TG Therapeutics' CEO Discusses Q3 2013 Results - Earnings Call Transcript

Nov.12.13 | About: TG Therapeutics, (TGTX)

TG Therapeutics, Inc. (NASDAQ:TGTX)

Q3 2013 Earnings Conference Call

November 12, 2013 08:30 ET

Executives

Jenna Bosco - Director, Investor Relations

Michael Weiss - Executive Chairman and Interim Chief Executive Officer

Sean Power - Chief Financial Officer

Analysts

Joe Pantginis - ROTH Capital Partners

Matt Kaplan - Ladenburg Thalmann

Jonathan Aschoff – Brean Capital

Operator

Greetings and welcome to the TG Therapeutics’ Third Quarter 2013 Financial Results and Business Update Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jenna Bosco, Director of Investor Relations for TG Therapeutics. Thank you, Ms. Bosco. You may begin.

Jenna Bosco - Director, Investor Relations

Thank you. Good morning and welcome to our conference call regarding TG Therapeutics third quarter 2013 financial results and business update. I am Jenna Bosco, TG’s Director of Investor Relations and I welcome you to our conference call today.

Following our Safe Harbor statements, Sean Power, TG’s Chief Financial Officer, will provide a brief overview of our financial results and then turn the call over to Michael Weiss, the company’s Executive Chairman and Interim Chief Executive Officer, who will provide an update on the ongoing development of our novel glycoengineered anti-CD20 monoclonal antibody, TG-1101 and our orally available PI3K delta inhibitor TGR-1202.

Before we begin, I would like to remind everyone that various remarks that we make about our future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. TG cautions that these forward-looking statements are subject to risks and uncertainties that may cause our results to differ materially from those indicated. Factors that may affect TG Therapeutics operations include various risk factors and uncertainties that can be found in our SEC filings. This conference call is being recorded for audio rebroadcast on TG’s website, www.tgtherapuetics.com, where it will be available for the next 30 days. All participants on this call will be on listen-only mode.

Now, I would like to turn the call over to Sean Power, our Chief Financial Officer to briefly discuss the financial results for the third quarter of 2013, as well as the company’s overall financial condition.

Sean Power - Chief Financial Officer

Thank you, Jenna and thanks everyone for joining us. As you maybe aware, our financial results were released yesterday evening and can be viewed on the Investors and Media section of our website at www.tgtherapeutics.com.

As of September 30, 2013 the company had cash and cash equivalents of $50.2 million, as compared to $16.5 million at December 31, 2012. We will continue to operate with the very controlled burn rate and expect our current cash will be sufficient for at least 24 months.

Turning to the financial results for the quarter. The consolidated net loss for the third quarter ended September 30, 2013 was $4.6 million or $0.16 per share compared to a consolidated net loss of $2.7 million during the comparable quarter in 2012, representing an increase in consolidated net loss of $1.9 million. The consolidated net loss for the third quarter ended September 30, 2013 included an increase in other research and development expenses of $1.7 million, principally related to the TG-1101 and TGR-1202 clinical development programs and drug supply costs. The consolidated net loss for the third quarter ended September 30, 2013 also included $1 million of non-cash compensation expense related to equity incentive grants.

Consolidated net loss for the nine months ended September 30, 2013 was $14.8 million, or $0.62 per diluted share compared to a consolidated net loss of $22.7 million during the comparable quarter in 2012, representing a decrease in consolidated net loss of $7.9 million. Included in the consolidated net loss for the nine months ended September 30, 2012, was $16.6 million in non-cash stock expense recorded in conjunction with the license for TG-1101, which was partially offset that in 2013 by increases in other research and development expenses of $5.9 million, principally related to the 1101 and 1202 clinical development programs. Consolidated net loss for the nine months ended September 30, 2013, included $4.3 million of non-cash compensation expense related to equity incentive grants.

I now turn the call over to Mike Weiss, our Executive Chairman and Interim CEO.

Michael Weiss - Executive Chairman and Interim Chief Executive Officer

Thanks Sean and thanks to all you for joining us on this call today. Our primary focus during the third quarter was to aggressively put in place all the elements necessary to commence our combination clinical program as well all to continue to enroll as quickly as possible into our TGR-1202 Phase 1 dose escalation trial. I am pleased to report that we believe we will be well-positioned to commence our first combination trial of TGR-1101 plus ibrutinib shortly after ibrutinib is approved which we believe will be before the end of the year.

