CASI Pharmaceuticals, Inc. (CASIF) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the CASI Pharmaceuticals First Quarter 2022 Business Update and Financial Results Conference Call. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Rui Zhang, Vice President of CASI Pharmaceuticals. Please go ahead.

Thank you, Jamie. Good morning. Welcome to CASI's First Quarter 2022 Conference Call. Earlier today, CASI issued a press release providing the details of the company's business update and financial results for the quarter ended March 31, 2022. This press release is available in the Investor Relations section of the company's website. Today's call will be led by Dr. Wei-Wu He, our Chairman and CEO; along with Mr. Larry Zhang, our President; Dr. Alex Zukiwski, our Executive Vice President and Chief Medical Officer; and Dr. Jim Goldschmidt, our Chief Business Development Officer. They will also be available to answer questions during the Q&A portion of this call. As a reminder, we will be making forward-looking statements, including our business plans, objectives and milestones. These forward-looking statements are not a guarantee of future performance, and therefore, you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those projected or implied in our forward-looking statements. For a description of the important factors that could cause actual results to differ, we refer you to the statements in our ITC filings. It is now my pleasure to turn the call over to our Chairman and CEO, Dr. Wei-Wu He. Doctor?

Thank you, Rui. Good morning, everyone, and thank you for joining us. I will begin the call with an update on the business, followed by our lead programs and near-term catalysts, concluding with our financial highlights. We have experienced significant challenges during the first quarter of 2022, mainly due to the recent COVID-19 lockdown in China, including Shanghai, where we generate significant revenues. The restrictive measures put in place secondary to the COVID-19 surge are extensive and shift the hospital priorities away from the non-COVID-related cares and procedures. The lockdown in several cities continues as of today and may have a negative impact on the sales of our products for the second quarter and the whole year. The restrictions also adversely impacted the enrolling of patients for the CNCT19 Phase II studies. Despite these challenges, we continue to make progress across a number of our priorities. Sales of EVOMELA increased by 58% compared to the same period last year. Our strategic focus in 2022 will continue to be to advance the development and commercialization of the portfolio. Through our partners' ventures, the CNCT19 NDA submission to the NMPA is still on track, with potential minor delay due to COVID-19 lockdown in cities where we are conducting trials. We anticipate the start of BI-1206 Phase I trial in China. We expect CB-5339 to receive clinical trial application approval from NMPA during 2022. Meanwhile, our CID-103 Phase I study continues. We are excited by our momentum and we'll continue to execute on several key milestones across our broad portfolio in the quarters ahead. Now let's move to CASI's first commercialized product, EVOMELA. We are pleased to report $9 million in EVOMELA sales for the first quarter of 2022. EVOMELA is approved in China for use as a high-dose conditioning treatment prior to hematopoietic stem cell transplantation in patients with multiple myeloma. EVOMELA is a proprietary formulation with patent protection until at least 2030, is currently the only cyclodextrin-enabled formulation of injectable melphalan commercially available in China. Our experienced specialty sales and marketing team in the hematology/oncology market in China is a major competitive advantage. We have established access to a substantial number of key opinion leaders who can advise us on the unmet medical needs of our patient population. CASI continues to pursue a similar strategy with respect to marketing efforts and the physician visits to further the adaptation of stem cell transplantation as a standard of care in the multiple myeloma treatment setting, and we'll continue working to address the persistent high unmet need in this patient population. CNCT19, our CD19 CAR-T treatment. Our partner, Juventas Cell Therapy, continues the development of CNCT19, an autologous CD19 CAR-T investigative product for which CASI has core commercial and profit-sharing rights. CNCT19 is being developed as a potential treatment for patients with hematological malignancies which express CD19, including B-cell leukemia, B-ALL and B-cell non-Hodgkin lymphoma. In January, CNCT19 received orphan drug designation by the U.S. FDA. CNCT19 is being locally developed and will be locally manufactured, which distinguishes this program from other