Pharma Mar, S.A. (PHM) Earnings Call Transcript & Summary

Welcome, ladies and gentlemen, to 40th Annual Healthcare Conference sponsored by Crédit Suisse. Today, we have Pharma Mar presenting. Pharma Mar is found -- has been founded in 1986 and as a Spanish biopharmaceuticals company, headquartered in Madrid over here in Europe and is listed on the Spanish Stock Exchange. Pharma Mar focuses on the development of something very interesting. Which is marine inspired oncology as well as virology treatments, other ventures include genomic testing and R&D projects in the area of RNAi as well as Gene Silencing, in general, in, for example, dry eye disease. It currently also holds the world's largest collection of marine organisms for research purposes. Pharma Mar was the first company in the world to develop a marine based cancer drug called Yondelis, fruit to commercialization in soft tissue sarcoma as well as ovarian cancer in global markets. Other marketed products cover multiple myeloma as well as small cell lung cancer. We now look forward to hearing more from Pascal Besman on Pharma Mar's highly interesting business and its future plans.

Thank you, Garrett, and thank you, Credit Suisse, for their invitation today. And my slides are not advancing. So that's the problem. Here we go. So here is our management team and our mission statement, which Garrett paraphrases that we are inspired by the C driven by science and motivated to improve the lives of cancer patients by delivering novel medicines. Where what we would have called maybe 30 years ago, a fully integrated pharmaceutical company with discovery, preclinical, clinical development through to commercial. We are developing primarily marine inspired oncology drugs, and we have succeeded to have 3 approved, Yondelis was the first originally approved by EMA in 1980 -- or 2007 for soft tissue sarcoma followed 2 years later with an indication for platinum-resistant ovarian cancer. That compound is now approved in over 80 countries or 1 or both of those indications. Aplidin is a second different organism based marine-based oncology drug that was approved for late-stage myeloma by the Australian authority. And Zepzelca, which is really the transformational product for Pharma Mar that we will focus on today, also known as lurbinectedin was approved by FDA under accelerated approval for relapsed small cell lung cancer in 2020 and has subsequently been approved by a number of countries such as Australia, Canada and will be more in the future, we hope. We currently have an established European oncology sales force and infrastructure, which we're trying to leverage into in-licensing other assets to layer on to that. Our R&D platform starts with marine expeditions, takes compounds that have unique mechanisms of action and anticancer properties into preclinical and then hopefully, clinical testing. We're expanding our pipeline, hopefully, in the next year with a couple of new Phase IIs and a new compound entering. And we are profitable and have cash. Last year, we had a very nice profit on the back of that, Zepzelca launched our cash for a couple of weeks back EUR 220 million, which represents about 20% of the market cap as you see here. So we are looking really at 3 layers here. Our organic growth leveraging our commercial products by looking at lurbinectedin, Zepzelca approvals in other countries and in other indications. Our pipeline, we're looking to expand the pipeline for lurbinectedin, both in small cell and other indications, bringing our PM14 into Phase II in 1 or 2 indications and having 1 or 2 new compounds into Phase I clinical setting. And leveraging that European infrastructure as a goal of ours by in-licensing a cancer drug for the European theater. We think we have a lot to offer there. Of course, it takes too tangle, but we can give you some of the parameters as to what we're looking for and how we will deploy that robust cash position we have. So pictorially, you can see here, Yondelis I described already approved in second and third line soft tissue sarcoma as monotherapy. Recently, there was a French sarcoma group trial presented at ESMO in the frontline setting, which is interesting, and we're newly true what to do about that. In the ovarian setting, we're in combination with Doxil, pegadricase doxorubicin in the resistant setting, and that in many countries, not quite as many as sarcoma. And then after that, as I said, late-stage multiple myeloma in Australia in combination with dexamethasone. But the game changer is Zepzelca, which as I said, approved monotherapy in the U.S. and other countries, getting ready to start a confirmatory trial that we're connected in versus topotecan or irinotecan starting late this year, perhaps early next depends when the sensors open, and we're finalizing our thoughts on feasibility of a Phase III in relapsed mesothelioma in combination with a checkpoint inhibitor. Interestingly, we have some combinations ourselves we've been exited in combination with checkpoints and 1 of them we'll show the first data ever at the SITC on Saturday. We have a poster that has 26 patients in combination with pembrolizumab. That data is still embark good. However, I can say that we are encouraged in our partner, Chaz, that is leveraging that and planning to do a trial in the maintenance setting of small cell in combination with Roche and their pembrolizumab. Our next pipeline after that is ecubectedin or PM14 and as I said, getting ready to enter Phase II. We're