Earnings Call: Q2 2018

Aug 7, 2018

Good morning. My name is Crystal, and I will be your conference operator today. At this time, I would like to welcome everyone to Karyopharm Therapeutics' second quarter 2018 financial results conference call. There will be a question and answer session to follow. Please be advised that this call is being recorded at the company's request. I would now like to turn the call over to Mr. Ian Karp, Karyopharm's Vice President, Investor and Public Relations. Thank you, Crystal. Thank you all for joining us on today's conference call to discuss Karyopharm's second quarter 2018 financial results. This is Ian Karp, and I am joined today by Dr. Michael Kauffman, Chief Executive Officer, Mr. Michael Falvey, Chief Financial Officer, Dr. Sharon Shacham, our Founder, President and Chief Scientific Officer, and Mr. Christopher Primiano, Chief Business Officer. On the call today, Michael Kauffman will make some introductory comments, then Mike Falvey will provide an overview of the second quarter 2018 financial results. Dr. Kauffman will then discuss our upcoming key milestones and provide some summary remarks. We will then open the call up for questions for which Sharon, Chris, and I will also be available. Earlier this morning, we issued a press release detailing Karyopharm's results for the second quarter of 2018. Additionally, we issued a separate release yesterday afternoon announcing the completion of our rolling submission to the U.S. FDA for a new drug application for selinexor, our lead clinical candidate. Both releases are now available on our website at karyopharm.com. Before we begin our formal comments, I'll remind you that various remarks we will make today constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments and regulatory matters and timelines, the potential success of our product candidates, financial projections, and our plans and prospects. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent quarterly report on Form 10-Q, which is on file with the SEC and in other filings that we make with the SEC in the future. Any forward-looking statements represent our views as of today only. While we may elect to update these forward-looking statements at some point, we specifically disclaim any obligation to do so even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent of today. In addition, please note that any references we make to clinical trial data during today's discussion refer to interim, unaudited site data unless otherwise specified. I'll now turn the call over to Dr. Michael Kauffman, Chief Executive Officer of Karyopharm. Thank you, Ian, and good morning, everyone. Thank you for joining us on today's call. Over the past few months after receiving Fast Track designation, we have made tremendous progress advancing our lead selinexor program and completed the submission of our first new drug application to the U.S. Food and Drug Administration, seeking accelerated approval for selinexor in multiple myeloma. The NDA is supported by data from our phase II-B STORM study, which evaluated selinexor and low-dose dexamethasone to treat patients with penta-refractory disease. These patients have previously received two proteasome inhibitors, Velcade and KYPROLIS, the two immunomodulatory drugs, REVLIMID and POMALYST, and the anti-CD38 monoclonal antibody DARZALEX, as well as alkylating agents, and their disease is also refractory to at least one proteasome inhibitor, at least one IMiD, DARZALEX, and their most recent therapy. There are about 120,000 patients living with myeloma in the U.S., and over 30,000 new cases are expected this year. Unfortunately, despite a variety of available therapies, nearly 13,000 deaths from myeloma are also expected this year. Thus, there is substantial urgency for new therapies, especially those with novel mechanisms. This is the first new drug application submission of a novel mechanism for the treatment of relapsed refractory myeloma since DARZALEX was approved in 2015. It is an important achievement for both Karyopharm and for patients battling this difficult-to-treat cancer. Their stories continue to inspire us every day, and we're grateful to all of the physicians, caregivers, patients, and families who've contributed to the selinexor program to date. We also greatly appreciate the FDA's collaboration and support during the application process, and we look forward to continuing this productive dialogue during the review process. We are also actively working towards submission of a Marketing Authorisation Application for the European Medicines Agency in early 2019 with a request for conditional approval for selinexor based on the data from the STORM study. Finally, while we are thrilled to be one step closer to better serving the needs of patients with penta-refractory myeloma, we also believe that our recent NDA submission marks only the beginning for Karyopharm. We remain convinced that selinexor has the potential to become an important option for myeloma patients in earlier lines of therapy, as well as for