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Cellular Biomedicine Group Inc (CBMG)
Q3Â 2019 Earnings Call
Nov 6, 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's Third Quarter 2019 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [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 afternoon and thank you to everyone for joining us this afternoon. Speaking today is Chief Executive Officer and Chief Financial Officer of Cellular Biomedicine Group, Tony Liu. After he completes his quarterly update, we will open the call to questions. Please note 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 and 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 obligations to update any forward-looking statements or information which speak as of their respective date.
I'd now like to turn the call over to Tony for introductory remarks.
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Thank you, Derrick, and thank you to everyone for joining us today. This was an exciting quarter for our Company on both the clinical and corporate side. We made a major commitment and started our US expansion for research and clinical development in a new 22,000 square foot facility in Rockville, Maryland in October 2019.
We plan to use the Rockville site to initially support our clinical development in hematological indications in the United States. As you recall, we leverage our China operations to develop and hone our CMC process, institutionalize the manufacturing process for swift, high quality, vein-to-vein delivery and build out [Indecipherable] clinical confidence via investigator initiated trials. While we believe those technology platforms are ready, we will add US clinical trial sites to our clinical endeavors. This Rockville site commitment marks a great milestone for us as we are excited about beginning clinical development in this site.
I am very proud of our team's progress to date. Our R&D team will be presenting at two upcoming medical conferences this quarter. First up is a Poster Presentation at the Society of Immunotherapy in [Phonetic] Cancer or SITC Annual Meeting in Maryland at 7:00 AM this Friday. The title of the presentation is the Next Generation Off-The-Shelf Universal CAR for Adoptive Immunotherapy.
Additionally, we will present at the American Society of Hematology Annual Meeting or known as ASH in Orlando, Florida. The presentation titled Developing a Novel Anti-BCMA CAR T for the Relapsed or Refractory Multiple Myeloma would be presented on December 7 at 7:45 AM at the Orange County Convention Center.
Speaking of lead IO asset, the anti-BCMA program for multiple myeloma, I want to step your expectations in terms of clinical development progress. We begin patient enrollment in January of this year and added two additional clinical sites recently. Although it may appear that we are slower than some of our peers in a crowded space in the market, shown by others work in BCMA to obtain INDs ahead of us, our approach has been to prioritize and institutionalize distinguishable manufacturing process that is repeatable and can help us ensure quality clinical data.
Having seen our early clinical feedback, I remain cautiously optimistic that we can be one of the key companies in this indication. Our intention is still to show some early clinical feedback later this year and to continue to update everyone on our clinical progress.
Besides our leading IO asset for anti-BCMA for multiple myeloma, we continue to make great progress in our other clinical programs which include CD19 and CD25 CAR, TIL and KOA. We ended the September quarter with $29 million cash on our balance sheet as compared to $39 million at the end of June 30, 2019. Net cash used in operating activities for the first three quarters of 2019 was $28.1 million compared to $19.4 million for the same period in 2018. As you can see, our team has been dedicated and executing on our vision of being vertically integrated cell therapy focused Company. We continue to develop our clinical pipeline conservatively and as 2019 comes to a close, we see our Company expanding to the US. These clinical programs in US and in China along with our US facility expansion will require significant funding in the upcoming next 12 months, both in terms of business operation and in terms of capital expenditures. Therefore, we will need to raise additional capital for the foreseeable future. We plan to use approximately $82 million of the next 12 months to continue to develop our clinical programs and to expand our capacity and infrastructure.
Overall, Cellular Biomedicine Group has continued to progress on both the clinical and operation side of our business. We stay focused on our vision to build a global platform capable of researching, developing our own robust pipelines as a cell therapy Company while continuing to build out our globally leading manufacturing capabilities building on efficiency, scale and innovative approach.
With that, I'll turn it back to Derrick, opening our discussion for any questions you may have for us.
Derrick C. Li -- Head of Strategy and Investor Relations
Thank you, Tony for the introductory remarks. So at this time, we would like to open up some questions. So operator, in the queue order, we go with the first person on the list.
Questions and Answers:
Operator
Thank you, certainly. We will now begin the question-and-answer session. [Operator Instructions] The first caller is from Madhu Kumar of R.W. Baird. Please go ahead.
Madhu Kumar -- Robert W. Baird & Co. -- Analyst
Hey, guys. Thanks for taking our questions. So first one, I mean, I'll try and hopefully, you'll say something. What is kind of a reasonable estimate for the number of patients you might expect in the BCMA update at ASH, obviously, abstract is close to 3[Phonetic], but will be a reasonable number to expect for that presentation in December and then I have a follow-up as well.
