Edited Transcript of BYSI.OQ earnings conference call or presentation 18-Dec-19 1:00pm GMT – Yahoo Finance

NEW YORK Jan 8, 2020 (Thomson StreetEvents) -- Edited Transcript of BeyondSpring Inc earnings conference call or presentation Wednesday, December 18, 2019 at 1:00:00pm GMT

BeyondSpring Inc. - CFO

BeyondSpring Inc. - Co-Founder, Chairman & CEO

* Ramon W. Mohanlal

BeyondSpring Inc. - Executive VP of Research & Development and Chief Medical Officer

* Richard J. Daly

BeyondSpring Inc. - COO

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* David Schemelia;Kanan, Corbin, Schupak & Aronow, Inc.

Good day, everyone, and welcome to BeyondSpring's Third Quarter 2019 Conference Call. My name is Rob, and I'll be your operator on today's call. Please be advised that this call is being recorded.

At this time, I would like to turn the call over to the host, David Schemelia, Senior Vice President at KCSA Strategic Communications.

Thank you, operator, and thank you, everyone, for joining today's call. I would like to advise listeners that remarks made on today's call may reflect forward-looking statements relating to such matters as BeyondSpring's clinical and preclinical research and development activities and results, regulatory and commercial plans, industry trends, marketing potentials, collaborative initiatives and financial projections, among others. While management believes that its assumptions, expectations and projections are reasonable in view of current available information, you are cautioned not to place undue reliance on these forward-looking statements. The company's actual results may differ materially from those discussed during this call for a variety of reasons, including those described in the forward-looking statements and risk factors sections of the company's 20-F and other filings with the SEC, which are available on the Investors section of BeyondSpring's website.

Joining us on today's call is Dr. Lan Huang, BeyondSpring's Chairman and Chief Executive Officer; Dr. Ramon Mohanlal, Executive Vice President of Research, Development and Chief Medical Officer; Richard Daly, Chief Operating Officer; and Edward Liu, Chief Financial Officer.

It is now my pleasure to turn the call over to Dr. Lan Huang.

Lan Huang, BeyondSpring Inc. - Co-Founder, Chairman & CEO [3]

Thank you for joining today's call. Thank you, David. For those of you who are just now starting to follow our story, BeyondSpring is a global biopharmaceutical company focused on the development of transforming immuno-oncology cancer therapies for unmet medical needs. The last quarter had been very exciting with a few significant milestones achieved. First, our lead asset, first-in-class agent, Plinabulin is on track to file an NDA for non-small cell lung cancer and the prevention of chemotherapy-induced neutropenia or CIN indications in China and in the U.S. in the next 6 to 18 months, leading with the filing in China for CIN around quarter 1 2020.

Second, with Plinabulin validated as a potent inducer for Antigen Presenting Cells or APC inducer with recent publications in cell journals, Plinabulin has the potential future indications with triple combo combining with PD-1 or PD-L1 antibodies and chemo or radiation for multiple cancer indications.

Last but not the least, Plinabulin's recent U.S. patent granted in brain tumors adds to its robust patent portfolio of 75 granted patents in 36 jurisdictions with protection to 2036, including composition of matter patents. Thus, we have a very long patent runway to realize Plinabulin's clinical and commercial potential.

Since our last update, we continue to progress in our clinical studies. In October, we reported that the first patient was enrolled in the company's Study 106, a global Phase III clinical trial, with Plinabulin in combination with G-CSF to prevent CIN, designed to show superiority in CIN and bone pain control compared to G-CSF alone. As you know, G-CSF is the standard of care for CIN for the last 30 years, with annual sales over $7 billion globally.

In addition, I'm very pleased to report that after 5 years of efforts, collaborating with leading scientists at University of Basel and Mass. General, we have uncovered Plinabulin's unique mechanism in cancer treatment and in CIN control. Plinabulin's anti-cancer in new mechanisms work as a potent agent to induce standard cell maturation and T-cell activation were published in the prestigious peer-reviewed cell publication, Chem and Cell Reports, in September.

