Cellectar Biosciences, Inc. (CLRB) Q3 2017 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] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Jules Abraham from JQA Partners. Sir, you may begin.

Thank you, Brian and good morning everyone and thank you for joining us today to review the financial and operational results of Cellectar Biosciences for the third quarter of 2017 on this conference call and live webcast. Following the close of market yesterday, the company filed its financial statements with the SEC for the quarter ending September 30, 2017 which can be found both on the SEC website at www.sec.gov and the Investor Relations section of the Company's website at www.cellectar.com. In addition, a replay of this conference call will be available on the company's website. Joining me today from Cellectar are Jim Caruso, Chief Executive Officer; John Hamill, Cellectar's Interim Chief Financial Officer; John Friend, M.D., Vice President and Chief Medical Officer; and Jarrod Longcor, Cellectar's Chief Business Officer. 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. Additionally, there may be forward-looking statements during the Q&A session following 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 Cellectar'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'll now turn the call over to Mr. Caruso. Jim?

Thank you, Jules, and thank you to all participants for joining us today to review Cellectar's financial and corporate results for the third quarter of 2017. We are pleased with our progress going to third quarter and continue to rapidly advance the company on all stated strategic fronts. Our development of CLR131 for liquid tumors continues at an encouraging pace with strong results and our collaboration with the University of Wisconsin for the MCI funded head and neck solid tumor program is ahead of schedule. Our Chief Medical Officer, John Friend, will discuss our liquid tumor results shortly, including our recently announced multi-dose regiment for cohort 5 of our Phase I multiple myeloma study. We continue to create value generating opportunities through additional strategic corporate collaborations such as Avicenna and Onconova that allow us to further optimize our PDC delivery platform and to enrich the company's small molecule pipeline with proprietary assets. In parallel, our relationship with Pierre Fabre continues to expand. We are also developing an internal pipeline through our preclinical development programs for solid tumors. Jarrod Longcor, our Chief Business Officer, will provide additional insight regarding these activities. From a financial perspective, we believe our September 30 cash balance and the proceeds from our recent registered direct financing are adequate to fund the operations of the Company for the next 12 months. Our Interim CFO, John Hamill, will provide further details of the financing, as well as our financial results for the quarter. Following these discussions, I will provide some closing comments after which the entire executive team will be available to answer your questions. At this time, I'd like to turn the call over to Cellectar's Interim CFO, John Hamill, for an overview of the third quarter 2017 financials.

Thank you, Jim and good morning, everyone. Yesterday afternoon, we filed our 10-Q for the third quarter ended 2017. Additionally, we filed with the SEC a registration statement on Form S-1 for the resale of upto 3,108,538 shares of our common stock issuable upon the exercise of outstanding warrants. We are not selling any shares of our common stock. These warrants were issued in October 2017 as part of the recent financing, and we agreed to file our registration statement within 60 days of the issuance of the warrants. We also filed a registration statement on Form S-8, primarily to register 1,620,000 shares of the Company's common stock, issuable in accordance with the terms of the Company's amended and restated 2015 stock incentive plan. For the third quarter ended September 30, 2017, our Company's financial results were in-line with our expectations. Cellectar's research and development expenses increased to approximately $2.3 million from approximately $1.3 million in the third quarter of 2016, primarily as a result of increased support for the ongoing Phase II clinical trial in hematologic malignancies and increased pre-clinical development costs. General and administrative spending in the third quarter was approximately $1.2 million and flat compared to third quarter of 2016. Our net loss in the third quarter of 2017 was approximately $3.5 million, or $0.26 per common share, as compared to a loss of approximately $2.3 million or $0.43 per share in the third quarter of 2016. The results included non-cash stock-based compensation charges of approximately $176,000 in the third quarter of 2017, and approximately $174,000 for the third quarter of 2016. Turning to the balance sheet, total cash and cash equivalents as of the third quarter ended September 30 were approximately $5.7 million versus approximately $11.4 million at year end 2016. As Jim mentioned, on October 12 we raised approximately $7 million, net of offering expenses in public and private offerings of 1.954,838 shares of common stock and 41.0412949 shares of preferred stock which is immediately convertible into 2,190,330 shares of common stock. In addition, through private placement we issued 3,108,538 warrants that are immediately exercisable at $1.78. The resale S-1 that was filed yesterday afternoon is for the shares issuable upon exercise of these warrants. The warrants have a 7-year term, and of all warrants issued in the private placement or exercise, additional net proceeds were totaled approximately $5.5 million. We believe our September 30 cash balance of approximately $5.7 million and the approximately $7 million in net proceeds from the October financing are adequate to fund operations for the next 12 months from today. And now, I'll turn the call back over to Jim.

