Spectrum Pharmaceuticals, inc (SPPI) Q2 2021 Earnings Call Transcript

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Spectrum Pharmaceuticals, inc (SPPI)
Q2 2021 Earnings Call
Aug 12, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Spectrum Pharmaceuticals' Second Quarter 2021 Earnings 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. Kurt Gustafson, Chief Financial Officer. Please go ahead.

Kurt A. Gustafson -- Executive Vice President and Chief Financial Officer

Thank you, operator, and good afternoon to everyone. Thank you for joining us today for Spectrum Pharmaceuticals' second quarter 2021 financial results conference call. Our second quarter financial results press release was sent out earlier this afternoon, and is available on our website at www.sppirx.com. Joining me on the call today from Spectrum Pharmaceuticals will be Joe Turgeon, President and CEO; and Dr. Francois Lebel, Chief Medical Officer.

Before we get started, I would like to reference 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 make 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 W. Turgeon -- President and Chief Executive Officer

Thank you, Kurt. Good afternoon, everyone, and thank you for joining us. And thank you for your interest in Spectrum. As most of you are aware, Spectrum received the complete response letter from the FDA last week regarding the BLA for ROLONTIS, seeking an indication for the treatment of neutropenia in patients receiving myelosuppressive anti-cancer drugs.

The entire company is greatly disappointed by the CRL. However, I can assure you that our team is already working closely with our partners to resolve the CRL. The CRL cited deficiencies related to manufacturing at the bulk manufacturing facility, which will need to be remediated and indicated that reinspection will be necessary. The CRL also cited deficiencies at the fill and finish facility which will need to be remediated.

We are in communication with our CMOs and the remediation work is already underway. The company is seeking further clarification from the FDA regarding the remediation timelines and the plans to meet with the agency as soon as possible. The CRL did not cite any need for new clinical trial. We look forward to providing an update following this engagement with the FDA.

Now let me shift to poziotinib, our other late-stage pipeline asset. Spectrum's poziotinib program has continued to make great progress in 2021, and we are advancing to a very important milestone, the submission of the NDA. The NDA for poziotinib will be based on the positive data from Cohort 2 of the ZENITH20 study. The cohort evaluated previously treated patients with non-small cell lung cancer with HER2 exon 20 insertion mutations, and met the pre-specified primary endpoint in these patients.

Poziotinib has Fast Track Designation, an indicator of the medical need that this drug may be able to alleviate for patients with this terrible disease, for which there is no approved therapy. An additional advantage of Fast Track Designation is the ability to have more frequent interactions with the agency. During the second quarter, we took advantage of this designation to meet with the agency, and Dr. Francois will update you further.

We remain on track to submit the Pozi NDA later this year. Our recent data presentations at ESMO TAT, AACR and ASCO shows that twice daily dosing data appears to provide a significant improvement in both efficacy and tolerability.

And with that, I'm going to turn the call over to Dr. Francois Lebel, our CMO, for an update on our clinical development progress of poziotinib. Dr. Lebel?

Francois J. Lebel -- Executive Vice President and Chief Medical Officer

Yeah, good afternoon, everyone. I'm glad to be with you on today's call. Joe has provided you the update on ROLONTIS, so I will focus on poziotinib. The submission for our NDA under Fast Track Designation is well underway and planned for later this year. It will be based on our positive data with QD dosing from Cohort 2 of the ZENITH20 clinical trial. We recently had a Type C meeting with the FDA to agree on the data package to be provided in the submission.

The submission will be aiming for an indication the treatment of patients with HER2 exon 20 insertion mutation in non-small cell lung cancer. And we believe poziotinib has the potential to be first to market for this indication in an area of great unmet medical need. As part of our Type C meeting, I am pleased that the FDA agreed that we can include our recent data on BID dose.

