Karyopharm Therapeutics Inc. (NASDAQ:KPTI) Q1 2023 Earnings Call Transcript

Karyopharm Therapeutics Inc. (NASDAQ:KPTI) Q1 2023 Earnings Call Transcript May 6, 2023

Operator: Good morning. My name is Ryan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Karyopharm Therapeutics First Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that this call is being recorded at the company’s request. I would now like to turn the call over to Elhan Webb, Senior Vice President, Investor Relations. Thank you. Over to you.

Elhan Webb: Thank you, operator, and thank you all for joining us on today’s conference call to discuss Karyopharm’s First Quarter 2023 financial results and recent company progress. We issued a press release this morning detailing our financial results for the first quarter 2023. This release, along with a slide presentation that we will reference during our call today are available on our website. For today’s call, as seen on Slide 2, I’m joined by Richard, Sohanya, Reshma and Mike, who will provide an update on our Q1 results and recent clinical developments. 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, as outlined on Slide 3.

Actual results may differ materially from those indicated by these forward-looking statements, FLS as a result of various important factors, including those discussed in the Risk Factors section of our most recent Form 10-K, which is on file with the SEC and in other filings that we may make with the SEC in the future. Any FLS represent RV as of today only. While we may elect to update this FLS at some point in the future, we specifically disclaim any opportunity to do so even if our views change. Therefore, you should not rely on these FLS as representing our views as of any later date. I will now turn the call over to Richard. Please turn to Slide 4.

Richard Paulson: Thank you, Elhan, and thank you all for joining us today for Karyopharm’s Q1 2023 Earnings Call. As we turn to Slide 5, we are making strong progress as we execute on Karyopharm’s next stage of growth by deploying our novel mechanism of action, selective inhibition of nuclear export, to expand our existing multiple myeloma franchise, currently centered around our commercial drug, XPOVIO, which is now approved in over 40 countries and continues to move into earlier lines of therapy in multiple myeloma. As Sohanya will discuss further, year-over-year, total demand for XPOVIO continues to grow. However, this is not translating into growth in net product revenue due to increased distribution of free product through our carry forward patient assistance program, PAP and higher gross-to-net discounts.

These factors have caused us to revise our total revenue guidance for 2023 to a new range of $145 to $160 million. In addition, we have accelerated our closure of nonpriority programs, thus lowering our spend in 2023 and we are maintaining our guidance for cash runway through late 2025. We believe the factors resulting in the significant increased use of our PAP programs are expected to be mostly limited to 2023. And while we are not specifically commenting on our revenue expectations for 2024, we believe we will see a decreased impact of this challenge next year given the IRA-related Medicare Part D redesign. We have a focused pipeline and are rapidly advancing our mid- and late-stage clinical development programs that can help patients who suffer from cancers with high unmet need, demonstrate efficacy at lower doses with improved tolerability and where we believe we’ll have the highest probability of success.

We are conducting pivotal Phase III studies in both multiple myeloma and endometrial cancer with the third pivotal Phase III study of myelofibrosis, which we expect to start in the first half of 2023. Collectively, we believe we have the potential to achieve multiple product approvals over the next 2 to 4 years as we deliver our next phase of growth, leveraging our proven and established commercialization and mid- to late-stage development capabilities as we work to generate value for patients and shareholders. As we look at our first quarter highlights on Slide 6, we achieved $28.3 million XPOVIO net product revenue for the quarter, which is consistent with the first quarter last year. Total demand for XPOVIO grew year-over-year in a very competitive multiple myeloma marketplace, and we are encouraged by the continued growth in the community setting.

Shifting to selinexor’s position internationally, our continued global expansion provides further opportunities to treat patients in need with the additions of new license territories with Menarini in the Middle East and Africa as well as full marketing authorization for an XPOVIO in the U.K., broadening our international footprint. We continue to advance a streamlined clinical pipeline focused on our 4 core programs. I want to highlight our recent data presented at AACR in treatment-naive myelofibrosis, where selinexor 60 milligram in combination with ruxolitinib demonstrated rapid, deep and sustained spleen response. Based on this, we are planning to initiate a pivotal Phase III study this quarter as we believe selinexor 60 milligram plus ruxolitinib has the potential to transform standard of care for frontline myelofibrosis.

Additionally, earlier this week, we announced encouraging interim efficacy data from the Phase II study of eltanexor, our second novel sign compound in 30 patients with hard-to-treat higher-risk, relapsed or refractory MDS, which Reshma will discuss. With that, I would now like to turn the call over to Sohanya on Slide 7 for her review of the commercial performance for the quarter and perspectives on our updated guidance for 2023. Sohanya?