Thank you, John. As you know, we recently completed the fourth Cohort of our Phase I dose escalation trial of CLR131 for the treatment of relapse refractory multiple myeloma, and have initiated our NCI supportive Phase II trial as well. John Friend, will now provide us with an update on those clinical programs.

Thank you, Jim. Good morning, everyone. We continue to be quite pleased with the performance of our lead PDC compounds, CLR131, and our Phase I open label dose escalation study in relapsed, refractory multiple myeloma patients. As you recall, the primary objective of the study is to determine the safety and tolerability of CLR131. We continue to observe clear signals of both safety and efficacy in all four Cohorts to-date. Off note, we recently completed the fourth cohort of the study in which one of the three valuable patients experienced a partial response to treatment. The enrolled Cohort 4 patients were heavily pre-treated relapsed, refractory multiple myeloma with greater than five prior line abbreviation or chemotherapy and had a high degree of tumor burden upon entering into the trial. Each patient in the cohort received a single 31.25 millicurie per meter squared dose of CLR131 as a 30-minute infusion and was evaluated over the course of 85 days for safety and efficacy. All three patients in the cohort experienced a measure of clinical benefit with two patients achieving stable disease and one patient achieving a partial response. One of the patients experiencing stable disease attained a 44% reduction in m-protein. The patient experiencing a partial response had an 82% reduction in pre-light chain, the appropriate biomarker as this patient did not produce m-protein. This patient had received seven prior lines of treatment, including radiation, stem-cell transplantation, and multiple combination treatments including one with tumor mab [ph] that was not tolerated. We are still collecting survival data on the patients from all four cohorts, these data are provided with batches that the patients are seeing in their respective cancer care clinic every two to four months. As we reported earlier this week, following the single infusion of 12.5 millicurie per meter squared, patients in this first cohort had achieved an impressive median overall survival of 26.2 months. While patients from the second and third cohorts who received 18.75 millicurie per meter squared and 25 millicurie per meter squared doses have experienced median overall survival of 15.4 months and 10 months respectively. Please remember that this trial remains ongoing and median overall survival may continue to increase overtime. While we will provide an update as soon as additional data is made available, it is worthwhile to note that while no head-to-head studies have been conducted to date with CLR131 for comparison purposes, the median overall survival benefit seemed with three most recently FDA approved third-line therapies for multiple myeloma ranges from 11.9 to 18.6 months in separate trials. As of the data update, we have now exceeded the median overall survival with a single dose from cohort 1 by more than 40%, meet those benchmarks with cohort 2 and are closing in on the range with cohort 3. In addition, given the favorable outcome of the 31.25 millicurie per meter squared dose in the fourth cohort, we recently announced the design of a fifth cohort from the study. In this cohort we will alter the study protocol and split the 31.25 millicurie per meter squared dose into two 30-minute infusions of 15.625 millicurie per meter squared doses given one week apart. Moving into a multiple or VP dose regiment is extremely exciting considering our preclinical results observed to-date. We have tested repeat doses of CLR131 in various solid tumor xenograph mouse models including pancreatic and murine [ph] cancer cell lines, and each time have demonstrated clear efficacy signals, concluding overall survival increase and/or reductions in tumor volume compared to a single dose of CLR131. We have been working with our lead investigators to initiate this new aspect of the protocol and anticipate enrollment shortly. With regard to our MCI supported Phase II study of CLR131 in multiple myeloma and other hematologic malignancies, it is active and enrolling. It is being conducted at top cancer centers across the United States for patients with a variety of orphan designated relapse or refractory hematologic cancers. The study's primary endpoint is clinical benefit rate with additional informative secondary endpoints of overall response rate, progression-free survival, median overall survival and other markers of efficacy. All patients will receive a single dose of 25.0 millicurie per meter squared dose of CLR131 with an optional second dose of 25 millicurie per meter squared that can be infused approximately 75 to 180 days later. The hematologic cancers studied in the trial include multiple myeloma, chronic lymphocytic leukemia, small lymphocytic lymphoma, lymphoplasmacytic lymphoma, marginal zone lymphoma, mantle cell lymphoma, and potentially diffuse large B-cell lymphoma. In addition to the CLR131 infusion, multiple myeloma patients will receive 40 milligram oral dexamethasone weekly for upto 12 weeks. Efficacy responses will be determined by the latest International Multiple Myeloma Working Group criteria, and efficacy for all lymphoma patients will be determined according to the Lugano criteria. We look forward to providing updates on both of these trials as they become available. I would also like to provide you with an update regarding the work being performed by the University of Wisconsin, Madison. As you know, they received an exclusive National Cancer Institute specialized program of research excellence or support grant, it's an improved treatments and outcomes for head and neck cancer patients. Dr. Paul Harare [ph], Chair of Human Oncology and Project Leader, and his colleagues have made tremendous progress over the past 14 months and are currently working on the design of a Phase I clinical study to evaluate the safety and tolerability of CLR131 in combination with external beam radiation in recurrent head and neck cancer patients. Over 300,000 people in the United States are living with oral cavity oropharynx cancer and over 80,000 with larynx cancer. And majority of head and neck cancer patients will experience recurrence following their initial therapy. Radiation must be considered with great caution due to the risk of severe injury to normal tissue structures that maintain long recall from the prior radiation exposure. Several studies have examined the role of radiation in head and neck cancer. However, there is considerable risk for high grade toxicities including death. On October 28, 2017 additionally preclinical data was presented at the International Conference on Molecular Targets in Cancer Therapeutics as pre-treatment with one of our PDC molecules, CLR127 prior to external beam radiation, both enhances the radiation effects, as well as inhibit DNA repair mechanism across numerous adult and pediatric tumors. We will continue to provide updates as more data becomes available and as the University of Wisconsin team closes in on launching the first head and neck cancer study utilizing CLR131 and external beam radiation. With that, it's my pleasure to turn the call over to Jim.

