Good day, ladies and gentlemen, and welcome to the Spectrum Pharmaceuticals Third Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call will be recorded.

I would now like to introduce your host for today's conference, Mr. Shiv Kapoor, Vice President of Strategic Planning and Investor Relations..

Thanks. Good afternoon to everyone on the call today. Thank you for joining us today for Spectrum's third quarter 2018 financial results conference call. Our press release is available on our website at www.sppirx.com. Joe Turgeon, our CEO and President, will start the call today and provide an overview, followed by Dr.

Francois Lebel, our new CMO, a financial update from our CFO Kurt Gustafson and the discussion of our operations, by our COO, Tom Riga. These statements are not guarantees of future performance and undue reliance should not be placed on them.

Such forward-looking statements necessarily involve known and unknown risks and uncertainties which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. With that, let me hand the call over to Joe..

Thank you, Shiv. Hello, everyone and thank you for joining us today and I appreciate you being on the call and I appreciate your interest in Spectrum. It certainly was a data rich quarter on our late pipeline candidate poziotinib. At the Worldwide Conference in September, Dr.

John Heymach of MD Anderson led an oral presentation that highlighted poziotinib interim data which demonstrated impressive antitumor activity in a hard to treat mutation. As I talked to investigators who were treating the patients in the MD Anderson trial, I'm proud to see the impact that poziotinib is already having on the lives of these patients.

Non-small cell lung cancer is devastating alone and these patients are in an even more complex situation. They were rare and insidious mutation for which current therapies have demonstrated limited effectiveness. For many of them poziotinib has given them more time to live their lives.

We are very encouraged by these data and in fact we submitted an application for breaking therapy designation status with the FDA. With their 60-day response window we expect to hear back from the agency by the end of the year. We have expanded the clinical program to expose the full potential of poziotinib in broader patient populations.

Tom Riga will provide you an update on the expansion later on this call. In short, our confidence in poziotinib is high and we're accelerating its development on multiple fronts. Now let me shift to ROLONTIS. We have important milestones for ROLONTIS taking place at the end of this year.

These include data being presented in a poster session at the San Antonio Breast Cancer Symposium in December and the filing of the ROLONTIS BLA. As we close out the year the end of 2018 looks very promising with two big milestones, the FDA's response on Breakthrough Therapy designation for poziotinib and ROLONTIS BLA submission.

Before we move on to financials, I wanted to introduce you all to our new CMO, Dr. Francois Lebel. We are pleased to have him onboard. He is a veteran in drug development and deepening Spectrum's leadership team. He has phenomenal experience in both the U.S. and in global markets.

Before joining Spectrum, he was the CMO and Head of R&D at ZIOPHARM Oncology and he has held critical leadership roles at Baxter International and at MedImmune. He has led NDAs and BLA processes for multiple products and his broad experience is exactly what we need. I'm going to turn over now the call to Dr. Lebel to say a few words..

Thank you, Joe. I'm just honored to join Spectrum. As I was getting to know the company, it became very apparent that Spectrum was the right place for me.

I have watched the evolution of the company under its new leadership and I've been impressed with the focus and rigor to aggressively develop targeted and novel product in oncology, including poziotinib, an intriguing therapy in development for lung cancer.

Exon 20 mutation in non-small cell lung cancer, a notoriously aggressive and hard to treat, unlike the more well-known mutations that we have all become accustomed to in lung cancer, like ROS1, ALK, and acquire mutation like the T790M. Treatment of exon 20 mutation have been elusive and frankly inadequate.

A case in point, at ESMO just a few weeks ago, data for osimertinib at a label 80 mg dose in exon 20 insertion mutations showed response rate of only 5.6%. Let me remind you our effective osimertinib is for acquired mutation. These results really speak of the challenges that exon 20 mutation present for patients and investigators.

The unique characteristics of the binding pocket and structural features of these mutations have proven to be very difficult to overcome. This brings me to poziotinib. I was very impressed with the data coming out of the MD Anderson trial and it was in fact a key driver in my final decision to join Spectrum.

