Good day, ladies and gentlemen, and thank you for standing by. Welcome to Spectrum Pharmaceuticals Q3 2017 Earnings Conference 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 conference will be recorded. And now I’d like to introduce your host for today's conference, Shiv Kapoor, Vice President of Strategic Planning and Investor Relations. You may begin.

Thanks. Good afternoon, and thank you for joining us for Spectrum's third quarter 2017 financials result conference call. I hope you've all had a chance to review the press release we issued earlier today. If not, it's available on our website at www.sppirx.com. I would like to remind everyone that during this call, we will be making forward-looking statements regarding future events of Spectrum Pharmaceuticals, including statements about the product sales, profits and losses, the safety, efficacy, development, time line and clinical results of our drug products and drug candidates that involve risks and uncertainties that could cause actual results to differ materially. These risks are described in further detail in our reports filed with the Securities and Exchange Commission. These forward-looking statements represent the Company's judgment as of the date of this conference call, November 2, 2017, and the Company disclaims any intent or obligation to update these forward-looking statements. However, we may choose to update them and if we do so, we will disseminate the updates to the investing public. For copies of today's press release, historical press releases, 10-Ks, 10-Qs, 8-Ks and other SEC filings and other important information, please visit our website. Dr. Raj Shrotriya, our CEO, will start the call today and provide you with the highlights of the third quarter and overall strategy. I'd now like to hand the call to Dr. Shrotriya.

Thank you, Shiv, and thank you, everyone, for joining us this afternoon. We have been focused on developing our late-stage pipeline and I am proud of our progress. I would like to start by highlighting our key priorities for the year. First, let me say few words about poziotinib. A significant event in the third quarter as preliminary data from Phase II study at MD Anderson Cancer Center was presented two weeks ago at the World Conference on Lung Cancer in Japan by Dr. John Heymach of the MD Anderson. Poziotinib is being developed for patients who have non-small-cell lung cancer with a genetic mutation involving exon 20 insertion. These patients are generally younger, non-smokers, females, and have a progression-free survival of about two months. Current treatments for these patients are unsatisfactory. Promising preliminary data was presented in Japan two weeks ago with overall response rate seen in 73% of patients. Following guidance from the FDA, we have initiated a Phase II study. This study is currently enrolling patients. Many of the premier cancer institutions in the country are expected to participate in this study. We are committed to working with the FDA to find the fastest regulatory pathway for the approval of poziotinib. Our second drug ROLONTIS, our novel GCSF, we plan to announce topline data in first quarter 2018 from over 400 patients that will study in the United States in a study called ADVANCE trial. Enrollment is also well underway in a second trial, which is an international study with size mainly in U.S., Europe and Canada is called RECOVER study, which is similar to the ADVANCE study, but will enroll approximately 218 patients. We remain on track to file a BLA, our Biologics License Application in the fourth quarter of next year. Lastly, a novel tumor-activating…

Thank you, Raj, and good afternoon to everyone on the call today. I'm going to cover a few important financial highlights from the quarter and let's start with revenue. Total revenues for the third quarter were $36.4 million and of this, product sales were $31.2 million. In addition to product sales, we’ve recorded a one-time $5 million milestone in license fee revenue based on the approval of FOLOTYN in Japan and the first commercial sale. Moving on to expenses, SG&A expenses were $18.9 million this quarter, while this may look like an increase from the previous quarter is actually the result of the change in the line items, in which we reported with expense. As I pointed out in last quarter's call, our collaboration with Eagle Pharmaceuticals ended on June 30. As a result, we are no longer reporting a portion of our sales and marketing expenses as cost and services revenue have promotion of Eagle products, but rather all sales and marketing expenses now back to be reported in the SG&A line. As compared to the second quarter, SG&A expenses actually decline due to lower staff related costs. R&D expenses were $13.9 million for the quarter. During the third quarter, we raised a $114 million due to the sale of 12.6 million shares utilizing our at-the-market security offering program. We ended the quarter with $248 million in cash and cash equivalents versus $139 million at June 30. Subsequent to the end of the quarter, we issued 1 million shares for net proceeds of approximately $14 million of our ATM. Also subsequent to the end of the quarter, we entered into agreements with a few of our convertible bondholders and exchange approximately $69.5 million in aggregate principal of bonds for approximately 5.4 million newly issued shares of stock plus $26.7 million cash. Following these and other exchanges, we have reduced our debt from $120 million down to approximately $40.5 million. Financially, the Company has well equipped to find our three advanced stage programs, to hear more about these, let me turn the call over to Joe.

