Cellectar Biosciences, Inc. (CLRB) Q3 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the Cellectar Third Quarter 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]. I would now like to introduce your host for today’s conference, Mr. Jules Abraham from JQA Partners. You may begin.

Thank you. Good morning and welcome to Cellectar Biosciences’ 2016 third quarter conference call and webcast. The company filed its financial statements for the quarter ended September 30, 2016 with the SEC on Thursday, November 10. And these filings can be found on its website at www.cellectarbiosciences.com in the Investor Relations section as well as on the SEC website at www.sec.gov. Joining me from Cellectar this morning are Jim Caruso, Chief Executive Officer; Chad Kolean, Chief Financial Officer; and Jarrod Longcor, Senior Vice President of Corporate Development and Operations. Before I turn the call over to Mr. Caruso, please note that some of the remarks you will hear today may contain forward-looking statements about the company’s performance. As well, there may be forward-looking statements during the Q&A session following the company’s prepared remarks. These statements are neither promises nor guarantees and there are number of risks and uncertainties that could cause actual results to differ materially from those set forth in these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements is contained in the company’s filings and periodic reports filed with the SEC. Copies of which are available on the company’s website or maybe requested directly from them. Forward-looking statements are made as of today’s date and the company does not undertake any obligation to update any forward-looking statements made during today’s call. With that said, I now turn the call over to Mr. Caruso. Jim?

Thank you, Jules and thank you to all participants for joining us today for our third quarter 2016 call. We are pleased to report that significant progress for Cellectar continues and we remain focused on executing our corporate strategy, supporting our operating plan and advancing our therapeutic phospholipid drug conjugate or PDC assets. Specifically, our lead product candidate CLR 131 and CLR CTX our chemotherapeutic conjugate program. As a result of this ongoing focused execution, the team continues to achieve key milestones as demonstrated by our Q3 operating performance. These milestones include; key talent acquisition, further strengthening of our intellectual property portfolio, acquisition of $2 million NCI grant providing non-diluted funding to support CLR 131 development, participation in $12 million NCI SPORE grant to research CLR 131 in head and neck cancers. In addition, we have reported impressive clinical data and an excellent product profile for CLR 131 from our Phase I clinical trial for multiple myeloma. And the company recently accelerated guidance from the first half to the first quarter of 2017 for the study initiation of our Phase II clinical trial of CLR 131 in multiple myeloma and other clinically and commercially attractive – cancers. We look forward to further discussing these topics as well as providing our financial update on today’s call. To briefly outline the agenda, we still start by having our CFO, Chad Kolean provide the financial summary. I will then deliver a general overview of our progress. Jarrod Longcor our Senior Vice President of Corporate Development and Operations will provide a detailed update regarding CLR 131, our lead PDC currently in a Phase I clinical study for the treatment of relapsed refractory multiple myeloma as well as an update on the initiation of our NCI sponsor or supported Phase II clinical trial of CLR 131 in selected orphan designated hematologic malignancies. In addition, Jarrod will provide further insight regarding the clinical potential of CLR 131 as well as a progress report on our CLR CTX chemotherapeutic conjugate program, an update on the Pierre Fabre collaboration as well as an overview of our Q3 intellectual property advancements which have further strengthened and expanded our IP portfolio. As always, at the conclusion of the call, the executive team will be available to answer your questions. At this time, I’d like to turn the floor over to our CFO, Chad Kolean for our financial update. I would now like to turn the conference over to Ms. E.E. Wang. Please go ahead.

