TG Therapeutics, Inc. (TGTX) Q2 2015 Earnings Report, Transcript and Summary

Greetings, and welcome to the TG Therapeutics' Second Quarter 2015 Financial Results and Business Update Conference Call. At this time all participants are in a listen-only-mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jenna Bosco, Director of Investor Relations. Thank you, you may begin.

Thank you. Good morning and welcome to our conference call regarding TG Therapeutics second quarter 2015 financial results and business update. I am Jenna Bosco, TG's Director of Investor Relations and I welcome you to our conference call today. Following our Safe Harbor statement, Sean Power, TG’s Chief Financial Officer, will provide a brief overview of our financial results and then turn the call over to Michael Weiss, the company’s Executive Chairman and Interim Chief Executive Officer, who will provide an update on the ongoing development of our novel glycoengineered anti-CD20 monoclonal antibody, TG-1101, and our novel once-daily PI3K delta inhibitor, TGR-1202, as well as a review of our preclinical program. Before we begin I would like to remind everyone that various remarks that we make about our future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. TG cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated. Factors that may affect TG Therapeutics’ operations include various risk factors and uncertainties that can be found in our SEC filings. This conference call is being recorded for audio rebroadcast on TG’s website, www.tgtherapeutics.com, where it will be available for the next 30 days. All participants on this call will be on a listen-only mode. Now, I would like to turn the call over to Sean Power,

Thank you, Jenna. And thanks, everyone for joining us. As you may be aware, our financial results were released this morning and can be viewed on the Investors and Media section of our website at www.tgtherapeutics.com. I’d like to begin by providing an update on our cash position. At June 30, 2015, we had cash, cash equivalents, investment securities and interest receivable of $110.6 million, as compared to $78.9 million at December 31, 2014. Included in our June 30th cash balance is approximately $51.2 million of net proceeds from the utilization of our aftermarket or ATM sales facility during 2015, $42 million of which had been discussed on our fourth quarter conference call. During the third quarter we continued to opportunistically utilize the ATM facility raising an additional $15.8 million in net proceeds at an average price of $18.38, providing us with a June 30, 2015 pro forma cash position of more than $126 million. As of today we have approximately 52.5 million shares outstanding. Turning to the financial results for the quarter; our consolidated net loss for the second quarter ended June 30, 2015, excluding non-cash items, was approximately $10.9 million which included approximately $4.8 million of manufacturing and CMC expenses in preparation for Phase 3 clinical trials and commercialization. The consolidated net loss for the second quarter ended June 30, 2015, inclusive of non-cash items, was $17.1 million or $0.38 per diluted share, compared to a consolidated net loss of $12 million during the comparable quarter in 2014, representing an increase in consolidated net loss of $5.1 million. The increase in consolidated net loss during the second quarter was primarily the result of other research and development expenses for TG-1101 and TGR-1202, increasing approximately $5.8 million and $1.3 million respectively over the comparable period in 2014. The increase in other research and development expenses related to TG-1101 was primarily the result of increased manufacturing and clinical trial expenses related to ongoing and planned future Phase 3 registration programs. Our consolidated net loss for the six months ended June 30, 2015, excluding non-cash items was approximately $20.1 million, which included $9.1 million of manufacturing and CMC expenses in preparation for Phase 3 clinical trials and commercialization. The consolidated net loss for the six months ended June 30, 2015, inclusive of non-cash items was $31.7 million or $0.73 per diluted share compared to a consolidated net loss of $19.5 million during the comparable period in 2014, representing an increase in consolidated net loss of $12.2 million. The increase in consolidated net loss during the six months ended June 30, 2015 was primarily the result of other research and development expenses for TG-1101 and TGR-1202 increasing approximately $9.8 million and $2.5 million respectively over the comparable period in 2014. As stated for the three months period the increase in other research and development expenses related to TG-1101 was primarily the result of increased manufacturing and clinical trial expenses related to ongoing and planned future Phase 3 registration programs. I will now turn the call over to Mike Weiss, our Executive Chairman and Interim CEO.