Recently, Plinabulin's mechanism in CIN control by reversing chemo-induced bone marrow suppression and its effects in reducing CIN with multiple chemo with different mechanism as published in Cancer Chemotherapy and Pharmacology this month. This paper further validates what we have observed in human studies in Plinabulin's durable anticancer benefit and CIN control with multiple chemo and synergizes with G-CSF.

On the financing side, in late October, we completed a public offering, significantly expanding our institutional shareholder base and strengthening our balance sheet as we advance our clinical pipeline towards NDA submissions in the U.S. and China. So as you see, it has been a very busy few months for BeyondSpring.

All in all, we view Plinabulin as a pipeline in the drug. To date, Plinabulin has treated more than 580 patients with good tolerability. The fundamental indications of Plinabulin are in non-small cell lung cancer and in CIN with multiple clinical studies confirming Plinabulin's benefit, some with high statistical significance. Most of the second and third-line non-small cell lung cancer and CIN indications are severely unmet medical need indications. First, in patients with second and third-line non-small cell lung cancer who are EGFR wild type, which accounts to 85% of Western patients, there are very few approved therapies available, and current treatment options have a modest median OS, or overall survival rate, of 8 to 10 months, but at the expense of severe adverse events, such as severe neutropenia and quality of life. Even response rate with PD-1 inhibitor monotherapy is around 20%, with a median survival benefit of only 2.8 months compared to docetaxel, the standard of care in this patient population.

Secondly, in CIN, the current standard of care is G-CSF monotherapy with a long-lasting version Neulasta being the market leader. However, after using Neulasta, about 90% of patients with high-risk chemotherapy still develop grade 3 or 4 neutropenia. Grade 3 or 4 neutropenia requires the chemotherapy dose to be reduced, the next cycle to be delayed, the regimen to be downgraded or be discontinued altogether. So we call this 4Ds, all of which result in significant reduced survival outcomes for patients. Thus, we are very confident Plinabulin has the potential to disrupt the current treatment landscape and greatly improve overall patient outcomes and quality of life.

Our regulatory strategy is submitting NDAs in China for CIN in the first quarter of 2020 and for non-small lung cancer in the second half of 2020. We also plan to submit NDAs in the U.S. for CIN in the second half of 2020 and for non-small cell lung cancer in the first half of 2021. This staggered NDA filing strategies for both China and the U.S. allows agencies in both countries to sufficiently review the Plinabulin's preclinical, safety and CMC sections when we submit for the NDA for the CIN indication.

And when it comes to the submission for the non-small cell lung cancer indication, since the same preclinical and CMC sections of Plinabulin submissions have been reviewed, we expect the review and approval process will be much accelerated. Such an approach has been adopted by FibroGen with its innovative, first-in-class asset, which successfully obtained regulatory approval in China first with a speedy time line ahead of the U.S. approval.

In November of this year, we had a successful pre-NDA meeting with the U.S. FDA and reached alignment that our current safety data needs requirement for NDA filing for both indications of Plinabulin. We believe Plinabulin's transforming potential in triple combo of combining Plinabulin, PD-1 or PD-L1 antibodies and radiation or chemotherapy for the treatment of multiple cancer types. This triple combination approach optimizes utility of immunotherapy as radiation or chemotherapy generate tumor antigen, Plinabulin's DC maturation effect optimizes presentation of this tumor antigens to cytotoxic T cells and checkpoint inhibitors-enabled activated T cells to kill cancer cells. In other words, Plinabulin's steps on the gas, PD-1 releases the brake. So this triple combination approach could be a powerful cocktail that resembles the powerful HIV cocktail therapy, which transformed HIV from a deadly disease to a chronic disease with patients having normal life expectancy.

In addition, we remain on track to advance 3 preclinical immune agents, BPI-002, 003, and 004 and the research platform using ubiquitin-mediated degradation pathways, the Nobel prize-winning technology, which can target 70% of (inaudible) target, as we have a leading team working on this.

Now I'm turning the call over to Dr. Ramon Mohanlal, who will discuss our recent clinical developments in more detail.

