Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB) Q4 2022 Earnings Call Transcript
Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB) Q4 2022 Earnings Call Transcript March 31, 2023
Operator: Good morning, and welcome to the Y-mAbs Therapeutics, Inc.'s Earnings Call for the Fourth Quarter 2022. As a reminder, today's conference will be recorded. Let me quickly remind you that the following discussion contains certain statements that are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about our business model and development; commercialization and product distribution plans; current and future clinical and preclinical studies, and our research and development programs; expectations related to the timing of the initiation and completion of regulatory submissions; regulatory, marketing and reimbursement approvals, including statements with respect to future development of other development programs, potential for DANYELZA territory expansion and advancement of SADA; collaborations or strategic partnerships and the potential benefits thereof; expectations related to our anticipated cash runway and the sufficiency of our cash resources; DANYELZA revenue guidance and other guidance for 2023; and our financial performance, including our estimates regarding revenues, expenses and capital expenditure requirements; and other statements that are not historical facts.
Because forward-looking statements involve risks and uncertainties, they are not guarantees of future performance, and actual results may differ materially from those expressed or implied by these forward-looking statements due to a variety of factors, including those risk factors discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 30, 2023. At this time, I would like to turn the conference over to Thomas Gad, the company's Founder, Interim CEO and President. Please go ahead, sir.
Thomas Gad: Thank you. Good morning, everybody. And thank you for joining us today. With me today, I have company's CFO, Bo Kruse; our Chief Commercial Officer, Sue Smith; and our Chief Medical Officer, Vignesh Rajah. Let me begin by briefly reviewing with you the highlights of our fourth quarter. First and foremost, DANYELZA sales picked up notably, and we are proud to report record net product revenues in Q4 of $16.4 million, up 31% compared to Q3 2022. Further, we received a $15 million approval milestone from SciClone Pharmaceuticals, as DANYELZA was approved in China in the fourth quarter, resulting in a net profitable quarter for the company. Earlier this quarter, we announced a restructuring plan, which focused on expanding commercialization of DANYELZA and developing our SADA technology.
The plan includes a 35% reduction in force, and an anticipated 28% reduction of annual operating expenses for 2023. After the implementation of this plan, we expect that our $105.8 million in cash and cash equivalents as of December 31, 2022, when combined with anticipated DANYELZA revenues, will be sufficient to support our business operations as currently planned into the first quarter of 2026. This estimate excludes further development of omburtamab, as well as any potential business development, which Bo will talk more about later in the call. Now turning to DANYELZA. All of us at Y-mAbs are truly proud of our launch to-date and the opportunity to offer children DANYELZA following the accelerated approval for treatment of relapsed and refractory high-risk neuroblastoma in the bone and bone marrow for patients who have demonstrated a partial response, minor response or stable disease to prior therapies.
After a modest start, we are clearly gaining momentum, and we are making considerable efforts to expand access to DANYELZA outside of the U.S. In December 2022, DANYELZA received conditional approval in China, and we look forward to the planned launch of the product in China during the first half of 2023 on our collaboration agreement with SciClone. As you recall, DANYELZA was recently approved in Israel for relapsed and refractory high-risk neuroblastoma and is to be commercialized by our partner, Takeda. The regulatory submission in Brazil was also completed by Adium in September 2022 on the tail of submissions in Mexico and Colombia. We look forward to continuing DANYELZA's expansion efforts in the LatAm region. In December 2022, we announced a distribution agreement with WEP Clinical in connection with early access program for DANYELZA in Europe.
We continue to seek partners to provide access to DANYELZA on a global scale. As I mentioned, our DANYELZA net revenues for the fourth quarter increased 31% sequentially from the third quarter '22, primarily driven by an increase in new U.S. patients as we are starting to see the positive results from a successful execution on our 2022 strategic development plan. We are confident that we are gaining momentum. Having reported net DANYELZA revenues of $49.3 million for the full year of 2022, we are pleased to note that we landed nicely at the top of the end of our full year 2022 DANYELZA revenue guidance of $45 million to $50 million. And I'm very pleased to have Sue on the call today, and I'll turn it over to you now, Sue. Thank you.
