Welcome to the first quarter financial results and business update conference call for CASI Pharmaceuticals. [Operator Instructions] Please note, that the remarks today will include forward-looking statements, including other business plans, objectives and milestones.

These forward-looking statements are not guarantees of future performance, and therefore, we should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those projected or implied in the company's forward-looking statements.

For a description of important factors that could cause actual results to differ, we refer you to the forward-looking statements in today's press release and the note on forward-looking statements in the company's SEC filings..

At this time, it is my pleasure to turn the call over to CASI's Chairman and CEO, Dr. Wei-Wu He, Dr. He, please proceed. .

Thank you so much for the introduction. And I also really would like to take this opportunity to thank some of our long-term shareholders for supporting the company for so long and being -- sticking with us. And -- so good afternoon. And welcome to CASI's First Quarter Financial Results and Business Update Conference Call.

With me today is, actually, Cynthia Hu, our COO, I believe. Larry Zhang, our President, will also join us. .

I will focus my comments today on a few selected programs and near-term catalysts. That said, I'll be happy to answer any questions during the Q&A session not covered in my remarks..

I think the most exciting thing for CASI as a biotech company is, I always say, the most difficult thing for a biotech company, start-up company, is to launch its first product. So I will begin the call by discussing our first quarter sales of EVOMELA, our first product.

Despite the unprecedented conditions impacting our global economy, I'm pleased to report that we have made very encouraging progress this past quarter.

In the first quarter, during which the peak of the pandemic occurred in China, we have experienced some disruptions to our EVOMELA marketing and sales activities due to travel restrictions and prioritization of hospitals and physicians to attend to the COVID-19 patients..

Nonetheless, we recorded encouraging EVOMELA revenue of $3.4 million in Q1. So that said, we -- during the height of the pandemic in China, our commercial team quickly adopted to the online space by creating online events, training modules and marketing events to continue our commercial activities.

Gradually, our commercial team started returning to normal activities. And by April, our team has returned to business as usual, with the exception of a few areas, which has been impacted the hardest..

I'm proud of our current commercial team's ability to respond and adapt and return to normal so quickly. .

So with this successful launch of this product -- so in China, the EVOMELA launch is considered to be a classic successful launch. We only launched this drug in August of last year. So EVOMELA has proven to be an essential drug for multiple myeloma patients. And it's the only form of melphalan commercially available in China.

EVOMELA is an intravenous formulation of melphalan commercialized by AcroTech in the United States in the multiple myeloma treatment setting, and it is unique from other form of melphalan. So our formulation of melphalan, which has great stability when reconstituted, allowing longer [ preparation ] and infusion time.

We expect a high unmet need in this patient population will continue to drive the sales of EVOMELA. So this is really a quick introduction on EVOMELA because EVOMELA is our first true commercial product in China. And with the successful launch of EVOMELA, we have built a wonderful commercial team about 70 sales people in China.

They are all recruited from multinational corporations..

And so with this product launch, CASI is really a fully integrated commercial product -- commercial company, pharmaceutical company. But the future of CASI -- we are very excited about CASI because we think we are building one of the best hematology/oncology franchise in China.

And I'll give you update -- a little bit update on some of the exciting drugs in the pipeline..

So our next one is a CAR-T 19. We all know that CAR-T 19 was approved in the U.S. in 2017. And it's really -- it's a very exciting program. I'm pleased to report that together with our partner Juventas, our CAR-T 19 program, targeting B-ALL and lymphoma are well underway, which was an incredible accomplishment during these unprecedented times.

Although our partner Juventas experienced some delay in the start of the trial due to COVID-19's impact on hospitals, this clinical trial have resumed their original time line..

We understand from our partner Juventas that the patient accrual for both B-ALL and lymphoma trials are well underway..

And the 2 trials conducted by our partner Juventas are single-arm, open-label, nonrandomized dose escalation Phase I studies to determine safety and efficacy in adult patients with relapsed or refractory acute lymphoblastic leukemia.

And in adult patients with relapsed or refractory diffusion non-Hodgkin lymphoma, expected enrollment is 18 participants for each of the trial. We fully expect that the Phase I will be completed this year, and we will start Phase II trial -- Phase II registration trial probably sometime in the end of this year.

Because just a little bit reminder because this compound has already been dosed over 100 patients in China under an IRB in one of the best hematology/oncology institute in China. So the molecule is very well validated in the sense -- in an academic setting.

But right now, we are doing actually a genuine Chinese FDA registration trial by end of this year..

So I'll touch a little bit base on CD38. So both CD38 and our CAR-T 19 program, we all own the global rights of these 2 drugs. CD38 -- we believe, our CD38 is one of the best-in-class drugs for this class.

The leading drug, obviously, is J&J's dara, and we think our CD38 has much less infusion reaction than dara based on the primary data in the preclinical development..

And so unfortunately, we did actually hit a little bit of delay for our IND for CD38 in U.K. because Europe is heavily impacted by COVID-19, but we still expected -- we still expect to file an IMPD/CTA for CD103 in Q2 this year and initiate our Phase I study during late part of 2020 and the first or maybe the first half of 2021.