Thank you for the summary of our progress with CLR131 John. We remain very pleased with our programmed momentum and look forward to sharing future updates. At this time, I'd like to turn the call over to Jarrod Longcor, Cellectar's Chief Business Officer, to discuss select preclinical programs, as well as our collaboration efforts with Pierre Fabre, Avicenna Oncology and Onconova Therapeutics.

Thank you, Jim. As was mentioned previously, based upon the results that we have seen to-date with PDC platform, and its ability to target cancer cells and deliver various payloads to tumors, we've expanded our pipeline to include two proprietary PDC programs. The first of these PDC programs is CLR 1700 Series is focused on hematologic cancers. And the second, CLR 1900 Series is focused on solid tumors. During this quarter we were able to demonstrate that the phospholipid ether delivery vehicle was able to reproducibly providing meaningful increase in the therapeutic index of the chemotherapeutic payload as compared with the chemotherapeutic parent molecule overall [ph], in invitro studies. Our research shows that even though we have changed the payloads, we continue to see between a 6-fold and 30-fold increase in the uptake of the PDCs into the various tumor cell lines. Upon uptake of the PDC and release of the payload into the cytoplasm of the tumor cells, the molecules become active and kill the tumor cells invitro, while at the same time we do not see a similar effect occurring in healthy cells. We continue to progress both, our internal programs and our partnered PDC programs into animal models with the global entrant in clinical trials as rapidly as possible. I would now like to discuss our collaborations and our collaboration strategy. Our collaborations are designed to provide long-term bank generation for Cellectar and its shareholders; that value will be captured either in the form of upfronts, milestones and royalties, and/or by defraying our cost of research through research and development reimbursements and/or in providing the Company with access to interesting therapeutic molecules or payloads that we believe can be improved by becoming a PDC molecule, and which we have the rights to continue development of the new PDC molecule. Pierre Fabre, Avicenna Oncology, and our most recently announced collaboration with Onconova Therapeutics, each provide these types of strategic benefits. Avicenna provides us with the unique opportunity to collaborate with experts in the antibody drug conjugate or ADC field; not only does this provide the opportunity to work with a very promising small molecule payload but it also allows us to produce data to further differentiate our PDCs from ADCs in a head-to-head comparison rather than via a retrospective analysis of ADC data. We expect to be able to start reporting data from this collaboration next year. Similarly, our collaboration with Onconova provides us with access to multiple interesting proprietary molecules with the Onconova's early stage product pipeline. As with our other collaborations, we'll perform the conjugation of the molecules for a phospholipid ether delivery vehicle perform the early preclinical assessments to our efficient and rapid screening process. Onconova will be responsible for supplying with payloads to Cellectar which will include molecules that target eukaryotic initiation factor-4α or EIF-4α [ph]. Again, this collaboration provides us with access to proprietary small molecules that target intracellular pathways that might be enhanced with the ability to target the delivery specifically to the cytosol of the tumor cells. Finally, our collaboration with Pierre Fabre continues to make significant progress. We have successfully conjugated several molecules and progressed them through our rapid and iterative screening process. Based upon the results seeing to-date, we've identified several lead molecules that have been optimized and are now slated for initial invivo analysis. Given our progress with these molecules and both, Pierre Fabre and Cellectar's mutual desire to advance, we recently announced an expansion of our original collaboration agreement with them. The expansion provides us with the opportunity to further test and advance [ph] some of these molecules prior to entering the next phase of development within our collaboration. Additionally, during the preceding quarter, we completed a handful of invivo experiments evaluating COL131 in various solid and liquid tumors including multiple myeloma, myeloid leukemia, ovarian prostate bladder and lung cancer, as well as glioma. CLR131 has shown excellent activity in each of these models as a single agent. We also had exploited the use of multiple doses in several of these tumor types, here again, we have seen that CLR131 when given in multiple doses and/or fractionated doses of 2 or 3 provides excellent single agent affect with statistically significant improvement in efficacy over the single dose including more than doubling of survival in the several solid tumor models. We expect to have further updates on all of these programs in the weeks and months to come. Finally, in late October our academic collaborators from the University of Wisconsin, Madison, presented a poster at a medical conference demonstrating that our phospholipid ether delivery vehicle conjugated to a non-radioactive iodine, known as I-127 or CLR127 decreased tumor volumes in markedly delayed tumor regrowth when given in combination with external radiation in an invitro and invivo animal models of both, pediatric and adult cancers. Additionally, the effect of the radiation is significantly increased and persist at higher levels for upto 24 hours post-administration of the external radiation. Investigators observe that CLR127 was taken up and retained in the tumor cells at a 6 to 10-fold higher level than normal tissue, and sensitized those tumor cells to external radiation. This sensitization appears to be the result of the phospholipid ether molecule inhibiting the normal double-stranded DNA repair mechanisms within the tumor cell. We will keep you updated with regard to any plans we have or pursuing this approach as appropriate. I'd now like to return the call to Jim.

