CASI Pharmaceuticals, Inc. Q4 FY2021 earnings call

• Lead Programs and Near-Term Catalysts: 2021 was a year of growth for CASI. EVOMELA was a key focus with strong revenue performance. Pipeline updates included CNCT19, an autologous CD19-directed CAR-T investigational product with orphan drug designation by the U.S. FDA, BI-1206, a first-in-class monoclonal antibody in clinical trials, CB-5339, a VCP/p97 inhibitor acquired for Greater China, CID-103, a fully human anti-CD38 monoclonal antibody in Phase 1 trials, and Thiotepa in regulatory submission for indications. - Financial Highlights: Revenues consisted of EVOMELA sales, with $30 million for the full year 2021 compared to $15 million in 2020. Cost of revenue was $12.6 million in 2021 vs. $9.5 million in 2020 (including royalties). The company had $48.7 million in cash and cash equivalents at year-end 2021.

EVOMELA, CASI's first commercialized product, generated $9.12 million in revenue for the fourth quarter of 2021 and $30 million for the full year 2021, achieving over 100% revenue growth. EVOMELA was used in the treatment of nearly 6,000 patients in China in 2021. In terms of revenue contribution, EVOMELA's full-year 2021 revenue of $30 million was the primary segment performance as it was the only commercialized product discussed.

• CASI intends to price its CNCT19 CAR-T therapy significantly lower than imported CAR-T 19 therapies in China. - The sales force in China is being expanded in preparation for the CAR-T 19 launch, with the goal of growing over 200 in the marketing team in the next 18 months. - Anticipation of NDA filing for the CD19-directed CAR-T program in the second half of 2022.

• Disruptions due to COVID lockdowns in China, such as difficulty communicating with hospital physicians in March, though EVOMELA's sales were not severely impacted as transplant procedures continued. - Potential challenges in clinical trial disruptions, though currently, no significant setbacks have been observed for CASI's trials.

Q: Good morning, thank you for taking the questions and congratulations on the progress. Question from me on the CAR-T side with two anti-CD19 products now approved in China, I wanted to ask if you can share with us if you know what the pricing of those is currently? And if you can share with us your strategy with respect to competitive pricing for your product in that market?

A: Yes, I will comment that. So the first two approval are all imported CAR-T 19 therapy approved in the U.S. Because the nature of the CAR-T therapy is an autologous individualized therapy, it is actually very expensive in China. Right now, it’s priced at 1.2 – around RMB1.2 million in China, which is about close to $200,000 per treatment. So we believe we will price it significantly lower than this pricing. So obviously, we have not got the drug approved. So we believe, we will price it our CAR-T 19 at a significant less cost than the imported CAR-T 19.

Q: Okay, thank you, Wei. And then just a question on 1206, when we should expect to see the clinical data update on that compound in its two different trial settings?

A: Leland, yes, this is Alex. It will be up to our partner, BioInvent, to be releasing the data. They are, I believe, will be making some public statements on the potential presentations in the near future. So I’d advise you to look at the BioInvent website for details.

Q: Good morning, guys. Congrats on a great quarter and thanks for taking my questions. Just half – my first one is on the COVID. So, recently, both the Northeast Shenzhen and now Shanghai have been lockdown. I was wondering whether these lockdowns were causing a significant disruption to your sales this year?

A: Yes. So, the first, I think for the first two months, it’s business as usual. But we are actually seeing some difficulty of communicating with hospital physicians in March. So, we are obviously very diligently monitoring the situation in China.

Q: I see. Thanks. And in the prepared remarks, you mentioned that your – the sales force in China is now over 100 individuals. I was wondering whether do you still foresee a growth for this year? And if so, where do you expect the number to get to?

A: Yes. So, right now, actually, our sales force probably is sufficient for our first drive of EVOMELA. So, we are expanding our sales force preparing for the CAR-T 19 launch. And because in order to CAR-T 19 launch, it will be quite a challenging in China because this is an autologous cell therapy product. So, we really are growing our marketing and sales team in preparation for CAR-T launch. So, we probably will eventually grow over 200,000 marketing people in China in the next 18 months.

Q: Good morning, hi team. Thanks for – hi, Wei-Wu, how are you and thanks for taking the questions. Congrats on a great quarter here. I just wanted to follow-up about the ongoing situation of COVID lockdowns in China and hope you all are staying safe. But I was just curious, if you see any disruptions to clinical trial activity in China? And kind of what your thoughts are on the latest situation on the ground there?

A: Yes. My understanding is we have not seen significant disruption in clinical trials. We are seeing hospital is not allowing our salespeople to go meet with physicians, right. So, the good thing about our EVOMELA is actually, we think, actually majority of the transplant physicians are now already familiar with the drug. So, the transplant procedure is still going on in China. So, that’s on the product side. We have not seen significant setback on clinical trials, at least for us.

Q: Great. Okay. That makes sense. And hopefully, you are all staying safe and the situation resolves soon. And then further, I just had a question how you are thinking about potential additional business development transactions potentially, or how you are thinking about potentially expanding the pipeline at CASI?

A: Yes. Well, actually, I will say a few words and then Jim may chime in on our business development. We love our business model because China is a 1.4 billion people population country, and it’s a country embracing the modern innovative drug development pipeline. And so we think the smart business model we are using to look for global innovation, but using China as a market should go on for quite a while. And we are aggressively looking at all sorts of assets. But right now, we are focused on hematology/oncology, because this is really our core strength with our commercial franchise. We did over $30 million revenue for a very niche product that’s just proven – we have proven to investors that CASI as a company, we really know how to commercialize product in this particular niche market. And so we are very focused on looking for anything related to hematology/oncology. And we are probably going to focus on this. But for the next 2 years, CAR-T 19 probably will be one of our major, major asset, because this is – this will be, hopefully, this will be the first Chinese domestically developed CAR-T 19 therapy, lower cost. There are 50,000 patients we can treat with this compound. So, with that said, we will continue to look for anything which we think can make a difference for the patient. Jim, do you want to make a few comments?