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

Good morning, once again, and welcome to the 46th Annual TD Cowen Healthcare Conference. I'm Yaron Werber from the biotech team. And it's a great pleasure to moderate the next fireside chat with Nuvation Bio. With us today really needs an introduction, David Hung, Co-Founder, President and CEO; and Philippe Sauvage as well, Chief Financial Officer. Gentlemen, thanks for joining us.

Thanks, Yaron.

So maybe, David and Philippe for both of you, give us a little bit of a sense, first of all, the market reaction, I mean, this week has been kind of bananas with everything that's going on. We've seen a lot of volatility in stocks. You printed a decent Q4. It was preannounced at JPMorgan. Any sense sort of what happened with the stock? What's your best sense? And what was your main takeaway from your conference call?

Yes. So there -- we think the stock reaction after the call was a little bit unusual. There's really no new news. As you said, we preannounced our results at JPMorgan, and we're just trying to give some more color on the preannounced news from JPMorgan. One of the questions that we received at JPMorgan was if you look at our new patient starts, which have been very robust, 6x the BMS launch going from 204 in Q3 to 216 in Q4, why did there appear to be some gap between the new patient starts and the revenue. And the reason for that is that if you were modeling 12 months of revenue for every patient that started, that's not reflective of generally how oncology launches start. So as you know, almost always in oncology launches, you take the sickest patients first, especially when physicians don't have familiarity with a new drug, they'll take the sickest patients, so the farthest along, maybe third, fourth, fifth line patients and then you get experience and move them upstream. Secondly, as you know, if you look at TKI experienced patients, we calculate there's about a pool of about 1,000 of those patients. But because that's a pre-existing pool, they've all been identified. They already are known to have ROS1, having filled other ROS1 agents. That's a pool that's very easy to access, whereas incidence patients, which are new diagnoses, these are patients who have to develop their disease, get diagnosed with their disease and then figure out a treatment. So clearly, it's a lot easier to access the TKI experienced patients than the new patients. So what we've said is that most of our -- the majority of our patients in the Q3 and Q4 were TKI-experienced patients with some first-line patients, which are increasing literally as we speak. But what we -- the comment we made that I believe may have been misinterpreted was that if you look at our discontinuation rate, we have very little visibility into the profiles of our patients unless they come through the NuvationConnect hub. So the NuvationConnect hub is a hub that we have for patients who need reimbursement assistance. But because reimbursement has been pretty easy to secure for IBTROZI, very few patients go through that hub. So of the 432 patients we've treated to date, the number of patients who have gone through our hub is in the double digits. So because we only have a double-digit number of patients and that's coming through that hub, that's all we see in their profile, it's virtually impossible for us to be very confident what number of patients are in first line versus second line versus third line. We will get more visibility of that over time as the number of patients we see increases certainly to the triple digits, but not in the double digits. And how long they stay on drug, we have no visibility into. So what we did say is that from the limited number of patients we've seen in the NuvationConnect hub, 75-plus percent of our discontinuations are in the third, fourth line or longer setting. So I believe that comment might have been misinterpreted. We heard some feedback this morning that people were concerned that, oh my goodness, you have a 75% discontinuation rate. That's not what we meant. We meant that of the patients that we've seen discontinuations in, 75% of them are in the third line or greater setting. Now to the contrary, I would expect that to be reassuring because the first thing you never want to see in a drug launch is that the drug performs differently than you saw in your clinical trial. If you look at the durations of response in the first versus second versus third-line setting, durations of response decreased exponentially with later lines of therapy. So our duration of response in the first-line setting is 15 months. Our duration of response in the second-line setting is probably closer to 12 months, so not even a quarter. Duration of response in the third-line setting is probably a matter of a couple of months or in that ballpark, and the fourth line would be even shorter. So if 75% of our discontinuations are in the third line or later setting, that means that 25% of our discontinuations have to be in the first- or second-line setting, given the limited visibility we have to these hub patients. If we just apply the 4:1 ratio of DOR from our first line to our second-line setting, that would suggest that of the 25% that may be in first and second line, 3/4 of that or 4/5 of that would be in second line and 1/5 of that in the first-line setting, which would be actually very consistent with our total trial discontinuation rate of about 6.5%. So to the contrary, I think that, that 75% discontinuation rate in the third line gave us confidence that our drug is behaving exactly as we would have expected from our clinical trial results in the second and first-line setting. Now I still have the caveat that we only have visibility into a double-digit number of patients out of our 432 patients treated so far. But we think that, that is suggestive of a duration or discontinuation rate that we think is really good. And the reason that discontinuation rate is so important is because with a 50-month DOR, as long as you stay on drug, you can expect significant revenue stacking over 4 years into the fifth year. So we think that perhaps that comment was perhaps misunderstood. We think the 75% discontinuation rate in the third-line setting is actually a positive reflection of the durability of the drug and the tolerability of the drug in earlier line settings, and we expect that to play out throughout the year. That also said, we made the point that because third-line patients drop off quickly, of course, those revenues will stop earlier than in second line and then in first-line patients. So you would expect the gap between new patient starts and revenue to narrow as we move from a mix of a lot of third-line patients to mainly second and first-line patients and ultimately to just first-line patients. So we've always said that the name of the game is first-line treatment. And we do expect over time to have primarily first-line patients. And we're already seeing with every month an increase in our first-line patients and a decrease in third-line patients. Now again, this is based on just that double-digit number of patients we've seen so far through our NuvationConnect hub. But at least even in that limited number of patients, we're seeing first-line grow and third line come down just as you would expect. So what I said on the call that things were going directionally the way we would have hoped they are. We're seeing first lines increase. We're seeing third lines come down, and we would expect that to narrow the revenue gap over time. Now that's not going to happen immediately because for -- in the beginning of the launch, those third-line patients have very, very short duration of response and they come off drug. But in the second half of the year, we believe that the second half revenue will be certainly bigger than the first half and so this is not a linear ramp. It's going to be a little bit more of an inflection upwards in the second half. We've said on the call that our consensus for the year is, I think, $147 million, and we're comfortable with that for the year. So we're going to get there, but we're not going to get there in a linear fashion. We're going to have increasing revenues in the second half of the year. But -- all that to say, we think that the launch has gone incredibly well, 6x the BMS launch. We see no reason that's going to change. We said we're going to keep growing. But even if we have no further growth, we made the point previously on another call that even if we just do 200-something patients per quarter, if we assume 12 months of treatment, that would already equilibrate out around $220 million a year with no other growth. Of course, we anticipate further growth. But we're already at a number of patients per quarter that if we had no growth and they just stayed on for 12 months, which they all will once they get to second line and first line, they'll be longer than that, we'll equilibrate at around $220 million. And then any growth on top of that is just upside to that number. So we feel comfortable with the consensus of $147 million for the year. We think that the back half will have more revenue than the first half. It's not going to be a linear ramp, but it is going to get to that number. And we think that the launch is going really well, and the drug is performing exactly as we would have predicted from the clinical trial results, which is something that we find to be a very positive.

