Spectrum Pharmaceuticals Inc (SPPI) Q3 2020 Earnings Call Transcript

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Spectrum Pharmaceuticals Inc (NASDAQ:SPPI)
Q3 2020 Earnings Call
Nov 4, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to Spectrum Pharmaceuticals Third Quarter 2020 Earnings Call. [Operator Instructions] Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]

I would now like to turn the conference over to your host today, Mr. Kurt Gustafson, Chief Financial Officer. Sir, the floor is yours.

Kurt GustafsonChief Financial Officer

Thank you, operator, and good afternoon to everyone. Thank you for joining us today for Spectrum Pharmaceuticals’ third quarter 2020 financial results conference call. Our third quarter financial results press release was sent out earlier this afternoon, and is available on our website at www.sppirx.com. Joining me on the call today from Spectrum Pharmaceuticals will be Joe Turgeon, President and CEO; and Dr. Francois Lebel, Chief Medical Officer.

Before we get started, I would like to reference the notice regarding forward-looking statements included in today’s press release. This notice emphasizes the major uncertainties and risks inherent in the forward-looking statements that we will make this afternoon. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements.

With that, let me turn the call over to Joe Turgeon, CEO of Spectrum.

Joseph TurgeonChief Executive Officer

Thank you, Kurt. Good afternoon, everyone, and thank you for joining us today in the call. As always, I really appreciate your interest in Spectrum. And I’m pleased with the progress that Spectrum has continued to achieve over the course of this entire year, and that’s despite the challenges of the pandemic and the impact it’s had across our industry.

While Spectrum is in immune to the impact of the pandemic, our staff has demonstrated dedication, resilience and focus to position the Company for a strong finish in 2020. We have a number of key milestones coming up in the next couple of months. We’ll be meeting with the FDA to review our filing strategy based on the positive results we announced earlier in the quarter for poziotinib.

These data demonstrated that poziotinib met the pre-specified primary endpoint patients with non-small cell lung cancer HER2 exon 20 insertion mutations. This is a positive outcome and it’s significant for Spectrum and for the patients with this devastating disease. We’re also be providing an update on the overall poziotinib program, including dosing strategy and topline results from Cohort 3 prior to the end of the year.

Last week, we announced that the FDA was deferring action on the BLA for ROLONTIS. The reason for the deferral was the agency’s inability to inspect the Hanmi Bioplant in South Korea due to travel restrictions related to the COVID-19 pandemic. The FDA confirmed that this was not a Complete Response Letter, otherwise known as the CRL. This means that our file remains active. We have answered all the enquiries from the FDA, and we’re not aware of any outstanding items other than the inspection. We will be prudent with our financial resources and have gated certain activities, pending further feedback or action from the FDA.

Regarding the ROLONTIS plant inspection, our partner Hanmi Pharmaceuticals is a well-established global biopharmaceutical player with a world-class manufacturing facility. Hanmi is the second largest pharmaceutical company in Korea, behind only Samsung. They are prepared for the inspection and willing to be accommodative to the needs of the FDA, as it strives to meet the regulatory obligations. They’ve been a great partner, and are working in tandem with Spectrum to obtain an approval for ROLONTIS as soon as is possible.

I’m really confident in our ability to meet our corporate objectives and advance our programs with the aspiration of bringing new treatments for the patients with cancer who need it.

And with that, I’m going to turn over the call now to Dr. Francois Lebel, our CMO, for an update on our clinical development progress. Dr. Francois?

Francois LebelChief Medical Officer

Good afternoon, everyone. It’s good to be with you today for a short update. We have discussed previously the positive outcome for Cohort 2 of the ZENITH20 clinical trial. We will remain very excited by these results and look forward to our pre-NDA discussion with the FDA in the near-term. Let me remind you that there is no approved treatment for patients with HER2 exon 20 insertion mutation in non-small cell lung cancer, and we believe pozi has the potential to fill an important therapeutic gap in an area of great medical need.

Patients enrolled in the ZENITH20 Cohort 2 received 16 milligram of poziotinib once-daily. Most patients were heavily pre-treated, including chemotherapy and immunotherapy. The primary endpoint was objective response rate, as defined by RECIST 1.1. The intent to treat analysis demonstrated an ORR of 27.8%. The observed lower bound of 18.9% exceeded the pre-specified lower bound of 17% with a 95% Confidence Interval.

