CASI Pharmaceuticals, Inc. (NASDAQ:CASI) Q4 2021 Earnings Conference Call March 28, 2022 8:00 AM ET
Wei-Wu He - Chairman and Chief Executive Officer
Wei Zhang - President
Alex Zukiwski - Chief Medical Officer
Jim Goldschmidt - Senior Vice President, Business Development
Conference Call Participants
Leland Gershell - Oppenheimer
Sean Lee - H.C. Wainwright
Justin Zelin - BTIG
Good morning and welcome to the CASI Pharmaceuticals Year End 2021 Conference Call. [Operator Instructions] Please note this event is being recorded. I’d now like to turn the conference over to Wei Zhang, Vice President of CASI Pharmaceuticals. Please go ahead.
Thank you, Anthony and good morning everyone. Welcome to CASI’s fourth quarter and year end conference call. Earlier today, CASI issued a press release providing the details of the company’s financial results for the quarter ended December 31, 2021. This press release is available in the Investors section of the company’s website.
Today’s call will be led by Dr. Wei-Wu He, our Chairman and CEO along with Mr. Larry Zhang, our President; Dr. Alex Zukiwski, our Executive Vice President and Chief Medical Officer; Dr. Jim Goldschmidt, Chief Business Development Officer. They will also be available to answer questions during the Q&A portion of this call.
As a reminder, we will be making forward-looking statements, including our business plans, objectives and milestones. These forward-looking statements are not a guarantee of future performance and therefore you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those projected or implied in our forward-looking statements. For a description of the important factors that could cause actual results to differ, we refer you to the statements in our ITC filings.
It is now my pleasure to turn the call over to our Chairman and CEO, Dr. Wei-Wu He. Dr. He?
Thank you, Ray. Good morning, everyone and thank you for joining us. We will begin the call with an update on our lead programs and a near-term catalyst, followed by our financial highlights.
2021 was a year of unparalleled growth and advancement for CASI. The progress made in the past year reinforces our cost in building a leading commercial global pharmaceutical company to offer innovative therapies to cancer patients. I want to thank all functions of our team for their continued dedication and I am extremely proud of their accomplishments. CASI’s mission is to bring innovative medical solutions to meet the unmet medical needs around the globe. More specifically, we are initially executing a strategy, leveraging global innovations to address the unmet need of China’s aging population.
The China’s strategy is one of the most interesting medical innovation opportunities in our lifetime. First of all, China has the world’s largest population. Secondly, China’s pharmaceutical development process is progressively harmonizing with global developed economies. The vast patient population provides an unparalleled clinical trial resources for global innovations. CASI is developing such a strategy to bring life-changing products to patients, one product at a time with an initial focus in the hematology/oncology market.
Now, let’s move to CASI’s first commercialized product, EVOMELA. We are pleased to report $9.12 million in EVOMELA revenues for the fourth quarter and $30 million for the full year 2021. We have achieved our goal for full year 2021 revenue growth to reach over 100% growth. In 2021, EVOMELA was used in the treatment of nearly 6,000 patients in China. As a reminder, EVOMELA is approved in China for use as a high-dose conditioning treatment prior to hematopoietic stem cell transplantation in patients with multiple myeloma. EVOMELA is a proprietary formulation with patent protection until at least 2030 and is currently the only form of injectable melphalan commercially available in China. We anticipate that EVOMALA will continue to be the core of our commercial operation in the quarters ahead.
Through the efforts of the global CASI team and our commercial group of more than 100 hematology sales and medical marketing specialists in China, we have built a strong foundation for our commercial franchise. Our high-quality specialty sales and marketing team in the hematology/oncology market in China is a major competitive advantage. We have established access to a substantial number of key opinion leaders who can advise us on the unmet medical needs of our patient population. CASI continues to pursue a similar strategy with respect to marketing efforts and physician business to further the adaptation of stem cell transplantation as a standard of care in the multiple myeloma treatment setting and will continue working to address the persistent high unmet need in this patient population.
Now, I will turn to our Chief Medical Officer and Executive Vice President, Dr. Alex Zukiwski on to our some of our most exciting ongoing pipelines. Alex?
