Yahoo Finance Karyopharm Therapeutics Inc. (NASDAQ:KPTI) Q1 2024 Earnings Call Transcript
Karyopharm Therapeutics Inc. (NASDAQ:KPTI) Q1 2024 Earnings Call Transcript May 8, 2024
Karyopharm Therapeutics Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning. My name is Liz [ph] and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Karyopharm Therapeutics First Quarter 2024 Financial Results Conference Call. There will be a question-and-answer session to follow. Please be advised that this call is being recorded at the company's request. I would now like to turn the call over to Elhan Webb, Senior Vice President, Investor Relations.
Elhan Webb: Thank you, Liza [ph] and thank you all for joining us on today's conference call to discuss Karyopharm’s first quarter 2024 financial results and recent company progress. We issued a press release this morning, detailing our financial results for the first quarter 2024. This release along with a slide presentation that we will reference during our call today, are available on our website. For today's call as seen on Slide 2, I'm joined by Richard, Reshma, Sohanya and Mike, who will provide an update on our first quarter results and recent financing transactions that we announced this morning as well. Before we begin our formal comments, I'll remind you that various remarks we will make today constitute forward-looking statements, or FLS, for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995 as outlined on Slide 3.
Actual results may differ materially from those indicated by these FLS as a result of various important factors, including those discussed in the Risk Factors section of our most recent Form 10-K which is on file with the SEC and in other filings that we may make with the SEC in the future. Any FLS represent our views as of today only. While we may elect to update this FLS at some point in the future, we specifically disclaim any obligation to do so even if our views change. Therefore, you should not rely on these FLS as representing our views as of any later date. I will now turn the call over to Richard. Please turn to Slide 4.
Richard Paulson: Good morning. Thank you, Elhan and thank you all for joining today for Karyopharm's Q1 2024 Earnings Call. As you have seen this morning, we have shared important news from a financial perspective that strengthens our potential to deliver on our innovation and growth strategy. I'll touch more on this in a moment. Turning to Slide 5. We have had a strong start to the year as we work to deliver our next stage of growth and advance our late-stage pipeline with trials that have the potential to enhance and create new standards of care for patients while providing significant value creation opportunities in the near term. Reshma will talk to our pipeline progress. Commercially, in the United States, we are pleased with our results this quarter in the highly competitive multi-myeloma market, including XPOVIO's growing role pre imposed T-cell therapies.
Additionally, with our partners, we continue to expand selinexor's presence, including recent reimbursement decisions in both China and the United Kingdom. Sohanya will talk to our commercial performance in the quarter. As we look to the future, the commercial infrastructure build provides us with the capability to support the rapid and smooth commercial launch of selinexor in new indications, if approved. We continue to believe that selinexor can generate up to $2 billion of annual peak sales in the United States alone, depending on the outcome of our 3 pivotal Phase III data readouts in 2025. As seen on Slide 6, importantly, from a financial perspective, we have taken a significant step that improves our capital structure, strengthening our opportunity to realize the full value of our late-stage pipeline.
Our comprehensive refinancing and amended royalty agreement announced this morning extends the vast majority of our debt maturities into 2028 and 2029. Well beyond the expected data readouts and potential approvals of our 3 Phase III programs. Finally, through continued disciplined execution and a concentrated pipeline, we have an expected runway into the end of 2025, providing us with the financial strength to deliver on our pivotal data readouts. Mike will discuss the details of the refinancing later on the call. Moving to Slide 7, I would now like to turn the call over to Reshma to expand further on our pipeline and the progress we have made. Reshma?
Reshma Rangwala: Thank you, Richard and good morning, everyone. On Slide 8, you can see our very promising late-stage pipeline with selinexor in 3 Phase III studies, all of which incorporate selinexor doses at 40 or 60 milligrams once weekly. Turning our attention to endometrial cancer on Slide 10. Endometrial cancer is a key focus in our pipeline given the high unmet need and substantial benefit observed in patients whose tumors are p53 wild type. Advanced in recurrent endometrial cancer is the most common form of gynecologic cancer in the United States with approximately 16,000 patients diagnosed each year. The evolving treatment landscape is being driven by molecular classifications. Today, for dMMR patients who represent approximately 20% of advanced recurrent endometrial cancer, the new FDA-approved standard is dostarlimab in combination with chemotherapy, followed by dostarlimab maintenance.
