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Edited Transcript of CTIC earnings conference call or presentation 3-May-17 8:30pm GMT

Thomson Reuters StreetEvents

Q1 2017 CTi Biopharma Corp Earnings Call

Seattle May 9, 2017 (Thomson StreetEvents) -- Edited Transcript of CTi Biopharma Corp earnings conference call or presentation Wednesday, May 3, 2017 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Adam R. Craig

CTI BioPharma Corp. - CEO, President and Director

* Ed Bell

* Matthew James Plunkett

CTI BioPharma Corp. - Chief Business Officer and EVP

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Conference Call Participants

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* Robert Cummins Hazlett

BTIG, LLC - MD of Equity Research Group

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Presentation

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Operator [1]

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Good day, and welcome to the CTI BioPharma First Quarter 2017 Financial Results Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Ed Bell. Please go ahead, sir.

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Ed Bell, [2]

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Thanks, and welcome, everyone, to our first quarter financial results conference call. The press release reporting our financial results can be found on the homepage and in the Investors section of our corporate website at ctibiopharma.com. Following formal remarks by management, the conference call will be open to questions.

Joining me today are Adam Craig, President and Chief Executive Officer; Matt Plunkett, Chief Business Officer; and Jack Singer, our Chief Scientific Officer.

Before we begin, please note that during the course of this call, we will make forward-looking statements based on current expectations. Such forward-looking statements are not guarantees of future performance and are subjects to risks and uncertainties that may cause actual results to differ materially from those anticipated by the forward-looking statements.

Additional information concerning these risks and uncertainties is contained in the press release reporting our financial results for the first quarter, the Risk Factors section of the company's quarterly report on Form 10-Q for the quarter ended March 31, 2017, and in the company's other periodic reports and filings with the SEC.

I will now turn the call over to Adam.

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Adam R. Craig, CTI BioPharma Corp. - CEO, President and Director [3]

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Thank you, Ed, and good afternoon, everyone. It's my pleasure to update you on our recent achievements and progress. Since this is my first call since joining the company in March, I would like to lead off by providing a brief introduction and sharing my reasons for joining CTI.

I've worked in the area of hematology/oncology, drug development in both the U.S. and Europe over the last 20 years. Most recently, I worked as an independent clinical consultant, providing strategic and operational support to CTI BioPharma and other hematology/oncology companies. Previously, I was Chief Medical Officer for Sunesis Pharmaceuticals. I worked with CTI for nearly 6 months before joining the company and assisted the team in getting the clinical halt removed by the FDA and worked on the first marketing authorization filed with the European Medicine Agency. As a result of this process and after examining the data in detail, I concluded that pacritinib has the potential to be a therapy that addresses a significant unmet medical need in patients with myelofibrosis. So I was pleased that the board offered me the opportunity to lead the company as President and CEO. With that, let's move on to a brief regulatory and clinical update, as well as our first quarter financial results.

We plan on submitting the marketing authorization, or MAA, for pacritinib to the EMA midyear. As we stated previously, we made the decision to withdraw the original application and to submit a new application, following discussions with the EMA about how to PERSIST-2 data, which became available after the initial submission. I'd like to address the issues raised by reviewers and how the PERSIST-2 data could be integrated into the filing.

The new application will focus on patients with baseline platelet counts less than, or equal to, 100,000 per microliter, including patients with prior exposure to JAK2 inhibitor therapy. This is a group of patients where a serious unmet medical need remains, and based on the existing clinical data, we believe that pacritinib may be able to address this need.

We're also on track to initiate the Pac203 trial this quarter for patients with primary myelofibrosis, who have failed prior ruxolitinib therapy, evaluating the dose-response relationship using spleen volume reduction or SVR. This study was requested by the FDA as a condition of removal for clinical hold, and we'll evaluate 105 patients and 3 dose regimens: 100 milligrams QD, 100 milligrams BID and 200 milligrams BID. The 200 BID regimen was used in PERSIST-2. We expect to perform an interim utility analysis by year-end 2017, when the first 15 evaluable patients in each arm have 12-week SVR data.

Moving on to PIXUVRI. Last week, we announced an expanded license and development collaboration agreement for PIXUVRI with Servier. Under this expanded agreement, Servier will have rights to PIXUVRI in all markets except the U.S., where we retain the commercialization rights. Servier will pay us EUR 12 million with the potential for us to receive EUR 76 million in additional sales in regulatory milestone payments as well as royalty on net product sales. This agreement will leverage Servier's commercial resources in the EU, allow us to focus our resources on the development of pacritinib and provides us with nondiluted funding. As part of the conditional marketing authorization of PIXUVRI in Europe, we are required to conduct a postauthorization trial, which we refer to as the PIX306 trial, comparing PIXUVRI and Rituxan, with gemcitabine and Rituxan, intersecting over aggressive B-cell NHL. If positive, the trial will confirm the treatment's -- confirm treatment's current indication and could potentially support a broader indication. This trial continues to involve patients, and we expect there to release topline results this year.

