UroGen Pharma Ltd. (URGN) Earnings Call Transcript & Summary

Welcome, everybody, to the second day of our conference. I'm Boris Peaker. I'm one of the biotech analysts at Cowen. It's my pleasure to host a fireside chat with UroGen, and with us is Liz Barrett from UroGen. Welcome, Liz.

Hello. Thank you. Hi, everyone. Glad to be here.

So let's just jump right in. You recently had a Jelmyto approved. Can you comment what you're seeing from the commercial launch of the drug and how we should be thinking about it over the next maybe a year or 2 or even longer term.

Sure. Absolutely. I think everybody knows we launched June 1, so right in the middle of a pandemic. I always think about what would happen if we had launched under normal circumstances, but we'll never know that. And the reason I say that is because we're really pleased with so far how things are going. So we think about, oh, things are going well, even though we've had to do things differently. Boris and I were just talking about, will things ever go back to the way they were. I don't think they will go 100% back there. There are some things that we sort of missed out on, and that's our representatives being in the office all the time to give a reminder to the physicians and the staff. But having said that, what we were able to do with the launch was we were able to launch virtually. So we moved everything. Example is we were supposed to be at the AUA in May. We brought the AUA to physicians. We were able to share in a very unique way our booth and all of the things that they would normally see in person, but they were actually able to interact. And just as we're doing Zoom today, physicians were open to Zoom meetings, and they actually had time because, unfortunately, patients weren't going into their offices. So they actually had the time to spend with us. So what we're saying so far is we're happy and pleased with the way things are going, the way we've communicated from a revenue perspective is that we're comfortable with the consensus. So if you think about and look at the consensus, both for 2020 and for 2021, the guidance we've given is that we're comfortable with that. So while we're not actually giving specific numbers, and we'll be sharing our earnings in the next couple of weeks, we are pleased with how things are going. And so physicians, I think, are interested. Our data, we've done some research and, frankly, the awareness and the intent to use is off the charts from what I've seen in many launches in the past. So happy with the way things are going. Obviously, still in a pandemic, the vaccinations are starting. So we're cautiously optimistic as we get into 2021, and I'm excited about being able to bring this important medicine to patients who really need it.

Great. So let's talk a little bit about reimbursement as well. So Jelmyto has a J-code, which just has since the beginning of this year. Can you explain what that really means, why that's important?

Absolutely. So what a J-code does is it gives you a unique code that to gain reimbursement. And what -- it moves everything from -- into being able to electronically get reimbursement. Why does that matter? One, you don't get the pushback that you might get with from payers with a miscellaneous code. It's very specific to your medicine, and it just gives confidence to the physician's office that they'll actually get reimbursed and reimbursed properly. And so again, and the time, the time it takes. Before you have a J-code, you have what they call miscellaneous code, which is done manually, and it just takes longer to get reimbursed because of the review. So J-code is very important to doctors who are used to buy-and-build drugs. For us, we had also a C-code, and that is used in the outpatient setting in a hospital or in a surgery center. We received that on October 1. So that helped, and then the J-code will help even more. And it's really around, again, the accuracy, the confidence and the timing of reimbursement. That's -- those are the things that the J-code helps.

Can you comment about the economics of using Jelmyto for these physicians versus the alternative they using before Jelmyto?

It's a good question. There's not great data on all of the costs associated with treating a patient with UTUC. We do know it's very expensive, not just because of the procedures because they'll either have repetitive endoscopic procedures or they'll eventually 70% to 80% go to an RNU. But there's comorbidities associated with that and long-term impact on costs. So we've done the best work that we can. What's important is your -- I think what you're asking about is really the physician, the financials for the physician's office. What we've tried to do is really minimize that as a barrier to use. In other words, we want to do what's in the best interest of the patient. But we don't want to be in a situation where physicians are using our drug because they're making medicine or they're not using our drug because they're losing it. And so what we feel like is they've pretty much come out even. But they do make money on the drug. They do -- it is ASP plus 6%. So they make that margin. So if you think about it from a reimbursement standpoint or a financial standpoint to the physician's office, they do make money on the procedure. They only own surgery center, they make money on the technical fee. They have the professional fee and so they get reimbursed and a lot of -- using a lot of the code that they normally use day-to-day. And then the incremental reimbursement is really around the purchasing of the medicine.