Sue Smith: Thank you, Thomas, and good morning, everyone. I'm pleased to be with you all today and happy to have the opportunity to talk about the progress we've made. We believe that Q4 2022 revenue growth demonstrates that our strategic commercialization plan positions us well for further organic growth in the marketplace. For us, the patient is at the center of everything as we pursue a transformational shift in patient outcomes. Our team understands the urgent need to educate the market about the safe and effective use of DANYELZA, a treatment option that potentially transforms their experience in terms of disease control and an administration schedule that allows them to go home at night. We are full steam ahead right now on expansion in three key areas: caregiver engagement, new patient identification, and a very aligned field and marketing team focused on key customers.
First, our caregiver education and support programs are a meaningful way to provide education and support. We continue to provide new resources and support, meaningful parent and physician dialogue and initiation of treatment. Secondly, in an orphan indication and therefore, the very targeted patient population, identification and tracking strategies play in a central role in the success of the commercialization of a rare disease therapeutic. This has also been a focus of the team to track and assess the patient's journey by way of their physician and cultivating that relationship with the physician to implement the DANYELZA intervention once the patient becomes relapsed or refractory. And third, the marketing and sales team are aligned with plans focused on the target and opportunity accounts where these patients are treated.
As a result, DANYELZA adoption and market share is trending upward in the U.S. anti-GD2 market, exiting the fourth quarter of 2022. We gained five new customer accounts in Q4 '22 and including several notable centers of excellence. By the end of 2022, we had 48 accounts with 18 of those or 38% who have had two or more patients on DANYELZA. I'm proud of the team, and we are excited to continue building on the solid foundation we have in place for DANYELZA. Thank you for your time. Back to you, Thomas.
Thomas Gad: Thank you, Sue. Great. We believe that Y-mAbs is well positioned to unlock the further potential of our platform to provide benefits to more patients while creating value for our shareholders. In the clinic, we are actually recruiting into a new investigator-sponsored study BCC018 study, which is sponsored by Beat Childhood Cancer Research Consortium. This multicenter Phase II trial explores naxitamab with standard induction therapy for patients with newly diagnosed high-risk neuroblastoma. This study has now initiated five sites, more on the way, and dosed three patients so far. We believe that the addition of anti-GD2 therapy to the induction chemotherapy early in the treatment process may result in improved end of induction responses and improved survival.
BCC aims to have a total of 40 to 50 sites in the U.S. and Canada and target enrollment of 76 patients. Further, we continue to work on our pivotal multicenter osteosarcoma trial for DANYELZA to potentially expand our label to new indications. As you can hear, we are very excited about the various possibilities going forward to address additional pediatric unmet medical needs and augment the commercial opportunity of DANYELZA. Our strategy to provide drug for ISS studies to potentially create a proof-of-concept in larger adult indications is also taking shape. We look forward to poster presentations on naxitamab's activity in triple-negative breast cancer in a preclinical study by MD Anderson at AACR in April this year. We're also providing naxitamab for an investigator-led Phase Ib study at Ohio State University, adding naxitamab to gemcitabine and NK cells.
Photo by National Cancer Institute on Unsplash
This study is awaiting IRB approval and is aiming to recruit patients in Q3 of this year, and we plan to follow up at our Annual R&D Day in December of this year. Turning now to our self-assembly disassembly, SADA, two-step pre-targeted radioimmunotherapy technology platform. SADA is a key platform in our portfolio, and we believe it continues to show great promise in targeted delivery of radiopharmaceuticals to tumor sites with minimal off-target effects, creating potential opportunities to significantly increase therapeutic indexes. As we continually work to optimize the technology, we become even more encouraged about the potential scientific advancement it represents for the company and the medical community. The IND for GD2-SADA, which is our first SADA construct, cleared during the third quarter 2022 and the first site opened in November 2022.
