CASI Pharmaceuticals, Inc. (CASI) on Q3 2021 Results - Earnings Call Transcript
Operator: Hello and welcome to the CASI Pharmaceuticals, announced Third Quarter 2021 Financial Results. . Today's event is being recorded. I now would like to turn the conference over to Jacob Moshel. Mr. Moshel, please go ahead.
Jacob Moshel: Thank you, operator. Good morning, and welcome to CASI's third quarter conference call. Earlier today, CASI issued a press release providing the details of the company's financial results for the quarter ended September 30, 2021. This press release is available in the Investor Relations section of the company's website. Today's call will be led by Dr. Wei-Wu He, our Chairman and CEO; along with Mr. Larry Zhang, our President; Dr. Alex Zukiwski, our Chief Medical Officer; and Dr. Jim Goldschmidt, our Senior Vice President of Business Development. All will be available to answer questions during the Q&A portion of this call. As a reminder, our remarks today will include forward-looking statements, including our business plans, objectives and milestones. These forward-looking statements are not a guarantee of future performance, and therefore, you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those projected or implied in our forward-looking statements. For a description of important factors that could cause actual results to differ, we refer you to our statements in our SEC filings. It is now my pleasure to turn the call over to our Chairman and CEO, Dr. Wei-Wu He. Dr. He?
Wei-Wu He: Thank you, Jacob. Good morning, everyone, and thank you for joining us. I will begin the call with a general update, focusing on our lead programs and near-term catalysts, followed by our third quarter financial highlights. That said, we are happy to answer any questions during the Q&A session not covered in our remarks. We are all very pleased with the progress which has been made in the third quarter. And I'm proud of all functions of our team for their continued dedication and focus. We are well on our course in building a leading and financially strong pharmaceutical company. CASI's mission is to bring innovative medical solutions to meet the unmet medical needs around the globe. More specifically, we are initially executing a strategy, leveraging global innovations to address the unmet needs of China's aging population. The China strategy is likely one of the most interesting medical innovation opportunities in our lifetime. First of all, China has the world's largest population. Secondly, China's pharmaceutical development process is progressively harmonizing with the global developed economies, hence, advanced the patient population provides an unprecedented clinical trial resources for global innovations. CASI is deploying such a strategy to bring life-changing products to patients one product at a time with an initial focus in the hematology/oncology market. We will use our product pipeline to illustrate our strategy and ongoing execution. The first product we were able to successfully bring to market is EVOMELA in China. EVOMELA. We are pleased to report EVOMALA revenues of $8.1 million for the third quarter, a 92% increase from a year ago. Based on the continued growth, we remain confident in our guidance for full year 2021 revenue growth to exceed 80% over 2020. EVOMELA is approved in China for use as a high-dose conditioning treatment prior to hematopoietic stem cell transplantation in patients with multiple myeloma. It is the on form of injectable melphalan commercially available in China. Following EVOMELA's launch, we worked closely KOLs to drive market awareness and expedite adoption in the Chinese market. In 2020, our first 4 year, more than 2,600 patients were treated with EVOMELA versus 800 prior to the launch of EVOMELA. EVOMELA is not just a melphalan, it is a proprietary formulation with patent protection until at least 2030. The post-marketing study for EVOMELA in China has completed accrual, and the clinical study report is being finalized for submission. So far as expected, the data we are seeing is consistent with published studies of EVOMELA. Through EVOMELA, we have built a strong commercial team of more than 100 hematology/oncology sales and medical marketing specialists in China. They have established themselves with the successful launch our first commercial product and are prepared to launch our future commercial assets. Our high-quality