Q1 2024 G1 Therapeutics Inc Earnings Call

Participants

Will Roberts; Communications Officer, IR & Corporate Communications; G1 Therapeutics Inc

Jack Bailey; Chief Executive Officer; G1 Therapeutics Inc

Andrew Perry; Chief Commercial Officer; G1 Therapeutics Inc

Rajesh Malik; Member of the Management Board, Chief Medical Officer; G1 Therapeutics Inc

John V; Chief Financial Officer; G1 Therapeutics Inc

Gil Blum; Analyst; Needham & Company

Joseph Thome; Analyst; TD Cowen

Laura Prendergast; Analyst; Raymond James

David Nierengarten; Analyst; Wedbush Securities

(Steve Bersey); Analyst; H.C. Wainwright

Presentation

Operator

Good day and thank you for standing by, and welcome to the G1 Therapeutics First Quarter 2024 financial results. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today will Roberts. Please go ahead.

Will Roberts

Thank you, Victor. Good morning, everyone, and welcome to the G1 conference call to discuss our first quarter 2024 financial results and business update. Press release on these financial results was issued this morning and can be found in our news section of our corporate website, G1 Therapeutics.com. On this morning's call, the team will provide a business overview of the 2024 first quarter, including an update on our commercial progress and clinical programs in that period with Cascella which is approved and commercially available to decrease the incidence of chemotherapy-induced myelosuppression in adult patients when administered prior to a platinum etoposide containing regimen or topotecan containing regimen for extensive-stage small cell lung cancer. A Q&A session will follow the prepared remarks.
Before we begin, I want to remind you that today's webcast contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements.
More information on such risks and uncertainties, please refer to our filings with the Securities and Exchange Commission, which are available from the SEC or on our corporate website. Any forward-looking statements represent our views as of today, May 1, 2024. For joining me on the call today are Jack Bailey, our Chief Executive Officer, Andrew Perry, our Chief Commercial Officer, Dr. Raj Malik, our Chief Medical Officer, and John upset, our Chief Financial Officer.
I'll now turn the call over to Jack.

Jack Bailey

Just thanks. Well, good morning, everyone. And thank you for joining us on the call today. From a commercial perspective, we continue to identify and execute on growth opportunities for cross-sell. As you will hear from Andrew, our bio volume growth in the quarter was 4% over the fourth quarter of 2023 due to some challenges that he will speak to shortly. But as a result of the impact of the actions we've taken and the more recent sales trend, we remain confident in our 2024 net sales guidance of $60 million to $70 million. We are committed to expanding usage of to sell it in its first indication in extensive-stage small cell lung cancer. And assuming we continue to achieve our internal forecasts, expect to drive G. one to profitability in cash flow positivity later next year.
As you'll hear from Raj, we also remain focused on the opportunity for category leadership across the spectrum of triple-negative breast cancer and in that regard, look forward to two important upcoming data readouts over the coming months. First, we've shown promising results thus far in our ongoing Phase two trial when trila cycling is combined with the ADC sacituzumab govitecan, including meaningful improvements in median overall and 12-month survival.
As you saw this morning, we are excited to provide the updated results in a poster at ASCO. 2024 in early June. Next, if the final results from our ongoing Phase three preserved two trial of trial acyclovir positive, they would be amongst the most significant data generated in the first line metastatic setting across PD-L one status and a compelling data set for people living with this extremely aggressive disease, as Raj will discuss based upon recent interactions with the FDA regarding the inclusion of events from patients enrolled in Ukraine. These results are now expected late in the second quarter of this year.
Finally, as you saw in a press release earlier today, we've outlicensed the global rights to try cyclic, excluding the Asia Pac region to an early stage Transgenomic's company called pepper Bio. Through this transaction, pepper, BIO-key has exclusive rights to develop, manufacture and commercialize Pluralsight live in those areas for all indications, except for certain renewal protected uses, they've identified CDK4/6 as a key pathway for hepatocellular carcinoma through their proprietary data platform. Lerociclib will now be their lead clinical stage asset to complement their early-stage discovery pipeline.
On today's call, Andrew will provide an update on our recent commercial efforts. Raj will provide the status of our ongoing TNBC trials and remind you of the timing of the data from each. John will then provide the financial results for the quarter, including our revenue expense and cash expectations, along with a review of financials associated with the pepper bio transaction. Finally, I'll be back for some concluding comments.
With that, I'll turn the call over to Andrew.

