TG Therapeutics, Inc. (TGTX) Earnings Call Transcript & Summary

Greetings. Welcome to the TG Therapeutics Update Call. [Operator Instructions] Please note that this conference is being recorded. At this time, I'll now hand the call over to Jenna Bosco, Senior Vice President, Corporate Communications. Ms. Bosco, you may now begin.

Thank you, and thanks, everyone, for joining us this morning. I'm Jenna Bosco, and with me today to discuss the recent regulatory updates for our oncology program as well as provide an overview of our commercialization efforts and financial position are Michael Weiss, our Chairman and Chief Executive Officer; Adam Waldman, our Chief Commercialization Officer; and Sean Power, our Chief Financial Officer. Before we begin, I'd like to remind everyone that various remarks that we make about our future expectations, plans and prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. TG cautions that these forward-looking statements are subject to risks that may cause our actual results to differ materially from those indicated. Factors that may affect TG Therapeutics' operations include various risk factors that can be found in our SEC filings. In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any later date. We specifically disclaim any obligation to update or revise our forward-looking statements. This conference call is being recorded for audio rebroadcast on TG's website, www.tgtherapeutics.com, where it will be available for the next 30 days. With that, I'll turn the call over to Mike Weiss, CEO.

Excellent. And thanks, Jenna. Good morning, everyone, and thank you for joining us. As we announced last week, we have voluntarily withdrawn both the BLA and sNDA for U2 in CLL and SLL. Based on that, we also decided to voluntarily withdraw UKONIQ from the market in the approved indications of relapsed or refractory marginal zone lymphoma and follicular lymphoma. Accordingly, the pending ODAC scheduled for April 22, 2022, has been canceled. We made this decision based on our recent review of the overall survival data from the UNITY-CLL trial. As mentioned in the press release, pursuant to a recent information request made by the FDA, updated overall survival data were collected, which showed an increasing imbalance in favor of the control arm, trending closer to the original OS previously reported back in November. Recall that in February of this year, we reported that we had provided an updated OS analysis to the FDA that at that time that showed an improvement from the original OS analysis run in November of 2021, which we thought was encouraging. As we have stated previously, the OS analysis of the UNITY-CLL study is underpowered and not designed to prospectively determine an OS difference. Nevertheless, we and our advisers felt, based on this new data, it was important to take a step back and withdraw the CLL, BLA and sNDA. I know I speak for all of us at TG when I say this is a very disappointing outcome. From the beginning, we at TG have recognized many of the liabilities of most PI3K-delta inhibitors. We have always believed and continue to believe that umbralisib is a different -- is differentiated from the others and we had been preparing tirelessly to make that case to the ODAC. However, successfully establishing a differentiated profile is difficult given the newly updated OS data and the growing concerns around the class. Underscoring that last point is the FDA's position now well articulated in their recent Lancet article that PI3K-delta inhibitors as a class, including umbralisib, may pose unacceptable toxicity to patients that can only be detected in an overall survival analysis. Accordingly, at the moment, we are considering continuing to follow the UNITY-CLL study for overall survival in the hope that we could reengage the FDA at a future date. If the OS from the longer-term follow-up of UNITY-CLL would support the differentiation of umbralisib from other members of the class on overall survival. However, for now, we will be pausing development of umbralisib and the U2 combination in oncology to focus the company on the opportunities that we believe will provide the greatest upside potential in the near term. First and foremost, we'll be to focus on ublituximab for multiple sclerosis for which we have a pending BLA in relapsing forms of [ MS ] with a PDUFA goal date of September 28, 2022, less than 6 months away. We believe this has the highest potential impact for TG, and other activities will be substantially curtailed as we work toward a potential approval and launch. Following which, we will reevaluate our B-cell-focused portfolio for future development. It is important to remember that TG is a fully integrated B-cell-focused company, and many of the assets that we have developed or are developing are in therapeutic classes that can play a dual role in oncology and autoimmune diseases. For the near term now, our focus is on executing what we believe is the substantial opportunity immediately ahead of us with ubli and MS. And as we move the company forward, we see a lot of potential of our B-cell platform across MS and autoimmune indications, and we will also assess further oncology development. So let's spend some time reviewing ublituximab and MS. As a reminder, ublituximab is a novel, glycoengineered, anti-CD20 monoclonal antibody that targets a unique CD20 epitope. The ublituximab BLA is primarily based on the ULTIMATE I and II Phase III trials, which evaluated ublituximab compared to the active control arm of teriflunomide in patients with the relapsing forms of MS. The trials met their primary endpoint of improvement in annualized relapse rate at 96 weeks and also met key secondary endpoints. The ULTIMATE program randomized nearly 1,100 patients in 2 identical global trials. Dr. Lawrence Steinman, Zimmerman's Professor of Neurology and Neurological Sciences and Pediatrics at Stanford University chaired the program. ULTIMATE I and II are the first MS Phase III clinical trials to yield an annualized relapse rate of less than 0.1, a major milestone of therapy. Results from the ULTIMATE I and II studies have been the subject of podium presentations at all the major MS and neurology conferences, including ACTRIMS and AAN. The role of the B-cell in MS has come into increasing focus over the last several years and has paved the way for the only 2 approved anti-CD20 agents to sell approximately $6.5 billion in 2021 global revenue, capturing approximately 50% of all new MS starts in the U.S. Finally, MS is a chronic and debilitating CNS disorder where patients are in need of new therapies that can improve their quality of life. It is estimated that there are nearly 1 million Americans living with MS. And we estimate that approximately 125,000 of them are currently on anti-B cell therapy, representing about 1/3 of all currently treated patients, leaving room for growth as patients consider switching from legacy therapies and as newer existing patients need treatment. With that, let me turn the call over to Adam Waldman, our Chief Commercialization Officer, who will walk us through our MS commercial preparation activities. Adam?