going to talk primarily about Zepzelca, Here, a brief talk on its mechanism of action. It is an inhibitor of [indiscernible] oncogenic transcription. By doing that, it leads to DNA double-strand brace and apoptosis as well as having tumor micro environment impact and an immunomodulatory effect through tumor associated macrophages. So let's talk a little bit about the transaction we consummated with Jazz at the end of 2019. This was a day before we filed. We received $200 million upfront in the weeks following in 2020 and got $100 million regulatory milestone on FDA approval with the potential for up to $700 million more in regulatory and commercial milestones. The first 4 quarters here under the box, they did $200 million launching in COVID and actually now with the fifth quarter, which happened this week, we're up around $260 million the 4 quarter run rate for this year, if you annualize it's around a quarter of billion dollars. We get 17% volume royalty going up to those high teens up to 30%. As I mentioned a moment ago, Jazz and Roche have initiated a Phase III in first-line maintenance setting after platinum etoposide IO. This is a trial, which is very interesting to us because the duration of therapy in that frontline maintenance setting is almost double what we think it is in the second line setting. So a big opportunity to increase the theater that we can attack. So from that approval during chemo, the drug launched very well, and I'll describe in a few slides why that is, and there are some unique assets of the need that made it so desirable for physicians and patients and caregivers alike. It was added to the NCCN guidelines, today when it was launched. As I said before, we're going to be running a confirmatory trial for that accelerated approval in the second-line setting that we will also serve for our registrational capacity in jurisdictions such as EMA, which require that. It's a 3-arm study of lurbinectedin versus the combination of lurbinectedin and irinotecan versus physician's choice of topotecan or irinotecan, and we are hoping to get the first patient in this year. In terms of the launch, I would say that it's interesting that Jazz presented a slide the other day and said the first 5 quarters despite us being the only 1 of the drugs who got attention during the COVID, we exceeded the sales of ZEJULA, neratinib, Jakafi and ADCETRIS, hopefully, that will continue. I'll talk a little bit now about small cell lung cancer. Part of lung cancer that many people are less familiar with. It represents about 15% of all lung cancers. It's a highly aggressive tumor and almost always associated with prior or current tobacco use. Most of these patients are quite symptomatic when they turn up usually in the emergency room, either with shortness of breath, coughing up blood or both and many of them don't need the hospital before they've gotten their first chemo. Nevertheless, while they all tend to respond to first-line therapy, the response to sleeting and the disease comes back quickly and more aggressively such that the 5-year survival rate is single digits and the median over are all survival once your second-line patient is under a year. In terms of the U.S., it's about 30,000 new patients in 2019 there are limited treatment options, number of patients in Europe approximately doubled, which is a function of a population that's about 50% higher and higher tobacco use. Here, you have a time line of development progress in small cell lung cancer, which is exhausted and non-cancel lung below the years, which is not exhausted, we couldn't hit them all. So the immediate question that you would probably say is why is non-cell lung cancer getting all of the presence under their Christmas tree and small cell lung cancer looks like the giant desert with a few OE season. And the answer is that most of the drivers of non-small cell lung cancer are targetable mutations, targetable either by blocking a receptor or mopping up ligands. Whereas in small cell lung cancer that is not the case with the mutations, in small cell lung cancer are almost ubiquitously in [indiscernible] genes, P53, RB1 and P10 specifically. And so as our friend and colleague, [ Dr. Groton ], as eloquently said, it is very difficult to turn off an off-switch. Looking at the treatment paradigm of small cell, frontline treatment and about 19% of frontline diagnosed patients get treated, is [indiscernible] side now with the addition of either atezolizumab or durvalumab. The label reads 4 cycles of platinum etoposide in combination with IO could see the IO after the 4 cycles until progression. That period of the mono IO is called maintenance, although it's the longest part of the trust line label, and that is where the Jazz, ROCHE trial will be prosecuting Zepzelca in combination with Atezo. We are in second line. We're the only other approved drug is topotecan. Topotecan the day before, we got approved has a distinction of being a monopoly with a market share of about 15%. That is a testimony to a drug that has modest efficacy, about a 20% response rate only in the best patients, sensitive patients, a very toxic adverse event profile with over 50% of patients requiring transfusions and support as well as an inconvenient administration protocol where patients have to go to the clinic 5 days out of 7. We get administered once every few weeks. And so in Covid having a 1-hour chair infusion from Zepzelca with results that were 50% better than topotecan comparing the cross trials, of