Sohanya Cheng: Thank you, Richard, and good morning, everyone. On Slide 8, I will be discussing first quarter of XPOVIO performance within an evolving and competitive multiple myeloma landscape. In the first quarter, XPOVIO continued to show growth year-over-year in total demand and new patient starts despite facing a competitive landscape that intensified over the past year. Net product revenue was consistent with the same period last year and was adversely impacted by multiple external factors. When you look at what is positively driving our total demand, the community business continued to grow, contributing to about 70% of XPOVIO’s revenues in the first quarter. In the community setting, XPOVIO continues to be viewed increasingly favorably as an effective, convenient oral and manageable therapy with a novel mechanism of action in second to fourth line.

In the academic setting, we saw sustained demand year-over-year despite increasing uptake of the novel bispecifics and CAR-Ts. The positioning of XPOVIO is actively evolving in the academic setting with the emergence of T cell therapies, and we have an opportunity to serve key patient segments with an increasing body of evidence for XPOVIO that Reshma will expand upon shortly. Now let’s take a look at some of the key headwinds we see that adversely impacted our net product revenues year-over-year. First, there was an impact from a higher gross to net discount, 5 points higher in Q1 2023 versus Q1 2022, driven by increased 340B discounts and Medicare and Medicaid rebates. Second, there was a significant increase in utilization of our carryforward patient assistance program, or PAP, where we provide free drug to patients who qualify and who are unable to afford the cost of their medication.

Many patients rely on financial assistance from independent nonprofit foundation dedicated to improving access to important medications by providing financial support including programs supporting Medicare CAR-T patients who need co-pay assistance for their multiple myeloma oral therapy. Medicare patients constitute about 60% of our total patient mix for XPOVIO. However, these foundations did not have sufficient funding and were unable to provide financial support to patients in Q1 of 2023 and continuing through the end of April. As a result, we faced an unprecedented increase in the use of our patient assistance program in this period. Historically, our PAP program attributed to approximately 5% of total demand and has steadily increased since February of this year, approaching 20% in April.

Patients entering PAP remain in the program through the year and course of treatment. Thus, there is a cumulative effect over subsequent quarters due to the refills associated with these new starts. Now moving forward in 2024, IRA related changes in the design of Medicare Part D will eliminate the patient burden of the 5% beneficiary coinsurance requirement and we expect significantly less need for Medicare Part D patients to utilize carryforward for co-pay assistance. While there are several external factors that can shift in the marketplace, the primary driver for revising our net product revenue guidance to $110 million to $125 million is higher year-to-date usage of PAP and their associated refill impact as well as our uncertainty around whether foundations supporting multiple myeloma patients will be able to provide financial support for new eligible patients throughout 2023.

We recognize the important role that XPOVIO can play in patients that are battling multiple myeloma, and we are dedicated to continuing to provide free access to XPOVIO for patients that qualify for our carryforward program. As we look to key drivers of growth for 2023 and beyond, we are pleased with the continued positive momentum across our leading indicators. Importantly, we continue to make strong progress in shifting into earlier lines. In Q1 2023, XPOVIO new patient share approached 60% in the second to fourth line compared to 45% in Q1 of last year. This is encouraging as it allows patients to potentially have a more optimal experience in the early lines and extend time on therapy. This is supported by our intent to prescribe data, which showed an improvement in tolerability perception in the second to fourth line.

Let’s now turn to Slide 9. Amidst the crowded and evolving landscape, we believe we are strongly positioned as a novel class of therapy in the second to fourth line in between 3 major classes used in the first and second lines and T cell therapies in later lines. And I remain confident in our potential for mid- to long-term growth. We are positioning XPOVIO in 3 targeted patient populations. First, in the community setting where earlier line patients tend to be treated, XPOVIO is an optimal therapy in the second to fourth line post anti-CD38 treatments as a novel class of therapy that is an effective manageable, easily combinable and a convenient oral therapy. Second, as T-cell therapies emerge and are used increasingly in the academic setting, XPOVIO may be an optimal potentially T-cell bearing therapy that can be used at any stage of a patient’s treatment journey.