specialty sales and marketing team in China in hematology/oncology market is a major competitive advantage for CASI. We have established access to a substantial number of KOLs who can advise us on the unmet medical needs of our patient population. We also are becoming the partner of choice for innovative biotech companies who have no presence in China. A few words about our CAR-T 19. With regard to our CD19 CAR-T, our partner Juventas, continues to make excellent progress with its current ongoing trials. As you may recall, CNCT19 is an autologous CD19 CAR-T investigated product to which CASI has global commercial and profit-sharing rights. CNCT19 is being developed by Juventas as a potential treatment for patients with hematological malignancies, which express CD19, including B-ALL and B-NHL. CNCT19 has been developed and will be manufactured locally, which greatly distinguishes it from other CAR-T 19 therapies developed and manufactured in part outside of China. Drug and cell therapy pricing is a very important issue for patients in China, particularly for premium and innovative products. Comparable CD19 therapies that are developed and components manufactured outside of China are subject to certain ex China CMC and high cost of goods, making the price point significantly higher than where we believe CNCT19 can be priced. Additionally, Juventas recently completed a Series C financing bond through which it raised more than RMB 410 million, which is approximately USD 63 million. We believe this financing will allow for our partner Juventas to continue the adaptation of CAR-T therapy in China. We continue to see very encouraging activity and Juventas is on track to find NDA with NMPA in 2022. Next, I will address our other key assets. CID-103, anti-CD38. CID-103 is a fully human Ig1 anti-CD38 monoclonal antibody, recognizing a unique epitope. It is selected to have strong ADCC activities against CD38 positive malignant cells and with a reduced CDC activity with a potential reduction of infringing reactions observed with existing anti-CD38 treatments. In June, the first patient was enrolled in our Phase I study. This is a dose escalation and expansion study in patients with previously treated relapsed or refractory multiple myeloma. CID-103 has previously shown encouraging preclinical efficacy, a favorable preclinical safety profile and greater antibody-dependent cellular cytotoxic -- cytotoxicity activities, than other anti-CD38 antibodies. We are hopeful this will translate into great patient benefit. This Phase I trial is currently enrolling in Cohort 3 and is expected to generate valuable information and has the potential to provide early evidence of clinical activity in the treatment of patients with multiple myeloma. BI-1206. In October 2020, we in-licensed BI-1206, a first-in-class fully-human monoclonal antibody that targets Fc gamma RIIb receptor for the greater China market. BI-1206 has a novel mode of action, blocking the single inhibitory antibody checkpoint receptor, Fc gamma RIIb to unlock anticancer immunity in both liquid and solid tumors. Fc gamma receptors are antibody checkpoints that modulate the efficacy of tumor cell directly targeting antibodies and immune checkpoint targeting antibodies used in cancer immunotherapy. BI-1206 can potentially be used with all therapeutic monoclonal antibodies that rely on ADCC/CDC for efficacy. BI-1206 is BioInvent lead drug candidate and is being investigated by BioInvent in a Phase I/II trial in combination with anti-PD-1 KEYTRUDA in solid tumors and in a Phase I/II trial in combination with rituximab for the treatment of non-Hodgkin lymphoma. Recently, BioInvent announced further positive data that will obtain from the ongoing dose escalation Phase trial with a July 21 cutoff BI-1206 in combination with rituximab demonstrated an objective response rate of 50% with 3 complete responses and the 3 partial responses seen in 12 patients evaluated for therapeutic benefit. The treatment stabilized disease in 1 additional patient given a disease control rate of 58%. The complete responses also appeared to be long-lasted sustaining beyond 18 and 24 months in 2 patients completing the study. Previous rituximab treatment without BI-1206 had failed in these patients. Together with BioInvent, we plan to continue to develop BI-1206 in both liquid and solid tumors with CASI responsible for development and commercialization in Greater