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Spectrum Pharmaceuticals Inc (SPPI)
Q4Â 2019 Earnings Call
Feb 27, 2020, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the Spectrum Pharmaceuticals 4Q 2019 Earnings Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Mr. Shiv Kapoor, Vice President of Strategic Planning and Investor Relations. Thank you. Please go ahead, sir.
Shiv Kapoor -- Vice President, Strategic Planning and Investor Relations
Thanks. Good afternoon to everyone. Thank you for joining us today for Spectrum Pharmaceuticals fourth quarter and full year 2019 financial results conference call. Our press release is available on our website at www.sppirx.com. Joe Turgeon, our CEO and President, who will start the call and provide an overview followed by a financial update from our CFO, Kurt Gustafson, and a discussion of our clinical development programs from our CMO, Dr. Francois Lebel.
Before we get started, I would like everyone to please refer to the notice regarding forward-looking statements included in today's press release. This notice emphasizes the major uncertainties and risks inherent in the forward-looking statements that we will be making this afternoon. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements.
With that, let me hand the call over to Joe Turgeon, CEO of Spectrum.
Joseph Turgeon -- Chief Executive Officer
Thank you, Shiv. Good afternoon, and thanks for joining us today. I appreciate everybody's interest in Spectrum. We remain highly focused on our late-stage assets ROLONTIS and POZIOTINIB. So let me begin with the updates on these programs. ROLONTIS is our late-stage drug being developed for the treatment of chemotherapy-induced neutropenia. We submitted our BLA in October of 2019 and it was accepted for filing with a PDUFA date of October 24, 2020. If approved ROLONTIS could be the first novel granulocyte colony-stimulating factor available healthcare providers in over 15 years. We have confidence in the future of ROLONTIS and are looking forward to potentially competing in it's multi-billion dollar market.
Our launch preparations for ROLONTIS are actively under way. As the PDUFA date approaches, we'll accelerate our commercial build out and have already put key leadership personnel in place. Our plan is to launch with a lean yet effective commercial infrastructure to maximize the impact of ROLONTIS. We are closely monitoring the evolving market dynamics and continue to believe that launching a novel asset with -- will benefit patients, our customers and our shareholders. Competing in this market is a significant opportunity for our company, and we'll be ready to go.
Our other late-stage clinical asset POZIOTINIB targets hard-to-treat mutations in lung cancer. Results from the first cohort of the ZENITH20 trial, which were announced in December were disappointing. While the response rate of Cohort 1 in this trial was lower than we expected. The positive signals that we observed provides support for the continued clinical evaluation of POZIOTINIB in this patient population with significant unmet medical need. Dr. Lebel will give you a comprehensive update of the current status of the pozi clinical program later on the call. Spectrum's focus is on the development of two late-stage assets and expanding the pipeline.
Last year, we made significant progress in transitioning the company and now completed the shift from small niche products to higher volume targets through divestiture of our legacy assets, advances in our product development pipeline and the acquisition of the fifth platform. As I think about 2020, we are well funded. We're preparing to launch a product into the biggest market in the company's history. We have multiple data catalysts and we have the development talent to realize the promise of our current assets. Additionally, we are seeking new business development opportunities that will complement our pipeline.
With that I'm going to turn it over to Kurt to cover the financials.
Kurt Gustafson -- Chief Financial Officer
Thanks, Joe. Let's start with a review of our continuing operations. Our SG&A expense for the fourth quarter of 2019 was $15.1 million versus $16.6 million in the previous year. R&D expense was $23.3 million versus $29.9 million in the fourth quarter of 2018. Our net loss for the quarter from continuing operations was $40.2 million versus $53.1 million in the comparable period of 2018. On a non-GAAP basis, which primarily backs out stock compensation costs. Our loss for the quarter was $33.4 million.
As we prepare for the launch of ROLONTIS, we would expect to see an increase in our SG&A expense in the second half of the year. And while we have the key leadership positions in our commercial organization already on board, we will be hiring our sales team in the back half of this year. We ended the quarter with $224 million in cash plus marketable securities. This is down $28 million from the prior quarter. This cash balance gives us plenty of runway to continue the development and commercialization of our late-stage assets.
And with that, let me now hand the call over to Francois to cover updates on our clinical programs.
Francois Lebel -- Chief Medical Officer
Thanks, Kurt. Hello, everyone. I'm going to start by providing an update regarding our late-stage asset ROLONTIS, which is being actively reviewed by the FDA. ROLONTIS is a novel long-acting granulocyte colony-stimulating factor seeking an indication for the treatment of neutropenia and patient receiving myelosuppressive cancer chemotherapy.