Yes, that's very useful, David. When you're looking at dynamics into Q1, there's a little bit of seasonality. I mean, look, this quarter, there's going to be snow effect for everybody, and we're going to kind of hear that everywhere. So it's one thing we'll all just have to keep in mind a little bit, at least in the U.S., which is obviously where majority of your market, but obviously, I imagine a lot of your sales are not sitting in the Northeast on the East Coast. But should we expect growth in Q1? And what about gross to net dynamics right now? I think you said kind of low 20s.

I think what's important is that we are extremely bullish long term for IBTROZI. It's an extraordinary drug. 90% response rate in first line, 90% response rate in first line. I want everybody to understand that. In the cancer space, it's kind of unheard of. And because of this 90% response rate in first line, of course, these patients will respond, overwhelming majority of them. They will stay on drug to David's point, median DOR 50 months, so they will stay on drug for a long time. That's the first-line patient. And that's what ultimately will drive this market, extraordinary response rate, patients staying on therapy for a very long time. What you're worried about in the launch is, do we see anything which is abnormal? We don't. Contribution driven by first line, as David said. So late-line patients. Response rates in late line is lower because that's what it is for everyone in oncology. And the reality is that there is no meaningful potential for very late line in ROS1. So the steady state, where we're going, where we are on track to go is extraordinary because of those first-line patients. But the launch is not a steady state, and I think it's exactly your point. So at the beginning, you gradually grow your first-line patients, but you have second-line patients, you have third-line patients, you have beyond, and those could come off. On top of that, you have snowstorm in the East, maybe you have patients not visiting their doctors for something they do not expect. I would like everybody to remember, ROS1 patients never smoker, 50 years old, female. So you don't necessarily expect to have lung cancer. So this is not something like, oh, I really need to see my physician now. So there could be evolution there. But the steady state, the growth, the first-line patients, the promise of IBTROZI is extraordinary. So yes, first -- Q1, we'll see exactly where we land, but we have -- the dynamic is great. We are accruing patients at a rhythm, which is 6x the others. And those patients will be first-line patients over time. And that will drive the growth, and that's exactly where we go.