China. We plan to leverage our existing expertise, including clinical medical teams and established relationships with hematology KOLs, hospitals, medical centers and pharmacies to accelerate development and commercialization of BI-1206 in China. Our lead indication will be BI-1206 in combination with rituximab in patients with relapsed refractory NHL. CASI has submitted an R&D for BI-1206 with the NMPA in 2021. Next, a few words on CB-5339. In March 2021, we acquired CB-5339, a first-in-class p97 inhibitor from Cleave Therapeutics for the Greater China market. CB-5339 is an oral second-generation small molecule, 297 inhibitor. Cleave's novel approach to inhibiting p97 in hematological malignancy is supported by extensive preclinical research and early clinical data. CB-5339 represents a promising new target for selectively targeted p97 in cancer and is a complementary addition to our pipeline of hematology/oncology assets. CB-5339 is currently being evaluated by our in Phase I clinical trial in patients with AML and MDS. Together with Cleave, we plan to jointly develop CB-5339 in AML as an initial indication with CASI responsible for development and commercialization in Greater China. CASI has submitted a pre-IND currently . We look forward to the joint development of CB-5339 with our focus on helping accelerate the development program by initiating trials for current and potential new indications in China. Thiotepa, as a note, our Thiotepa assets is continuing to progress. Thiotepa was introduced to CASI through a leading KOL in China. Since China still does not have a high-quality, high dose injectable form of Thiotepa. CASI licensed Thiotepa product from . The regulatory submission for 2 indications are in progress with the Thiotepa registration study starting as quickly as possible after regulatory authorization. Thiotepa a chemotherapy agent has multiple potential indications, including a conditioning treatment for use prior to hematopoietic stem cell transplant. This completes the update on our key pipeline assets. Now I will give a few financial highlights. With that, a few words on our financial highlights for our third quarter. Our press release contains more details of our financial results. Rather than read through all of these results, my comments today will address the key highlights. Revenue consists of product sales of EVOMELA that launched in 2019. Revenue was $8.1 million for the 3 months ended September 30, 2021 compared to $4.2 million for the 3 months ended September 30, 2020. Revenues increased by 93% in the third quarter of 2021 as compared to the same quarter in 2020 due to the continued growth in EVOMELA cell. And cost of revenue was $3.4 million for the 3 months ended September 30, 2021, compared to $1.8 million for the 3 months ended September 30, 2020, which includes royalty payment of $1.6 million and $0.8 million for the same period. Cost of revenue, excluding royalty, was $1.8 million and $1 million for the 3 months ended September 30, 2021 and 2020. Cost of revenue, excluding royalty as a percentage of revenues decreased significantly in the 3 months ended September 30, 2021, compared with the 3 months ended September 30, 2020, due to the alternative manufacture in place, resulting in a considerable decrease in the unit cost of inventories of EVOMELA. As of September 30, 2021, CASI had cash and cash equivalents of $53.1 million compared to $57.1 million as of December 31, 2020. At the current run rate, the company has sufficient resources to fund its operations beyond the 2022. We continue to be extremely thoughtful on how we deploy our cash position with a focus on building shareholder value. Now I will turn to the operator for question and answers.
Operator: . And the first question comes from Leland Gershell with Oppenheimer.
Leland Gershell: I wanted to ask about the commercial organization in China on the ground. If you could comment on how that may have expanded or been growing as you've been continuing to grow EVOMELA sales? And how we should think about that organization may be continuing to expand as CNCT19 makes it way to the market. I also have a question with respect to further business development deals. Obviously, you've had a nice series of those to date and want to ask us to get into 2022, should we expect the pace of these types of third-party deals should be the same? How should we think about kind of additional BD for CASI?