patients suffering from other forms of cancer. On the commercial front, we have been making exciting progress building our commercial infrastructure in preparation for the first potential selinexor product launch in the U.S.. During the first half of 2018, we hired several key positions, including vice presidents of marketing, sales, and market access, as well as our new Chief Commercial Officer, Anand Varadan, formerly of Chiasma, Inc., Amgen, and Procter & Gamble. Anand is a 25-year industry veteran with a strong track record of building successful marketing teams and commercializing novel medicines. We are delighted to welcome him to the executive team as we continue building our commercial foundation for the future. For the record, Anand is more than 25 years old. These regulatory and commercial initiatives are supported by the positive top-line results reported during the quarter from Part 2 of the phase II-B STORM study, evaluating twice-weekly oral selinexor plus low-dose dexamethasone, or sel/dex, in patients with penta-refractory myeloma. For the STORM study's primary objective, oral sel/dex achieved a 25.4% overall response rate as assessed by an independent review committee. In addition to the 29 partial or very good partial responses, there were two stringent complete responses which were negative for minimal residual disease. The median duration of response is 4.4 months. Patients with any response to sel/dex, including minimal partial, very good partial, and complete responses, had a significantly prolonged overall survival as compared with patients who did not respond. On the safety front, oral selinexor demonstrated a predictable and manageable tolerability profile consistent with that previously reported from part one of the STORM study, with no new safety signals identified. When occurring, the adverse effects were often reversible, transient, and manageable with dose modification and/or standard supportive care. We plan to present the detailed STORM study results at an upcoming medical oncology meeting. In addition to serving the refractory population, our development strategy is aimed at advancing selinexor to reach patients in earlier lines of treatment. We are conducting the pivotal randomized phase III BOSTON study to investigate once-weekly oral sel/dex in combination with once-weekly Velcade, compared to standard twice-weekly Velcade dex alone in patients with myeloma who've had one to three prior lines of therapy. To our knowledge, this is the first combination regimen utilizing once-weekly subcutaneous Velcade on the experimental arm. This regimen could provide greater convenience with once-weekly physician office visits, as well as reduced rates of Velcade associated side effects versus the usual twice-weekly Velcade regimens. We expect to complete enrollment in BOSTON this year and report top-line data in 2019. Assuming a positive outcome, we believe the data from the BOSTON study will support a full approval for the sel/dex plus Velcade combination regimen as a highly active, well-tolerated, and convenient second-line treatment for myeloma. We also continue to advance the multi-arm STOMP study, evaluating sel/dex in combination with several standard approved therapies, including REVLIMID, POMALYST, Velcade, KYPROLIS, and DARZALEX in patients with relapsed or refractory myeloma, and in combination with REVLIMID in patients with newly diagnosed myeloma. In June at EHA 2018, we reported updated data from the Velcade, POMALYST, and DARZALEX arms. All three of the presented arms continue to show robust anti-myeloma activity and manageable tolerability when combined with these standard approved therapies. Given the observed synergistic activity of selinexor with these anti-myeloma therapies, we believe oral selinexor has the potential to be a future backbone therapy in myeloma. In addition to myeloma, we are also developing selinexor for the treatment of diffuse large B-cell lymphoma or DLBCL. We remain on track to report top-line results from the phase II-B SADAL study by the end of 2018. The SADAL study is investigating single-agent selinexor in patients with relapsed or refractory DLBCL who are not candidates for stem cell transplantation. If the final results of the SADAL study are positive, we plan to submit an NDA for accelerated approval in the first half of 2019 for this indication. In addition to the key clinical and regulatory highlights I just outlined, we also made significant progress towards expanding our geographic reach for both selinexor as well as our other pipeline assets. In May, we entered into a strategic partnership with Antengene Corporation for the development and commercialization of selinexor and additional pipeline assets, eltanexor, verdinexor, and KPT-9274 in China and other important regions in Asia. Antengene has a strong clinical regulatory expertise and capabilities in China and the covered territories. This partnership, which carries a total deal value up to $162 million plus royalties, creates an important alliance, which nicely