Great. And can you also talk about the intellectual property around Jelmyto, when does that expire? And how we should be thinking about it?

Sure. I think we think about it in the 2030s. And when I say 2030, that's because our initial patent around composition of matter will start to expire 2031. But we have a very broad range of patent, a very broad patent family around use patents and ability to use it. The manufacturing of our technology is very difficult, right? So there is a high bar for anyone coming in even post the patent. Because the technology, I've talked to a lot of people that I've tried to develop similar technology and have not been able to. So we know that how difficult it is to develop such a technology. And so we feel like even after the 2031, 2033 patents, we still think that there's a bar for manufacturing.

Got you. So let's continue on with UGN-102. I think there's more investor interest in that compound. First, in terms of differences, if any, what's the difference on Jelmyto and UGN-102 in terms of the underlying drug itself?

Yes. The -- their similarity is that they both utilize our RTGel, and they both utilize mitomycin as a medicine inside the gel. That's where it is. The ratio of the 2 drugs and the volume are very different. We've had a lot of questions, well, couldn't I use Jelmyto off-label for bladder, you can't because the volume of the bladder, obviously, is much bigger. And anytime we develop a medicine with our technology, the scientists actually -- it's unique. It's unique to each one because the ratio of how the medicine works with the gel is really important. And so the main differences between those 2, Jelmyto and 102 is the ratio and the volume. So the ratio in mitomycin to the gel and then the volume that you need for patients.

Great. So you're studying 102 in bladder cancer. Before we dive into the specific trials, you've conducted their plan to have ongoing. Can you comment where you plan to fit this in within the treatment paradigm of bladder cancer?

Absolutely. It's really important to note 2 things. One, we're talking about low-grade disease. We often get lumped in. We get asked the question about the competitive landscape and what you -- what the competitive landscape today is very busy in bladder cancer, but it's really busy in high-grade disease. There's really no one else looking at this low-grade intermediate risk. We chose the intermediate risk patient because that's actually the patient that has a high unmet need. Why do they have a high unmet need because they -- TURBT doesn't work today. So transurethral resection of the bladder tumor, that is standard of care today for these patients. It's a surgery where you go in and cut out the tumor. What happens, unfortunately, with this intermediate risk patient population is they recur and they recur quite often. As an example, in our own study that we just finished, the over 50% of the patients had had 3 plus, 3 or more TURBTs. So that's the patient population we're talking about, low-grade intermediate risk. So that show -- that -- they today, again, it's TURBT. I think what you'll see when we're able to bring this medicine to patients into physicians does that initially start with a patient that has had these recurrences. Of the 80,000 patients, 60,000 of those patients are your recurrent patient population. And again, many of those have multiple TURBTs. So we expect that initially, it will be a replacement for the multiple TURBT. Eventually, then we would also expect that we would get primary treatment for the initial diagnosis because there is very clear definition of what an intermediate risk patient looks like. And we believe that physicians will want to use it and, frankly, give patients the option. We've done our own research with physicians, where they'll say, 25% of my population should not be going under general anesthesia right now. So off the top, they're saying that they shouldn't even be going into surgery today. And that's not the ones that, again, are getting these multiple surgeries.

Great. So let's talk about some of the clinical work you've done in this setting. Please describe your Phase II OPTIMA trial to design, the results you reported and when we'll get some of the final data there?

So we reported 65% complete response rate, 72% Kaplan-Meier estimation at 12 months from initial therapy, 9 months post CR. That is the final data. We're not continuing to follow these patients since that was our primary endpoint, and then we expect that we'll have a publication this year. So we're really, really happy and pleased to see the data in this, again, intermediate risk patient because we know that they're at high-risk for recurrence. So to be able to have a 65% complete response rate with these patients and over 72% of them still in complete response. 12 months after the initiation was really pleasing for us. And frankly, the foundation for which we started our Phase III study.

