TG Therapeutics, Inc. (TGTX) Q2 2013 Earnings Report, Transcript and Summary

Greetings. And welcome to the TG Therapeutics Second Quarter 2013 Earnings Call. At this time, all participants are in a listen-only mode. A brief 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, 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 2013 financial results and business update. I’m Jenna Bosco, TG’s Director of Investor Relations and I welcome you to our conference call today. Following our Safe Harbor statements, 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 glycoengineered anti-CD20 monoclonal antibody, TG-1101 and our novel PI3K delta inhibitor TGR-1202. 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 the purposes of the safe harbor provision, 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 results to differ materially from those indicated. Factors that may affect TG Therapeutics operations will include various risk factors and uncertainties that can be found in our SEC filings. This conference call will -- is being recorded for audio rebroadcast on TG’s website www.tgtherapuetics.com, where it will be available for the next 30 days. All participants on this call will be on listen-only mode. Now, I would like to turn the call over to Sean Power, our Chief Financial Officer, to briefly discuss the financial results for the second quarter of 2013, as well as the company’s overall financial condition.

Thank you, Jenna, and thanks everyone for joining us. As you maybe aware, our financial results were released yesterday evening and can be viewed on the Investors and Media section of our website at www.tgtherapeutics.com. As of June 30, 2013, the company had cash and cash equivalents of $13.4 million, as compared to $16.5 million at December 31, 2012. Subsequent to June 30th, the company completed an underwritten public offering of our common stock, which provided proceeds for the company of approximately $37.4 million, net of underwriting discounts and offering expenses. Including the net proceeds from the offering, as of June 30, 2013, on a pro forma basis, the company had cash and cash equivalents of approximately $50.8 million. Following the offering the company will continue to operate with a very well controlled burn rate and we expect that our current cash will be sufficient for approximately 30 to 36 months. Now turning to the financial results for the quarter. Consolidated net loss for the second quarter ended June 30, 2013 was $6.6 million or $0.29 per diluted share, compared to a consolidated net loss of $2.6 million during the comparable quarter in 2012, representing an increase in consolidated net loss of $4 million. Consolidated net loss for the second quarter ended June 30, 2013, included an increase in other research and development expenses of $3.1 million, principally related to the TG-1101 and TGR-1202 clinical development programs. Consolidated net loss for the second quarter ended June 30, 2013 also included $1.4 million of non-cash compensation expense related to equity incentive grants. Consolidated net loss for the six months ended June 30, 2013 was $10.3 million or $0.46 per diluted share, compared to a consolidated net loss of $20 million during the comparable quarter in 2012, representing a decrease in consolidated net loss of $9.7 million. Included in the consolidated net loss for the six months ended June 30, 2012 was $16.6 million in non-cash stock expense recorded in conjunction with the license for TG-1101, which was partially offset in the six months ended June 30, 2013 by an increase in other research and development expenses of $4.2 million, principally related to the TG-1101 and TGR-1202 clinical development programs. Consolidated net loss for the six months ended June 30, 2013 also included $3.3 million of non-cash compensation expense related to equity incentive grants. With that, I will now turn the call over to Michael Weiss, our Executive Chairman and Interim CEO.

Thank you, Sean, and thanks to all of you for joining us on this call today. We had an extremely productive second quarter and I’d like to start by highlighting just a few of the major accomplishments. June represented data three major medical conferences on both TG-1101, our glycoengineered anti-CD20 monoclonal antibody also known as ublituximab, which I’ll refer simply today as 1101 and TGR-1202, our next-generation PI3K delta inhibitor, which I will refer to as 1202. Data presentations from all three medical meetings can be obtained on our website and include a clinical presentation on 1101 from the American Society of Clinical Oncology annual meeting, several poster presentations from the European Hematology Association annual meeting and an oral presentation was highlighted the synergies displayed with the preclinical combination of 1101 and 1202 at the International Conference on Malignant Lymphoma in Lugano Switzerland. From the financial standpoint, we were pleased to be approved the listing on the NASDAQ Capital Market in May and earlier this month we completed the capital raise of approximately $40 million, which we used to the fund the aggressive clinical development of 1101 and 1202. I’d like to now share some highlights from our 1101 clinical presentation at ASCO. A poster presentation by the lymphoma team from Columbia Presbyterian Medical Center led by Dr. Owen O'Connor, we were excited to report the first clinical data with single agent 1101 in patients with Rituxan relapse and/or refractory non-Hodgkin's lymphoma. The presentation highlighted preliminary safety and efficacy data from four cohorts of three patients each at dose levels of 450, 600, 900 and 1,200 mg flat dosing. Also patients were valuable for safety, while 10 of the 12 patients were valuable for efficacy, some patients were too early for efficacy evaluation. Patients in the study were heavily pretreated…

(Operator Instructions) Thank you. Our first question comes from the line of Jonathan Aschoff with Brean Capital. Please proceed with your question.

Thank you. Good morning, guys.

Good morning

Good morning

I was -- just a couple of questions, I was wondering, could you give an update on those responders that were filed at ASCO, are you ready to give that now? And I was also wondering maybe I missed it. I was a bit distracted by someone during the call, what's left to learn before you definitively go into a 1202, 1101 combination trial?

So let me answer the first question. We haven't yet updated that but I could say that all those patients are still in response. The longest one is out almost a year now on those patients with total response. In terms of 1101-1202 combination, we are still dose escalating. So we are kind of getting all the preparations together to start that combination study, sort of, a hurry up and wait for the moment and we’re just waiting to get up, high enough for the dosing that we can comfortably start the combination. We’d like to get to a point where we are comfortable with the activity level and the safety profile. So we’re evaluating in real time and we are waiting also particularly to get the PK analysis done. We want to get through the PK on the first four cohort. Again our goal is to analyze that information and make it available to you and the investors hopefully by the end of the summer, so into September and certainly before the end of the month for sure.