Thank you, Sean, and thank you Jenna and thanks to all of you for joining us on this call today. The second quarter of 2015 has been an action packed few months with updated data from all of our key Phase 1 and 2 clinical trials having been presented at several major medical conferences, including five oral presentations and four poster sessions. The data presented continues to fuel our excitement and reinforces our belief that the safety and efficacy profiles of TG-1101 and TGR-1202 are well suited to form a backbone for multi-drug combinations. Accordingly we remained focused on commencing before year-end one or more Phase 3 registration trials for our proprietary combination of TG-1101 and TGR-1202, what we refer to as 1303. Additionally we are focused on continuing to broaden our clinical development program to include additional triple therapy combination trials, launching our first trial in autoimmune diseases as well as continuing to evaluate opportunities to enhance our product pipeline to enable further proprietary combinations. Well that as a quick overview of the quarter and our goals for the remainder of the year let me do a quick update on our ongoing GENUINE Phase 3 trial. During the quarter we were excited to announce that we now have over 120 sites open to enrollment into this Phase 3 clinical trial. Driving enrollment into our GENUINE trial is our top priority and to already have so many sites on board is an incredible accomplishment. From the design standpoint the GENUINE Phase 3 study is a randomized trial where patients will receive either 1101 in combination with ibrutinib or ibrutinib alone. The population for this study is patients with high risk chronic lymphocytic leukemia or CLL, while the primary endpoint of the study is progression free survival. Approximately the first few 100 patients of an expected total enrollment of approximately 330 patients will be assessed for overall response rate or ORR. If the ORR assessment is positive, as per our session protocol assessment or SPA, the company plans to use the overall response data as a basis for submission for accelerated approval for 1101. All patients will then be followed for PFS assessment, which is designed to support full approval. As mentioned in the past we hope to complete enrollment into the study and evaluate the overall response endpoint by the end of 2016. The study is supported by what we believe is very compelling data demonstrating the safety and activity of this regimen. Updated results from the Phase 2 study of the 1101 plus ibrutinib in patients with CLL were presented in an oral presentation at the International Conference on Malignant Lymphoma, held in Lugano, Switzerland. Highlights from that presentation include adverse events overall were manageable with limited grade 3, 4 events observed and only 7% of CLL patients discontinuing from study due to an adverse event, none believe to be related to 1101. 88% overall response observed in the 40 CLL patients evaluated for response, for the iwCLL Hallek 2008 criteria and with an additional four patients or 10% achieving no reductions without disease progression. Interestingly, in the 20 high-risk CLL patients evaluated for response the overall response rate was 95% with 25% of the patients exhibiting minimal residual disease and or confirmed or unconfirmed complete response. We call it disciplined study population for the GENUINE Phase 3 trial. We believe 1101 plus ibrutinib if approved will be a very attractive treatment option for patients with relapsed/refractory CLL, especially in those patients with high risk of [indiscernible] where chemotherapy has proven to have little effect. We believe the robust Phase 2 data is highly supportive of a successful outcome in the GENUINE Phase 3 study and then a successful outcome with support approval of the combination under our SPA. We look forward to presenting data from this trial before the end of next year. With that I’d like to present some highlights from the other data presented at a major medical conference in this quarter. For single agent 1202, some of the key findings were that 1202 continues to be well tolerated in the patients now on study for upwards of two plus years. Of the 16 evaluable CLL patients treated at the higher doses of single agent 1202, 88% or 14 of 16 patients achieved a novel PR with 63%, 10 of 16 patients achieving a partial response for the Hallek criteria. In patients with Non-Hodgkin's lymphoma or NHL, 83% of the patients with follicular lymphoma had a reduction of disease burden and 50%, three of six patients treated at higher doses of 1202 achieved partial response. Similar to other BCR antagonists late onset responses and evolving responses have been common especially in CLL and follicular lymphoma. Enrollment into our single agent TGR-1202 study continues and expansion cohorts for CLL, NHL and Hodgkin's lymphoma. And for 1303 some of the key findings presented this quarter were that the combination continued to be well tolerated in the 55 patients evaluable for safety with 18 patients or about a third of patients on the combination for six plus months. A significant dose response difference was seen between the lower doses and higher dose levels. At the higher doses tested 83% of the CLL-SOL patients achieved a partial response for the Hallek criteria, 64 of the patients with follicular and marginal zone lymphoma responded, including two complete responses, and 50% of the patients with diffused large B-cell and Richter's responded, including two complete responses. As seen with 1201 as a single agent responses to the combination have shown to improve overtime. Finally let me highlight the findings for our first chemo-free triple therapy trial of the combination of 1101, 1202 and ibrutinib, which was presented in an oral presentation at ASCO by Dr. Nathan Fowler of the MD Anderson Cancer Center. The key findings in that study were that the triple therapy combination was generally well tolerated and adverse events were manageable, with grade three and four events occurring in only 6% of the patients and no patients discontinued due to an adverse event. On the FXG [ph] side, all four patients with CLL-SOL achieved a response as per the Hallek criteria and three of four of the patients with heavily pretreated Follicular or Marginal zone responded to triple therapy including a follicular patient that was on ibrutinib and rituximab refractory remains on study over 9.5 months. All responses to triple therapy were rapid and profound. The 76% median reduction in disease bearing at the first efficacy assessment and with all patients who had subsequent efficacy assessments achieving a deeper response with a median 92% reduction. All of these studies continued to enroll and I look forward to providing updated data at future conferences. This wraps up just a brief summary and highlights of the substantial data presented in the second quarter, and I encourage anyone interested in the company to review the full data presentations which are available on our website where we have all posters and presentations available for download. Overall, we are very pleased, encouraged and excited by the activity and safety profile of our drugs, both in combination with each other as well in combination with ibrutinib. Given the safety, tolerability and broad section of activity across CLL and NHL, we believe our proprietary 1303 combination could represent an ideal backbone for future combination therapies and are looking forward to broadening our clinical program and explaining other triple therapies. As we've said from the beginning, as a company, our goal is to provide best-in-class multiple drug combination regimens. To achieve this goal we need a well-tolerated and efficacious backbone to build upon. We believe 1303 represents that. With that let me quickly remind everyone of our goals and objectives for 2015. First and fore most we will aggressively recruit into the GENUINE Phase III clinical trial of 1101 in combination with ibrutinib, which now has over 120 sites onboard with the goal of total completing enrollment and analyzing the overall response assessment in the second half of next year. Beyond the GENUINE Phase III trial we are targeting and launching additional combination Phase 3 trails including one or more for our proprietary 1303 combination of 1101 plus TGR-1202 across CLL and NHL. And building for the future, an additional registration trail down the road we planned to expand our overall development program with the launch of new triple combination trails. Notably we announced at ASCO that we're planning a new study with the University of Pennsylvania lead by Dr. Anthony Mato to explore the triple combination of 1101 plus 1202 plus a PD-1 inhibitor which we are excited to commence imminently. Longer term with an eye to our development of our proprietary triple and quad therapies and we will continue to push forward our preclinical pipelines, including the IRAK4 anti-PD-L1 and anti-GITR development process and opportunistically seek to identify drug candidates with complementary mechanisms of action. In the second half of the year we plan to expand into auto-immune diseases. This is an area of great interest to us but one area that we have spent little time discussing with investors. I believe later this year and into next year investors will become more aware of the role of B-cells in auto-immune diseases especially multiple sclerosis and that 1101 and possibly 1202 can play an important role in treating MS. And finally we look forward to providing another full data update on each of our key Phase 1 and 2 clinical trials at the American Society of Hematology Annual Conference held in Orland, Florida this coming December. Let me now turn the call back over to the conference operator to begin the Q&A session following which I will return to make some concluding remarks.

