Beyondspring, Inc. (BYSI) Q4 2021 Earnings Call Transcript

Beyondspring, Inc. (NASDAQ: BYSI) Q4 2021 earnings call dated Apr. 14, 2022

Corporate Participants:

Ashley Sierchio — Investor Relations

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Ramon Mohanlal — Executive Vice President, Research and Development, Chief Medical Officer

Elizabeth Czerepak — Chief Financial Officer

Analysts:

Maury Raycroft — Jefferies — Analyst

Chi — Bank of America — Analyst

Joel Beatty — Baird — Analyst

Joe Pantginis — HC Wainwright — Analyst

Presentation:

Operator

Good morning, and welcome to BeyondSpring’s Fourth Quarter and Year End 2012 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded today, April 14, 2022.

I will now turn the call over to Ashley Sierchio of LifeSci Advisors.

Ashley Sierchio — Investor Relations

Thank you everyone for joining today’s call. I would like to advise listeners that comments made on today’s call may reflect forward-looking statements that are related to such matters as BeyondSpring’s clinical and preclinical research and development activities and results, regulatory and commercial plans, industry trends, market potential, collaborative initiatives and other financial projections among others. While management believes that its assumptions, expectations and projections are reasonable in the view of the currently available information, you are cautioned not to place undue reliance on these forward-looking statements. The company’s actual results may differ materially from those discussed during this call for a variety of reasons, including those described in the forward-looking statements and risk factors sections of the company’s 20-F and other filings with the SEC, which are available on the Investors section of BeyondSpring’s website.

Joining us on today’s call is Dr. Lan Huang, BeyondSpring’s Co-Founder, Chairman and Chief Executive Officer; Dr. Ramon Mohanlal, Executive Vice President, Research and Development and Chief Medical Officer; and Elizabeth Czerepak, Chief Financial Officer.

It is now my pleasure to turn the call over to Dr. Lan Huang. Lan?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Good morning, everyone, and thank you for joining today’s call. It’s a pleasure to be here today, reporting our fourth quarter and year end results and providing an update on our progress in the past few months. After the complete response letter from the US FDA last November, we took steps to streamline our operations in order to extend the cash runway. Now, we are focused on executing near-term opportunities for value creation.

First, we’re pleased with our ongoing discussions with China NMPA on the review of Plinabulin’s NDA in combination with G-CSF for the prevention of chemotherapy-induced neutropenia or CIN. The G-CSF market in China is significant, with $1.2 billion in sales in 2020 and around 30% annual growth in 2017. In addition, we continue our discussions with the FDA regarding the clinical and regulatory pathway for Plinabulin in CIN in the US.

Second, moving to our Plinabulin program in non-small cell lung cancer, where we announced in August and September 2021 at ESMO conference positive top line data from our Phase 3 DUBLIN-3 study. In the second and third line non-small cell lung cancer with EGFR wild-type, which represent severe unmet medical needs with limited treatment options, Plinabulin and docetaxel combination showed significant improvement in overall survival, especially in doubling the two-year and three-year survival rate compared to docetaxel alone. We believe the data supports the role of Plinabulin as a potential anti-cancer treatment option in this indication.

We are moving forward to target an NDA filing in China by year end. Dr. Ramon Mohanlal, our Chief Medical Officer, will provide additional details during his remarks shortly. Finally, we continue to develop Plinabulin as a potential pipeline in a drug. Using cost effective investigator-initiated studies, we’ll continue our development plans for Plinabulin in immuno-oncology combinations in various cancers to target unmet medical need in patients who have failed PD-1 or PD-L1 inhibitors. We continue to see strong interest by investigators and we’ll share additional data and updates as they become available.

Overall, we’re proud of the support we have received as we continue our efforts to bring Plinabulin to market. One of our validating steps was announced in last fall, a strategic partnership between Wanchunbulin, our 58% [Phonetic] owned China subsidiary and Hengrui Pharmaceuticals, a leading oncology R&D and commercialization company in China for the development and commercialization of Plinabulin in Greater China. Hengrui is a well-respected company with over 10,000 sales people in China. In 2020, the company had $4.2 billion in sales, of which $2.4 billion was for oncology drug sales. In addition, Hengrui has a leading market position with its long-acting G-CSF in China.