In October of last year, we submitted an updated BLA to the FDA, which the agency accepted for review with a PDUFA date of October 24, 2020. We are working closely with the FDA as it conducts its review of our BLA. The BLA is based on robust clinical data from two large pivotal randomized controlled trial. In both studies, ROLONTIS met the pre-specified endpoint of non-inferiority and duration of severe neutropenia and met all the secondary endpoints. The safety profile was similar to pegfilgrastim.
In October last year, we presented the Phase III data for ROLONTIS at the ASCO Supportive Care in Oncology Symposium in San Francisco. These two trials together enrolled 643 early stage breast cancer patients. The analysis provided integrated efficacy and safety data that were consistent with results from the individual study. Let me remind you that the ROLONTIS development program continues. I'm pleased that an abstract with preclinical data looking at same day dosing in our rodent [Phonetic] model has been accepted for presentation at the upcoming AACR in April.
Now shifting gears, we are continuing to investigate POZIOTINIB for the treatment of Exon 20 insertion mutation in non-small cell lung cancer. Exon 20 insertion mutation are among the most difficult to treat. These patient and their physician are in search of the first effective treatment option as there are no approved therapies for this indication. ZENITH20 is a comprehensive multi-cohort study evaluating a broad range of lung cancer patient with specific mutation.
As we announced in December, the top line results from ZENITH20 Cohort 1 evaluating a pozi in 115 previously treated EGFR patients with Exon 20 insertion mutation did not achieve the primary endpoint of objective response rate. Patient in this cohort received 16 milligram per day of POZIOTINIB. The intent to treat analysis showed that 17 patient at a formal resist response and 62 patient had stable disease for a 68.7% disease -- 68.7% disease control rate. The confirm objective response rate or ORR was 14.8%. The median duration of response was a noteworthy 7.4 months. The safety profile was in line with the type of adverse events seen with other second generation EGFR tyrosine kinase inhibitor. While the study did not meet the primary endpoint, the data showed that the drug as real biologic activity that merits further investigation.
The analysis shows that about two-thirds of the patient had temporary dose interruption and two-thirds at dose reductions. These data also indicate that patient who stayed on therapy at a better response rate, so we are examining ways to enhance the ability of patients to stay on their assigned dose for longer duration. We will be providing additional insight at a podium presentation at the 11th Annual Congress on Pulmonary and Respiratory Medicine in Amsterdam on March 18. Following the presentation, we plan to provide an update to investors on the program.
In summary, drug development is rarely a straight line. We are planning the learnings from Cohort 1 and taking decisive action going forward. Let me remind you that ZENITH20 is a study with multiple independent cohorts. Cohorts 2 has been fully enrolled and is evaluating pozi in previously treated HER2 patients. We expect top line results will be available for this cohort mid-year. Cohort 3 is nearing full enrollment and we'd expect results from this cohort by the end of the year. We look forward to sharing more information on this program after our presentation in Amsterdam.
Now I will turn it back to Joe.
Joseph Turgeon -- Chief Executive Officer
Thank you, Dr. Francois. And before I shift it to Q&A, I have something special to talk about. I'd like to take the opportunity to thank Shiv Kapoor for his many years of dedicated service to Spectrum. Shiv is going to be leaving Spectrum to pursue some entrepreneurial activities and he is provide a great contribution to this organization and I got to tell you, he has been a great friend, he is a great person, a great dad, husband and a lot of fun to be around besides being a very knowledgeable. He is going to be missed and we wish him continued success in all your future endeavors, Shiv, and I really appreciate all you've done and personally. Thank you.
So with that, let's open the line for questions.
Questions and Answers:
Operator
[Operator Instructions] And your first question comes from Maury Raycroft with Jefferies.
Joseph Turgeon -- Chief Executive Officer
Hi, Mark.
Farzin Haque -- Jefferies -- Analyst
Hi. This is Farzin on for Maury. So the question is regarding after ZENITH20 Cohort 1 data. Have you had a chance to assess how those reductions may have impacted the overall response rate? And since the readout, have you shorten the list of what variables you may have contributed?
Joseph Turgeon -- Chief Executive Officer
Yeah. Let me first start by saying that on the 18th when we have after the presentation, the data will be presented in great details from Cohort 1. And then after what we'll do is, we will have an investor call will go over the data itself and also our strategy moving forward. Dr. Francois, I don't know if you'd like to add anything to that.