Thank you, Kurt. Thank you, Dr. Raj, and thank you, Shiv and thanking everybody on the call. These are really exciting time to Spectrum. First, let me talk about poziotinib, our oral irreversible tyrosine kinase inhibitor, which is shown potential on lung cancer patients with exon 20 insertion mutations and also in breast cancer patients. As Dr. Raj mentioned, just two weeks ago, we announced encouraging preliminary data from a current ongoing trial at MD Anderson Cancer Center studying poziotinib in non-small cell lung cancer patients with exon 20 insertion mutations in EGFR or HER2. Patients with such tumors are generally non-smokers, younger and have very few options for treatment. The prognosis for these patients is poor with a medium progression-free survival of about two months and current therapies are unsatisfactory. There is a significant unmet need for this population. Poziotinib has shown evidence of significant antitumor activity in non-small cell lung cancer and patients with EGFR exon 20 insertion mutations. Dr. John Heymach reported that all 11 patients who received the daily poziotinib show tumor shrinkage. The objective response rate using RECIST criteria was 73%. It was also evidence of central nervous system in a patient with central nervous system metastasis and another with leptomeningeal disease. This is especially exciting news because these patients are generally resistant to available treatments. We just announced Monday that we have initiated in currently enrolling patients in our own multicenter Phase II trial of poziotinib. This trial has been designed with input from leading KOLs as well as the FDA. The goal of the Phase II trial is to evaluate both the efficacy and safety of poziotinib in patients with non-small cell lung cancer that is locally advanced or metastatic and have an exon 20 insertion mutations in either EGFR or HER2. The…

Thank you, Joe. These are exciting time to the Specturm. With that, let’s open the call for questions. Operator, please.

[Operator Instructions] Our first question comes from the line of Adnan Butt of Guggenheim Securities. Your line is open.

Hi, thanks. Hey everyone. Clearly impressive data for poziotinib. At this point would you be able to tell us when the next update from the MD Anderson study could take place?

Adnan, as you know the current study at MD Anderson is Investigator Sponsored Study. Although, we are intimately involved in ordering and monitoring these patients, and for the update is concern, I think it will be sometime in early – I expected sometime to be early in next year as we have been discussing about filing an abstract, submitting an abstract with some paper work for the ASCO presentations, which happens in February. So I would say something like in February, I am expecting some update, but again, I don’t control that that has to come from MD Anderson, but my discussions reveal that the plan is to find an abstract for ASCO in February next year.

That’s good to hear. Dr. Raj, I think on the prior conference call, Dr. Heymach mentioned that there would be an update from the HER2 code as well and do you expected at the same update or could that be a separate update?

I am not sure at this time, Adnan, I’ll have to go back to Dr. Heymach and find out about it.

Okay. Let me just ask a question on your study and it’s good to see you start the Phase II. Could you tell us if there are any differences between the protocols that you’ve developed versus the MD Anderson protocol?

Well, I think those are very fine difference, Adnan, after this call you and I can get over this, I can have our Chief Medical Officer, Brendan, Chief Project Officer, and Dr. Zane Yang, our Senior VP Medical to go over the differences with you, but they’ve settled their minor, they are all targeting non-small [indiscernible] advanced metastatic non-small cell lung cancer with exon 20 insertion mutations. There are some fine points that we can talk about the – for example, we have built a centralized – leading up these PET scan, CT scans. Because after this multicenter, we expect 20 to 50 sites participate in the trial. We want to make sure that all the cancer risk centrally that is something that we are insisting. And similarly we are collecting plasma from all these samples, all these patients and trying to collect tissue from all these. Some of the things that are unique to a multicenter trial that are certainly different from MD Anderson cancer trial, but the fundamental basic will be the same. Patients remain the same, diagnostic criteria using NGS remain the same, and also these scans remain the same.

So last one from me, Dr. Raj, in terms of managing patients either via prophylaxis access or primary prophylaxis. Are there any plans to do them to make them stay on the dose, higher dose longer?