Thank you, Jim. Here is an overview of our operating results for the third quarter of 2016. For the current quarter, research and development expenses were $1.3 million, an increase of $0.1 million from the prior year. As we announced the end of October, we’ll be initiating a Phase II clinical trial in hematologic malignancies in the first quarter of 2017 and that we have already incurred some costs in preparation. General and administrative expenses for the quarter totaled $1.2 million, which is $0.3 million higher than the third quarter of 2015 while representing $0.2 million reduction from the second quarter of 2016. The main components of the increase in the prior year were consulting fees relating to financial reporting and investor outreach in addition to increase personnel cost for executive recruitment. Our loss from operations was $2.5 million for the current quarter whereas for the same quarter last year, operating loss was $2.1 million. Other income was $0.2 million for third quarter 2016 which is consistent with the prior year. Our net loss for the quarter ended September 30, 2016 was $2.3 million or $0.43 per share while in the quarter ended September 30, 2015, we reported a net loss of $1.9 million or $2.46 per share. As of September 30, 2016, we had $5.6 million in cash and cash equivalents on hand compared to $3.9 million in cash and cash equivalents at December 31, 2015. We estimate that our available cash and cash equivalents should fund the company’s planned operations into the first quarter of 2017. Additional capital will be required to complete planned pre-clinical research and further clinical development of key assets. Back to Jim.

Thank you, Chad. Prior to discussing our planned milestones for the remainder of 2016 through the first half of 2017, let’s first review key achievements of the past quarter. This has been an important quarter in terms of clinical achievement for our lead product candidate CLR 131. In line with our guidance, we completed the second cohort of our Phase I clinical trial of CLR 131 for the treatment of multiple myeloma. From this cohort, we observed a positive adverse event profile and impressive activity. We also secured a non-dilutive Fast-Track SBIR contract from the National Cancer Institute in the amount of $2 million which we used to support the Phase II trial of CLR 131 in multiple myeloma as well as a number of clinically and commercially attractive hematologic malignancies. We recently announced the design of this trial and provided these selected cancers. During the last quarter, the National Cancer Institute also provided $12 million SPORE grant to the University of Wisconsin to research head and neck cancers or squamous cell carcinoma. With the additional funding from the university, a total of $15 million has been set aside for this research. Our lead product CLR 131 was selected to be used in combination with external beam radiation for the treatment of this challenging cancer. This achievement possesses the potential to expand the clinical utility of CLR 131 as well as further demonstrate the benefits of our patented PDC delivery platform technology with little need of company resources. Finally, at the end of the quarter, we received a formal patent allowance from the USPTO for CLR 1603, one of our paclitaxel chemotherapy conjugates which covers method of use for the treatment of clinically and commercially important solid tumors and associated cancer stem cells using the company’s proprietary PDC delivery platform technology. These tumor types include breast, prostate, lung, pancreatic and colorectal. I’d now like to transition to a more detailed discussion of the achievement cited and we’ll begin with Jarrod Longcor discussing our research and development program updates to further discuss our ongoing Phase I relapse refractory multiple myeloma clinical study and our recently announced Phase II clinical study relapse refractory multiple myeloma and other selected malignancies. Jarrod?