Great. So let's talk about that Phase III study. So please describe the ATLAS study, it's design and the ultimate goal for a regulatory strategy.

Sure. The -- when we -- in our discussions with the FDA, they want to see data head-to-head against TURBT because, that's "standard of care". We do believe we have a lot of education to do with the FDA because they sort of view as TURBT is being sort of benign. I think in our meetings with them, they're really starting to understand that TURBT is not benign, and there's a lot of comorbidities associated with that, you have, again, this patient that's identified. So what we've done is we've developed a study that is head-to-head against TURBT. So patients are randomized. Obviously, it's not a blinded setting because you can't blind surgery. So half the patients will get -- they'll be randomized to TURBT and and the other half to UGN-102. At the 3-month mark, they'll be assessed for response. That's typical. That's what we've done in our current study, and they'll either have a CR, they won't have a CR. For the patients that are in our arm that received UGN-102, if they did not get a complete response, they will actually go on to get a TURBT. So they'll get a TURBT, they'll get a surgery, and they'll be rendered a complete response. And then UGN-102 arm, I mean, in the control arm, the TURBT patients will get that when they get assessed at 3 months, if they're not in complete response, they'll actually get a second surgery, a second TURBT. And then those patients, all patients will be followed for disease-free survival. The primary endpoint is disease-free survival. The recurrence is recurrent free survival, disease-free survival, that's excellent actually the endpoint. So at patients, at that point, may have had only one TURBT. They may have had 2, they may have had UGN alone or UGN plus TURBT. And we will be evaluating one arm versus the other.

So how does the -- is there a crossover of patients essentially then in the study? And how would that impact the statistical interpretation of the data?

Well, the way that -- it's not considered "crossover", like you would typically here see in a clinical study. It's just that they will -- it's almost like looking at them, they'll have either -- it's UGN-102, plus or minus the TURBT. So you -- we'll get the data, the way that the initial statistics will run will be just the 2 arms. But we'll also be able to look at patients that had 2 TURBTs, and we'll be able to look at patients that have both -- that have received both UGN-102 plus TURBT. So neoadjuvant. So we'll be able to look at those, but the primary endpoint will be one arm versus the other. Does it complicate things? In some ways, you would say that. But what will happen is the way the statistics will work, is we will add those -- we'll be subtracting the 3 months from those patients. So when you combine them, you're going to get a combination of patients with 102 plus or minus TURBT and the combination of patients that had single TURBT versus both. It's very unique, but this was the conversation that we had. It's where -- it's a little bit more complex than you would see as straightforward, but it's the way that we -- the conversation we had with the FDA that they were comfortable in being able to really identify what is the benefit of UGN-102. We think it's pretty apparent, and we need to demonstrate that in this Phase III study.

So what would you anticipate the control, the CR to be in the control arm for a TURBT?

Well, at the initial CR, I mean, the initial look, which is at the 3-month mark, you would probably see 80% to 90% of those patients in CR compared to our study at 65%. What happens is though, those patients because they're this intermediate risk, 50% to 80% of those patients will recur within 12 months. So those are the -- obviously, the data we use when we developed our own analysis of the statistics around our study. So we expect to be able to, at 12 months either be superior or noninferior to TURBT. So if you think about it from that perspective, we would expect 50% to 80% of those patients in the TURBT arm to have recurred within 12 months.

Got you. Is there an interim analysis or any interim updates from the study?

There won't be any interim updates. We are -- we have built in a look -- 2 looks at the data. Obviously, still blinded to us, but the data -- but testing for superiority. So the only way that it would stop is an interim as if it's already statistically significant from a superiority standpoint. The primary analysis is both superiority and noninferiority. So at this point in time, I would say our base case is that they will run the entire time. So the study is expected to be a 3-year study, a year for enrollment and then 2 year follow-up.

Got it. And which clinical centers are you using? Is this US owned? Is it international?

It's an international study. We are enrolling in the U.S., obviously, in Israel, where our company started as well as many, many locations and sites in Eastern Europe. So we wanted to make sure from -- particularly because the COVID and the pandemic to ensure that we had one global study for a clinical perspective, but also to ensure we had many sites. So we will expect over 100 sites around the world to be able to enroll as quickly as possible, as we said, estimated about a year for enrollment. So yes, it will be an international study expected around the world.

And in terms of the study design, I would imagine you've discussed it with the FDA, did you also discuss it with the EMA to see if that will be sufficient for approval in Europe?

We have not yet, but our plan is in the next few months to do that. So we will talk to the EMA this year as well as the Japanese authorities. So we'll understand the path forward so that we can in parallel, if there's any additional data they want to see, that in parallel, we'll be able to start now to generate that data. Obviously, we were a small company when we did Jelmyto or 101. So we didn't do a lot around the world, and we're just now developing our sort of ex-U.S. strategy for Jelmyto, and we'll put 102 in there. So we know that ahead of time. We're more proactive on how we can bring this to patients around the world.

So what is -- since you mentioned, what is the [indiscernible] strategy for Jelmyto?

Yes. Right now, what we're doing is we've actually engaged both the regulatory authorities as well as some of the payers. In Europe, as we've discussed before, the issue really is in approval. I think everybody inherently understands that if you can avoid losing a kidney, there's a clinical benefit to that. And so EMA, we think we'd be able to get regulatory approval, even on our single-arm study but reimbursement in these countries really ends up being -- they use comparators. So whether you're looking at Germany or France or the U.K., they look at what's out there today, and unfortunately, the only thing out there to compare to would be generic mitomycin. That's not feasible. That does not make it a viable proposition for whether us or someone else. But we've actually engaged some experts in Europe, particularly around pricing and reimbursement, and we're finalizing our strategy there. But it looks like we do think that we can -- we have a couple of things in mind. There have been other medicines approved that have received a decent price, even though they may have had before a comparator that was a generic. So that's what we're working through in Europe. In Japan, it's actually the opposite. We think we can get a decent reimbursement, but we need to do a small bridging study. And right now, we've requested a meeting with the PMDA, and we expect to have that meeting in the next 3 or 4 months. So I think by midyear, kind of, we'll be able to give you more specifics about our launch strategy in Europe and Japan.

Great. So let's switch gears back to 102. So you mentioned the study design, and obviously, CR is the primary endpoint that you're looking across the arms. Curious, what is the value of a partial response? Is that something that's tracked? Is it something that physicians or regulatory agents care about?

Yes. That's a good question. Actually, just -- CR is not the primary endpoint. It is disease-free survival. It is recurrent-free survival.

No, no. [indiscernible] CR after the primary endpoint.

Yes, sorry. No, no. It's interesting. Partial responders are something that we need to study to generate. I think physicians, if they see a partial response they're just going to go in and do surgery, and that's what will happen for those patients. Even in the Jelmyto study, we had 58% CR, but we had another 22% partial responders. So what we need to do is we need to go back to those patients when they get a partial response and maybe do 1 or 2 additional installations to see if we can get those patients to CR. We'll look to do the same thing with 102. With 102, 65% of those patients were in CR, a partial response doesn't mean anything, but it means something if you can take those partial responders and get them to a complete response. And we believe that we may be able to do that if we -- again, if we add a few additional installations.

Great. So what do you think -- if the drug is approved, let's say, in the bladder, what factors you think will incline physicians in choosing between TURBT and UGN-102? Is there a specific suber for patients kind of as a low-hanging fruit for this? How do you see it evolving if approved?

I do think there's a patient population that's a low-hanging fruit. I mentioned earlier that physicians have told us there's 25% of patients that should not be getting at TURBT. They're just not healthy enough to be going under general anesthesia. They've already been under general anesthesia many times. We know there was just a recent study in Denmark that showed that going -- that general anesthesia is a marker from increased mortality. So even though you look at it and you say, well, the patient can handle the surgery going under general anesthesia multiple times, we know has its own risk for patients. This is an elderly patient population. So we think that the low-hanging fruit are patients that, one, have had multiple TURBTs in a short period of time. And to that patient population that physicians don't believe should go on to general anesthesia.

