Good afternoon, ladies and gentlemen, and welcome to CASI Pharmaceuticals First Quarter 2021 Financial Results and Business Update Conference Call. [Operator Instructions] At the end of the prepared statements, participants will have the opportunity to ask questions.

[Operator Instructions] I would now like to hand the call over to Cynthia Hu from the company for a preliminary statement. Please go ahead..

Thank you, operator. Good morning, and welcome to CASI's First Quarter Conference Call. Earlier today, CASI issued a press release providing the details of the company's financial results for the quarter ended March 31, 2021. The press release is available in the Investor Relations section of the company's website. Today's call will be led by Dr.

Wei-Wu He, our Chairman and CEO. Our President, Mr. Larry Zhang as well as our CMO, Dr. Alex Zukiwski will also be available during the Q&A portion of this call. As a reminder, our remarks today will include forward-looking statements including our business plans, objectives and milestones.

These forward-looking statements are not a guarantee of future performance, and therefore, you 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 our forward-looking statements.

Of course, for a description of important factors that could cause actual results to differ, we refer you to our statements in our SEC filings. It is now my pleasure to turn the call over to our Chairman and CEO, Dr. Wei-Wu He..

Thank you, Cynthia. Good morning, everyone, and welcome to CASI's first quarter financial results and business update conference call. I will begin the call with a general update, focusing on our lead programs and near-term milestones followed by our first quarter financial highlights.

That said, we are happy to answer any questions during the Q&A session not covered in our remarks. Our press release contains details of our financial results for the first quarter of 2021. Let me begin by saying that we are very pleased with the progress we have made in the first quarter.

I'm extremely proud of our team across all functions for their continued dedication and focus. There's no doubt in my mind that we are well on our course in building a leading and financially strong biopharmaceutical company.

I will address our financial highlights in the later session of this call, but I would preface it by sharing my optimism in our financial performance. Revenues from EVOMELA, our first commercial drug, continue to increase with costs going down.

With that experience, our commercial and medical marketing team is poised to start the preparation and premarketing activities for the launch of our next commercial drug, CNCT19. Beyond that, we will continue our traction of launching and delivering life-saving drugs to patients.

While we move forward with our commercial and later-stage assets, we will continue to make progress with our product pipeline as well as continuing to pursue additional assets to grow our company.

We are interested in products that fits our core competency in global drug development, allowing us to leverage China's clinical development and the large patient population in China. We look at business development opportunities with an entrepreneurial eye.

Specifically, we not only look at an asset's fundamental global development potential, but we also look at our partners' investment potential. Our business development execution typically includes an investment component in our partner.

We believe this additional layer of investment deepens our collaboration with our partners and signals our confidence and trust. This venture approach has proven effective in developing all our cross-cultural global partnerships. It also provides our shareholders additional upside in the potential return on equity.

We used this dual approach in our in-license of our CD19 CAR-T, BI-1206, CID-103, anti-CD38 assets, and most recently, in our in-license of CB-5339 VCP/p97 inhibitor.

We believe our style of venture medicine that is investing and having conviction in our partners while jointly developing asset together, one, greatly enhances our collaboration; and two, gives our shareholders an additional opportunity to capture value.

This approach also reflects the deep experience and core expertise of our executive management in both drug development and biotech investment. With this approach, we will continue to build our pipeline one asset at a time. We will now address more specifically EVOMELA, our commercial product and our pipeline.

We recorded EVOMELA revenue of $5.7 million for the first quarter, a 69% increase from a year ago quarter. For the full year 2021 revenue, we are targeting much greater than 50% growth over 2020.

As you will recall, EVOMELA is approved in China for use as a high-dose conditioning treatment prior to hematopoietic stem cell transplantation in patients with multiple myeloma. And it is the only form of injectable melphalan commercially available in China.

EVOMELA is not just melphalan, it is a proprietary formulation with patent protection until at least 2030. Prior to EVOMELA's entry into Chinese market, an average of only 800 stem cell transplant per year were conducted in the multiple myeloma treatment setting.

Following EVOMELA's launched in August 2019, CASI worked closely with KOLs to drive market awareness and expedite adaptation in the Chinese market. In 2020, more than 2,600 patients were treated with EVOMELA. In the first quarter of 2021, we dosed -- in that 1 quarter alone, we dosed over 1,000 patients.

And we are well on our way to meet our expectation of more than 50% growth over 2020. The post-marketing study for EVOMELA in China has completed accrual and is in the follow-up phase. So far, the data we are seeing is consistent with published studies of EVOMELA.

Through EVOMELA, we have built a commercial team of more than 80 hematology sales and medical marketing specialists based in China. They have been thoroughly tested with the launch of our first commercial product and now stand ready to not just expand EVOMELA use, but also ready to launch additional products such as our CD19 CAR-T commercial asset.