Francois Lebel -- Chief Medical Officer
Yeah. Well, a good question. As I mentioned in my formal remarks there that patient who were able to stay on drug longer at a better response rate. The details around that will be presented in Amsterdam at the lung meeting. So you'll have -- unfortunately, you'll have to wait a little bit more few weeks before you get the full story.
Farzin Haque -- Jefferies -- Analyst
And for the second one is, what is the bar for success in HER2 exon 20 non-small cell lung cancer and how much to read through is there from Cohort 1? And if there is any plans to make changes to increase chances of success?
Joseph Turgeon -- Chief Executive Officer
You're breaking up a little bit.
Francois Lebel -- Chief Medical Officer
The question we couldn't hear -- especially the first part of the question. We couldn't hear it.
Farzin Haque -- Jefferies -- Analyst
What is the bar for success in HER2 exon 20 the cohort and how much read through is there from Cohort 1? And is there any plans to changes this, increase the chances of success?
Joseph Turgeon -- Chief Executive Officer
So, as you know we have given you the result of this study in terms of response rate of 40.8%. We have not disclosed publicly, what the bar was, as you know, there are many other drug and development and we think it's -- result of a negotiation with the FDA and we are not disclosing publicly that. And also we have other cohorts that are maturing right now. So that's confidential at this stage. So I would say the part -- the part of the bar, I'm sorry, that was there another component to your question.
Farzin Haque -- Jefferies -- Analyst
So basically, how to make any changes to increase chances of success in the Cohort 2 -- based on the Cohort 1?
Joseph Turgeon -- Chief Executive Officer
Well, Cohort 2 is fully enrolled, OK? So we're just awaiting the maturing of that data by mid-year, we'll be able to show you exactly with the dataset. Again, we can't tell you what the outcome is till we see it. It's a different patient population. So we just don't know that. It's exon 20 and HER2 refractory. And if so there is nothing we can do and I'll remind you that Cohort 3 is almost fully enrolled and we'll have that data late this year. So there's really nothing to do. But again on that call we have in the 18th, I'll remind you, besides the data, we will go through our strategy and what we can do going forward.
Farzin Haque -- Jefferies -- Analyst
Thank you.
Joseph Turgeon -- Chief Executive Officer
You're welcome.
Operator
And our next question comes from Mayank from B. Riley.
Sahil Kazmi -- B. Riley -- Analyst
Hi, guys. Good afternoon. This is Sahil Kazmi on for Mayank. I appreciate the update. Just a couple of brief questions for me. First of all, regarding the launch preparations. Can you discuss kind of any of the strategy you've guided to in terms of given the fact that it will be a lean sales force where you will be targeting etc.?
Joseph Turgeon -- Chief Executive Officer
Yeah, Tom, why don't you take that.
Thomas Riga -- Chief Operating Officer
Yeah. Very much appreciate the questions. And our preparations are well under way and we are really enthusiastic about the opportunity to launch into this market. And I think our -- the platform for launch really comes down to four things. And the first one you hit on, which is, customer focus. I think how we target to segment this market is really contingent upon our success. Each of the segments of this space behave and are motivated by different things. So we are spending a lot of time studying the different segments of the business and how we will go about approaching the market in that light.
The second thing that we are spending a good bit of time looking at is patient access, whether that be through the various stakeholders or healthcare costs for patients are always a concern and having a patient access program that enables support for patients is a really important component to launch. I think, thirdly is supply and we are confident in the supply that will bring to the market. And fourth is really the customer connectivity that the field force that we're putting on the field will inevitably have. So I think, in summary, we're feeling really good about our proposition of competing in a very large market and are anxiously awaiting opportunity to do so.
Sahil Kazmi -- B. Riley -- Analyst
Great. Appreciate the color. And maybe another question regarding ROLONTIS. Just any additional sort of incremental color you can provide on the abstract at AACR? And how you think about the implications in the clinic for same-day dosings?
Francois Lebel -- Chief Medical Officer
Yeah. Listen the abstract has been accepted. We can't go into the data, there is embargo on that and you can't really talk about that. So what just the abstract has been accepted deal and it will -- at that time we can discuss the data that's in there.
Sahil Kazmi -- B. Riley -- Analyst
Okay, understood. And looking forward to the presentation on the 18th. Thanks for taking my questions.
Francois Lebel -- Chief Medical Officer
You're welcome. Thank you.