Are you ...

And gross to net, I'm sorry, I didn't answer your part about gross to net. So yes, there is always a little bit of gross to net variability. You have some reset of co-pays, et cetera. This is our first year of launch. So it's hard for us to see exactly where it's going to be. We have had so far extraordinary access. We had very limited free drug programs and everything. So we are confident it should not impact us too much, but it's hard to say before we get the deals to some extent because we've never seen that.

And last year, you said I'm sorry, was low 20s, 25% last year.

We said last quarter in Q4, we were at 25%, a little bit beyond 25%, and we still expect it to grow a little bit further. Net sales to decline, you prefer the growth to go away.

Yes. Is it really driven by 340B? Is that what it is?

340B, some Medicaid, obviously, in terms of share of Medicare, more limited because, again, 50 years old, never smoker, so less Medicare and some contracting as well. It's very important in a space like that when you have kind of limited number of patients to make sure that at least there is not too much -- so access is critical. So we are doing what we need to do to make sure that access is there. It's still a relatively expensive drug, and we are doing great, and we're doing good.

Yes. So ROZLYTREK sales have been going down. I mean, there were $17 million in Q1 '25, and they've been down $2 million in the quarter. Is that sort of what you're seeing? I mean, frankly, BMS reported AUGTYRO and then they stopped reporting AUGTYRO altogether. So it's de minimis, it sounds like. But are you taking over ROZLYTREK? And then any signs yet what's going on with crizotinib?

Again, so we have -- again, we see what we see through our limited portal window. But what we have seen there is that we believe that we are already the standard of care among existing ROS1 TKI. So if you look at ROZLYTREK's progression-free survival of 16 months in the first-line setting, it's just really, really hard to justify use of that when you have drugs again, that have 4-year plus DOR. So I think that's just going to be increasingly hard to justify. We don't know what repotrectinib sales are, but we do know that, again, the discontinuation rate of that drug for CNS side effects is significant. And as you look at our adverse events in our 6 most common adverse events, out of 337 patients, there was one discontinuation for any of those 6 events. So we just think that, that it's going to be difficult to compete with our efficacy profile, especially response rate, like Philippe said, 90% plus of durability of 4 years plus in the first-line setting. It's also going to be hard to compete with our tolerability. I mean 1 out of 37 patient discontinuation. That's a 0.3% discontinuation rate for the top 6 adverse events. So we do think that over time, we will be the preferred agent, and we're already starting to see glimpse of that. But I want to just go back to the first one because I was so shocked to hear this morning the misunderstanding. 75% discontinuation -- of the discontinuations we have, 75% were in the third-line setting. We do not have a 75% discontinuation. To the contrary, it is a -- that's a very, very low number, very similar to our clinical trial results. But of the ones that we do have, it was 75% in the third-line setting or later.

And they were not for any emerging adverse events or just for progression, which is a sad reality of very late-line patients in oncology. We would love to get great response in late line like everybody else, but this is not the case anywhere, honestly. And we had a couple of miracle stories of very late-line patients that responded super well. One of them went back skiing and went back to work. I mean this is -- why we are in this business. As you know, this is the kind of miracle story you want to hear. But the sad reality of oncology is that when you're very, very late-line patients, in most cases, you just want response -- respond, sorry.

The -- do you have a sense -- it sounds like the academic community was the initial bigger one to adopt and looks the community is picking up. Any sense on trends and what you can do because a lot of all the first liners are probably sitting there?

Yes. So I think that if you look at where the patients are, we believe that about 70% of the patients are going to be in the community versus about 30% in the academic centers. If you look at the beginning of our launch, 70% of our scripts came from the academics and 30% from the community. So it was actually backwards because academic centers tend to be the early adopters, and they are the ones who tend to know the literature better and they are more familiar with the cutting-edge drugs. But we are already seeing a shift in that. We're already seeing now an increase in community. And as a result, the academic percentage will come down, the community will go up. The challenge that we'll face is that testing in academic centers is near 100%. In community centers, it isn't there. But that is a rising tide because of the treatability of lung cancer in particular. If you look at now all the mutations in lung cancer, EGFR, ALK, RET, ROS1, lung cancer has suddenly become one of the most treatable cancers on the planet. And in fact, what's very interesting, there is now a nationwide shift in approach to genetic testing. Louisiana became the first state in the union to now mandate NGS for lung cancer, and that's starting -- we're starting to see that in other states. So this is a tide that is rising, and we think that it will certainly help to increase testing rates in the community. But right now, we still have a lot more to go in the community because we start off mainly academic centers. That's already shifting. And ultimately, we think that scripts will follow the distribution of patients between academic and community settings.

