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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, and welcome to BeyondSpring's Fourth Quarter and Year-End 2021 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded today, April 14, 2022.
I will now turn the call over to Ashley Sierchio of LifeSci Advisors.
Thank you, everyone, for joining today's call. I would like to advise listeners that comments made on today's call may reflect forward-looking statements that are related to such matters as BeyondSpring's clinical and preclinical research and development activities and results, regulatory and commercial plans, industry trends, market potential, collaborative initiatives and other financial projections, among others.
While management believes that its assumptions, expectations and projections are reasonable in the view of the currently 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 Co-Founder, Chairman and Chief Executive Officer; Dr. Ramon Mohanlal, Executive Vice President, Research and Development and Chief Medical Officer; and Elizabeth Czerepak, Chief Financial Officer. It is now my pleasure to turn the call over to Dr. Lan Huang. Lan?
Good morning, everyone, and thank you for joining today's call. It's a pleasure to be here today reporting our fourth quarter and year-end results and providing an update on our progress in the past few months. After the complete response letter from the U.S. FDA last November, we took steps to streamline our operations in order to extend the cash runway. Now we have focused on executing near-term opportunities for value creation. First, we are pleased with our ongoing discussions with China NMPA on the review of Plinabulin's NDA in combination with G-CSF for the prevention of chemotherapy-induced neutropenia or CIN. The G-CSF market in China is significant with $1.2 billion in sales in 2020 and around 30% annual growth since 2017. In addition, we continue our discussions with the FDA regarding the clinical and regulatory pathway for Plinabulin in CIN in the U.S.
Second, moving to our Plinabulin program in non-small cell lung cancer, where we announced in August and September 2021 at ESMO Conference, positive top line data from our Phase III DUBLIN-3 study. In the second and third line non-small cell lung cancer with EGFR wild type, which represents severe unmet medical needs with limited treatment options, Plinabulin and docetaxel combination showed significant improvement in overall survival, especially in doubling the 2-year and 3-year survival rate compared to docetaxel alone. We believe the data supports the role of Plinabulin as a potential anticancer treatment option in this indication. We are moving forward to target an NDA filing in China by year-end. Dr. Ramon Mohanlal, our Chief Medical Officer, will provide additional details during his remarks shortly. Finally, we continue to develop Plinabulin as a potential pipeline in the drug. Using cost-effective investigator-initiated studies, we'll continue our development plan for Plinabulin in immuno-oncology combinations in various cancers to target unmet medical need in patients who have failed PD-1 or PD-L1 inhibitors. We continue to see strong interest by investigators and will share additional data and updates as they become available. Overall, we are proud of the support we have received as we continue our efforts to bring Plinabulin to market. One of our validating steps was announcing last fall, a strategic partnership between Wanchunbulin, our 58% owned China subsidiary and Hengrui Pharmaceuticals, a leading oncology R&D and commercialization company in China for the development and commercialization of Plinabulin in Greater China. Hengrui is a well-respected company with over 10,000 salespeople in China. In 2020, the company had $4.2 billion in sales, of which $2.4 billion was for oncology drug sales. In addition, Hengrui has a leading market position with its long-acting G-CSF in China. In September 2021, we received a CNY 200 million estimated to be around $31 million upfront payment from Hengrui and will be eligible to receive up to CNY 1.1 billion, estimated to be $171 million in regulatory and sales milestones. We will receive all proceeds from sales of Plinabulin products and pay Hengrui a predetermined percentage of such sales. We will provide updates on commercialization plans as we get closer to potential approval in China. In conclusion, we remain committed in bringing Plinabulin to market as Plinabulin has a long patent life with patent protection to 2037 in 40 jurisdictions, which includes 19 granted patents in the U.S., we would have a long runway to realize Plinabulin's potential to help many patients in need. One more note, we are making good progress in our subsidiary Seed Therapeutics. Seed focuses on differentiated molecular glue technology in the targeted protein degradation field. We signed R&D collaboration agreement on a number of targets with Eli Lilly in November 2020. Now I will turn the call over to Dr. Ramon Mohanlal, our Chief Medical Officer, for some additional details on our development programs, Ramon?
Thank you, Lan. I would like to make the following comments regarding the CIN program. First, we firmly believe that our drug works in CIN [ setting ]. We have clinical evidence that Plinabulin increased its neutrophil count through a rapid mechanism of action, acting within 24 hours after chemotherapy. This clinical evidence was presented at ASH last year. Second, we have positive data in every single clinical study for CIN that we have conducted, totaling over 1,200 patients in these studies. The data has led to multiple presentations at leading scientific conferences as well as publications in highly regarded peer reviewed journals.