Yes. Thanks, Mike. I am happy to share that our efforts to prepare for the commercialization in MS are in full swing. We believe ublituximab represents a significant commercial opportunity. And with the recent events in hematology, our attention, focus and commercial resources will now shift to the MS launch. Let me first say that we've been able to attract top-tier talent to join our MS team. Currently, we have team members from Genentech/Roche, Novartis, Biogen, Teva and many others, all of whom have decided to join TG because they believe in the potential of ublituximab becoming a meaningful treatment for patients with MS. We have also already built core commercial infrastructure and capabilities in market access, patient services, analytics, marketing and medical affairs that will be leveraged to support this launch. Over the first quarter, we continued to make great strides in launch preparation for ublituximab in MS. And everything we have learned about the MS market over the past several months only increases our confidence. We have conducted market research and have had extensive engagements with stakeholders across the MS community. These interactions have been overwhelmingly positive, including our very recent engagements at the American Academy of Neurology Annual Meeting in Seattle. I thought I would highlight some of the learnings and the reasons we are so excited about this opportunity. First, our research tells us that the profile of the drug is compelling and offers meaningful differentiation for physicians and patients. Advisers are impressed with ublituximab's overall clinical profile and recognize that ublituximab is still the only agent that has demonstrated an annualized relapse rate of less than 0.1. We also see the safety profile to be on par with other CD20s and believe the absence of breast cancer risk in the ULTIMATE I and II studies could be differentiating. Second, the 1-hour infusion is an important differentiator as it has the potential to provide a better patient experience, improved convenience and enhanced efficiency for busy centers of excellence. Approximately 80% of the MS specialists we surveyed felt that 1-hour infusion would provide meaningful benefit to their patients. And our research also tells us that a majority of patients are still receiving the 3.5-plus hour infusion of ublituximab. Third, the demand for CD20s remains robust and now accounts for almost 50% of the dynamic market share in the U.S. Meaning, of all patients seeking a new treatment for MS, 50% each year will go on to a CD20. B-cell therapy has become the gold standard in efficacy, and more and more physicians are adopting a high-efficacy, early treatment approach. Fourth, our pricing strategy has received very positive feedback from payers. They're eager to see ublituximab launch, which will continue to introduce healthy competition and potentially lower overall costs in the category. And finally, this is a market that is highly concentrated with a small number of high-volume centers really driving the market. We estimate that in the U.S., the top 550 accounts represent over 70% of the patient volume and the majority of these accounts report that they are always or at least sometimes operating in infusion capacity. We see these market attributes as an ideal place for a smaller disruptive player to come in and make a big impact. So let me finish by acknowledging the hard work, dedication and contributions of our hematology team over the last 2 years. Obviously, the entire TG team is sad that we will not be able to launch U2 and CLL right now. And I want to thank our team for everything they've done to help establish TG as a commercial organization. With that, I'd like to turn the call over to Sean Power, our CFO, to provide a brief update on our financial position.

