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Edited Transcript of GTHX.O earnings conference call or presentation 28-Feb-19 9:30pm GMT

Q4 2018 G1 Therapeutics Inc Earnings Call

DURHAM Mar 5, 2019 (Thomson StreetEvents) -- Edited Transcript of G1 Therapeutics Inc earnings conference call or presentation Thursday, February 28, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Barclay A. Phillips

G1 Therapeutics, Inc. - CFO, Senior VP of Corporate Development & Secretary

* Jeff Macdonald

G1 Therapeutics, Inc. - Head of Investor & Public Relations

* Mark A. Velleca

G1 Therapeutics, Inc. - CEO, President & Director

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Conference Call Participants

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* Chris Shibutani

Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

* Dane Vincent Leone

Raymond James & Associates, Inc., Research Division - Research Analyst

* Gil Joseph Blum

Needham & Company, LLC, Research Division - Analyst

* Matthew Alexander Bannon

JP Morgan Chase & Co, Research Division - Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the G1 Therapeutics Fourth Quarter and Full Year 2018 Financial Results Conference Call. (Operator Instructions)

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Head of Investor Relations, Jeff Macdonald. Mr. Macdonald, you may begin.

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Jeff Macdonald, G1 Therapeutics, Inc. - Head of Investor & Public Relations [2]

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Thank you, operator. Good afternoon, everyone, and welcome to the G1 Therapeutics Fourth Quarter and Full Year 2018 Financial Update. Joining me are Mark Velleca, Chief Executive Officer; and Buck Phillips, Chief Financial Officer and Senior Vice President Corporate Development.

Before we begin, I would like to remind you that today's call will include forward-looking statements based on current expectations. Such statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from expected results. Please refer to our filings with the SEC, which are available from the SEC or on our corporate website for information concerning risk factors that could affect the company.

I'll now turn the call over to Mark.

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Mark A. Velleca, G1 Therapeutics, Inc. - CEO, President & Director [3]

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Thanks, Jeff. Good afternoon, everyone, and thank you for joining us today. In 2018, we made significant progress advancing all 3 of our clinical-stage investigational therapies. This sets up 2019 as an important year for regulatory milestones and clinical readouts across our pipeline. We will provide a comprehensive overview on trilaciclib, lerociclib and G1T48 at our upcoming Investor Day on March 6.

So on today's call, I will briefly review select 2018 operational highlights and 2019 anticipated milestones. Buck will provide comments on 2018 financials. Then we'll open the call for questions.

Leading off with trilaciclib, we reported data from 4 randomized Phase II trials in 2018 that showed the benefits of trilaciclib across different indications, lines of therapy and chemotherapy regimens. Positive multi-lineage myelopreservation data from 3 randomized, double-blind, placebo-controlled Phase II trials in small cell lung cancer showed statistically significant improvements in the primary endpoints, occurrence and duration of severe neutropenia. Trilaciclib also demonstrated clinically meaningful reductions in G-CSF administrations and red blood cell transfusions versus placebo.

Importantly, across the 3 trials, treatment was well tolerated with an overall reduction in adverse events compared to placebo. We also presented preliminary improved progression-free survival data from our randomized Phase II trial of trilaciclib in combination with chemotherapy in patients with metastatic triple-negative breast cancer, or TNBC. The safety profile of trilaciclib was consistent with the small cell lung cancer trials and no trilaciclib-related serious adverse events were reported.

As previously disclosed, we are meeting with U.S. and European regulatory authorities to discuss the totality of these data and next steps for the development of trilaciclib. We'll provide an update on those meetings in the second quarter.

I'll now turn to lerociclib, our oral CDK4/6 inhibitor. We currently have 2 clinical trials ongoing: a Phase II trial in combination with Faslodex in patients with ER-positive, HER2-negative breast cancer; and a Phase I trial in combination with Tagrisso in non-small cell lung cancer. We expect to report data from both these trials later this year.

We are also advancing our third clinical program, the oral selective estrogen receptor degrader, or SERD, G1T48. We are continuing the dose escalation portion of this Phase I trial in patients with ER-positive, HER2-negative breast cancer. Enrollment is on track, and we'll report preliminary data later this year.

Finally, I want to point out that we are presenting the first data from 2 of our preclinical programs at the upcoming AACR meeting in April. Those abstracts are now posted on the AACR website.

Leveraging our in-house expertise on cyclin-dependent kinases, we have been exploring approaches to CDK4/6 inhibitor resistance. While our primary focus remains on advancing our clinical-stage drug candidates, we believe that it is important to continue to invest in discovery efforts in areas of unmet medical need.

I will now turn the call over to Buck for a discussion of the financials. Buck?

