TG Therapeutics Inc

NASDAQ:TGTX

Earnings Call Transcript 2019-Q3

[Operator]

Greetings. Welcome to TG Therapeutics' Third Quarter 2019 Financial Results and Business Update Call. [Operator Instructions]. Please note that this conference is being recorded.

At this time, I'll turn the call over to Jenna Bosco. Jenna, you may now begin.

[Jenna Bosco, VP, IR & SVP, Corporate Communications]

Thank you. Good morning, and welcome to our conference call regarding TG Therapeutics' Third Quarter 2019 Financial results and Business update. I'm Jenna Bosco, TG's Senior Vice President of Corporate Communications, and I welcome you to our conference call today.

Following our safe harbor statement, Sean Power, TG's Chief Financial Officer, will provide a brief overview of our financial results and then turn the call over to Michael Weiss, the company's Executive Chairman and Chief Executive Officer, who will provide an update on the ongoing development of our lead compound, ublituximab and umbralisib, as well as an overview of our overall company standing.

Before we begin, I would like to remind everyone that any remarks we make about our future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. TG cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated. Factors that may affect TG Therapeutics operations include various risk factors that can be found in our SEC filings.

This conference call is being recorded for audio rebroadcast on TG's website, www.tgtherapeutics.com, where it will be available for the next 30 days. All participants on this call will be on a listen-only mode.

Now, I would like to turn the call over to Sean Power, our Chief Financial Officer, to briefly discuss the financial results for the third quarter of 2019 as well as the company's overall financial condition.

[Sean Power, CFO, Corporate Secretary & Treasurer]

Thank you, Jenna, and thanks, everyone, for joining us. As I'm sure you've all now seen our financial results released this morning and can be viewed on the Investors and Media section of our website. Our net loss for the third quarter of 2019, excluding noncash items, was approximately $59.9 million, with a GAAP net loss for this quarter of $61.9 million or $0.69 per share compared to a net loss of $34 million or $0.43 per share during the comparable quarter in 2018. Included in this quarter's net loss was an increase in manufacturing and CMC expenses of approximately $27 million. These costs relate primarily to manufacturing expenses associated with Phase III development and in preparation for commercialization. And we've been able to secure favorable payment terms on the bolus of these expenses, deferring payment of these costs for up to 1 year.

Offsetting increases in manufacturing expenses has been a continued decrease in clinical trial expenses, $3.8 million in the quarter, which we expect will continue into 2020. All in all, for the quarter, we saw a cash burn of approximately $33 million. With the bulk of our manufacturing cost now behind us and with our clinical costs continuing to decrease, we expect our cash burn to be in the $25 million to $30 million per quarter range. Accordingly, with a pro forma cash position as of September 30 of approximately $96 million, which includes approximately $24 million raised under our ATM facility subsequent to the end of the quarter and our future availability under the ATM, we believe our cash will be sufficient to fund our operations into the fourth quarter of 2020, and importantly, through our near-term milestones of Phase III readouts for UNITY-CLL and MS, which we believe should be significant value-creating inflection points for the company.

With that, I will now turn the call over to Mike Weiss, our Executive Chairman and CEO.

[Michael Weiss, Executive Chairman, CEO & President]

Great. Thanks, Sean, and thank you, Jenna, and thanks, everyone, for joining us this morning. Seeing as we were just on a call a few weeks ago, we're going to try to keep this one relatively short. I thought I'd start out by focusing on the ASH abstracts that we released last week. I'll provide a little bit of color and context around those presentations, and then touch on some of this year's major accomplishments and conclude, after the Q&A with some upcoming goals and catalysts for the company.

So to start, let's talk about the 2 presentations in ASH that we announced last week. First is an oral presentation on the triple combination of umbralisib, our highly selective PI3K delta and CK1 Epsilon inhibitor; and ublituximab, our glycoengineered anti-CD20 monoclonal antibody, which together, we refer to as U2, so U2 plus venetoclax, in patients with relapsed or refractory chronic lymphocytic leukemia, also CLL.