At the ASCO meeting in June, we presented data on patients with brain metastasis. This analysis look at the result for 284 patients from Cohort 1, 2 and 3, of which 36 patients had brain metastasis at baseline. Three of these patients, 8% achieved intracranial complete responses. Brain metastasis occurs frequently in non-small cell lung cancer and in up to 25% of patient and is associated with short survival. The patient in this analysis received pozi at a dose of 16 milligram once daily. These data show clinically meaningful CNS activity for pozi treated non-small cell lung cancer patient with CNS metastasis, with either EGFR or HER2 exon 20 insertion mutation.

In April, we presented data at AACR from Cohort 5 of the ZENITH20 trial. These results have provided further support of our hypothesis around BID dosing. For the 38 patients who received 16 milligram per day and randomized to either pozi 16 milligram QD or 8 milligram BID in Cohort 5, improved response were observed in the BID arm with 31.6% of patient reaching a partial response, which represents near doubling of their response rate. Other arms to refine the minimum effective starting dose demonstrated activity, but the 8 milligram BID performed best. A clinically meaningful improvement and tolerability was also observed.

The Grade 3 or higher related adverse events were reduced by approximately 60% with BID dosing. Dosing at 8 milligram twice a day also allowed for an improved rate of dose reduction and interruption. As a result in Cohort 5, we are dosing patients exclusively at 8 milligram BID. Cohort 4, of the ZENITH20 clinical trial is continuing to enroll well at 8 milligram BID in first-line treatment. During the balance of the year, we expect to meet our key regulatory milestones and have additional data readouts. We plan to provide you with updates on our progress in the coming months.

I will now turn it over to Kurt for a discussion of our second quarter financials.

Kurt A. Gustafson -- Executive Vice President and Chief Financial Officer

Thank you, Francois. Our SG&A expense for the second quarter of 2021 was $15 million versus $14.7 million in the previous year. We have continued to delay additional investments in our commercial infrastructure until we gain clarity on the ROLONTIS approval.

R&D expense was $29.1 million versus $21.7 million due to increased program costs primarily associated with poziotinib, as well as slightly higher personnel-related costs. Our net loss for the quarter from continuing operations was $49.9 million or $0.32 per share versus $32.2 million or $0.29 per share in the comparable period of 2020. On a non-GAAP basis, which primarily backs out stock compensation costs and the change in the value of our equity securities, our loss for the quarter was $39.3 million or $0.25 per share versus $31.8 million or $0.28 per share in the prior year period.

We ended the second quarter with approximately $159 million in cash plus marketable securities, compared to $163 million last quarter. Operating cash burn for the quarter was $29.7 million, which is consistent with where we have been the last few quarters. During the quarter, we received net proceeds of approximately $31 million from equity issued off of our ATM agreement.

With that, let me now hand the call back over to Joe.

Joseph W. Turgeon -- President and Chief Executive Officer

Thank you, Dr. Francois and thank you, Kurt. While I'm disappointed in the latest decision of ROLONTIS, we're committed to working with our partners and the FDA to resolve these issues as soon as possible. I'm pleased with the strong and steady progress, Spectrum continues to make on our poziotinib development program. We are actively preparing our NDA submission for pozi and we're planning to share additional results from our ongoing Cohorts in the ZENITH20 clinical trials later this year.

And with that operator, I'd like to open up the call to questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Maury Raycroft from Jefferies. Your line is open.

Joseph W. Turgeon -- President and Chief Executive Officer

Hey, Maury.

Maury Raycroft -- Jefferies -- Analyst

Hi, everyone. Hi, Joe.

Kurt A. Gustafson -- Executive Vice President and Chief Financial Officer

Hi, Maury.

Maury Raycroft -- Jefferies -- Analyst

Hi, Kurt. Hi, thanks for taking my questions. Maybe first question on ROLONTIS. Just wondering if you can provide a little bit more clarity on what next steps could look like there? If it's possible for FDA to answer some of their questions by reviewing documents from Hanmi, or potentially doing additional follow-up virtually? Or would they have to go back and decide, if you can provide any more clarity there?