I was in Toronto at the World Lung Cancer Meeting where Dr. Heymach's presentation on poziotinib trial and saw the data firsthand I found poziotinib to be a compelling asset with impressive interim data. The overall response rate is strong with significant duration of response. This product may provide hope to patient with very limited options.

I look forward to working with the team on an aggressive development program as we seek to address this high unmet medical need. At Spectrum we have a passionate and talented group of scientists who are simultaneously preparing the ROLONTIS BLA filing for the first quarter while making major progress on poziotinib.

I am thrilled to be part of the team. Now, I'll turn it over Kurt for a financial update..

Thank you Francois, and it's great to have you on the team. Starting with the top line, our total revenues for the third quarter were $25.3 million of which $24.6 million were product sales. With regards to cash, we ended the quarter with $167 million in cash and $54 million in marketable securities or a total of $221 million of available liquidity.

Cash burn for the quarter was $8 million. We are refining our total revenue guidance to be between $100 million to $110 million for the year versus our previous guidance of $95 million to $115 million. Our cash guidance also remains unchanged as we expect our cash balance is sufficient to fund operations into 2020.

With that, let me now hand the call over to Tom to cover our operations..

Hey, thanks Kurt. Last quarter I provided you with an overview of the full poziotinib clinical program and our four key development areas. The first area of development is in the use of poziotinib in previously treated non-small cell lung cancer patients.

We've also laid out three additional areas of clinical development, including the use in treatment naïve non-small cell lung cancer patients, the treatment of other solid tumors, and the use in combination regimens. I'll provide to you an update on all four areas. First, let me talk about the heavily pretreated patients.

We have made significant progress on this front with the presentation of updated interim data from the MD Anderson Phase 2 trial. This data was in a heavily pretreated population with 68% of the patients having failed at least two prior therapies.

The headline from the interim data is that poziotinib demonstrated high antitumor activity in both EGFR and HER2 exon 20 mutations. Let me provide some highlights from the data that to Dr. Heymach presented at the conference. In the EGFR cohort there was a 43% confirmed objective response rate in the evaluable population.

This compares favorably to an overall response rate of less than 10% with available TKIs in a rate of less than 20% with the current standard of care second line agents. 19 EGFR or over 40% of the patients remained on treatment at the date of cut off, six of which have been on the drug longer than a year. The median PFS was 5.5 months.

In the HER2 cohort, MD Anderson reported a 42% confirmed response rate in the evaluable patients with a median PFS of 5.1 months. EGFR related toxicities were manageable and consistent with the class. Discontinuation due to poor tolerance was rare and seen in 3% of patients. Overall the time in Toronto at World Lung was extremely productive.

We conducted steering committee and advisory board meetings and I was energized by the investigators' early experience with poziotinib. There was clear alignment that there is significant unmet medical need and poziotinib had the potential to uniquely address it.

Regarding the approval pathway, we remain confident in our belief that poziotinib meets the criteria for a breakthrough therapy designation. We have submitted our application for BTD with the FDA and anticipate that we will receive a response by the end of the year.

This breakthrough therapy request is specific for previously treated non-small cell lung cancer patients with EGFR exon 20 mutations in the MD Anderson data is the backbone of this submission. There is a clear unmet medical need in this disease and we believe that poziotinib demonstrates substantial improvement over existing therapies.

Let me shift to our ZENITH20 study. It is well underway. We currently have more than 40 sites and have initiated our first European sites with patient enrollment anticipated in Europe by the end of the year. Overall we're pleased with the enrollment in our trial and we expect that the EGFR cohort will be fully enrolled by the first quarter of 2019.

The second poziotinib development area is the use in treatment naïve patients. In the third quarter we initiated two first-line cohorts in our ZENITH20 trial. We now have first-line EGFR and HER2 cohorts that are enrolling in parallel at our sites along with the previously treated cohorts.

Each of the four cohorts will be independently analyzed with prespecified statistical hypotheses and power. This expanded patient population to drive significant benefit from early intervention with a targeted therapy that is specific to their mutation.

The third area of poziotinib clinical development is in the treatment of other solid tumors with EGFR and HER2 mutations. This strategy is grounded in the prevalence data initially unveiled at AACR in the second quarter and further validated in Toronto at World Lung.