For PMMR which represents the remaining 80% of patients, the primary treatment option is chemotherapy followed by watch and wait. Despite the availability of the checkpoint inhibitors, given the limited efficacy achieved with these agents in this molecular subgroup, p53 wild-type represents a potentially unique but fundamental biomarker as it is found in the majority of all advanced recurrent endometrial cancer. As seen on Slide 11, patients whose tumors who are both PMMR and p53 wild-type represent 40% to 55% of all advanced or recurrent endometrial cancer patients. The long-term follow-up data from the TP53 wild-type subgroup of the SIENDO trial which evaluated selinexor as a maintenance therapy has generated substantial enthusiasm from the medical community and highlights selinexor's potential to meaningfully improve outcomes for patients with TP53 wild-type endometrial cancer.
With the paradigm shift underway, opinion leaders confirm there is a clear unmet need for patients whose tumors are p53 wild type and emphasize the opportunity for new agents. On Slide 12, you can see this long-term follow-up data with selinexor treatment. After completion of approximately 6 months of chemotherapy, showed a median PFS for selinexor of 27.4 months and 5.2 months for placebo corresponding to a hazard ratio of 0.41. These robust subgroup data demonstrate the potential to provide substantial benefit to a unique and sizable population defined by p53 status which directly ties to selinexor's mechanism of action given that XPO1 inhibition retains p53 within the nucleus thus enhancing cell kill. As shown on Slide 13, the benefit observed with selinexor in the PMMR subpopulation is even more impressive with a hazard ratio of 0.32 and a median PFS that has not been reached as of our most recent data cut-off presented.
These efficacy data, coupled with a generally manageable side effect profile suggests that oral selinexor is uniquely positioned as an optimal maintenance therapy where convenient, tolerability and meaningful efficacy in a precise patient population are the hallmarks of the maintenance option. We look forward to the oral presentation at the ASCO meeting in June where additional follow-up data and new analyses from this important TP53 wild-type subgroup will be reported. On Slide 14, you can see the design of our EC-042 pivotal Phase III study which will enroll approximately 220 women whose tumors are TP53 wild type. We look forward to presenting top line results from this pivotal trial in the first half of 2025. Let's now move to myelofibrosis.
As you can see on Slide 16, ruxolitinib remains the standard of care for the majority of JAK-naive patients. However, there is an opportunity to improve benefit given that the efficacy with ruxolitinib is limited with only about 35% of patients achieving an SVR35 or less and half of those patients achieving a meaningful symptom improvement. XPO1 inhibition is a fundamental mechanism in myelofibrosis, given that it targets both JAK and non-JAK pathways, underscoring selinexor additive, if not potentially synergistic activity when dosed in combination. As you can see on Slide 17, we presented updated data last year from our trial, evaluating selinexor 60 milligrams with ruxolitinib in JAK-inhibitor-naive patients. Amongst the 14 patients enrolled to the selinexor 60-milligram dose, a 78% SVR35 at week 24 was observed in the ITT population.
Importantly, amongst the evaluable patients, 100% achieved an SVR35 at any time. As we move to Slide 18, when we look at SVR35 and TSS50 together, we see that 50% of patients experienced both of these responses at week 24 and 75% experienced both SVR35 and TSS50 response at any time. On Slide 19, both TSS50 absolute TSS showed very meaningful improvements at week 24. 58% of the ITT and 78% of the efficacy evaluable achieved a TSS50 response. For Absolute TSS, an average 18.5 point improvement was observed in the efficacy-evaluable population at the same time point. Compare these historical ruxolitinib data where TSS50 was observed in 42% to 46% of ruxolitinib treated patients and the average TSS improvement was 11 to 14 points. All symptom domains were substantially improved the selinexor combination and showed that pro-inflammatory cytokines demonstrating rapid deep and sustained reductions relative to baseline.
Taken together, these data validate that the novel combination of selinexor plus ruxolitinib has the potential to maximize symptom improvement relative to ruxolitinib alone in the ongoing Phase III study. The subgroup analysis shown on Slide 20 which depicts SVR35 and TSS50 responses despite treatment with suboptimal doses of ruxolitinib is suggestive of potential monotherapy activity. Further demonstrate selinexor's potential fundamental role in myelofibrosis and to build upon the growing data demonstrating monotherapy activity in both treatment-naive and JAK-exposed myelofibrosis patients we have initiated the CENTRIC II Phase II trial, as you see on Slide 21, this trial will include treatment-naive myelofibrosis patients with moderate thrombocytopenia and is the potential to entrench selinexor as a foundational therapy in approximately 90% of treatment-naive myelofibrosis patients.