Yes, you are right. On oncology we try to use maximum tolerating dose of MPD. A goal is to give the highest dose possible. So as that we started our breast cancer study with 24 milligrams that [indiscernible] and here we found that 16 milligrams was the best dose in our assessment. So everybody starts with 16 milligrams and a goal is eat everybody else 16. But the reality is that some patients don’t tolerate the highest dose. And therefore we have to gradually reduce the dose. Those reduction is only subject to what kind of side effects they have, not everybody has the same severity of reaction. But suddenly we have seen rash, diarrhea, paronychia, and mucositis, it’s all depends how well the patients are tolerating. But clearly our design – a study is designed to keep the patients on as high dose as possible or as long as possible.

Okay, great. I’ll get back in a line. Thanks.

Thank you. Our next question comes from the line of Laura Engel with Stonegate Capital Partners. Your line is open.

Good afternoon. Thanks for taking my questions. I wondered if you had any update from MD on the potential readout, whether you thought we might hear something before year end or is it looks like it would be 2018 for that next readout?

So from Hanmi any readout will be in 2018. I’m not aware of any readout in this year.

Okay. And then on the QAPZOLA, can you give us on any idea of the number of patients or the number of active sites thus far and then if you part anything as far as the how dosage that’s being used in this trial design, if that’s going still well with this second design?

Yes, so QAPZOLA trial, we have a lot of experience in this area because we have done previous two trials in which involve almost 90 centers that participated in enrolling patients. We have gone back to several of those sites at least 40, 50 sites have been told and active right now, patients are being actively recruited both in U.S. and in Canada and number of patients that we need valuable patients for 425. There are three differences in this trail is completed in previous trial, three major differences, one of them is that are we are using double the doors of the previous study, it’s 8 milligrams rather than 4 milligrams. We also have time to rigorous as the end point and also features a randomize 2:1. In fact, with every two patients that get QAPZOLA, only then be one patient of placebo and this trial design was blessed by the FDA. There was one major change because in the first trial patients could get QAPZOLA right soon after surgery. And we found that some of the patients who might have bleeding that bleeding deactivate or inactivate this drug. In the current protocol, we are allowing 30 minutes to pass before we consider giving QAPZOLA and in fact there is front bleeding then we wait even longer. We saw one hour plus or minus 30 minutes. So some patients could wait for 1.5 hour, let me see. So these are the major three or four difference between the first trial. But clearly we have very aggressively pursuing these trials and people and the – they are investigated a very excited about the potential that this drug could be in the hands of patients.

Okay.

Hey Laura. This is Joe. I’ll just add to also that San Antonio Breast Hanmi, we will have a poster on the ESMO based data that I reference…

Okay.

In a transcript, so there will be a poster San Antonio Breast.

Okay, great. And then just one more related to current sales, so just comparing ups and downs quarter-to-quarter, reflected a little bit of continuing decrease in FUSILEV strong increase for EVOMELA. I wondered if you could just comment looking forward the largest actual change was in MARQIBO saying that right – plus $2 million, so if you could comment on that and then just as far as EVOMELA still gaining traction going forward. How you feel about that and its market share at this time?

So I have Tom Riga, our Chief Commercial Officer and Head of Business Development to answer this question.

Hi, Laura, I hope you are well. Let me start with MARQIBO. As a reminder, this is indicated in a very limited population, there about 1,600 patients and adult Philadelphia negative ALL. In the third quarter we actually saw two competitive entrance come into the space with different mechanism of action and clearly had an impact on our business. Now we're going to monitor that going forward and keep you posted as we go, but your observation is correct in those new products are likely the cause. When you look at on an absolute patient basis, while you see the million dollar decrease you're looking at less than 15 patients as we evaluate that, but in a very small market that presents itself as significant, so we'll keep an eye on that. Regarding EVOMELA, we are thrilled with the performance. I think this is the highest quarter we've seen with the brand. We are the market leader and the market has spoken on the differentiation of the product. That said, there are four generic competitors that we're constantly competing with and price pressures are a reality of the game. We believe we're differentiated. We've been holding strong, but our team is working tirelessly to continue to earn new business as well as maintain our differentiated price schedule, but that's something we have to monitor on a very regular basis.

Right. Okay. Great. Well, thanks for taking my questions and I'll get back in the queue.

Thank you.

Thank you. Our next question comes from Ed White with H.C. Wainwright. Your line is open.

Hi. Thanks for taking my question. So I just wondered – I saw them ask about the commercial products, but I do want to come back to MARQIBO, but on sales, if you can give any update on the protocol you submitted for the SPA for CHOP versus the CHMP?

Dr. Zane.