course, which we're not meant to do. You can see that our efficacy seems better. Our tolerability seems much better. And rather than going to the COVID in tested clinic 5 days out 7, were once every 3 weeks. This really resonated with the treating physicians. And is the reason why today, just 5 quarters in, our market share in the second line setting is 37% and rising. Below that, you could see in the NCCN guidelines, a dozen or so other drugs that are used primarily in the United States, irinotecan very little IO at this point because it's out of label in small cell or third line labels were withdrawn and plus the NCCN guidelines qualify those recommendations by stating they are only to be used for people who are IO naive and those patients primarily don't exist. If we go back in time to before we got approved, about 60% of patients are getting treated in second line, which, of course, begs the question where are the others going? And so we don't have very great numbers on that, but we know that some of them don't get treated because they get diagnosed too late in terms of the disease or too frail to treat. A second group of patients has be passed away during that frontline therapy. A third group of patients come out with frontline therapy and were proposed topotecan with modest efficacy, adverse event profile in convenience and decide, no I am good, I'm going to live my days on a peace at home, leave me alone. Another group gets sent to hospice out of the front line. And the fourth group does something alternative, maybe acupuncture whatever it is. We're noticing that that's going to be trending up how we think. And that's because Zepzelca value proposition is very different. And so some of those patients are saying, no man, leave me alone. I don't want to go get more chemo leave me alone. They're going to choose Zepzelca. And perhaps some of those who are choosing something alternative will view the value proposition is tilting the balance instead of giving something else to try. So hopefully, the number of patients get treated higher over time. in Europe, the treatment paradigm is much the same and it's interesting that we lurbinectedin has been added to the ESMO guidelines even before approval, perhaps a testimony to the paucity of options. Let me now share with you the data that supported us getting approved, and this was presented in an oral presentation at ASCO in 2019 by Dr. Paz [indiscernible]. And when you look at the waterfall plot on the right, which summarizes the 35% response rate. When I first saw this, I thought that doctors would say, "Oh, how impressive you've got quite a few of the patients are on the right of the horizontal bolted line. With that almost to a doctor who is not what they focused on, what they focused on was the purple bars. Those are the resistant patients for which topotecan is not approved and for which nothing has ever worked before. And they noticed that you know what, you've got quite a bit of effect size here on a number of these patients, [indiscernible] some seem be on salvage. But that was really something that impress them and who led them to want to try it early on with their patients. I discussed earlier the adverse event profile, you can see at the -- have a look at the top right, 3 hematological adverse events. These are areas paper toxicities, generally, don't know you got them until someone looks for them. And they are all eminently manageable by oncologists with their eyes close with drugs and treatment options that they already have. They really trouble symmetrics event here is [indiscernible], where we have a rate of grade 3/4 of 5%. This is troublesome because the patient knows something's wrong there in an ICU with a fever, and the doctor as something wrong because he's worrying a patient with guided infection rather than from their cancer. Nevertheless, a rate of 5%, really is something which is part of that is in the alternatives we've seen so far. I would also state that the trial in question here did not have primary prophylactic GCSF. The rate of rescue med GCSF was 22%. We're hearing that there's quite a bit more use of that in the real world, which should help with these adverse spends. I mentioned earlier, thinking about our malignant mesothelioma trial. Mesothelioma is another very aggressive externally catalyzed tumor, in this case, asbestos, which is still legal in a number of countries, including the United States and areas. It's smaller than small cell 3,000 U.S. patients more in Europe. And there is change afoot here. We've had [indiscernible] approved in both jurisdictions in the last year. And that's put down a lube-based regimens and last into the second line setting. We're considering a trial in the relapse, which would encomp the second and third line. And this is off the back of data presented at ESMO 2019 by a Swiss cooperative group called SAC SAKK, of 42 patients, which showed an intriguing primary endpoint of PSS, also an intriguing OS with manageable adverse events. This trial is being compensated in combination with a checkpoint inhibitor, and we are hoping we'll be able to finalize our decision in the near future on this. I mentioned we're looking to in-license a cancer drug for layering into our existing European sales force and part of that effort, which is ongoing. And we screened over 100 assets or companies got engaged in 40 or so under CDA with 15 and are narrowing it down to the final expert that we're looking at in the conversations with the