Celator Pharmaceuticals, Inc. (NASDAQ:CPXX) Q1 2016 Earnings Conference Call May 10, 2016 4:30 PM ET
Scott Jackson - Chief Executive Officer
Lawrence Mayer - Founder, President and Chief Scientific Officer
Fred Powell - Chief Financial Officer
Arthur Louie - Chief Medical Officer
Derek Miller - Chief Business Officer
Brandon - Jenny
Joe Pantginis - Roth Capital Partners
Chad Messer - Needham & Company
Stephen Willey - Stifel
Good day, ladies and gentlemen. And welcome to Celator Pharmaceuticals' Business Update and First Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available on the Investor Section of Celator's website at ir.celatorpharma.com. This call is subject to copyright property of Celator Pharmaceuticals and recordings, reproduction or transmission of this call without the expressed written consent of Celator Pharmaceuticals is strictly prohibited. As a remainder, today's call is being recorded.
I will now like to turn the call over to Fred Powell, Celator's Chief Financial Officer. Sir, please begin.
Good afternoon, everyone, and welcome to Celator's business update and first quarter 2016 financial results conference call. The press release became available at approximately 4 PM Eastern Time today and can be found on the Investors Section of the Company's website.
In addition, we are conducting a webcast of this call. I am joined this afternoon by Scott Jackson, Chief Executive Officer, Dr. Lawrence Mayer, Founder, President and Chief Scientific Officer, Dr. Arthur Louie, Chief Medical Officer and Derek Miller, Chief Business Officer.
Scott will provide opening remarks and share some highlights of the quarter and recent events. I will review the financial results and then we will open up the call for questions.
Please note that today's conference call and any webcast may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent any statements made on this call contain information that is not historical, these statements are essentially forward-looking and are subject to risks and uncertainties detailed in the Company's filings with the SEC, such as Form 10-K, Form 10-Q and Form 8-K reports.
I will now turn the call over to Scott.
Thank you, and good afternoon, everyone. We are pleased to have you joined us today. The first quarter of 2016 was one of significant achievement and progress for Celator. We got a mission at Celator to transform the science of combination therapy and develop products to improve outcomes for patients with cancer. We are making great stride towards this mission with our most advanced product candidate VYXEOS as well as our proprietary technology platforms. We recorded positive results from the Phase 3 clinical trial comparing VYXEOS to the current standard of care known as 7+3 in patients with high-risk acute myeloid leukemia. We believe this is definitive proof of the value of the CombiPlex technology platform.
Previously, we announced results demonstrating the technology platform is applicable to molecularly targeted agents as well as traditional chemotherapeutics. We are now working to broaden our oncology pipeline and establish new R&D collaborations. These are significant goals and we are optimistic are within our reach because of our expertise in drug development and now the technology including drug formulations and delivery systems.
Now on to VYXEOS. In March, we announced the Phase 3 trial on patients with high-risk including secondary AML achieved the clinically meaningful and statistically significant improvement in overall survival. The hazard ratio was 0.69 with the p value of 0.005, which represents a 31% reduction in the risk of death versus 7+3. The median overall survival for patients treated with VYXEOS in the study was 9.56 months compared to 5.95 months for patients receiving 7+3 representing a 3.61 months improvement in favor of VYXEOS.
The percentage of patients alive 12 months after randomization was 41.5% on the VYXEOS arm compared to 27.6% on the 7+3 arm. The percentage of patients alive 24 months after randomization was 31.1% on the VYXEOS arm compared to 12.3% on the 7+3 arm. Sixty-day all-cause mortality was 13.7% versus 21.2%, in favor of patients treated with VYXEOS. No substantial difference in Grade 3-5 adverse events was observed between VYXEOS and 7+3. In the intent-to-treat population, Grade 3-5, hematologic adverse events were similar for overall infections, febrile neutropenia, and bleeding events. In the intent-to-treat population, Grade 3-5, non-hematologic adverse events were similar across all organ systems, including cardiac, gastrointestinal, general systems, metabolic disorders, musculoskeletal, nervous system, respiratory, skin and renal.