In September 2021, we received RMB200 million, estimated to be around $31 million upfront payment from Hengrui, and will be eligible to receive up to RMB1.1 billion, estimated to be $171 million in regulatory and sales milestones. We will receive all proceeds from sales or Plinabulin products and pay Hengrui a pre-determined percentage of such sales. We will provide updates on commercialization plans as we get closer to potential approval in China.

In conclusion, we remain committed in bringing Plinabulin to market as Plinabulin has a long patent life with patent protection to 2037 in 40 jurisdictions, which includes 19 granted patents in the US, we would have a long runway to realize Plinabulin’s potential to help many patients in need. One more note, we’re making good progress in our subsidiary, SEED Therapeutics. SEED focuses on differentiated molecular glue technology in the targeted protein degradation field. We signed R&D collaboration agreement on the number of targets with Eli Lilly in November 2020.

Now, I will turn the call over to Dr. Ramon Mohanlal, our Chief Medical Officer for some additional details on our development programs Ramon?

Ramon Mohanlal — Executive Vice President, Research and Development, Chief Medical Officer

Thank you, Lan. I would like to make the following comments regarding the CIN program. First, we firmly believe that the drop worked in CIN prevention. We have clinical evidence that Plinabulin increases neutrophil count through a rapid mechanism of action, acting within 24 hours after chemotherapy. It’s clinical evidence was presented at ASH last year. Second, we have positive data in every single clinical study for CIN that we have conducted, totaling over 12 on the patients in these studies. The data has led to multiple presentations at leading scientific conferences as well as publications in highly regarded peer reviewed journal. And third, although we have positive clinical trial data, we do fall short in satisfying the US FDA’s requirements to receive approval at this time. In that, more data will be needed. A second Phase III CIN study will be required and we are currently in discussions with US FDA to align on the design of this study.

We are highly committed to bringing Plinabulin for CIN prevention to the market, to provide doctors the tools to better protect this patient against CIN, which continues to be a condition with unmet medical need. Today, CIN continues to cause preventable mortality and sub-optimal cancer treatment due to chemotherapy dose reductions necessitated by the occurrence of severe neutropenia.

Moving on to non-small cell lung cancer, I would like to make the following point. Firstly, we firmly believe that the drop worked in non-small cell lung cancer as well as other cancer indication. We have strong mechanistic evidence that Plinabulin has a dual mechanism of action in cancer. Firstly, Plinabulin has immune-enhancing effect that enables the immune system to better fight off the cancer. Secondly, Plinabulin has direct anticancer effect as a single agent in a number of cancer types.

The second point I would like to make, we have positive clinical trial data in the Phase 3 DUBLIN-3 study in non-small cell lung cancer and in the Phase 1 trial in small cell lung cancer conducted with the Big Ten Consortium. Data from these trials were presented at ESMO and ASCO last year respectively. Notably, in the non-small cell lung cancer trial, we have more surviving patients over a time span of four years with the Plinabulin plus docetaxel combination compared to standard of care those have failed [Phonetic].

In the small cell lung cancer trial, the addition of Plinabulin and nivolumab and ipilimumab more than doubled objective response rate ORR at more than 40% compared to historic controls of nivolumab and ipilimumab alone. Of note, we still have one patient in the trial who failed a prior checkpoint inhibitor and yet continues to benefit from Plinabulin after more than 58 cycles, which for second line small cell lung cancer is highly exceptional.

The third point I would like to make regarding the path to approval, what is relevant if the patient population of the trial. In DUBLIN-3, around 87% of the data was derived from China. This has brought into question whether this data set is applicable to the US population with our US FDA discussion. This is a topic that not only affects us, it affects many companies that have derived their data primarily from China. In the February ODAC meeting, the review of a BLA for Sintilimab, the FDA committee publicly noted that while it was convinced about the efficacy and safety of the data presented, they would require additional data that is applicable to the US population. Having around 87% of the patients derived from China, however, this is a distinct advances for obtaining approval in China, as a data is highly applicable for Chinese patients.