Reshma will expand upon the building body of evidence that suggests XPO1 inhibition may be associated with preserving T-cell health. Finally, in the academic setting, a third segment of patients is the elderly patients that constitute about 2/3 of all of myeloma patients, and they typically are not able to access a T-cell therapy due to age and frailty. As we think about the mid- to long-term growth potential of XPOVIO in multiple myeloma, we’re encouraged via XVd study, the triple combination of selinexor with pomalidomide and dexamethasone and find investment could lead to the only all oral potentially T cell sparing regimen in the marketplace, if approved. Pomalidomide and IMiD has shown no potential negative impact on T cell function, unlike alkylating agents such as cyclophosphamide that have shown to impact T cells at one year post exposure.

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Additionally, pomalidomide is over a $2 billion drug and a critical backbone in second to fourth line with potential for increasing utilization accelerated by the need for T cell sparing therapies in the future. In summary, despite the headwinds in 2023, we continue to advance our mission for XPOVIO that every eligible patient with multiple myeloma should receive selinexor during their patient journey. Please advance now to Slide 10, and I’ll turn the call over to Reshma to review our clinical pipeline progress.

Reshma Rangwala: Thank you, Sohanya. Starting off with an overview of our clinical pipeline on Slide 11. We are rapidly advancing our pipeline, which is evaluating 2 complementary novel sign compounds selinexor and eltanexor across multiple cancers of high unmet need, including myelofibrosis, myelodysplastic neoplasms, endometrial cancer and multiple myeloma. Turning now to Slide 12. We continue to optimize the dose of selinexor across our clinical programs. The lower doses of 40 or 60 milligrams weekly that are incorporated in all of our current selinexor clinical trials. A 1/4 to less than half of the original approved dose of 80 milligrams twice weekly. The substantially lower doses optimize the patient benefit by improving its tolerability ultimately enabling patients to stay on therapy longer and improving their overall benefit.

I’m going to spend most of my time today talking about our recent data in myelofibrosis and myelodysplastic neoplasms. But first, on Slide 14, it is worth reviewing some of the evidence about the potential benefit of selinexor in T cell fitness. There are a number of published studies, which have shown that selinexor maintains a T cell function in mice and can help maintain the effectiveness of CAR-T therapies in mice pretreated with selinexor. To further expand on these data, we are collaborating with academic institutions on additional preclinical research studies to further explore the impact of signed mechanisms on T cell fitness. In addition, we are leveraging real-world evidence data to determine whether patients who were treated with selinexor prior to receiving CAR-Ttherapy benefit from improved outcomes with CAR-T.

Lastly, we are evaluating multiple clinical studies that will evaluate the benefit of selinexor when used before or after BCMA or CAR-T therapy in patients with multiple myeloma. This body of evidence will enhance our understanding of the role of XPO1 inhibition has in maintaining the T cell environment, which may potentially augment the benefit achieved with subsequent T cell therapies. Now let’s discuss the data that we presented a few weeks ago at AACR on the efficacy and safety of selinexor plus ruxolitinib in first-line myelofibrosis patients. Since we already discussed these data at the event we hosted on April 18, I will cover these slides quickly. For anyone looking for additional details, I would encourage you to listen to a replay of our webcast from April 18, which is available in the Events and Presentations section of our website.

Turning to Slide 16. The only approved class of therapy in myelofibrosis is the JAK inhibitors. Less than 50% of patients achieved in SVR35 and TSS50, and there are notable subgroups, including men and those who start on low dose of ruxolitinib were fewer than 25% achieved in SVR35 at week 24. And First, let’s turn to Slide 17, which shows the trial design for our Phase I 034 study from which the efficacy and safety data for the selinexor plus ruxolitinib combination have been observed. On Slide 18 are the SVR35 and TSS50 results broken down by dose. In the efficacy evaluable in ITT populations, the SVR35 rate at week 24 achieved in the 60 milligram dose cohort were 92% and 79%, respectively, which is almost double compared to the rates achieved at 40 milligrams.

Furthermore, these reductions occurred rapidly with a 71% SVR35 rate observed at week 12 in the 60 milligram ITT patient population. Consistent with the SVR35 data, treatment with the 60 milligram dose showed greater symptom improvement compared to patients treated with the 40-milligram dose. At week 24 for patients who received a 60 milligram dose of selinexor, TSS50 was observed in 78% of the efficacy evaluable population and 58% of the ITT population. Here as well, you see rapid improvement in symptoms with approximately 67% of the ITT population who received selinexor 60 milligrams achieved a TSS50 as early as week 12. The waterfall on Slide 19 shows the spleen volume response and the efficacy evaluable patients. As you can see, 100% of the evaluable patients treated with selinexor 60 milligrams achieved a spleen volume response of 35% or more at any time.