With respect to TGR-1202, recruitment continued into our first in man Phase 1 dose escalation study at a very nice pace in the third quarter. And is now enrolling at the 1200 mg once daily cohort provided a maximum tolerated dose with an outreach additional cohorts with sequentially higher doses of 1202 our plan. Let me remind everyone that this study which is being led by Dr. Michael Savona at the Sarah Cannon Research Institute is a standard three plus three dose escalation study gives us the safety and efficacy of TGR-1202 in patients with select hematological malignancies.

In September, as previously promised we provided a PK overview on this ongoing study. In that update, we confirmed that TGR-1202 can be dosed once per day. With the first dose half-life of approximately 14 hours, a steady state half-life that exceeds 24 hours, a significant accumulation for day 15 of dosing offer a patient the convenience of a once daily PI3K Delta inhibitor. We also noted that no drug-related liver toxicity has been observed to-date which is a well known adverse event associated with competitive PI3K Delta inhibitors. And we also described that we have seen what arm trial investigators believe the PI3K Delta related activity, including lymphocytosis and nodal reductions. We look forward to continued enrollment in this dose escalation portion of the trial opening future expansion cohorts and presenting the preliminary Phase 1 data at the American Society of Hematology meeting next month.

Additionally at ASH, we will have several preclinical posters exploring novel combination for the 1202 including two posters that will look at 1202 in combination with carfilzomib, the proteasome inhibitor formulate from Onyx now Amgen describing the synergy of 1202 and carfilzomib in multiple myeloma cell line, with a second poster highlighting the synergy of the two compounds in B-cell and mantle cell lymphoma cell lines. The third preclinical poster will demonstrate the activity of 1202 in Hodgkin’s lymphoma cell lines as a single agent as well as in combination with rituximab and anti-CD 30 conjugated monoclonal antibody approved for patients with Hodgkin’s lymphoma developed by Seattle Genetics.

Some additional accomplishments in the third quarter included in July, we completed a $40 million financing which included some of the top healthcare specific investment funds. And in September, Dr. Mark Lanasa from Duke University Medical Center presented data at the 15th International Workshop on Chronic Lymphocytic Leukemia which demonstrated that 1202 induced cytotoxicity and inhibited phosphorylation of AKT in PLL cells in vitro at similar concentrations for both 17p deleted and non-17p deleted samples. Patients with 17p deletion chronic lymphocytic leukemia generally have a poor prognosis when treated with conventional therapy since these PLL patients with normal cytogenetics.

Let me now spend just a few moments updating the status of TG-1101 clinical trial and the exciting developments in the area of glycoengineered anti-CD20 monoclonal antibodies. (Indiscernible) where we confirm the activity of TG-1101 in patients with advanced B-cell lymphomas in preparation for a combination trial, we began additional dosing cohorts to better understand the safety and tolerability of different dose levels and schedules of TG-1101. These data were too immature as of the ASH abstract deadlines and accordingly we planned to present data from these additional patients at one or more conferences in 2014. There are currently no longer implementations in the single agent study to conserve resources for and focus on our upcoming combination trial.

Similarly, we have also completing enrollment in our combination trial of TG-1101 with Revlimid and we believe is the pending approval of ibrutinib in mantle cell lymphoma and chronic lymphocytic leukemia. We have deemphasized this combination. We do believe that additional combinations with Revlimid and B-cell lymphomas maybe interesting and we will evaluate this opportunity in the context of other possible trials and available resources. With respect to the evolving landscape, our novel anti-CD20 monoclonal antibodies, we are very pleased by the recent approval of GA-101 now called Gazyva, a glycoengineered anti-CD20 monoclonal antibody developed by Roche Genentech.

In addition to FDA approval, data to be presented at this year’s ASH will show that Gazyva plus chemotherapy was better than Rituxan plus chemotherapy. We believe this is a strong validation that you can improve the performance of an anti-CD20 monoclonal antibody through glycoengineering. We also believe that we are the only other clinical stage glycoengineered anti-CD20. We of course have remaining to approve with respect to TG-1101, but we believe we are on the right track and we believe our proposed combination trials are do not to showcase the beneficial attributes of our anti-CD20 without the need to utilize chemotherapy.

With that, let me reiterate our highest priority is commencing combination trials for TG-1101 with novel non-chemotherapy small molecules, especially ibrutinib and our PI3K delta inhibitor, TGR-1202. Early trials combining ibrutinib with anti-CD20 monoclonal antibodies have shown very high response rates. Same can be said for the PI3K delta inhibitors when combined with anti-CD20 monoclonal antibodies. Accordingly, we believe these early data validate our approach and provide a high-level of confidence in a positive outcome of our planning program.