--------------------------------------------------------------------------------

Ramon W. Mohanlal, BeyondSpring Inc. - Executive VP of Research & Development and Chief Medical Officer [4]

--------------------------------------------------------------------------------

Thank you, Lan. First, I would like to provide an update to our registrational trials for our lead asset, Plinabulin. First, non-small cell lung cancer study 103 is a 554 patient Phase III registrational study, evaluating the anticancer effects of Plinabulin in combination with docetaxel compared to docetaxel alone in second and third-line non-small cell lung cancer, with its primary endpoint of median overall survival. To date, we have enrolled approximately 480 patients in the U.S., Australia and China. The study has 2 prespecified interim analysis: the first when 1/3 of the patient's death is reached; and the second, when 2/3 of the patient deaths are reached.

Earlier this year, we reached the first interim analysis and Data and Safety Monitoring Board, or DSMB, recommended the trial to continue with no change to the protocol specified number of patients. Final results of the trial at a death rate of 439 patients are expected to be available in the second half of 2020.

Second, Studies 105 and 106, evaluates Plinabulin's effect in the prevention of chemotherapy-induced neutropenia. We have aligned with U.S. and China FDA that 105 and 106 studies would support the broad CIN label for all cancers, all chemos and to be combined with G-CSF.

Study 105 is a Phase II/III registrational trial of Plinabulin after the standard regimen of docetaxel in advanced breast cancer, hormone refractory prostate cancer and advanced non-small cell lung cancer patients in the U.S., China, Russia and the Ukraine. Previous data from the Phase II portion of this trial already demonstrated that Plinabulin, given as single-dose cycle on the same day of chemotherapy would be as effective as Neulasta, with the benefit of causing much less bone pain, improved quality of life, offering a superior immune profile compared with Neulasta and having the potential to mitigate thrombocytopenia. Plinabulin's non-G-CSF based unique mechanism of action, potentially makes it complementary to Neulasta in preventing CIN. In December last year, we announced in a prespecified interim analysis, the Phase III portion of Study 105 met its primary endpoint of noninferiority with Plinabulin at a 40-milligram fixed dose versus Neulasta at 6 milligrams for DSN in the first cycle.

Study 106 evaluates the combination of Plinabulin with Neulasta versus Neulasta alone to prevent CIN and bone pain, in patients receiving TAC chemotherapy, which is a triple combination of Taxotere, doxorubicin and cyclophosphamide in breast cancer patients. Previous top line data from the Phase II portion of this trial suggests, firstly, a significant improvement in efficacy in treating CIN; secondly, a significant decrease in the percentage of patients experiencing grade 3 or 4 CIN; thirdly, a more than 90% reduction in patients experiencing bone pain; and lastly, a reduced potential immune suppressive phenotype, when adding Plinabulin to the standard of care.

The Phase III portion of the Study 106 will compare Plinabulin at a 40-milligram fixed dose combined with 6-milligram Neulasta versus 6-milligram of Neulasta alone in a double-blind study. The intent of the study is to show superiority in DSN in the first cycle as the primary endpoint. We have already enrolled the first patient in this study in October. The data generated to date suggests that Plinabulin offers a novel approach to preventing CIN and bone pain in patients receiving chemotherapy. Minimizing neutropenia and bone pain would allow more patients to receive a full dose of chemotherapy and complete their chemotherapy treatment, implying that the addition of Plinabulin to G-CSF has the potential to significantly improve the current CIN standard of care, resulting in better anticancer outcomes and patient quality of life.

Positive clinical results of Plinabulin have been accepted for presentations at world-leading conferences. In late September and early October, we presented 2 posters at ESMO. The first poster focus on the novel trial design for Study 103 and its success compared with the failed Javelin Lung 200 trial. Researchers surmised that the open-label design of Javelin versus single blinded Study 103 trial, attributed to Javelin's failure as patients dropped out of the study prior to receiving the first dose.

The second poster evaluated in Study 106 the effects of Neulasta combined with Plinabulin on absolute neutrophil and platelet count and measured the frequency of thrombocytopenia. Our data show that the combination appears to have a superior product profile of Neulasta in CIN control, platelet counts and bone pain.

Additionally, we recently presented 2 e-publications on Study 105 at ASH, highlighting Plinabulin's ability to protect hematopoietic stem cells which differentiates into neutrophils and other white blood cell types. The mechanism of action preclinical paper is consistent with this message.