Thank you, Jarrod. As always, we look forward to announcing additional Company milestones and events as they occur, including results from our CLR131 program, as well as our early stage programs and collaboration efforts. In the meantime, I'd like to thank you very much for your participation on this call and your continued interest in Cellectar. I would also like to take this opportunity to thank our employees for their hard work and continued dedication to moving these programs forward. At this time, John Hamill, Jarrod Longcor, and John Friend, and I welcome any questions that you may have.

[Operator Instructions] Our first question comes from the line of Wangzhi Li with Ladenburg. Your line is open.

Good morning. Thanks for taking my question. The first question is, it's about the -- so the cohort 1, 2, 3 just [indiscernible] updates, especially the cohort 1 already exceeds 26 months; I mean that's 8 months more than what expects from that tumor map. Just wondering, maybe you can give more color into what you expect for your drug dose regimen because of the single infusion or the since two -- it's your pretty good benefit so far, right, for quarter one especially. Do I know you're exploring the two dose regiment, I understand that there is a preclinical result distributing benefit for two dose, but I mean just what's your expectation you hope to achieve from the drug dose?

Terrific. Well, first of all, thank you for the question Wangzhi, thank you for your participation in the call today. Obviously, Company is very pleased with the data we've seen to-date with median overall survival, not only in cohort 1 where we currently sit at north of 26 months; but also the preceding or subsequent cohort 2 or 3 already rivaling chemotherapy and other simply introduced compounds. I think the drug dose is also really exciting for the Company and I'll have Dr. John Friend further address and give additional color to both of those questions.

Thanks Wangzhi, that's -- it is a great question and definitely, somewhat forward-looking of course that we can't really predict in terms of the survival what we expect out of the multi-dose. As you mentioned, seeing the survival cohorts 1, 2 and 3 was very encouraging; extremely encouraging actually. By splitting the dose to 31.25 we're taking a dose that in cohort 4 that actually we did see a very nice partial response in some – obviously, all patients have some sort of clinical benefit and splitting that in half over 7 days considering the preclinical results in multiple tumor models that we've seen in both, invitro and invivo as you heard Jarrod Longcor give some flavor to. We would hope to at least see some continued benefits in terms of safe profile, we've already demonstrated some very nice safety with all four cohorts to-date but we could potentially see some additional safety benefits. And in terms of efficacy, I have to say time will tell whether those preclinical results then translate into the clinic. So stay tuned.