Thank you, Jim. Before I review our clinical progress, it continues to be worth noting that multiple myeloma is an incurable malignancy of the plasma cells which is part of the B-cell lineage of immune cells diagnosed in approximately 30,000 Americans each year, thus qualifying as an orphan disease. This hematological cancer is characterized by both diffuse distribution and radio sensitivity suggesting a systemic radio therapeutic such as CLR 131 may have a role in the treatment of this challenging disease. While available options generally treat newly diagnosed disease, myeloma usually recurs in both treatment response rates as well as time-to-disease progression dropped significantly in the relapsed refractory setting. As a result, and despite recent expansions in treatment options, high unmet medical need remains in this arena. Given that there are limited treatment options currently available in the refractory setting and based on clinical benefits already observed with CLR 131 and heavily pre-treated relapse refractory patient population, we remain optimistic regarding the potential clinical and quality of life benefits that CLR 131 may provide to patients with relapse refractory multiple myeloma. As Jim stated earlier, we recently completed the second cohort of Phase I clinical study and it’s difficult to treat patient population evaluating the safety and tolerability of escalating doses of CLR 131. Please remember that this Phase I study is designed to help determine the maximum tolerated dose and what the potential therapeutic dose could be for this indication. Along with the studies investigators and independent data monitoring committees, we have been closely observing and evaluating both safety and efficacy signals and are extremely encouraged with the overall performance of a single dose CLR 131. In the first cohort patients, patients received a single dose of 12.5 millicuries per meter squared over a 30 minute infusion and impressively four of four evaluable patients achieved stable disease. Two patients achieved M-protein drop of approximately 20% and 30%. As a reminder, M-protein is a surrogate marker of efficacy and according to the International Myeloma Working Group, a drop of 50% or greater is considered a partial response in this patient population. These same patients that achieved the reduction previously received a 50% or greater drop in another important surrogate market of efficacy the Free Light Chain or FLC marker. According to the International Multiple Myeloma Working Group, in the absence of M-protein, a reduction of 50% or greater from base line is considered a partial response when measuring FLC. Most importantly, Cohort 1 patients achieved progression-free survival or PFS for an average of three months. During the third quarter, we announced the completion of the second cohort and similar to Cohort 1 all four evaluable patients achieved stable disease. The second cohort received a 50% dose increase to 18.75 millicuries per meter squared from 12.5 millicuries per meter squared. Two of four patients in this cohort achieved a 50% or greater FLC reduction from base line and the responses were deeper and more sustained as compared to Cohort 1. As of October 7, 2016, patients in the second cohort had obtained an average PFS of 120 days representing a 30% increase compared to the first cohort. It is important to note that as of this call, PFS continues for two out of the four evaluable patients in Cohort 2. To provide context regarding CLR 131’s interim PFS of greater than 120 days, two recently approved drugs for relapsed refractory multiple myeloma, achieved a 111 days and 120 days of PFS in their pivotal studies, which means CLR 131 at a single dose of 18.75 millicuries per meter squared achieved similar or greater PFS than these compounds. As striking as CLR 131’s activity has been, its adverse event profile has been equally impressive. Despite the 50% increase in dose, the adverse event profile for the second cohort did not increase from the first cohort to the second cohort with medium adverse events being two events per patient and medium grade of severity of adverse event being two out of five with five being the most severe. Including the eight evaluable patients from this study and the 28 total patients treated with CLR 131, there have been no neuropathies, cardiotoxicities, gastrointestinal upset or irritation nor deep vein thrombosis adverse events reported with the use of CLR 131. As expected, the most common adverse events seen are hematologic in nature. Although previously stated, I’d like to step back a moment and remind participants on this call that CLR 131 is administered as a 30 minute single dose infusion at the beginning of the evaluable period. Please also recall that this study is designed to evaluate CLR 131 in a heavily pre-treated patient population with progressive disease, some of whom have undergone as many as 12 lines of prior therapy. In fact, Cohort 1 had 6.5 lines of prior therapy as the average, four if not including the patient reference with the 12 lines of prior therapy. Cohort 2 also had four prior lines of therapy as the average in CLR 131 patients, this line of systemic treatment. All evaluable patients had previously received treatment with a proteasome inhibitor and immunomodulatory drug as well as treatments consisting of three drugs also called triple combination. These combination treatments are considered a single line of therapy. In addition, four of the eight evaluable patients also received stem cell transplantation. Based on the clear demonstration of activity and extended level of progression free survival outlined along with a very clean adverse event profile, the data monitoring committee fully endorsed and the company rapidly initiated the study’s third cohort. The Cohort 3 CLR 131 dose is 25 millicuries per meter squared which represents a 33% increase from the 18.75 millicuries per meter squared dose using Cohort 2. As previously stated, we have initiated enrollment and look forward to sharing data from this cohort when it becomes available. Recently, the company announced the design of our NCI supported Phase II study of CLR 131 in relapsed refractory multiple myeloma and other selected relapsed refractory hematological cancers. Originally, the company provided guidance that this study would be initiated in the first half of 2017. Thanks to the collective effort of the team which included our employees, our contract research organization and investigators and consultants, we accelerated our study initiation guidance to the first quarter of 2017 and announced that preliminary efficacy data was expected in the second half of 2017. The Phase II study design was carefully constructed to optimize our understanding of CLR 131 by further defining its clinical benefits in a both a single and multi-dose regime for the treatment of relapse refractory multiple myeloma. The results of which we believe will be instrumental of a pivotal clinical trial. Based on our evaluation, we believe CLR 131 may also provide therapeutic benefit in a number of orphan designated, difficult to treat hematological cancers that clinically and commercially attractive in design, the Phase II study to rapidly and cost effectively explore the drug’s broader clinical utility. The study will be conducted in up to 15 centers across the United States. The company expects that all patients will receive a single dose of CLR 131 at 25 millicuries per meter squared infused over approximately 30 minutes, with the option of a second dose approximately 80 days to 160 days later based upon physician assessment. Concurrently, patients in the trial with relapsed refractory multiple myeloma will be receiving 40 milligrams oral dexamethasone weekly for up to 12 weeks. The primary endpoint for the study is Objective Response Rate or ORR; secondary endpoints include progression free survival and other measures of efficacy. In relapsed refractory multiple myeloma patients, efficacy responses will be determined according to the latest International Multiple Myeloma Working Group criteria while in lymphomas, efficacy will be determined by according to the Lugano criteria. With that, I’m pleased to turn the call back over to Jim.