At the data cut-off, with a median follow-up of 8.3 months, the responses were durable with a median of 5.1 months and seven patients continued to receive drug after one year. Progression-free survival was 5.5 months, with a disease control rate of 70%. The safety profile was in line with the type of adverse events seen with other second-generation tyrosine kinase inhibitors.

We also presented the results for Cohort 2 at the European Society for Medical Oncology or ESMO at their Virtual Congress in September 2020. This was the first presentation of the medical and — to the medical and scientific community of the positive results for this large registrational trial. We are preparing for the pre-NDA meeting with the FDA for pozi, which has already been scheduled. We will discuss the path forward to registration seeking initially an indication for the treatment of patients with previously treated locally advanced or metastatic non-small lung cancer with HER2 exon 20 insertion mutation.

Additional cohorts are still under way in this pivotal trial. Results for both Cohorts 1 and 2 have been reported and Cohort 4 in the first line HER2 exon 20 insertion mutation is now actively enrolling at 8 milligram BID. We plan to update you further before the end of the year on our poziotinib dosing strategy and the fully enrolled Cohort 3 in first-line EGFR non-small cell lung cancer patients that received 16 milligram in a single daily dose.

The exploratory Cohort 5 is enrolling well with over 110 patients to date, and successfully provides us data to further define the minimal effective dose. We have recently stopped enrollment in the 10 milligram per day dosing arm, as during safety reviews, it demonstrated an enhanced safety profile, but sub-optimal anti-tumor activity. An indirect benefit of this early action is to accelerate the enrollment in our 6 milligram and 8 milligram BID dosing arms. We will be providing additional data in a future scientific meeting.

Now let me shift to ROLONTIS. Our BLA for ROLONTIS is supported by robust clinical data from two large randomized clinical trials. ROLONTIS met the primary endpoint of non-inferiority in duration of severe neutropenia and met all the secondary endpoints. The safety profile was similar to pegfilgrastim. I should mention here that we will be presenting a poster at the San Antonio Breast Cancer Virtual Meeting taking place this coming December 8 to 11. The poster will be available for viewing prior to the meeting and shows the pooled analysis of two Phase 3 trials, demonstrating the strength of our clinical package.

As a reminder, enrollment in our same-day dosing study continues. This is an exploratory study that evaluates the dosing of ROLONTIS on the same-day as chemotherapy. We expect to have data by the end of this — of the year that will determine whether we move to an expansion phase of this study.

As to the deferred action on our ROLONTIS filing, we have answered all questions from the FDA related to the review of the BLA and we’ve had advanced labeling discussions. On the manufacturing side, we have conducted multiple mock inspections of our plant, and are exploring ways to expedite the inspection, possibly using alternative methods to ensure the earliest completion of the review of our BLA during this COVID-19 pandemic.

We look forward to updating you on important program milestone in the next two months, including the outcome of our poziotinib registration discussion with the FDA.

I will now turn it over to Kurt for some insight into our third quarter financials.

Kurt GustafsonChief Financial Officer

Thank you, Francois. Our SG&A expense for the third quarter of 2020 was $15.1 million versus $13.1 million in the previous year. R&D expense was $24.5 million versus $17.2 million. The increase in R&D expense relates primarily to a purchase of $8 million of ROLONTIS drug substance in the third quarter compared to no purchases in the third quarter last year, as we kept the manufacturing facility in a state of readiness for an FDA inspection. Recall that the accounting rules require us to expense this inventory as R&D expense until the product is approved, but when we sell this inventory, it will be at a zero cost of goods.

Other income expense for the third quarter was a loss of $9.1 million compared to income of $2 million in the period a year ago. The loss is primarily related to a decline in the market value of our equity position in CASI. Our net loss for the quarter was $48.5 million versus $26 million in the comparable period in 2019. On a non-GAAP basis, which primarily backs out stock compensation costs and the change in value of our CASI securities, our loss for the quarter was $35.2 million versus $24.5 million in the prior year period.

We ended the quarter with $198.3 million in cash plus marketable securities. The cash balance reflects the proceeds from our financing in late July that raised a net $82 million. Operating cash burn, which is the best measure of our ongoing cash flow, was $28 million for the third quarter. This is consistent with where we’ve been in the last few quarters. And as you can see, we are well positioned financially with plenty of runway to continue the development and commercialization of our late-stage assets.

With that, let me now hand the call back over to Joe.