In April, we announced that a late-breaking abstract submitted to ASCO was accepted for an oral presentation on June 4, at 3:00 pm Central Time and will be presented by Dr. Jeffrey Lancet from H. Lee Moffitt Cancer Center & Research Institute. The abstract will also be discussed by Dr. Richard Larson from the University of Chicago at 3.24 pm Central Time. We are also pleased to announce that the abstract was selected for inclusion in the best of ASCO forums which are held in several cities in the United States. According to the ASCO website, the meetings contain the most cutting edge science and education from the ASCO Annual Meeting into a two day program. The abstracts chosen for presentation and discussion reflect the foremost research and strategies in oncology that will directly impact patient care. Expert faculty will place abstract findings in the clinical context and discuss how the results may change the current standard of care.
We are happy that the late-breaking abstract was chosen for an oral presentation and being included for discussion. However, we recognize the time limitations. Therefore, we are hosting an Analysts and Investor meeting to discuss VYXEOS on Saturday June 4, starting at 7 pm Central Time. This will provide an opportunity to review data from the VYXEOS Phase 3 clinical trial in more depth and hear insides from key opinion leaders.
In April Celator announced that patients with newly diagnosed AML treated in the Phase 2 clinical trial, treated with VYXEOS demonstrated reduced healthcare resource use compared to 7+3. These results were presented at the AMCP Managed Care and Specialty Pharmacy Annual Meeting. Also in April, Celator presented positive data for VYXEOS in FLT3-ITD Mutated AML cells derived from patients with newly diagnosed AML at the American Association for Cancer Research Annual Meeting. The presentation given by Dr. Jeffrey Tyner from Oregon Health & Science University examine the ex vivo sensitivity of AML cells derived from newly diagnosed patients to VYXEOS, which may provide a means to identify specific AML patient genotype or phenotypes that could benefit most from VYXEOS treatment.
In addition to the Phase 3 clinical trial, progress has been made with investigator initiated studies and oncology cooperative group studies. And these studies will provide data across the range of patient populations in AML, MDS and other hematologic malignancies. In January, Celator announced that VYXEOS was selected for participation in Cardiff University sponsored clinical trial in adults' patients with newly diagnosed AML or high-risk MDS. Enrollment in this trial is underway. It is important to evaluate VYXEOS in other patient populations to potentially demonstrate broader use which segways to commercialization.
We are planning to commercialize VYXEOS on our own in the US and partner ex-USA. As communicated on prior calls, a commercial launch plan for US has been drafted and we've started key pre-launch activities. The pre-launch plans for VYXEOS key stakeholders and include but not limited to key opinion leader education, math-ing formulary submission processes and evidence requirement. Development and validation of a value dossier, and global pricing strategy and developing a health economic model.
Lastly, we anticipate achieving the following key objectives. First, to continue to execute on the VYXEOS commercial readiness in the United States. Second, to submit the New Drug Application or NDA for VYXEOS by the end of third quarter of 2016. Third, to continue to expand the clinical development of VYXEOS via investigator initiated studies, oncology cooperating group studies and company sponsored studies. Fourth, that if the NDA is achieved by the end of the third quarter of 2016 at the Prescription Drug User Fee Act or PDUFA date assuming the FDA grants priority review which we will request when we submit the NDA. The PDUFA date would then be by the middle of 2017. And last that in the United States, we would have the commercial launch assuming FDA approval by mid-2017 in the third quarter of 2017.
And with that I'll turn the call over to Fred for an overview of the financial results from the first quarter of 2016.
Thank you, Scott. Earlier this afternoon, we issued a press release detailing our financial results for the first quarter of 2016. In the first quarter, our cash position was strengthened as a result of completed underwritten public offering of 4.6 million shares for the company's common stock resulting in net proceeds of approximately $40.6 million.
Now on to the financial results. As of March 31, 2016, cash and cash equivalents were $67.5 million compared to $23.3 million as of December 31, 2015. The increase was primarily due to the underwritten public offering that netted approximately $40.6 million and $9.8 million in net proceeds from the issuance of common stock through an at-the-market equity offering program. We believe that the cash and cash equivalents as of March 31, 2016 will be sufficient to meet estimated working capital requirements and fund planned operations into 2018.
