BYSI - NASDAQ

Good morning, and welcome to BeyondSpring's First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a brief question-and-answer session. As a reminder, this call is being recorded today, June 16, 2021. I'll now turn the call over to Ashley Robinson of LifeSci Advisors. Please go ahead.

Thank you, everyone, for joining today's call. I would like to advise listeners that comments made on today's call may reflect forward-looking statements that are related to such matters as BeyondSpring's clinical and preclinical research and development activities and results, regulatory and commercial plans, industry trends, market potential, collaborative initiatives and financial projections, among others. While management believes that is assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on these forward-looking statements. The Company's actual results may differ materially from those discussed during the call for a variety of reasons, including those described in the forward-looking statements and Risk Factors section of the Company's 20-F and other filings with the SEC, which are available on the Investors section of BeyondSpring's website. Joining us on today's call is Dr. Lan Huang, BeyondSpring's Co-Founder, Chairman and Chief Executive Officer; Dr. Ramon Mohanlal, Executive Vice President, Research and Development and Chief Medical Officer; Richard Daly, Chief Operating Officer; and Elizabeth Czerepak, Chief Financial Officer. It's now my pleasure to turn the call over to Dr. Lan Huang. Lan?

Thank you, Ashley. Hello, everyone, and thank you for joining today's call. It has been a very short time since we last spoke with you on our comprehensive year-end earnings call. So I will keep today's remarks brief, but I would like to take time to highlight the key activities and continued progress as we keep moving towards commercializing and developing our lead asset first-in-class agent, plinabulin as a pipeline in a drug for CIN prevention, non-small-cell lung cancer and potentially many other cancer indications. In this past quarter, U.S. FDA filed our NDA filing, and we have an anticipated PDUFA date set with the agency of November 30 this year. We were very pleased and grateful to receive priority review from the agency. Priority review is granted by FDA to applications for medicines that, if approved, would provide significant improvements in the effectiveness or safety of the treatment, diagnosis or prevention of serious conditions when compared to the standard of care. We, of course, believe that plinabulin meets this definition and look forward now to our November PDUFA date. As we wait our PDUFA date, we have made progress in developing plinabulin as a direct anti-cancer treatment agent in a global Phase 3 non-small-cell lung cancer study, or DUBLIN-3 and various checkpoint inhibitor combination studies in seven different cancers. In the coming months, we are looking forward to further validating plinabulin's direct anti-cancer ability with top line overall survival data from our DUBLIN-3 study in non-small-cell lung cancer. This Phase 3 registration trial being conducted globally in 60 clinical sites had finished enrollment of 559 patients. It is designed to evaluate plinabulin in combination with docetaxel in patients with second- and third-line non-small-cell lung cancer with measurable lung lesion and EGFR wild-type, which is around 85% of western lung cancer patients. This is a severely unmet medical need indication as only four therapies approved with limited survival benefits and severe side effects, such as severe neutropenia in docetaxel-based therapies. This study has achieved two successful interim analyses. If a positive result in the study is achieved, we would anticipate seeking FDA approval and moving towards commercialization in the second indication for plinabulin. In addition, resistance to immunotherapy is a severe unmet medical need, and we believe plinabulin may have a potential synergistic anti-cancer effect when combined with checkpoint inhibitors. First, our vision of developing plinabulin as a treatment in oncology is supported by the compelling data, our scientific team presented at the recently concluded ASCO conference. At ASCO, we presented Phase 1 data that showed plinabulin in combination with nivolumab and ipilimumab at 46% ORR in 13 patients with PD-1/PD-L1 naive or resistant tumors in second line and beyond in small-cell lung cancer. Additionally, the data showed that plinabulin combination was able to re-sensitize tumors that had progressed on prior PD-1/PD-L1 inhibitors, with third-line small-cell lung cancer with 43% of ORR. The three PR patients in PD-1 resistant patient population, a tumor reduction over 50% and the long duration of treatment with one patient treated for 18 months. Second, we had initiated an investigator-initiated Phase 1b/2 trial, evaluating the safety and tolerability and efficacy of plinabulin in triple combination with both, PD-1 or PD-L1 antibody and radiation therapy in seven advanced cancers who failed PD-1 and PD-L1 inhibitors at MD Anderson. The first patient was dosed in non-small on who failed to Keytruda in early June. I'm very proud of our team as they tirelessly execute on these programs, all of us are committed to raising the standard of care for cancer patients in the largest global market with first-in-class treatment. We now draw closer than ever to achieving this mission and look forward to advancing plinabulin and realizing upon our many opportunities to succeed. I will now turn the call over to Dr. Ramon Mohanlal for a very important announcement of our upcoming R&D Day event. Ramon?