Lastly, BeyondSpring presented a poster at ASH on Study 106, which provides rationale for the addition of Plinabulin to Neulasta due to their complementary mechanism of action for the prevention against chemotherapy to achieve synergy.

With that, I'll now turn the call over to Rich, who will discuss our commercial and partnership strategy.

--------------------------------------------------------------------------------

Richard J. Daly, BeyondSpring Inc. - COO [5]

--------------------------------------------------------------------------------

Thanks, Ramon. As you've heard, our clinical data continues to support our belief that Plinabulin can improve the standard of care to positively affect the lives of cancer patients, those who require the prevention of chemo-induced neutropenia and those seeking innovative new options in the treatment of non-small cell lung cancer. To that end, we're working diligently to advance our organization for commercialization on both fronts. As we await additional clinical readouts in 2020, the upcoming year holds immense promise for the company and potentially for the patients and providers we hope to serve.

First, we'll address CIN. Recently published data in Lancet forecast continued growth in chemotherapy from 9.8 million to 15 million cycles between now and 2040, a 53% increase. We share this growth-oriented view of the opportunity in CIN.

As mentioned earlier, CIN continues to persist despite the use of G-CSF and cause clinicians to change or reduce dose of patients' regimens, which can have devastating effects on anticancer outcome. In fact, CIN is the most frequent cause of change for chemotherapy regimens. Our clinical program and recently completed proprietary market research tells us that Plinabulin, used together with G-CSF, has the potential to play a major role in both improving the standard of care and benefiting the patient's quality of life.

Even small changes in chemotherapy doses or brief delays in chemotherapy infusion can have detrimental effects on overall survival. Just a 15% reduction in chemotherapy doses can result in a 50% reduction in overall survival. This fact is not lost on oncologists. In fact, upon learning about the benefits of Plinabulin plus G-CSF combination therapy in blinded market research, 65% of doctors and KOLs we interviewed were excited at the prospect of treating patients with Plinabulin. It's clear, doctors are receptive to new treatment options for CIN and understand there is a high unmet medical need in the market.

Our market research and clinical research continues to build the case for Plinabulin as a therapy that can improve the standard of care in cancer therapy. By developing Plinabulin to work with and to enhance G-CSF therapy, the goal is to allow HCPs to avoid the 4Ds mentioned earlier and provide stable chemotherapy doses, sustained chemotherapy cycles and the strongest chemotherapy regimens. Moreover, our proprietary market research continues to indicate that oncologists are favorable towards the Plinabulin enabling product profile and physicians quickly grasp the logic of the complementary mechanisms of action of both Plinabulin and GCSF. This means the speed of Plinabulin's onset versus the delayed onset of G-CSF, the superior absolute neutrophil count and the reduction of bone pain.

The Plinabulin plus GCSF combination shows tremendous promise in enabling oncologists and their patients to adhere unabated to the individualized treatment plan and avoid the 4Ds. Additionally, our goals go beyond preventing neutropenia and bone pain. We see Plinabulin's clinical benefits as a way for providers to potentially generate better chemotherapeutic outcomes, empower oncologists to choose the most appropriate, most aggressive therapy for patients and have confidence that neutropenia can be significantly reduced and patients can remain on their targeted chemotherapy. Our ongoing data generation, both clinical and market research continues to give us confidence that combination therapy, that is Plinabulin plus G-CSF, can offer an improved standard of care.

Additionally, we believe that market dynamics such as the growth of chemotherapy and the success of combination approach highlights CIN as a growth opportunity. In short, the combination approach is proving to provide a number of benefits for clinicians, patients and payers, including significantly reduced neutropenia with the goal of avoiding the 4Ds and driving a stable, sustained cycle with the strongest dose of chemo and improved bone pain profile to ensure enhanced therapeutic experience and the potential for greater persistency and clinical data that suggests anticancer activity. Our clinical data validates a clearly differentiated product profile and our market research indicates a clear and compelling market need for new therapies to improve the standard of care and CIN.

