Nuvation Bio Inc. (NUVB) Earnings Call Transcript & Summary

Hi, everyone. My name is Farzin Haque. I'm one of the biotech analysts at Jefferies. It's my pleasure to introduce David Hung, CEO; and Philippe Sauvage, CFO of Nuvation Bio. So this is a fireside chat format. Thank you for -- both for joining us today. So for those that are new to the story, maybe start off with a 1-minute overview of your program.

So Nuvation Bio is late-stage commercial-stage company. We have 2 late-stage assets. One is IBTROZI. It's a ROS1 inhibitor that received FDA approval in June of this year, and it completed its first quarter of sales in the third quarter. Our second asset, safusidenib is a mutant IDH1 inhibitor for the high and low-grade gliomas. And we just announced new data Monday night on the latest Daiichi study for low-grade glioma showing very robust response rates and durability.

Great. So let's start with IBTROZI. The first full quarter on the market, we saw like 204 patient starts. This far exceeds our expectations. So what factors drove the strong uptake? And how do you expect the patient demand to trend in the fourth quarter?

Yes. So we are very pleased with the first full quarter. If you just look as a comparator, it's been criticized that perhaps the ROS1 market is not that large. We would argue that they just haven't had the right drugs for it. The market is actually about 3,000 patients per year, new patients per year based on DNA testing, we believe that will increase to about 4,000 patients a year with RNA testing. If you look at the launch of the first quarter of sales for repotrectinib, the nearest competitor to us, in their first quarter, they had 34 new patient starts on AUGTYRO. In our first full quarter, we had 204 new patient starts, exactly 6x the first quarter of BMS sales. If you look at the data we've generated, they are unprecedented. So we recently updated our data, and that's been submitted for a new label amendment. The response rate for IBTROZI is 90% and the new PFS and duration of response is now 50 months. There are actually no cancer drugs in any solid tumor indication that have ever been able to match that response rate and duration of response. So we think that's quite unique. On top of that, the drug is well tolerated. If you look at our World Lung presentation a month ago and look at the 6 most common adverse events that you see with IBTROZI in order being ALT elevation, AST elevation, which are both paper issues, not clinical, they're not symptomatic, followed by nausea, vomiting, diarrhea and dizziness. Out of our 337 patients, the total number of discontinuations for any of the top 6 adverse events was 1. So that's a 0.3% discontinuation rate. So when you look at a 90% response rate, a 50-month duration of response and a 0.3% discontinuation rate, for the top 6 adverse events. We think that is an extremely attractive profile. And just to put this in context, if you look at what used to be standard of care in the space, which is IO chemo, the average PFS of those patients was 6 to 12 months. Now with the precision oncology agent, we've now -- we're now -- first-generation precision oncology agents were in the range of 1.5 years. Repotrectinib's published PFS is about 36 months. Now with 50 months, we would say that that's a new generation of ROS inhibitors that has not been seen.

Right. So in which setting the first line or the post TKI are you seeing the fastest uptake? And do you plan to drive first-line use further over time, particularly in the community settings, which you noted at the third quarter earnings was like 25% of the new patients.

Yes. So we don't have complete visibility. In fact, we don't have majority visibility on what kind of profile these patients have, because unless they come through the Nuvation Connect hub, we don't actually know their profile. So we don't really know exactly how many first-line versus second-line patients there are. We know we have -- from the ones who've come through our hub, we know we have some first-line patients. We know we have some second-line patients. There's probably relatively few third-line patients. They don't tend -- their survival is much, much shorter. So we would think that the majority of our patients are first and second line. But the point I want to make, I think that maybe not understood. We did 204 new patient starts in the third quarter. If in the fourth quarter, first quarter next year, second quarter next year, and for the next 4 quarters, if all we did is 204, we had no growth at all. We multiply 204 patients by the current drug price, that's $55 million. If you multiply that to 4 with no growth, if they were only second-line patients, which is -- just assume a year of treatment, that would still be a $220 million revenue stream. That would be the lower end of what we would expect because if you just multiply 204, no increase, only second line, that's $220 million in revenue a year. If we assume that 100% of them are first-line patients, now that's not going to be the case, but let's just make that argument to tell you what the other end of the bookend is. If they are -- if there's 204 patients that are all first line with a 50-month DOR, when you equilibrate at 50 months, that comes out to $2 billion a year. That's with no growth, and we just stay at 204. So clearly, we're going to be somewhere between the left bookend and the right bookend, somewhere between $220 million and $2 billion. So depending on the mix of first and second-line patients, that's where it will shake out. But I don't think many have the appreciation that the low end of the book -- the left end of the bookend, if we assume only second-line patients and no growth, it's still $220 million a year.