Andrew Perry

Thank you, John. I'm going to take this opportunity to update you on our first quarter 2024 performance. This was a quarter where we made significant headway in parts of our commercial business, although in other areas, we also faced some short-term challenges. Our goal in Q1 was to build on the strong double digit quarter-over-quarter vial growth, which we delivered in Q4 of 2023 and to set up growth opportunities, which will help us deliver our full year goals.
We were largely successful in these objectives with some regional and segment variance driven by some executional headwinds, which we took actions to address within the quarter. And while our vial volume grew, it should have been closer to double digits this quarter as we had executed better in several areas. As a reminder, in first-line extensive-stage small cell lung cancer, a maximum duration of chemotherapy is less than 90 days.
So our quarterly growth relies on building a new patient base every quarter and then creating additional breadth and depth with new or existing accounts in order to grow, beginning with sales volume. We ended Q1 with 4% overall vial volume growth compared with Q4 2023 loan growth was attributable to three factors. First, we added two fewer new patients over the holiday period of December into January, which then impacted the number of continuing patients through the quarter.
Secondly, we have a slow start with several large customers, primarily in the Southeast. These customers typically comprise a fifth of our volume and their orders were below the levels we would expect in the first part of the year. Currently, three of our contracted customer networks performed below expectations. In each case, I will outline the actions we took to address the executional gap.
Firstly, we deployed three new sales representatives at the beginning of January Secondly, we invested in a significant digital advertising push with increased display ads in high-potential geographies, including the Southeast as well as a digital and field campaign focused on driving better with existing co-sell prescribers and customers affiliated with contracted accounts. Currently, we met with senior management at our large customers in the Southeast to address any educational or operational gaps, which could be slowing sales growth.
Finally, we enhanced several of our existing contracts and executed two new community network contracts, including one in February, which has been immediately successful and significantly growing volume slow start to the year in the Southeast was offset by almost 30% growth in our West region, which comprises around a quarter of our volume, three of six territories in the West region grew more than 50% in the year. As a result of this success, we added an additional headcount in our West region focused on the Texas market, which continues to represent an enormous opportunity.
We also saw double-digit growth in the customers covered by our expanded strategic account function, which combines specialist knowledge of oncology pharmacy with extensive health systems experience those customers grew over 20% during the quarter and now comprise roughly 20% of our overall volume. Going into Q2, we added an additional set of customers to their mix where we believe this team can accelerate systematic adoption,
Focusing on the top 100 customer organizations, which represent around half the volume opportunity in the market, we added two new top 100 customers during Q1 and another one in April, meaning 78 of the top 100 of order seller launched today, top 63 100 customers ordered during Q1 which jumped up from 56 in Q4, a highest number of top 100 customers to order in a quarter since launch, our proportion of business in top 100 space similar to Q4 at 57% across our business. We added over 50 new accounts in total, which is similar to the last few quarters. Our estimate, of course, our patient share remains around 14% in the first-line market, demonstrating that there remains significant opportunity.
Moving into Q2, we saw a return to stronger growth in March and April has been our highest month for both volume and ex-factory sales launch to date, large customers in the southeast who started slow in Q1 are back to growth at over 30% quarter-to-date and our contracted business is also growing in double digits quarter to date, with the actions we have taken with three new top one hundreds and for the first time more than 60,100 skus and cross-sell during the quarter for a confident in continued growth under gated product revenue target.
I'll now pass the call to Raj.