I’d like to finish by summarizing when investors should expect for the remainder of 2013 as well as into 2014. The management of combination trials for TG-1101 with ibrutinib and our own PI3K delta inhibitor, TGR-1202 first clinical presentation of our Phase 1 dose escalation data for TGR-1202 at the upcoming ASH Meeting next month. Additional data outputs for TGR-1101 and TGR-1202 at major medical meetings in the first half of 2014 and assuming timely recruitment to our initial Phase 1/2 combination clinical trials along with strong data, our goal is to launch our Phase 3 combination registration program in 2014.

With that, I’d like to turn the call back over to the conference operator for the Q&A session, following which I will return and provide some concluding remarks.

Question-and-Answer Session

Operator

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Our first question is coming from Joe Pantginis from ROTH Capital Partners. Please proceed with your question.

Joe Pantginis - ROTH Capital Partners

Hey guys. Good morning. Thanks for taking the question. Can you hear me okay?

Michael Weiss

Hey, John.

Joe Pantginis - ROTH Capital Partners

Great, hey. So I am going to focus on my questions pretty much on 1101, I guess like you said it was good news that Gazyva if I said that correctly, has that approval changed any of your plans, it seems like it has been with regard to this approval, looking forward beyond say 2014 as the profile of what you want to do with the drug changed at all?

Michael Weiss

Absolutely not. We have been anticipating the Gazyva approval. I think you did say it right, if I said it right, so I think we are both at pronunciation to give in that label, but yes, we have been anticipating this approval for more than a year now. I mean, the data has shown the advantage over the (indiscernible) arm was available at last year’s ASH. So that’s been out for quite a while. We have anticipated this approval and where we have unchanged our plans, we have been focused almost with laser beam focus on combinations with ibrutinib and our own delta. There may be some additional opportunities that arise because of the delay of approval.

Joe Pantginis - ROTH Capital Partners

Sure. And then coming off to your ASCO data, I know and Dr. O’Connor had mentioned this quite a bit, I just wanted to see if there is any update with regards to the plans in marginal zones?

Michael Weiss

Yes, so when we – after ASCO we did a full evaluation of the opportunities that were in front of us. And marginal zone looked interesting. We definitely did some further explorations. We have talked to that international group that wanted to do a trial. They actually voted on it and they were all excited about getting the trial started. It’s a large international group, but it’s going to take them six to nine months at minimum to get launch from ASCO. So we still have plus three or four months from today I think from where they were targeting even to start or open the trial.

In the process or along the way, our research basically told us that marginal zone was going to be treated pretty much as an indolent lymphoma and with the new approval of idelalisib coming out of the market. It sort of complicated the single agent strategy in marginal zone. We were being encouraged by folks to study the entire indolent population, which is fine and in fact to be plan on studying that indolent population. We plan on as soon as idelalisib is approved we plan on using our CD-20 plus idelalisib. It’s a great patient population for us that take Rituxan refractory population. So we think it’s one of the – and more interesting proof of principle areas for us, on top of which it’s a registration area for us. So in light of the fact that by – we thought that we can get a trial up and running by early in the year at the earliest for marginal zone alone and we thought that we can actually get a combination study up and running with idelalisib probably within two or three months after that at the latest. It just can make financial sense or strategic sense for us to push forward with marginal zone under those circumstances.

Joe Pantginis - ROTH Capital Partners

Okay, that makes sense. And that’s just your comments there about strategic and financial sense is a great segue to my next question, I think your strategy of buying with ibrutinib, ibrutinib is obviously a strong one and concurrently obvious. So with that said, so we can understand your promise regarding the Revlimid combination study just wanted to see if there were any other potential factors about emphasizing that study?

Michael Weiss

Yes, no other factors other than for the moment ibrutinib looks quite strong and its not approved yet, so we are basing of what we know from the published literature. We are looking forward to seeing a label and seeing all the factors around it. But we feel pretty confident that as we sit here today that we want to dedicate resources to that program. We also want to dedicate resources to our combination with our own delta inhibitor. So Revlimid, it’s a tough drug to treat patients with CLL. That’s one I think the folks said as Celgene is that they had to stop one of their key Revlimid CLL studies.

In non-Hodgkin’s lymphoma it seems to be quite a good drug and so we think that there may be some opportunities. We just need to circle back around and figure out what the best strategy in non-Hodgkin’s lymphoma is for us in Revlimid. But ibrutinib it’s just so clear focus for us particularly in CLL that again given that we are a small company. We want to make sure we focus on areas we know – we don’t know, but we feel confident that we can be successful and that’s the one that we are going with. Again I think if more resources were available and we thought there was a good strategy for us in combination with Revlimid in non-Hodgkin’s lymphoma we certainly pursue it. I think our goal is be focused on one or two really important high impact opportunities and then layer around them as we see fit.