So that's actually -- but we are continuing to look for new assets because I think the process to build CASI is a long-term process. With our first successful drug launch and with our business team in place, we are very excited to work with many, many potential partners to bring drugs into our pipeline.

And I'm actually going to stop here to maybe take the -- or maybe I'll update a little bit on our financials. .

So we -- this quarter, our revenue is $3.4 million revenue, and we still have cash and cash equivalent about $53.9 million on our balance sheet. And we run a pretty frugal operation, even with our scale-up our commercial activity, we expect our -- this year, our burn rate will be around $30 million.

So with that said, I would love to entertain questions.

Operator?.

[Operator Instructions] Our first question is from Sean Lee from H.C. Wainwright. .

My first question is on the commercial side.

It's very encouraging to see that CASI managed $3.4 million in revenues in Q1 despite the challenges with COVID-19, so I was wondering, could you provide a little more color on these revenues? Are these endo-patient sales? Or is there any distributor channeling even like initial inventories in there?.

Yes. It's a great question. But there is some inventory, but our inventory actually gets cleaned up very quickly, believe or not, okay? So because this is actually a -- to be honest with you, we right now actually are worried because we're changing a few supplies, if you -- you kind of know.

When we launched the drug, it was supplied by a company called [indiscernible] and now we change a supplier, which is a lower cost and potentially even higher quality one. So we are actually afraid of running out of supply right now. But I don't want to worry you, but yes, there's some inventory -- go into the inventory..

But it -- so we think it's actually -- we have not disclosed exactly how much inventory are that. But there is some inventory into that. But in general, my answer to you probably is our inventory gets used up very quickly, actually, at the current rate. .

Okay. No, that's good to hear. And leaving out from the supply side, you mentioned -- I saw that the cost of goods for the first quarter was quite high.

So could you provide a bit more color on that?.

Yes. Again, that's the history of the original manufacturer of this drug is a company called [indiscernible] and they actually stopped -- because our supply spectrum has stopped using [indiscernible] because we're in the middle of launching this drug, we kind of use the old manufacturing to launch this drug.

Because in China, when we import drug into China, anytime we change the manufacturer, we have to reapply. But luckily, we have got approval for the new supplier to Acrotech. So the cost of goods sold will come down significantly..

So we expect to probably -- eventually we'll get at least better than 65% gross margin on this product moving forward. .

Okay. No, that's good. That's good to hear. Sticking with commercials for another question. On the sell side, you mentioned there are 70 sales people currently working in China.

So how much of the coverage do you have with 70? Do we expect to expand the salesforce in the, let me say, within the next 12 months? And also, how much of the business has returned to normal? Would you say you're 80%, 90% back to pre-COVID-19 net levels?.

Actually, I don't know that -- I can't quantitate that way to 80% to 90%. But we actually see a quite different southern part of China versus northern part of China. So Southern part, actually, significant part of the southern part of China is very much back to normal.

And -- but I think around Beijing area that the regulation is still much tighter in terms of visiting physicians and all that..

With regard to your question about are we going to significantly expand our sales team? The answer probably is no because we think 60 to 70 is a decent-sized team because our current drug EVOMELA is a very niche product. If you are detailing the people who are doing autologous transplant for multiple myeloma and lymphoma.

This is why we're very excited about the CAR-T 19 program because the channel to detail melphalan is very similar to the channel for CAR-T treatment. It's all the same hematology oncologists. So we are detailing all the top hospitals in China working on hematology/oncology.

Like changing hematology/oncology like Shanghai and Guangzhou, a few really, really good hematology/oncology institutes, we're detailing all of those patients. .

We think actually around 70 is a pretty optimal sales team. .

Yes, that makes a lot of sense. Moving on to the clinical front. You mentioned that you expect to -- first 2 single-arm studies to be complete by the end of this year.

So I was wondering, can we expect any data releases before then? Or are the top-line results from those 2 studies the next big clinical catalyst for the company?.

Yes. I actually believe the data for the previous, like around 100 patients, I think around 50 in B-ALL and 50 in the lymphoma is actually -- it's already published. I can dig out that for you. But that's an IRB trial done by changing Hematology Institute. It's not an NMPA sanctioned trial.

So right now, we're doing a genuine registration development trial. So the -- yes, so the -- but we believe that it's the same drug, same lending particle with the same cell. We don't see huge differences, except our CMC today is much more robust than the IRB trial.

Does that answer your question?.

Yes, yes. .

Yes. So we basically -- so the CFD still asks us to do a dose-escalating trial, that is why we are doing the 18 patient in a dose-escalating trial, both in lymphoma and B-ALL.

But as soon as that finishes, we will basically bridge that to a genuine Phase II registration trial, right?.

And do we expect to report results from the dose escalation studies... .

We should, yes. After we finish it, we definitely will probably release it in -- yes. Yes, probably in... Yes. Yes. .

And my last question, just on the business front. So with one product selling and 2 products in clinic -- or ready to -- yes, either in the clinic or ready to enter the clinic, would you be looking to add to the portfolio or... .