Thanks, Adam. As you can imagine, with the shift in focus towards ublituximab in MS, we expect to see substantial OpEx cost savings as we streamline our oncology operations on both the R&D and commercial fronts. We will spend the coming weeks calculating the full impact of these factors on our overall cash burn, but they will undoubtedly have a meaningful impact in the quarters ahead. With all that said, our burn for Q1 '22 was slightly north of our target of $65 million, and we feel good that our Q2 burn will be around our target of $55 million. In the third and fourth quarters of 2022, we expect to more fully see the impact of the shift in focus and related workforce and R&D reductions, which will be partially offset by increases in commercial prep for our MS launch. Our goal would be to see our burn at approximately $50 million for each of those quarters. However, we will provide further updates here as we understand the full magnitude of the OpEx reductions. With approximately $280 million in cash at the end of the first quarter 2022 and additional capacity under our Hercules credit facility upon MS approval, we believe we are well positioned to launch ublituximab in MS without turning to the equity markets at this time. With that, let me turn the call back over to our CEO, Mike Weiss.

Thanks, Sean. So let me reiterate a few key points that I'd like folks to take away from the call today. While we're disappointed by the withdrawal of U2 application, BLA and sNDA and UKONIQ from the market, ublituximab in MS has been taking an ever-increasing importance to TG and its shareholders over the last 2 years. And now ublituximab in MS will take center stage. We see ublituximab in MS as a potential best-in-class CD20 in what is expected to be the largest therapeutic class of MS treatments. The PDUFA goal date is September 28, 2022, less than 6 months from today. And finally, as Sean mentioned, we believe we are well-capitalized to launch ubli in MS and have no plans to tap the equity markets at this time. With that, let me turn the call over to the conference operator to begin the Q&A session, and then I'll come back at the very end just for some concluding remarks.

[Operator Instructions] And our first question will be coming from the line of Chris Howerton with Jefferies.

This is [indiscernible] from Chris' team. I guess we're wondering how committed overall U2, CLL and umbralisib and kind of what it require to reinvigorate the oncology strategy? Out of these discussions with the FDA, was there any -- is there absolutely no effect to the ublituximab BLA in MS? And maybe on your credit facility, how much of that is still available?

Sure. So in terms of CLL going forward for the moment, our focus, as I mentioned in the prepared remarks, is going to be on MS with ublituximab. We'll revisit the CLL and other oncology opportunities probably in the 6- to 12-month time frame once we get ubli on the market. So I think for the moment, like we said in the prepared remarks, that's on hold. Most activities associated with that will be curtailed, and everything is focused on getting ublituximab approved in MS. In terms of -- what was the second half of your question? I think I've heard something there for Sean -- oh, the credit facility. Sean just mentioned...

No, was there any talk about that ublituximab BLA in MS from these discussions on the [indiscernible]?

There was no discussion about that. There was no discussion about that.

And on the credit facility question, there's $45 million available upon the approval of ubli in MS. And there's an additional $65 million that's discretionary based on both parties.

The next question is from the line of Eric Joseph with JPMorgan.

This is Chuan on for Eric Joseph. And just a related one, can you speak to whether there are any relevant risk or concerns from UNITY to ULTIMATE at this point? And how has the RMS regulatory process has been proceeding and -- based on your likelihood of a panel that you expect at this moment?

Sure. So at this time, we are not expecting a panel for relapsing forms of MS. That's the current position of the FDA. But I would put a caveat to that, which is that was the current position of the FDA for UNITY-CLL and we ultimately ended up with a panel. So at this time, we can say that there is not planned a panel for MS. In terms of crossover effects between MS and the UNITY application, again, I think as you could see by -- for the folks who have read the Lancet article now that came out, just after we had put in our withdrawal notice, the FDA is really cracking down on PI3K-deltas. I think our position is that the majority -- vast majority, almost exclusively, the issues of the FDA were associated with the PI3K-delta class. So we don't see a read-through from the PI3Ks and the discussions we've had with the FDA to the MS application at this time.