And third, although we have positive clinical trial data, we do fall short in satisfying the U.S. FDA's requirement to receive approval at this time in that more data will be needed. A second Phase III CIN study will be required, and we are currently in discussions with the U.S. FDA to align on the design of this study. We are highly committed to bringing Plinabulin for CIN to the market. We provide doctors the tools to better protect the patient, the CIN, which continues to be conditioned with unmet medical need. Today, CIN continues to cause preventable mortality and suboptimal cancer treatment due to chemotherapy dose reductions necessitated by the occurrence of severe neutropenia. Moving on to non-small cell lung cancer. I would like to make the following point. Firstly, we firmly believe that the drug works in non-small cell lung cancer as well as other cancer indicators. We have strong mechanistic evidence that Plinabulin has the dual mechanism of action in cancer. Firstly, Plinabulin has enhancing effect that enable immune system to better fight off the cancer. Secondly, Plinabulin has direct anticancer effect as a single agent in a number of cancer types. The second point I would like to make, we have positive clinical trial data in the Phase III DUBLIN-3 study in non-small cell lung cancer and in the Phase I trial in small cell lung cancer, conducted with a Big Ten consortium. Data from these trials were presented at ESMO and ASCO last year, respectively. Notably, in the non-small longest trial, we had more surviving patients over the timespan of 4 years with the Plinabulin plus docetaxel combination compared to standard of care docetaxel. In the small cell lung cancer trial, the addition of Plinabulin to nivolumab and ipilimumab more than doubled objective response rate, ORR, at more than 40% compared to the controls of nivolumab and ipilimumab alone. Of note, we still have 1 patient in the trial who failed a prior checkpoint inhibitor and yet continues to benefit from Plinabulin after more than 58 cycles, which for second-line small cell lung cancer is highly exceptional. The third point I would like to make regarding the past approval, what is relevant is the patient population of the trial. In Dublin-3, around 87% of the data was derived from China. This has brought into question whether this data set is applicable to the U.S. population with our U.S. FDA discussion. This is a topic that not only affects us but affects many companies that have derived their data primarily from China. In the February ODAC meeting, the issue of BLA for sintilimab, the FDA committee publicly noted that while it was convinced about the efficacy and safety of the data presented, they would require additional data that is applicable to the U.S. population. Having around 87% of the patients derived from China, however, is a distinct advantage for obtaining approval in China as the data is highly applicable for Chinese patients. The NDA filings for non-small cell lung cancer in China will therefore be our near-term priority. We, however, will remain committed to continuing our clinical and regulatory discussions in the U.S. and on the regions. In addition to the development of Plinabulin in CIN and non-small cell lung cancer, we are developing Plinabulin and immunotherapy combinations through a number of Phase I/II IIT trials that are currently ongoing and we will share the data as we receive it. With that, I will now turn the call over to Elizabeth, our CFO, for a review of our financials. Elizabeth?
Thank you, Ramon. I will now briefly discuss our fourth quarter and year-end 2021 financial results. For greater detail to these results, I refer you to our press release issued this morning and to our 20-F filing, both of which can be accessed under the Investors section of our website.
With that, I will now highlight some of the key financial results. R&D expenses in the fourth quarter of 2021 were $5.8 million compared to $8.4 million in the same period last year. The decrease of $2.6 million was primarily due to lower clinical development expenses and personnel costs, including noncash share-based compensation expenses, which were partially offset by higher preclinical and professional expenses. G&A expenses were $5.0 million in the fourth quarter of 2021 and included a noncash credit of $2.0 million related to the reversal of share-based compensation expense. This compares to $10.4 million for the prior year, which included $2.1 million in nonrecurring personnel costs. The decrease was primarily driven by lower share-based compensation expense. The net loss attributable to the company in the fourth quarter of 2021 was $9.5 million compared to $17.6 million for the same period last year. For the full year 2021, R&D expenses were $36.9 million compared to $41.8 million for the prior year. The $4.9 million decrease was primarily due to lower clinical development expense and noncash share-based compensation expense, partially offset by higher personnel costs, preclinical and professional services expenses as well as a $2.9 million NDA application fee paid to FDA, which is expected to be refunded during the second quarter of 2022. G&A expenses for the full year 2021 were $30.7 million compared to $22.6 million for the prior year. The majority of the $8.1 million increase was due to higher pre-commercialization expenses for Plinabulin, which we do not expect to continue this year. There were also increases in personnel costs, administrative expenses and other costs, which were partially offset by lower noncash share-based compensation expense. The net loss attributable to the company for the full year was $64.2 million compared to $61.0 million for the prior year. Our cash balance at December 31, 2021, was $41.6 million, and we had short-term investments of $30.7 million for a total of $72.4 million, which we believe will be sufficient to support our ongoing operations and clinical programs over the next year. With that, I'll now turn the call back over to Lan for closing remarks. Lan?
