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Cellular Biomedicine Group Inc (CBMG)
Q2 2019 Earnings Call
Aug. 06, 2019, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Thank you for standing by. This is the conference operator. Welcome to the Cellular Biomedicine Group, Inc. Second Quarter 2019 Earnings Conference call.
[Operator Instructions] I would now like to turn the conference over to Derrick Li, Head of Strategy and Investor Relations. Please go ahead.
Derrick C. Li -- Head of Strategy and Investor Relations
Good morning and thank you, everyone, for joining us. Today, on our call is Tony Liu, Chief Executive Officer and Chief Financial Officer of Cellular Biomedicine Group. After he completes his quarter update, we will open the call to questions.
Before we begin, I'd like to remind everyone that some of the information you'll hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding revenue, gross margin, operating expenses, other income expenses, taxes, capital allocation and future business outlook. Actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in CBMG's most recently filed periodic reports on Form 10-K and Form 10-Q. Cellular Biomedicine Group assumes no obligation to update any forward-looking statements on information, which speaks as of the respective dates.
I'd like to turn the call over to Tony for introductory remarks.
Tony Liu -- Chief Executive Officer
Thank you, Derrick, and thanks to everyone for joining us today for the second quarter to 2019 earnings call. I am very pleased to provide an update on our robust pipeline, as we have been making significant progress on our development. On today's call, I will be bringing everyone up to date on our immuno-oncology or I/O pipeline comprised of CAR-T and specifically, our B-cell maturation antigen or BCMA for multiple myeloma program and our anti-CD19, CD20 BICAR for non-Hodgkin lymphoma or NHL. Additionally, I'll be providing updates on our alpha-fetoprotein TCR-T or AFP-TCR-T, tumor infiltrating lymphocytes or TIL. Besides I/O development progress update, I will also discuss our regenerative medicine for knee osteoarthritis or KOA pipeline. I'll also touch base on our critical partnership with Novartis in bringing Kymriah to China.
In 2018, our team laid the groundwork for a new state-of-the-art facility in Shanghai, Pharma Valley. And I'm very pleased to say you, you reap what you sow. I hope to articulate succinctly the benefits of our seasoned research and development team, our own high-capacity GMP facility and our own highly experienced process development, manufacturing, quality, regulatory affairs and clinical teams. We plan to seek additional GMP manufacturing site in China and in US to further cement our advantage in significantly differentiated high through-put, low cycle time, better quality cell manufacturing process.
In the second quarter, we made strides on a number of initiatives, including preclinical development, manufacturing readiness and clinical development. First, we continue to work closely with Novartis to support the required technology transfer that will facilitate the introduction of Kymriah in China.
Second, our in-house developed anti-BCMA target began patient recruitment during the first quarter of 2019. And we have added two more sites to our investigator initiated trial. We're very pleased to see our initial anti-BCMA CAR-T, which showed good in vivo anti-tumor activity. Our differentiated automated manufacturing process uses serum-free culture and a swift cycle time with a digital [Indecipherable]. Preliminary results from the clinical trials have been positive, and we plan to present preliminary clinical data during the fourth quarter of this year.
Third, we have been seeing encouraging preclinical data with our anti-CD19, CD20 BICAR and have developed a proprietary automated, fully close serum-free culture, swift manufacturing processing, using what we have coined as GC Expo. We expect to initiate the first-in-human study as soon as possible or practical.
Now let's turn our attention to updates on the solid tumors. We are working on finalizing our AFP-TCR-T trial or HCC. China has half of the world's liver cancer patient population and constitutes a serious, widespread and unmet medical need. We have done critical preclinical toxicity studies and are pleased with our findings. Kudos to our research and translational medicine, manufacturing and clinical teams as we have worked closely with the leading HCC hospital NPI in China to establish the foundation for the first-in-human study. Meanwhile, our research and translational medicine and manufacturing teams continue to work together to develop CBMG's TIL program based on technology we licensed from the National Institutes of Health for solid tumors. Our first indication for TIL therapy with the target late-stage non-small cell lung cancer or known has NSCLC. We will continue to provide timely updates on our progress in development in TIL therapy in the coming quarters, both from disease indications and manufacturing process perspectives.