Next question comes from the line of Ed White with H.C. Wainwright.

Mike, when you're talking about the oncology franchise, regarding TG-1701 and 1501, the trials that are ongoing, will they -- will you continue following patients and just stop enrolling new patients? Or how should we be thinking about that? And also, you've always talked about triplet and potentially quad formulations. If you can give us your thoughts maybe on are you now thinking of monotherapy indications or other combinations?

Yes. Thanks, Ed. So for the moment, certainly, all new enrollment in those trials will be paused. I assume we'll continue to follow the patients that are in those trials that you referred to. In terms of triple and quad therapies going forward, all that is on hold, and we're going to take a look at that at a future date and see where we are. And again, I think we need to line up all the opportunities that are in front of us for the molecules that we have in the portfolio and determine whether our next moves are expanding the portfolio into MS and autoimmune diseases and/or into oncology indications. We could do any or all of the above, but I think we need to line up everything with a fresh look. I mean without U2 as the backbone, that definitely changes a lot of how we think about our oncology business. So for the moment, like I said in the prepared remarks, all of that is on pause. We're going to be curtailing everything that we can to keep our focus on MS -- ublituximab in MS, and we'll revisit at a later date. So for the moment, I would say everything is on pause.

Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann.

Just wanted to focus a little bit more on kind of your decision to move to -- focus on autoimmune and MS. Can you describe beyond ublituximab what other assets you have in autoimmune, inflammation outside of ublituximab and your plans for that currently?

Sure. So again, I think our plans are in the works. And like I said, I think we're going to do a full portfolio valuation once we have approval and launch of ublituximab in MS. But in the meantime, I'll just note that obviously, BTKs can be used in autoimmune diseases. There's no reason CD19/CD47 can't be used in autoimmune diseases. So I think we have a portfolio that can be translated from oncology to autoimmune diseases if when we go ahead and do a full review that makes the most sense. So I think that's what we're implying when we talk about a B-cell platform. And most of the drugs that we're working with can translate over to autoimmune and MS. And again, I think it's just all about what's the best opportunity, the highest impact and return to shareholders to augment what we're doing with ubli in MS.

Okay. That's helpful. And then secondly, you mentioned this in some of your prepared remarks, but with respect to ublituximab in MS, can you touch on the -- its clinical profile and how it differentiates and potential in the MS anti-CD20 class, how it differentiates there?

Yes, sure. Adam has obviously been working closely with the team and is in closer contact with the market research. And maybe, Adam, you want to answer that question?

Sure, Matt. So I think a lot of what I said in the prepared remarks sort of outlines it. But ublituximab, from market research that we've done, is quite compelling and differentiating to physicians. Still the only agent that has shown in 2 Phase III trials to have an annualized relapse rate of less than 0.1, a safety profile that seems on par, and the 1-hour infusion does seem to be quite attractive to both physicians and to patients. And I think -- so you got best-in-class efficacy, convenience. And as I mentioned, we are pretty far down the line on our pricing strategy and accelerating and making sure that we do what we can to create the broadest access as possible, is the overall profile of the drug.

The next question comes from the line of Mayank Mamtani with B. Riley.

Just -- maybe just a quick follow-up on the ODAC preparation refin package. Would there be any disclosures, as was expected before the ODAC panel, that may still happen this weekend? And just curious if there was any assessment made on the individual impact of ubli monotherapy, is the individual component as I'm sure FDA likes to break down what was ubli monotherapy versus the umbra monotherapy in UNITY-CLL? And then I have a follow-up.

Sure. Thanks, Mayank. So the -- I don't believe the briefing materials will be available for the April 22 meeting. But there will be a PI3K meeting on April 21, which I'm sure will contain plenty of information about all drugs in the PI3K class. And we understand that umbralisib will be included in that discussion. In terms of single-agent ubli in the, I guess, the review of the UNITY-CLL package, single-agent ubli was included. There were 90 patients that were in that arm. In terms of -- I'm not really sure what the question is, but in terms of the review, like I said, most of the focus has been on the PI3K class.