Thank you, Elizabeth, and thank you to everyone who is on the call for your strong support. We are fully committed to bring Plinabulin to market to help many patients in need, and we continue to believe in its great potential. I would like to open the call for Q&A now. Operator?
[Operator Instructions] And our first question is from the line of Maury Raycroft with Jefferies.
I wanted to check on the China approval for CIN. You've mentioned that you're in ongoing discussions with China's NMPA for CIN. What kind of feedback on a potential approval decision have you received so far? And is there an update on what the timeframe for approval could look like?
Maury, thank you for supporting us over the years. So the CIN NDA application is currently under independent review with the China NMPA. As you see, actually, I'm currently in China to work with our China team on the review process. So far, we have had multiple positive meetings with CBE, which is the Center of Drug Evaluation in the NPA, and we remain hopeful of the potential approval in China. But as also you know, anything dealing with regulatory process has its inherent uncertainties. However, our optimism is based on the strong data generated in Asian patients in the 106 Phase III study. And we will provide the progress of the discussions with China NMPA in due course.
Okay. Understood. And for non-small cell -- well, for CIN in the United States, you mentioned running an additional study. Can you elaborate on conversations with FDA on what the additional study in CIN could look like and when that could start?
Yes. So I will just turn this question to Ramon. Ramon, would you like to answer this?
Yes. Thank you, Lan. Yes, this is an important question. And we have active discussions ongoing with the U.S. FDA on the design of that study. When we have more clarity, then of course, we will disclose that, but we are actively discussing this study.
Understood. And then maybe last question for me. Just for non-small cell lung cancer, is there still a path forward in the United States? And when will you learn more about what that path could look like?
Yes. So also for non-small cell lung cancer, we are in active discussions with the U.S. FDA. Those discussions are ongoing. Obviously, as I mentioned, the data is positive and will remain to be positive. I also pointed out that most of the data was derived from the Chinese population, which is an important topic in our discussions with the U.S. FDA.
Got it. Okay. I guess would another study be needed there or could the IO studies potentially expand? And would that be more of the path forward for non-small cell lung cancer?
So non-small cell lung cancer, second and third line is still tremendous on that medical need because you will be aware that most of the IO agents have moved into first line, which, in essence, creates an opportunity in second and third line, and that's where we are positioned. So we have positive data with one study, and these process are ongoing regarding also positioning in second and third line. But separately also, as you indicate, our interest also is in first line with a number of Isle combinations. We are active on both fronts, focus on second and third line, but also strong attention to first line with IO combinations.
Our next question comes from the line of Jason Gerberry with Bank of America.
This is Chi on for Jason. I guess the first one on the U.S. non-small cell filing. I just want to confirm, if the second half 2022 filing guidance is off the table right now as you continue discussion with the FDA? And I'm curious if you have any sort of early feedback from the FDA about what's the gating factor for the U.S. filing? I understand there's sort of the dynamic of evolving FDA view about the preference for multiregional clinical trials. I'm curious if that's sort of the driver for that discussion.
And I guess, thirdly, there is -- at the Lilly's Innovent AdCom, I think one thing the FDA took issue with sort of data generating in China was based on an older report several years ago, I think, from 2016 that maybe there's some data compromised in China trials. And one of the questions they asked the sponsors there were if there's any overlap with their trial size compared to what is document in that 2016 report? I understand there are like a few years have gone by, things have changed. But I'm just curious if there's any overlap between your trial sites and the list of China trials listed in that document?