A total of four sites, including Memorial Sloan Kettering Cancer Center in New York that opened up a few weeks ago are open at this point, and we have started actively screening patients with GD2 positive solid tumors in small cell lung cancer, sarcoma and melanoma. We intend to share pharmacokinetic data by imaging later this year from our first in-human Phase I trial. At our R&D Day in December '22, we also announced a second SADA construct CD38-SADA against non-Hodgkin's Lymphoma as our second potential IND, which we plan to submit to the FDA within the next three to four months. We aim to address the unmet need in third-line radiation-sensitive multiple myeloma patients who have failed antibody treatments and are excited about CD38 as a target in the context of the SADA technology.
We believe that we are well positioned to explore potential partnership options to leverage our priority SADA platform, our team's expertise and our streamlined process validation. SADA's differentiation stems from our two-step infusion and our ability to collect pharmacokinetic data by imaging. This potentially enables us to access programs early. Moreover, the two-step technology makes it possible for our potential partners to use existing large infusion centers as our drug candidate is infused as a protein-only injection followed by an isotope injection. This unique two-step method facilitates the involvement of the med/onc and removes the need to send patients direct to nuclear medicine departments, among other advantages. We also plan to explore potential partners previously failed late-stage clinical constructs that have already been studied in humans by optimizing them into a SADA construct to potentially overcome those limitations through the rapid profile of SADA and potentially significantly improving the therapeutic window.
We continue to work efficiently to support DANYELZA with a global commercial footprint through regional partnerships across the globe. As you know, we established a partnership with SciClone Pharmaceuticals for DANYELZA expansion in Greater China, we are especially excited about the regulatory approval for marketing in China that took place in December 2022, which triggered a $15 million regulatory milestone to Y-mAbs. We believe that this market could potentially be an important revenue driver for DANYELZA sales in Asia. The fourth quarter of 2022 demonstrated the continued progress among our other partners in covering LatAm, Central Eastern Europe and Israel to support DANYELZA's potential and gaining access to global markets, subject to regulatory approval in the relevant areas.
Moving to our recent restructuring plan. In January 2023, we initiated a strategic focused on DANYELZA and SADA platform. It includes deprioritizing of omburtamab and other early-stage programs, including the CD33 bispecific and the GD2-GD3 vaccine programs. We held a Type A meeting in January 2023, during which the FDA made recommendations for us to consider in terms of omburtamab trial designs to demonstrate substantial evidence of effectiveness and a favorable benefit risk profile. At this point, the program has been deprioritized. Though we continue to consider the future for our omburtamab development program, we are focused on DANYELZA growing on-label, revenue and label expansion opportunities and the development of SADA constructs making us a commercial-state biotech company with a sharp focus on value creation.
We have implemented a reduction in our workforce of approximately 35%, and we anticipate our revised business plan will result in a reduction in annual operating expenses of 28% for 2023, which we expect, when combined with the anticipated DANYELZA revenues, to extend our cash runway into Q1 2026. At this point, I want to extend my sincere appreciation and gratitude to all our colleagues for the work that has been -- that has brought us this far and for their dedication and service to Y-mAbs, whilst striving to develop new treatments for pediatric patients with cancer. We ended the fourth quarter of 2022 with $105.8 million in cash. With a strong cash runway and a robust pipeline, we believe we are well positioned to continue our effort to deliver further clinical and commercial milestones to support the continued commercialization of DANYELZA and advance our earlier stage programs with the revolutionary SADA technology constructs.
We are comfortable with our current financial positions. And Bo will now give us his financial update. Thank you. Over to you, Bo.
Bo Kruse: Thank you, Thomas, and good morning, everyone. Our net revenues of $31.5 million and $65.3 million for the fourth quarter '22, for the year ended December 31, '22, represented increases of 228% and 87%, respectively, over $9.6 million and $34.9 million in the comparable periods of 2021. Net revenues in the quarter and year ended December 31, 2022, included license revenues of $15 million and $16 million, respectively, compared to no license revenue in the quarter ended December 31, 2021, and license revenue of $2 million for the year ended December 31, 2021. During the three months and year ended December 31, 2022, we recognized license revenue for a regulatory approval milestone of $15 million from SciClone Pharmaceuticals for the conditional approval of DANYELZA in China.
