CTI BioPharma Corp. (NASDAQ:CTIC) Q4 2022 Earnings Call Transcript

CTI BioPharma Corp. (NASDAQ:CTIC) Q4 2022 Earnings Call Transcript March 6, 2023

Operator: Good morning, and welcome to the CTI BioPharma Fourth Quarter and Year-End 2022 Financial Results and Corporate Update Conference Call. As a reminder, this conference call is being recorded. I would now like to introduce your host, Remy Bernarda, CTI Investor Relations. Please go ahead.

Remy Bernarda: Good morning, everyone, and thank you for joining us on the call today. Before we begin, please note that during this call, we will be making forward-looking statements based on current expectations. Such statements are within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including, but not limited to, the types of statements identified as forward-looking in our most recent annual report on Form 10-K and our subsequent periodic reports filed with the SEC, which are available on our website in the Investors section. Such forward-looking statements, which are indicated by terms such as expect, intend and seek represent our views as of the date of this call are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those anticipated by the forward-looking statements, including many that are beyond our control.

These statements include our expectations regarding cash runway, timing to profitability, market adoption of VONJO and the future success of our product launch. In addition, any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements in the future, we specifically disclaim any intent to do so even if our views change. For a further description of these and other risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements as well as risks related to our business, please see our periodic reports filed with the SEC. On today’s call, we have Dr. Adam Craig, our President, Chief Executive Officer and Interim Chief Medical Officer; David Kirske, our Chief Financial Officer; and Jim Fong, our Chief Commercial Officer.

After our formal remarks, we will open the call for your questions. I would now like to turn the call over to Adam.

Adam Craig: Thank you, Remy. Good morning. We appreciate everyone joining us earlier than planned so that we can provide a timely update following the recent release of portfolio revenue by our Royalty Financing partner. I want to start the call today by reflecting on the achievements we have made over the past year as we’ve transformed from a research and development organization to a fully integrated biopharma with a strong commercial presence. In the first quarter of last year, we received accelerated approval from the FDA for VONJO, pacritinib for the treatment of adults with myelofibrosis with a platelet count below 50 times 10 to the 9 per liter. This approval launched our commercialization efforts and we are extremely pleased with our progress to date.

We generated $54 million in net sales in just the first nine months of commercialization, exceeding our internal year-end revenue goal and in the process, treated over 1,000 patients with VONJO in 2022, a meaningful achievement for a rare disease such as MF. Jim Fong will elaborate on our commercial success in just a moment. But I’d like to spend a little time talking about the new data presented in December at the ASH Annual Meeting in New Orleans by Dr. Stephen of Washington University. In his oral presentation, it was shown that pacritinib is a potent activin A receptor type 1 or ACVR1 inhibitor that has potential to provide the significant anemia benefit in patients with cytopenic myelofibrosis. ACVR1 mediates hepcidin production and its inhibition is thought to lead to improvements in transfusion independence and anemia in myelofibrosis patients.

Anemia is common in MF, both the diagnosis and during therapy, and it’s a poor prognostic factor. Almost all MF patients will develop anemia over the course of their disease due to disease progression and/or drug toxicity from other approved JAK inhibitors. Dr. Oh’s presentation highlighted several key findings related to pacritinib. In vitro data demonstrated that pacritinib inhibits ACVR1 at four times greater potency compared to momelotinib with 24-hour inhibition of the target. It was shown in vitro to reduce hepcidin levels. The clinical data demonstrated that treatment with VONJO at the approved dose of 200 milligrams twice daily, led to improvements in transfusion independence and anemia when compared to available therapy, which included ruxolitinib in invaluable patients treated on the Phase 3 PERSIST-2 study.

Over the last year, we have worked hard to establish the VONJO franchise in the commercial space. To this end, we have filed for a patent term extension for our main composition of matter patent that if granted, would extend this term by five years with an expected exploration date of 2034. And last month, VONJO was granted seven years of orphan drug exclusivity by the FDA for our label indication that began in February 2022. As we enter our second year of commercialization for VONJO, we are focused on generating quarter-over-quarter product sales, while providing the best care to patients with cytopenic myelofibrosis. With that, I’ll now hand the call over to Jim.