Got it. Any feedback from the docs on whether they're switching from the prior ROS TKIs?

Yes. So that's been maybe the most surprising thing. So I'm an oncologist. And in general, we don't switch patients to another drug unless they progress. We've been very pleasantly surprised that in our first quarter, we saw switches from other TKIs to ours for progression. We saw some for tolerability issues, but we also saw some for neither. It's not often that you see a switch to another drug for neither tolerability nor progression. And we think that just speaks to the fact that our profile is so robust and our tolerability is so good that, that's the decision they've made in spite of having no real rationale for making that switch. So I think that's probably been maybe the most pleasant surprise for us in this launch.

Makes sense. How has the new NCCN guideline updates strategically basically designating IBTROZI as a preferred option for patients with brain mets and resistance mutations impacted the prescribing behavior?

Yes. I think -- so that's another important point. So one of the contributing factor to why ROS1 sales prior to this have been really small. Not only do we believe the agents have not had the profile we've had, but prior to January 7 of this year, the NCCN actually specifically recommended 2 treatment options for ROS1, either continuing IO chemo if they start on it or a ROS1 agent. That was because if you look at the first-generation TKIs, if you look at entrectinib's PFS, it was 16 months. If the average PFS of IO chemo is 6 to 12 months, one could argue 12 months at the upper end is not that different than 16 months. So the NCCN did -- that was the recommendation. After repotrectinib introduced a 36-month PFS, the NCCN on January 7 of this year, modified their guidelines. So not only is IO chemo not recommended, but now IO is actually contraindicated, and you need to give a ROS1 agent for ROS1 lung cancer, which is a major tailwind that didn't exist prior to this year. So we think, we were just a lucky beneficiary of that. So these days, if you have ROS1 lung cancer, giving IO chemo would be considered malpractice, and especially given the huge disparity in PFS. And now IBTROZI is one of the preferred agents, and we would argue at the top of that list because our DOR of 50 months is not precedented.

Great. So you have noted the gross to net discount at 20%. Has anything surprised you in terms of patient access barriers or formulary uptake?

No. I mean, our access has been tremendous. We had a deliberate strategy to price ourselves slightly lower than repo because repo had some step edits, and we felt it was really the wrong thing for patients considering the extraordinary efficacy of IBTROZI. And when we talked about that back in the second quarter report, we said we were already at more than 50% of lives covered. And at the end of the third quarter, we were at 80% of lives covered label -- per label. So no step edit. So the access has been extraordinary, as often the case when you bring to the market a drug with such efficacy for a patient population, which is heavily commercial compared to typical oncology patients because the average age of patient is around 50 years, typically never smoker. So everybody understands that it's really important to give to those patients the best possible drug. And yes, that's what we've been doing, and we have had really great access. We had a small kind of fast out program for patients to check their kind of reimbursement, but it has been underused compared to our assumptions. So really, really strong uptake from reimbursement and listing.

Got it. And RNA NGS sequencing or testing will increase the annual incidence of ROS1 by 30%. That's what we estimate. So how are you addressing this issue and current limitations of this testing method?

So that's correct. So current standard of care or at least the old standard of care was DNA testing, which is still the most common. So in mid last year, RNA testing was approved, and that does detect about 30% more ROS1 fusion. So that annual incidence in the U.S. of 3,000 patients should go to 4,000 patients when RNA testing becomes standard of care. We think that's going to probably happen in a year or two. We've certainly participated in the effort to increase awareness of -- for lung cancer patients about genetic testing. If you look at the advent of new precision oncology agents starting with EGFR, then ALK, then RET, and now ROS1, lung cancer, which only a decade or two decades ago was considered invariably fatal, short survival disease has suddenly become one of the most treatable cancers on the planet. If you look at the survival that you see with osimertinib and with ALK agents and RET and now ROS1, ROS1 being actually the longest DOR of any of them, it's really important to identify those patients because they can really have really different survivals than what used to be standard of care. So not only are we working on trying to increase patient awareness, but we're working with advocacy groups whose mission is to try to make sure patients know what their options are, seek the best treatment options, and so we're doing a lot of that, and then we're also working with health care systems to make sure that they are using standard of care testing to make sure that all their patients realize when they have a really treatable cancer, that there are options available that can lead to really long-term great outcomes.

Great. Coming back to the -- you haven't provided any guidance yet, but are you comfortable with the consensus sales estimates of currently $14.4 million for fourth quarter? And then for 2026, it's like $142 million.