Thank you, Lan. I'm very pleased to announce that we will be hosting an R&D Day planned for Friday of next week, June 25 at 8 a.m., where we will be sharing with you our anti-cancer development strategy for plinabulin. Our event will feature presentations from Dr. Steven Lin, PI for the immune combination study from MD Anderson and Dr. [indiscernible], our DUBLIN-3 study PI from the [indiscernible] Cancer Center. Our team will also plan more details over the view of our program. Plinabulin is a first-in-class agent with a unique mechanism of action with selective binding to tubulin and therefore releasing the broad immune defense protein GEF-H1. This novel mechanism of action has been greatly derisked through strong animal data and strong with preliminary efficacy data in small-cell lung cancer patients that was recently presented at ASCO. Based on this mechanism of action has also been published in peer-reviewed journals. Of course, we are known as a company that developed an innovative CIN approach with combining the non-G-CSF in plinabulin with G-CSF and we are very happy with that data. We now increasingly would like to direct our attention to the anti-cancer application for plinabulin. And at the R&D Day, we will outline the Company's anti-plastic strategy that will focus on these three key areas. Number one, reversal of resistance to I/O therapy. Number two, reversal of cold tumors, which currently are not permanent for I/O treatment into hot [indiscernible], which we expect will become candidate for I/O therapy. Number three, prevention of immune-related adverse events which can occur in approximately 40% of patients and Grade 3/4 of this event can lead to permanent discontinuation of this I/O agent. We will share more about this at R&D Day, and I would like to encourage you to attend that event. With that, I will now turn the call over to Rich who will discuss our commercial and partnership strategies. Rich?

Thank you, Ramon. Our prelaunch activities and preparations for a commercial launch in the CIN market are building with our PDUFA date clearly set for November. Over the next several months, our seasoned commercial leadership team is preparing to deliver a fully integrated market preparation and launch program to support a successful launch of plinabulin in early 2022, complete with elements such as driving awareness of the unmet medical need or what we call the neutropenia vulnerability gap, continuing our large account outreach, preparing for NCCN guideline submission, KOL development, speaker mobilization, key stakeholder outreach, including patient groups and federal, state and local legislative initiatives, medical symposium education, publications, targeted advisory boards and finalizing our patient support services to ensure broad access at launch. Specifically, we plan for a dedicated and focused team for the U.S. market. Importantly, we will have a field reimbursement liaison team, supported by a patient services hub in place to ensure effective reimbursement from day one to provide support for both providers and patients. We believe this extensive commercial strategy will position us well to successfully launch plinabulin combination therapy to capture long-term commercial success. We look forward to updating you on our progress with our prelaunch activities over the coming months. In China, we are taking a parallel path, having dedicated and focused commercial team build-out and partnership discussions with potential synergistic commercial partners. I'll now turn the call over to Elizabeth to provide the financial update. Elizabeth?

Thanks, Rich. I'll now briefly discuss our first quarter 2021 financial results. For greater detail to these results, I refer you to our press release issued this morning and to our 6-K filing, both of which can be accessed under the Investors section of our website. With that, I will now highlight some of the key financial results. R&D expenses in the first quarter of 2021 were $11.3 million compared to $13.7 million in the same period last year. The decrease of $2.4 million was primarily due to a decrease in clinical trial expenses and noncash stock-based compensation, which was partially offset by an increase in manufacturing costs and costs related to the plinabulin regulatory filings. G&A expenses were $6.4 million in the first quarter of 2021 compared to $2.9 million for the same quarter of 2020. The $3.5 million increase was primarily due to higher personnel costs and noncash stock-based compensation as well as pre-commercialization activities for plinabulin. Net loss in the first quarter of 2021 was $17.0 million compared to $16.1 million for the same period last year. Our cash balance at the end of Q1 was $90.6 million, which we believe will be sufficient to support our ongoing clinical programs over the next year including our immune-oncology pipeline and to prepare for the potential launch of plinabulin in CIN in early 2022. With that, I'll now turn the call back over to Huang to conclude. Huang?