Joseph W. Turgeon -- President and Chief Executive Officer

Yeah. Listen, I love your question, because they're are all important things, obviously, Maury. But first of all, the FDA -- the next step, you're asking what the next step is, is we're preparing the questions, sending them to the agency, requesting the meeting. Because the most important next step to answer everything you're asking is having that meeting with the agency. And because when we have a chance to clarify -- everything that you asked with the FDA, the extent of how we -- the deficiencies, how we answer those, how quickly. The timeline is the most important thing.

Once we meet with them, we will be able to clarify all the manufacturing deficiencies, the estimated timelines. And as far as asking, could we do it a different way than a physical inspection? Don't know the answer to that, that's certainly one of the questions we'd be asking, when we're with the agency. Great question.

Maury Raycroft -- Jefferies -- Analyst

Got it. And it sounds like at base case, they would not request you to do an additional study. And maybe if you can just talk more about your confidence to getting this issue resolved? And also one of the other questions we had too, is just on communicating with Hanmi. I guess, what is Hanmi said about the situation? And have they provided any additional clarity on what FDA could be looking for on their end?

Joseph W. Turgeon -- President and Chief Executive Officer

Yeah, let me start with the confidence. I'm confident that I think you're asking, are these things fixable? And we believe that all those deficiencies and the items can be remediated. There is no question. I'm confident they can be remediated. But I obviously want to gain additional clarity with the agency. I got to keep going back to that until we do meet. And normally that meeting, once you submit it takes within 30 days, the agency will meet with you.

So I am confident that we can fix these remediations. They asked about meeting with Hanmi. Of course, we've already met with Hanmi. And it's ongoing. We're working together very closely. I can even tell you, as I said earlier, a remediation process has already started. So we're already willing to work with Hanmi on the remediation, but we want to clarify everything and give you those timelines you're looking for.

Maury Raycroft -- Jefferies -- Analyst

Got it. That's very helpful. Thanks for taking my questions. I'll hop back in the queue.

Joseph W. Turgeon -- President and Chief Executive Officer

Thank you, Maury.

Operator

Your next question comes from the line of Alethia Young from Cantor. Your line is open.

Alethia Young -- Cantor -- Analyst

Hey, guys. Thanks for taking my questions. Maybe just a couple. One, just can you talk to like more specifics on the FDA's comfort with the clinical data package that you have provided. Like, was there anything in the complete response letter that indicated that part of it was at least crossed off? Or any color you can provide from that.

And then the second question is, isn't poziotinib debate in the same facility? So I guess -- I guess, if you resolve these issues for ROLONTIS, is it helpful for pozi or how do we think about that? Thank you.

Joseph W. Turgeon -- President and Chief Executive Officer

Yeah. Hey, Alethia. First of all, on the FDA clinical, what I can tell you is, they did not request an additional clinical trial. I think anytime you resubmit any new safety data or anything you add, you would put into there. But there was no -- the CRL focused -- the remediations are focused around manufacturing. Now as far as pozi, you're asking the question. We did license pozi from Hanmi. And I'll remind you, it's a small molecule, so it's a different manufacturing process. But that's actually manufactured at another South Korean company.

Alethia Young -- Cantor -- Analyst

Okay. And just as a follow-up to that, I guess, in the first part, like, how do you know that, like -- I, guess, like there were like a year that passed. I guess, it's the best way to put it. And was it just maybe lack of communication with Hanmi or were they not -- the FDA didn't communicate like definitely they didn't figure out. And there was like ample amount of time with them just not being able to get over there to review it. Was that the factor, or were they just not communicative? Thanks.