Moving to Slide 20. We have the subgroup data in patients treated with selinexor 60 milligrams. In general, efficacy was similar across all of the subgroups that were evaluated. Highlighted in Orange are 2 important subgroups, specifically the response rates for men and women in the ITT population, which were similar at 78% and 80%, respectively. Similar efficacy was also observed by ruxolitinib starting dose with patients who were treated at starting doses of 15 or 20 milligrams of ruxolitinib achieving an SVR35 of 75% as compared to 83% amongst patients treated with 5 or 10 milligrams of ruxolitinib. On Slide 21, we show a unique subgroup analysis from patients that had their ruxolitinib dose reduced to 5 milligrams as early as cycle 2 and remain on that dose for the remaining duration of their therapy.

Even with the subtherapeutic dose of ruxolitinib, all patients evaluable at week 24 achieved a spleen volume reduction of 35% or more. Similarly, symptom score improvement was observed in all patients with 5 out of 6 patients achieving a 50% or greater improvement in their total symptoms. These data suggest that XPO1 is a fundamental mechanism in myelofibrosis. Slide 22 presents a breakdown of adverse events. The most common adverse events were nausea, anemia, fatigue and thrombocytopenia and the most common grade 3/4 AEs were anemia, thrombocytopenia and neutropenia. While 75% of patients experienced nausea, the vast majority of these events were Grade 1 and transient with the majority of these events resolving within 2 cycles. Amongst the patients who received one prophylactic antiemetic, nausea rates was decreased and occurred at only a Grade 1 severity.

We anticipate that these rates will further decrease in the Phase III study, which will incorporate mandatory dual antiemetics for the first 2 cycles. On Slide 23, even though some patients experienced nausea and vomiting, there was a median absolute weight gain of 2.5 kilograms observed at week 24 in patients treated with selinexor 60 milligrams. As shown on Slide 24, we highlight the potential findings for disease modification given that the median hemoglobin levels return to baseline and there’s a rapid normalization of platelet levels contrast this with findings from patients who have received ruxolitinib as a single agent where hemoglobin levels drop after treatment initiation and stay low. The increase in hemoglobin over time, coupled with the rapid normalization of platelet levels between cycles 2 to 3 may be evidence of disease modification.

Critical finding for patients given that thrombocytopenia is the leading cause for ruxolitinib discontinuation. In summary, as we turn to Slide 25, we believe selinexor 60 milligrams in combination with ruxolitinib has the potential to transform frontline myelofibrosis treatment paradigms. The combination is generally well tolerated and manageable, allowing most patients to remain on therapy. Rapid, deep and sustained spleen response and robust symptom improvement was found in patients treated with selinexor 60 milligrams in combination with ruxolitinib appearing to work together synergistically. As seen on Slide 26, the planned Phase III trial will enroll JAK inhibitor naive patients with intermediate and high-risk myelofibrosis, 306 patients will be randomized 2:1 to ruxolitinib plus selinexor or ruxolitinib plus placebo.

We are eagerly looking forward to initiating the Phase III trial this quarter. Now let’s turn our attention to our research in patients with myelodysplastic neoplasms or MDS, starting on Slide 28. Between 12,000 to 20,000 people in the United States are expected to have been diagnosed with higher-risk MDS in 2022. Hypomethylating agents are the current standard of care for newly diagnosed higher-risk MDS patients. However, only approximately 50% of patients respond. Prognosis and higher-risk relapsed/refractory disease is poor with an expected overall survival of only 4 to 6 months, and there are currently no approved therapies for HMA refractory MDS. Given the importance of XPO1 inhibition in MDS, eltanexor has the potential to meaningfully improve survival and provide benefit to patients who are in need of effective therapies.

Turning to Slide 29. You can see the design of our Phase II study of eltanexor in relapsed/refractory higher-risk MDS. The data that we will be discussing today is from the 30 patients enrolled as part of the Phase II interim analysis. All patients were treated with the recommended Phase II dose of eltanexor identified in the Phase I, which was 10 milligrams daily for 5 days of each week. As shown on Slide 30, the objective response rate observed in the ITT population was 27%. All of the responses were marrow CRs with 2 of these patients also achieving hematologic improvement. Noteworthy was the transfusion independence rate observed in 29% of the patients who were transfusion dependent on red blood cells or platelets at baseline. The median overall survival was 8.7 months, which is encouraging given the median overall survival for patients with higher-risk relapsed or refractory MDS is typically only 4 to 6 months.