Rajesh Malik

Thanks, Andrew, and good morning, everyone. Today, I will provide the status of our ongoing clinical trials and our expectations for the timing of results for our Phase three preserve two trial in combination with gemcitabine and carboplatin as we mentioned on our last call, the boundary hazard ratio for a positive result at the final analysis of 0.67. As a reminder, the hazard ratio for the pembrolizumab arm of KEYNOTE three five five in the intent-to-treat or ITT population was 0.89 and the FDA approved PD-L1 positive population was 0.73. So a positive result in preserved two would mark the biggest improvement in overall survival to date in first-line metastatic triple negative breast cancer.
Regarding this trial, we recently received feedback from the FDA recommending that the final analysis should be conducted in the ITT population, which includes the survival events from patients that were enrolled in the Ukraine rather than the modified ITT population that would have excluded subsequent to our February financial results call, we reached agreement with the FDA on the statistical methodology for the overall survival analysis incorporating these events.
As a result, we have amended the protocol to account for these changes, and we now expect that the final overall survival analysis will be conducted at the end of the second quarter of 2024, we will announce the top-line results via press release at a positive look forward to a more robust presentation of results at a medical meeting later in 2024, assuming we achieve the overall survival endpoint, we will meet with the FDA to discuss the results and our plans for a supplemental NDA filing as soon as possible thereafter.
Next, regarding our Phase two trial of trila slightly in combination with the Trop-2 antibody drug conjugate sacituzumab. We're happy to announce this morning that the updated results have been accepted for poster presentation at ASCO. in early June. As a reminder, in January, we described promising initial data, including meaningful improvements in median overall survival at 12 months survival among patients receiving trila site live in combination with sacituzumab compared to historical results for the ADC alone, and we are excited to update these initial results at Asco.
Our measure of a successful trial would be an approximately three months or more improvement in median overall survival over historical results for sacituzumab. We believe that such a result would be of interest to companies developing Trop-2 ADCs toward pursuing development partnerships with us to move this combination into pivotal trials in triple-negative breast cancer and beyond. We're also very interested in exploring efficacy in various subsets of patients such as those treated with prior checkpoint inhibitors or CDK4/6 inhibitors.
These types of exploratory analyses, which will be included in the Asco results, could be helpful in designing future clinical trials of Talus SciPlay plus Trop-2 ADC combinations. We look forward to both readouts as positive results from these trials would enable us to build category leadership in triple-negative breast cancer.
With that, I'll turn the call over to John for an update on our financial results. John?

John V

Thanks, Raj, and good morning, everyone. As Lou mentioned, full financial results for the first quarter of 2024 are available in this morning's press release and will be in the 10-Q, which we expect to file after market close. Net sales Cascella were $14.1 million for the first quarter of 2024. This compares favorably to $10.5 million in net sales of solar in the first quarter of 2023, representing an increase of 34%. Our total revenue for the first quarter of 2024 was $14.5 million, which compares favorably to $12.9 million in the first quarter of 2023.
Our total operating expenses were $23.5 million in the first quarter of 2024 compared to $38.7 million for the same period in 2023, comprised of the following $1.1 million in cost of goods sold compared to $1.5 million for the same period in 2023, $7.3 million in research and development expenses compared to $15.5 million for the same period in Q3. This change was primarily due to continued wind-down of previously completed studies. And lastly, $15.1 million in selling, general and administrative expenses compared to $21.8 million for the same period in 2023.
The decrease in SG&A expense was primarily due to decreases in personnel costs and medical affairs, continued optimization of our commercialization activities. Regarding our cash position, we ended the first quarter with cash cash equivalents and marketable securities of $65.2 million compared to $82.2 million as of December 31, 2023.
It is important to note that this current cash balance of $65.2 million reflects an $8.7 million paydown of our debt facility during the quarter due to the borrowing base limit tied to our trailing three month revenue. However, by reducing our principal, we will realize cash interest savings this year of almost $1 million. Based on our current revenue projections, we do not anticipate having any further paydowns until required principal payments begin in December of this year. Absent this paydown, our operational cash burn totaled approximately $8 million for the quarter.
Next regarding our revenue expense and cash runway guidance for 2024. As previously stated, we remain confident in our net sales revenue guidance of between $60million & $70 million dollars for 2024, there is no change to our 2024 gross-to-net expense percentage adjustments. We anticipate receiving a $5 million milestone payment from Genworth in the back half of 2024 following their commercial approval of recycling in China. If approved, we would begin receiving royalties on sales of later cycle within the territory.
Regarding expenses for 2024 we currently expect operating expenses to be 15% to 20% lower than that of 2023. This is driven by reduced R&D spend in addition to continued optimization of our cost structure following previously targeted headcount reductions while continuing to invest in the commercial organization, we continue to expect the 2024 year end cash, cash equivalents and marketable securities balance in the range of $50 million to $60 million. And based on the foregoing, we expect that our cash runway will take us into the third quarter of 2025. This cash runway includes anticipated TNBC filing and launch related costs, but does not include any TNBC associated reps.
Finally, Jack mentioned earlier in the call that we have outlicensed layer cyclic to pepper bio, excluding the Asia Pac countries which previously out-licensed to Gener, G1 expects to receive upfront payments of mid single digit millions within 12 months, and we are eligible to receive up to $135 million upon achievement of certain development and commercial models. In addition, we will receive a double-digit royalty on aggregate annual net sales per site. With that I'll turn the call back over to Jack for some closing comments. Jack?