Joseph W. Turgeon -- President and Chief Executive Officer

Alethia, I don't know if communication along the way is, because they don't really communicating. This was actually, you're right. It was actually over a year for the actual -- when originally they were going to inspect the plant. Now during the year, we didn't sit still. I can assure you, we had outside experts and there we did several mock inspections. I thought we were going to get approved. I'm not going to lie to you. I expected to pass. However, the reality is they found some deficiencies, they want to be fixed. And we're going to work real hard, real quickly to get those fixed as quickly as possible. I do think they are fixable.

Alethia Young -- Cantor -- Analyst

Okay, great. Thank you.

Joseph W. Turgeon -- President and Chief Executive Officer

Thank you, Alethia.

Operator

Our next question comes from the line of Michael Schmidt from Guggenheim Securities. Your line is open.

Joseph W. Turgeon -- President and Chief Executive Officer

Hi, Michael.

Charles Zhu -- Guggenheim Securities -- Analyst

Hey guys, this is actually Charles on for Michael. Thanks for taking the questions. And sorry to hear about the recent ROLONTIS news. But to my guess -- my first question on pozi. So it does sound like Cohort 2 NDA is still on track for this year. Could you provide a little bit more color perhaps around how I think enrollment for Cohort 4 has yet to be completed. I guess, where are you guys with that? And how should we think about near term timelines? Thanks.

Joseph W. Turgeon -- President and Chief Executive Officer

Francois, why don't you take that?

Francois J. Lebel -- Executive Vice President and Chief Medical Officer

Sure. So Charles, thanks for the question. We have communicated before, that we were pleased with the enrollment in Cohort 4. We've also indicated that we had 49 patient enrolled in 16 milligram once daily. And as you know, we are now enrolling with BID dosing, it may -- 8 milligram BID dosing. I think, importantly, you know as indicated in our formal part of the presentation here is that one of the key question we had on Type C meeting was whether or not the FDA would accept that we provide them with some of the information about BID dosing. As I'm sure you appreciate, given the signal, positive signal we had seen with BID dosing.

We felt that it would be good to be able to incorporate some of that information in the filing. And we've indicated today, that's new information that the FDA agreed that we can provide this information. Now critically that doesn't mean necessarily that it's going to find its way in the labels, but it certainly gives us a chance to present the data and the improvement and the efficacy in the safety profile. So we think that's an important win. And it's going to obviously be subject to the agency reviewing this data, etc. And we'll see where they come out. But that's where we are right now. I assume, I've answered your question, but maybe you want to come back with your questioning.

Charles Zhu -- Guggenheim Securities -- Analyst

Got it. All right. Yeah, thanks for that. And I guess like my second question back to ROLONTIS. And as a bit of a follow up to Alethia's prior question. I'm kind of wondering, some of the deficiencies that the FDA had mentioned and that you guys are aggressively addressing right now. Could you provide some color as to -- are those deficiencies something that I guess specific to one of the facility itself? Or is it something that it kind of pertains to how one would manufacturer or finish a biologic versus a small molecule. And I guess as a bit of a check the box follow up too to that. Could you also remind us was the prior BLA with drawback in 2019, I believe, was that the process where the inspection had already taken place? Or where you guys with that, I guess, you know, coming into this particular inspection? Thanks.

Joseph W. Turgeon -- President and Chief Executive Officer

Yeah. Well, let me, first thing, I'm not going to go into the specifics of the deficiency until we meet with the FDA. So I can -- we can provide you with clear information on timeline, mostly timelines, but also the exactly what we have to do to remediate. But you are correct. As you said and as we reported, we have started working on those deficiencies or the remediations as such.

Now you asked about the prior BLA. If you recall, if you -- when we first submitted the original BLA, what had happened is, it was during the government shutdown. As you probably don't recall that, so it sat. And then they had 60 days to get back to us. And what they did is when they went through the BLA, they hadn't started the actual review yet. They hadn't accepted the file yet. So -- what they did is, they contacted us and said, look, we want some additional information. It was more information that they wanted on the manufacturing side. It was manufactured. But it was information at the time that they were looking for and we had to go and get that information for them.