Wei-Wu He: Thank you so much. Well, the commercial team, we are actually expanding our commercial team pretty aggressively preparing for the CAR-T 19 launch. The beauty of this strategy is, first of all, as our revenue of EVOMELA growth. We believe beyond $40 million revenue, we -- actually, the first drug, EVOMELA, will cover the cost of our commercial team in China, so which put us in a very unique position. And EVOMELA being a very niche product, we do not believe moving forward in year 4, year 5, a huge commercial team to maintain the product. So our growth in commercial team really is prepared to launch additional hematology/oncology product potentially next year and the year after. So we are truly building a commercial engine in China to launch one product after another. And hopefully, with the second product launch, we probably will achieve potential profitability. So I don't know if that answers your question. So our team is still expanding in that regard and really is to prepare for our future product launch. Regarding to in licensing, we are very picky in terms of what kind of product we're licensing because we really want to fit our CASI is literally a startup company. It was the first product on the market. So when we look at the global asset, we really want to look for asset can be extremely synergistic with our commercial strategy. So our 2 products most likely will be in the pipeline of commercial launch is CAR-T 19 and Thiotepa. These all fit very well with our commercial team because our commercial team talked to the same KOLs day over day. Basically, the people using EVOMELA -- the doctors using EVOMELA will be the same doctor using CAR-T 19 and the Thiotepa. So we are really looking for a lot of products can fit into this commercial engine. So we will be -- in a sense, we will be a little bit optimistic. When we see a lot of good product fix our pipeline, we probably will be aggressive. But if after a while we don't see it, we might slow down. So we don't really have a defined pace in a sense. But ideally, we'd like to look for what we call the 20 carat diamond. How do we license the product that has tremendous upside potential. I hope I answered your question.
Leland Gershell: Yes, was very helpful. And congratulations on the progress.
Operator: And the next question comes from Sean Lee with H.C. Wainwright.
Sean Lee: Congrats on the great quarter. My first question is on the EVOMELA. So you mentioned that 2,600 patients were treated last year compared to 800 prior to EVOMELA launch. So could you update us on how many patients were treated in the first 9 months of this year? And how much -- how many do you think the upper limit is for this indication?
Wei-Wu He: Actually, this year, we are planning to treat about 5,000 patients for the whole year. And so you're quizzing me on the exact number. Larry, do you know the exact number for the first 9 months?
Wong Hu: It's almost a 4,000 patients that we treated already.
Wei-Wu He: Yes. So 4,000. So our current goal is to exceed the 10,000 patients per year. So there's a lot of other utility for -- there's some orphan indication for this drug. So at least for the current indication, we are targeting at least more than 10,000 patients for now. But obviously, the potential in China is much bigger because in the U.S., with a little bit over 300 million people, U.S. actually does more than 10,000 autologous transplant per year. China has 1.4 billion people. And so we believe that the ultimate number will be probably a lot higher. But EVOMELA still is considered to be a kind of a premium priced drugs. As China, this is one reason we think it's very exciting in the Chinese market as people's living standard goes up, probably the penetration will be much higher. But right now, we are targeting over 10,000 patients for EVOMELA.
Sean Lee: Great. That's good to hear. My next question is on the Juventas collaboration. So I think previously, you mentioned that they expect to complete enrollment of this nutrition studies by the end of this year and some next year. So I was wondering whether the enrollment still on track? And whether we can expect to see any data releases before they submit next year?
Wei-Wu He: Yes. We are -- Juventas, as far as we know because we don't necessarily know all the updates, it's still moving on track to complete the B-ALL enrollment for this year. And since China has approved 2 CAR-T 19 for the lymphoma market, we may be required by CDE to enroll more patients for the lymphoma market. So we think the B-ALL will be ahead of lymphoma trial by Juventas. So at least for B-ALL, so far, it looks like it's still on track to complete by end of the year and submit NDA next year.
Sean Lee: Great. In terms of commercialization, do you have to prepare anything special in anticipation of those products? And are there any special learnings that you had help in launch those smoothly.
Wei-Wu He: So the -- is by the time this drug is approved, CASI probably already have more than 200 field salespeople, detailing the KOLs for the same market. So that's one of the preparation, but there's a lot of preparation for -- before we launch the drug. So we are already doing a lot of kind of a nitty-gritty launch preparation in China by our team. We think we will be in a much better position than our competitor in this space because we have kind of the experience of launching EVOMELA in this market. And our team is so specialized in the hematology/oncology space. And this is really -- we think we will have an advantage.