Yes. We said during the call of our Q3, we were very comfortable with the consensus. As David was pointing out earlier, if we were to keep the patients we had at the end of Q3 on therapy for a full year, we are talking about $55 million annualized. So if you keep adding every quarter the same number of patients, you can see how much it can grow for next year. And so $140 million for next year, we think we're comfortable with that, I think something we can achieve.

Okay. And then you're supposed to submit the supplemental NDA for updating the label with the 50 months median PFS. Have you submitted that yet?

Yes. That's been submitted.

Okay. And then you also started TRUST-IV, that is the adjuvant study early stage. So how long will it take to enroll the study and anticipated time lines for data?

That's a long study. I mean it will be a multiyear study, but it's an important study because, again, treating the disease as early as possible gives the patients the longest chance of a really long-term survival. We are the only ROS1 agent being studied in the adjuvant setting. If you look at what happened to TAGRISSO's market share and commercial growth after they got their adjuvant study done, it was a dramatic increase. And so we think that, that's an important thing to do for patients, an important thing to do for us as a commercial company. And as I mentioned, we are the only ROS1 company that's in an adjuvant study today.

And then for ex U.S., should we expect a potential partnership by year-end or could be more into the next year?

No, we are very advanced in our conversation with an ex U.S. partner, and we expect to announce this partnership before the end of the year.

And when do you plan before the EMA approval or when is the year?

That would be before the EMEA approval, yes. There's still a little bit of work to do with the EMEA approval. For many different reasons, we expect that sometimes potentially middle next year or a little bit later.

Mid next year. Okay. And then in China, can you remind us, did you get the NRDL listing yet? I think it's in early 2026, right?

Yes. This is in early 2026. So our partner in China is Innovent. We got approved in China back last Christmas, more or less, one of our main Christmas gifts. But this was just approval, not reimbursement. As you might be aware, in China, the NRDL listing is updated only once a year. So unfortunately, we had to wait for kind of a full year. But we're getting to the point we expect Innovent to have a price come January and be able to sell. We also just got approved in Japan, where our partner, Nippon Kayaku will owe us a $25 million milestone for this approval. And again, they will start selling right away.

Got it. One last question. How do you view competitive threat from Nuvalent drug, which is expected to be approved in 2026, but our understanding is only in the second-line settings initially?

We look at the data that are available in the second-line setting, again, Nuvalent's published response rate is 51%, ours is 56%. Their confirmed intracranial response rate is 45%, ours is 66%. And I think we've noted previously that Nuvalent excludes any concomitant driver mutations, whereas we don't, and neither did repotrectinib. So arguably a significantly harder-to-treat patient population. And we saw that when Nuvalent just announced the recent ALK data where there was about a 20% reduction in response rate from the ESMO presentation to their data 2 days ago, because the ESMO presentation had excluded competent driver mutations, and the presentation 2 days ago did not exclude them in the Phase II. So it is a harder-to-treat population as their own CEO spoke about in their conference call. So we think that given the fact that our data in second line are still superior as they stand without excluding driver mutations, we feel very confident that our drug is highly competitive and still the drug to beat. Nuvalent is not going to be submitting a first line -- getting a first line label for a while. And we have 50-month -- our median DOR is over 4 years. And so it will be years before they'll have a first-line duration of follow-up even approaching ours. In fact, it will never catch up to ours, but it will be a while before they can get -- if they're fortunate enough to get to 50 months, it's going to be a while.

Great. Switch to IDH1 now. So earlier this week, you disclosed the new data. It looked impressive, 44% ORR, 24-month landmark PFS was like 8%, and compared to the vorasidenib's 11% ORR and 59% 24-month landmark PFS. So can you please discuss the data update and what it means for the patients?

Yes. I was -- we're very excited about that data. So vorasidenib is the only other IDH1 mutant inhibitor that's in glioma today. It's approved only in low-grade glioma. Vorasidenib was approved based on a study called the INDIGO trial. And in that study, as you point out, it was an 11% overall response rate. And at 2 years, 59% of patients were still -- had not progressed, which is great data. What we announced 2 nights ago was that in the identical patient population, our response rate is 44%, so 4x the INDIGO response rate in low-grade glioma. And at 24 months at 2 years, instead of 59% of patients being progression-free, we had 88% of patients progression-free, which we think is a very substantial benefit to them. Based on that, we've already started a pivotal study. That pivotal study will include both high-grade patients as well as low-grade patients. And when we spoke a little while ago and mentioned on our last earnings call that we were not going to do a head-to-head study against vorasidenib, I think some interpreted that as maybe a lack of confidence in the drug. I think that was misinterpreted. The reason we killed the head-to-head study is that with these data, if the data were closer to vorasidenib, we might have felt more compelled to do a head-to-head study to show it's better. But now with a 4x the overall response rate in the same patient population and a progression-free patients -- 30% more patients being progression-free at 2 years, we don't think a head-to-head is necessary and at a cost of $0.5 billion in 7 years of time. That's just not worth -- that's not a prudent financial investment. So we've started a pivotal study. That pivotal study will have high-grade patients. It will also include low-grade patients with higher risk features. And we think that we will have data in both low-grade and high-grade patients, and we think that this drug with this profile will be a very, very attractive choice for patients if this reads out. And I think that...