Thank you, Elizabeth. We have had an extremely productive period and everyone inside the Company feels the momentum as our vision of commercializing plinabulin and expanding our indications comes closer. From treating chemotherapy side effects, to treating cancer directly, plinabulin is truly a pipeline in a drug with its encouraging data showing efficacy in many indications. Plinabulin could be a game tender in cancer treatment by combining with checkpoint inhibitors. We intend to capture the value for shareholders and continue advancing our programs through clinical testing and into potential commercialization as novel cancer treatment options in the months and years ahead. Finally, I would like to thank the patients, our dedicated team, our shareholders and our partners for their continued support as we work towards improving the current standard of care for cancer patients worldwide. This concludes our prepared remarks today. I will now ask the operator to begin our Q&A session. Operator?

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Jason Gerberry with Bank of America.

Two for me, just your confidence level that plinabulin won't have an FDA advisory committee. I know that so far, they have not asked or requested that an AdCom be scheduled. But given that it is a new mechanism of action, which is a typical trigger for convening a panel, curious if you can share your thoughts on maybe why an AdCom wouldn't be necessary in this particular instance? And then my second question is just, as you look at the data generated with the triple plinabulin plus I/O, in tumors that have progressed beyond PD-1 therapy in the small-cell in context. What are your thoughts about looking at this combination in non-small-cell lung? Obviously, a bigger market opportunity, and I assume you're going to want to wait until you see the DUBLIN results before making any investment decisions, but just sort of curious your outlook there for the utility in non-small-cell lung cancer?

Yes. Thanks, Jason. This is Lan. Let me answer the first question regarding what our confidence, regarding the AdCom and then second question, I think the Triple I/O to be extrapolated or later to have studies potentially in non-small cell lung cancer. I will give this baton to Ramon to answer at he is clinical brain behind all the study designs. So for the no-Adcom meeting, we did have in this letter from FDA, staying very specifically there's no-AdCom plan at this moment. We think that probably that's due to two very positive elements during the two months review. Number one is FDA inspection did happen in our New York office in the beginning of May, and we do not have any [483] after the inspection. And then secondly is we also had a large AOM meeting with the FDA. So AOM meeting is the orientation meeting for NDA applications from FDA side, they usually are given to an agent who had breakthrough designation and also have like orphan disease and which are truly helping with some medical needs. So that meeting had a huge support from the FDA side. They have almost 40 clinical leaders in CMC and preclinical all of those experts coming to the core, and we had a pretty nice meeting there. So potentially, they were happy with what they hear. And another thing I think we add to the confidence potentially no AdCom is, as you see from our earlier press release, we did show that ASC-based endpoints such as prevention of grade for neutropenia is correlated to the reduction of chemical outcome such as the incidence and duration and severity of febrile neutropenia and also hospitalization. So that is the key element, which we think gives FDA and also later for the clinical community, confidence that the combination of plinabulin adding G-CSF is providing meaningful and very clinical meaningful benefit for patients compared to the standard care pegfilgrastim alone in preventing CIN, which does lift the standard of care for the first time in the last 30 years. Does this answer your question?

Yes. No, definitely. Thank you so much for the thoughtful answer.

Thank you. So I'm going to give the second question to Ramon.