complements our existing partnership with Ono Pharmaceutical for Japan and certain other Asian countries. This impressive set of partners will be an important part of the global advancement of our novel oral drug candidates in these important markets. With that, I'll now turn the call over to Mike to review financials. Thank you, Michael. Since we issued a press release earlier today outlining our full financial results, I'll just review our second quarter 2018 financial highlights. As of June 30th, 2018, cash equivalents, and investments, including restricted cash, totaled $250.5 million compared to $176.4 million as of December 31st, 2017. In May 2018, we completed an underwritten public offering of just over 10.5 million shares of our common stock at a price to the public of $14.75 per share. The net proceeds to Karyopharm from the offering, after deducting for underwriting discounts and commissions and other estimated offering expenses, were $145.7 million. For the quarter ended June 30th, 2018, Karyopharm recognized $19.9 million in revenue, compared to a small amount of grant revenue for the three months ended June 30th, 2017. The increase in revenue was primarily the result of recognizing $19.7 million of revenue related to fulfilling an obligation under our license agreement with Ono. The cash related to this revenue was part of the upfront payment received from Ono in October 2017. For the second quarter of 2018, research and development expense was $44.7 million, compared to $23.1 million for the same period in 2017. General and administrative expense for the second quarter of 2018 was $9.5 million, compared to $6.6 million for the same period in 2017. Comparing the second quarter of 2018 to the prior quarter, the first quarter of 2018, R&D expense increased by $3.4 million, reflecting increased spending on activities associated with our NDA submission. For the second quarter of 2018, we reported a net loss of $33.7 million, or $0.60 per share compared to a net loss of $29.4 million, or $0.64 per share for the second quarter of 2017. Net loss included stock-based compensation expense of $4.4 million and $5.1 million for the second quarters of 2018 and 2017, respectively. Karyopharm expects its operating cash burn, including research and development and general and administrative expenses for the year ended December 31st, 2018, to be in the range of $175 million to $185 million. Based on our current operating plans, we expect that our existing cash equivalents, and investments will be sufficient to fund our operations into the third quarter of 2019. Importantly, this runway takes us through the potential launch of Selinexor in the first half of 2019. These plans include the continued clinical development of Selinexor in our lead indications and preparing the commercial infrastructure, including hiring a sales force to support the potential launch of Selinexor in the U.S. I'll now turn the call back over to Michael Kauffman for concluding remarks. Michael? Yeah. Thank you, Mike. Before I review our upcoming milestones and move to the Q&A, I'd just like to take a moment to formally welcome our newest member of the team, our Vice President, Investor and Public Relations, Ian Karp. Ian brings over 20 years of investor relations, corporate development, and strategic communications experience, and I'm confident that he will serve as a key resource to our investors as we continue the significant progress we are making. Moving on now to our upcoming milestones. We are extremely pleased with the significant progress made to date in 2018, including the submission of our first NDA for Selinexor, and we're excited about the key upcoming milestones we expect to achieve. For our SADAL study in DLBCL, we expect to report top-line data by the end of 2018, which would support regulatory filings in the first half of 2019. For the pivotal phase III BOSTON study, we expect to complete enrollment by the end of this year, with top-line data expected in 2019 and, if positive, regulatory filings in 2020. In early 2019, we plan to submit an MAA to the EMA for conditional approval of Selinexor, based on the data from the STORM study. For the STOMP combination study in myeloma, we will continue to provide data updates at appropriate medical meetings. For our solid tumor development programs, the ongoing phase III SEAL and SIENDO studies continue to advance in patients with liposarcoma and endometrial cancer, respectively. In closing, I would just like to take a moment to reflect upon what has truly been a remarkable time for us at Karyopharm. The completion of our first NDA submission is a landmark event for the company and brings selinexor one step closer to the many patients battling myeloma today. Should the FDA grant our request for accelerated approval, selinexor could be available to patients in the first half of 2019. On behalf of our entire management team and board of directors, I want to express our sincere gratitude to the entire Karyopharm team for advancing the selinexor NDA so quickly. In just over