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Barclay A. Phillips, G1 Therapeutics, Inc. - CFO, Senior VP of Corporate Development & Secretary [4]

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Thanks, Mark. Our fourth quarter and full year 2018 financial results can be found in our earnings press release, which is available on our website. I'd like to take this opportunity to walk you through the financial highlights contained in that release.

We reported a net loss of $24.1 million for the fourth quarter of 2018 compared to $17 million for the fourth quarter of 2017. Net loss for the full year of 2018 was $85.3 million compared to a net loss of $60.1 million for the prior year period.

Operating expenses were $26.1 million for the fourth quarter of 2018 compared to $17.3 million for the prior year period. Operating expenses include noncash stock compensation expense of $3.3 million for the fourth quarter of 2018 compared to $1 million for the prior year period.

Operating expenses for the full year of 2018 were $89.3 million compared to $61 million for 2017. Those operating expenses include noncash stock compensation expense of $10.2 million for 2018 compared to $3.4 million in 2017.

Research and development expenses for the fourth quarter of 2018 were $19.1 million compared to $15.1 million in the fourth quarter of 2017. R&D expenses for the full year of 2018 were $70.7 million compared to $59.3 million for 2017. The increase in R&D expense in 2018 was primarily due to an increase in clinical program costs, drug manufacturing costs to support those clinical programs, external research studies and personnel-related costs due to additional headcount.

General and administrative expenses for the fourth quarter of 2018 were $7 million compared to $2.2 million for the prior year period. G&A expenses for the full year of 2018 were $18.6 million compared to $7.1 million for the prior year. The increase in G&A expenses was largely due to an increase in professional fees and personnel-related costs.

As of December 31, 2018, we had $369.3 million in cash and cash equivalents on the balance sheet compared to $390.5 million as of September 30, 2018, and $103.8 million as of December 31, 2017.

Looking ahead into the balance of 2019. The outcome of our regulatory discussions will help us chart our clinical, regulatory and commercialization activities for the second half of 2019 and beyond.

Based on the timing of those regulatory meetings, our initial financial guidance for 2019 will cover the first 6 months of the year. To that end, we expect June 30, 2019, ending cash and cash equivalents to be between $315 million and $325 million. That equates to a cash burn over that 6-month period of approximately $44 million to $54 million. We expect to provide further guidance on the second half of 2019 after we have integrated the input from regulators into our development and operating plans.

I'll now turn the call back over to Mark.

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Mark A. Velleca, G1 Therapeutics, Inc. - CEO, President & Director [5]

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Thanks, Buck. As a quick summary, before we go to Q&A, we are meeting with U.S. and European regulatory authorities to review data from our trilaciclib Phase II program and discuss next steps for development. We will provide an update on the outcome of those regulatory discussions in the second quarter.

Both lerociclib and G1T48 are advancing in the clinic, and we expect to report data from multiple trials later in 2019.

We are looking forward to providing a comprehensive overview of our clinical-stage programs at G1's first Investor Day scheduled for next Wednesday, March 6. In addition to updates on trilaciclib, lerociclib and G1T48 from our Chief Medical Officer, Raj Malik, and a trilaciclib commercial update from our Chief Commercial Officer, John Demaree, there will be presentations from 2 prominent oncologists. Dr. Jeffrey Crawford from Duke Cancer Center is a leading researcher in the area of myelosuppression and did much of the pioneering work that led to the approval of G-CSF as a treatment for chemotherapy-induced neutropenia. Dr. Lowell Hart is the Director of Research at Florida Cancer Specialists, a network of community oncology centers that is among the leading clinical trial sites in the country. Dr. Hart has been an investigator on all 4 trilaciclib Phase II trials.

That concludes our prepared 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) Our first question comes from Chad Messer of Needham & Company.

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Gil Joseph Blum, Needham & Company, LLC, Research Division - Analyst [2]

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This is Gil Blum on for Chad. Seems like we're going to have an exciting 2019. Although I'm sure you're going to elaborate on this one at the R&D day, could you maybe provide a little bit of information about new studies coming up with trilaciclib in 2019?

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Mark A. Velleca, G1 Therapeutics, Inc. - CEO, President & Director [3]

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Sure. We do have additional studies planned for trilaciclib in the second half of this year and those studies are going to be informed by the ongoing regulatory discussions. So more to say about that in the second quarter.

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Operator [4]

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And our next question comes from Dane Leone of Raymond James.

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Dane Vincent Leone, Raymond James & Associates, Inc., Research Division - Research Analyst [5]

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So within the press release that you put out today, you did mention the results of the metastatic triple-negative breast cancer study. And the totality of the focus there did actually seem to dial in on the PFS differential. So I'm just kind of curious, it seems like you're hinting at that going forward in that effort, PFS would be something that you would be potentially quite focused on, which might contrast a little bit than the current strategy in small lung cell cancer? So I'm just a little curious for you to elaborate on any additional thoughts you have on the triple-negative strategy as we go through 2019.