Yes. Thank you, Lan. Yes, certainly, the goal is indeed together now with plinabulin, what we call proof-of-concept evidence that it works in specific I/O combinations. And then the next step will be that we move these combinations into first line. So moving into non-small cell lung cancer is certainly the plan as one of the next steps. There are two big I/O combination strategies currently employed. We have the Merck approach with a PD-1 inhibitor, but combining that with chemo, and that also is approved, of course, first-line non-small-cell lung cancer. And we see an excellent opportunity for plinabulin to be added to that regimen to therefore get better survival benefit, but also and that's the -- those are important points we are making. Plinabulin not only adds to the overall survivable benefit, but also fans important side effects. With the chemo, of course, that is neutropenia and with I/O agents that is immune-related events. Plinabulin, therefore, is very uniquely positioned to not only increase overall survival but also prevent both neutropenia and immune-related events. The other big I/O triple strategy that's being employed is by where they combine two different I/O agents, PD1 inhibitor nivolumab with ipi. There is no chemo in the mix. However, there are much more immune-related AEs. There, again, plinabulin is very well positioned to both increase the overall size but also to reduce the immune-related AEs. So, we start here with small-cell lung cancer, yes. But then the next step will be -- we will move into first line non-small-cell and other cancer types and adding Plinabulin to these different triple combos that are currently employed by the various big pharmas.

Got it. Great. So yes, look forward to R&D Day next week to maybe if we can get a little bit more of a clarity around the pathway. Would that be next steps and sort of the clinical pathway would be helpful to learn more about. Thanks.

Thank you, Jason, for your support.

Thank you. Our next question comes from the line of Maury Raycroft with Jefferies. Please proceed with your question.

Congrats on the progress and thanks for taking my question. First question is just for Phase 3 DUBLIN. If you can provide any specifics on where you're at in respect to reaching the 439 events needed for the final analysis? And you've guided to top line data midyear, but do you think this will be more of an August or September update.

So probably I can -- this is Lan. I can answer this great question. So as of now, we did reach at least 439 death events, which is the final analysis of criteria. So still cleaning the data, no analysis has been done yet. So, I think we guided the market that it's midyear because when you do the cleaning to make sure the raw data is same in the EDC system that is an extensive process and also there's additional sensitive emphasis. So still guiding is mid-year.

Got it. Okay. And then also -- sorry, go ahead.

I said, thank you.

And then the other question was also related to Phase 3 DUBLIN. Just wondering, if there's anything additional you can say on the patient baseline characteristics at this point, including proportion of patients who are PD-1 failure patients? And how baseline characteristics factor into your efficacy expectations? Or is this something we can learn more about at your R&D Day event next week?

First is, I think our R&D next week will be very comprehensive. So, we are going to go into details into the designs and also primary and secondary endpoint for the DUBLIN-3 study. So I think that's the right platform to review the details. And secondly, for the baseline characteristics, they are all balanced. So, we are selecting the measurable lung lesion patients, which is the mechanism enriched population pre specifically. And secondly, this is in the EGFR wild-type, which is 85% of the non-small-cell lung cancer, this is much larger than the EGFR mutant or the ROS or ALK mutation population. And this is the very, very sick patients, as you know, that Tarceva, the TKI study does not even work as well as docetaxel in this EGFR white type patient population. So we do stratify patients who had previous PD-1, or PD-L1 experience, so those arms balanced, but we have a limited percentage in those patients in this study.

[Operator Instructions] Our next question comes from the line of Andy Hsieh with William Blair. Please proceed with your question.

Great. Thanks for taking my question and congratulations on all the regulatory milestones that you've achieved in the past six to nine months. So my question has to do with kind of the regulatory sentiment. So, the basis of the question has to do with during the COVID pandemic, I think NCCN was really aggressive in terms of updating guidelines regarding management of CIN patients. I'm just wondering, through the breakthrough designation discussions with the FDA priority review is the agency bring up kind of that factor or that benefit that plinabulin can provide, especially maybe in the U.S., we're probably a 60% over. But I guess on a global level where we're still very much in the pandemic.

Thanks for this great question. Let me probably start the first half answer, and I'm going to give the baton to Rich, who actually also has done a lot of market research to see how this NCCN guideline update is going to affect the market reach for the plinabulin and G-CSF combination. So first is, I think FDA is kind of independent from the NCCN guideline members. But as you see, we did get breakthrough, right? This is for the unmet clinical need and also to raise the standard of care. So that's the true criteria for the breakthrough. And secondly, we're also very grateful but yet to give us priority review. That's another help in a way, supported from FDA saying that this is a truly unmet need. We like to as this exited review time so that if the drug is proven to be effective, you want to get to the market as soon as possible, right? So that's the backdrop. So probably I can give the baton to Rich to talk about how this in interesting kind of update is affecting how the doctors using G-CSF and later our market penetration potential.