This is a Phase I/II study was designed with the intent to assess whether U2 plus venetoclax could potentially drive deep and durable responses in a fixed time frame of treatment. For example, in the study, 12 months and then stop treatment if you achieve MRD-negative in the bone marrow. A few exciting and tidbits in this abstract included that U2 alone was highly active. With an overall response rate of 85%, 11 of 13 patients after 3 cycles of therapy, and this is, again, prior to the introduction of Natcat. We start with a U2 alone induction. And these are patients who are heavily pretreated, relapsed/refractory CLL patients, including a number of them that were refractory to ibrutinib. Following cycle 3, venetoclax was introduced to the study and all 9 patients that had at least 7 cycles of follow-up at the time of the ASH abstract submission had a complete or partial response to the 3 drug combination. As importantly, of the 5 patients with 12 cycles of follow-up at the time of the ASH abstract submission, all of them had achieved undetectable minimal residual disease in the peripheral blood and 4 or 5 of those patients had achieved undetectable MRD in the bone marrow, and were able to stop treatment at the end of cycle 12.

While these are small patient numbers, these results appear to represent a substantial improvement over existing therapy. We look forward to the presentation with additional data from this study at ASH, including additional patients to the longer and patients through longer follow. To confirm these dramatic effects, these data will be presented at ASH by Dr. Paul Bar, Director of the Clinical Trial Center at Wilmot Cancer Institute at the University of Rochester. Additionally, we have already begun enrolling in what we hope will be a registration-directed Phase II single-arm study called the Ultra V study, which looks at the combination of U2 plus venetoclax in both relapsed/refractory and treatment naive CLL patients. This study is being led by Dr. Richard Furman. He's the Director of the CLO Research Center at Wild Cornell Medicine here in New York City.

The second abstract accepted for a poster presentation is the Phase I study of TG 1,701, our novel BTK inhibitor as a sale agent and in combination with U2 for patients with a variety of relapsed fractory B-cell malignancies. As you may recall, we have previously studied the triple combination of U2 plus ibrutinib, where we demonstrated a 100% response rate in patients with CLL and marginal zone lymphoma, with a well-tolerated safety profile. The promising results seen in the U2 Casarino study, which was published in Lancet hematology motivated us to move our proprietary once-daily BTK inhibitor into triple combination studies as rapidly as possible.

The ASH abstract includes the first ever clinical data on our BTK inhibitor, TG-1701 and includes data from the single agent cohort as well as the triple combination cohort with U2. Responses haven't seen at all dose levels. And all patients treated in the triple combination at the lowest dose have achieved a response at the first assessment, including a complete response in a patient of follicular lymphoma and 2 partial responses, one in a patient with follicular lymphoma and one in a patient with marginal zone lymphoma.

This study is particularly important to us at TG, as it represents a significant step forward in our mission to develop novel combination therapies to those patients in need. This is the first triple combination study conducted for all the agents or proprietary TG drug candidates. Needless to say, we are excited for the ASH Meeting in Orlando next month. Both of these trials will come into better focus when we have the UNITY-CLL pivotal data, but please understand that we're conducting today the studies that will hopefully enable a strategy that puts U2 in a position to be used both as you go alone and also on top of BTKs and venetoclax to optimize those treatments. Neither BTKS nor venetoclax alone are the solution. Our belief is that U2 makes those treatments better and should enhance the number of patients to get long-term durable remissions, so patients can stock therapy. That is the goal of all this work. With that, it's probably a good time to transition to the UNITY-cLL study as much of the excitement of these 2 abstracts hinges on a positive CLL outcome.

As a reminder, the UNITY-cLL trial is a randomized Phase III study of U2 compared to an active control arm of a combination of a chemotherapy and an anti-CD20 monoclonal antibody in patients with both treatment naive as well as relapsed/refractory chronic lymphocytic leukemia.

The primary endpoint for this trial is progression-free survival. As we have said previously, we hope to have results from this study around year-end or into the first quarter of next year. However, as this is an event-driven trial, it is challenging to precisely predict the timing of completion. We remain extremely optimistic about the study and the prospects for a successful PFS outcome.