Thank you, Jared. As we have been for some time, we remain highly focused on the successful execution of our Phase I clinical study of CLR 131, for the treatment of multiple myeloma as well as our new NCI supported Phase II clinical study in multiple myeloma and selected hematologic malignancies. Now I’d like to ask Jarrod to provide some additional insights on CLR 131 as well as to provide updates on our other programs including our CTX program, our Pierre Fabre research collaboration and an intellectual property summary.

Thanks again, Jim with both our ongoing Phase I and near-term Phase II study, we will continue to assess the efficacy and safety of CLR 131. To-date, the most commonly encountered adverse event has been a reduction in platelets which has been very predictable and manageable. Importantly, there has been no neuropathy or cardiotoxicity associated with the compound. Therefore, as we think about combining CLR 131 with additional therapies, we are quite optimistic patients could experience significant benefits. When considering combination therapy, it’s important to consider the adverse event profile of the potential combination. Unlike many commonly used treatment combinations to-date, with the adverse event profile is synergistic or additive because the compounds have very similar profiles. CLR 131 may allow for significantly improved safety profile when used in combination with other therapies due to CLR 131’s improved adverse event profile, the predictable and manageable nature of the adverse events we are seeing and the infrequent dosing regime that we are going with. Pre-clinically, we have initiated an examination of CLR 131 in combination with other compounds and plan to advance this high potential yield programs in the near future. Next, as Jim mentioned during the previous quarter, the USPTO issued a formal patent allowance of CLR 1603 which covers method of use for the treatment of a variety of solid tumors and associated cancer stem cells using the company’s phospholipid drug conjugate or PDC delivery platform technology with paclitaxel. This patent allowance follows the May 26, ‘16 issuance of the composition of matter patent for the same compound. This action further contributes to the patent protection of our proprietary technology well into the 2030s and also represents the fifth action by the USPTO on our technology this year. The company excepts to continue its aggressive approach to strengthening and expanding its intellectual property portfolio for strategic assets. Now moving into an update on our PDC chemotherapeutic conjugate or as we call it, our CLR CTX program. We continue to make excellent progress. We believe our tumor targeting delivery platform will allow us to combine the PDC delivery vehicle with a multitude of chemotherapeutic agents converting untargeted agents into novel targeted agents. We believe these targeted agents or PDCs will improve the therapeutic index versus the original untargeted agent and in some cases, result in improved efficacy and/or safety. To-date, we have progressed a number of internally developed programs with on-market generic chemotherapeutics as well as several novel proprietary agents within our collaboration with Pierre Fabre. Our earlier focus with our internally developed programs has been to develop our paclitaxel series of PDCs and further validate the platform in vivo. In a parallel pathway, we have continued to progress our collaboration with Pierre Fabre. This collaboration was announced in December of 2015 and was initiated during the first quarter of 2016. It represents the first step in our client partnering model which will allow us to advance our research and development efforts and key milestones through strategic partnerships. Both Pierre Fabre and Cellectar remain excited about the potential of this synergistic relationship. As you may recall, the objective of this collaboration is to leverage Cellectar’s PDC platform for the selection of Pierre Fabre’s proprietary natural product chemotherapeutics to convert non-targeted molecules into tumor targeting agents to improve their respective product profiles. As part of the collaboration, Pierre Fabre provides their proprietary chemotherapeutics extensive oncology research experience and selective resources, while Cellectar is providing our PDC platform technology, our oncology drug development experience and expertise in conjugating oncologic payloads with our PDC small molecule delivery vehicles. We will be initiating in vitro and in vivo studies to select the best conjugated molecules to advance. It is important to note that this series of molecules represents novel intellectual property. We have provided guidance that we will provide an update on the Pierre Fabre collaboration in the first half of 2017. With that, I’d like to turn the call back to Jim.