Hi, this Zane. So the [LIPOSOME] study is designed for the MARQIBO in non-Hodgkin's lymphoma patient population and we have discussion with the FDA regarding the study denied and speaking for the SPA in order for the clear path for the registration and the discussion, you guys under discussion with the agencies.

Okay. So there's no real update yet on that one?

Not really, Ed, but that will be Phase III registrational trail. If I remember we get it – we are just trying to get it under FDA.

Okay, great. Thank you. And then Joe, a question for you and maybe if you can talk about the changes that you're expecting in the GCSF market in the U.S. either through the biosimilars or the healthcare reform, what has changed since you started strategically planning the ROLONTIS launch and how you're positioning in the market we've talked about that before, but there is anything changed that either makes you think that there's less of an opportunity or more of an opportunity now for ROLONTIS?

Yes. I think first of all Ed, what hasn’t changed is exciting because what hasn’t changed is novel agent. The way reimbursed was still true today puts us in a good position to compete because we will be the novel agent, but I guess the only real change in the time we've been talking and watching it is several biosimilars that we thought would be in the market already are not yet on the market. You’ve also seen that in Europe and some of the no one, so right now, I don't know who will get to this market first as a long-acting biosimilar, but at this point there are none on the market. So that's different than I thought. I thought to be at least one if not two on a market already. Raj you want to add.

Yes. The only thing I would add is early this last night there was some news on TV just reforming United States. We have the company believe that cancer cares does held with the community oncologist and I think the reform to the PHS space really helps eliminate some of the issues that have – patients in that segment and puts the control of the care back into the community oncologist hand, which I think is advantageous for the GCSF space. And as we've talked in the past today greater than 70% of all GCSFs are treated by the community and that number is only looking to grow as we see to PHS reform coming through vision.

Okay, great. Thanks Tom. So maybe just one last ROLONTIS question, you expect BLA submission in the fourth quarter of 2018. Is it safe to assume the European submission early 2019?

Yes. That’s what we are planning, yes.

Okay. And then it just one pozi question in breast cancer. So Joe had just said that in running the single agent second Phase II trial in third line. Can you give us an idea of how many patients are enrolled or when we could see data from that study?

Dr. Zane?

So these study has been contact that for more than a year and initially this study design is for the patient with metastatic – line and HER2 positive for breast cancer with a single agent of poziotinib 24 milligram once a day, two weeks on, one week off regiment recommended by our partner from Hanmi Pharmaceutical. Our experience that we feel, there is no strategic rational for having the holiday, anticipation population, but also we do believe there is no material increase that patient that’s on ability and without a compromise the patient efficacy by justify the dose from 24 milligram to 16 milligram, because of this observation we open this discussion with FDA and then we get our agencies agreement when moves to amendment, now we have two cohort currently in the study. The first cohort we have a 32 patient treated with 24 milligram a once daily for two weeks on, one week off that’s cohort complete and the data is under analyze and hopefully we maybe share this information in the major scientific conference in the future. And more importantly the second cohort will open in the U.S. and used 16 milligram once daily continues and we do so – we are still have number of patient so is earlier to say the observation of the data, but I just want to let you know the second cohort is open and all this information is available and the clinical trial back off.

And Rajesh remind you, it’s overall ended 70 patients, just to remind you.

Great, thanks Joe. And thank you very much. That would be answered all my questions.

Thanks Ed.

Our next question comes from the line of Matthew Andrew with Jefferies. Your line is open.

Hey, good afternoon. Question on poziotinib, at what point do you go to the agency to advanced discussion on potential for breakthrough designation? Is there a minimum amount of safety and efficacy data that you need to have to request such meeting?

So Matthew this is good question in fact the data that we saw in Oklahoma, it was really ahead of its time, in other words when we started this trial Dr. Heymach thought that to take two to three is complete this trial in 30 patients and now actually we already have data is present and we didn’t expect this data to be available until December of this year. So they are quite harden to see that the data is already available and we are – as we speak we are preparing our submission to the FDA requesting a meeting to discuss a regulatory strategy, whether it involves breakthrough designation or it involves exclusive approval or it involves just – we are planning to have a meeting to the FDA as soon as possible. It’s just not for bidding a document and we will present very good into the FDA. There is a lot of excitement in the lung cancer community, a lot of excitement in the patients and I can tell you that our investigators are even dated with the number of patients that are calling in about the use of our poziotinib for them. So we are very excited and we hope to meet with the FDA as soon as the FDA would allow us.