Joseph TurgeonChief Executive Officer

Thank you, Kurt, and thank you, Dr. Francois. I think you can see from everyone’s remarks that Spectrum continues to make strong and steady progress on our pipeline. In the coming weeks, we’ll be doing all that we can to facilitate the completion of the inspection of our ROLONTIS manufacturing facility. We look forward to updating you later this year on our FDA discussions on the registrational pathway for pozi and to sharing additional results for our ongoing cohorts in the ZENITH20 clinical trial.

Let me remind you that we will be participating in several upcoming healthcare investor conferences and hope to connect with many of you at that time. Once again, I’d like to thank our entire team for their hard work, their dedication in these unprecedented times. We look forward to keeping you informed on our future progress.

And with that, I’d like to open up the call for questions. Operator, if you could open up the call please. I’d appreciate it.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Your first question comes from the line of Maury Raycroft from Jefferies. Your line is open.

Joseph TurgeonChief Executive Officer

Hey, Maury.

Maury RaycroftJefferies — Analyst

Hi, everyone. Hi, Joe.

Kurt GustafsonChief Financial Officer

Hey, Maury.

Maury RaycroftJefferies — Analyst

Hi. Thanks for taking my question. So, first question is on ROLONTIS. So Francois mentioned label discussions. Just wondering if you can elaborate on that? And then, you mentioned the mock inspections. And I’m wondering if that’s something FDA asked for and how that could help move the process along? And I guess, is FDA considering potential to do a virtual inspection?

Joseph TurgeonChief Executive Officer

Yeah. Francois, why don’t you take it now? I’ll jump in after. First, there is really three questions in there. Let’s start with the label question you asked. Francois, any comments there?

Francois LebelChief Medical Officer

Right. Sure. So as we have indicated in my remarks and Joe’s, the — look, to our knowledge, right, we have received during the review of this file many questions. We believe that we’ve answered all of them and that the FDA was satisfied, but of course, we don’t know that until they approved as drug. To our knowledge, the only thing outstanding right now is the inspection of our manufacturing — main manufacturing plant.

I think the second component was, would they consider a different alternative form of inspection. So actually, I was just reading earlier today that the FDA has actually issued a statement yesterday that they are in the process of developing guidance for interactive video GMP evaluation. So, that’s one thing that we certainly would be open to. We have not specifically talk to them about that yet. And as you may know, the European agencies are conducting plant inspection using technology like that. FDA had issued guidance for priority drugs that they were considering that. But now, the news of yesterday is that they are in the process of developing guidance for other drugs. So, we look forward to hearing more from that.

And I can’t remember the third component of your question.

Joseph TurgeonChief Executive Officer

Yeah, I’ll take that Francois. I’ll just add one thing to what Dr. Francois said on what he said this time. It’s important to understand that the agency certainly has the authority to conduct an inspection in a variety of different ways. And keep in mind to that like for example, this plant has been inspected by the Korean authorities. So, maybe that’s something that can help, we don’t know. But bottom line is we’re going to try everything we can and it’s good news that in unprecedented times, they are looking to change the way they do business because you kind of have to. And I want to stress another thing, we are absolutely ready for this inspection. We are ready for a long time. We welcome it.

Matter of fact, the third part of your question was the mock inspections, was it required. They are certainly not required by the agency. We do that to make sure we’re ready. And I can tell you we have Spectrum boots on the ground there. We have Hanmi, which I mentioned, is a world-class manufacturer with a world-class plant. Their people are ready and we work very closely with them with these mock inspections. And we have a third leg to the stool, we have people — outside experts we’ve hired to run these, not only run these mock inspections, but also help the readiness. And these are people who have done this for a living. They do this — they know exactly what people — what FDA is looking for an inspection. So, we feel we’re ready. We welcome the inspection. We’re ready. We can’t wait.

Maury RaycroftJefferies — Analyst

Got it. It’s all really helpful perspective. And second question was on the Pre-NDA meeting. I’m just wondering if you can provide some insight in the case — into the case that you’re going to make to try to persuade FDA? I guess will it include post hoc analysis and reconciling data from Cohorts 1 and 2? Or will the argument be more around having FDA factor in new data from Cohort 3 and Cohort 4 through 7 as you get the data from those additional cohorts?