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Hi, Madhu, how are you? This is Tony. Thanks for the question. I think, we have -- when we submitted our -- the ASH presentation, that was a few months back -- a couple of months back and we continue to monitor and follow with patient. So, I think we are looking at a single number of the patients. We have continued to do dose escalation. We so far feel very good about it. And I think that last two months, we added two more sites. So, you will see us continue to pick up speed in terms of number of patients to be enrolled. Although, some may not be fully ready to evaluate yet, but I think that you would expect a total in terms of the available patients plus the dosed [Phonetic] patients close to about 10 patients. The actual numbers, the outcome of results on clinical from safety, efficacy, we'll have to share with you when we do the ASH presentation.
Derrick C. Li -- Head of Strategy and Investor Relations
And additionally, I'll add to that, Tony. This is Derrick Li. So our approach on how we want to make sure that we speak to investors and analysts and basically stakeholders who are watching our story is to be very conservative with the kind of data that we're showcasing. I think that there has been some pushback and some reluctance of investors who accept data originating from China and our goal really is to have and showcase our data in a way that there are going to be reduced questions regarding that. And so, our approach is going to be to show the most conservative way in order to do that. And so, that's the way that we want to do it going forward. Yeah.
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Thank you.
Madhu Kumar -- Robert W. Baird & Co. -- Analyst
Hey, thanks, Derek and Tony. So beyond that, you had the CD20 program and post CD19 DLBCL. When might we expect initial clinical results from the anti-CD20 CAR-T program?
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Great question. We have dosed patients and so far we feel good about it. Again CD20 is, at this point in our clinical study is to IIT is been positioned as treating patients with the CD19 relapsed patients. So we, at this point with dosed patient, I think that they hopefully in weeks ahead or that which we have to see the early from the safety perspective, great, but we want to see, hopefully, in weeks time ahead, we'll see some early indication from the efficacy perspective.
Madhu Kumar -- Robert W. Baird & Co. -- Analyst
Okay. And then anything about the TIL program? So your direction was non-small cell lung cancer. How are you envisioning the non-small cell lung cancer TIL program? Do you think about it more from kind of the Iovance approach of you take the tumor, make TIL to immediately treat or say the Moffitt investigator-initiated trial approach which has been bank TILs, treat with PD-1 inhibitor, when you have progression on PD-1, then administer the previously banked TIL, right. Which approach are you thinking about for your TIL trial?
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
We, in a big picture, great question. We look at the TIL program essentially two approaches. One is what considered would be a traditional TIL treat -- TIL method, however, we will be doing with the -- from the process perspective more or less try to shorten the time and -- but the -- just what we call a traditional TIL. And then, that would be an indication in lung cancer, yes.
And then the second method at this point we are through our collaboration with NIH, we are by expanding TIL through what you call biomarker based expansion and we are in the process of developing consistent -- the scalable methodology. Hopefully once that's done, we're going to start to have another cohort using new treatment method. So from the overall approach, that's -- you have the both traditional as well as new from selection-based approach. And CBMG has been very strong historically and consistently and our approach has been, we want to make sure solve the manufacturing issues ahead of the -- any kind of clinical programs in this case. We like the -- we saw the early indications from the treatment of TIL, great results. We want to continue to follow that. That's why we call it Tier 1 at least, working well from potential outcome, but in the long-term perspective, we want to focus a lot of energy in terms around from the consistent, scalable approach perspective, develop our own proprietary, the methodology from the caution [Phonetic] perspective based on the biomarker-based selection. So that's the second, more in the future when it's vertical.
Madhu Kumar -- Robert W. Baird & Co. -- Analyst
Okay and I'll squeeze one more in. Do you guys have any updates on the Kymriah BLA submission in China?
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
We -- on that one, again, thanks for the question. We continue work with Novartis on that. We're making progress as planned. So far, it's on track. So it is both sides, both Novartis and CBMG, we're pleased with the progress and we continue to move forward with that. And I -- our deferred specific time frame to -- for you to follow up with Novartis, but CBMG has been extremely pleased with the collaboration with Novartis.
[Speech Overlap] for our IND in China has been accepted, so far so good.
Madhu Kumar -- Robert W. Baird & Co. -- Analyst
Okay, great. Thank you.
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Thank you.
Operator
The next question is from Amanda Murphy with BTIG. Please go ahead.