Sean Lee: That makes it more clear. My final question is on BI-1206. So with the updated -- with the positive updated Phase I results, what are your plans for the next steps?
Wei-Wu He: I didn't catch the last part.
Sean Lee: Yes. So what are your plans for the next steps of the drug in terms of clinical development?
Wei-Wu He: Yes. I'll leave it to Alex, our CMO. Alex, are you on the call?
Alexander Zukiwski: Yes, I'm on the call. So to address the question for BI-1206, we have a very good established relationship with BioInvent. And they're proceeding along with a potential FDA end of Phase II meeting that's planned for the near future. Once that is completed in collaboration with BioInvent, we'll be moving the program forward as we always outlined the IND equivalent has been filed in China. And so we anticipate that we will be required to have a Chinese-specific somewhat truncated PK/PD study, will move forward after which we will join the global registration programs that in conjunction with BioInvent.
Operator: And the next question comes from Justin Zelin with BTIG.
Justin Zelin: Congrats guys, especially the robust sales on EVOMELA, quite impressive. You mentioned that you're planning to grow -- continue to grow sales from, let's say, 5,000 patients to over 10,000. So maybe if you could just speak to some of the trends there. Will it be more geographies that you're targeting and additional sites that EVOMELA can use that? Or is it more KOL outreach? And as you mentioned, kind of the appreciation of the health care system in China. Or are you also expecting additional indications for EVOMELA.
Wei-Wu He: Well, we actually think the current biggest bottleneck is the transplant unit in the hospital. Because before we launched EVOMELA, transplant is kind of -- is not commonly used in China to treat multiple myeloma. People use all the drugs developed by and others. People kind of -- so right now, we kind of have a new test to educate doctors that transplant is actually for a lot of patients is a much better therapy. Because I think around -- 14% of the patients has autologous transplant can live for 20 years. It's really a life-changing intervention for a lot of patients. But because previously, the preconditioning agent was not available in China, the doctor kind of has been used to other intervention without using the autologous transplant. So our path really is to kind of reeducate the doctors that transplant for a lot of patients is the frontline treatment. So that's really the -- that's probably the hurdle. And China, a lot of the hospitals don't have sufficient transplant units, physical units to do this type of treatment. So -- but we are seeing encouraging trend that all the new hospitals are expanding in this direction. So it's going to be a slow graduate communication with the doctors, and we are seeing very encouraging trend for using this protocol in the sense. Does that answer your question, Justin?
Justin Zelin: Yes, that's very helpful, and it makes a lot of sense to me. And maybe just for my last question, have you noticed any trends with the currently available CAR-T cell therapies in China? Has there been much uptake? Or is there any kind of pushback on the price of that product currently?
Wei-Wu He: Yes. So China has approved 2 CAR-T 19. One is from Kite, the other is from . And they are all priced above RMB 1.2 million, which is about USD 200,000, which we believe it's on the expense side for the Chinese population. So the adaptation as far as I know, this is less than 50 patients have been treated after these 2 drugs being approved. We believe that it's probably largely due to the high price for now. And I think the -- in the end, this type of therapy is probably going to take some time at the $200,000 out of pocket treatment in China, it's going to be a pretty high hurdle. But eventually, I think the price will come down. And we believe that we will -- our price should be significantly less than the current 2 drugs in China.
Operator: And the next question comes from with . All right. Apparently, the phone must be on mute. So that actually does conclude the question session. So at this time, I would like to return to management for any closing comments.
Wei-Wu He: Thank you again for joining today's call. We have had a remarkable year as far as CASI with progress across our hematology/oncology portfolio. We continue to be encouraged by what we would expect will be forecasting. We look forward to leveraging our existing commercial infrastructure as we move forward on key business development initiatives. So -- and we are looking forward to additional product launches in the near future. We would like to thank each of you for your continued support in passing during this exciting period. Operator, thank you. We may now conclude this call.
Operator: Yes. Thank you. As mentioned, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