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions]. Our first question is coming from the line of Joe Pantginis with ROTH Capital Partners. Please proceed with your question.

Hey guys good morning. Thanks for taking the question. Michael you have been pretty consistent with regard to your data presentations and the what appears to be the differentiated safety profile, but there even at your KOL [ph] events at ASCO and subsequent to that there still seems to be some underlying trepidation by some of the investment community. So I guess is there anything you can -- about the potential for emerging AE even though you are seeing any colitis and liver tox to-date. Subsequent to ASCO and EHA can you add anything further with regard to the safety profile?

Thanks Joe. Yeah I don’t know that I could really add too much we haven’t been to data updates after the big events. But I think the drugs we presented at the event a pretty good overview of the toxicity profile seen to-date. We have plenty of patients on I think we generally believe that the drug, if it has any signs of liver toxicity is very low. We saw the incidents in the low single-digit percentage in that presentation. Again we’ve never said we won’t ever see colitis but again given the numbers we are seeing, that number will also be quite low relative to the other. So again I think as we add more data overtime, again we’ve never said we were going to devoid of colitis we are not devoid completely of liver tox but it’s just a totally different toxicity profile. And again some of the tox of some of these other drugs maybe again just a function of partially mechanism, partially the toxicity of backbone, possibly a combination of the two and again we believe that we are on a different platform, a different backbone provides a different toxicity profile and I guess I think we’ve presented plenty of patients to get comfort that it’s different. We think reasonably dramatically different.

No, that’s very helpful, thank you. And then maybe just two other quick questions, while one housekeeping question one maybe a little philosophical, one for Sean, can you just comment on how much is left on your existing ATM and then the somewhat philosophical question is when you are looking at these triple combos obviously over the last several medical conferences there has been increasing push back with regard to the drug cost today. So if you are going to be putting together the potential for three different drugs with 1101 and 1202 as part of that do you have any comments to -- forward-looking comments with regard to potential pricing and types of pressures you might or might not experience based on having these multiple drugs as a regiment? Thanks.

Hi, Joe this is Sean. I will start and then hand it over to Mike for the second question. So we have about $7 million remaining under the ATM as of today.

