belantamab. And there are other infectious diseases that also might come in here. But basically, they're all good. They're all in the low spectrum, because myeloma patients do get infections. So they're all good here. This is nothing remarkable. That is high single digit or low double digit numbers. However, if you go beyond that, you will notice that Melsusen after the background noise of infections is empty in this box. While 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. So as a patient, you obviously want to try it because the alternative is death. But this 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. And if the safety reporting is done properly, this should be added to the twenty seven point four percent to almost then 32% blurred vision in total. And here, it's important to understand what blurred vision grade three means. Grade three 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 four means blind. This also means of course that grade two is pretty serious as well. Grade two means you can't read and write, you can't drive the car, you can't watch the tele properly. So the fact that almost a third of the patients have grade three, grade four blurred vision is a real concern. And 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. So this is a really tricky one. So at this stage, looking at these datasets, we firmly believe that we actually have the best safety and efficacy in combination of the three drugs in this segment. And 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. So net net, we feel that we are in a very good position with this data set. And then of course, we will fully report for all one hundred and fifty seven patients later this spring, and I will come back to that. Next slide please, Slide number eight. So we talked about the combination trial Lighthouse to expand the label so that single and double class refractory myeloma patients can be treated with nosupremin 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. Will planning is full steam ahead, and we will initiate this during the spring. Next slide, please. We are also now initiating we have initiated, sorry, the light chain amyloidosis trial. This is our new indication. So this is not myeloma. And 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. I would probably describe it as highly viscous honey or something like that, but very small. And since that flows around then 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. And what normally gets these patients is that you get almost like stalactite like structures on the inside of the heart. And 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 nerselutin in these patients. We presented preclinical data at ASH that was highly, highly promising, very different than what we've seen with other alkylating agents, which has highlights that this is really a different drug as well to the surprise of many investigators regarding that. So we feel fairly confident that we will be able to produce good results in this study. Next slide, please, Slide number 10. And here I leave the word to Anders, the CFO. Thank you. Thank you, Jacob. As you can see on this slide, the operating loss for the year increased to SEK $739,000,000 from SEK $411,000,000 the year before. And for the fourth quarter, the operating loss was SEK $244,000,000, that's more than double the loss in 2018. That was SEK 111,900,000.0. And of course, as you see, this is mostly driven by increased R and D costs, where it went from EUR 3 and 13,700,000.0 to EUR 548,300,000.0, primarily driven then by the larger clinical trials. The OASHAN trial is our biggest trial, and that we spent roughly $211,800,000 on that, almost well, not doubling from the year before, but up from $132,000,000 Horizon, there is more than doubling from the year before. It went from $28.5 to 70,900,000.0 That's because this trial has become much bigger than originally anticipated as it has become a pivotal trial for us. So we have had significant extra costs for that, but I think that'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 $51,100,000 to $127,400,000 for the full year. Of the €127,000,000 roughly half was spent in the fourth quarter. For the fourth quarter, the sales and marketing was €56,200,000 for this year, up from €16,000,000 last year. So it's a significant increase. We're now up and running full speed, preparing for the commercialization later this year. Cash flow was negative €690,000,000 for the year. That's also a huge increase or a big increase from 330,000,000. For the fourth quarter, the negative cash flow was SEK216.9 million. So a burn rate is roughly SEK72 million per month currently. And the cash position was SEK $926,000,000 for the end of the year. That was a significant increase, of course, because of the two rates of share issues that were performed during the year. I think that's it for the numbers. I'll leave the word back to Jacob. Thank you, Anders. Next slide, please, Slide number 11. So it is a very intense year for us in terms of news flow. We will go through it quarter by quarter. So now in quarter one, we will have the first patient in the amyloidosis trial. We've had last patient in an ocean and we will have the first patient 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 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. So it's a big problem to actually treat this effectively. And we seemingly have much less of an issue with poor renal function. And we want to show that in the study to get as 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 exactly what to present at EHA. We will obviously be present and present a lot of data. And the big one is actually what when and how do we present the final data set from the Horizon trial. As I stated before, on January 14, we locked that's the database lock date. We have 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, but that information is really key since that underpins the whole submission to the FDA and we need to say something. So 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 4.5 are really intense from a useful point of view. Then 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 much database 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. So when enough patients have progression, we can cut it and start to do the database clean. So after the last patient in here in quarter one, we basically have to wait for a certain amount of progressions to occur, then we can start the database lock process with the database clean. So 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 lost patient in an ANCHOR. That is the trial where we combined with bortezomib. We already have had the lost patient in the daratumumab arm, but we are still recruiting to the bortezomib arm. Then 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 point five months, meaning that it should occur in quarter four according to that, but there's obviously some standard deviation around that. And of course, with the approval also comes to launch in The U. S. At the same time. So very intense 2020 for us with plenty of milestones and news flow items. We are happy to take on any questions you might have at this point. So next slide, Slide number 12. Thank you. Thank you. And our first question comes from the line of Lucy Codrington of Jefferies. Just a couple for me. I was wondering if you could give us some guidance on rough guidance on cash burn for 2020 or how we might think about cash burn relative to 4Q going forward? Secondly, just you mentioned about being unlucky in the screening failures for the amyloidosis trial. Could you give us any more detail as to to what is is there a common denominator as to why the patients are failing the