number. And as I said earlier, of course, until it's signed in ink and dry, there's nothing for us to say other than we're going to keep trying. We think we have a lot to bring to the table here. We have years of experience marketing each of the doctors and hospitals and in Europe, the doctors are in the hospitals primarily. We've already navigated the European, the U.K. and the Swiss regulators. We've dealt with the logistics, the joy of printing labels in 35 different languages. Yes, in Spain, this 3 Belgium has 2, Switzerland 4. We've done that. We've dealt with reimbursement and market access. All of these things take experience. And so we think for the right asset, we're big enough to matter and slow enough to care, finance that doesn't perhaps justify someone building their whole European infrastructure from scratch. Hopefully, more on that in the near future. Quickly to just go over our IT on our 2 main commercial assets. Zepzelca is protected by orphan until 2027. We are contemplating a pediatric extension and have already filed for the has 5-year patent term restoration, which we qualified for based on a number of years in development. In Europe, we will also have a composition of matter patent. However, there, we would hope to get our 10 years of orphan protection post the first approval. And of course, as with every company, there is a life cycle management plan in place, which we don't intend to share. We also have a program in COVID with [indiscernible], the approved drug for myeloma. The hypothesis of this data to the beginning of COVID because all of our drugs are based on marine and vertebrates. And marine and vertebrate were the second class of organism on this earth, following viruses and bacteria patients. And so Marine and Vertebrates, which have no immune system managed to survive and evolve in a landfill of viruses, contemplated us to think about their antiviral properties. And so we did some work on this in vitro, and you can see from the cell plates their large spirits. And we then went into various species of in legal experiments, which confirm this and then went into a human Phase II safety study, which again led us down the same path. So we're in a Phase III of 600-odd patients 3 different doses in hospitalized patients and this trial is recruiting right now in Europe, in Latin and South America, Eastern Europe as well and hoping that we'll be able to recruit this and read out results. Of course, once you've recruited patients, the results come pretty quickly. A quick word on financials. You can see here our cash took a significant upswing in last year. Although we signed our deal with Jazz in 2019 because of the [indiscernible] wait period it was booked primarily in January '20. And we're now up $222 million of cash, we're profitable. And we've reduced our debt by over 50% in the last 2 years. We think we've got a lot of firepower for this in-licensing deal. We have the ability to finance the transaction with cash, the debt with equity with a mixture of the 3. So there's a lot going on, we'd like to call this a transformative time for Pharma Mar. Starting from our deal in 2019 with Jazz, which has done -- they've done a tremendous job having had only 6 months to prepare for launch before that approval and launch. We've got our Phase III trial. Unfortunately, the slide is not loading fully that there is meant to be some of the volumes for the future, which talked about our validation of Zepzelca with the confirmatory trial starting, which will also serve a European approval where we own all of the rights the initiation of lurbinectedin in other tumors or settings of small cells and the initiation of 2 -- Phase II trials for PM14 as well as delivering ease into the clinic. So these are our near-term objectives. So here comes the -- I didn't know I had to do that. I beg your pardon. Now you can see our -- And our catalyst calendar, we didn't have time to change this yet, but we have, as I said, the SITC data of lurbinectedin, atezo will be presented Saturday the abstracts already there. The second-line trial where we hopefully get first patient in this year. Jazz is expecting in their trial to get their patients in the maintenance trial in this year, PM14 1st patient in this year. We have a number of other countries where lurbinectedin is already approved. We do hope to record our first sales milestone payment from Jazz at some point. We haven't discussed where those breakpoints are or where the royalties start climbing up and we do hope that at an unknown point in time, we will be in licensing this asset. I've spoken about numerous signs. So as we think about our time here -- plan, we look to leverage our profitability and our drugs with Zepzelca, and its IP leverage that into different indications and settings expand into new territories, premium new assets accelerate our R&D engine. So there's a lot going on, nothing binary for the next year that appeals to some dose to others. Nevertheless, we're excited about the future. We have the financial gravitates now to do what we want to be doing. We are building up our scale of employee, our headcount as well. And so we're extremely bullish for the future and are very delighted to add your attention for the last half hour or so. Thank you.

Thank you very much, Pascal. Unless the operator disagrees, I think this concludes today's presentation. We hope you had a good look into Pharma Mar and be sure to follow up via website. Thank you very much.

Thank you. Bye-bye.