Amanda Murphy -- BTIG -- Analyst
Thanks. So, I guess just a couple of follow-ups to some of those questions on asked to start off. A couple of things. So are you -- or maybe you can even give us a sense now in terms of manufacturing timelines, what you're seeing in IIT trial, sort of being the [Indecipherable] time. And then -- so secondly, it seems like, your adverse event profile is pretty favorable. So just curious there if you could speak to specifically, why that is or what you might disclose more on that front at ASH?
Derrick C. Li -- Head of Strategy and Investor Relations
I mean, I don't know, if we can...
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Hi, Amanda.
Derrick C. Li -- Head of Strategy and Investor Relations
I would prefer not to speak too much about the additional data that we disclosed at ASH. So just to kind of jump ahead of Tony on that just because we don't want to violate any [Indecipherable] et cetera. But on the manufacturing side, we kind of stated it and I believe that our Chief Scientific Officer stated it at your conference. We believe that there we do have some pretty substantial vein-to-vein manufacturing advantages compared to our peers on this. And so -- but we believe that the combined effort and what we end up disclosing at ASH, the conference, should be pretty compelling. So...
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Hi Amenda. How are you? Great, thanks, Derek. Yeah?
Unidentified Participant
Then just on the BCMA program because obviously you've got IIT trial running. What's the next step there as it relates to the NMPA. Are you planning on a filing there? Or can you just update us? I forgot what you've said previously, but -- kind of give us a timeline from a Chinese FDA perspective?
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Yeah, sure, sure. Great question and I first want to echo what Derrick said earlier about the overall BCMA program. Our approach truly has been focused on quality of clinical enrollment and we -- but enormous effort on the quality, patients, enrollment, every single comes in. Review it thoroughly, and make sure the criteria is met and every patient has dosed worked closely with hospitals. So that's -- then on top of the manufacturing, what we are very proud of that with great swift process and digital based and that's by far from the -- in our review. We have one of the best process in place.
Then with that asset foundation, the IND filing is under way. I think that once we have the great -- all the IND indications and then we [Indecipherable] IND, we will show that from the both IIT perspective as well as IND and eventual commercialization that CBMG will show to the regulators that we have consistent process in place from manufacturer perspective versus the peers, some of which may be decide to start with research and solve the manufacturing later. That's not the case in CBMG. So we want to make sure we put all the -- line up all the dots, if you will, and from IIT to IND and to commercialization, we have a consistent process in place where we can show from the -- each stage that we don't change the manufacturing protocol.
So that's the approach in IND and we would very much in the process working with the CFDA's and NMPA to [Indecipherable] as soon as possible.
Amanda Murphy -- BTIG -- Analyst
Got it, OK. And then, I guess, sort of a broader question as it relates to your thoughts on partnership. You've obviously talked about bringing -- with TILs, you asked it with NCI -- at least the licensing in NCI, but there's been some recent investments looking at Amgen and BeiGene for example. So just, I guess, curious, how are you thinking about that part of the business whether it be just BCMA or I guess more broadly, you've obviously got a pretty deep pipeline now in terms of candidates. So how are you thinking about US partnership, whether it'd be manufacturing or bringing the drugs to the US commercially.
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Sure, sure. That's a great question. I think the -- overall CBMG has been consistently stick to the approach that we want to be, not only a strong drug development in cell therapy which as you can see, we have a broad pipeline from the liquid tumor to solid tumor. You have the partnership with Novartis to bring Kymriah to China. We have BCMA. We have -- earlier we talked about the presentation Universal CAR. We also have the CD19, CD20 bi-CAR from the investigator-initiated study perspective. We have CD20 treating relapse patients for CD19 and we have TCR and TIL program. And that along with the strong manufacturing capabilities and in addition -- and just a reminder that we also have two Phase 2 assets for KOA program which by far CBMG in China has the half of the INDs, if you will, are for approved in China from the stem cell regenerative perspective and -- but we have both our Phase II. So overall, we have a broad pipeline on the hand. With that, yes, we are very excited to saw the partnership with the others in this sector, biotech sector as it only puts CBMG in an unique position from -- both from the assets developement perspective and as well as from the leveraging our strong manufacturing capabilities.