Jack Bailey

Thanks, John. Raj, Andrew, and we'll do as always, I also want to recognize the cancer community. We are thankful for the opportunity to be a part of your journey. As you heard from Andrew, we are encouraged by the continued growth and acceptance of co-selling in our top 100 accounts the return to expected ordering patterns in April by some large customers in the southeast after a slower than expected first quarter. And the immediate impact of our strategic accounts function while our commercial team continues to execute on growing the product and its first indication, our corporate focus must state on the upcoming clinical results from our ongoing TNBC trials that if positive could build category leadership in triple-negative breast cancer. To that end, we look forward to presenting the mature survival results from our Phase two trial of trila cycle in combination with the Trop-2 ADC sacituzumab at Asco in June.
We believe that an improvement in overall survival of approximately three months or more due to the addition of trila side with today, do you see would be a striking success and would allow us to pursue development partnerships to move the combination of trying to site glib and Trove to ADCs into pivotal trials. Furthermore, we expect final results from our ongoing Phase three preserve trial in first-line triple-negative breast cancer late in the second quarter of this year. If positive, we would move quickly toward filing of an SNDA.
Thank you for your time this morning. We will speak again in this format on the second quarter 2024 call in August, and we'll see many of you at Asco or on our upcoming non-deal roadshows.
With that, I'll close the call and turn it over to Q&A. Operator, would you please remind our listeners how to ask a question.

Question and Answer Session

Operator

(Operator Instructions)
Gil Blum from Needham.

Gil Blum

Good morning, everyone, and thanks for taking our questions. Maybe maybe a quick one on the commercial aspect here. Would you say that we're starting to see some level of seasonality or what you saw. I'm kind of focusing on the remarks regarding the holidays and how that effected the efficient pickup BioSkills, though, I would not say that it takes us a couple of months in the claims data to diagnose.
When we see a drop in new patients. We diagnose the issue around February, and we're able to obviously immediately act on it. I don't think that there's any reason to think that in any way, this is a seasonality issue. This is about our ability to execute, which we hope to continue to improve every quarter. What we have seen, of course, also during Q1 was with some great enhancements at our execution and some parts of the country. And in some segments of our business, looking at our web business and our strategic accounts business actually in our academic sector as well, which also grew during the quarter. So And so yes, I hope that answers your question.
It does seem that that was very helpful. And as to the readout for the triple-negative breast cancer study, what details do you think you're going to include in that readout? And will those the tone and the level of disclosure depend on whether the study is successful? Thank you.

Rajesh Malik

Yes. Hey, Gail, Roger. Yes. So we plan to include enough in the press release on really for the investment community to get a sense of what the results were. We always have to balance this when presenting the full set of data at a medical conference. So obviously, the degree of improvement in overall survival are some important subsets. Some comments on safety, obviously, those types of comments, but it should be a fulsome disclosure.