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Jim Fong: Thank you, Adam, and good morning, everyone. As I look back on 2022, I’m extremely proud of my commercial team and our medical affairs colleagues who led a successful launch for VONJO, a novel JAK2 ACVR1 IRAK1 inhibitor. We achieved many accomplishments over the first nine months of launch, highlighted by the team exceeding our internal revenue goals and reaching the milestone of treating over 1,000 myelofibrosis patients. Looking ahead, we are very encouraged by the continued double-digit sales growth of our team is producing. Today, I will provide a bit more context on these numbers as well as provide a snapshot of what we are seeing so far in 2023. We completed a strong sales performance with a 16% quarterly sales increase in Q4 and continued to show strong launch momentum in the quarter across several key metrics, including consistent growth in new patient starts, substantial increase in the number of active patients on VONJO, significant growth in new MF prescribers and accounts, a strong and expanding refill order rate and increased awareness and interest in VONJO’s hematologic safety profile for anemia and thrombocytopenia.

To maintain this trend, we continue to focus on educating our existing and new prescribers on the benefits of VONJO. Throughout 2022, we have conducted approximately 200 peer-to-peer education programs reaching more than 2,300 health care professionals. Due to these efforts, the physicians are becoming increasingly aware of VONJO as an important treatment option for MF. The scientific and clinical rationale for VONJO is resonating with providers, and they are recognizing cytopenic MF as a different disease that requires a different therapy such as VONJO. As a result, the number of VONJO new prescribers and accounts continues to grow and a high proportion have become repeat users. Although, my commercial team can only promote use consistent with the FDA-approved label, we are seeing utilization €“ the utilization of VONJO evolve.

In Q4, market research indicates approximately 50% of current VONJO use is in patients with platelet counts at or above 50,000 per microliter compared to only 33% in Q3 with the majority of use coming from second-line patients. This change is likely related to the increasing awareness of the NCCN recommendations for VONJO. In addition, we are seeing growth of VONJO as a first-line treatment as well as an overall increase in duration of therapy. As previously mentioned, our physician user base continues to expand with broader adoption and penetration. The success of our market penetration is evidenced by the fact that the number as community physicians prescribing VONJO has now exceeded physicians in the academic setting. As we all recognized, adoption of new treatments is typically much slower in the community versus the academic centers.

With the growing number of prescribers coming from the community, I believe this will translate into increased sales potential for VONJO over time. Our sales momentum has carried nicely into 2023. We have seen consistent sales demand to start the year, and I look forward to updating you in May on our first quarter results. In summary, physician adoption is growing due to the increased recognition of VONJO’s differentiated mechanism of action and hematologic safety profile for cytopenic MF patients. Notably, we also continue to garner increased acceptance from the entire MPN community as a whole with VONJO becoming top of mind as evidenced by our continued strong brand awareness among our audience. We expect our highly effective commercial team to continue their progress in 2023, leveraging our robust promotional and educational efforts and maintaining a significant presence at major medical meetings.

I will now turn the call over to David to discuss our financial results.

David Kirske: Thanks, Jim. Our financial results for the fourth quarter and year-end 2022 were published this morning in our press release and are available on our website. Therefore, I will summarize our current financial status. As Adam mentioned, we continue to increase our product sales quarter-over-quarter. For 2022, I’m pleased to report that we generated $21.1 million in net revenue in the fourth quarter and $53.9 million for the nine months of commercialization, exceeding our revenue goals. All revenue was entirely attributable to the sales of VONJO. As expected, towards the end of the year, we observed some holiday seasonality with our product sales, which is common for most oncology drugs. VONJO product sales also provided meaningful reductions in our overall operating loss in the fourth quarter and full year while we continue investment in SG&A related to marketing and commercialization of the product.