Research and development expenses were $2.7 million for the three months ended March 31, 2016 and for the same period in 2015.
General and administrative expenses were $2.5 million for the three months ended March 31, 2016, as compared to $1.8 million for the same period of 2015. The increase was primarily attributable to increases in compensation, pre-launch commercial activities, public company expenses and professional fees.
Net loss increased to $5.5 million for the three months ended March 31, 2016, from $4.7 million consistent with the same period in 2015.
In summary, we are devoting our resources to execute on our operational plan and targeting and NDA submission by the end of the third quarter of 2016. Undertaking pre-launch commercial activities, advancing our CombiPlex platform and working to achieve our other corporate objectives. As Scott mentioned earlier, we continue to expect significant progress in 2016 and look forward to keeping you updated throughout the year.
Now I'd like to turn the call over to the operator for any questions you may have. Operator?
Our first question will come from the line of [Kim Jovovich] from Jenny. Your line is open.
Hi, guys. This is actually Brandon on for Kim. Thanks for taking my question. I have a couple I guess my first one is just hoping to guess more detail on your plans for the ex-US partnership. I guess my question is around I guess your current confidence right now based on your recent data, how confident are you in finding up partner, how confident are you that partner will help with the filing in Europe and any timeline updates you may have on filing for European approval?
Yes. Hi, Brandon. It's Scott. I am going to ask Derek to comment on the first part and then I'll come back and comment on the European regulatory submission. Derek?
Hey, Brandon. Thanks for the question. So we are very pleased with the level of inbound interest and the point at which the conversations are as it relates to ex-US partnerships. I'd say clearly since the Phase 3 data were announced back in March, we had an additional inflow, if you will, of interest. And I think as it pertains to timing of filing I think Scott will touch upon this a little bit more but our assumptions in US that we will be able to complete the filing by the end of the third quarter. And then in Europe that we would do that in 1Q, 2017. There is clearly an opportunity depending on the timing of announcing an ex-US partnership to accelerate that timeline into 2016. So that remains to be seen but I am very pleased with the progress we've made on those conversations.
I think he just provided what I was going to also say. Derek is just a bit -- but I'll take a moment to reiterate. So, again, looking at the NDA by the end of the third quarter, we would request a priority review, if the FDA grants us a priority review then we are looking at a PDUFA date before the middle of 2017. And therefore we are assuming a US commercial launch in third quarter of 2017. As it related to the MAA submission, as Derek just mentioned, we are looking at that as 1Q, 2017, if that were the timing then we will be looking at CHMP opinion in 1Q, 2018. But as Derek mentioned depending upon the progress that we make in terms of ex-US partnering that timeline could be move closer to the NDA submission, that simply a reflection on Celator submitting the MAA. So clearly if we are successful sooner rather than later in terms of partnership then we could accelerate that timeline to be closer to the US submission.
Okay. Great. And then for US launch, do you anticipate hiring your sales force prior to approval or would you wait until post approval to start building out that sales force?
Yes. Hi. This is Derek again. So we would anticipate hiring as close to launch as possible quite frankly. We don't anticipate bringing any field based employees onboard I think now until maybe the quarter prior to the expected launch. Of course, other folks either in office or at the management level maybe hired in advance to that. But we would be looking to time this as close as possible to the launch. And you need to do that because the timing obvious can -- even if it shifts a little bit you want to make sure you give yourself some room there for that expanse.
Okay, great. Sorry one more question. Sorry to capitalize so much of your time. I was wondering if there is any update on the CPX-8 program you could share?
Well, I think as we've communicated previously publicly --
Sorry I meant CPX-1, I apologize.
[Multiple Speakers] Product formulation that looks very promising. But we are actually focusing now as utilizing that docetaxel nanoparticle formation as a basis of doing combinations with molecularly targeted agents. We think this would be a differentiating approach that will give us even greater benefits in terms of therapeutic efficacy. So those are part of our initial foray into the application that CombiPlex 2 molecularly targeted agents and the results from that as we presented last year at the EORTC-AACR meeting in Boston were very favorable. So we are still looking at options there in terms of where want to go with that combination.
Yes, thank you, Brandon. I don't think Lawrence had heard you saying CPX-1. So I think what he just illustrated is where a lot of our time and attention has been focused outside of VYXEOS is really on the technology platform work. In terms of CPX-1, we think its viable product candidate but at this point in time we are envisioning that's going to move into clinical development again that it would be under our partnership situation.
Thank you. Our next question will come from the line of Joe Pantginis from Roth Capital Partners. Your line is open.
Hey, guys. Good afternoon. Thanks for taking the question. I guess two relating questions. I guess with regards to the Phase 3 data, when do you anticipate having the healthcare resource utilization data from the study? Or and is there anything to point to now and will we potentially see any of that at ASCO? And also with that in mind how much do you think HRU data might fit into your partnering discussions?
No, thank you, Joe. It's good to hear from you. And with regards to the health resource utilization, one of the things that the team is really been focused in on is evaluating or assessing the Phase 2 data. Obviously, we just reported on some of that as I referenced earlier in this calendar year as well as at ASH at end of last year. Derek you want to comment in terms of the HRU from the Phase 3 specifically?
Sure. Yes, thanks, Joe. We actually have received some of the health economic data from the Phase 3. And we have built out essentially a health economic model initially calculating with the Phase 2 data just a sort of run through its pages. But I think we are at the point now where we are still analyzing some of the data from the Phase 3. We will be looking at things such as admission to the ICU and readmission to no such a thing, so I am actually very excited about those analysis, but they are still underway. And they are clearly I think a key component of our value proposition and value story that we are trying to create from a pricing and access and reimbursement strategy. And also a clear interest in our partnering discussion as well. I think the value component of the commercial phase of the plan is critical. And the health resource utilization data really helps to underpin that.
It is very helpful. Thanks and I guess if I just follow with one last quick one. As you come to work keep stay all of you guys, what's taking most of your time right now with regard to -- I don't know what to call it, the getting factor but what's going to require the most effort right now to get the NDA filed?
Yes, well, you actually answered part of the question right there, Joe. In terms of what is really taking up a bulk of our time and it really depends upon of course the individual or the functional area. Derek is quite busy in trying to get us ready in terms of the pre-commercial activities that I alluded to. Arthur and Lawrence and others on the team are highly focused on the NDA submission at this point in time. And so it really depends upon the function area within the team as to what's really taking up the majority of that individual or that team's time but clearly the first and foremost is the ASCO event coming up, communicating the clinical data because we've been only in the projection that communicate the top line information. So that presentation and the discussion followed by the analysts and investor event, we are given a bit more time than 12 minutes to go through some of that clinical data. And get some key opinion leader insight into the data. It's going to be important but we haven't lost focus in terms of that NDA by the end of the third quarter.
Thank you. Our next question will come from the line of Chad Messer from Needham & Company. Your line is open.
Great. Thanks for taking my question. I know there is a lot of really important execution stuff going on here with the NDA in preparation for launch. But I may throw out a bit of bigger picture question which is top of mind for me, and that's taking a little bit longer term about value creation with VYXEOS and by extension for Celator and all the other platform opportunities you have. How do you think about the different opportunities going forward just from your initial label? I know there is some IIS ongoing, there is some interesting data with FLT-3, can you maybe bucket the opportunities in terms of sort of easier and nearer term to reach and sort of longer term maybe we can get there kind of opportunities for VYXEOS in the future in terms of expanded use beyond the initial indication?