The NDA filing for non-small cell lung cancer in China will therefore be our near term priority. However, we’ll remain committed to continuing our clinical and regulatory discussions in the US and other regions. In addition to the development of Plinabulin in CIN and non-small cell lung cancer, we are developing Plinabulin and immunotherapy combinations through a number of Phase 1/2 IIT trials that are currently ongoing, and we will share that data as we receive it.

With that, I will now turn the call over to Elizabeth, our CFO, for a review of our financials. Elizabeth?

Elizabeth Czerepak — Chief Financial Officer

Thank you, Ramon. I will now briefly discuss our fourth quarter and year end 2021 financial results. For greater detail to these results, I refer you to our press release issued this morning and to our 20-F filing, both of which can be accessed under the Investors section of our website. With that, I will now highlight some of the key financial results.

R&D expenses in the fourth quarter of 2021 were $5.8 million compared to $8.4 million in the same period last year. The decrease of $2.6 million was primarily due to lower clinical development expenses and personnel costs, including non-cash share-based compensation expenses which were partially offset by higher preclinical and professional expenses. G&A expenses were $5.0 million in the fourth quarter of 2021, and included a non-cash credit of $2.0 million related to the reversal of share-based compensation expense. This compares to $10.4 million for the prior year, which included $2.1 million in non-recurring personnel costs. The decrease was primarily driven by lower share-based compensation expense.

The net loss attributable to the company in the fourth quarter of 2021 was $9.5 million compared to $17.6 million for the same period last year. For the full year 2021, R&D expenses were $36.9 million compared to $41.8 million for the prior year. The $4.9 million decrease was primarily due to lower clinical development expense and non-cash share-based compensation expense, partially offset by higher personnel costs, preclinical and professional services expenses, as well as a $2.9 million NDA application fee paid to FDA, which is expected to be refunded during the second quarter of 2022.

G&A expenses for the full year 2021 was $30.7 million compared to $22.6 million for the prior year. The majority of the $8.1 million increase was due to higher pre-commercialization expenses for Plinabulin, which we do not expect to continue this year. There were also increases in personnel costs, administrative expenses and other costs, which were partially offset by lower non-cash share-based compensation expense. The net loss attributable to the company for the full year was $64.2 million compared to $61.0 million for the prior year. Our cash balance at December 31, 2021 was $41.6 million, and we had short-term investments of $30.7 million for a total of $72.4 million, which we believe will be sufficient to support our ongoing operations and clinical programs over the next year.

With that, I’ll now turn the call back over to Lan for closing remarks. Lan?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Thank you, Elizabeth, and thank you to everyone who is on the call for your strong support. We’re fully committed to bring Plinabulin to market to help many patients in need and we continue to believe in its great potential.

I would like to open the call for Q&A now. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question is from the line of Maury Raycroft with Jefferies. Please proceed with your question.

Maury Raycroft — Jefferies — Analyst

Hi, good morning. Thanks for taking my questions. I wanted to check on China approval for CIN. You’ve mentioned that you’re on an ongoing discussions with China’s NMPA FOR CIN. What kind of feedback on a potential approval decision maybe you received so far and is there an update on what the time frame for approval could look like?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Oh, thank you so much, Maury, and thank you for supporting us over the years. So the CIN NDA application is currently under independent review with the China and NMPA, as you see actually currently in China to work with our China team on the review process. So far we have had multiple positive meetings with CDE, which is the Center of Drug Evaluation in the NMPA, and we remain hopeful of the potential approval in China. But as also you know, anything dealing with regulatory process has its inherent uncertainties. However, our optimism is based on the strong data generated in Asian patients in the 106 [Phonetic] Phase 3 study. And we will provide progress of the discussions with China NMPA in due course.

Maury Raycroft — Jefferies — Analyst

Okay, understood. And for non-small cell lung — well, for CIN in the United States, you mentioned running an additional study. Can you elaborate on conversations with the FDA and what the additional study in CIN could look like and when that could start?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Yeah, so I would just turn this question to Ramon. Ramon, would you like to answer this?

Ramon Mohanlal — Executive Vice President, Research and Development, Chief Medical Officer

Yes, thank you, Lan. Yes, this is an important question, and we have active discussions ongoing with the US FDA on the design of that study. When we have more clarity, then of course we will disclose that, but we are actively discussing the study.