So on the call few weeks ago, Dr. Heymach mentioned enrolling the cohort of frontline patients. What is the strategy for your multicenter study? Do you plan out of the 174 patients to have a proportion that are actually first-line or what are the thoughts around that? Does the MD Anderson data phase how you enroll for first-line, anything you can add on that?

So, Matt, the current protocol that was heavily discussed with the FDA and with key opinion leaders requires, the FDA requires that the patients must have failed one treatment, whether it chemotherapy or targeted therapy they must have failed one therapy. However, these discussions with [indiscernible] the thinking is the following. That because an exon 20 insertion mutations, the standard chemotherapy or targeted therapy is not effective, why waste time with these patients giving them therapies that are not effective, and therefore there is a pitch that we should treat some patients first-line with poziotinib, a discussion that we plan to have with FDA and we will let you know when the decision is made.

Okay. Thank you. And just lastly following up on Adnan’s question, as it relates to minimizing rash and other toxicities, it sounds like you are committed to starting with 16 milligrams, is that right or would you consider starting at a lower dose 12 milligrams?

So like I told you, I know oncology right, left and center and in oncology, you give the best dose that is the best chance of success. Remember our first patient that we started in November of last year under compassionate ground started with 16 milligrams daily dose. This patient had metastatic lesions and pain and difficulty breathing and cough and within first week – our clinical benefit was seen within first week and [indiscernible] four weeks, plus 16 milligrams daily. Clearly, I and the physician would not want – I would want every patient to benefit from this quick and early effect we saw in first patient. So we have no plans to start at this time at lower result 16. One of the patient started 16 and then if they develop in tolerant that we can suddenly reduce the dose, then standard practice in oncology and as we plan to continue at this time. 16 milligrams dose has been found to be safer and effective dose in these patients population, so far with the limited experience that we had. But let me just give you an idea that poziotinib has already been given to about 300 patients while the lung cancer patients are limited the total exposure to breast cancer patient, and other patients is over 300. So we feel pretty comfortable giving 16 milligram as a starting dose.

Okay, great. Thank you.

Thank you. And we have a follow-up question from Adnan Butt with Guggenheim Securities. Your line is open.

Hey, thanks for the follow-up, just a quick one here. Could you tell us how common place cleaning for these mutations in the lung cancer and other cancers. And then maybe have you had a chance to do some work on how common place these mutations are at least in the major market?

So I’ve seen numbers all over the place. This is – you start looking at the non-small cell cancer indication about 200,000 patients a year and that goes to the United States. And the number of patients that could have exon 20 insertion mutations have seen numbers anywhere from 4,000 to 8,000 patients, but that is just in the U.S. But you just start going to Europe and Japan, the number of patients expand as much as 15,000 to 20,000 patients. So that number is I can’t tell you that how accurate this number in, but suddenly there is a range that seems believable to me. When we were in the Oklahoma, we did meet experts from Japan and they were all very, very interested. We had Chairman of the Department for Lung Cancer, Thoracic Cancer in Oklahoma – in Tokyo and in several other places in the Japan, Osaka and Nagoya and we certainly plan to – Japan has the highest incidence of exon 20 insertion mutations. There is a lot of interest in these people and we suddenly plan to have some program going forward in Japan.

Okay. And then would you know how – is it standards cleaning for these mutations?

It is becoming – you should realize that until 2004 nobody knew about these mutations. This is all relatively new. Thanks to Human Genome Project, and now everyday increasingly the people are being tested routinely with the genetic mutations because lung cancer is a number one killer for cancer death in both men and women. And the reason for that is we were treating blindly these cancers. Give them chemotherapy, give them platinum therapy, not knowing that there is certain genetic mutation that prevents for this chemotherapies to act. So now therefore, more and more physicians even in practice, community practice, they’re resolving to these, let’s call liquid biopsies or blood plasma and they run it through what’s called next-generation sequencing on foundation test or Oncomine test, so they are able to do quickly the genetically cleaning of these patients. And therefore, our targets therapies are becoming more common, tests are becoming more common, but still is [indiscernible] I think as this grows, number of patients diagnosed will be far greater than what its today.

Okay, great. Thank you. End of Q&A

Thank you. I would now like to turn the call back over to Dr. Rajesh Shrotriya for any further remarks.

I would like to thank all the participants today in this conference. I want to thank you for your interest in Spectrum, and we look forward to updating you in the near future on our continuing progress. Stay tuned, I believe best is yet to come. Thank you.

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