Yes. I'll start off and then I will ask Arthur and Derek to also comment. And thank you Chad for acknowledging the investigator initiated studies and the oncology cooperative group studies that are underway. So absolutely while we are conducting the Phase 3 clinical trial, we wanted to make sure that we are exploring the opportunity for VYXEOS in other patient populations not only within AML but in other blood cancers such as MDS or AOL are couple of examples. We do believe that one or two of the IIS studies maybe in a position to read out and time for ASH later this year. So just kind of recap work not go into too much detail, we have an IIS looking at VYXEOS as a preconditioning regimen prior to cord blood stem cell transplant. We think that's probably going to be more the second quarter of 2017. We have an IIS in high-risk MDS or AML at high-risk for treatment related mortality. That study we think that we could have data from that investigator in time for ASH that's from the Fred Hutchinson primarily. And then we have high-risk MDS or AML after HMA therapy. This is an IIS at Stanford originally looking to try and have data for that at the end of this year. But due to resource considerations although the trial is active, it's not currently recruiting I think they created a little anxiety in some folks a couple weeks back. But it's nothing product related; it's just resource considerations at the university. So I don't have an updated timeline but we were originally thinking we could have data coming from that study at ASH. We also had AML patients who are at high-risk of induction mortality from MD Anderson that could be either the fourth quarter or the first quarter of 2017. And then we are looking at two oncology cooperative group studies. One is building of some work that was done in pediatric or young adult in ISS study in recurrent or refractory hem malignancies. And that led into COG study in children with relapse or refractory AML and hopefully in not too distant future we will be able to provide an update on that, the status of that particular trial. But the other cooperative group study is AML-19 at Cardiff University that I referenced in high-risk AML patients between the ages of 18 and 60. And that trial was currently ongoing. So that's the extent of what's happening right now. A lot of planning activities are taking place in parallel with the NDA activities. What we are trying to do is balance making sure that that's not attracting the team from the NDA. But we are also wanted to revisit some of the company sponsored studies. Previously we've said we are going to look at VYXEOS in induction failure patients. And we are going to look high-risk AML patients under the age of 60. Some of those need to be revisited and just simply because where the data from the Phase 3 may indicate, you had mentioned that we had some interesting FLT-3 data preclinical data if you will, that we presented at AACR. We want to look at the FLT-3 data from the Phase 3 trial as well. So although we've identified two company sponsored Phase 2 studies we want to embark on. We want to make sure that that's indeed the direction we want to go or do we kind of call an article and change the course because we are also getting inbound interest from other people who see the potential in VYXEOS about combining their drug with VYXEOS. And so we wanted to consider those opportunities as well. So Arthur or Derek?
Sure. Yes, I guess the only thing I would add there in as you know near term Scott laid out I think our plans around the studies that are being conducted now or about to kick off and I would say those are really enabling us to look for other patient population and with VYXEOS may provide a benefit as a single agent. And further to Scott's point I think Arthur will allude to, as we learn more and more about the Phase 3 data I think it really does sharpen our ability to identify maybe other -- could be even more compelling and effected to be moving for with. In between though I think that end and other work that we are doing with the CombiPlex technology platform are potential combination with VYXEOS and other agents that are being developed in AML and we are excited about some of those potential opportunities.
Yes. And for those that maybe participating on the call who are less familiar with our story than you are, I think Derek repeating that, the way we look at VYXEOS is we are looking at this is becoming a new foundation of care for AML. And if we become that new backbone treatment, we view some of these agents that are in development particularly a number of the targeted therapies as potentially complimentary to VYXEOS and not necessarily competitive. And so what we've always said is that depending upon the drug that's being asked about in the patient population, it could be complimentary but clearly there are certain patient populations and certain drugs that are in development where we could be viewed as potentially competitive with one another. Arthur?
Okay. Yes. I think that I'll give you an example of a near-term target for the drug. Our Phase 3 study looks at patients with high-risk secondary AML but restricts the eligibility to patient that are between ages of 60 and 75. I imagine that if you simply go and lower the age to below 60, there is every reason to believe that those patients would respond just as well and if anything they are more resilient and the safety will be even better. So I think that will be an area that would be relatively easy to get, no conceptual difficulties is that straightforward. Little bit longer term would be an example such as patients that are older but a little bit less fit. Large number of patients are out there, they are not very well served right now and I think that the safety of the drug as such and the efficacy as such and particularly with the elevated response rate, it's now possible to think of portion of that population that may become suitable, and we just have to show that that's feasible and practical and what the results are. And then that will actually catch hold. And similarly for patients with high-risk MDS. Patients in our Phase 3 study have AML as soon as they have greater than 20% blast count the marrow. And so patients with MDS that crosses the 20% barrier become AML patient. Patients below the 20% barrier between 10% and 20% would be biologically very similar and again we have to show that it works there and feasible. And so those are things that I think can be attack. And lead to more return.