The data presented included 390,000 patients from 15 different data bases; Foundation Health, Garden, MD Anderson and multiple others were combined to make the single largest database for these mutated cancers. These data demonstrated that HER2 and EGFR exon 20 mutations are prevalent across multiple solid tumors.

Both, Spectrum and MD Anderson will soon be initiating a pan-tumor basket study to explore poziotinib's use in this setting. The fourth poziotinib clinical development area is in use with combinations with other treatments. We will study poziotinib in combination with other drugs to further improve outcomes.

The focus is to identify synergistic mechanisms with non-overlapping toxicities. We engaged KOLs at World Lung to further develop this and are actively pursuing combination studies. We will provide updates along the way. Our clinical development plan for poziotinib has been robust and in full swing.

We have a responsibility to act with urgency and remain steadfast in our belief that poziotinib may significantly advance the treatment of cancer patients with exon 20 mutations. Now I'll talk about ROLONTIS. In the third quarter we had positive pre-BLA meeting with the FDA.

Based on that meeting our team has been diligently working on the BLA submission for ROLONTIS and we expect to file by the end of the year. In December data from the Phase 3 RECOVER study will be presented at the San Antonio Breast Cancer Symposium.

We previously announced that the RECOVER study met its primary endpoint and we'll have more detailed data at the conference. RECOVER is the second Phase 3 ROLONTIS study to have met its primary end point. The data has demonstrated that ROLONTIS has strong efficacy and a comparable safety profile to pegfilgrastim.

If approved, we have the experience to effectively compete in this multibillion dollar market. As we close the year we are focused on advancing the poziotinib development program and filing of ROLONTIS BLA. We look forward to keeping you updated on our progress and I'll now turn the call back over to Joe..

Thank you, Tom and thank you everyone else and with that I'd like now to open up the call to questions.

Operator, could you please open up the call for the questions?.

Thank you. [Operator Instructions] And our first question comes from Ed White with HC Wainwright. Your line is open..

Hi guys, thanks for taking my questions. So just a few on poziotinib, but I wanted to start with the levoleucovorin, the new formulation and name, just wanted to discuss any sales expectations there or what your idea is there for launching that product if you do intend to launch in 2019..

Yes Tom, do you want to…?.

Yes, hey ED. It is Tom. KHAPZORY is the name of that product. We expect to launch that product in January of 2019. That was filed in October of last year largely as a lifecycle management strategy for FUSILEV and we will be bringing that to market, but it is a final 5B2 pathway.

There is plenty of generic competition in that space, but right now we're working with the group purchasing organizations and distribution to make sure that we're running from that margin January..

Okay, thanks Tom. And yes, this is something new for you guys to take the final 5B2 pathway, but you do have a lot of experience as you said with FUSILEV.

I'm just wondering is this still, are you still thinking of this as a niche product for you just to fit in with the legal, the current sales force and selling FUSILEV right now?.

Yes Ed. We have a lot of experience with 505(b)(2) as you know and I think our expectations on this one will be it will fit into the sales force that we currently have and the sales line our expectations are low being that it is a highly competitive space..

Okay, thanks Tom. And then just moving on to poziotinib, I mean the ZENITH20, so the first line cohort we're initiating in the third quarter and you said enrollment in the EGFR previously treated cohort is expected to be completed by the first quarter of 2019.

Can you give us any timing as to the first line cohorts when you expect them to be fully enrolled and when we can see some data?.

Yes, we're thrilled that the enrollment trajectory in the previously treated population to have that enrollment finished in the first quarter of 2019. I think it's early at this point to be making projections on the front line cohort, but we do have 40 sites up and running in the U.S.

The initiation of the sites in Europe has happened and we're going full steam ahead with our sites and we'll provide updates as we make progress..

Okay, thanks Tom, and then just the last question. With poziotinib and the rash I think Dr. Heymach went into great detail at World Lung to explain the experience with rash.

I just wanted to get your thoughts on the rash side effect and are doctors, in the training that you're going to go into with the docs to keep patients on drug perhaps lowering dose, but keeping them on drugs, so that they can maintain their responses..