Maybe just to present in a different angle, Yaron, as well. And we spend a lot of time talking to doctors in KOL, of course. And for those that are very much plugged in the science and aware of the data, there's just no doubt that IBTROZI is the best thing out there. So what we need and what we're working on very hard is to make sure that everybody is getting tested. More and more patients can benefit from a TKI because once their doctors know that's what they need, they will put them on IBTROZI.

Yes. You announced a deal with Eisai in January. I think Eisai is going to file in Europe in the first half of the year. In parallel, in China, you're doing a head-to-head study against or Innovent is doing a head-to-head against crizotinib. But you don't think you need that for Europe?

No, we're going to get a full approval in Europe. That head-to-head study is really not for Europe, but we do need it for the Chinese authorities. So we're doing that study. It's also, in some sense, is defensive because BMS is doing a similar study with AUGTYRO. And it's always good, especially if you look at NCCN guidelines right now, all the ROS1 agents are considered recommended therapies for ROS1, but to show that you actually are better than one of the earlier first-generation agents is probably somewhat helpful. So I think we know our plans are to continue that study, but we do not need it for European approval.

Okay. Any questions from the audience? If anybody has a question by all means, just let us know at any point. Okay. So in Europe, and in terms of pricing, the current data can be sufficient for pricing?

Yes. Yes. I mean we have lots of discussions with our partner, Eisai there. They are very well used to those discussions. And of course, we know the pricing in Europe will probably be lower than in the U.S. That's to be expected, just like it was a bit lower in Japan and China. But this is also a slightly larger population, and it's a good opportunity. And I think in terms of time line, getting there in Q2 for an approval early next year is really positive and I think better than their expectations. So that's great.

Can you just remind us the financial terms to you? And did you ever disclose what the milestone would be on approval?

So yes, we did disclose -- we got EUR 50 million already. We will get EUR 25 million more on approval, so early next year. That has further reinforced our balance sheet, which is always useful, especially in times of movements like these days in the market. And we have great ways to use it to drive our portfolio of product forward. IBTROZI and safusidenib, we can talk about in development. And then we have high double-digit milestone getting to the high double-digit royalties, I mean...

Yes. Okay. So let's move to safu, which is an area that's getting a lot more attention just given the progress for IDH1 mutant glioma, it's about 2,400 patients per year. Survival for low grade is 12 to 20 years plus. And then for high grade, that's grade 3 or 4, it's about 12 to 24 years. Population is split half and half between low and high risk. diagnosis usually late 30s, sort of mid-40s. So you recently announced the SIGMA Phase III. That's going to enroll 300 patients 1:1, 250 mg BID safu against placebo. And this is where it's fairly innovative. You're doing grade 2, 3 astrocytoma with high risk. sort of a little bit lower with high-risk features and then the grade 4 astrocytoma, obviously, higher risk. These are experienced patients post surgery, radiation and chemo. Primary endpoint is PFS. How fast do you think you can enroll this?