Operator
And our next question comes from Alethia Young from Cantor Fitzgerald.
Joseph Turgeon -- Chief Executive Officer
Hey, Alethia.
Alethia Young -- Cantor Fitzgerald -- Analyst
Hey guys. This is Jes Li [Phonetic] on for Alethia. Just a couple of questions from us. So first is, I'm kind of curious, have you met with FDA through this -- sort of the review the Cohort 1 data and discuss the path forward? And then how is the enrollment going in the Cohort 5 in a device maintenance [Indecipherable] to the process?
Francois Lebel -- Chief Medical Officer
So Alethia, this is Francois going to answer the question. So we have not disclosed any communication with the FDA. There is interaction on an ongoing basis and as to the enrollment we have -- the enrollment we are satisfied with the enrollment and actually we sort of stated previously that in spite of missing the primary endpoint in Cohort 1, enrollment continues to be very strong and requests for drug continues to be very strong. So investigators, clinicians continue to be very interested in dosing patients. They clearly remained excited in spite of the primary endpoints, all investigators that we've shown the waterfall plot and as you've seen it, it remained very convinced that there is real activity there.
Alethia Young -- Cantor Fitzgerald -- Analyst
Okay. Got it. Thank you.
Francois Lebel -- Chief Medical Officer
Thank you.
Operator
And our next question comes from Ed White of HC Wainwright.
Joseph Turgeon -- Chief Executive Officer
Hello, Ed.
Ed White -- HC Wainwright -- Analyst
Hi, guys. Thanks for taking my questions, and before I ask, I just want to thank Shiv as well for all the years of help that he has given me. I really appreciate it and I wish you a lot of success in the future.
Shiv Kapoor -- Vice President, Strategic Planning and Investor Relations
Thanks, Ed.
Ed White -- HC Wainwright -- Analyst
You're welcome. So just a question on pozi, the basket trial was initiated at M.D. Anderson, is this trial going to continue or has there been any change to the status of that trial?
Francois Lebel -- Chief Medical Officer
Yeah. You are absolutely correct and the basket trial continues, obviously our emphasis is on the pivotal aspect of the three cohorts and our lung cancer trial, but we absolutely continue and are interested in pursuing basket study.
Ed White -- HC Wainwright -- Analyst
Okay. Thanks. And then just on, you had mentioned Cohorts 2 and 3, is there any update on Cohort 4?
Francois Lebel -- Chief Medical Officer
It continues to enroll. I mean the reason we only mentioned Cohort 2 and 3 is because simply to remind you, Cohort 2 is fully enrolled, and as you know, the Cohort 2 was that 16 milligram, Cohort 3 and 4 are both at 16 milligram as well. And Cohort 3 is nearly completely enrolled and Cohort 4 is first line HER2 is not the genetics of that are not in the primary panel that clinician do it with their patients, so therefore it takes a little longer to recruit that Cohort, but it continues to enroll well.
Ed White -- HC Wainwright -- Analyst
Okay. Thanks. And then just you didn't mention the fifth platform. I know we are expecting enrollment of 20 patients in the Phase I trial and non-Hodgkin's lymphoma, I was just wondering if you could give any update on the status of that trial?
Francois Lebel -- Chief Medical Officer
Yeah. The status has not changed. We continue to work very closely with the investigator and evolve and the PR being at UCLA, Dr. Timmerman. So we continue to review data and look at the data with him to make sure we have a full understanding of the platform and we are working very aggressively with them to restart. You know, there was no clinical earlier, in the prior company had run out of funds and there was no regulatory or clinical reason to delay enrollment and we are simply going through the regulatory process of reactivating the trial and we'll have an update for you later in the year as to what to expect.
Ed White -- HC Wainwright -- Analyst
Okay. Thanks, Francois. And Kurt, maybe just a question for you, and thank you for the SG&A guidance commentary. I'm just wondering if you can add any comments on SG&A, excuse me, R&D expense in 2020?
Kurt Gustafson -- Chief Financial Officer
Yeah, Ed. At this point, we're not giving any specific guidance on R&D expense. A lot of this is a function of when we buy material, our accounting practice is to as we buy pre-commercial inventory, we extend that as R&D expense. So I don't have any specific guidance on that for you, but I think you will agree that ending the year $224 million in cash gives us plenty of runway to continue the development program and the commercialization of ROLONTIS.
Ed White -- HC Wainwright -- Analyst
Yeah. That was my next question, if you could give any guidance on how long that cash will last, what you runway -- what you think your runway is?