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Mark A. Velleca, G1 Therapeutics, Inc. - CEO, President & Director [6]

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Dane, good question. We are intrigued with the preliminary findings of improvement in PFS in that TNBC study. We are following results in all 3 cohorts of that trial and plan to update those data later this year. So more to come on those PFS data as they mature.

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Dane Vincent Leone, Raymond James & Associates, Inc., Research Division - Research Analyst [7]

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So if I could just follow up on that. Is there a -- have you had the opportunity to kind of get some feedback from your principal investigators that were working with you on that trial? And has there been more specific discussions in terms of where people like to see the next steps taken?

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Mark A. Velleca, G1 Therapeutics, Inc. - CEO, President & Director [8]

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Yes. We are in, obviously, close communication. Joyce O'Shaughnessy, the PI on that study as well as others, Antoinette Tan. There are other treatment regimens in TNBC that we're quite interested in as well. So we'll be exploring those options in addition to continuing to follow the results with gem/carbo.

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Operator [9]

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And our next question comes from Chris Shibutani of Cowen.

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Chris Shibutani, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [10]

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So just to be sure that we're clear about time lines for the regulatory meetings in your disclosures. So these meetings have been set. And for instance, after an FDA meeting, you'd have 30-day minutes from that. And then you'd be sharing with us your decisions about what the feedback was and what your go-forward plans are during the second quarter not necessarily in August or -- the period that you report the second quarter?

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Mark A. Velleca, G1 Therapeutics, Inc. - CEO, President & Director [11]

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That's correct, Chris. In the second quarter, we will be giving the update on the outcome of the regulatory discussions both in the U.S. and in Europe.

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Chris Shibutani, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [12]

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And then to the extent that people are trying to maybe understand or interpret what the regulatory feedback could be, how useful is historical precedent, particularly when we think about other myeloprotective therapies like Neupogen, which go back probably over a decade? Is there something that you think is important to bear in mind that maybe implies differences in how that process went and how perhaps your process will go now? Obviously, different molecules, different time, but I think a lot of investors tend to use that as a bit of a proxy. Tell us where maybe we should be mindful of how it could be very different or not?

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Mark A. Velleca, G1 Therapeutics, Inc. - CEO, President & Director [13]

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Yes. Well, I think as we have disclosed previously, the endpoint certainly for G-CSF and Neupogen, we are looking at both occurrence and duration of severe neutropenia. So that's a similarity. I think one of the differences is that G-CSF is not a protective agent, it's a stimulant, whereas we do have a different mechanism that preserves HSPC's function. So I think we have the benefit of some regulatory precedent regarding endpoints and differentiation based on mechanism.

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Chris Shibutani, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [14]

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And then your process and dialogue thus far between U.S. and European regulators, have they been quite similar or should we expect that there are distinctions?

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Mark A. Velleca, G1 Therapeutics, Inc. - CEO, President & Director [15]

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Yes. We'll provide the totality of the feedback from both the U.S. and Europe once we have all of those discussions completed.

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Operator [16]

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And our next question comes from Anupam Rama of JP Morgan.

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Matthew Alexander Bannon, JP Morgan Chase & Co, Research Division - Analyst [17]

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This is Matt on for Anupam. So I think in January you guys provided guidance on cash runway extending into 2021. With this half year financial guidance, is that runway still -- is that still what you forecast your runway? And if so, what does that take into assumption?

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Barclay A. Phillips, G1 Therapeutics, Inc. - CFO, Senior VP of Corporate Development & Secretary [18]

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Yes. This is Buck. I think the financial guidance you should use from this point forward is the guidance I've given on this call for the first 6 months. I think we've given guidance that the cash balance -- the total cash on the balance sheet would allow us a significant runway. Given the outcome of these regulatory meetings, we're respectful that, that will have an impact on how we operate the company. So we would guide you to use this 6 months' guidance I've just provided and we'll update you in the second quarter.

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Operator [19]

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I'm not showing any further questions at this time. I would now like to turn the call back over to Dr. Velleca for any further remarks.

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Mark A. Velleca, G1 Therapeutics, Inc. - CEO, President & Director [20]

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Thank you, operator. That concludes the call. Please reach out to us with any questions. As a reminder, in addition to our Investor Day on March 6, we will be presenting at the upcoming Cowen and Needham investor conferences, and I look forward to seeing many of you over the next 2 months. Thank you for joining us, and have a good evening.

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Operator [21]

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Thank you, ladies and gentlemen. Thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a wonderful day.