Joe Pantginis - ROTH Capital Partners

It’s really helpful Michael. Thank you.

Michael Weiss

Thanks Joe.

Operator

Thanks. Our next question today is coming from Matt Kaplan from Ladenburg Thalmann. Please proceed with your question.

Matt Kaplan - Ladenburg Thalmann

Hi, good morning guys.

Michael Weiss

Good morning Matt.

Matt Kaplan - Ladenburg Thalmann

Couple of follow ups to Joe’s question, but I guess first what should we expect to see at coming ASH meeting I guess for 1101, 1202 both?

Michael Weiss

Right. So basically as we described in the prepared remarks, the – any additional data from our single agent studies for 1101 were premature for the ASH abstract, so we won’t be presenting 1101 data this year at ASH, but we do think we’ll have a pretty good set of data to present at ASCO this year – next year actually, including if all goes well, pretty robust early dataset in combination with ibrutinib and possibly in combination with our own delta. In terms of 1202, we basically plan to update or actually the time updated, it would be the first presentation of the safety and efficacy of 1202 in patients with a variety of heme malignancies. We’ll update the PK profile for the drug. So our plan is we should have – in September, we presented PK data through the 800 mg cohort at the conference – at the BioCentury Conference, we will be updating that. So we have PK data through 1200 and we should be able to provide safety and efficacy through the 800 mg cohort. At the time that we presented at BioCentury, we really only had information through the 400 mg cohort.

Matt Kaplan - Ladenburg Thalmann

And can you give us a sense in terms of the number of patients we should see with respect to safety and efficacy at that point?

Michael Weiss

Yes, in terms of safety and efficacy, it’s about probably 23 to 24 for safety and about 18 to 24 efficacy.

Matt Kaplan - Ladenburg Thalmann

Great. And then in terms of talk a little bit about the timing of the initiation of combo studies, I guess when do you think assuming approval of ibrutinib this year, when do you think you will be in position to I guess start a study and then how could one of these combinations may potentially be to a – for registration combo program?

Michael Weiss

Sure. So our feeling at this point is that upon ibrutinib’s approval, by the time, the drug is in the channel, the commercial channel, we should be prepared to start the study. So I think we are looking at two weeks is probably our target maybe is up as far as four weeks, but no longer than two to four weeks to start the combination once ibrutinib is approved. And we assume that it will be pretty rapidly available in the channel. In terms of registration program, I think our goal is get 20, 30 patients on the combination. We need actually two months, four months of follow-up probably to get good understanding of the activity level in terms of response rates. Our anticipation is that we will have higher and quicker response rates and one would expect from ibrutinib alone. Again, I think ibrutinib over a long period of time can generate and let’s talk about CLL first, in CLL close to 70% response rates, if you take up to 12 plus months to get there. We think we can produce potentially 85, 90% plus response rates within a two to four-month period. So we’ll be looking at the short-term response rate. Obviously, we are going to want to follow up the durability, but I think confidence for us to move into a pivotal program, we will be validating the future study can provide relatively rapid and high response rates. Once you do that, our feeling is we will roll pretty quickly into some randomized response rate study with – that are part of that study or in another study, PFS for full approval. So the response rate – our goal is to look at response rate for (indiscernible) approval followed by PFS analysis for full approval.

Matt Kaplan - Ladenburg Thalmann

Great, thanks for the detail and congrats on the products.

Michael Weiss

Thank you.

Operator

Thank you. (Operator Instructions) Our next question is coming from Jonathan Aschoff from Brean Capital. Please proceed with your question.

Jonathan Aschoff – Brean Capital

Thank you. Good morning guys.

Michael Weiss

Hi, Jonathan.

Jonathan Aschoff – Brean Capital

I was wondering maybe too early for this, but do you have any information, any unifying characteristics on why patients doesn’t respond to 1101 or 1202 or patient that did respond or stable and then stopped?

Michael Weiss

We have no information that I could share at this point and maybe way too early for us to be able to tell.

Jonathan Aschoff – Brean Capital

And now is about maybe describing regarding drug cost let’s say the importance is perhaps owning both anti-CD20 as well as the delta inhibitor, could you speak a little bit for that?