Yes, Ed, I'll - let me answer your question and Tom you could add anything you like. First of all well you're right, Dr. Heymach did go into great detail I think at World Lung and what you saw was clearly that it was - while the rash as I believe that's 34% it was manageable is what we heard from the scientists. It's not that different than other TKIs.

You are correct, in our trial we have a rash kit that we've added to ours and we fully trained the sites, whether it be the site nurses, the physicians et cetera, on the rash. It's usually what we've seen, it happens early when it happens, it’s it usually, it could be a precursor to a response and then it seems to dissipate over cycles.

But the bottom line is, it's a fact with TKI's.

I think most sites know how to deal with it and I do want to point out too another great factor we did see despite the rash and other ATs [ph] that you see, that only 3% as Tom pointed out of the patients actually discontinued due to do ATs [ph] and that's extremely low, lower than other TKIs that you've seen in other trials.

So Tom, I don't know if you'd add anything?.

No, the key here is, is the drug effective? And potency really matters with this elusive mutation. And I think the data from World Lung clearly answers that question is yes, and then the management vary, TKI like side effects is something that the sites are quick to do..

Okay, thanks Tom and Joe. And just one last thing, I'm not sure if you saw the [indiscernible] Paper it’s an in featured study, it was positive for poziotinib versus the competitors, but it did mention 058 [ph] was identified as a mechanism underlying acquired resistance to poziotinib.

So I'm just wondering if you saw that and if you think that maybe that's an opportunity there to identify patients who would respond better to poziotinib? That's all I have. Thank you..

Thanks ED. Regarding resistance mutations we'll – we can get back to you on that. I think MD Anderson is obviously looking at that closely as are we and we can get back to you..

Fair enough. Okay, thanks guys..

Thanks Ed..

Thank you. Our next question comes from Adnan Butt with Guggenheim Securities. Your line is open..

Great, thanks.

First on the study that’s almost enrolled, could you tell us if you decided to enroll all the 87 patients or how many patients have you enrolled?.

Well, you know, Adnan we haven't said how many patients exactly, we've enrolled, you are correct it is up to 87 patients is what we agreed to with the agency. When we're talking about getting it fully enrolled that would be up to the 87 patients by the first quarter. If there's anything less than that then we could, we would let you know that.

The plan is 87 right now, up to 87 and we can get that done certainly by the first quarter..

And Joe and team, based upon what you saw from the MD Anderson study and when this study will complete enrollment, are you prepared at this time to give some timelines as to when this one could read out?.

Yes, Adnan it’s Tom. If enrolment finished in the first quarter there's eight week confirmation, there is time for cleaning up the data. I would expect to see top line in the back half of 2019, would be the way I'd be thinking about it..

Great and then a related question, maybe you can expand on this one a bit more, do you expect responses in this particular arm to track those that we saw from the MD Anderson study or are there tweaks in the study that could lead to differences?.

Well, I want to make sure you said crack, I want to make sure I understand the question..

Will that be similar to what we have seen already or can they be improved upon?.

Yes, so Adnan, I guess we'll wait and see what the data reads out but I think it's important to just point out the differences in design of these studies. So if you remember, the MD Anderson study needed 16 weeks to confirm, so the first scan was at 8 weeks, second scan was 8 weeks later. Our confirmation will occur at 8 weeks.

So there is a timing difference in confirmation. When you're dealing with a patient population with current treatment that have - PFS is 1.9 months, I think time is of the essence and we think by having that interim scan at four weeks could prove to be beneficial, but we have to wait and see the data..

And I’ll add, if you remember Adnan that there are dosing differences, whereas in the MD Anderson study it was 16 to 12 down to eight. We're only going 16, 14, 12, and only down to 10 with monitor approval. So that's learning and that's one of the changes we made in our trial.

Yes, more mutations are not included in our trial whereas they were included in the MD Anderson trial..

Just a last one from me, in terms of the breakthrough therapy designation, is that decision basically based upon the data that we have seen at World Lung or did you also submit any additional information clinical data to the FDA.?.