Before I transition to a quick highlight reel of what we've accomplished this year so far, let me also remind everyone that in addition to the UNITY-CLL Phase III data, we have another large Phase III program reading out in 2020. That, of course, is our ultimate one and two Phase III trials in relapsing forms of multiple sclerosis. These are two independent Phase III trials comparing ublituximab to oral teriflunomide. The primary endpoint for each study is annualized relapse rate, following 96 weeks of treatment and are designed to support submission for full approval of ublituximab in relapsing forms of MS.

These trials are being conducted under special protocol assessment with the FDA and have been fully enrolled for over a year now. We are targeting top line data from these trials in the middle to second half of next year. For sure, exciting times ahead for TG. But let's not forget all the progress we've made already this year.

Let me finish my prepared remarks with a little recap with the major achievements for the first three quarters of 2019. Earlier in the year, we announced that our registration-directed UNITY-NHL studies, marginal Zone lymphoma cohort met its primary endpoint, and we received a breakthrough designation from the FDA for this indication. Soon thereafter, we presented preliminary positive data at a few important medical conferences, demonstrating an approximate 50% overall response rate and approximately 20% complete response rate for embolism as a monotherapy with what appears to be a well-tolerated safety profile.

Later, we announced that we met with the FDA to discuss a module one lymphoma filing. And after such meeting, we announced our intention to target the commencement of a rolling NDA submission around year-end.

Then we announced that almost - with almost 4 years of follow-up, our GENUINE study demonstrated that ublituximab, in combination with ibrutinib, improved progression-free survival over ibrutinib monotherapy in patients with high-risk relapsed refractory CLL.

Despite recent approvals, this patient population remains a high unmet medical need, compared to share of the data with the FDA and present this data at a future medical conference. And finally, just two short weeks ago, we announced that the follicular lymphoma cohort from our UNITY-NHL study also met its primary endpoint of overall response rate. The follicular lymphoma cohort was designed to replicate the successful accelerated approval our pathway is taken by other PI3K deltas. Overall response for the approved PI3 K Delta has ranged from 42% to 59%, and our target range for success was 40% to 50%. We plan to discuss these results with the FDA with the goal of initiating an accelerated approval filing for follicular lymphoma in 2020.

We 2019 has been an exciting year for us, and we plan to keep the momentum going into 2020, which we believe will be a transformational year for our company with 2 substantial pivotal data readouts for our UNITY-CLL and ultimate MS. Phase II trials and our transition into a commercial organization with the potential approval of umbralisib for marginal zone lymphoma before year-end. With that, I'd like to turn the call over to the conference operator to begin the Q&A session, following which I will return to make some concluding remarks.

[Operator]

[Operator Instructions]. The first question comes from the line of Matt Kaplan with Ladenburg Allen.

[Matthew Kaplan, Ladenburg Thalmann & Co.]

Congrats on the progress during the quarter. It might can you just give us some added detail with respect to next steps for the UNITY-NHL cohorts for marginal zone and follicular lymphoma with respect to preparing and filing potential NDAs for those two indications parabolic?

[Michael Weiss, Executive Chairman, CEO & President]

Sure. Yes, sure. So as we've discussed previously, with respect to margin lymphoma. We've already met with the FDA; we feel like we have a good plan for filing the NDA. And the plan - our current plan is to get a rolling submission started from margin on lymphoma around year-end, should take about 3 months or so to get that filing complete. And then with respect to follicular lymphoma, as you know, we've just received that data our current thinking is, perhaps we can squeeze that one into the modules filing. It will depend on timing, will depend on FDA's interest in that kind of a combined filing. So some things to think about. And then if it does not go into the marginal zone lymphoma, again, I think is less likely cereol, it will be a stand-alone filing in 2020 or it would be combined with the filing for CLL based on UNITY-CLL positive. So we've got a few options for how we would get the follicular on file. But I think they're all good options, we just got to figure out which one makes them no sense.