Michael Weiss

Sure, I mean we definitely think we’ll have a competitive advantage by having both of those components. We have flexibility in price to be able to customize a treatment at a the set price whereas folks who are just going out and buying the independent components from the marketplace, they maybe paying potentially two times as much as we could periodically charge. Obviously it’s way too early for us to consider what our pricing strategy will be. But and certainly have a lot of flexibility. And I think having the two components in-house and particularly given the fact that cost are rising and we start to think out combining GA-101 plus ibrutinib, you are talking about very expensive combination regimen. We started to think about combinations idelalisib plus ibrutinib, plus or – and/or plus GA-101 or even Rituxan you are still talking about very expensive regimen. Again you could layer in ublituximab which is also a $120,000 per year drug in combination with any of these small molecules. And again you are pushing $200,000 to $250,000 per year per patient without data to support those regimens. So off label, we’re trying to combine those agents that that cost. It could be quite challenging. So our belief is that one there is room to combine our two agents particularly in a clinical trial setting and gather a lot of information where people can’t go off label very easily and two obviously when we get to the market, (indiscernible) we have set a pricing strategy that works for both the patients, us and the payers.

Jonathan Aschoff – Brean Capital

Thanks a lot Mike.

Michael Weiss

Thanks.

Operator

Thank you. Our next question is coming from (indiscernible). Please proceed with your question.

Unidentified Analyst

Hey, good morning and thank you for taking my question. I just had a couple, first to come I know on the Gilead call, they talk a little bit about their 9820 program, I was just wondering at this point I know it’s early if you got any competitive intelligence on how that profile of that product is shaping up?

Michael Weiss

We don’t have much competitive intelligence at this point. Our understanding is that one of the rationality of that drug is to avoid liver tox. And three, they may be thinking that things will liver toxic can push the dose, if they could push the dose they can push the activity, that’s been our thesis all along that we don’t believe that – we don’t necessarily believe in tox driving that well we don’t necessarily believe that liver tox is a PI3K delta related effect. It sounds like for the first time maybe Gilead is thinking along the same line that perhaps its molecule specific, not target specific. Again we are not seeing any liver tox in our 1202 or delta program, so guarantees so long have been if we can – don’t have the liver tox, which we do is we can keep linear pharmacokinetic into the higher and higher doses that perhaps we can drive a better level of activity. Again, I don’t want to read too much into what Gilead is doing since I really don’t know much about it. But again we did hear that one of the goals of that program was to avoid the liver tox.

Unidentified Analyst

Okay, maybe the second question if I could ask is just to direct same kind of bigger picture items such as when you might think about potentially if you are thinking about it partnering any of these assets just maybe some overall thoughts whether this is truly a go alone strategy or if there is something that you were partnering and if so when do you think you might see a good time for TGX to be thinking about those type of things?

Michael Weiss

Yes, so obviously we are always thinking about them in terms of executing we are I mean not that interested at this moment in any major partnership. Again I think, we feel pretty confident that we have a very straight forward path to approve, we think it will be relatively quick to approval – the strategies that we’re working on and we think there is a lot of value to be created for our shareholders. So, I think for the moment, I mean, again someone were to give us what we precede to be a fully valued transaction today whether it’s a partnership or M&A, we certainly will look at that and the interested we just don’t feel the M&A actually been out there aggressively looking and we’re just not anticipating that for the moment, we’re getting in the marketplace itself before value proceed for the asset. We think we definitely need to show a little bit more, we need to improve a little bit more, but once we get there we think on the other side, there is significant value and then we could monetize again whether through a partnership or through an M&A transaction, we can make that decision on the other side of some more positive data or again we could also just go to loan at that point, the evaluation support and the investors are interested in giving as capital to perform the clinical trials and develop the commercialization, we’re certainly comfortable in that position as well. So, I think for the moment we feel that we’re not being valued where we think we should be – we know that we need to improve more to the marketplace to get that value once we’re there then we could really start to negotiate from a position of strength or not if we choose not so at that point.

Unidentified Analyst

Okay, thank you. Maybe our last question just has to do with the ASH event itself and I was just curious if you guys were thinking about hosting any events during ASH, I certainly obligate our presentations which kind of extracurricular to that?

Michael Weiss

Probably not, we are, I mean, we’ll be meeting with investigators. We’ll be doing scientific meetings and hosting small events in that arena, but not an investor event at ASH this year.

Unidentified Analyst

Okay. Alright, thank you for taking my questions and congrats on all the progress.

Michael Weiss

Thank you.

Operator

Thank you. There are no further questions at this time. I’d like to turn the floor back over to Michael Weiss for closing comments.

Michael Weiss – Executive Chairman and Interim Chief Executive Officer

Great, thank you. So on behalf of all of us at TG Therapeutics, I’d like to thank all of you for your continued support. We believe we have the critical pieces in place to drive novel, non-chemotherapy based combination therapy designed to improve patient care with better activity and lower toxicity. We look forward to closing on the successful 2013 to set the stage for an exciting 2014. Thanks again for joining us and have a great day.

Operator

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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