Thank you, John. The only color I will provide there is that, in that cohort 5 Wangzhi, these single doses to split those to 31.25 millicurie per meter squared will be split into two 15.6 millicurie per meter squared doses and they will be one week apart. Additionally, I think it's also important for us to note our Phase II trial for multiple myeloma and other hematologic malignancies; we're introducing that second dose in that Phase II [ph] and beyond area. And if you recall our data from many of these patients the response to the single dose is extended and often times, remains below their baseline m-protein or FLC surrogate markers beyond those 85 days. So we're also excited to report on data from our Phase II with that second dose occurring two, three, four months beyond the initial dose as well; to see if we can continue to extend disease control and potentially with that second dose, further reduce these brigade efficacy markers of FLC and m-protein further beyond the baseline at the -- at time of the initial dose.

Great, that's very helpful, thank you. Maybe another question, as Jarrod mentioned that you have multiple collaborations ongoing, maybe remind us the timeline of what we expect from updates from the collaboration that what do you expect or what you hope to achieve from those three collaborations?

Terrific. Before I turn this question over to Jarrod, I will tell you this. We're very excited about the manner in which we're advancing our collaboration model, the team executed in a very effective manner; I mean in terms of all of our key collaboration objectives. And I will turn this over to Jarrod to provide additional color, he and his team are leading our efforts in this area and I think he can provide additional insights.

Thanks, Jim and thank you, Wangzhi for the question, it is an important question. So when it comes to timeline, obviously what I'd say is there are each of the programs, there are each of the collaborations historical on their own timeline at this juncture just because of when they were constructed. Obviously, we've been in a collaboration with Pierre Fabre the longest, and we just made -- what I think was a pretty significant announcement about the extension or expansion of our collaboration with them. As we look to go forward, the outputs from that obviously will be sort of driven by -- as I mentioned, we are in the process right now, we've optimized the handful of lead molecules and we are looking to down select those into one or two candidates perhaps with a backup or two along with that just so that we have the diversity of molecules that we want and can get the optimal program moved forward and into the clinic. So that sort of -- I haven't really answered the timeline portion of that but that lays out sort of the outputs that we're becoming from that and we expect to execute against that extremely rapidly here in the near-term. With regard to our collaboration with Avicenna, you know, that had -- that and the Onconova occurred earlier this quarter or last quarter; and so those are sort of just getting kicked off and getting up in operational at this point in time. That said, based on our understandings and learning's both from each of those collaborators and what we've learned as we've optimized the program with Pierre Fabre, we expect those programs to move quickly and to be able to give significant readouts in the course of time over the next year or two. Again, sort of those outputs will be to move those programs as rapidly as possible from where we are which is going to start with just achieving or conjugating the molecules with a desired linkers, and then executing and screening those as rapidly as possible through our screening [indiscernible], and then moving -- again, moving forward with the candidate molecule. And obviously, it's probably important to reiterate the strategic nature of these in the sense of whether it'd be the comparative data adverses and antibody drug conjugate within exactly like molecule as we're doing with the ADC collaboration or the Avicenna collaboration and/or we getting access to very interesting molecules that are targeting an interesting target with inside tumor cells as in the Onconova program. And obviously, in all of these there is a component that will -- could potentially leave or does lead to revenue generation, eventually.

Jarrod, thank you very much for that overview, and also for taking the time to compare and contrast to a certain extent potential benefits that our PDC delivery platform will have or we believe has relative to antibody drug conjugates and how it will lever the Avicenna oncology collaboration to provide that data, same tumor type, same payload; and so we think that will be as opposed to retrospectively looking at data, having that head-to-head or side-by-side with the antibody drug conjugate delivery platform, it's going to be very instructive for us. I will also say and summarize, when you think about our collaboration model to further summarize the three major takeaways as Jarrod alluded to; if the collaboration model allows us to gain access to very interesting proprietary compounds, it allows us in a very rapid manner to expand and diversify our pipeline, and also most importantly, accelerate drug development while offsetting the associated R&D cost.

Okay, that's helpful. Thanks for taking my questions.

Terrific. Thank you for your participation Wangzhi.

And I'm showing no further questions. I would now like to turn the call back to Jim Caruso, CEO; for any further remarks.

Terrific. Well, thank you Brian. Thank you to all of our participants. Wangzhi, we appreciate your coverage of the Company, as well as your participation in the call as well today. We look forward to providing additional updates as they occur, and we are very pleased with our Q3 results as we continue to build the Company and advance all of our primary strategic objectives in a timely fashion. Thank you.

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