Now transitioning to non-small cell lung cancer. Non-small cell lung cancer is one of the most exciting therapeutic areas in all of medicine today and continues to evolve rapidly. Advancements in the care with the approval of I/O therapies for first line creates a need for new options in second and third-line therapy. The advancement of I/O therapy presents a great opportunity for BeyondSpring, Plinabulin and patients. Plinabulin's clinical data to date in our non-small cell therapy lung cancer program demonstrates promise as an effective agent in second and third-line therapy. Given the dearth of effective options for patients at this advanced stage, we are excited about the prospects of delivering clinically meaningful data and results for patients with Plinabulin for non-small cell lung cancer.

As we consider life cycle management for Plinabulin, we look to our early work in combination with I/O compounds. It is our hope that we may demonstrate benefits over and above that which is currently seen with I/O alone. This may represent an additional significant growth opportunity to help patients and providers struggling to address this devastating disease.

Now moving on to business development. We believe Plinabulin has tremendous potential as the CIN and non-small cell lung cancer anticancer therapy. As mentioned earlier, our most recent market research with over 100 HCPs as well as payers, gives us confidence that the data we have generated to date demonstrate differentiated product profile. Additionally, receptivity of these oncologists and payers to the profile is indicative of an unmet market need.

We see these responses echoed in our business development efforts with great interest coming from potential partners. As we prepare for upcoming data inflection points, we are well positioned to maximize the value for Plinabulin both here, in the U.S. and abroad, through our go-to-market strategies. A recent ZS study showed that 7 out of 10 companies launching their first oncology product in the U.S. went to market on their own due to the potential strength of the U.S. P&L, while 70% partnered in Europe. For both CIN and non-small cell lung cancer, the U.S. represents more than 75% of the global value, and we are prepared to optimize this value through our business development and commercialization efforts. We look forward to updating you on our progress as we go forward.

In closing, our clinical profile is excellent and fills a clear unmet need in the market. We have the potential to set a new standard of care. Our market research indicates HCPs recognize that Plinabulin is a differentiated product with significant clinical potential. HCPs are also excited about the opportunity to use Plinabulin in the prevention and treatment of CIN to keep patients on the most appropriate, most aggressive chemotherapy regimen. As we prepare to file NDAs for Plinabulin in China and the U.S. for CIN and non-small cell lung cancer, our U.S. and global commercialization plans are aligned with our development and regulatory time lines. We are taking steps to ensure BeyondSpring can bring Plinabulin to the market so that we optimize the benefits for patients, providers and shareholders.

With that, I'll now turn the call over to Edward, who will provide a financial update. Edward?

--------------------------------------------------------------------------------

Dongheng Liu, BeyondSpring Inc. - CFO [6]

--------------------------------------------------------------------------------

Thanks, Rich. I'll now briefly discuss our third quarter 2019 financial results. For greater detail related to these results, I refer you to our press release issued this morning and to our 6-K filing, both of which can be accessed under the Investors section of our website.

With that said, I now highlight some key numbers. R&D expenses in the third quarter of 2019 was $7.2 million compared to $14.1 million in the same period last year. The decrease of $6.9 million was largely attributable to a $3.9 million decrease in CRO expenses and other service fees related to clinical trials, a $0.5 million decrease in preclinical trials and a $0.5 million decrease in noncash share-based compensation.

G&A expenses were $2.5 million in the third quarter of 2019 compared to $1.5 million for the same quarter of 2018. The $1 million increase was mainly due to a $0.7 million market research expense incurred during the quarter. Net loss attributable to BeyondSpring in the third quarter of 2019 was $9.4 million compared to $14.9 million for the same period of last year.

Our cash balance at the end of Q3 was $24.7 million. Subsequent to the third quarter on October 24, we successfully completed a $25.8 million follow-on equity offering.

The transaction was led by the Decheng Capital and attracted a strong demand from high-quality U.S.-based institutional investors. This transaction, together with the financing in July, continued to significantly improve the liquidity of our stock.

With our strengthened balance sheet, we are confident that our current cash resources are sufficient to support our clinical trials and submit NDAs for Plinabulin for the treatment of CIN and non-small cell lung cancer in both the U.S. and China, and to advance our immuno-oncology pipeline as well as our ubiquitination protein degradation research platform.

With that, I'll now turn the call back over to Lan for the conclusion. Lan?