Well, thank you so much, Chi. I can answer this quickly because Remo has answered a lot on the non-small cell lung cancer previously. So first is, yes, we confirm that the second half of 2022 filing for non-small cell lung cancer is for China. For the U.S., I think the current discussion is around the relevance of the [indiscernible] patient population to the U.S. patients. So thanks for asking the question regarding the PD-1 agent from Lilly and Innovent, that ODAC meeting. But as we know that China do provide good data with GCP qualities. So we do not see any issues with our data as we also use ICON, which is a global CRO to conduct the study globally. In China, there's 30 sites there for -- they're all very well-respected sites, which has passed the NMPA inspections. So we are very confident with the quality of our data from China.
Got it. And if I may just ask one quick follow-up. Has the FDA sort of initiated a conversation that you may need a second trial with some flavor of multiregional representation or has that discussion not come out yet?
No, this discussion did not come up.
Our next question is from the line of Joel Beatty with Baird.
The first one is on CIN in the U.S., you mentioned that there will be a second study needed there. For clarity, could you point out which study the FDA considers as the first study for that setting?
Thank you so much, Joe, and thanks for your support and this is a great question. So the first study will be considered as the 106 Phase III study, speaking on combination label.
Makes sense. And has FDA explicitly said that they consider that study to be a success?
I think they considered the efficacious data.
Okay. So it sounds like maybe they've had a positive tone, yes, it would still be a review issue at a future point in time?
Yes. But currently, we use the 106 Phase III interim data actually got us the breakthrough and the final data is consistent with the interim data, which is a positive data from the primary endpoint. And also, we show the relevant clinical benefit in the combination compared to the pegfilgrastim. So that is efficacious and also it's safe from what we see from the data on Plinabulin in this CIN dose. Ramon, you want to add a little bit more? Well if not, did I answer your question, Joel?
Yes, it's helpful. Sorry, go ahead, Ramon.
Sorry, I was on mute. I would like to add, study 106 is a combination study with Plinabulin and Pegfilgrastim. We met the primary endpoint. The data is positive. The data is positive in many different directions. So that as a study on its own is a positive study. Obviously, with the new concept, a new paradigm with a combination approach in CIN the FDA would like to have a level of robustness what we already have communicated with you. And to reach that level of robustness, a second study will be needed. The way the data will be looked at is, of course, in totality once that data of the second study has been obtained. Those discussions are ongoing with the U.S. FDA, in particular, regarding the design of the second study.
Got it. And maybe switching to non-small cell lung cancer in the U.S. for a trial to support that indication, would it be a matter of conducting a trial similar to Dublin-3, but with the U.S. and global patients or would there be differences in trial design compared to DUBLIN-3?
So a second study is not mentioned was in our discussion with U.S. FDA. So the current discussion point is the relevance of the 103 study for the U.S. population. But even as you see from the ODAC meeting with FDA of this PD-1 from Innovent, Lilly, FDA did say there is certain regulatory flexibility in 3 parts: Number one is on [indiscernible]; number two is rare disease and potentially our drug is not in the rare disease point, but number three is novel mode of action and plinabulin does have novel mode of action, so potentially that's an area of interest as well.
Our next question comes from the line of Joe Pantginis with H.C. Wainwright.
So I wanted to just focus on CIN as well. So let's start with China. So I just wanted to get a sense, what's the role that Hengrui is playing in the regulatory filing discussions in China? And maybe a little more detail as you feel as part of your discussions as what you currently view as the rate-limiting steps?
Thank you so much, Joe. Thanks for the great question. So Hengrui is really an ideal partner for us in China because they have many drugs approved in China and also a lot of them are innovative drugs. So currently, we are working together to prepare the answers for the NMPA review questions and then also do attend the meetings with us with the CDE.
And is there anything to make to is what the key factor is that it still needs to be addressed?
We're still answering some of the review questions from the CFDA -- the NPA. So after those questions are answered and then they will have final review. It's a step-wise approach.
I understand. Sure, sure. And then regarding the FDA, I can certainly respect and understand, obviously, not being able to provide any guidance regarding the design or scope of the second study. So I guess I'll ask this question, and I'm not sure if you can answer it at this point. What are the chances that BeyondSpring will conduct this study on your own versus someone else or in partnership?
Well after the design is done, I think we plan to do it ourselves. If there is a partner coming along, I think we would also be happy to do it together.
Thank you. There are no further questions. I will now turn the call over to Dr. Huang for her closing remarks.
Thank you, everyone, for joining the call today, and thank you for your strong support. We will be keeping you posted in our upcoming progresses. Thank you, and have a nice day.
This will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time.