As the body of our data grow and positively evolve, we see increasing interest from the medical community on the potential of selinexor in myelofibrosis. We maintain a high level of confidence in our ongoing Phase III shown on Slide 22 which evaluates the combination of selinexor 60 milligrams with ruxolitinib versus ruxolitinib alone in 306 JAK-naive myelofibros patients. We remain on track to report top line results in the second half of 2025. Turning now to multiple myeloma. There is a growing need being discussed amongst myeloma thought leaders to identify and incorporate therapy as early into a patient's treatment journey. That do not deteriorate a patient's T cell levels and which can be used pre and post T cell redirecting therapies such as bispecifics and CAR-Ts. We have been building a body of evidence around selinexor's role in preserving cytotoxic T cell function.
As seen on Slide 24, we are further evaluating the effect of selinexor on the immune environment through preclinical, translational and real-world data as well as clinical trials. We have also been hearing encouraging feedback on the positive evolution of XPOVIO, its effectiveness and tolerability at the lower doses and real-world outcomes observed with decent combination with a well-established backbone therapy of pomalidomide and dexamethasone. Being on Slide 25, we are evaluating selinexor at the low dose of 40 milligrams with this combination in our ongoing Phase III trial post anti-CD38 antibodies. We expect to report top line data from this trial in the first half of 2025. In summary, we have near-term late-stage opportunities supported by compelling data in our rapidly advancing pipeline that will potentially benefit multiple cancer patient populations of high unmet need building upon our approved indications.
With that, I will now hand it over to Sohanya to review our commercial highlights.
Sohanya Cheng: Thank you, Reshma. Turning now to Slide 27. I will discuss our commercial highlights for the first quarter of 2024. In the first quarter, XPOVIO net product revenue was $26 million minus 8% year-over-year and plus 4% quarter-over-quarter amidst increased competition. Quarter-over-quarter growth was driven by an increase in new patient starts and partially offset by a softness in refills due to the impact of fewer new patient starts in the prior quarter. Additionally, a higher gross to net discount typical of what we see in the first quarter of the year adversely impacted XPOVIO net product revenue this quarter. The community setting contributed to roughly 60% of XPOVIO's net revenues in the first quarter. There was increased breadth of use as we added new community prescribers to our customer base and growth in new patient starts offset by softness in refills.
This is encouraging as new patient starts have the potential to positively impact XPOVIO net product revenue in upcoming quarters. In the academic setting, there was quarter-over-quarter growth in demand as XPOVIO continues to fulfill patient needs in an evolving competitive multiple myeloma landscape. As Reshma mentioned, XPO1 inhibition provides patients with a potentially T cell sparing treatment option before or after T cell therapies. This advantage places selinexor in a flexible position in the treatment paradigm as a novel mechanism of action. In the first quarter, XPOVIO's new patient mix in the second to fourth line stayed stable quarter-over-quarter. As we look ahead, we expect to see continuation of selinexor treatment in second to fourth line, primarily in the community setting and in later lines in the academic setting, typically pre or post T cell therapies.
In a highly competitive multiple myeloma landscape, our team is executing with resilience to drive an increasingly important role for selinexor in the treatment paradigm as a novel effective treatment option for patients. We are reaffirming XPOVIO's 2024 net product revenue guidance of $100 million to $120 million. Now turning to Slide 28 and shifting to achievements in the ex U.S. as XPOVIO continues to expand its global footprint. We are pleased with the positive recommendation by NICE in the United Kingdom for reimbursement of selinexor in the early line treatment setting. Inclusion in China's national reimbursement drug list as of January 1, 2024 and approval for reimbursement in Germany. In conclusion, our multiple myeloma franchise continues to positively impact more patients every year while being a key driver in funding our pipeline.
Our strong commercialization team is focused on expanding our multiple myeloma business and rapidly launching in potential future indications. Now, I would like to turn the call over to Mike to discuss our recently announced transactions and give an update on our financials.
Michael Mason: Good morning, everyone and thank you, Sohanya. Before turning to our 1Q 2024 financial results, I'm incredibly pleased to announce we've extended the vast majority of our debt maturities into 2028 and 2029, well beyond expected data readouts from our 3 Phase III trials and potential launches, positioning Karyopharm sustainable value creation. Now I will walk you through the series of refinancing transactions announced this morning and as outlined on Slide 30, you can see the impact on our balance sheet. First, we retired approximately $148 million or 86% of the $172.5 million existing convertible notes due in 2025 for approximately $111 million of newly issued secured convertible notes due in 2029. This exchange is at a 25% discount to par.