Makes sense.

It's the right strategy for the company.

So what is the expected time line for the data for this pivotal? Like can there be potentially an interim readout for accelerated approval?

So we just hate to guess on things that we don't know. It depends how the placebo arm performs. Clearly, it's an event-driven trial. So if the placebo is really much shorter than the drug arm, then conceivably, we could identify differences earlier. We've said that at the outside limits, we think the trial would read out in 2029. Could it be faster? I don't know. It's always possible, but I think that it won't go past 2029.

Got it. Coming back to the market opportunity. So vorasidenib is only $1 billion run rate after launching just like a year, August 2024. So how do you expect the launch in high-grade glioma to compare?

So that -- the vorasidenib launch has been spectacular. I got to be one of the best launches in the history of biotech. So if you look at the breakout -- breakdown between high-grade and low-grade glioma and vorasidenib is only approved in low-grade glioma, it's 50-50, about half. So now the prevalence of low-grade glioma is higher because they live longer, up 10 to 15 years versus 3 to 7 years for high-grade, but the incidence is the same. So we think the market opportunity is massive. And also if high-grade glioma is the more dire condition, so it's actually the more greater unmet need. So we think that if safusidenib performs as we expect, we should capture the high-grade market, but because our study will include low-grade patients, with higher risk features, we think that we will have an opportunity to demonstrate the activity of our drug as well in the other side, the low-grade market. So I think that we would expect this to be a very, very commercially attractive drug.

Makes sense. So we have a few minutes left. So switching to pipeline, you have the 1511 program. So that's the drug-drug conjugation platform. So Phase I/II study is expected by year-end. So what should we expect? Are you sitting on expect bars?

Yes, that trial still is actually still running. So we're going to announce it sometime before year-end, but I think I really couldn't say much more at this time.

Okay. And then going forward, thinking about portfolio expansion or monetization, like are there areas of oncology you're looking to in-license new assets to complement the portfolio or conversely out-license any of your early-stage programs?

So we have always been focus on BD. We recently raised $200 million in a royalty financing with Sagard. We didn't do that because we needed more cash for -- to get to profitability. We had already guided that we were -- we had enough cash to get to profitability without doing the $200 million raise, but we raised it for BD. So we are looking at lots of different opportunities. We think the market has had significant dislocation. If you look at valuations in the last 4 years. It's been a challenging market for biotech. And so we think there are some -- there are assets that are relatively undervalued. And if we could find something that is a good strategic fit, we would probably act on that. I mean, we think AnHeart was a perfect example of that. That was a great acquisition. But for us, it would have to be a really good ROI and the strategic fit for us to act on it.

Got it.

Just to maybe to add some color to David's comment about the acquisition, $260 million stock a bit more than a year ago, we got $150 million back in synthetic royalty for 5% of the U.S., plus already the milestone in Japan I was talking about. So it's more milestone to come with the licensing. So really a great deal, not even considering that we are selling taletrectinib, IBTROZI, and we have set from the pipeline.

Yes. So we did $150 million for 5% and just that math would be $3 billion for U.S., and we paid $260 million for the whole company for 2 assets. So that's the kind of deal we would love to do again.

Super deal indeed. So this has been a great conversation. So to close off, what is your cash position and then runway assumptions with the pivotal underway?

Yes. So at the last -- at the end of the last quarter, we had $549 million in the bank, not counting what we said about milestone to come. And as we said many times, we consider, we have enough to take us to profitability in cash position.

And what are the key catalysts for the next year?

Well, we have a number of things. So clearly, the Street is going to be looking every quarter very closely at our sales, and we would expect that to continue to ramp. We're going to look -- we're waiting for an announcement of a European partnership. And we're going to get safu further into the clinic. We're also doing the adjuvant study, and then potentially any new BD opportunities would be something else that I might keep an eye on.

Great. Thank you so much.

Thank you, Farzin.

Thank you so much.