So first of all, if you look at the glioma pie, we've always said it's about 50-50 low grade versus high grade. But within low grade and high grade, they can be further subdivided into low risk and high risk. So vorasidenib, the only glioma drug approved today is approved in low risk, low grade. So there's 3 other parts of that pie where they're not approved. The SIGMA study goes after 3 of the 4 pieces of that pie, just to be clear about that. Because there's nothing approved in those areas and remember that in the half of the pie that's high-grade disease, vorasidenib's response rate was 0. So we believe that study can enroll pretty quickly because there are -- there's nothing else for those patients. That said, it's still a PFS study. So the length of that readout to 2029 is not because of necessarily enrollment. It's because it has -- patients have to be followed for a certain amount of time to allow for a PFS readout. But we are well aware though that it would be nice to have data sooner and to have ways of entering the market sooner. So we started a second study called the -- it's a -- it's a Grade 3 oligodendroglioma study. The difference between this population of patients and the others is that these patients have measurable disease. So they would be considered the low-risk, high-grade patients. Now there's a lot of overlap between low-risk, high grade and high-risk, low grade. okay? So -- but neither are approved for -- vorasidenib is approved. So in this subset of patients with Grade 3 oligodendroglioma, because they have measurable disease, we can look at response rate. So that study has started, and we're going to enroll at least 40 patients and a readout will be sometime next year. But we will start to see glimpses of our own data sometime hopefully later in the year. And we start to see responses that we consider interesting. We will consider the possible of increasing size of that trial because just as a reminder, Day One's glioma drug OJEMDA was approved based on response rate in 77 patients. So there is nothing approved in Grade 3 oligodendroglioma. In fact, there's nothing approved in anything of the 3 of the 4 pieces of that pie I was talking about. So we're going to have some data on response rate in a population where these patients can live 12 to 14-plus years. So really long survival, significant revenue stacking opportunity, huge unmet clinical need, just nothing is approved. These patients can't take radiation and chemo for 15 years. So we think that's going to be a very interesting study. So we will have a readout -- a full readout on that study from the 40 patients in '27. But if we start to see glimpses of any activity, we're going to probably increase that, go to FDA and have a discussion about what they would want to see to convert that to a registration study.

Would that -- the registration would be based on ORR or PFS?

So OJEMDA was approved based on ORR.

And that was for pediatric.

Pediatric glioma and the only difference between that population and ours is their age. It's still the glioma, high unmet need, invariably fatal disease. So we think that is just as important.

And it's still a disease of relatively young patients, right?

And these patients are actually -- they're not pediatric, but many of them are in their 20s and 30s.

And how many patients are in that -- in the low-risk, high-grade oligos?

There's probably about 400 patients a year in the United States alone. But then given the fact that they live for 12 to 14-plus years, you're talking about, again, a really significant commercial opportunity. And because they live that long, that 400 patients I mentioned is an incidence number. If you multiply that times just 15, now you're talking about thousands of patients out there in the prevalence pool.

Yes. The SIGMA, just to go back to the previous study, the -- is that -- do they have measurable disease at baseline as well?

No, they've been resected and have had chemo and radiation. And so that's why -- PFS is the endpoint in the SIGMA study. But in the Grade 3 oligos, they all have measurable disease, and they just cannot take radiation for 15 years. So their brains won't do well. So they need an alternative therapy that can be given for 15 years.

If they don't have measurable disease, what the risk is it's not measurable now, but it's an aggressive tumor. So it comes...

The Sigma patients?

The Sigma.

Yes. So they will relapse at some point. But once they relapse, they're not going to do well.

Super tough disorder. So Voranigo is approved, as you mentioned, 11% response rate. This is the low-grade population. They were approved for low grade, low grade.

Low risk, low grade.

Low risk.

Yes. So there -- so in the same population, low risk, low grade, our response rate was 44% and with all the caveats of cross-trial comparisons, of course. But still, we think that, that's still noticeably different. If you look at the vorasidenib progression rate at 2 years, it was 41% in our study, again, with the same caveats of cross-trial comparisons, it was 12% progression at 2 years. We just think that's -- no matter how you look at it, even without comparison, 12% progression at 2 years in any glioma study would be considered remarkable. If you just were to extrapolate that out, you're talking about 10-year plus survival for patients, and that's going to be something that I think every patient and physician will find attractive.

Yes. The -- when we look at Voranigo, Royalty Pharma disclosed $118 million in royalty and they get 15% up to the first $1 billion, so you can actually back into it to $788 million, right, in sales of the first.

So in the last quarter, if you back out the sales from Servier's -- from the royalty based on Servier sales, vorasidenib generated $258 million in the fourth quarter. So they're already at a $1 billion run rate in their fourth full quarter of launch, which I think is remarkable.

Yes. It's already the biggest product, and it shows the level of unmet need. It's incredible. And then safu, do you think you'll commercialize it yourself globally? Or is that something you'll partner eventually?

No, I think that we'll probably reach that position when we get further along. But certainly, in the United States, we think that we have a great commercial team, and we would love to do that. In Europe and Asia, it's just harder, and we'll have to see what the math works out to be.

Maybe final question. I know I think we're just a little over now. Any more room to do BD?

Sure. I mean, as Philippe said, after we get our next milestone payment from Eisai, we'll have about $620 million in the bank. That's far more than we need to get to profitability. So we'll certainly look at BD, but again, it has to be really a good deal for us.

Yes. Well, terrific, David and Philippe. Thank you.

Thank you.

Appreciate it.

Thank you. Thank you.