That's extremely helpful. I realized there are severe limitation from a clinical trials endpoint of addressing this but is there any reason why VYXEOS shouldn't be better, at least as good as if not better although maybe hard to prove, pretty much anywhere 7+3 is used and possibly even places where it is avoiding being used.
We certainly agree with that. The plan longer term is to have VYXEOS become the backbone of treatment wherever 7+3 is used. And I think there is example I gave of patients that simply don't get treated because they are considered less fit. So a patient who is 75 years of age and has some co-morbidity those patients often are not treated at all. And I think if we can identify patients that are fit among them or if we can simply demonstrate that there are ways of using the drug perhaps slightly lower doses that would work for that population. Those are all things that are -- that can be tried and are being tried now in the investigator initiated study.
All right. Great. Thanks. I appreciate you guys taking some time to go big picture and dream big with me. Please do make sure you execute well on that NDA launch. So with that --
Our next question will come from the line of Stephen Willey from Stifel. Your line is open.
Yes, good afternoon, guys. Thanks for taking the questions. Just as I guess as you talked to ex-US collaborators or potential partners, just wondering if there is a bit of variability in terms of the feedback that you are getting with respect to how each partner believes that they can build out the label in Europe just obviously given the fact that it's a bit more measured over there with respect to just how things are reviewed and the adherence to on label prescribing. I am just curios to see if there seems to be kind of different opinion amongst some of the partners you are talking to with respect to how quickly that label can build out?
Hey, thanks a lot. This is Derek. I would say in terms of where we would want to expand a label and need to, there is a pretty good I would say a level you can [groom] if you will, across a different discussions we've had. I would say with a variability is quite frankly just prioritizing one versus the other and slightly the timing of those. But I would say generally as we kind of laid out our strategy for expanding the dataset to support this VYXEOS and other patient population, I think there is a pretty significant level of alignment across that. It's more into details of the timing and the size of trials and what not and which one you would do first versus second. But generally a pretty good alignment I would say.
Is that a level of alignment and is predicate on the notion the label would be expanded kind of obviously through additional clinical development but to the extent that there maybe I guess a bit of broader -- a broader initial filing? At least in terms of claims.
Yes. Exactly right. And obviously, the other thing that we are very focused on even regardless of partnering discussion is making sure that we can expand the awareness and experience of VYXEOS in the European market for example which is why the AML mighty trial is so important. That's why we are continuing engaging with the investigators in the European key countries, so we can explore other potential areas of interest within AML and other hem malignancy. So that's happening in parallel as well due sort of our internal med affairs approach if you will.
Okay. And then maybe just lastly you talked about the emphasis on broadening the pipeline and the R&D collaborations. Just wondering if you could be maybe provide a little bit of color around perhaps some of the high end interest you maybe seeing on the R&D collaboration front and to the extent that you guys are fairly preoccupied getting VYXEOS across the regulatory finish line. Just kind of wondering how much work you can dedicate at this point to trying to move novel candidate into the clinic. Thanks.
Yes, no, great question. I would say few things to that point. With the read out of the Phase 3 data, I think we look at that as well as others as real proof of concept for the CombiPlex technology platform. And interest that we had discussions prior to that with a number of companies but I think that sort of helped us to kind of gets-- you get those discussions moving a little bit in a more meaningful direction. I would say though that I hear your point on where is this emphasis and focus is. But I would say that many of the companies with whom we are discussing VYXEOS also have interest in exploring extra combination strategies using the CombiPlex technology platform. And so those conversations are having or taking place I would say actually in parallel. So they are not necessarily mutually exclusive in the conversation that we have been having because many of the companies with whom we have been discussing VYXEOS also have their own internal pipeline, and I think they are interested in the technology as well. So we try to sort of parallel track those discussions with those organizations.
Thank you. At this time, I am showing no further questions in the queue. I'd like to turn the call back over to Scott Jackson for any closing remarks.
I want to thank everyone for participating in today's call. And we look forward to updating you again very soon.
Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect. Everyone have a great day.