CAR-T 19 therapies developed and manufactured in part outside of China. The pricing of cell therapy and other innovative drugs in China is a crucial issue for patients. Similar CD19 CAR-T developed and manufactured utilizing imported components are subject to certain ex China CMC and high cost of goods, making the price point significantly higher than where we believe the price of CNCT19 will be. Juventas has completed the Phase I studies in B-ALL and B-cell non-Hodgkin lymphoma in China and is currently enrolling the Phase II registration studies for both indications. Throughout 2021, our commercial franchise has thoroughly prepared for the anticipated China NDA filing of CNCT19 CAR-T program, which we currently expect to be in the second half of 2022. Next, I will address other product candidates in our pipeline, BI-1206, along with our partner BioInvent. We continue to progress the development and regulatory framework for BI-1206 in China. We in-licensed BI-1206, a first-in-class fully human monoclonal antibody that target Fc gamma RIIb receptor for the Greater China market. BI-1206 has a novel model mode of action, blocking the single inhibitory antibody checkpoint receptor, Fc gamma RIIb, to unlock anticancer immunity in both liquid and solid tumors. Fc gamma receptors are antibody checkpoints that modulate the efficacy of tumor cell direct-targeting antibodies and immune checkpoint-targeting antibodies used in cancer immunotherapy. BI-1206 can potentially be used with all therapeutic monoclonal antibodies that rely on ADCC and CDC for efficacy. BI-1206 is currently being investigated outside of China into Phase I/II trials. One is evaluating the BI-1206 combination with rituximab for the treatment of non-Hodgkin lymphoma, which includes patients with follicular lymphoma, mantle cell lymphoma and marginal zone lymphoma, who have relapsed or are refractory to Rituxan. A second Phase I/II trial is investigating BI-1206 in combination with anti-PD-1 therapy, KEYTRUDA, in solid tumors. The NMPA granted BI-1206 CTA approval in December 2021. Early this year, the U.S. FDA granted orphan drug designation for BI-1206 for the treatment of follicular lymphoma, the most common form of slow-growing non-Hodgkin's lymphoma. Together with BioInvent, we plan to continue to develop BI-1206 in both hematological malignancies and solid tumors, with CASI responsible for development and commercialization in Greater China. Our lead indication will be 1206 in combination with rituximab in patients with relapsed and refractory NHL. We anticipate the start of BI-1206 Phase I trial in China in the second quarter of 2022, with the first patient in, in Q4 2022. Now a word about CB-5339. In 2021, we acquired CB-5339, a first-in-class VCP/p97 inhibitor from Cleave Therapeutics for the Greater China market. CB-5339 represents a promising new agent for selectively targeted VCP/p97 in cancer and is a complementary addition to our pipeline of hematology/oncology assets. Cleave is responsible for the ex China development of CB-5339, an oral second-generation small molecule VCP/p97 inhibitor and is evaluating the molecule in Phase I clinical trial in patients with acute myeloid leukemia and MDS. Together with Cleave, we plan to develop CB-5339 in AML as the initial indication, with CASI responsible for development and commercialization in Greater China. CB-5339 CTA application for the multiple myeloma indication is in preparation after receiving an acceptance letter for the CB-5339 IND package from the China Center for Drug Evaluation. We look forward to the joint development of CB-5339 with our focus on helping to accelerate the development program by initiating trials for current and potential new indications in China. CID-103, our anti-CD38 program. CID-103 is a fully human IgG1 anti-CD38 monoclonal antibody, recognizing a unique epitope that has demonstrated encouraging preclinical efficacy and safety profile compared to other anti-CD38 monoclonal antibodies. CASI maintains exclusive global rights and is developing CID-103 for the treatment of patients with multiple myeloma. In June of 2021, we enrolled the first patient in our Phase I dose escalation and expansion study of CID-103. The Phase I study in patients with previous treated relapsed or refractory multiple myeloma is currently ongoing in France and in U.K. This Phase I trial is expected to generate valuable information and has the potential to provide early evidence of clinical activity in the treatment of patients with multiple myeloma. Thiotepa. Lastly on Thiotepa. We are in process of regulatory submissions for 2 indications. Now this completes the update of our key pipeline assets. Next, we are going to provide updates on our financials. And Wei is actually going to give everybody the financial highlights. Rui?