We now have $24.5 million remaining of the existing convertible bond due in October 2025. In addition, Healthcare Royalty or HCRx, purchased $5 million of the 2029 convertible notes. Second, we issued a new $100 million senior secured term loan due in 2028 with $85 million committed from certain existing convertible noteholders and $15 million from HCRx. we used $49.5 million of the proceeds along with $5 million in 2029 convertible notes and $15 million of the secured term loan to HCRx to satisfy the remaining principal portion under our existing agreement with HCRx. Lastly, we amended our existing agreement with HCRx, eliminating any potential gross-up payments and reducing the royalty rate on net revenues to 7%, down from 12.5%. Overall, you can see the difference in our debt maturity profile on the right side of the slide.
Net-net, our total liability to reduce slightly an additional approximately $30 million of cash strengthens our balance sheet with cash runway into the end of 2025. Have confidence in continued support in Karyopharm future from Healthcare Royalty and our top convertible noteholders reflects their confidence in the potential of selinexor in our late-stage pipeline programs. These transactions represent a fundamental change and benefit to our capital structure and the financial health of the company, strengthening our opportunity to deliver the value of our late-stage pipeline as we provide benefits to patients in need new treatment options. Turning to our financials. Since we issued a press release earlier today with the full financial results, I will just focus on the highlights which are on Slide 31.
Total revenue for the first quarter of 2024 was $33.1 million compared to $38.7 million for the first quarter of 2023. Net product revenue from U.S. commercial sales of XPOVIO for the first quarter of 2024 was $26 million, compared to $28.3 million for the first quarter of 2023. The gross to net discount for XPOVIO in the first quarter of 2024 was 29%. As a reminder, gross to nets are typically higher in the first quarter. We expect gross to net discount to be in the 25% to 30% range for the full year 2024. Our total expenses for the first quarter of 2024 were down year-over-year, 4%, reflecting our ongoing cost reduction initiatives and focused investments in our late-stage pipeline. R&D expenses for the first quarter of 2024 were $35.4 million compared to $32.3 million for the first quarter of 2023.
The increase in R&D expenses was primarily attributable to higher clinical trial costs related to the advancement of our 3 pivotal Phase III programs. SG&A expenses for the first quarter of 2024 were $29.5 million, compared to $35.9 million for the first quarter of 2023. The decrease in SG&A expenses was primarily due to our ongoing cost reduction initiatives and lower headcount. Cash, cash equivalents, restricted cash and investments as of March 31, 2024, totaled $149.3 million compared to $192.4 million as of December 31, 2023. Based on our current operating plans, we are reaffirming revenue guidance for the full year of 2024 as follows: Total revenue is expected to be in the range of $140 million to $160 million. XPOVIO net U.S. product revenue expected to be in the range of $100 million to $120 million.
We are also reaffirming our expense guidance for the full year of 2024 as follows: R&D and SG&A expenses are expected to be in the range of $260 million to $280 million which includes approximately $20 million to $25 million of estimated noncash stock-based compensation expense. And finally, we expect our existing cash, cash equivalents and investments as well as the revenue we expect to generate from XPOVIO net product sales and other license revenues will be sufficient to fund our planned operations into the end of 2025. In summary, we have taken significant steps to improve our capital structure with our recent debt exchange and amended agreement with Healthcare Realty. We are rapidly advancing our 3 Phase III trials and driving commercial performance while continuing to be very diligent when allocating our resources.
I'll now flip to Slide 32 and turn the call over to Richard for some final thoughts. Richard?
Richard Paulson: Thank you, Mike. As you can see on Slide 33, we have several key milestones across '24 and '25 and are pleased to have extended the vast majority of our debt maturities into 2028 and 2029. Well beyond the data readouts and potential approvals of our 3 Phase III programs. With the substantial improvement in our capital structure, we have strengthened our opportunities to realize the full value of our late-stage pipeline with our Phase III clinical trials in multi-myeloma, endometrial cancer and myelofibrosis. Each of which would be transformative for patients and our organization. With data expected from each of these pivotal trials in 2025, next year is going to be an incredibly exciting time for our organization.
As we believe the largest opportunities for selinexor are yet to come. We are focused on delivering on our next phase of growth and our organization continues to be fueled by our belief in the extraordinary strength encouraged of patients with cancer and the potential of our novel mechanism of action to positively impact their lives. Thank you again for joining us today. And I would now like to ask the operator to open up the call to the Q&A portion of today's call. Operator?
See also
15 Best Places to Retire in Delaware and
12 Best Gig Economy Stocks To Buy.
To continue reading the Q&A session, please click here.