Thank you, Jarrod. During our last call, I committed to continued progress with both corporate and product development milestones over the course of 2016. And I believe we can confidently say that the team has made good on that commitment. As always, we understand that we have much work yet to do and a number of milestones to achieve. However, we believe that the company has positioned itself nicely for continued performance and future growth. In Q4, we announced the design of our Phase II clinical trial for CLR 131 and provided guidance that we had accelerated its initiation to the first quarter of 2017 from the first half of 2017. And that interim efficacy data will be released during the second half of 2017. In the meantime, for the last six weeks of 2016, we can anticipate the release of a more complete and updated clinical data set from the second cohort of our Phase I study of CLR 131 in multiple myeloma, a CLR 131 data presentation at the American Society of Hematology conference in December and the announcement of additional milestones and events as they occur. We anticipate 2017 to be an eventful year in terms of clinical development milestones for Cellectar and expect the first half of the year to include; the initiation of our Phase II clinical trial at CLR 131 in multiple myeloma and selected hematologic malignancies; announcement of the first patient enrolled to that trial; the completion of the third cohort of our Phase I multiple myeloma study at CLR 131 at a dose of 25 millicures per meter squared; a preliminary data – of the third cohort at 25 millicures per meter squared as well as a second more complete update as the study is completed in its entirety; initiation of the fourth cohort of that study required for study protocol to establish CLR 131’s maximum tolerated single dose; a Pierre Fabre collaboration update within the guidelines of our agreement; and of course the announcement of additional milestones and events as they occur. With that, I’d like to thank you very much for your participation on this call and your continued interest in Cellectar. At this time, Chad, Jarrod and I welcome any questions that you may have.

Thank you. [Operator Instructions]. And our first question comes from the line of Jay Albany from SeeThruEquity. Your line is open.

Hey guys. Thanks for the results and the overview and update on the clinical progress. May be you could expand on regulatory – the choices of regulatory pathways in Phase II trial and sort of what are the benefits you might get from this approach?