Gil Blum

Okay. Excellent. And that's all from us today. Thank you.

Operator

Joseph Thome from TD Cowen.

Joseph Thome

Hi there. Good morning and thank you for taking my questions. Maybe one around the the inclusion of the Ukrainian patients in the TNBC study. Maybe can you just give us an idea of what proportion of patients were from Ukrainian sites and whether the Company was advocating kind of one way or the other to do the ITT. or the MITT population, were there any issues with getting patients drug or data quality or anything like that?

Rajesh Malik

Yes, hey, Joe. So there were 13 patients that were enrolled in Ukraine. So we had initially proposed the modified ITT population, which would have excluded these patients. And obviously, the events from these patients, the agency recommended that we include the events from these patients. And so it was really the discussion back and forth on how to do that because there are a variety of approaches to do that. And that's kind of what resulted in a time line. But in terms of and we were obviously blinded to the data and we remain confident in the results. So it was a relatively small number of patients 13 out of 187 or so. So yes, we feel we feel confident in that there.

Joseph Thome

Great. And then maybe just one on the combination with Trodelvy in sort of the path forward there? I know you indicated some potential partnership interests of the data are positive and kind of hit that three month benchmark. Maybe where are you in terms of potential partnership discussions? And is there a path forward for combination without a partner? Or would you need a partner to move towards Phase three? How are you thinking about that?

Jack Bailey

Yes. Thanks, Joe. This is Jack. I don't really think we're prioritizing partnership on this. I mean, a there's just a lot of ABC companies out there, multiple Trove to companies. So we've had discussions ongoing and a lot of folks are anticipating or waiting for that data to come out. So and that is our preferred path at this point to look for partnership, but development capital to be able to do that often greatly look forward to the update.

Joseph Thome

Thank you.

Operator

Anubhav Rama from JPMorgan.

Hi, guys. As a goes on for at-home test, and I just have one quick question. I think it was mentioned in the call that 60 of the top 100 accounts are using sell or how would you tackle those who are not using Vintela? And are there any commonalities between those that you can target?

Rajesh Malik

Thanks, Bianca. Yes. So actually, 78 of the top one hundreds of trials co-sell are launched today and then we added three since our last call. So actually, we've continued to add to the number that are trialing in Q4 56 of the top 100 had actually order during the quarter that jumped up significantly to 63 in Q1. So that's actually the really the biggest jump that we've seen in quite a few quarters.
So the secret to growth, obviously in those top one hundreds is continuing to build that and moving from trial utilization to systematic adoption, we do continue to add top one hundreds overtime and things like the guideline improvements. I saw an article last year and obviously helpful as are the real world evidence that we've been able to compile on the medical front. So we continue to make headway in the top one hundreds, and we continue to see them as a growth driver going forward. And we look forward to reporting success and future financial performance. Yes.

Thank you.

Operator

Laura Pat Prendergast, Raymond James.

Laura Prendergast

thanks for taking the questions. Just two quick ones for me on first, as far as in first line triple negative breast cancer. What is the expected time on chemotherapy treatment for a patient versus what you guys have been seeing in lung cancer? And then if a further two trial does hit on on overall survival, do you expect to be able to get approval beyond first line are based off of this preserve to study or just how are you guys are thinking about this patent or off?

Rajesh Malik

Yes. So in terms of the first-line TNBC, we obviously can't comment on our Phase three just because it's still ongoing. However, if you refer back to the Phase two studies, the number of cycles on the median number of cycles is around eight. But if you look at the total cumulative dose of chemo is about 50% to 60% greater when patients receive trila compared to chemotherapy alone.

Jack Bailey

So in terms of your your second question was, could we potentially get approval beyond the first-line indication. This is always going to be a matter of discussion once we have the data and related to the indication statement on. And obviously, our approach will be to try and get as broad an approval as possible with regards to gemcitabine, carboplatin combinations, which could, of course, span first line and beyond. But that will be a matter of discussion with the agency.