So, we see a potential, both inbound/outbound partnership with partners who try to come to China, work with us, leveraging our manufacturing capabilities and our strong development capabilities, move out if we see -- have early lead programs, great efficacy and safety profile, then it's only the potential opportunities for others to work with us in the United States or other regions. And so, it will remain open for consumers -- as we see opportunities and we'll go from there. And I guess, just one more and feel free to answer this however you'd like, but I've just been curious how the competitive landscape is shaping up in China in terms of players that have GMP manufacturing capabilities for cell therapy at this point. Obviously, you have quite a lot of capacity. I'm just curious how -- that there -- how many players there are, how competitive it is especially given -- again, going back to the breadth of your pipeline as you think about each asset going forward and potentially partnering or not?
That's a great question, Amanda. I think the China known for many clinical studies, mainly in the phase of IIT and then probably for IND. So they're winning in this sector. For one, I always have the view of [Indecipherable] that allow us to continue to work with each other from the perspective to conquer cancer, if you will, But on one hand to -- we also hold a view that the companies who has not only great clinical programs, but also has the strong manufacturing capabilities, continue quality manual system, will eventually be able to take the clinical studies to the commercialized stage, because at certain point, it's going to be about the quality management, it's about the efficacy, safety and then from that perspective, CBMG has been not only to look at today, but also we keep an eye on the two or three years from now on when our assets say, for whatever it is, they are ready to commercialize, we will be in a great position to take that to the next step.
And certainly, our partnership Novartis in which we have tremendous respect and we have learned a great deal by working with Novartis that will help us to get us from the -- from first research a couple years back and now to working actively in getting our site ready to be able to take on the manufacturing for commercialization. So from all the perspective that in our view for CBMG in a very competitive position from the market perspective. So from that end, we feel very good about our positioning within this competitive landscape.
Amanda Murphy -- BTIG -- Analyst
Great, thanks very much Tony and Derrick. Appreciate it.
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Thank you.
Operator
The next question is from Varun Kumar with Cantor Fitzgerald. Please go ahead.
Varun Kumar -- Cantor Fitzgerald -- Analyst
Hey, good evening, everyone and thanks for taking the questions. First on the BCMA program, I see again US collecting the dose. In the ASH abstract, the three patients are still at a lowest dose. I think it's 1 million cells [Phonetic]. Just wondering what is the current rationale of further escalating the dose given you are already seeing activity at the lowest dose?
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Great question, and I think again from the most recent clinical data, we will at least wait for the ASH presentation. I think that overall so far, CBMG has been try to following the guidelines in China from the low dose to mid dose, which is 3 m/kg [Phonetic] and then go from there, from the clinical perspective. And so far, we are very -- from the early to additional sites, we are very pleased with the continued progress in that and we are cautiously optimistic about the program and looking forward to present at the ASH on December 7.
Varun Kumar -- Cantor Fitzgerald -- Analyst
Great. Thanks, Tony. And maybe on the patient with a prior treatment line, I think and it's a heavily pre-treated patient around 7 prior line of treatment. Now, It's very different than the local competitor you have financing of large meeting in earlier line. I was just curious, once you start expanding the trial, let's say, next year, will you then enroll -- are you envisioning to enroll earlier line patient or the current focus or at least the near-term you plan to have this heavily pre-treated multiple myeloma patients?
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
It's great question again. I think China in general from a multiple myeloma perspective in terms of the drugs available to treat a little bit different from US in that enrolling consisting the sectors, segments in line of patients. It's a challenge and I think that that's why in our approach, we have taken the position of quality and treating patients comparable to US as the key priority. Then, as time passes, as more patients enroll and US start to enroll some patients. So long, we are very clear about what the patients have been treated before in the high quality hospitals or for the well-known -- the physicians will believe that these patients should be treating both and then we would try to enroll, but overall, we have ensured every single patient comes in, we work extremely close with to ensure that we only enroll patients with clear medical history, the background in terms of lines of treatment and that has been the [Indecipherable] and that has been exhibited from the data -- only data and we'll continue to do so and look forward to present to ASH.
Varun Kumar -- Cantor Fitzgerald -- Analyst
Thank you. And on patient enrollment, I was thinking about the follow-up time you may have -- for the ASH. Now as you mentioned, the enrollment study in January and going to what Derrick was saying setting expectations for investors, I was just curious, should we expect some durability color at ASH, mostly in terms of how much follow-up we may-- we may have at ASH a bit from maybe around 8 patients or 10 patients you mentioned?
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
In terms of specific number of patients and results, I really have to defer to the percentage income at ASH, but -- and because of this dose escalation -- escalating studies and we follow closely. So you do have to stage one after another than before to -- and then wait for the committee to review and move on to the next dose. So it has to -- as you know, take time, step by step. So -- but we've now in the new sites added for high dose and I think that's just pick up the speed a bit although from the durability perspective then the low dose meant to be from safety and signal and then we start to see more from the efficacy in the higher doses. So therefore and from the duration response perspective and -- I think it's still too early to tell, but we -- I'm sure we will continue to keep you guys all posted as the data become available.