So I will hit on the second point Joe, so in terms of pricing and obviously as you start to think about two and three drugs, I think everyone is acutely aware of the concern that the drug cost will get out of control if you were to pay for all two drugs, right alone three drugs it could upwards the cost of what $200,000 to $300,000. Clearly we believe and part of the reason why we are doing all of this to make sure we have as many pieces in house as possible is we believe that, that’s not practical so in fact access to the patients will be limited by cost, if you had to pay of each of these drugs individually. Our plan has been and continues to be and to be able to come up with a package pricing for the treatment option that we are providing to the patients and we believe that would be highly competitive in a way that it would be very challenging for other companies to come along and add two, three maybe even four pieces and try to compete with us on price. I think we’ll be the lowest cost provider for treatment option that includes multiple drugs.

Very helpful, guys. Thanks a lot.

Thank you Joe.

Thank you. [Operator Instructions]. Our next question is coming from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your question. Mr. Kaplan your line is live you may proceed with your questions.

Hello, can you hear me?

Hi Matt. I can hear you.

Great, perfect. Congrats on the progress during the quarter. Looking forward in terms of the launch of additional Phase 3 studies. Could you give us a little bit of color what you’re thinking at this point in terms of the 1303 combination studies?

So as you know we have not provided too much color other than to say that we’re excited to move 1303 forward across CLL and NHL. We’ve also guided that more likely than not, that a 1303 registration trial in CLL would be first and then we’ll work our way into Non-Hodgkin's lymphoma, both with diffuse large B-cell. So I think if all goes the way we hope the first announcement would be for a CLL trial and then we’ll start layering in additional 1303 studies and possibly we might sneak in some other studies too, just to make it clear.

Okay, sounds good and then one of the things that I’ve consistently heard, as Joe commented on is the tolerability profile, so far especially from KOL, that’s been encouraging. And with the launch of I guess additional triple combination studies where do you think you can take this in terms of the doublet and then going to additional triple combination studies based on the tolerability profile?

Yeah, so what we’ve seen to-date with 1303 it definitely gives us comfort that we can layer in most other third drugs. And when you think about the profile with ibrutinib, there’s no question that another drug can be layered on top of that. So I think what we know today comfortably is that 1303, there’s room for another drug on top of that. We know that if that drug happens to be ibrutinib or maybe another PK inhibitor that’s tolerable in a similar fashion, that easily a fourth drug can be layered on top of that, and again it will depend on what work and the third and fourth drug tolerability profile looks like, but I do feel very comfortable that. 1303 can easily get another drug on top -- almost any third drug should go on top pretty easily. And then the question is what’s the fourth drug potentially that goes on top of that and like you said if we use ibrutinib as the third drug or BTK inhibitor with a similar safety toxicity profile then of course fourth should be quite simple as well, quite achievable.

Okay, great and just to shift gears a little bit in your prepared remarks you started to talk autoimmune disease indications, potentially initiating clinical development later this year. What are you thinking initially, is it monotherapy or is that combination therapy in autoimmune diseases?

I would say we’re going to start as a single agent with 1101. I think that’s the most prudent path. But I think pretty early on we will try to explore a potential to combine the two drugs and see how that may change the activity profile. But I think the base case, the simplest base case is 1101 what’s -- we’re talking, did talk about MS, let’s talk about MS a little bit more, so 1101 in MS, you’ve got Ocre, that’s going to present some data and that comes in the next few months. Again we think that’s going to be, at least the way Roche is talking about, it could be game changing in what they believe will be the care of patients with MS. We think we can be a reasonably fast follower to them. So obviously it’s a huge market opportunity. So we think we have a very competitive simple approach to be a fast follower to Ocre up in MS. And then we’ll start to get fancier when we start to layer in 1202 and see how that works. But I think the base case is just very simply be the fast follower on to Ocre in what could be this pitch by Roche, could be a game changing way to treat these patients by a basically attacking the B-cells.

Great well look forward to more announcements from the autoimmune phase and also your presentations at ASH, so thanks. Mike.

Thanks, Matt, appreciate it.

Thank you. It appears there are no additional questions at this time. So I’d like to turn the floor back over to Mr. Weiss for any additional concluding comments.

Great, thank you. So to conclude let me just say that I couldn’t be more proud of progress made by the team in the first half of this year and we’re all looking forward to achieving our key objectives in the second half. Our mission remains the same as always. We want to bring highly active, well tolerated combination treatment options to patients who need them most. We feel confident from a financial perspective of a $125 million in cash on a pro forma basis we’re well positioned to achieve our goals. On behalf of all of us at TG Therapeutics I’d like to thank our investigators and our patients as well as our shareholders and investors for their continued support. Thanks again for joining us on the call today. Have a great day.

Ladies and gentlemen this does conclude today’s teleconference. Again we thank you for your participation and you may disconnect your lines at this time.