Thank you, Dr. He. We saw continued growth and strong performance across our business. Today, I will briefly summarize our financial results and provide key highlights for the first quarter. Revenues consist of product sales of EVOMELA. Revenue was $9 million for the quarter ended March 31, 2022, 58% increase compared to $5.7 million for the quarter ended March 31, 2021. Costs of revenue was $3.8 million for the quarter ended March 31, 2022 compared to $2.4 million for the same period last year, which includes royalty payment of $1.8 million in first quarter of 2022 and $1.1 million for the same period in 2021. We closed this quarter with $29.3 million cash and cash equivalent. We have sufficient resources to fund our operations beyond 2022. By implementing management and budgetary control, we continue to be thoughtful on how we deploy our cash with a focus on creating sales order value. And next, I would like to address two items which are uncertain on our investment radar. Early this year, CASI announced the [ receival ] of deficiency letter from the Listing Qualifications Department of the NASDAQ stock market. We continue to actively monitor the closing price of CASI's common stock and are considering available options including a reverse stock split. In CASI's recent proxy statement, CASI has submitted a reverse stock split proposal to shareholders for approval. Next, I would like to address the recent event related to the Holding Foreign Companies Accountable Act, which refers to HFCAA. According to the HFCAA, after being conclusively identified as the commission identified the issuer for 3 consecutive years, there will be an initial trading prohibition. We're working with the auditor to address the method to comply with the Public Company Accounting Oversight Board rules. In the meantime, we would like to note that China Securities Regulatory Commission is holding talks with U.S. regulators on audit cooperation. And there is expectations that an acceptable resolution regarding this matter will be reached between the 2 respective government entities. We continue to monitor developments and evaluate all strategic options which include, but are not limited to, adding business processes and controls to meet the requirement of the HFCAA. Now I would like to turn the call back over to the operator to open up the line for questions. Jamie?

[Operator Instructions] And our first question today comes from Justin Zelin from BTIG.

Congrats on the quarter. I was just curious on CNCT19, if you have an idea from your partner, Juventas, whether they'd be on track for filing the NDA potentially within the next 12 months. Or if you think that potentially, the COVID-19 pandemic may disrupt the filing or delay it?

Yes. Yes. Thank you, Justin. So sorry, I would interrupt a little bit. So your question is really the -- regarding the COVID-19 impact on the delay. I don't know -- Alex, do you want to address that question?

Sure. Justin, this is Alex. As we anticipated, there might be some slight delay. But we are reasonably confident that within the next 12 months, our partner, Juventas, will be able to complete the filing, unless there is substantial additional disruption secondary to COVID-19 impact in China. If there is further disruption and any delay that we can foresee, we'll obviously inform the investors through the appropriate channel.

Great. That's very helpful. And obviously, EVOMELA continues to be very strong in the revenues. I was just curious on how you're seeing, real time, how the COVID situation may impact the sales of EVOMELA in the future, whether you're seeing -- you expect to see any disruption there?

Yes. Probably Larry can address you this question since he's in charge of commercial. Larry, do you want to address?

Absolutely. Thank you, Justin, for the question. You can see in our first quarter revenue is even strong compared to the same period of last year. And we believe the entire year in our sales, we will keep in a relatively growth. However, as our Chairman and CEO, Dr. He, mentioned that the COVID-19 impact is there, especially in the lockdown in Shanghai and some other big cities. And we will pay close attention to the impact, what the impact would be. We still don't know for how long the pandemic will continue, especially for the lockdown in the big cities. And hopefully, will go over quickly. We still don't know. So we will see. We'll try all the best to get the business on track and we assume as normal as we can.