Varun Kumar -- Cantor Fitzgerald -- Analyst
Thank you, Tony and maybe my last question on the AFP hepatocellular carcinoma program. If you can just briefly provide what's the current status in terms of the clinical enrollment and are we on track to have some initial proof of concept data next year?
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
We are in the process of, as you know, our program, AFP program, targets a subtype, which among the Chinese liver cancer patients is only about 15% of those. So we have only one site and in the process of -- you have to do lots of tests to get to that, but I'm confident soon we'll have the first patient. We're also in the process, adding two more sites from the IIT perspective. And therefore, from the -- the reporting back to you and as far as patients enrollment, I'm sure, starting next year, we'll see some.
Varun Kumar -- Cantor Fitzgerald -- Analyst
All right. Thank you very much Tony and Derrick. Have a nice day. Thank you.
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Thank you.
Operator
The next question is from David Bautz with Zacks Small Cap Research. Please go ahead.
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Hi, David.
David Bautz -- Zacks Small-Cap Research -- Analyst
Hey, good afternoon, guys. So looking at the Q, I noticed that R&D expenses were up pretty considerably this quarter. I'm just curious if that's kind of a one-off jump or is that going to be the new normal for future quarters?
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Great question and observation. I think the -- as a biotech, as we start to pick up speed in terms of the broad programs and the clinical development, I think that in a way that from -- as a CEO, you want to see rapid development in terms of clinical programs, but on the hand, as you know that also means the costs increase. So in a way, I look at this as only indication of CBMG in accelerating our speed from the clinical program, development programs. And I think that -- I hate to say it, but it is a fact that the more you spend and in the next phase you start to more see data come in and more programs come in. So, you should expect more continued increase in spending, but also you will see more clinical results and clinical updates and program updates. So, I think that go hand-in-hand together.
Derrick C. Li -- Head of Strategy and Investor Relations
I'll add to that, David, as well. I think that a big piece of our strategy that we've been very consistent about is about understanding and utilizing the IIT clinical process in China to dose and get early signs of efficacy and safety within our programs and we've done so in BCMA and several of our other programs. And so, we -- our belief and one of the reasons why that we opened up the facility in Rockville and we're are laying the groundwork there is that, the leverage -- the positive signal of efficacy in the proof-of-concept work that we're doing and then translating back to some more serious work additionally and then proving that in the rest of world. And so, I think that is just -- it's a very -- in our sign that we're very -- we're cautiously optimistic about within the programs and what we've seen so far. So...
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Yeah, that's correct. A quick comment. I'll add one more thing. So, once you -- because you've done IIT in China and you decide to take to US, from that perspective, that gives you greater confidence when you come to point of doing the R&D in US because you've done some IIT already. You've seen some indications from the efficacy and safety perspective, therefore you spend a bit more upfront and which in China has high efficacy from the efficiency perspective. But then, they don't -- you avoid the long lengthy program only to discuss program that maybe as expected, but that's not to say, you guarantee any kind of success. However, it does help you to mitigate potential risks and provide better chances, if you will.
David Bautz -- Zacks Small-Cap Research -- Analyst
Yeah, OK. Earlier in the call, you had given a value for what you thought your cash needs for the upcoming year. And I'm sorry I missed what that value was, so could you repeat that please?
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
It was $82 million.
David Bautz -- Zacks Small-Cap Research -- Analyst
Got it. All right.
Derrick C. Li -- Head of Strategy and Investor Relations
Thanks for the questions.
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Which includes the normal operating expenses and capex and et cetera. So, it also covers the programs both in US and China and as well infrastructure expansion.
David Bautz -- Zacks Small-Cap Research -- Analyst
Got it, thanks.
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Thank you, guys. This concludes the question-and-answer session and today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Duration: 38 minutes
Call participants:
Derrick C. Li -- Head of Strategy and Investor Relations
Tony Liu -- Executive Director, Chief Executive Officer and Chief Financial Officer
Madhu Kumar -- Robert W. Baird & Co. -- Analyst
Amanda Murphy -- BTIG -- Analyst
Unidentified Participant
Varun Kumar -- Cantor Fitzgerald -- Analyst
David Bautz -- Zacks Small-Cap Research -- Analyst