[Matthew Kaplan, Ladenburg Thalmann & Co.]

Okay, very good. And then in terms of - with the near term, I guess, regulatory filings and kind of, I guess, turning over the card for UNITY-CLL. Can you give us a sense in terms of your commercial preparations for, I guess, number less than U2 as well?

[Michael Weiss, Executive Chairman, CEO & President]

Yes. So as I think most everyone knows we by now going to be found the company we hired Adam Wallman to be the Chief Commercial Officer. He has been busy building his team. He's got a great team. We put together a number of additional Celgene alum and others from other large companies. So the team is coming together, they're building the plan. I think we're getting to a position where, I think, probably in the early part of next year, we'll finally roll out an out and let him personally tell everyone about is great trend for commercialization, but he is working actively on building the team, like I said, he's put together a great team and all building together a great launch plan.

[Operator]

The next question is from the line of Alethia Young with Cantor Fitzgerald.

[Unidentified Analyst]

This is Lee Arm for Alethia. And we have a couple of questions here. The first for the rolling submission for single-agent umbralisib in MCL around year-end, how much follow-up did FDA asked for in order to file? And how much follow-up do you guys have now? And then for the UNITY-CLL trial. Obviously, the PS status reading out around year-end or early 2020. Could you just remind us why you decided not to conduct an ORR analysis as originally planned and instead, to look at CapEx has paid out.

[Michael Weiss, Executive Chairman, CEO & President]

Sure. So on the rolling submission for margin zone and the follow-up. We haven't disclosed the precise amount of follow-up required. But I could say that it's greater than 12 months of follow-up would be required to make a filing in this area. So - and it's longer than that. So we are in the process of following patients, as probably the last piece that will go into that rolling submission will be the clinical data with the required follow-up.

But again, we haven't disclosed it. But I think we should - we've made it pretty clear that the rolling submission will be in some reasonable time frame after we get the rolling started the completion should be done. And the follow-up that was requested by the FDA will be all in there.

[Unidentified Analyst]

Okay. And for the UNITY-CLL trial?

[Michael Weiss, Executive Chairman, CEO & President]

Yes. So for the UNITY-CLL. So you may recall, the DSMB back in September of '18, I guess, it was decided that the data were not mature enough at that time to conduct the overall response analysis that was based on their assessment that they could not, I guess, reliably, consider a complete and so if they couldn't feel was complete, the data was not mature. So the net result was the DSMB looked at the maturity of the data, not the data itself and decided that they prefer to wait to do that analysis. At that point, we, as a company, decided that there was probably no further use or overall response as the delay if it was 3 fix or et cetera, would be putting the overall response information too close to the progression-free survival information. And so we decided at that point to reserve the overall response assessment for the same time as the PFS.

Having said that, at this point, then the overall response has no value to us. The overall response was built into the trial as a potential way to get an early filing for accelerated approval. Once we decided to wait for progression-free survival, which is and was the primary point for the trial. The relevance of overall response as a regulatory importance went away.

[Operator]

The next question is from the line of Ed White with H.C.

[Edward White, H.C. Wainwright & Co.]

First, congratulations on the 1701 data, maybe you can give us the next steps in your thoughts for development for 1701?

[Michael Weiss, Executive Chairman, CEO & President]

Sure. So we are super excited about 1701 data, and we're excited to present the data. What I think is probably most interesting initially about 1701 of the potential applications outside of CLL. So as you saw in the initial cohort of patients in the Phase I that were treated the lowest dose of all patients responding all three patients were indolent patients. So these are patients that are either follicular or marginal zone, again, two core areas for us as everyone is now aware, based on our unelitist as a monotherapy in unit NHL. So just to give a sense, and this has and continues to be an iterative process. So in step one in indolent lymphoma, so follicular module zone.

Step one has been, let's look at embolic monotherapy. Step 2 is we're looking at U2 in those same indications. And so we are well into enrollment into our - hopefully, what could be registration directed, U2 studies under the NHL in Marginal zone and follicular. And then the next step would be to layer in the U2 plus BTK.