--------------------------------------------------------------------------------

Lan Huang, BeyondSpring Inc. - Co-Founder, Chairman & CEO [7]

--------------------------------------------------------------------------------

Thank you, Edward. As you can tell, we are extremely proud of our clinical development efforts and the flow of data that further validates Plinabulin's favorable drug profile to improve cancer care. Plinabulin is the only novel agent in development, which combines anticancer and CIN prevention potential. Looking ahead, we expect many important data and regulatory milestones in 2020, which will transform us from a clinical-stage company to a commercial-stage company.

Together with our shareholders, investors and partners, we are working hard to continue to create value and deliver innovative medicines to the patients in severely unmet medical needs all over the world. I look forward to keeping you updated on our progress towards that goal in the coming months.

We have integrated U.S. and China resources to achieve time and cost efficiency in the 2 largest pharmaceutical markets in the world. We believe that this unique and scalable business model will maximize the return for our shareholders.

To those of you who have been on this journey with us, we want to thank you for your trust and your support. To those new to our mission, 2020 promises to be an exciting year as we anticipate NDA filings for Plinabulin in both the U.S. and China in the near future. We look forward to continue this journey with you.

Thank you for your attention. And now I'm turning this back to the operator.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Our first question is coming from the line of Joe Pantginis with H.C. Wainwright.

--------------------------------------------------------------------------------

Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [2]

--------------------------------------------------------------------------------

Lan, since you guys have such a unique inroads into the Chinese market based on your relationships there and things like the Thousand Talent Award -- Thousand Talent Innovator Award, et cetera. I was just curious your status of your discussions with both the CFDA and the Chinese government with regard to both things like pricing and reimbursement and manufacturing and as part of that question, what remains outstanding other than data for you to deliver the NDA?

--------------------------------------------------------------------------------

Lan Huang, BeyondSpring Inc. - Co-Founder, Chairman & CEO [3]

--------------------------------------------------------------------------------

Thank you so much, Joe, and thank you for your continued support and I believe in our company and also in Plinabulin. So yes, thanks for this great question. So as you see that not only I do have the Thousand Talent Award from the government but also we -- Plinabulin also has this certain 5-year grant from the Chinese government, and that basically is the most important innovation grant from the state government, and that does give us the regulatory speed in the expedited review and also later to be potentially included in the national insurance. One example for the speedy review is for our CIN indication, we received the CTA for Phase III initiation from CFDA within one month after package submission, which is really a historical record because most of those approval takes 1 year to 2 years.

So as you see that we do have continued discussion with the CFDA regarding the submission readiness of our package, and as you see from our target, we are on track to submit quarter 1 of 2020. And currently, for the manufacturing, we do use CMOs in China to manufacture for the China domestic NDA filing. And so that's a check and a clinical trial data actually currently just our -- as always, I said, it's 105 Phase III interim plus the 106 Phase II data is supporting the submission and so those are set. And for the safety database, that's set because we have -- already had 580 patients treated with Plinabulin. The safety database is only 300 and also the quality before the trials has been checked. So those actually have all the data ready to be submitted.

And but then you had a question regarding the pricing and then potentially getting to the insurance system. So we probably can use FibroGen as a significant example, right? So FibroGen does have this innovative first-in-class anemia drug and it got China FDA approval first, recently, in the beginning of the year and -- ahead of the U.S. approval. And that was a speedy approval after all data is in, it's 2 months afterwards, it was approved.

And then secondly, it was just recently got into the national insurance with a very good pricing because it is the only drug in the category. So you can see that Plinabulin potentially could also follow similar steps like FibroGen, which has set a very, very good example for us. And as you know, actually Dr. Peony Yu, who is the Chief Medical Officer of FibroGen, she's on our SAB board.

--------------------------------------------------------------------------------

Operator [4]

--------------------------------------------------------------------------------

(Operator Instructions) The next question is from the line of Andy Hsieh with William Blair.

--------------------------------------------------------------------------------

Tsan-Yu Hsieh, William Blair & Company L.L.C., Research Division - Senior Research Analyst [5]

Originally posted here:
Edited Transcript of BYSI.OQ earnings conference call or presentation 18-Dec-19 1:00pm GMT - Yahoo Finance