three months following reporting the top-line STORM data, the team was able to successfully and effectively prepare and submit our first NDA, I could not be any prouder of the professionalism and dedication I've witnessed over the past few months. We are committed to working closely with the FDA during this review process, we are looking forward to the exciting prospect of potentially introducing the first ever FDA-approved XPO1 inhibitor to help these patients who have exhausted all other available therapies of likely clinical benefit. I will now turn the call over to the operator for questions. Operator? Thank you. Ladies and gentlemen, if you have a question at this time, please press the star followed by the number 1 key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Once again, to ask a question, please press star and then 1 now. Our first question comes from Brian Abrahams from RBC Capital. Your line is open. Hi, all. Thanks for taking our question. This is actually Rick on the line for Brian. Congrats on the NDA submission and all the regulatory progress. First, my question is could you describe some of the work that is being done around the submission of the Marketing Authorisation Application to the EMA? If you anticipate any potential rate-limiting steps for getting this submitted by early 2019? Sure. This is Michael. As you're probably aware of the Common Technical Document which forms the basis of both the NDA and the MAA are quite similar, hence the name Common Technical Document. We're moving forward in converting the various appropriate sections of the CTD into the MAA format, we'll be moving that as expeditiously as possible with our planned filing in the first half of next year. Great. As far as the potential for conditional approval in Europe goes, in your view, is the EMA aligned with the FDA in terms of the unmet need in the penta-refractory population and what the expected bar for efficacy would be for these patients? Yeah. In general, FDA has allowed a couple more accelerated approvals, but in all cases of novel mechanisms, namely with Velcade and with DARZALEX more recently, the EMA has been open to that. Of course, we're discussing this with EMA, and they are certainly open to discussions around this novel mechanism of action in a population of patients that's exhausted all EMA-approved therapies as well. All right. Just one more Europe-focused question from me, then I'll hop back in the queue. Could we get the latest update for potential commercial partners in Europe? With the potential submission in early 2019 and the potential for approval in the back half of 2019, what are timelines for establishing a partnership? How much lead time do you think a potential partner would need to support a launch in the back half of 2019? Yeah. I'll turn that over to Christopher Primiano. Yeah. Sure. Hi, this is Christopher Primiano, the chief business officer here at Karyopharm. It's a great question, and I also want to just echo what Michael said at the end of our prepared remarks, which is that the company really undertook an amazing feat to submit the NDA so quickly. All of the folks here at Karyopharm had patients in the forefront of their minds as the driving force to accomplish that so quickly. Patients are one of our stakeholders, and as are investors and caregivers, physicians, patient advocacy groups, regulatory authorities, and the like. When it comes to European partnering and a commercial launch in Europe or anywhere ex-U.S., we're going to do the right thing by all of these stakeholders and do the right thing strategically for the company and for patients. I'm a little bit reluctant to attach any particular timelines to a commercial partner in Europe. We're constantly evaluating the regulatory and reimbursement landscape in Europe and otherwise ex-U.S., and there are always opportunities to do things that actually have an even better strategic fit for Karyopharm. I think it would be a little bit unnecessary to probably provide specific timelines. I would say to the other part of your question around how long does a partner need to get sort of prepared for a launch, I would think that six months is probably a reasonable amount of time. Obviously, the longer the better. The trick in Europe, as you know, is not so much around regulatory approval, but around the understanding and navigating your way through the reimbursement landscape. That's where a lot of the timelines will lie. I think the takeaway here is that this is obviously an important topic for us and one that is subject to ongoing evaluation here. I wouldn't put specific timelines on a European partner or any other strategic decisions we'd make ex-U.S. around commercialization. Just know that we will do the right thing by all of these various stakeholders with respect to any commercial launch. Thank you. Our next question comes from Arlinda Lee from Canaccord Genuity. Your line is open. Hi, guys. Thanks for taking my questions. I'd like to add my congratulations on completing your first NDA filing. I wanted to