So all in all, we're very pleased with a wide range of immuno-oncology clinical assets development in CAR-T, AFP-TCR-T and neoantigen, in which TIL covering both hematological diseases as well as solid tumors. In the first quarter of 2019, we'll receive the first Phase II IND approval from NMPA, formerly known as CFDA, our recruitment in our allogenic stem cell program using human adipose-derived mesenchymal progenitor cells or treat KOA. The recent approval validates our effort in our -- in over half of decade of product development, the institutionalization of our manufacturing exercise and the clinical development. We have been diligently working with the PIs and expect to initiate the patient recruitment in the near future.
In Q2, [Indecipherable] our previously compiled Phase I and Phase II data and filled the IND application on the new regulation for the autologous KOA and awaiting feedback from the NMPA. We concluded the second quarter ended June 30, 2019 with $56.7 million in total cash and short-term debt of $14.5 million on our balance sheet as compared to $62 million, short-term debt of $6.1 million for the first quarter ended March 31, 2019. Net cash used in operating activities for the first half was $18.65 million, compared to $13.66 million for the same period in 2018, due to increasing expense relate to R&D, preclinical and clinical studies as well as the continued development of our pipeline. As a drug developed company, we have a robust cell therapy technology platform, ranging from CAR-T with bi-specific CARs to AFP-TCR-T, TIL and regenerative medicine.
We focused our second quarter's resources on advancing our I/O and KOA assets and get ready to bring Kymriah to China. We have continued to increase our R&D investment, specifically on the I/O side. We have added two more sites for the IIT of anti-BCMA CAR-T therapy targeting relapsed/refractory multiple myeloma in China. We have started patient recruitment in AFP-TCR-T on HCC. We expect our assets, many of which are highly differentiated from US competitors, to continue to advance to more promising stages at which time we will utilize trial data to support the launch of clinical trials in the US.
Our team is simply amazing. They are progressively moving the board down the line toward the first-in-human trials and advancing our assets. I'm happy to inform you that we are on schedule on the tech transfer to bring Kymriah to China. Our R&D, process development and clinical teams are working harmoniously with the hospitals on the clinical development and IRB approvals for our assets in China. We're planning our US TIL clinical trial for lung cancer and will provide more color on that soon.
As I stated on our first quarter conference call, we have accelerated our operating activities in the second quarter and have throttled up on our IIT clinical trials. Throughout the first half of 2019, we've continued to advance our pipeline, executing upon our most critical initiatives. As the value of our preclinical assets continue to grow, we remain focused on our execution and long-term development. We're encouraged by the progress we've made and look forward to providing additional updates in the near future.
So with that, I'd like to turn you back to Derrick, opening up for any questions you may have for us. Thank you.
Derrick C. Li -- Head of Strategy and Investor Relations
Thank you, Tony. Operator, please open the call for any questions.
Questions and Answers:
Operator
[Operator Instructions] Our first question comes from Madhu Kumar of R.W. Baird.
Madhu Kumar -- Robert W. Baird. -- Analyst
Yes. Thanks for taking my questions. So first one is, in terms of the BCMA data, so you guided for the fourth quarter '19 and we expect that to be presented at a medical conference like ASH or separately as a company press release.
Tony Liu -- Chief Executive Officer
Hi, Madhu. How are you doing? Thanks for the quick question.
Madhu Kumar -- Robert W. Baird. -- Analyst
Good, how are you?
Tony Liu -- Chief Executive Officer
We -- yes, hi. We believe by the time we get to ASH, we'd have enough data to present or oppose at ASH, then follow that, because certainly, as you know, ASH has a cutoff date and we expect by the end of the year, we'd have the full data, more broader data set to share toward the end of year. But we definitely plan to present preliminary data at the ASH.
Madhu Kumar -- Robert W. Baird. -- Analyst
Great. And how do you think about the clinical market space and positioning for the CD19, CD20 BICAR program vis-a-vis Kymriah?
Tony Liu -- Chief Executive Officer
That's a great question. I think that at this point, we are based on our preclinical study and also that in terms of overall, we think that this program BICAR has the -- grade from the scientific -- from positive perspective, some improvements in terms of the -- at the investigator initial stage and we have not filed any kind of IND yet. So we'll just initially do some investigate initial studies first. We'll go from there.
Madhu Kumar -- Robert W. Baird. -- Analyst
Great. Thank you.