Kurt Gustafson -- Chief Financial Officer
The only guidance I would give you Ed is, so the ending balance is $224 million we burned $28 million in the quarter. If you take a look at the last couple of quarters we're in that sort of $30 million range. So we do expect SG&A expense to increase a little bit in the second half of this year, but I think if you take a look at the trends, our balance should provide us plenty of runway.
Ed White -- HC Wainwright -- Analyst
Okay. Thanks, Kurt.
Kurt Gustafson -- Chief Financial Officer
Sure.
Operator
And our next question comes from Michael Schmidt of Guggenheim.
Charles Zhu -- Guggenheim -- Analyst
Hey, guys. This is Charles Zhu on for Michael Schmidt. Thanks for taking the questions. One quick one here, to what degree would you say that some of this dose interruption or the learnings from the dose reduction from Cohort 1 might be potentially applied to ongoing, I guess, cohorts that are not quite yet mature, such as 3 or 4 for example?
Francois Lebel -- Chief Medical Officer
Yeah, very good question right out there. But it is not Michael right? You said it is Charles Zhu. Okay, terrific. So it is like I said, there is -- and you know, I can't really give you that much detail today because it is going to be presented in Amsterdam. But what we have noted is clearly that patient, it is key that patients have to be kept on drug dose interruption or dose reduction may impact the response rate. So we are looking very aggressively to improve the ability to keep the patient on the drug and in Amsterdam, we will disclose what we have in mind here, as well as provide the data so that you can really seen the correlation between if a patient was at drug interruption or not. I just want to clarify here that drug interruption means temporary stopping the drug, for example, in adverse event and it is not permanent interruption of the drug. We had disclosed previously that a permanent drug related, permanent drug discontinuation once of the order of 10%. What we are talking about here is short interruption in dosing for allowing and helping the patient to recover from an AE and to get back on the drug and they continue. So hopefully that answers you.
Charles Zhu -- Guggenheim -- Analyst
Great. That's helpful. Thanks. And I might have missed this one a bit earlier on ROLONTIS and the Neulasta [Phonetic] long-acting G-CSF market, but how do you see the trajectory of a unit price or overall market opportunity erosion continuing for this market? And I guess to a degree, would you expect such trends from other markets such as NeuPogen or REMICADE to kind of repeat within this Neulasta market?
Joseph Turgeon -- Chief Executive Officer
Tom, do you want to take that?
Thomas Riga -- Chief Operating Officer
Yeah, Charles. This is Tom. We're watching this pretty closely. So I think the way to think about it is, if you look at Amgen's average selling price, the biosimilar pricing is in the range between 5% and 13% decline off of the average selling price. So you do see market erosion, but it is behaving more like a competitive branded space than that of a generic. So I think when you are looking at this market today it is just north of $3 million where prior to biosimilar entrants it was sitting at $4 million. So there definitely is erosion. But we see this as the biosimilar entrants have done a few things.
One, they've shown the ability to compete. They currently have north of 25% of the market; and two, to-date the pricing has been rational and the rate of decline is that of a competitive branded space versus that of a generic.
So as we look at the launch trajectory of ROLONTIS in the market that we will be launching into, it will no doubt be competitive, but having a novel asset that enables you to control your own discounts, your own pricing, independent of any of the other behavior in the market certainly will be an advantage for this asset and our ability to compete within the space. Hope that answers your question.
Charles Zhu -- Guggenheim -- Analyst
Got it. Thanks.
Operator
And there are no further questions at this time and I would like to hand the call back over to Mr. Joe Turgeon.
Joseph Turgeon -- Chief Executive Officer
With no further questions, I thank everybody for their interest. I again thank and wish Shiv well and I appreciate everyone's interest that will end the call. Thank you very much.
Operator
[Operator Closing Remarks]
Duration: 30 minutes
Call participants:
Shiv Kapoor -- Vice President, Strategic Planning and Investor Relations
Joseph Turgeon -- Chief Executive Officer
Kurt Gustafson -- Chief Financial Officer
Francois Lebel -- Chief Medical Officer
Thomas Riga -- Chief Operating Officer
Farzin Haque -- Jefferies -- Analyst
Sahil Kazmi -- B. Riley -- Analyst
Alethia Young -- Cantor Fitzgerald -- Analyst
Ed White -- HC Wainwright -- Analyst
Charles Zhu -- Guggenheim -- Analyst