Absolutely, Jay and first of all, thank you for your participation and the company appreciates your coverage. Good question. We believe that the Phase II ultimately is going to be very transformational for Cellectar. As mentioned in the script, we believe it is a very clever or smartly designed study. We did a very thorough evaluation and analysis using a wide variety of constituents to really develop what we believe a design what we believe is a program that will help us to accelerate development as well as create value optimizing opportunities for the company. Our internal constituents played an important role. We have a number of experts in this area. Externally, we use third party consultants. We’ve used [indiscernible] that have extensive both clinical trial experience as well as clinical experience the weigh in on the practicality of the study design. We used a world class CRO organization as well that is intimately involved in the – space to help us a leader as well. So we feel as if we’ve used a great group of consultants to come up with the optimal design and before I turn this over to Jarrod for a more thorough response, I will tell you that this provides us with optimal flexibility from a regulatory pathway perspective. It’s extremely cost effective for the company and will allow us to be selective in terms of how we advance our regulatory platform for multiple myeloma as well as really get some nice clinical line of sight on these other selected hematologic malignancies. So with that, I’ll turn it over to Jarrod.

Sure. Just to lay out the design and regulatory – of the company, obviously it is our goal to as rapidly as possible accelerate this program and accelerate the company from where it is today and hopefully into pivotal studies on one or multiple of the indications that we are now pursuing in this Phase II study. The way we’ve designed the study is to maximize our flexibility with each of the various what I’ll call cohorts of patients in the study. This means that we are able to essentially as one cohort such as multiple relapsed refractory multiple myeloma were to complete, we can close that cohort and proceed into potentially pending data proceed into a pivotal study with the submission to the FDA to progress in that cohort while we continue with the remaining cohorts of the Phase II. Additionally, I think it’s important to note as we mentioned in the script, that multiple myeloma being a plasma or B-cell malignancy, the other associated malignancies that we’re pursuing also are variations on that same theme and bring us the potential of rapidly being able to progress within a multitude of opportunities versus just in a single indication.

I think the other -- way to answer that, thank you, Jarrod, is the way that this is designed as well, it really gives us flexibility in terms of – it’s an open label so it provides flexibility for us to turn some cards both from an adverse event profile as well as from an efficacy piece. And so we think that’s exciting as well because we get an early and clean line in sight. I think it’s also important to note that we don’t necessarily have to complete this Phase II study in its entirety. Remember one of the unique elements of this study is it’s the second dose. So we’re currently experiencing an outstanding profile to-date with impressive activity and really clean AE profile with our single dose. And we started at 12.5, and we’ve received some really nice data there. So keep in mind, this is going to be a single dose of 25 millicuries upfront and then with investigator option for a second dose of 25 millicuries 80 to 160 days later. So if you think about it, that’s four times the drug that we’re currently using in the introductory cohort and received some really nice quite frankly data both from an activity and an adverse event profile. The other piece that I think is significant here is that as we’ve advanced from the first cohort to 12.5 to 18.75 almost a 50% increase in dose, we’ve seen that corresponding activity but yet our adverse event profile as Jarrod mentioned, is essentially the same which is very encouraging for us in order for us to potentially push this dose and we feel confident in this multi-dose regimen as well. We’re really looking forward to it because we believe it may have the capacity to really help patients further push down the efficacy markers of FLC or Free Light Chain as well as in M-protein and then potentially extending progression free survival. And we’re going to be able to turn those cards at a time early as the second half of 2017. It also was designed, and this is the final point, to allow us to advance to a pivotal trial with multiple myeloma prior to the study’s conclusion. So, one of our expectation is because of the activity that we’ve seen, our investigators are particularly excited about this drug in multiple myeloma based on what they’ve observed. Our expectation is that that cohort may reasonably fill quicker than these others. And as a result, that will give us flexibility to push forward into a pivotal trial even before prior to the close of this trial. I think that’s about right.

Thanks for the answer.

Thank you.

Thank you. [Operator Instructions] At this time, I’m showing no further questions in the queue. I would like to turn the call back over to Jim Caruso for closing remarks.

Terrific. Well thank you to everyone who participated in the call. We do appreciate your interest in the company and we look forward hopefully with additional releases in the near term to continue to have an appropriate communication flow with all of our external constituents and --. Thank you very much. Look forward to our next call.

Ladies and gentlemen, thank you for participation in today’s conference. This does conclude the program. You may now disconnect. Everyone have a great day.