And I guess lastly, I was wondering if you are familiar at all with this insight delta, this PI3K delta that they have -- I think they have just started or about to start a Phase I with it, if you have any knowledge about that and how it compares to 1202?

You stumped me really Jonathan, sorry about that. Looks like we haven't -- it hasn’t been really on our radar screen, but we will take a look and see what we know about it and what we can [learn] from it but I don't think it’s in clinic, probably we’ll do a little bit of research on it.

Okay. Thank you.

Our next question comes from the line of Joe Pantginis with ROTH Capital Partners. Please proceed with your question.

Hey, guys, how are you? Good morning. Couple of quick questions, for ublituximab, is for the marginal zone study, I know you are targeting about 40 to 50 patients, are we still looking at that potential size?

Thinking in total, yeah, we would like to see if we get a nice population, 40, 50 patients will be great.

Okay. And going of some comments from Dr. O'Connor just wondering if you can dive into it a little more especially, after the ASCO data, there were some commentary. Obviously there is a lot of people who are entrenched using Rituxan and are stalwart fans of the drug, but there had been, I guess, I am quoted as some rethinking of the ADCC activity associated with Ublituximab, I was just wondering if you can add any more color to that?

Sure, I mean, I think -- our thinking, I think is the same as all the doctors of Rituxan. It is a fantastic drug but eventually you can't use it anymore and the real question is after that can you still target CD20 with other agents? I think the data that came out of ASCO on GA-101 is I think really the first -- was it a hard evidence, close to hard evidence, that enhancing, with ADCC, glycoengineering these molecules does make molecules more potent than what we see in the predecessors whether you use it instead of which I think is the goal of GA-101 or use it after Rituxan which is our goal. I think the rethinking that Owen was referring to that the data coming out of the GA-101 head-to-head study against Rituxan showed some dramatic differences in both response rates PFS, and minimal residual disease status. So I think that was the piece of data that started the rethinking. I don’t think -- I don’t think Rituxan is going to wholesale switch over to TG-1101 but I do think from a perception standpoint, it is reasonably clear now to folks that glycoengineering and enhancing that ADCC actually does matter and does change the profile of activity of these compounds.

Great. Thanks a lot guys.

Welcome.

Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

Hi, guys. Good morning.

Good morning.

Just a follow-up on Joe’s question, a little bit in terms of 1101, given the activity that you’re seeing to-date so far in the marginal zone and patients and the plan, I guess study in that group. Can you talk a little bit about potential regulatory pathway for the product perhaps even in marginal zone patients?

Sure. So obviously, we’ll have to at some point, have discussions with the FDA about it. I think in general regulatory sense if we -- it is a subtype of indolent lymphomas. There’s nothing that’s ever been specifically approved for the indication. We do believe that it represents particularly relapsed or refractory setting after you’ve been through several lines of treatment with Rituxan plus chemotherapy that represents an unmet medical need. And we think if you look at ibrutinib in Mantle Cell Lymphoma, there is probably a pass forward through a single-arm study assuming that we show very high levels of activity in patients who are relapsed or refractory to standard of care. And it probably requires single-arm study between 50 and 100 patients. It would be probably reasonable again depending on the magnitude of the effect. So we’re kind of remodeling our thought process again subject to close to discussing out some point with the FDA making sure that they continue the same way. We look to kind of modeling our thought process after the ibrutinib process for Mantle Cell.

Great. Thanks. And one additional question on 1202, you mentioned so far you’re -- in dose escalation you’ve seen no DLTs and you have reached the MTD. Can you tell us how many dose cohorts have been completed so far and then what your plans are for additional cohorts.

Sure. So we’ve completed three cohorts. We’re in the process of completing the fourth cohort and our goal is to the start with fifth cohort within the next 30 days. And we’re going to continue to dose-escalate. We haven’t seen any dose-limiting toxicities. So we’re clear to continue to escalate the drug. And we’ll continue to do so until we get toxicity.

And in terms of the dose that you’re at and how it compares to the activity you saw pre-clinically. Do you think you’re reaching doses that are clinically relevant at this point?

Probably, getting near to the lower end of the range of what might be clinically relevant, based on what we are thinking before we start the study. But again I think we’ve been pretty cautious. Let say, I have been personal cautious about projecting too much from limited animal PK information. And I have been sort of reserving my judgment until we have the analysis of the first four cohort, that’s sort have been my target from day one. So I think once we have the PK information, the [TD] information from the first four cohorts. I think we’d be able to come up with the much better target from where we expect to see clinical activity.

Great. Well, thanks for taking the questions and congrats on the great progress.

Thanks Matt.

Mr. Weiss, it appears we have no further questions at this time. I would now like to turn the floor back over to you for additional or closing comments.

Great. Thank you. So again let me thank everyone for joining us on the call today. Very excited about the results generated thus far with 1101, looking forward to more information coming out on 1202 and we certainly continue to be extremely excited about our future prospects. Our goals continues to be to develop a novel, non-chemotherapy based highly active, less toxic treatment option for patients with relapsed or refractory B-Cell cancers. We and leading experts believe that novel targeted combination therapies, also the greatest hope to enhance larger patients we’ll try to be on the forefront of this effort. Thanks again for joining us and have a great day.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.