Maury Raycroft — Jefferies — Analyst

Understood, and then maybe last question for me, just for non-small cell lung cancer. Is there still a path forward in the United States and when will you learn more about what that path could look like?

Ramon Mohanlal — Executive Vice President, Research and Development, Chief Medical Officer

Yes, so also for non-small cell lung cancer, we are in active discussions with the US FDA. Those discussions are ongoing. Obviously, as I mentioned, the data is positive and will remain to be positive. I also pointed out that most of the data was derived from the Chinese population, which is an important topic in our discussions with the US FDA.

Maury Raycroft — Jefferies — Analyst

Got it, okay. I guess, I guess would another study be needed there or could be IO studies potentially expand in, and would that be more of the path forward for non-small cell lung cancer?

Ramon Mohanlal — Executive Vice President, Research and Development, Chief Medical Officer

So, non-small cell lung cancer, second and third line is still tremendous on that medical need because you will be aware that most of the IO agents have moved into first line, which in essence creates an opportunity in second and third line, and that’s where we are positioned. So we have positive data with one study and these process are ongoing regarding also positioning in second and third line, which separately also as you — as you indicate, our interests also is in first line with a number of IO combinations. We are active on both fronts. Focus on second and third line, but also strong retention to first line with IO combination.

Maury Raycroft — Jefferies — Analyst

Okay, okay. Thanks for taking my questions.

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Thank you so much, Maury.

Operator

Our next question comes from the line of Jason Gerberry with Bank of America. Please proceed with your questions.

Chi — Bank of America — Analyst

Hi, good morning, everyone. This is Chi [Phonetic] on Jason. Thanks for taking my questions. I guess the first one on the US non-small cell filing. I just want to confirm is the second half of 2022 filing guidance is off the table right now as you continue your discussion with the FDA? And I’m curious if you have any sort of early feedback from the FDA about what the gating factor for the US filing? I understand there is sort of the dynamic of evolving FDA view about the preference for multi-regional clinical trials. I’m curious if that’s sort of the driver for that discussion.

And I guess thirdly, there is at the Lilly’s in of an AdCom [Phonetic] I think, why do you think the FDA took issue was sort of data generating in China was based on an older report several years ago, I think from 2016, that maybe there some data compromise in China trials and one of the questions they asked the sponsors there were if there is any overlap with Bayer trial sites compared to, you know what is documented in the 2016 report. Understand there are, like you know, a few years have gone by, things have changed. But I’m just curious if there’s any overlap between your trial sites and the list of China trials listed in that document? Thank you.

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Thank you so much, Chi. I can answer this quickly because Ramon has answered a lot on the non-small cell lung cancer previously. So first is, yeah, we confirm that the second half of 2022 filings for non-small cell lung cancer is for China. For the US, I think the current discussion is around the relevance of the [Indecipherable] patient population to the US patients. So thanks for asking the question regarding the PD-1 agent from Lilly and Innovent at ODAC meeting. But as we know that China to provide good data with GCP qualities. So we do not see any issues with our data as we also use ICON, which is a global CRO to conduct the study globally, in China there study sites there for — they are all very well respected sites which has passed NMPA inspections. So we are confident with the quality of our data from China.

Chi — Bank of America — Analyst

Got it. And if I may just ask one quick follow-up. Has the FDA sort of initiate a conversation that you may need a second trial with some flavor of multi-regional representation or has that discussion not come up yet?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

No, this discussion did not come up.

Chi — Bank of America — Analyst

Thank you.

Operator

Thank you. Our next question is from the line of Joel Beatty with Baird. Please proceed with your questions.

Joel Beatty — Baird — Analyst

Hi, thanks for taking the questions. The first one is on CIN in the US, and you mentioned that there will be a second study needed there. For clarity, could you point out would study the FDA considers as the first study for that setting.

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Thank you so much, Joel, and thanks for your support, and this is a great question. So the first study will be considered as the [Indecipherable] study. We are seeking a combination label.

Joel Beatty — Baird — Analyst

Makes sense. Has the FDA explicitly said that they consider that study to be a success?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

I think they considered this efficacious data.