Oh, absolutely. Yes, absolutely. We are actually looking at -- we have 4 full-time BD professionals in the U.S. covering from West Coast, East Coast. We also look at a lot of European assets, Japanese assets.

So the -- CASI is going to continue to acquire assets and in-licensing assets because after we build this commercial engine, it's really then launching product will just become easier and easier.

And we actually -- one aspect of our excitement is that we -- I personally believe that next 20 years, life sciences in hematology/oncology space is going to be so exciting. If you look at all the bispecific, ADCs, cell therapy. Oh man, I think next 20 years is going to be so exciting. .

But when we actually present CASI to a kind of a U.S. or European start-up company, they're just funded by French capitalists. They are very eager to talk to a company like CASI, right? Because we can help them do clinical trials in China. And most start-up companies don't have any resources to go after Chinese market. But we have a machine.

We have over 100 people in Beijing. We're focused on commercialization in China. So we also can reduce the overall cost of clinical trials..

So -- and we have wonderful relationships with the top hematology/oncology institute in China. So we are almost like a partner for a lot of U.S. and European early stage companies in clinical development. So I think you will see we will be doing quite a few interesting deals in the next -- near future.

And we're just going to keep doing this until we had significant revenues on the market, right?.

Our commercialization really just only been started in August last year. And I have only been on the job for about a year. And to me, this is one of the most exciting company that the ceiling is unlimited.

The market potential is unlimited, right? Because there's so much unmet medical need in hematology/oncology space in China and globally, right?.

[Operator Instructions] Our next question is from Nathaniel Calloway from Edison Research. .

My first question is just on the -- I was just hoping to get a little bit more detail on the patients in the CAR-T trial that have been enrolled so far? And you mentioned on the press release that you had dosed your first patient.

I was wondering if you can give some more specifics on the number of patients that have been enrolled today, not necessarily dose, but have you increased the enrollment since the last year -- the last earnings call?.

Well, actually, to tell you the truth because this is changing every day, so I -- my assumption is, we are actually -- we dosed both first patients for B-ALL and first patient for lymphoma. I think we are totally on track on -- we were initially worried about that COVID-19 might delay the enrollment of patients.

But now in China, until this month, we have totally caught up with the timeline. And I probably will give everybody a much more accurate update next quarter. But we actually dosed both patients. So we're probably right now in the waiting period for the -- looking at the patient safety and all that.

I think we probably will have better color next quarter. And right now, our plan is still to complete Phase I by end of this year. .

All right. That's helpful. And my second question is just regarding the production facility that you originally agreed to break ground on. If I remember correctly, that the timeline for that was -- there were some financial obligations associated with that, by the end of this coming quarter or around the middle of 2020.

Are you still planning on [ dealing with ] these obligations and scaling them by CapEx money? Or are you planning on delaying that?.

Well, we are being a little bit optimistic because China has changed significantly on the policy of generic drug pricing.

So this is one of the key reasons we actually delayed some -- because we had a few really pretty potential -- good potential generics in our pipeline, but we have delayed the major investment on that because the cost -- the market pricing are like for integrate, for instance, has dropped almost by 90%.

So really, there's no reason for us to go into those markets. So we have changed a lot of the original thinking of scaling up our large-scale manufacturing plant.

But we are actually designing -- because we are really building CASI for the long-term because I personally don't know of any pharmaceutical company that doesn't have its own manufacturing facility and a manufacturing site. This is a site that the Wuxi government gave to us. It's a beautiful site.

It's 20 minutes away from the high-speed train to go to Shanghai, within another 30 minutes. So this manufacturing site, literally, our employee can go from this side to Shanghai for less than 1.5 hours just by taking the train. So this type of property is very hard to get by in China anymore. .

So with that said, we own our facility. We can, in the future, build out anything we want to fit our vision of building a fully integrated pharmaceutical company. So right now, we're exploring, building small like a monoclone antibody manufacturing site and all that. We haven't disclosed a lot of details of what we are going to do.

And the funding we got from local government is actually very flexible. We never really had -- it's -- we don't have a gun in our head in the sense that we have to spend money by a certain date. They are extremely collaborative.

And so -- but the beauty is we own the site, and we have a building that's being built out to do small-scale manufacturing for different portfolio we have. And we're going to use the site to ultimately build products we can have great margins on. But I hope that answers your question? I know it's a little bit convoluted, so, yes. .

And that concludes our Q&A session for today. I would like to turn it back to Dr. He for closing remarks. .

Well, again, I really am grateful -- we are very grateful to all the shareholders and analysts supporting this company. Personally, I have been involved in biotech company for 20 -- almost 30 years now. I really think CASI is a great story.

We have commercial products, and we have a platform to bringing compounds and use China -- Chinese market as a beachhead to launch products. But a lot of our product we're licensing in, potentially, will have global reach, like our CD38 and the CAR-T 19.

So I think we're going to continue to develop one product at a time and build a wonderful, fully integrated pharmaceutical company that ultimately can benefit patients. And thank you very much for your support. .

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. And have a wonderful day..