Thank you, Wei-Wu. Good morning. I am Alex Zukiwski, the CASI CMO. And for the next few minutes, I will be providing a brief update on the CASI pipeline. Let me start with CNCT19. Our partner, Juventas Cell Therapy, continues to develop – the development of CNCT19, an autologous CD19-directed CAR-T investigational product, for which CASI has co-commercial and profit-sharing rights. CNCT19 is being developed as potential treatment for patients with hematological malignancies, which express CD19, including B-cell acute lymphoblastic leukemia and B-cell non-Hodgkin’s lymphoma.
Although to-date, the development has been focused in China, in January, CNCT19 received orphan drug designation by the U.S. FDA. CNCT19 is being locally developed and will be locally manufactured in China, which distinguishes the program from other CNCT19 therapies developed and manufactured in part outside of China. Pricing of cell therapy and available drugs in China, particularly premium and innovative products, is a crucial issue for patients. Similar CD19-directed therapy programs being developed and manufactured outside of China are subject to certain ex-China CMC and higher cost of goods, making the price point significantly higher than where we believe the price point of CNCT19 should be. Juventas has completed the Phase 1 studies in B-ALL and B-NHL in China and is currently enrolling in the Phase 2 registration studies for both indications. Throughout 2021, our commercial franchise has thoroughly prepared for the anticipated NDA filing of the CD19-directed CAR-T program, which we currently expect to be in the second half of 2022.
Next, I will address our other product candidates in the pipeline, BI-1206. Along with our partner, BioInvent, we continue to progress the development and regulatory framework for BI-1206 in China. We licensed BI-1206, a first-in-class, fully human monoclonal antibody that targets the Fc gamma RIIb receptor for Greater China market. BI-1206 has a novel mode of action, blocking the single inhibitory antibody checkpoint receptor Fc gamma RIIb to unlock potential anticancer immunity in both hematological malignancies and solid tumors. Fc gamma receptors are unique antibody checkpoints that can modulate the efficacy of tumor cell-directed targeting antibodies and immune checkpoint-targeting antibodies used in cancer immunotherapy. BI-1206 can potentially be used with all therapeutic monoclonal antibodies that rely on ADCC or CDC for efficacy.
BI-1206 is currently being investigated in China in two Phase 1/2 trials. One is evaluating BI-1206 in combination with rituximab for the treatment of non-Hodgkin’s lymphoma, which includes follicular lymphoma, mantle cell lymphoma and marginal zone lymphoma, these patients who have relapsed or refractory to rituximab. A second Phase 1/2 trial is investigating BI-1206 in combination with the anti-PD-1 therapy, KEYTRUDA, otherwise known as pembrolizumab in patients with solid tumors.
The National Medical Products Administration in China granted BI-1206 a clinical trial application approval in December 2021. Earlier this year, the U.S. FDA granted orphan drug designation for BI-1206 for the treatment of follicular lymphoma, the most common form of slow-growing lymphoma – slow-growing non-Hodgkin’s lymphoma. Together with BioInvent, we continue to develop BI-1206 in both hematological malignancies and solid tumors, with CASI responsible for the development and commercialization in Greater China. Our lead indication for BI-1206 will be in combination with rituximab in patients with relapsed/refractory non-Hodgkin’s lymphoma.
Now a word about CB-5339. In 2021, we acquired CB-5339, a first-in-class VCP/p97 inhibitor from Cleave Therapeutics for the Greater China market. CB-5339 represents a promising new agent for selectively targeting the VCP/p97 receptor in cancers and is complementary – and it is a complementary addition to our pipeline of hematology/oncology assets. Cleave is responsible for the ex China development of CB-5339, an oral second-generation molecule – small molecule inhibitor of VCP/p97 and is evaluating the molecule in Phase 1clinical trials in patients with acute myeloid leukemia and myelodysplastic syndrome.
Together with Cleave, we plan to develop CB-5339 in AML as the initial potential indication, with CASI responsible for the development and commercialization in Greater China. The CB-5339 CTA application for multiple myeloma indication is in preparation after receiving an acceptance letter for the CB-5339 IND package from the China Center for Drug Evaluation. We look forward to the joint development of CB-5339 with our focus on helping to accelerate the development program by initiating clinical trials for the current and potential new indications in China.