screening? And then 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. So we have previously guided that we will run out of cash in Q4 of this year. We still maintain that. And when that happens, sort of the cash out days, depends a little bit on the activities that we performed during the year. So currently, we don't give any more detailed forecast on that. We stick to our Q4 time line. Thank you, Anders. And just as a comment to that. So that, of course, includes then a lot of the launch costs in terms of promotional material, etcetera. That's a significant amount of money plus scaling up the commercial organization before launch as well. But going to your second question regarding amyloidosis. So you are indeed right. There is a common denominator, and that is actually an inclusion criteria that we are currently amending because it was unnecessarily strict And to what extent that was a mistake to make it that strict or not is up to interpretation, but we are currently amending it because we don't see that as necessary. And now when we look at the patients that come in, we are just lowering the requirement regarding that parameter. It's so we expect a much, much lower screen failure rate going forward once that amendment has been put in place. So that has been resolved at the moment. As to the commercial plans, it's a very good question. So 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. So 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, etcetera, just for the pre approval FDA inspection that absolutely will come in the second half of this year. So 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. So 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 to image two proteasome inhibitors in addition to daratumumab. And I'm just curious how does this five drug failure patient differ from the triple class refractory definition? And 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. So the first question is the FDA never comments on the exact label. So 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. But we have included extramedullary disease patients as a subgroup, so it has the same it's equivalent to the triple class refractory group in every efficacy and safety table throughout the draft submission. And 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 the plate and they didn't shut 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. But ultimately, we won't know until we have actually filed the submission and heard their responses to that. As to you're absolutely right, the vast majority of Horizon patients had failed two image, 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. So when you actually demand that the patient has gotten Carfilzomib, you get a better patient population because the patients with cardiovascular comorbidities are those patients that perform the worst. It's a bit counterintuitive, but you basically enrich your patients for patient group that will perform better in your study than otherwise. Because 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, etcetera, 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. But I think that's a 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 Victor Sundal of ABG Sundal Collier. Please go ahead. Your line is open. Hi. Thank you for taking my questions. So my first one is on the OASHAN study. I think you have posted this on a previous call, but could you just confirm the median time from lenalidomide treatment to pomalidomide in the pomalidomide arm in the OCEAN study? Then also I a follow on question. So the I should be careful to say the median time, but the it's 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 sixty days. But then we also allow patients up to eighteen months, which is in line with the data where lenalidomide resistance actually hits through and makes pomalidomide less efficacious. And as you know, in the clinical practice, pomalidomide is used straight after lenalidomide failure. So it's not this is basically in line with the standard clinical practice. But are you closer to the eighteen months or like closer to straight after? Or could you give any color Closer to straight after. Okay. Yes, sure. And also for Ocean, that trial will read out in the middle of your accelerated approval process. And if that trial reads up positively, could you get full approval very soon after you get accelerated approval in Q4? Or if that report or that trial reads up negative, could that interfere with accelerated approval process in any way? Thank you. So it's two totally different labels, right? It's actually two and will be looked upon it that way. So 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, etcetera. And then we will need to look at Lighthouse for confirmatory trial for the accelerated approval application. Let's assume that it's a major safety event. Well, that will obviously affect the accelerated approval process because then it's not label specific. So it depends on how you fail the trial. Then 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 it will 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. So 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 Yudy of SEB. Please go ahead. Your line is open. Hi there. I might have missed this because I got cut off for a minute. But so marketing and distribution costs and administrative expenses. So should we expect them to well, first, for marketing and distribution to increase more? And can you give some kind of guide to that? And related, I guess, also on R and D, should could you have any guidance for what Lighthouse will cost? And then administrative expenses came down. Should we expect them to stay at that level or go back up? Okay. So for marketing, 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. And we have some nurse educators and medical affairs organization. And that's currently zero in terms of sales reps. So of course, it will increase towards the end of the year. So 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 and D, you should not expect neither a big saving or a big increase The cost for the Horizon travel will go down and Ocean as well. But then Lighthouse will come on, and we may start other trials as well. So I think it's fair to assume a slight increase in R and D costs. Great. All right. Thanks very much. Then just wondered, when have you are you planning a trial in solid tumors at all for just to kind of start at some point in the coming year or two? In 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. And we have just not had the bandwidth from an organizational point of view to even run such a trial. And I think it's a shame for the patients, for example, because I mean, they have nothing and we look really good. So yes, for twenty twenty twenty one, 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, etcetera. 2021, yes. Thank you. And we have a question from the line of Freddy Ettelen of Eton Markets. 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. So we are, of course, considering that in light of the expansion that we're doing. So 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 from both because the footprint of the company becomes much, 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. So the answer is yes. And then we'll see exactly how this plays out. Thank you. Thank you. And we have no further questions on the line. Please go ahead, Thank you very much. Always a pleasure to talk to the shareholders and the market. Do not hesitate to contact our IR function if or myself if you have any further questions. And we will, of course, be present at SG Cowen Conference Boston a little more than a week from now. But 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.