So again, there's a stepwise process to build toward doubles and triple combination, and we think U2 plus 1701 can be a really exciting opportunity for patients with indolent lymphomas, where again, ibrutinib monotherapy in marginal zone is pretty good. It's about a mid-40s response rate. It's much lower in follicular lymphoma in the reported mature in the 20s. So again, as a stand-alone BTK is not a - not typically regarded as the right target for indolent lymphomas. But in an add-on program, we think there's real value there. For us, again, being able to develop our BTK next-generation BTK as a once daily, we think has some real advantages when combined with umbralisib, which is a once daily, some of the newer BTK inhibitors that are coming to market are going to be twice a day, which you'd be surprised how that, twice a day, is certainly less convenient for patients.

So that's part of how we're thinking about 1701. We also think that U2 plus 1701 in CLL is a great alternative to BTK therapy as a monotherapy.

So again, we've already shown that if you take improve and U2 on top of it, you're going to get deeper responses that CR rates go up, the MRD-negative rates go up quite a bit. So we think that long term, BTK plus U2 is going to be a very attractive treatment option. Pretty much anytime you choose to use a BT inhibitor, you're going to want to put you to on top of that. Obviously, we're driving toward our own triple combination where we'll have our own BTK, that way we can try to make it as affordable as possible, and we put the 3 pieces together. And also, we have the opportunity to build that combination in a way that optimizes the activity while minimizing the toxicity of the agent. And again, all of the second-generation BTK, like the first generation ibrutinib, have the same pattern of AEs, whether we will find out soon whether they have them, to a lesser degree, but for the moment, they all carry the same risk of AFIB. They all carry a risk of bleeding the all carrier risk of our folgers. So there's a lot of room to improve the AE profile of the second-generation BTK and by doing it in combination with you, too, we think that affords us a lot of flexibility to create an optimal regimen.

So that's what we're thinking. I think we have a lot of room to operate in creating a triple combination of 1701.

[Edward White, H.C. Wainwright & Co.]

Great. And then maybe just a question for Sean. So what is the current share count out now when you include the fourth quarter ATM sales?

[Sean Power, CFO, Corporate Secretary & Treasurer]

It's right around the $100 million.

[Operator]

[Operator Instructions]. The next question comes from the line of Chris Howerton with Jefferies.

[Christopher Howerton, Jefferies]

Great. So Mike, maybe for the triple combination data at ASH. Maybe you could help us just contextualize those data within the context of what competing therapies have shown? And maybe what you hope to see in the current trial? And what kind of the regulatory hurdle might be in terms of clinical relevance.

[Michael Weiss, Executive Chairman, CEO & President]

Sure. So when - I guess, let's look at the triple therapy of U2 plus venetoclax, published and recall, these are patients that are in relapse. So these are Lasercard CLL patients. The best data to date for any treatment regimen in relapse fracture patient is of approved at each is venetoclax plus rituximab. That data comes from the MURANO trial. The CR rate for that study was around 10% and the MRD-negative rating the peripheral blood was somewhere G 40% and 50%. So again, I think what we're seeing, and that's hundred plus patients, and this is a handful of patients, but we're seeing the potential emergence of a treatment regimen that can substantially outperform what exists today. So we do think that this is a pretty significant potential improvement. We obviously need to put more patients on, which we are. We've got more patients coming through the Phase I that's being run by Dutch Cobar, and we also have the Ultra V study that's open and enrolling, and we're looking for a nice number of patients there, that I think are somewhere close to 100 patients. So - so we are going to enhance that patient's population is continue to see how that data evolves.

From a registration standpoint, I think in relapsed patients. Again, the comparator out there is Rituxan plus venetoclax. I've just described that data to you. Assuming that our data continues in relapsed patients to perform the way it's performed in the first handful of patients, then we certainly would be comfortable, at least, have any conversation with the FDA about the usability of our collective data from the Phase I and Phase II for accelerated approval.

Again, that would be on the backdrop of a U2 already approval, it would be possible unless U2 and the unsellable positive, but once it is positive, I think that does enable us to have that conversation about this data set.