Tony Liu -- Chief Executive Officer
And from the physicians perspective, solely, our Number 1 goal is working closer with the Kymriah to bring to China as the first approved product and that's a great product, and we're looking forward to -- and to get that for China. So many patients are waiting for that to be ready, to be in hospital for treatments.
Madhu Kumar -- Robert W. Baird. -- Analyst
Okay and then one last question and to that end. What are the key milestones left in terms of like progress milestones needed for a drug filing for Kymriah in China.
Tony Liu -- Chief Executive Officer
We won't go into details of that if I do, but we all continue going through a tech transfer as scheduled, as planned. So, so far so good. And after that, hopefully we, CBMG from the manufacturer perspective, which would be ready for taking patients for the processing.
Madhu Kumar -- Robert W. Baird. -- Analyst
Okay, great. Thanks so much, Tony.
Tony Liu -- Chief Executive Officer
Sure. Thank you.
Operator
Our next question comes from Varun Kumar of Cantor Fitzgerald.
Varun Kumar -- Cantor Fitzgerald -- Analyst
Hey, thanks for taking the questions. Couple of questions from me. First a follow-up on BCMA. If you can guide us, how many patient data should we expect in December and will there be different dose levels there in the December data set? And can you again tell me how many sites in total are open for the enrollment for BCMA program right now?
Tony Liu -- Chief Executive Officer
Sure, sure. Great questions, Varun and I think the -- we expect by the December, we should have at least 20 patients dosed with BCMA. We completed first cohort and then now in the second cohort. And if all goes as planned, I think that we should expect that already in the expansion stage for a second cohort and first cohort. And I think the -- right now we have three sites. All three sides are basically top leading sites in China for multiple myeloma patients. And that's why we think that by the end of the year, we should have at least 20 patients dosed at that point with data.
Varun Kumar -- Cantor Fitzgerald -- Analyst
Okay, great. And for the liver cancer, again, if you can guide us, how should we think about enrollment, given there's a lot of patients there in China. And when should we expect first data and should it be more like biomarker data or we can also expect some kind of response in the first half next year?
Tony Liu -- Chief Executive Officer
Sorry, which program is it?
Varun Kumar -- Cantor Fitzgerald -- Analyst
For the AFP and liver cancers?
Tony Liu -- Chief Executive Officer
That one we just start to patient enrollment. I think that this is by far one of the top positive results in China from liver cancer treatment. Yes, we do -- they have a lot of patient to go through [Phonetic]. However, we're targeting a subtype A2. So there were some screening process, but we're confident this is only the first solid tumor for lung -- for liver cancer in terms of patient involvement. We'll be taking a cautious approach from the screening perspective. I think that, yes, it is specifically targeting subtype A2 patients, even so, from the absolute amount perspective, still, a lot of patient population in China. And I think that by first half of next year, we should see some primary data in terms of the cohort for dose escalation and we'll go from there. We'll keep you posted as we progress in that.
Varun Kumar -- Cantor Fitzgerald -- Analyst
Great, thank you. And maybe the last one on the R&D expense, I see the increase in R&D expense, how should we think about going forward in the subsequent quarters just for the R&D expense?
Tony Liu -- Chief Executive Officer
Great question. I think the R&D expense, as we predominatly -- this is really due to the fact that we pick up in the clinical development. That's where we put them in the bucket. And I think that as we continue to increase the activities in clinical areas -- so far everything's on track based on our planning. And we don't see anything deviate from our previous internal projection, but certainly as we increase the clinical activities, I do see the costs continue to pick up, which is great thing. And obviously, you have more data to share and that continue to increase the value from curation [Phonetic] perspective.
Varun Kumar -- Cantor Fitzgerald -- Analyst
Great. Thank you very much, Tony and Derrick.
Tony Liu -- Chief Executive Officer
Thank you.
Operator
Our next question comes from Wayne Wu of B Riley FBR.
Tony Liu -- Chief Executive Officer
Hi, Wayne.
Operator
Wayne Wu, your line is live.
[Operator Closing Remarks]
Duration: 20 minutes
Call participants:
Derrick C. Li -- Head of Strategy and Investor Relations
Tony Liu -- Chief Executive Officer
Madhu Kumar -- Robert W. Baird. -- Analyst
Varun Kumar -- Cantor Fitzgerald -- Analyst
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