So basically what they told us, they said, look, if you just leave it as is and by the way they wanted some translations from Korean in a different way in some other tables, things like that. So, they told us, look in this form we wouldn't accept it, so you can wait for us to not accept that or you could voluntarily fix this stuff and resubmit. And that's what happened. So, no, there was never an inspection prior to that, because it wasn't -- the file wasn't accepted at the time.

Charles Zhu -- Guggenheim Securities -- Analyst

Understood. Thanks for providing that clarification. And thanks again for taking the questions.

Joseph W. Turgeon -- President and Chief Executive Officer

Well, thank you, Charles.

Operator

Our next question comes from the line of Ren Benjamin from JMP Securities. Your line is open.

Ren Benjamin -- JMP Securities -- Analyst

Hey, good afternoon guys. Thanks for taking the questions. I guess, just sticking with ROLONTIS here. Joe, can you give us a sense, how many issues are we kind of talking about here? Is it just like a handful? And is there any way to kind of bookends, how long this could take? And I guess just related to that, you mentioned that you had outside experts, you had mock inspections that were ongoing. Were these issues identified during the mock inspections? Or are they completely out of the blue, or was it like the FDA raised the bar on what you thought might have passed? I don't know just didn't for whatever reason.

Joseph W. Turgeon -- President and Chief Executive Officer

No, all fair questions, Ren. And first of all, on the amount and everything, let us speak with the agency. I want to be as transparent as we can and get all, because we want to know we have exactly what needs to be remediated and how long it's going to take. Again, I think they're all fixable. Yes, I'll say this, we're all trying to do the clock, a resubmission normally is a 6-month clock. But I'll remind you, there's not a requirement has to take that long either. So let us get that and will provide you with more information -- and then we will ultimately know more about the timelines, etc.

Now as far as the outside experts. Yes, we had great experts working there, it was a long time over a year. We did several mock inspections. I think everybody was confident, that we were going to pass. But you never know till they do the inspection. And they came in, found a few deficiencies, what normally happens is they after the inspection they give the manufacturer their observations. You have 15 days to get back to them on those observations which they did with a lot of help of us and the outside experts. And so I guess that's where my surprise is. But the bottom line is now after I got angry and emotional, I said, OK, let's put our head down and fix this thing as quickly as possible and get this drug approved.

Ren Benjamin -- JMP Securities -- Analyst

Got it. And did I hear right in your prepared remarks that there were deficiencies in South Korea as well as the fill finish manufacturing, which I thought from our prior conversations was actually in California. Can you just correct me, if I'm wrong on that?

Joseph W. Turgeon -- President and Chief Executive Officer

No, you are correct. There is deficiencies at both that are being remediated.

Ren Benjamin -- JMP Securities -- Analyst

Okay. So it's both manufacturing plants that are being remediated. Okay. And then how long will it take to prepare the questions that you have for the FDA and submit it?

Joseph W. Turgeon -- President and Chief Executive Officer

Well, obviously we're doing our best. We're preparing it right now, obviously as we speak. We are getting the -- our CMOs with us to make sure we're asking all the right questions and get those timelines. So all I can tell you is that we're working on it right now. We want to get it as quickly as possible. As I said earlier, within 30 days they should meet with us and then we'll have a lot of answers. So we'll get it in as soon as -- as quickly as possible.

Ren Benjamin -- JMP Securities -- Analyst

Got it. Thank you very much for taking the questions and good luck.

Joseph W. Turgeon -- President and Chief Executive Officer

I want to make sure, you asked all the great questions prior that in advance.

Operator

[Operator Instructions]. Our next question comes from the line of Mayank Mamtani from B Riley Securities. Your line is open.

Joseph W. Turgeon -- President and Chief Executive Officer

Hey, Mayank.