[Christopher Howerton, Jefferies]

Sure. Okay, great. All right. And then maybe just another one for the GENUINE results, obviously, positive PFS. But how should we think about that fitting into UNITY-CLL and, I guess, broader in deliberate strategy?

[Michael Weiss, Executive Chairman, CEO & President]

Yes. Look, I think it's another important piece of information showing that one of our drugs, in that case, ublituximab can enhance ibrutinib in a challenging patient population. That group, particularly the 17p and the P53s continue to underperform all other patient populations when treated with BTK inhibitors. So the response rates are all quite good, but they tend to have a shorter progression-free survival. So the fact that you can add any second-generation highly ADCC CD20 and enhanced PFS in those patients is another very important piece of information for us and for patients and for physicians. That is in contrast that we'll not to the studies that have been run with rituxan plus ibrutinib, where none of them have been able to show that Rituxan has added anything on top of ibrutinib. So again, I think it's - these are all layers of importance.

We have - so we now have data showing that if you take with ublituximab alone and you put it with a BTK inhibitor, certainly in the high-risk patients, the BTIs going to perform better. We've also shown that if you take on Belisi, and this is also published, I believe, landsend oncology, if you take umbers of our PI3k delta and combine it with BTK, in that case, ibrutinib, you're going to also enhance the outcome for patients, you're going to get more patients into CR and more patients with longer remissions. And we have a third piece of information, which shows that if you take U2 for the combination of both of those and you added on top of the BTK. Again, ibrutinib in that case, published in that to hematology. Again, we showed that you can drive deeper responses, MRD-negative in patients. And ideally, that will lead to getting patients off therapy. So again, I think all of this is leading to ideally a place which we kind of alluded to in the prepared remarks, that U2 is - it's going to be a treatment option, assuming the Unity sale deposits, which we believe will be and it's approved, U2 will be treatment option to be used on its own. And then we're building toward what could be better triple combinations using U2 plus BTK, U2 plus venetoclax.

So the utility of U2 is not just as U2 as a stand-alone basis, which we think is a - will be a very important treatment option, particularly for patients in the community, particularly for patients who have already seen a BTK inhibitor, which again, there's a pool of over 50,000 of those patients out there that are going to potentially come back into the system over the next 5 to 10 years for which U2 alone will be very interesting. But in upfront patients as we start to think about driving toward deeper responses in getting patients off BTK inhibitors. You don't want to say on them if you don't have to - for life. And certainly, it goes down then to progression. So layering something on top of the BTK inhibitor, and that is your first choice is going to be extremely important. We think U2 could be an ideal partner for that. Again, we got to do the clinical trials, which we're doing to build toward layer in U2 on top of some of these other agents.

[Operator]

I'm sorry, yes, go ahead.

[Michael Weiss, Executive Chairman, CEO & President]

So let me, I guess, conclude the call by making some final remarks. I got cut off by the conference operator. He was going to turn the call back over to me, which I'll just take it myself.

So first, again, let me thank everyone for joining us on the call today. I'll do a quick final review on the key objectives and goals for the remainder of the year and it's early next year and with regard to our pivotal programs.

So first, and very excitedly, in short-term around the end of the year, we should be initiating our first rolling NDA submission for patients with previously treated marginal zone lymphoma also, around year-end and into the first quarter of '20, as we've just been discussing we're hoping to have the top line announcement for our progression-free survival from the Phase III UNITY-CLL trial. We also plan to share the results from the follicular lymphoma cohort with the FDA again to determine the optimal following approach, which we just discussed. And then we're targeting top line data from the ULTIMATE Phase III trials in relapsing MS., middle to second half of 2020.

And finally, if all goes well, we could see our first approval for umbralisib and Module One lymphoma by the year-end 2020. So on behalf of all of us at TG, I'd like to thank our investigators and their patients for participating in our trials as well as our shareholders for their continued support, and thanks again, everyone, for joining us, and have a great day.

[Operator]

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.