Finally, on Slide 31, side effects were generally tolerable and manageable. The most common AEs were asthenia, diarrhea and nausea, the most common grade 3 plus AEs were neutropenia, thrombocytopenia and asthenia. There were no treatment-related adverse events leading to death, and 3 patients discontinued due to a treatment-related adverse event. Overall, the data from our interim analysis points to the potential importance of XPO1 inhibition in MDS. We plan to study these data further and determine the optimal development plan for eltanexor in MDS in the second half of this year. With that, please turn to Slide 32, and I will now hand it over to Mike.

Michael Mason: I hope everyone is having a great morning, and thank you, Reshma. Turning to our financials since we issued a press release earlier today with the full financial results, I will just focus on the highlights, which begin on Slide 33. Total revenue for the first quarter of 2023 was $38.7 million compared to $47.7 million for the first quarter of 2022. Net product revenue from U.S. commercial sales of XPOVIO for the first quarter of 2023 was $28.3 million compared to $28.3 million for the first quarter of 2022. As Sohanya discussed, net product revenue was adversely affected by more patients using our patient assistance program as well as higher gross to net discounts, which were 24% for the quarter. We now expect our gross to net discounts will be near the higher end of our range of 20% to 25% this year.

Turning to costs. With our continued disciplined execution, we are pleased to be delivering a combined 16% year-over-year reduction in our R&D and SG&A expenses this quarter. As we have discussed in the past, we have a focused pipeline and you are seeing this in our R&D spend. R&D expenses for the first quarter of 2023 were $32.3 million, down 23% compared to $42.1 million for the first quarter of 2022. Likewise, SG&A expenses for the first quarter of 2023 were $35.9 million, down 7% compared to $38.8 million for the first quarter of 2022. We are achieving this through purposeful and comprehensive spend discipline, which includes the accelerated closure of our noncore programs while simultaneously rapidly advancing 3 pivotal Phase III programs.

Cash, cash equivalents, restricted cash and investments as of March 31, 2023, totaled $261.9 million compared to $279.7 million as of December 31, 2022. As Sohanya outlined, we are lowering both our total revenue and XPOVIO net product revenue ranges by $15 million, primarily due to the higher-than-anticipated use of our patient assistant programs and associated free drug. In 2024, we expect this to improve with fewer patients utilizing our path for co-pay assistance due to IRA-related redesign of Part D benefits. With these changes, we are now guiding to total revenue of $145 million to $160 million for 2023 and U.S. XPOVIO net product revenue of $110 million to $125 million. On the cost side, as we’ve accelerated our closure of nonpriority programs and disciplined expense management, we are also lowering our expense guidance by $15 million.

We now anticipate non-GAAP R&D and SG&A expenses which excludes stock-based compensation expense to be in the range of $245 million to $260 million for the full year of 2023. And finally, that our existing cash, cash equivalent investments as well as the revenue we expect to generate from XPOVIO product sales and other license revenues will be sufficient to fund our planned operations into late 2025. We I’ll now flip to Slide 34 and turn the call over to Richard for some final thoughts. Richard?

Richard Paulson: Thank you, Mike. Turning to Slide 35. As we have discussed today, we are rapidly advancing our pipeline with 3 Phase III programs to potentially expand our commercial indications as we demonstrate the benefit that XPO1 inhibition can deliver to patients in areas with high unmet need. We continue to expand on our foundation in multiple myeloma and believe that every eligible patient should receive selinexor during their patient journey. I would like to thank our teams that continue to execute in a disciplined manner and who strive each day for patients with high unmet needs as we work to generate value for patients and shareholders. Thank you again for joining us today. And I would now like to ask the operator to open the call up to the Q&A portion of today’s call. Operator?

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Q&A Session

Operator: [Operator Instructions] Our first question comes from Peter Lawson from Barclays.

Operator: Our next question comes from the line of Maurice Raycroft from Jefferies.

Operator: Our next question comes from the line of Mike Ulz from Morgan Stanley.

Operator: Our next question comes from the line of Colleen Kusy from Baird.

Operator: Our next question comes from the line of Chris Raymond from Piper Sandler.

Operator: Our next question comes from the line of Eric Joseph from JPMorgan.

Operator: Our next question comes from the line of Jonathan Chang from SVB Leerink.

Operator: Thank you. Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back to Mr. Richard Paulson for any closing remarks.

Richard Paulson : Thank you, operator, and thank you again to everyone for joining today’s call. And we’re wishing everyone a great day.

Operator: Thank you. The conference of Karyopharm has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.