Yes. There's still a lot of uncertainty on the big city because most transplant happens in big cities. But unfortunately, right now, the major lockdown is in the big city. So there's still a lot of uncertainty that really is not under our control. Our salespeople are not even allowed to visit patients -- visit their doctors right now in Beijing and Shanghai. So the 2 pretty big revenue center for us.

Got it. Well, hopefully, the situation improves in the future.

And our next question comes from Sean Lee from H.C. Wainwright.

Just a quick question on the CID-103 study. So with the first patient in last year and almost a year into study, just wondering when can we expect to see some of the first results from it?

So Sean, this is Alex. We are currently at a relatively high level in dose escalation. We believe that within the next 1 dose -- in the next 1 to 2 dose escalations, we will potentially hit the recommended Phase II dose. That data will be determined on the safety profile and the PK profile. As soon as there is data available to be put into the public domain, we will seek the most appropriate medical scientific meeting to either have a presentation or poster put out to make sure that we get the information out to the public. We will keep you informed of the status of any presentation that will occur in the future.

And beyond that, is there any other clinical milestones that we can expect over the next 12 months?

Wei-Wu, do you want me to address that?

Yes.

Okay. So Sean, the milestones would be the initiation of the BI-1206 study. As Wei-Wu has outlined, we have gotten approval from the NMPA to start. We are actively looking forward to receiving study drug in China, and we anticipate getting the study started in the second quarter with the first patient enrolled in Q3. So we're targeting a July first patient in. However, depending upon COVID-19 impact, that could be delayed slightly. For the BI -- for the Cleave Bio 5339 program, we have submitted the regulatory applications. We are working with our partner, and we hope to get that program started as soon as possible. Some things are out of our control, such as the time line for the regulatory review. So we'll have at least 2 programs that will be getting started in the second and hopefully third and fourth quarter. For Thiotepa, we are in the midst of discussions on the regulatory submission and the path forward with the CDE, and we hope to have some more information ready for the analysts and investors in the next quarter or so.

And our next question comes from Trevor Allred from Oppenheimer.

So I guess just two quick ones from me. Can you remind us where the enrollment sites are for CID-103 and CNCT19? And do you expect to see any follow-up impact from COVID? And then also, do you expect to enroll sites for BI-1206 in areas which might have lower COVID impact?

So for the CID-103, the sites are located in France and in the U.K., and we are looking at expanding the sites because of -- we're looking for a specific patient population into the other Eastern European countries. In terms of the BI-1206, it's difficult to predict at this point in time where the COVID-19 pandemic will impact next. But we have chosen and selected what I think are some of the best centers to execute the 1206 plus rituximab program in China. In terms of the Juventas CNCT19, likewise, they have placed their study, their cell-based therapy study in some of the most, I think, prestigious institutions in China. And that is ongoing. So indeed, there is some slight impact, but we're getting very close to completing the accrual and the long-term follow-up, which the CDE has requested for this patient population. So hopefully, there won't be any further delay. If there is, it will be slight on the CNCT19 side. But I'm optimistic that we'll be able to meet the submission deadlines, as outlined by Dr. He earlier.

And ladies and gentlemen, with that, we will be ending today's question-and-answer session. I'd like to turn the floor back over to the management team for any closing remarks.

Well, thank you again for joining today's call. There's no doubt in my mind that we are on our course in building a fundamentally strong biopharmaceutical company. We look forward to leveraging our existing commercial infrastructure, pursue pre-commercial launch activities for this CAR-T 19 program, drive expanded pipeline progress and continue to observe steady EVOMELA growth. We thank each of you for your continued support in CASI during this exciting period. Thank you. Operator, you may now conclude this call.

Ladies and gentlemen, with that, we'll end today's presentation. We do thank you for joining. You may now disconnect your lines.