maybe follow up on the EMA filing. I'm wondering that if it's a Common Technical Document, if it takes, I guess 6 months-ish to convert that, or are you potentially waiting for the STORM data to kind of incorporate that into a filing and/or a European partner? Thanks. Hi, it's Michael. I think we're trying to be very careful about what we submit. Obviously, first impressions are lasting, and remember that in Europe, it's not just a process of submitting the documentation. There's a set of meetings that occur with various country experts in these diseases. We have to carry out all of those meetings, and then there's a rapporteur and co-rapporteur selection, which is done through the EMA process. We feel it's a very safe bet that this filing will be done in the beginning of next year. Okay, great. As a follow-up on the EU filing for STORM, you mentioned that the U.S. filing would be in the beginning of next year or next year. Is that timeline going to be the same for the European filing? Maybe you can talk about what specific commercialization efforts you guys are undertaking in the U.S. Thanks. Hi. On SADAL, I think we're not talking about the MAA filing for SADAL quite yet. It's a little premature given everything else we have on our plate. Rest assured that as we move this STORM NDA expeditiously, we will be working hard to get the proper documentation together for the SADAL NDA filing as well as for Europe as well. The commercialization, in general, is basically good because the target audiences are quite a bit overlapping between lymphoma doctors and myeloma. Obviously, at academic institutions, these are generally separate departments, but all of the institutions have both departments. For the more community physicians and the large group practices, these will be largely the same physicians. We won't have to increase our marketing efforts too much as we move into lymphoma. Thank you. Our next question comes from Eric Joseph from JPMorgan. Your line is open. Hey, guys. Congrats on the progress. Let me also extend my welcome to Ian. Thanks for taking the questions. I guess just a couple from us. The first on the NDA submission, I'm wondering if you requested or if it's reasonable to expect a review on priority timelines. As it relates to SADAL, I'm not sure if I missed it, but can you give us a sense of just where you are in terms of enrollment on the way to the target 130 patients and how you might be thinking about median duration of follow-up when the data read out later this year? Thanks. Hi. On the question of the priority review, as part of Fast Track designation, rolling submission, priority review, and accelerated approval are all components of that. To be clear, Fast Track allows you to request those. The accelerated approvals, I'm not aware of any accelerated approval that goes in without a Fast Track request. In general, one would expect that and as we receive the information back from FDA, we'll update you on the status of that. Can you repeat the second part of the question? Enrollment. Where part 2 stable enrollment stands on the way to completion, how to think about median follow-up at the time of data readout year-end? Yeah. We feel comfortable that by year-end, we'll have strong top-line data, with regards to the key endpoints of response rate and duration of response that'll be sufficient to provide a good amount of clarity on how that filing would go. Great. Thanks for taking the question. Thank you. Our next question comes from Maury Raycroft from Jefferies. Your line is open. Hi. Good morning, congrats on the update and milestone NDA filing. First, for the U.S. sales force for multiple myeloma, you mentioned 1H 2019 you'll start hiring. Is that enough time, are you doing any work before that to educate physicians before launch? Let me turn that answer over to Chris or Mike. Sure. As we noted with the successful completion of submission this week, we're on track for the first half launch in multiple myeloma in the U.S., we plan to commercialize that by ourselves. We've noted that we'll be bringing on a sales force in early 2019. Yes, there's a whole host of activities that will take place before we bring the sales force on board. Michael noted that we're pleased to bring on board Anand Varadan to lead our commercial effort. He joins a team of very experienced Vice Presidents that we hired earlier in the year. They've already started work on our marketing efforts, which includes branding, preparing the launch materials. I think also just beginning a general education campaign, which will gather force when we're able to share the full results from the STORM study. There's a number of commercial activities, educational in nature that take place prior to the launch, we've begun to put in place the plans to execute that. I think you'll start to see those activities begin a little bit later this year, Q4, into Q1, Q2, prior to launch. Got it. Very helpful. What are next steps for the STOMP combo studies, and any perspective or update on enrollment in the newly diagnosed setting