And from a reimbursement perspective, can you comment from the urologists view, how is TURBT compared to 102 if approved?

Yes. It's a good question. I mean it's part of the work that we're doing right now. We will -- we haven't developed our price or 102 yet. We're in the process of gathering that data. But we will look to -- I mean, there's a broad range, actually, of even the RNU or TURBT of what patient -- of what physicians get reimbursed, how they get reimbursed. So we'll take into consideration the cost of a TURBT, the cost of multiple TURBT as well as the comorbidity associated with TURBT when we develop our value price. So we will ensure very much like we did with Jelmyto that we're not in a situation that we really are pricing to the value of our medicine, and how it compares to the physician office as well as the payer and the patient compared to a TURBT or, again, their treatment for their low grade, intermediate risk non-muscle based bladder cancer. So ensuring that we're in line with that.

Great. And so let's maybe move on in interest of time with the pipeline. Can you talk a little bit about 302, and where it is in the development process?

Sure. 302 a combination product. I think that's the most important thing to talk about initially, and that's because we have our own TLR7/8 agonist that we licensed and acquired from Telematics many years ago, UroGen did. And then last year, we licensed in for local delivery or a CTLA-4 from Agenus. So the 302 is actually a combination of those 2. And so right now, what we're doing this year, and we announced in January, our collaboration with MD Anderson is we approach MD Anderson because they have a lot of expertise in [indiscernible] oncology. And we felt like we believe the combination and our preclinical data has shown us this is mouse data, obviously, that a combination of TLR7 with a checkpoint inhibitor and specifically with CTLA-4 actually improved survival. So with that data, that was the impetus for us to license in our CTLA-4. So right now, what we're doing is developing both in parallel. When I say both in parallel, I mean, we have to develop the dosage of each individually and then each together. And so that's what we will be advancing in 2021 as we'll be doing the work and the Phase I work on both of those products, and then move into in combination as quickly as possible.

Great. So in the interest of time, let's move a little to the manufacturing question. Can you discuss just RTGel manufacturing process, how it differs from maybe traditional pharmaceuticals? And anything else you could say about help us better understand this RTGel itself?

Yes. It's -- I would say, yes and no, I can't talk too much about it, obviously, from a proprietary standpoint. I think as I mentioned earlier, when we talked about the patent, that we do believe the manufacturing is a hurdle for anyone coming in because what's very unique about the technology, the polymer-based technology, it has your typical compounding, filtration, filling and capping from a manufacturing standpoint, we've streamlined the manufacturing as much as possible. We work with contract manufacturing organizations. But as I mentioned earlier, it is a complex manufacturing process, which is what makes it unique, which makes it innovative. And it is actually a liquid when it's cold, and as it hits the warm temperature of the body, it turns into a gel. And so that's the complexity around it, which is obviously why we call it reverse thermal gel, is because unlike most things, it's liquid when it's cold. So the manufacturing has to take all of those things into consideration. And it's a hydrogel solution. And so it's something that's very unique and proprietary, and we believe it gives us a competitive advantage.

Great. And in terms of that, what are your thoughts on application of RTGel outside of urology?

Yes. We believe it has application -- broad application across many areas. We've been talking -- we have academic centers that we talk to that they have ideas, and they're looking for a technology that allows for longer dwell times. So we believe the orthopedics potentially, women's health, and in other cancers, particularly in the GI, GU and even in the brain, maybe an opportunity for us to be able to bring the RTGel technology to other medicines across many therapeutic areas.

Great. And the last minute we have here, can you just comment on where you stand in terms of capital?

Sure. Absolutely. What we've communicated is that we have cash to get us into 2022. We're happy to say we have no debt on our balance sheet at the moment. We have a strong balance sheet. And so feel good about where we are financially. The last Q3 earnings, we said we had $135 million in cash. Obviously, like I said, we'll be sharing in the next couple of weeks. But a strong balance sheet. Now where we are, we feel good about our financial situation.

Great. And with that, we're right out of time. So thank you very much, Liz, and thanks to all listeners for joining us.

Great. Thanks, Boris. Thanks, everyone. Good to be here.