Joel Beatty — Baird — Analyst

Okay, so it sounds like maybe then you had a positive tone, yeah there would still be a review issue at a future point in time?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Yes, but currently we used the 106 Phase III interim data and regard as the breakthrough and the final data is consistent with the interim data, which is a positive data from the primary endpoint and also we showed relevant clinical benefit in the combination compared to the Pegfilgrastim

Alone. So that is efficacious, and also it’s safe from, from what we see from the data of Plinabulin in this CIN dose. Ramon, you want to add a little bit more? Or if not, did I answer your question, Joel.

Joel Beatty — Baird — Analyst

Yeah, yeah, that’s helpful. Sorry, go ahead, Ramon.

Ramon Mohanlal — Executive Vice President, Research and Development, Chief Medical Officer

Sorry, I was on mute. No, I would like to add, study model [Indecipherable] is a combination study with Plinabulin and Pegfilgrastim. We met the primary endpoint. The data is positive. The data is positive in many different directions. So that as a study on its own is a positive study. Obviously, with the new concept or new paradigm with a combination approach in CIN, the FDA would like to have a level of robustness what we already have communicated with you and to reach that level of robustness the second study will be needed. The way the data will be looked at is of course in totality once that data of the second study has been obtained. Those discussions are ongoing with US FDA, in particular regarding the design of the second study.

Joel Beatty — Baird — Analyst

Got it. Thanks for that. Maybe switching to non-small cell lung cancer in the US. For a trial to support the indication, would it be a matter of conducting a trial similar to DUBLIN-3 with the US and global patients or would there be differences in trial design compared to DUBLIN-3?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

So a second study is not mentioned within our discussion with US FDA. So the current discussion point is the relevance of the [Indecipherable] study for the US population. But even as you see from the ODAC meeting with FDA of this PD-1 from Innovent and Lilly, FDA did say here is certain regulatory flexibility in three parts. Number one is [Indecipherable] number two is rare disease and potentially our drug is not in the rare disease point, and number three is novel mode of action and Plinabulin does have novel mode of action, so potentially that’s, that’s an area of interest as well.

Joel Beatty — Baird — Analyst

Got it. Thank you.

Operator

Our next question comes from the line of Joe Pantginis with HC Wainwright. Please proceed with your questions.

Joe Pantginis — HC Wainwright — Analyst

Hi, everybody. Good morning. Thanks for taking the question. So I wanted to just focus on CIN as well. So let’s start with China. So I just wanted to get a sense, what’s the role that Hengrui is playing in the regulatory filing discussions in China? And maybe a little more detail as you feel as part of your discussions as what you currently view as the rate limiting steps?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Thank you so much, Joe. Thanks for the great question. So Hengrui is really a ideal partner for us in China because they have many drugs approved in China and also a lot of them innovative drugs. So currently we are working together to prepare the answers about NMPA review questions and they also do attend the meetings with us with the CDE.

Joe Pantginis — HC Wainwright — Analyst

And are there anything to point to to us what the key factor is that still needs to be addressed?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

We’re still answering some of the review questions from the CFDA [Phonetic] the NMPA. So after those questions answered and then they will have final review, but its a stepwise approach.

Joe Pantginis — HC Wainwright — Analyst

Sure, sure. Thank you for that. And then regarding the FDA, I can certainly respect and understand obviously not being able to provide any guidance regarding the design or scope of the second Study. So, I guess I’ll ask this question and I’m not sure if you can answer it at this point. What are the chances that BeyondSpring will conduct this study on your own versus someone else or in partnership?

Lan Huang — Co-founder, Chairman & Chief Executive Officer

After the design is down, I think we plan to do it ourselves if there is a partner coming along, think we’ll also be happy to do it together.

Joe Pantginis — HC Wainwright — Analyst

Okay, great. Thank you.

Operator

Thank you. There are no further questions. I will now turn the call over to Dr. Huang for her closing closing remarks.

Lan Huang — Co-founder, Chairman & Chief Executive Officer

Well, thank you everyone for joining the call today, and thank you for your strong support. We will keeping you posted in our upcoming progresses. Thank you and have a nice day.

Operator

[Operator Closing Remarks]