with REVLIMID? Hi, we'll just continue to update as appropriate when we have an update presented in abstract and hopefully a presentation format as times go on. We're moving along expeditiously. People are excited about this. I just remind everybody that the STOMP study uses once-weekly selinexor with all the different combinations, and we've seen additive or synergistic activity across the board so far. We're quite excited about it, and we'll just continue to update as we have recently. Thank you. Our next question comes from Jonathan Chang from Leerink Partners. Your line is open. Hi, this is David Ruch. I'm dialing in for Jonathan. Thank you for taking my questions, and congratulations again on the submission. Two questions here. Following the positive data from the SEAL study, how should investors be thinking about the opportunity in liposarcoma, and could you provide any guidance on additional plans in that population? Then also, with the ongoing progress of the BOSTON study with Velcade, is there any context that you can provide on the other combination data that was presented at EHA moving forward? Thank you. Sure. For liposarcoma, we're in the midst of the phase III study, and we intend to provide data by the end of next year. That's a randomized phase III study, two to one randomization and moving along. As I mentioned, on the other combinations, we'll just continue to update things as we move forward. One of our good problems to have is that selinexor has activity across a large variety of cancers, and choosing whether we continue to expand deeply into myeloma, which we will do at some point, or we also bring selinexor to other cancers, including liposarcoma, and as we mentioned earlier, in endometrial cancer. We'll have to make some choices as we go forward. The broad activity of selinexor really allows us to explore it across a number of different tumors, and we're just going to have to make some decisions on market sizes and unmet medical need across the board. Okay, great. Thank you. Thank you. Our next question comes from Konstantinos Angelakis from JMP Securities. Your line is open. Hey, guys. Good morning. Thanks for taking my questions, and let me add my congrats on all the progress. Assuming the SRD combination looks good in frontline multiple myeloma, do you know what kind of trial you'd need to run to get approval in that setting? The response rate you're seeing in pre-treated patients is already pretty high, especially in lenalidomide-naive patients. Do you need to see additional CRs for selinexor to bolster confidence? These are great questions, really, you have to look at the totality of the data as the FDA likes to talk about. The main issue in frontline myeloma is tolerability and long-term disease control. Deep responses are great, as we all know, deep responses that last a short time are probably less important than prolonged disease control. Part of it will have to be to mature some of the data. Of course, the big advantage of SRD, Sel-Rev-Dex, in frontline is it's an all-oral regimen, it utilizes once-weekly selinexor in combination with REVLIMID. As the data become available, we'll be able to update. Lastly, there are some explorations going on with FDA amongst a lot of people to use surrogate endpoints in the frontline setting because of the very prolonged PFS that's available now, perhaps response rate or deep responses would be looked at. There may be other ways to look at this, we'll have to decide as we move forward. Okay, great. Thanks, guys. Congrats again. Thank you. Again, ladies and gentlemen, to ask a question, please press star and then one now. Our next question comes from Ying Wang from Bank of America. Your line is open. Hey, guys. Ying Wang. Congrats on all the progress in filing your NDA. A question for us in terms of the NDA. What was included in the safety package? Was it just the phase IIb STORM, do you have a lot of the other trials also in there for the safety package? Thank you so much. As typical in an NDA, this is being discussed with the FDA, we are following the FDA guidance of what to include in the NDA, it includes most of the data in the hematological cancers for the safety information. Thank you. I am showing no further questions from the phone line. I would now like to turn the call back over to Michael Kauffman for any closing remarks. Hi, everyone. At Karyopharm, our mission since inception has been to advance the treatment of cancer through discovery and development of novel oral therapies, beginning with Selinexor. We are extraordinarily proud to be developing this first-in-class oral nuclear export inhibitor with the potential for activity across a number of hematologic and solid tumor malignancies. We are working with passion and urgency to foster innovation and lay the important groundwork for our future growth and commercial success. I thank everyone for your time today, and we look forward to keeping you updated on our continued progress. Have a good day. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a wonderful day.