Our cash, cash equivalents and short-term investments as of December 31, 2022, totaled $79.9 million. Subsequent to the end of the quarter, we received $6.5 million in additional funding from our royalty agreement with DRI Healthcare Trust in January of 2023. Based on our current revenue projections and expenses, our objective is to be cash flow positive by the end of 2023. However, any meaningful changes to our clinical development plans or other transactions would impact this forecast. We have an active investment conference schedule over the next several months. We will be presenting on Wednesday, March 8, at the 43rd Annual TD Cowen Healthcare Conference, and we will also be participating in the Needham Healthcare Virtual Conference and Stifel Oncology Days in April.

We look forward to these interactions and keeping you updated on our progress. I will now turn it back to Adam for closing remarks.

Adam Craig: Thank you, David. We are delighted to share our accomplishments on the commercialization of VONJO with you today. CTI is now established as a market leader in the treatment of cytopenic MF as we offer simple, safe and effective therapy for patients with an important medical condition. For 2023, we are focused on expanding the use of VONJO with the aim of driving quarter-over-quarter revenue growth. We also continue to explore ways to increase the long-term potential for VONJO through additional indications. This concludes our formal remarks. I’d now like to ask Shannon to open the line for questions.

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Q&A Session

Operator: Thank you. Our first question comes from the line of Ken Shields with SVB Securities. Your line is no open.

Ken Shields: Thank you and congrats on the great quarter. So you mentioned seasonality impacts for 4Q. I’m wondering if you could provide some additional color on this. And then additionally, you’ve mentioned the 50 to 50 on label versus off-label population. Wondering if you have any color on how many of these patients were potentially €“ or the off-label patients were potentially anemic myelofibrosis patients who have had higher platelet counts? Thank you.

Adam Craig: Thank you, Ken. I’ll answer both those questions. First of all, we don’t have that level of detail on the €“ on whether the patients who are treated off-label have anemia. That’s not something we have. With regards to the seasonality, the seasonality is really very much what we expected. The last quarter is a busy quarter for holidays. That’s also the American Society of Hematology meeting. So there’s a lot going on that takes doctors out of the office, and we experience seasonality in the same way as many, many companies do who are in the oncology space.

Ken Shields: Okay. Thank you. And then just one more, if I can. So you guys obviously got the milestone from DRI. Do you have any color on what that threshold was? Was that $50 million and are additional milestones expected this year. Any color there? And does that factor into the cash flow positivity guidance by end of 2023? Thank you.

David Kirske: Thanks, Ken. This is David here. We don’t disclose the details of that milestone payment, it is incorporated into our guidance with respect to our cash forecast.

Ken Shields: Okay. Thanks.

Operator: Thank you. Our next question comes from the line of Ben Burnett with Stifel. Your line is now open.

Ben Burnett: Thank you very much. I guess, I want to ask just two quick questions. First, I guess, where do you see the most ground to be gained kind of over the near-term in terms of the VONJO launch? And is it about getting deeper into the community? Are there other aspects of the launch that’s a bigger focus?

Adam Craig: Hi, Ben. Jim, please.

Jim Fong: Ben, this is Jim. Yes. So essentially, yes, we see the growth really coming from the community and continuing to expand there. So no doubt that that’s the observation we’re looking for. And in addition, obviously, we’re looking to get €“ continue to get better prognosis patients in the queue for us as well.

Ben Burnett: Okay. Excellent. And I guess on that last point, so what are you seeing in terms of duration of treatment? Do you expect this to change over time? So like I guess in other words, does the initial bowls of patients taking VONJO is that representative of sort of kind of what you expect the average patient, the duration of treatment from that average patient to be?

Jim Fong: Yes, Ben, obviously, we’ve only had nine months into our launch. So it’s tough to really prognosticate on the durations. However, to your point, like any new drug launch, the initial patients are going to be the €“ probably a poor progress of the patients. And so the durations typically are parallel of that. However, as we mentioned before, the evolution of the use of VONJO is towards better prognosis patients, and we’re seeing the durations parallel that.

Ben Burnett: Okay. Understood. Thanks so much.

Jim Fong: Yes. Thank you, Ben.

Operator: Thank you. Our next question comes from the line of Gil Blum with Needham. Your line is now open.