Okay. Great. And then you guys have been really active at least in neuro medical meetings. Just curious if, Adam, you can comment on the importance of the disability data, how useful or differentiated by -- that's found the opinion leaders, target prescribers, payers, et cetera. And just maybe remind us where you are with the ex U.S. filing for MS, particularly in Europe?

Sure. Yes, the disability data -- yes, the disability data scene is very positive. And I know it didn't hit the distal significance. But the number of patients that have progressed was very low. And the physicians see the number of patients that -- or the percentage of patients that have actual improvements as being quite encouraging. So we've -- the feedback we've received in that particular point has been very, very positive. Mike, do you want to take the ex-U.S. question?

Yes. So in terms of ex U.S., it's progressing at probably a 6-plus-month lag behind the U.S. application, possibly even 9 months. But it's in the works, and we'll keep you posted. But again, our focus almost exclusive at this point is to work on making sure we get ubli approved in MS in the United States.

Our final question this morning comes from the line of Josh Schimmer with Evercore ISI.

I guess first, since there really isn't a worse outcome than withdrawing the product and application, what do you have to lose by not trying to at least defend UKONIQ and U2 and at least trying to have a panel discussion to sway the committee?

Yes. So I mean we believe that our credibility was in -- objectively looking at the data, we have promised both the FDA and the investors that if we saw something that did not jive with our position that we believed at that moment, then we couldn't go forward. And we just didn't have the OS data to support everything that we were trying to prove. So when we had the improved OS, we were really excited. We felt we had extremely strong grounds to support our position. And when the FDA came back and asked us for an update and we put that update together, when the data came in, it just wasn't there. And we just didn't -- we didn't think we could credibly stand in front of the panel and ask. We had multiple experts lined up, and we just didn't feel we put them in a position to stand up in front of the ODAC and push for something that on its face did not look like it should. So I don't think, one, again, in hindsight, we have a lot more information now. We did not know at the time we put in withdrawal that the Lancet paper was literally coming out hours later. But I could assure you that the FDA was -- is pretty well dug in on their position. They wrote it up in a paper. Everyone can read it. So I think there's no question we made the right decision. And again, I think we made a commitment to both the FDA and to shareholders that if we saw something that was not to our expectations, we wouldn't move forward.

Can you provide any color on the causes of mortality in the UNITY-CLL trial that point to or away from a PI3 kinase inhibitor mechanism?

That point away from a PI3K mechanism...

Were they infection-related mortalities? Was there a colitis-related mortality?

It was primarily -- I think in the issues that were most concerning to the FDA were associated with infections. I think that's something that they've been on since the idelalisib days when they pulled it for undue excess infections. I think that's where they focus most of their attention. Look, when I look at the results, again, even to the very end, there's a lot of noise in the system. it's an underpowered trial. But trying to argue the noise-signal ratio in an underpowered study where the FDA has a thesis and they're strongly committed to that thesis, again, made it extremely challenging. But yes, I think across the board, there's lots of causes of death, including progressive disease in both arms, secondary cancers, evenly balanced cardiovascular thing. I mean it's a lot of -- you're looking at patients that have probably an average lifespan from point of treatment of anywhere from probably 7 to 15 years. Lots of things can happen in that time frame. So again, if you're underpowered, imbalances can easily be seen. But yes, I think in terms of overall concerns, the PI3K class and the things they're focused in on were infections.

At this time, I'll turn the floor back to Mike Weiss for closing remarks.

Great. Thank you, operator, and thanks, again, everyone, for participating in today's call. I know this is a disappointing day for our employees and shareholders alike. Nevertheless, I want to assure you that TG is well positioned to drive shareholder value over the short term with our ublituximab BLA pending for patients with relapsing forms of multiple sclerosis and a PDUFA goal date of September 28, 2022. Longer term, we plan to continue our B-cell-focused mission with our robust portfolio of B-cell-targeted agents. I want to thank the patients, physicians, nurses and site personnel for their participation in our clinical trials with the hopes of finding better treatments for patients with B-cell malignancies. And finally, I want to thank the fine team at TG that has worked tirelessly year-over-year and poured their hearts and souls into the development of umbra in U2. Your efforts are much appreciated. Thank you, and have a good day.

This will conclude today's conference and webcast. You may disconnect your lines at this time. Thank you for your participation.