I’ll take that one.

You want to…?.

Yes, so Adnan, we've had several engagements with the agency to understand what they were looking for, so what they were requesting wasn't identical to that of the World Lung Presentation, but it was a subset..

We knew exactly Adnan, what they wanted I think we gave them the data they asked for..

Okay, thank you..

Thank you..

Thank you. Our next question comes from Eddie Buck [ph] with B. Riley. Your line is open..

Yes, Thanks its David Buck of B. Riley FBR. Just to followup on poziotinib.

Can you talk about just breakthrough therapy the expectation if you do receive that will that automatically include a priority review with that? And for Joe, can you talk a little bit about ROLONTIS with the BLA filing by year end, what type of marketplace changes should we be looking for in terms of reimbursement and competitor activity? what are you anticipating, or what are you sort of worried about perhaps of the marketplace changes before approval? And maybe another one for Joe, anything in terms of activity on potential decision on Europe whether to go alone or out license poziotinib and any update on capsule where things stand with that program and keeping announced? Thanks..

Tom, you wanted to do the BTD? I’ll take the rest..

Sure. David, we're thrilled to have submitted the application for BTD and we remain very steadfast in our belief that there is an unmet need and poziotinib is showing indications of being substantially better than currently available treatment, that's ultimately the criteria.

Now the FDA will decide ultimately and where that goes, but there are multiple regulatory pathways, the size BTD like you had mentioned in the fast track setting in others that exist, but we are thrilled to have applied for that application and believe that the drug qualifies..

Yes, I agree 100%, and hey David, thanks for really asking these questions, so because we are excited about this. We're filing the BLA this quarter and you and I have been talking about this a long time, so here it comes right. What is best about the marketplace changes, listen obviously healthcare has exchanged a lot.

We watch the landscape and we will morph into whatever we have to do, but let me just say this, right now reimbursement remains the same as it has been and we're in a niche position because we are novel and no matter what happens David we're the only new novel product that will be available.

And so we'll be in a position to compete no matter what happens. So I'm excited to go compete with this thing and the next step is to get the drug approved and certainly do that by filing your BLA, so that’s it. It's been a long time coming and I'm glad to do this.

Now you also asked about activity on the financial decisions around what was the - on which one was that? I want to make sure I answer all your questions..

Yes, so was whether or not to go it alone with poziotinib in Europe and then also whether you your key ROLONTIS look to out license and what projections are there?.

Yes, great question. I'm not - I wouldn't say no to a partner in Europe for ROLONTIS. However, I'm looking across the road there, some of it and lot of international experience in Dr. Lebel. We have now we're opening sites there with poziotinib, so we'll go it alone if we have to.

I'd be open to discussing a partnership in Europe for ROLONTIS with the right partner and team, but we'll cross the bridge when we go there. Right now if we have do it our self we certainly are capable of doing that.

And I do want to say that our plan would be sometime in 2019, would be the time we start focusing on the EMA and filing an EMA for ROLONTIS. So we are excited about that.

Remember David, that's the reason in our second trial we got 20 sites in Europe because when you file in the EMA, you like - they like to have European patients in the trial and that's exactly why we did that.

And I'll remind you again, in the not too distant future, just in a matter of weeks you're going to see more data at San Antonio Breast beyond the top line data on our second trial, so we're excited about that also. You mentioned QAPZOLA that's something that I haven't had a question with it in a long time. The star remains.

There are patients still enrolling in that trial, however I will tell you this, that's something I want to evaluate as I’m looking strategically.

I may look for a partner with that because there's other competition there now, there's other drugs that are being used and secondly even though it's an oncolytic, I'll remind you it's used in urology offices, so – and I am sure in the long term that fits us. So I'd be willing to look at and outsourcing that also.

So nothing has changed with the trial at this point..

Thank you. I'm showing no further questions at this time. I would like to turn the call back to Mr. Joe Turgeon for any closing remarks..

Thank you, Catherine and thank you to everybody for getting on the call. I really appreciate your interest and I look forward to speaking with you in the next quarter and in between and have a great day and for the rest of the day and we appreciate your interest..

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day..