Now a short description of CID-103. CID-103 is a fully human IgG1 anti-CD38 monoclonal antibody, recognizing a unique epitope that has demonstrated encouraging preclinical and safety profile compared to other anti-CD38 molecules. CASI maintains exclusive global rights and is developing CID-103 for the treatment of patients with multiple myeloma.
In June 2021, we enrolled the first patient in our Phase 1 dose escalation and expansion study of CID-103. The Phase 1study in patients with previously treated relapsed and refractory multiple myeloma is currently ongoing in France and the UK. This Phase 1 trial is expected to generate valuable information and has the potential to provide early evidence of clinical activity in the treatment of patients with multiple myeloma.
A short description of the Thiotepa project. Lastly, on Thiotepa, we are in the progress – process of regulatory submissions for two indications. This completes the update of our key pipeline assets. I will now turn it back to Wei-Wu.
Wei Zhang is going to give us a financial highlight, Wei?
Thank you, Dr. Wei. On today’s call I will like to address key highlights in our financial for the year ended December 31, 2021. Our annual report on Form 10-Q provide further information regarding the financial results. Revenues consist of product sales of EVOMELA. Revenue was $30 million for the year ended December 31, 2021, compared to $15 million for the year ended December 31, 2020. Cost of revenue were $12.6 million for year 2021 compared to $9.5 million in year 2020, which includes the royalty payment of $5.9 million and $3 million for the same period.
Cost of revenue, excluding royalty of $6.6 million and $6.6 million for year 2021 and year 2020. We close this year with $48.7 million in cash and cash equivalent. The company has sufficient resources to fund its operations beyond 2022. We continue to be extremely thoughtful on how we deploy our cash with a focus on creating shareholders value.
With that, we’re now open for Q&A.
[Operator Instructions] Our first question comes from Leland Gershell with Oppenheimer. You may now go ahead.
Good morning, thank you for taking the questions and congratulations on the progress. Question from me on the CAR-T side with two anti-CD19 products now approved in China, I wanted to ask if you can share with us if you know what the pricing of those is currently? And if you can share with us your strategy with respect to competitive pricing for your product in that market? Thank you.
Yes, I will comment that. So the first two approval are all imported CAR-T 19 therapy approved in the U.S. Because the nature of the CAR-T therapy is an autologous individualized therapy, it is actually very expensive in China. Right now, it’s priced at 1.2 – around RMB1.2 million in China, which is about close to $200,000 per treatment. So we believe we will price it significantly lower than this pricing. So obviously, we have not got the drug approved. So we believe, we will price it our CAR-T 19 at a significant less cost than the imported CAR-T 19.
Okay, thank you, Wei. And then just a question on 1206, when we should expect to see the clinical data update on that compound in its two different trial settings? Than you.
Leland, yes, this is Alex. It will be up to our partner, BioInvent, to be releasing the data. They are, I believe, will be making some public statements on the potential presentations in the near future. So I’d advise you to look at the BioInvent website for details.
Thanks so much, Alex. Great. Thanks again.
Thank you, Leland.
Our next question will come from Sean Lee with H.C. Wainwright. You may now go ahead.
Good morning, guys. Congrats on a great quarter and thanks for taking my questions. Just half – my first one is on the COVID. So, recently, both the Northeast Shenzhen and now Shanghai have been lockdown. I was wondering whether these lockdowns were causing a significant disruption to your sales this year?
Yes. So, the first, I think for the first two months, it’s business as usual. But we are actually seeing some difficulty of communicating with hospital physicians in March. So, we are obviously very diligently monitoring the situation in China.
I see. Thanks. And in the prepared remarks, you mentioned that your – the sales force in China is now over 100 individuals. I was wondering whether do you still foresee a growth for this year? And if so, where do you expect the number to get to?
I didn’t catch the last question – the last comment.
Yes. If you still plan on growing your sales force, what number do you think you can get to?
Yes. So, right now, actually, our sales force probably is sufficient for our first drive of EVOMELA. So, we are expanding our sales force preparing for the CAR-T 19 launch. And because in order to CAR-T 19 launch, it will be quite a challenging in China because this is an autologous cell therapy product. So, we really are growing our marketing and sales team in preparation for CAR-T launch. So, we probably will eventually grow over 200,000 marketing people in China in the next 18 months.