With regard to our CD19 CAR-T, our next asset for commercialization, our partner, Juventas, continues to make excellent progress with its current ongoing trials in B-NHL and B-ALL. The NNPA granted CNCT19 breakthrough therapy designation last year based on initial Phase I data.

The Phase I studies of B-ALL and B-NHL in China by Juventas has been substantially completed with the Phase II B-NHL and B-ALL registration studies, both currently enrolling in China. We continue to see very encouraging activities, and we are starting to make preparations for the launch of CNCT19.

Juventas is on track to file an NDA with NNPA by the end of 2021. As we have previously stated, there are currently no approved CD19 CAR-T therapy products in China, foreign or domestic. CNCT19 will be locally developed and manufactured, which greatly distinguishes it from other CAR-T 19 therapies developed and manufactured outside of China.

Drug pricing is still an issue for patients in China, particularly for premium and innovative products. Comparable CD19 therapies that are developed, manufactured outside of China are subject to certain ex-China CMC and cost of goods, making the price point significantly higher than where we believe CNCT19 can be priced.

Next, I will address our most recent pipeline and provide updates on our other key assets. I'm pleased that we have made considerable progress across our current pipeline and have tactically added additional [Technical Difficulty].

Please go ahead, sir..

One, we are committed to building a major integrated biopharmaceutical company using China as our foundation and ultimately delivering profitability.

Two, we intend to launch products and increase our pace of acquiring assets, and we will be tactical and entrepreneurial about it, coupling clinical development partnerships with venture investments in our partners.

And three, we will continue to build and strengthen our R&D capabilities, further strengthen our sales and marketing team and expand the reach of our business development activity. It is an exciting time to be part of CASI. We look forward to future updates as we hit our milestones. And I will now turn it over to the operator for questions.

Operator?.

[Operator Instructions] Your first response is from Trevor Allred..

So even though it continues to grow at a good pace, I wanted to ask about what your focus is for the accelerated growth.

Is it going to be expansion into more hospital systems, more word-of-mouth among treating physicians? Or what aspects are you targeting for that optimal growth?.

Yes. No, thank you so much. We are actually doing probably both because the last year is really just the only first year of launching this product. We think the peak potential still takes probably many years to reach. We believe that the whole market is underestimating the utility of this drug.

As you will see, this year, we are targeting much more than 50% revenue growth. We are expanding more to the hospital. And by the way, we are also -- basically, it's a huge educational job because autologous transplant for many patients is the first-line treatment.

But historically, because transplant was not available in China for many patients, so the doctors have been convinced that using the traditional chemo agent is good enough. So there is a big education to educate the doctors as well that for many patients, using autologous transplant is a functional cure.

It is actually much more effective than chemotherapy or other small molecule drugs. So answering your question, we're doing both. We're expanding reach to more hospitals, but we are doing a -- slowly converting more KOLs into this new treatment regimen..

Your next response is from Difei Yang..

So just a couple. The first question is on EVOMELA. Could you comment on seasonalities for the typical Q1 seasonality in Chinese market? The reason we're asking this is that in U.S. market, typically, Q1 has the lowest revenue, assuming the product is stabilizing so -- because of reimbursement [indiscernible] about the commercial dynamics in China.

And then secondarily, the CNCT19 program, how should we think about the potential uptake because you're going to submit the approval fairly shortly? And then beyond this, how do you think about cell therapies in general in China?.

That's a great question. In general, the first quarter in China is always low because of the Chinese New Year, and the Chinese New Year is the longest vacation in China. So this people probably are not doing a lot of transplant during that break. So you are correct. The first quarter usually is a slow quarter for this type of operation.

So we expect the revenue to increase over the next 3 quarters this year. So in terms of the launch of -- yes.

Does that answer your question?.

Yes.

And then the next question is on -- yes?.

Yes. So CAR-T, I think we are very, very unique because right now, China has not approved a single CAR-T 19 therapy yet. We -- actually, as a domestic CART19 program, we are the most -- we are at the forefront of the pivotal trial. We believe that we will be the first domestic CAR-T 19 to complete the pivotal trial and submit NDA.

The real advantage we have is we think by the time we are ready to launch CAR-T 19, we probably will already have one of the best hematology/oncology marketing and sales team in place, thanks to EVOMELA. Because EVOMELA, our first drug, we're detailing the same physicians.

The physicians doing autologous transplant are also the physician who will be using CAR-T 19 therapy. So in the sense, we already built a successful commercial franchise ready for CAR-T 19 therapy. So we are very down hole about it. We think that the CAR-T 19 will probably be a lot bigger drug in China than our EVOMELA.

