2nd Q PR and CC impressions. As previously noted, upon reading the CC, I was relieved and happy. Relieved that earnings and revenue didn’t continue at the lower readout from the 1st Q. I still had reverberating in the back of my mind what JT said at the Jeffries HC Conf back in June in describing revenues “a 100 million, a 100 million plus”. When he said that, I wasn’t sure if he was pooh poohing revenues to emphasis they are not as important as the drugs in development or bracing us for lower future sales and it turns out it was the former. And I am happy because, well, you know, that’s self understood.
Continuing w financials, SPPI got 24M issuing stock at ~$7.40 per share and we got ~ a 4% dilution. You kind of suspected something like that was happening with the performance of the stock price over the last week. Not getting a double whammy of the SP going down but instead going crazily up yesterday was amazing. So we are good for at least the next 2 quarters. Not saying another dilution won’t happen but at least the Sword of Damocles isn’t hanging over SPPIs head in anticipation of an immediate dilution. Getting 5M later this year for licensing belinostat in Japan won’t hurt either. The last thing I have to say about the financials, and one of the more interesting tidbits, is they ended the quarter with $139 million in cash and equivalents compared to $137 million in the previous quarter. How they do that? That’s amazing! We know that’s one of the beauties of having 6 ‘boring’ cancer drugs generating revenue, it helps pay the bills! And this certainly was a demonstration of that. We know that won’t be the case going forward with more poziotinib trials in the works, the apaziquone P3 starting up (NOTE – they’ve done a good job of postponing it while still keeping the FDA happy that they will run it but postpone! and procrastinate! as long as possible since it won’t affect them one way or the other). On the other side of the coin, the 400 pt Rolontis trial is winding down so that will help some.
Regarding Rolontis updates, I am glad it is steadily moving along. Rolontis will be our next revenue driver starting in 2019 and will impact the stock positively as we get closer to that time. But what will double/triple our stock in the shorter term is positive news on poziotinib in NSCLC mutations with breakthrough designation to follow. AZN is predicting $3 Billion in sales in 2022 for Tagrisso (US+EU+ROW). It’s approved for EGFR T790M mutation-positive NSCLC. EGFR and HER2 Exon 20 mutants are in ~ half the patient base of Tagrisso. Do a back of the envelope calculation and let’s deduct a third for the Asia pts that are Hanmi’s and you get $3B * 2/3 of world * ½ of patient base = $1B. Even if you think AZN exaggerated the amount of sales from this drug (at their selling price of 12,750 per month, or $153,000 for a full year of treatment), you can still see that the poziotinib sales potental for Exon 20 mutant NSCLC, will be significant. And that’s just the tip of the iceberg, we’re still not looking at other mutations which Dr. Raj said poziotinib is active in or in other cancer indications such as breast or other cancers (a co-licencing deal will help with that). Dr Raj did say that they are looking to start soon a multi-center trial for Exon 20 mutations. I’d expect that it would be a pivotal trial so they can get accelerated approval. And let’s not forget the pozi combo study with T-DM1 in second line breast cancer that they mentioned during the 1st Q CC. And once we get positive news at 18th IASLC World Conference on Lung Cancer in mid-October or more complete interim results towards the end of year, it will start, if it hasn’t started already, the ball rolling for serious discussions in licensing pozi in the EU and co-licensing deal for the US. Many a major pharma company already has the sales force muscle and would love to put this in their arsenal along with their 1st and 2nd generation TKI inhibitors. Maybe a co-development deal to go along w that too.
So as we saw yesterday w the $1.63 spike in SP, some of the street is starting to figure this out. I read 2 articles that talked about it yesterday. Zachs was focusing on the clinical development and is starting to get it while Motley Fool was talking about you should be careful because within the year they’ll need to dilute again. Clearly they aren’t getting it. The next year should be a lot more fun as they do start to get it.