Okay, great to know. And my last question is on the clinical side. For the CID-103, can we expect to see any clinical data this year?
Alex, Sean. Sean, we are currently in an advanced stage of the dose-escalation program. It all depends on how the data rolls out. But we have not had any plans to present at AACR, at ASCO. But currently, if the data keeps moving the way it is, I think we may have a presentation at the upcoming ASH, but that’s not a guarantee.
That’s great to hear. That’s all I have. Thanks again for taking my questions.
Thank you, Sean.
[Operator Instructions] Our next question will come from Justin Zelin with BTIG. You may now go ahead.
Hi team. Thanks for – hi, Wei-Wu, how are you and thanks for taking the questions. Congrats on a great quarter here. I just wanted to follow-up about the ongoing situation of COVID lockdowns in China and hope you all are staying safe. But I was just curious, if you see any disruptions to clinical trial activity in China? And kind of what your thoughts are on the latest situation on the ground there?
Yes. My understanding is we have not seen significant disruption in clinical trials. We are seeing hospital is not allowing our salespeople to go meet with physicians, right. So, the good thing about our EVOMELA is actually, we think, actually majority of the transplant physicians are now already familiar with the drug. So, the transplant procedure is still going on in China. So, that’s on the product side. We have not seen significant setback on clinical trials, at least for us.
Great. Okay. That makes sense. And hopefully, you are all staying safe and the situation resolves soon. And then further, I just had a question how you are thinking about potential additional business development transactions potentially, or how you are thinking about potentially expanding the pipeline at CASI? Thank you.
Yes. Well, actually, I will say a few words and then Jim may chime in on our business development. We love our business model because China is a 1.4 billion people population country, and it’s a country embracing the modern innovative drug development pipeline. And so we think the smart business model we are using to look for global innovation, but using China as a market should go on for quite a while. And we are aggressively looking at all sorts of assets. But right now, we are focused on hematology/oncology, because this is really our core strength with our commercial franchise. We did over $30 million revenue for a very niche product that’s just proven – we have proven to investors that CASI as a company, we really know how to commercialize product in this particular niche market. And so we are very focused on looking for anything related to hematology/oncology. And we are probably going to focus on this. But for the next 2 years, CAR-T 19 probably will be one of our major, major asset, because this is – this will be, hopefully, this will be the first Chinese domestically developed CAR-T 19 therapy, lower cost. There are 50,000 patients we can treat with this compound. So, with that said, we will continue to look for anything which we think can make a difference for the patient. Jim, do you want to make a few comments?
Sure. Thank you, Wei-Wu. And as Wei-Wu said, yes, we have a very active business development group seeking to acquire additional innovative therapeutics that complement our existing hem/onc focus and expertise in China. And we also are looking for both compounds in clinical development as potentially commercial products that our sales and marketing organization could sell in China. So, we have a very focused and aggressive BD organization. We – as Wei-Wu said, we want to leverage our ability to conduct clinical trials in China at the top hem/onc institutions and forge strategic partners – strategic partnerships with the companies that we partner with by not only being a top co-development partner, but also being a strategic partner by investing in those innovative companies, which we believe really deepens and strengthens our collaboration and can provide additional returns to our shareholders. So, our goal is to continue to seek out innovative therapeutics that really complement our existing pipeline and our core expertise. And we want to continue to strengthen CASI’s position as a leading hem/onc company in China.
Great. Thank you so much for taking the questions.
This concludes our question-and-answer session. I would like to turn the conference back over to Dr. Wei-Wu for any closing remarks.
Thank you again for joining today’s call. We have had a remarkable year thus far at CASI with progress across our hematology/oncology portfolio. We continue to be encouraged by what we expect will be ahead for CASI. We look forward to leveraging our existing commercial infrastructure as we move forward on key business development initiatives, pursue pre-commercial launch activities for the CAR-T 19 program, drive expanded pipeline progress and continue to observe steady EVOMELA growth. We thank each of you for your continued support in CASI during this exciting period. Operator, thank you. You may now conclude this call.
Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.