In this case, $1.5 million share of the approval milestone was capitalized and that did accordingly not impact the P&L. DANYELZA product revenues for the quarter and year ended December 31, '22, was $16.4 million and $49.3 million, respectively, which represented increases of 71% and 50% over the corresponding periods in '21. DANYELZA net product revenues of $16.4 million in the fourth quarter of '22, increased by 31% sequentially compared to the third quarter of '22 of $12.5 million. The increase was primarily driven by an increase in new U.S. patients in the fourth quarter of '22, as we're building momentum. Moving to operating expenses. Our R&D expenses decreased by $8.9 million to $19.8 million for the quarter ended December 31, '22. The decrease reflects decreased spending for clinical trials, outsourced research and supplies and outsourced manufacturing services.
Our R&D expenses decreased by $1.6 million to $91.6 million during the year ended December 31, '22, compared to the prior year. This decrease reflects decreased clinical trial activity in '22. SG&A expenses decreased by $4.3 million to $10.8 million for the three months ended December 31, '22, compared to $15.1 million for the three months ended December 31, '21. The decrease in SG&A was primarily the result of a $1.8 million decrease in costs related to the commercialization of DANYELZA, primarily related to increased launch costs in the fourth quarter of '21. Our SG&A expenses increased by $6.3 million to $60.9 million for the year ended December 31, '22. This increase in SG&A was primarily attributable to a $7.8 million increase in severance and share-based compensation expense related to the termination of our former CEO in the year ended December 31, 2022.
We reported a net income for the fourth quarter ended December 31, '22, of $1.2 million or $0.03 per share basic and diluted compared to a net loss of $36.9 million or $0.85 per share basic and diluted for the quarter ended December 31, 2021. The favorable change from a net loss in '21 to net income in '22 was primarily driven by the 2022 license revenue impact of the $15 million and the gross profit impact of increased DANYELZA sales and decreased R&D expenses. Additionally, we reported a net loss for the year ended December 31, 2022, of $95.6 million or $2.19 per share basic and diluted compared to a net loss of $55.3 million or $1.28 per share basic and diluted for the year ended December 31, 2021. Net loss in the year ended December 31, 2021, was after a $62 million net gain from the sale of our DANYELZA Priority Review Voucher.
The decrease in earnings in the year ended December 31, '22, also reflects the onetime impact of contractual severance related benefits to our former CEO; and as noted above, partially offset by the favorable impact of growing revenues. As Thomas mentioned, we ended the fourth quarter of 2022 with cash and cash equivalents of $105.8 million. Our fourth quarter '22 cash burn of $8.8 million includes the $15 million license fee received in the quarter. This reflects that our cash burn in the fourth quarter of 2022, when excluding the license fee, was in line with the 2022 average. Also, given all the recent concerns about banks, I'm pleased to note that we hold our cash deposits and securities at a major national bank. We believe that our current cash position is sufficient to fund our current operations into the first quarter of 2026, and provides a solid financial runway to support our commercial initiatives and our prioritized pipeline programs as currently planned.
As we noted in previous quarters, the underlying assumptions for this guidance are important to understand. No new partnerships or other new BD income is included in the assumptions. The DANYELZA product revenues are assumed to increase by 10% each year in '24 and '25 for the purpose of this analysis of runway. We hope to see a higher growth rate for DANYELZA in the years to come as we execute our refined commercial strategy and work to deliver clinical data that could potentially lead to expanded indications and greater physician adoption. In terms of development activities, we have assumed that our prioritized programs will be advanced at our own expense and no new programs are assumed at this point. This financial runway forecast benefits from the fact that most of the expenses related to pivotal trials, post-marketing commitments and regulatory activities with respect to DANYELZA are behind us at this point.
For the purposes of guidance, we have not assumed any equity, debt offerings, borrowings. Also, as previously disclosed, we expect operating expenses of $115 million to $120 million and a total cash burn of $50 million to $55 million for the full year 2023. We believe Y-mAbs remains in a healthy financial position to execute our strategic mission, our priorities and to support the delivery of multiple milestones. This concludes the financial update. And I'll now turn the call back to Thomas.
Thomas Gad: Okay. Okay, thank you, Bo. This marks the end of today's prepared remarks. At this time, we can open up the line for questions for the operator. Thank you.
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