Cell Therapeutics Management Discusses Q2 2012 Results - Earnings Call Transcript

Cell Therapeutics (CTIC)

Q2 2012 Earnings Call

August 01, 2012 8:30 am ET

Executives

James A. Bianco - Principal Founder, Chief Executive Officer, President and Executive Director

Louis A. Bianco - Co-Founder, Principal Financial Officer, Principal Accounting Officer, Executive Vice President - Finance and Administration and Secretary

Steven E. Benner - Chief Medical Officer and Executive Vice President

Analysts

Michael G. King - Rodman & Renshaw, LLC, Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Cell Therapeutics Q2 Financial Results Call on the 1st of August, 2012. [Operator Instructions] I would now like to hand the conference over to Dr. James Bianco, President and CEO. Please go ahead, sir.

James A. Bianco

Good morning. Thank you for joining us today. Before I get started, I'd like to remind you, as is common with presentations of this type, that we'll be making forward-looking statements, and as such, I recommend you refer to our SEC filings for more information on the company.

Let me also remind you that this call is recorded and be available for playback on our website. Any unauthorized recording of this call or use of this recording is prohibited without written consent of the company.

So on today's call, we're going to review the financial results for the second quarter, update you on our prelaunch activities and in-market research on a potential commercial opportunity on Pixuvri, talk about the status of the pacritinib Phase III program and review the strategy for tosedostat and briefly discuss the activities on OPAXIO and brostallicin. Let me start with the financial results for the second quarter.

For the quarter ended June 30, the total operating expenses were $49.4 million compared to $16.9 million for the same period in 2011. The increase is predominantly due to acquired in-process R&D expense of $29.1 million related to the acquisition of pacritinib from S*Bio, in addition to some expenses related to prelaunch activities for Pixuvri.

As announced in June, we focused our research -- resources on the commercial launch of Pixuvri in EU and the advancement of pacritinib to its Phase III trials. We believe pacritinib represents a high-value product opportunity, addressing an unmet medical need in the myelofibrosis market even in the post-ruxolitinib approval here, which is clearly Phase III ready.

We've instituted a number of cost-containing initiatives, with the goal of reducing our average net operating burn from an average of over $6.5 million per month to now an average of approximately $4 million per month for the remainder of the year.

At the end of the quarter, we had approximately $14.8 million in cash prior to the receipt of $14.3 million in net proceeds received from the same institutional investor that purchased $20 million of stock and warrants in May.

So let's talk about Pixuvri. In the first quarter, we worked with PricewaterhouseCoopers EU life science partners on building the work streams a for cost-effective go-to-market strategy and launch plan for Pixuvri. In the second quarter, we began engaging our partners, including Quintiles, who will be our vendor with which we will hire our sales force. We have also in place a third-party logistics provider for product distribution, pharmacovigilance, product call center and other vendors that are required for compliance and effective launch. We are on schedule to launch in Austria and the Nordic countries starting in September, with Germany targeted to launch in November, at which time we are planning to present our value dossiers to the German health agency and begin the process that we expect will lead to the assignment of an innovation score and potential reimbursement note negotiations. Needless to say, our near-term focus is achieving our goal of developing solid reimbursement strategy for the product in the reference countries like Germany and France.

We often get asked what the commercial opportunity for Pixuvri is in the EU. So to assess the market size in addition to our own internal forecast, we engaged Kantar research, who conducted what they call in-market research in the EU among 251 lymphoma specialists in the 5 major market countries, capturing data on their current treatment practices for patients who are third or fourth line who have aggressive B-cell non-Hodgkin's lymphoma, and how those practices would potentially change with the introduction of Pixuvri.

Now it's important to keep in mind, our labeled indication is in the third and fourth line B-cell aggressive NHL. And in that subset of 112 patients, the CR/CRu rate was 28% for Pixuvri versus 4% for comparator, and overall response rate was 48% for Pixuvri compared to 12% for comparative single therapy. And at 2 years of follow up, there was a 50% reduction in the risk of death or relapse, the so-called progression-free survival, with the median overall survival for Pixuvri on being 13.9 months versus 7.8 months for the comparative active chemotherapeutic agent.

So these are the data that we'll focus on with the help and payers -- health authorities and payers when considering the value proposition for Pixuvri in this patient population. And based on Kantar's research, their analyses, including their discounts, we're encouraged by the projected market opportunity for Pixuvri in the EU given the percentage of physicians who noted that they would integrate Pixuvri into their current treatment practices for patients with relapsed aggressive B-cell non-Hodgkin's lymphoma. And we look forward to updating you as we initiate market introduction and begin to get an indication of product demand.

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