With that, I will now turn the call over to Matt, who will review our financials for the quarter

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Matthew James Plunkett, CTI BioPharma Corp. - Chief Business Officer and EVP [4]

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Thank you, Adam. I will now briefly review our financials for the first quarter of 2017. Please refer to our press release, issued today, for complete details.

Total revenues for the first quarter were $0.8 million compared to $36.5 million for the same period in 2016. The decrease in total revenues for the first quarter of 2017 is primarily due to recognition of $32 million in milestone revenue related to pacritinib in the first quarter of 2016.

Additionally, net product revenues of PIXUVRI for the first quarter of 2017 decreased to $0.7 million compared to $1.2 million for the same period in 2016. Operating loss for the first quarter of 2017 was $19.3 million compared to operating income of $4.1 million for the same period in 2016.

Research and development expenses decreased to $9.3 million for the first quarter of 2017 compared to $20.8 million for the same period in 2016. The decrease in R&D expenses was primarily attributable to reductions and costs related to pacritinib clinical development, due to the timing of completion of the Phase III clinical trials. Additionally, the decrease was attributable to a decrease in personnel costs, related to a reduction in average headcount between periods and reduction in costs for PIXUVRI clinical development and pacritinib manufacturing.

Turning to the balance sheet. As of March 21, 2017, cash and cash equivalents totaled $33.3 million. The cash balance does not include EUR 12 million to be received as part of the expanded Servier agreement.

With that, I will now turn the call back to Adam.

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Adam R. Craig, CTI BioPharma Corp. - CEO, President and Director [5]

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Thank you, Matt. This now concludes our formal remarks. Operator, please open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question from Dr. Leonard Ellman.

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Unidentified Participant, [2]

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I was wondering if you could offer any time line on the EMA review of your submission.

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Adam R. Craig, CTI BioPharma Corp. - CEO, President and Director [3]

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Thank you, Dr. Ellman, for your call -- for your question. We plan to submit in midyear the MAA, and then we will enter the standard review cycle that the EMA has outlined. And -- so the submission will be midyear.

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Unidentified Participant, [4]

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And any idea how long it will take until you get the reply from the EMA?

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Adam R. Craig, CTI BioPharma Corp. - CEO, President and Director [5]

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The first response we will get from them will be the Day 120 report, which is 120 days after submission. Typically, a review process for EMEA takes around 16 to 18 months, but we will not know how long the overall review process takes until we've got some feedback from the EMA reviewers.

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Unidentified Participant, [6]

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And I gather that would be at the 120 Day response, you will have a better idea at that time?

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Adam R. Craig, CTI BioPharma Corp. - CEO, President and Director [7]

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That will be our first feedback on the application, yes.

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Operator [8]

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(Operator Instructions) And we'll go ahead and take our next question from Bert Hazlett with BTIG.

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Robert Cummins Hazlett, BTIG, LLC - MD of Equity Research Group [9]

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I actually have 2. First is the -- could you remind us the endpoints of the Pac203 dose-exploration study by FDA? And again, I believe you said you would have -- you would be announcing data at 15 patients, as they reach the 12-week time point. Is that correct?

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Adam R. Craig, CTI BioPharma Corp. - CEO, President and Director [10]

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I'll answer the first question -- the second question first, if I may. But we'll have the -- we'll have interim data by -- we plan currently to have interim data by the end of '17. And we will look at that data and then we'll decide whether we announce it. And the most important thing for us is, though, that we can look at the data and see whether -- and it will be our first look at that trial. With regards to the endpoint, the study is looking at spleen volume reduction at 12 weeks at the interim analysis. So there will be 15 patients per arm, and we'll be looking at 12 weeks spleen volume reduction.

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Robert Cummins Hazlett, BTIG, LLC - MD of Equity Research Group [11]

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Okay. And then in the press release, you've talked about evaluating strategic product collaborations to accelerate development and commercialization. Is that something that we should be thinking about for pacritinib in the EU? And could you comment, is that also include tosedostat?

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Adam R. Craig, CTI BioPharma Corp. - CEO, President and Director [12]

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Matt Plunkett, would you like to take that question?

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Matthew James Plunkett, CTI BioPharma Corp. - Chief Business Officer and EVP [13]

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So we're trying to review, Bert, the best strategy for partnering pacritinib at this point. And it's really going to come down to the relative timing of the opportunity to partner vis-à-vis the European regulatory process. What we can say today is that there is very strong interest in the opportunity, and the right timing for a transaction for European commercial rights is to be determined.

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Operator [14]

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And it appears we have no further questions in the queue at this time. I'd like to turn the conference back over to our speakers for any closing remarks.

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Adam R. Craig, CTI BioPharma Corp. - CEO, President and Director [15]

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Well, thank you, Johnny. Thank you, everyone, for joining this call. We appreciate your interest in CTI BioPharma.

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Operator [16]

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Ladies and gentlemen, that does conclude today's conference. We'd like to thank you all for your participation. You may now disconnect.