Laura Prendergast

Thanks, guys.

Operator

David Nierengarten from Wedbush.

David Nierengarten

Thanks, for taking the question. I have a follow-up on the Ukrainian patients and the I guess the I'm wondering if the agencies preferred to include them because it would aid in statistical analysis or provide a more robust answer. And I ask this because it would seem some moving up and the time line that events have occurred from that population. So they would contribute unless I'm wrong. So that's the question.

Rajesh Malik

Yes, David? Yes. So events have occurred in those patients. And that is the reason why when you count those events, the time line moved up a little bit to the end of the second quarter on. We're obviously blinded. We don't know which you know, which arm those events actually occurred in. And I think this is an open question really in terms of how to deal with patients are enrolled in Ukraine, and there is really no good guidance out there. In fact, from the FDA or the European agencies are starting to put something out. So I think it's been sort of all over the board. So we put our proposal forward on the agency clearly wants to include all the data, which is what we're doing. So yes, that's where we landed.

David Nierengarten

Thanks.

Operator

Steve Bersey from H.C. Wainwright.

(Steve Bersey)

The Avantor, anyway, congratulations on the earlier cycle of deal. So we're just wondering whether the payments are per indication and are they going to be one-time payments? And then also what triggers the milestone payment and then the timing on those?

Jack Bailey

Yes. Thanks, Stephen. So we are certainly excited about the deal two, it gives us the real cycle of the opportunity, obviously, up benefit patients. So I didn't catch your first part in terms of the milestone, there are a combination of both of development regulatory. So those will unfold over time.
Your first part of your question was,

(Steve Bersey)

so are the are the payments going to be per indications, different indications like you go into?

Jack Bailey

Yes, there's very, very good can be built for payments based upon multiple invitations.

(Steve Bersey)

Okay. Thank you.

Jack Bailey

Yes, thank you.

Operator

Tosh Hasan from Rodman & Renshaw.

Good morning. This is touched on on for Tony Butler, if I heard correctly, I think Andrew spoke about the addition of three new headcount increases in the sales force. I wonder if you could share your thoughts about how this is expected to help with the commercial efforts in the current setting? And then I have another question.

Jack Bailey

Sheri, thank you for the question. And we always are looking at our sales force size and structure to be able to identify new opportunities and capitalize on them. And these these changes were our effort to do that.
I also mentioned that we added the headcount in the West, for example, to do exactly that to take advantage of some of the opportunities we've identified in many situations. The success of cross-sell relies on sales representatives, gaining access to key decision makers, key prescribers as well as nursing and pharmacy staff. And so our sales team performed a volleyball with doing that in combination with our market access team, including our strategic accounts team and then answering any questions that arise through our medical affairs team.
So in many respects, the continued evolution of our sales force is absolutely critical to our success, and we're delighted to welcome those new folks into our organization.

That's helpful. Thank you. The other question is about the small cell lung cancer patients beyond from the frontline setting, for example, can you share with us your data and assuming that there is any the share of second line that sort of end markets and also whether you see a significant number of patients being now being being dosed with Kadcyla in the second and third line after having received it in the frontline setting?

John V

Sure. Yes, I can give you an outline of that. So about 90% of our used today is in the first-line setting, about 10% is in second line plus within that 10% is the result of topotecan patients, which is part of our indication as well as patients who are re-challenged with the CompuSafe platinum, our overall market share or our first line market share is around 13%. Our overall market share is not too different from that. And our share in the second-line setting is not you are suddenly double digits and of eligible patients in the second-line setting. So there's not huge difference. And our market share across first and second-line use. Our focus is mainly first-line use because the US represents the majority of patients.

Very helpful. Thank you.

Operator

And if there were no further questions in the queue, I'd like to turn it back over to Jack Bailey, CEO for any closing remarks.

Jack Bailey

Thank you, operator. As always, we look forward to keeping everybody updated on our progress. Certainly, thank you for joining us today, and we'll be in touch.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect, and everyone have a great day.