Great. Thanks, Lan and thanks, Andy, for the question. So with the NCCN guideline change last March, we've seen the physicians actually begin to go deeper into the intermediate risk category. And our ongoing discussions with the KOL community, many of whom are deeply engaged with NCCN indicate that they do not believe that the NCCN will revert back to the old guidelines, which is high risk only anytime soon. So they believe that this is ongoing, mostly a couple of factors. One, there's a belief that patients or people, the community in general, will need boosters in the long run. Number two, cancer patients are among the most immunocompromised patients we have, obviously, we intentionally immunocompromised them with chemotherapy. And so they need added protection in this kind of an environment. So the guidelines appear to be with us -- for these updated guidelines are going to be with us for quite some time. And the physicians are getting quite comfortable with it as are the payers. So we see, obviously, the addressable market has grown by more than 100% because of these updated guidelines. The high-risk patients represent 35% of the patient population and intermediate risk represents 37%. So we think this bodes well for the opportunity because plinabulin is the only drug that can actually raise the standard of care in CIN, so we're pretty excited about the opportunity to help out and improve the standard of care. So, we believe this is a great opportunity for us for the providers and for the patients as well. Thanks.

Great. And maybe just a follow-up, Rich. So -- well, and obviously Elizabeth. So from a modeling standpoint, how do you think about the ramp? And Rich in your prepared remarks, you did talk about, if you're kind of building an integrated infrastructure here in the United States. So how should we kind of think about that SG&A build maybe basically from now to PDUFA and maybe from PDUFA to launch?

Yes, great question. So we have a threefold prelaunch approach. And we've talked about this before. We're talking about addressing the -- driving the awareness of this neutropenia vulnerability gap, so day 1 to day 7, 8, 9. So this is where plinabulin has its effect and is the perfect partner for G-CSF. With 1.4 million units of G-CSF being used, and this base is growing over time because of, obviously, this NCCN situation and the opportunity to improve the standard of care. So addressing this neutropenia vulnerability gap and being the perfect partner for G-CSF because it's really a good opportunity. And then positioning the plinabulin with the key decision-makers in payers in large accounts anyone affected by contracting, we can actually talk to now. And so, we are out talking to them right now, making them aware of the potential that the drug does, in fact, have and then activating these key accounts, making sure that they know who BeyondSpring is. They know that the drug is, in fact, coming and then being prepared for broad access availability and access for patients. So making sure that our systems are up and running. So as we think about the infrastructure build, we're well on our way. We're really confident we have the ability because of the -- as Lan mentioned, a deeply seasoned commercial team that has done this many times before. And when you think about our SG&A ramp, we will be hiring our sales -- identifying our sales team and only hiring them after we have a guaranteed approval. And because it's difficult to launch a product during the holiday season, that's why we referred to launching this in the first quarter. We don't want to have the physicians distracted by the holiday. It's not good for the product. It's not good for the Company and it's really not good for patient care. We want to make sure that we bring them product to market when we can attract the attention of the physician and get their full attention, and that's generally after the holidays. So that's what we'll be doing. So with that, I'll turn it over to Elisabeth for any additional comments.

Yes. Thank you. And I just want to continue to assure everyone that we're making all of the plans to make sure that the Company is well funded during this time period of prelaunch as well as preparing for the launch. And you'll note in our statements that we've just filed that we are sufficiently funded for the next year. However, that said, we are always evaluating options for getting other funding into the Company. And our preference at this point is some form of non-dilutive financing to just boost the balance sheet as well as at the right time to consider partnerships.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Dr. Huang for any final comments.

Thank you again to everyone for joining us for the call today. We're very proud of our accomplishments and look forward to speaking with you again on our R&D Day on June 25, next Friday. Thank you.