So the real advantage we will have is the -- obviously, we believe our costs will be the lowest among all the first batch of CAR-T 19 therapy will be on the market in China. And we also see some unique property of our CAR-T 19, which is very unique in China.

For instance, we see -- we have very low cytokine storms, which is, we think, it's actually a very beneficial property of this therapy. So in terms of cell therapy, I personally -- we all believe in cell therapy. It's the ultimate blue ocean. There's really -- cell therapy as a modality to treat human diseases. It's just the very, very beginning.

So we -- CASI is looking at a lot of global cell therapy assets that, after we launched our first drug, we believe that we will become a leader in cell therapy in China.

So does that answer your question?.

Yes, Wei-Wu..

Thank you..

Your next response is from Justin Zelin..

First, congrats, Wei-Wu and team on all the progress this quarter. The EVOMELA launch appears to be performing very well.

So can you comment on the size of your current sales force? And would you expect to increase the sales force in preparation of -- for the launch of CNCT19?.

Yes. Justin, yes, thank you so much. Our current sales force is a little bit under 100 people, marketing and salespeople. But this year, one of our major push is to potentially double our sales force in preparation for the CAR-T 19 launch.

So by the time -- if everything goes well, we should have close to 200 field people in the field to launch CAR-T 19. So this is why we have great hopes for CAR-T 19 launch because this will be the -- potentially the first Chinese domestic cell therapy launch in China.

And it's a pretty significant milestone for the country, and it's obviously for CASI..

Great. That makes a lot of sense to me..

Yes, go ahead..

I just had another question on Thiotepa. You mentioned you'll explore 2 indications for your IND.

And I was just curious if you could comment on those 2 indications and just how you see the drug fitting into the overall market?.

Yes. One is we're treating the -- maybe -- actually Alex is on the call, our CMO.

Alex, you want to chime in on that?.

So Justin, this is Alex Zukiwski, the CMO. We haven't publicly stated which indications we're going to be pursuing, but they are in the allogeneic stem cell transplant; one is a more uncommon genetic disease. And we believe that, that will get us to the market with this form of Thiotepa very quickly.

And the other is in the pursuit of the usual unexpected AML indication..

[Operator Instructions] Your next response is from Sean Lee..

Congratulations on the strong revenues. My first question is on EVOMELA. So it's great to hear that you guys have been continuously to increase the market for the drug based on educating KOLs. So I was wondering what's your thoughts on the -- what's the overall market demand for it.

And how long do you think you'll be able to reach the actual market level?.

Yes. We so far have not given a definitive guidance. We are learning ourselves. We -- right now, actually in China, the bottleneck is a lot of hospital has shortage of transplant units. So in my -- in our opinion, we probably will reach the peak revenue maybe in 3 to 4 years.

But then China always never kind of stop to surprise you in terms of its market potential. So we actually start to be more optimistic that we think this drug has pretty large opportunities. So -- but we so far have not given out peak revenue guidance, Sean, sorry, if that -- trying to kind of answer your question this way..

No problem. That's understandable. And my second question is in terms of the CD19 CAR-Ts.

So I was wondering, what do you expect to be the time line for the clinical studies? Will we see any clinical results published before the NDA applications?.

Yes. We probably will leave that to Juventas because, right now, their primary objective is to submit the NDA. And they will be opportunistically publishing the data actually on -- in the international conferences. My gut feeling is probably it will be around the same time the NDA is filed..

Great. And second question is also on the CAR-Ts.

So I was wondering, what's the manufacturing distribution side like for them? Is Juventas handling that? And what's the capacity there?.

Juventas is actually building or has just built a GMP facility. That plant can manufacture at least 2,000 patients. So it's a centralized GMP plant in Tianjin. That will be our first GMP plant for the initial launch of the drug..

Just a little bit on that.

Has that plant been completed? And has it been through all the inspection approvals?.

Yes, I believe so. It's actually -- it's already built, and it's already manufacturing some of the Phase II trial GMP -- the Phase II trial is in the new GMP plant..

We have reached the end of our question-and-answer session. I would like to hand the conference back to CASI Chairman and CEO, Dr. He, for closing remarks..

Well, thank you again for joining today's call. We are incredibly proud of the progress we have made this quarter and continue to be encouraged by what we expect will be a pivotal year ahead for CASI.

We look forward to leveraging our existing commercial infrastructure as we move forward on key business development initiatives, pursuing pre-commercial launch activities for our CAR-T program, drive expanded pipeline progresses and continue to observe sturdy EVOMELA growth.

It is an exciting time to be part of CASI, and we thank you again for your continued support. Operator, yes, please..

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect..