Clovis Oncology, Inc. (NASDAQ:CLVS) Q2 2022 Earnings Conference Call August 8, 2022 8:30 AM ET
Company Participants
Anna Sussman – VP, IR
Patrick Mahaffy – Co-Founder, CEO, President & Executive Director
Lindsey Rolfe – EVP, Clinical Development & Pharmacovigilance and Chief Medical Officer
Daniel Muehl – EVP & CFO
Conference Call Participants
Operator
Good morning. My name is Samantha, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clovis Oncology Second Quarter 2022 Operating Results Conference Call. Today’s conference is being recorded. [Operator Instructions]. Thank you.
I would now like to turn the call over to your Vice President of Investor Relations and Corporate Communications, Anna Sussman. You may begin your conference.
Anna Sussman
Thanks, Samantha. Good morning, everyone. Welcome to the Clovis Oncology Second Quarter 2022 Conference Call. We appreciate you joining us. You’ve likely seen this morning’s news release. And if not, it’s available on our website at clovisoncology.com.
As a reminder, this conference call is being recorded and webcast. Remarks may be accessed live on our website during the call and will be available in our archives for the next several weeks.
Today’s agenda includes the following: Patrick Mahaffy, our President and CEO, will discuss the second quarter and recent highlights; and then Dr. Lindsey Rolfe, our Chief Medical Officer, will provide a summary of the recently presented FAP-2286 data at SNMMI and ATHENA-MONO data at ASCO and the plans for Rubraca regulatory filings. Lindsey will also provide additional regulatory updates as well as the anticipated upcoming clinical milestones for FAP-2286 and Rubraca. Then Dan Muehl, our Chief Financial Officer, will cover the financial results for the quarter. Patrick will then make a few closing remarks, and then we’ll open the call for Q&A, during which time Pat, Lindsey and Dan will be available to answer questions.
Before we begin, please note that during today’s conference call, we may make forward-looking statements within the meaning of the federal security laws, including statements concerning our financial outlook and expected business plans. All these statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Our actual results could differ materially due to a number of factors, including the extent and duration of the effects of the COVID-19 pandemic and the timing and extent of recovery from it. Please refer to our recent filings with the SEC for a full review of the risks and uncertainties associated with our business. Forward-looking statements speak only as of the date on which they are made, and Clovis undertakes no obligation to update or revise any forward-looking statement.
Additionally, please note that we’ll be discussing cash burn, a non-GAAP financial measure, during today’s call. Required disclosures related to this are in today’s news release, which can be found on our website.
Now I’ll turn the call over to Pat Mahaffy.
Patrick Mahaffy
Thanks, Anna. Good morning. Welcome, everybody. We appreciate your time today. Sorry about that. We achieved a key milestone in the second quarter with a preview of the first clinical data from the LuMIERE trial of FAP-2286. The data, which were presented at the Society of Nuclear Medicine and Molecular Imaging Annual Conference, showed the first evidence of safety and clinical activity for our first peptide-targeted radionuclide therapy candidate, and importantly, further demonstrate that fibroblast activation protein, or FAP, is a promising theranostic target with expression across many types of solid tumors.
Lindsey, our Chief Medical Officer, will discuss the data in greater detail shortly, but we are obviously encouraged by the initial results and look forward to presenting additional clinical data and initiating Phase II expansion cohorts in multiple tumor types later this year.
Turning to Rubraca. Sales in Q2 2022 were $32.1 million, 6% lower than the prior quarter and 13% lower year-over-year compared to Q2 2021. The reduction in ovarian cancer diagnoses and fewer patient starts in the U.S. in previous quarters as a result of COVID has continued to impact second-line maintenance treatment. While ovarian cancer doses appear to be reverting to pre-pandemic levels, the effect of this increase is almost wholly observed on front-line treatments and will not likely impact the second-line indication for several quarters. In addition, we believe that the adoption of PARP inhibitors in the front-line setting is impacting the use of PARP inhibitors in later-line settings.
Despite the decline in sales, we remain confident in Rubraca’s potential to address larger patient population in earlier lines of therapy for both ovarian and prostate cancer based on our ongoing and recently reported Phase III studies. The positive results from ATHENA-MONO Phase III were presented at the recent ASCO Annual Meeting and at the prestigious Best of ASCO meeting series. ASCO also provided us the opportunity to interact with the clinical community, where we received overwhelmingly positive feedback on the ATHENA-MONO results. We intend to submit regulatory applications for approval in this indication to both the FDA and EMA during this quarter this year.
Following ATHENA-MONO, two additional top line Phase III data readouts for Rubraca are expected in the next few quarters. Data from the TRITON3 trial in the second-line prostate cancer treatment setting is expected early in the fourth quarter this year. Data from the ATHENA-COMBO trial with Rubraca, in combination with Opdivo in the front-line ovarian cancer maintenance treatment setting, is expected in the first quarter of 2023.
Before I turn the call over to Lindsey, I also want to reiterate our efforts to improve our balance sheet. While we were disappointed that resolutions related to a potential reverse stock split and authorized shares did not achieve the threshold to pass, we were grateful that a solid majority of the shares voted were in favor of our proposals. We are currently exploring alternatives and strategies to allow for flexibility for future equity raises.
Our efforts to raise additional capital also include entering into strategic partnerships or licensing arrangements, and we are currently in preliminary discussions related to partnering certain development and commercialization rights to FAP-2286 for an upfront payment with the potential for milestones, research and development support and royalties.
And with that, I’ll turn the call over to Lindsey.
Lindsey Rolfe
Thanks, Pat. Good morning. I’ll start with a summary of the clinical data for FAP-2286 that were presented at SNMMI and highlight the key clinical milestones expected for FAP-2286 in the near term. As a quick reminder, FAP-2286 is the first peptide-targeted radionuclide therapy and imaging agent targeting fibroblast activation program — protein, or FAP, to enter clinical development and is the lead candidate in our targeted radiotherapy development program.
In the ongoing Phase I/II LuMIERE study, FAP-2286 is used both as an imaging agent and a therapeutic agent often known as a theranostic. For the imaging agent, FAP-2286 is attached to the isotope gallium-68 to allow positron emission tomography, or PET, imaging and selection of patients for inclusion in the study. For the therapeutic agent, FAP-2286 is attached to the isotope lutetium-177, an emitter of beta particle ionizing radiation that causes DNA damage and cell death.
The Phase I portion of the ongoing LuMIERE study is evaluating the safety of the FAP targeting investigational therapeutic agents and will identify the recommended Phase II dose and schedule of lutetium-177 labeled FAP-2286.
The data presented at SNMMI included 9 patients treated in the first 2 dose cohorts. Overall, FAP-2286 demonstrated a manageable safety profile and early evidence of activity. Treatment-emergent adverse events were found to be generally mild to moderate among the 9 patients in the safety population that received 3.7 or 5.55 gigabecquerels per dose of FAP-2286.
The evidence of activity included a confirmed RECIST partial response in the lowest dose cohort of 3.7 gigabecquerels in a heavily pretreated patient with cancer of the appendix who completed the maximum allowed 6 administrations of 177 lutetium FAP-2286. Enrollment in the third of four planned dose cohorts is ongoing. In addition to the data from LuMIERE, additional data from a separate investigator-sponsored imaging study with FAP-2286 were also presented at ASCO and SNMMI. This study, which is currently underway at UCSF, is being led by Dr. Thomas Hope, who is also the principal investigator of the LuMIERE study.
In this Phase I study, FAP-2286 labeled with gallium-68 is being studied as a novel imaging agent to identify metastatic cancer in patients with solid tumors. Dr. Hope’s presentation suggested that 68 gallium FAP-2286 PET is a promising tool for imaging patients across a range of cancer types. Presentation of updated LuMIERE FAP-2286 data at the EANM Annual Congress and initiation of Phase II expansion cohorts in multiple tumor types are both anticipated in the fourth quarter of 2022.
Now switching to Rubraca. ATHENA is a Phase III 1,000-patient study in front-line, newly diagnosed advanced ovarian cancer maintenance. With ATHENA, we believe we are uniquely positioned to evaluate Rubraca in terms of two independent outcomes: monotherapy versus placebo in the front-line maintenance setting as well as any potential advantage of the combination of Rubraca and Opdivo over Rubraca alone in the same front-line maintenance setting.
As we detailed the results for ATHENA-MONO on a previous call, I’ll just provide a brief review today. The ATHENA-MONO trial, which is evaluating Rubraca monotherapy versus placebo, met its primary endpoint, showing Rubraca monotherapy versus placebo improved progression-free survival, or PFS, by investigator assessment in both populations in the primary efficacy analysis: HRD-positive and all patients randomized or ITT.
A benefit in PFS was also seen in the exploratory subgroups of patients with HRD-negative tumors: those within the HRD-positive population with either BRCA mutant or BRCA wild type/loss of heterozygosity, or LOH, high tumors and those with BRCA wild-type disease whose LOH status could not be determined. The safety of Rubraca observed in ATHENA-MONO was consistent with both the current U.S. and European labels.
For the front-line indication, we intend to submit an sNDA to FDA and a Type II variation to EMA during the third quarter. As we have previously disclosed, the FDA has recommended that we wait for more mature overall survival data from ATHENA-MONO to submit the sNDA. If the sNDA is submitted prior to receiving more mature overall survival data, FDA has indicated that the sNDA may need to be discussed at an Oncologic Drugs Advisory Committee known as an ODAC meeting. FDA has also indicated it will consider overall survival data from other rucaparib clinical trials when reviewing the ATHENA-MONO application.
We believe that the encouraging PFS results, the primary endpoint of the study, are strongly supportive of an approval and of use in the front-line setting. And we’re grateful for the support of the clinical community familiar with the results.
Looking ahead to other Phase III readouts for Rubraca, data from ATHENA-COMBO, the combination of Rubraca plus Opdivo versus Rubraca monotherapy, are expected in the first quarter of 2023. The only opportunity for Rubraca monotherapy in front-line maintenance treatment of ovarian cancer, the ATHENA-COMBO study represents the potential to introduce an anti-PD-1-containing regimen for the first time to a broad population of ovarian cancer patients.
In addition, top line data from the TRITON3 trial are expected early in the fourth quarter of 2022. TRITON3 is a Phase III study evaluating Rubraca versus physician’s choice of chemotherapy or second-line androgen deprivation therapy in patients with castrate-resistant prostate cancer with BRCA or ATM mutations. This trial is the confirmatory study for Rubraca’s current approval in metastatic castrate-resistant prostate cancer as well as an opportunity for a potential second-line label expansion.
ATHENA and TRITON3 each provide the potential to reach larger patient populations in earlier lines of therapy for both ovarian and prostate cancers. The timing for the ATHENA-COMBO data readout is contingent upon the occurrence of protocol-specified progression-free survival events.
Now I’ll turn the call over to Dan to discuss second quarter financial results.
Daniel Muehl
Thanks, Lindsey, and hello, everyone. We reported net product revenues for Rubraca of $32.1 million for Q2 2022, which included U.S. product revenues of $22.7 million and ex U.S. product revenues of $9.4 million, respectively. This represents a 6% — sequential 6% decrease from Q1 2022 and a 13% decrease year-over-year compared to Q2 2021 net product revenues of $36.8 million, which included U.S. product revenues of $27.7 million and ex U.S. net product revenues of $9.1 million.
Gross-to-net adjustments totaled 28.8% globally in Q2 2022, essentially flat with the 28.5% reported in Q1 2022. This metric fluctuates quarter-to-quarter, but the high 20% level seems likely depending on revenue and distribution mix for the U.S. and Europe. As previously discussed, as European revenues increased in proportion to the U.S., global gross-to-net will increase correspondingly.
Research and development expenses totaled $36.4 million for Q2 2022, down 20% compared to $45.8 million for the comparable period in 2021 primarily due to lower spending on Rubraca clinical trials.