Mayank Mamtani -- B Riley Securities -- Analyst

Good afternoon. Hey, Joe. Thanks for taking my questions. So high level, Joe, as you ballgame this situation going into FDA meeting, can you just give us a flavor of how the spectrum of NPVs for ROLONTIS from all the way back from 2019 to where we are in late 2021 and externally obviously things have also evolved. Like where does it get to a point where you may consider doing something disruptive and it could be as minimal as you work with a different manufacturing partners, Hanmi or you really just focus exclusively on pozi and the earlier stage programs? Just wanted to get a pulse of how you guys are thinking about this? And then I have a poziotinib question.

Joseph W. Turgeon -- President and Chief Executive Officer

Yeah. Great. Mayank, you're getting right into what we do for living rated strategy. And I understand why you're asking. I'm kind of glad you're asking that question, because obviously strategically we have decisions to make. But it's way too early for me to give you that strategy. I like the way you're thinking of, hey, based on what happens, which path do you take?

Obviously, let us get with the agency and get these timeline just down first, before I'd make any strategy decisions. But obviously, those are the kinds of decisions that you have to make to make the right decisions as you go forward for the company, for shareholders, etc. So let us get all the information and then strategically, we're always going to strive to make the right decision. I hope that answers your question.

Mayank Mamtani -- B Riley Securities -- Analyst

Okay. No, thank you for the color. And then on pozi. I was just curious, there are a couple of conferences before the end of the year. So, any color on depending on where we are without strikes for each of these and where you might be with Cohort 4 and 5? What might we see at some of these medical conferences, if you don't mind commenting.

Joseph W. Turgeon -- President and Chief Executive Officer

Yeah, why don't -- Francois why don't you take that?

Francois J. Lebel -- Executive Vice President and Chief Medical Officer

Sure. Mayank, you're correct. There's the number of conferences coming. The only thing I'll say is that, we have a significant amount of data here that's accumulating some of the data that is quite interesting and maturing is the QD dosing part in Cohort 4. So that data is maturing. So there's a couple of venue that potentially could be used to communicate that. The BID dosing data is a little less mature, but nonetheless, quite interesting. And also the other thing that we have not really talked about, but probably should mention is that there's some interesting data that is emerging right now in combining poziotinib with some KRAS inhibitor.

So we'll -- I don't want to give you specific until you know, we have full confirmation. But just to mention a few meeting, you know, there's as more coming up, there's the Triple meeting, there AACR-NCI-ORTC. And so again, we'll update you later. But let's just say for now, the next couple of months, we hope to be able to share data with you guys.

Mayank Mamtani -- B Riley Securities -- Analyst

Great, thanks for the color and look forward to some of these medical conferences. Thanks so much.

Francois J. Lebel -- Executive Vice President and Chief Medical Officer

Sure.

Joseph W. Turgeon -- President and Chief Executive Officer

Thank you, Mayank.

Operator

And there are no further questions at this time. Let me turn the call back to Mr. Joseph Turgeon for closing comments.

Joseph W. Turgeon -- President and Chief Executive Officer

Thank you, operator. And I really appreciate it everybody's questions, everybody's interest in the company. And I look forward to updating you more about ROLANTIS after our FDA meeting. We appreciate everybody's time on the call. With that operator, we can go ahead and shut down.

Operator

[Operator Closing Remarks]

Joseph W. Turgeon -- President and Chief Executive Officer

Thank you.

Duration: 30 minutes

Call participants:

Kurt A. Gustafson -- Executive Vice President and Chief Financial Officer

Joseph W. Turgeon -- President and Chief Executive Officer

Francois J. Lebel -- Executive Vice President and Chief Medical Officer

Maury Raycroft -- Jefferies -- Analyst

Alethia Young -- Cantor -- Analyst

Charles Zhu -- Guggenheim Securities -- Analyst

Ren Benjamin -- JMP Securities -- Analyst

Mayank Mamtani -- B Riley Securities -- Analyst

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