Selling, general and administrative expenses totaled $32.6 million for Q2 2022, down 1% compared to $32.9 million for the comparable period in 2021 due to overall cost reduction efforts. Included in Q2 2022 results is a onetime noncash adjustment of $9.7 million in other manufacturing costs related to the expected expiration of Rubraca currently in inventory. There were no such costs in 2021.
We reported a net loss for Q2 2022 of $71.3 million or $0.50 per share compared to a net loss for Q2 2021 of $66.4 million or $0.61 per share. Net loss for Q2 2022 included share-based compensation expense of $5.4 million compared to $7.4 million for the comparable period in 2021.
Turning now to a discussion of cash and debt. Clovis had $94.6 million in cash and cash equivalents as of June 30, 2022. As of June 30, 2022, the company had drawn $165.2 million under the Sixth Street Partners, LLC, SSP, ATHENA clinical trial financing and had up to $9.8 million available to draw under the agreement to fund the expenses of the ATHENA trial.
Based on our current cash, cash equivalents and liquidity available under the ATHENA clinical financing agreement, together with current estimates for revenues generated by Rubraca, the company will need to raise additional capital in the near term in order to fund our operating plan and continue as a going concern beyond February of 2023.
As a reminder, we have approximately 58%, a clear majority, of the shares voted at the 2022 Annual Meeting of Stockholders who were in favor of the reverse stock split. The overall total number of shares voted at the meeting was not sufficient to approve the proposed reverse stock split of Clovis common stock, which would have had the effect of increasing the number of authorized, unissued and unreserved shares of common stock available for the company to issue.
As a result, we do not currently have sufficient shares — available shares of common stock to be able to raise meaningful additional capital through public or private equity-based offerings. Therefore, we are currently exploring alternatives and strategies to increase the number of shares that would be available for issuance to permit greater flexibility in raising capital through equity transactions, including the offer and sale of super-voting mirorred preferred stock that has been utilized by peers in similar situations to support approval of such proposals where the existing votes of shareholders or stockholders already indicate favorable support.
As Pat mentioned, Clovis is also actively exploring sources of funding other than equity financing transactions, including through entering into strategic partnerships or licensing agreements for one or more of our products or product candidates, in order to raise sufficient capital to fund the company’s operating plan and continue as a going concern beyond February of 2023. We would expect that we would need to successfully complete some combination of strategic alternatives and equity financing.
Net cash used in operating activities was $35.1 million for Q2 2022, down 25% from $46.8 million reported in Q2 2021.
Cash burn in Q2 2022 was $26.4 million, down 21% from $33.4 million in Q2 2021 and down 46% from $49.3 million in Q1 2022.
Now I’ll turn the call back to Pat.
Patrick Mahaffy
Thanks, Dan. In summary, with the early but encouraging clinical activity and safety seen to date from the LuMIERE trial of FAP-2286, we look forward to presenting updated clinical data from the LuMIERE study in Barcelona in October and initiating Phase II expansion cohorts in multiple tumor types during the fourth quarter. We remain confident in Rubraca’s potential to address larger patient populations in earlier lines of therapy for both ovarian and prostate cancer.
Thought leader feedback on the ATHENA-MONO data has been enthusiastic and supportive, and we look forward to submitting the NDA and Type II variation based on the ATHENA-MONO data during the third quarter.
We continue to look forward to the anticipated Phase III data readout of TRITON3 in the second-line prostate cancer treatment setting early in the fourth quarter this year and ATHENA-COMBO in combination with Opdivo in the front-line ovarian cancer maintenance treatment setting in the first quarter of 2023.
And with that, we’d be happy to answer any questions you have.
Question-and-Answer Session
Operator
Anna Sussman
Okay. Thanks, Samantha. That’s unusual. In that case, we thank you all for your interest in Clovis Oncology today. If you have any follow-up questions, you can call me at 303-625-5022 or Breanna Burkart at 303-625-5023. This call can be accessed via a replay of our webcast at clovisoncology.com beginning in about an hour, and it will be available for 30 days. Again, we appreciate your interest and time. Thank you and have a good day.
Operator
This concludes today’s conference call. You may now disconnect.
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