Francois LebelChief Medical Officer

Sure. So, well, obviously, we’re pleased that Cohort 2 met its primary endpoints. And that’s the critical ingredient that you need to have a discussion with the FDA. So, our request to the FDA, as I indicated in my remarks, is that we’re seeking period of first approval for that particular indication for that cohort, which is in previously treated HER2 Exon 20 mutation in non-small cell. Cohorts were all — as pre-specified endpoint, they are all independent. The FDA had agreed to that. So, a positive outcome in Cohort 2 is not — in theory, not affected by what happens in Cohort 1, 3 or 4. So that’s the good news. That’s what we’re asking at this time. And obviously, once we’ve had the meeting which will be soon, we will update you on the outcome.

Maury RaycroftJefferies — Analyst

Got it. Understood. Thanks for taking my questions.

Francois LebelChief Medical Officer

Sure.

Joseph TurgeonChief Executive Officer

Thank you, Maury.

Operator

Your next question comes from the line of Michael Schmidt from Guggenheim Securities. Your line is open.

Joseph TurgeonChief Executive Officer

Hey, Michael.

Charles ZhuGuggenheim — Analyst

Hey, guys. This is Charles Zhu on for Michael Schmidt. Thanks for taking the questions. I have a couple regarding poziotinib. I guess starting off, the ZENITH20 Cohort 3 that should be reading out by year-end, given that this is a less heavily pre-treated population relative to Cohort 1, how should we think about I guess patient willingness or ability to tolerate poziotinib’s side effects at the 16 milligram dose? What could this mean for dose interruptions, discontinuations or overall drug exposure? Thanks.

Francois LebelChief Medical Officer

Sure. So, look, we — until we see the data and present the data and share the data with you, it is the topline data I can’t presume at this point of what we’re going to see totally in the safety profile. Clearly, we monitor safety on all our studies, including these cohorts. And for signals that would be out of the ordinary and as you know, we have not add to make any announcement of that sort. So, we’re going to have to wait for the complete analysis that is not that far away. We’re saying you’re going to have it before the end of the year.

Charles ZhuGuggenheim — Analyst

Got it. Makes sense. And then, my next question is on Cohort 4 in treatment-naive HER2 patients. I think you made some prior commentary around this cohort having a mix of patients either receiving the prior 16 milligram once-daily dose, as well as more recently enrolled patients were receiving the BID dosing. I guess on this front, my question is, if the alternative dosing schedule doesn’t indeed result in a different clinical profile, how would clinicians or the FDA interpret the results coming out of this cohort, given that it is independently powered? Thanks.

Francois LebelChief Medical Officer

Yeah. Sure. So, you’re absolutely correct. Cohort 4 was started at 16 milligram once a day. And you can think about it in the sense that probably roughly half of the patient originally intended were enrolled at 16 milligram once a day. The — currently, we’re dosing patients at 8 milligram BID. As you can imagine, 8 milligram BID is 16 milligram. So, we’re still dosing at 16 milligram, but we are administering at twice, 8 milligram BID. So, we think actually that will be helpful for us to understand better in that pivotal arm or cohort, is there a difference between when you give 16 milligram, but if you give it once a day versus twice a day.

So we think that could play in our favor. And we are — we have planned to potential — to continue the enrollment for our full 70 patients at BID, if necessary. But as you — we’ve indicated, we are going to be meeting with the FDA in the near-term and will have to gauge with them what they would prefer we do here. But from our perspective, we’re dosing patients in Cohort 4 at 16 milligram per day.

Charles ZhuGuggenheim — Analyst

Got it. Thanks for that clarification.

Joseph TurgeonChief Executive Officer

You’re welcome.

Operator

Thank you. Your next question comes from the line of Alethia Young from Cantor. Your line is open.

Alethia YoungCantor Fitzgerald — Analyst

Hey, guys. Thanks for taking my question. Maybe a couple. Can you give us like kind of more detailed color on how you’re thinking about potential timelines of being able to kind of thread the needle on a rereview at Hanmi? Also just can you take a little bit about your confidence of the broad ROLONTIS label? And then lastly, just can you just talk a little bit about like since Cohort 3 is coming up pretty quickly, why not maybe just wait and have a dual conversation with the FDA, or just generally you kind of why do these in sequence because you just don’t know when you can book meetings? Thanks.

Joseph TurgeonChief Executive Officer

Francois, do you want to take that or…

Francois LebelChief Medical Officer

I’m sorry, I — the — can you repeat the question? I think I wasn’t…

Alethia YoungCantor Fitzgerald — Analyst

Sure. So one is like on the estimate around like kind of can you give us a tired view on the timelines for ROLONTIS like do you think it will take months, do you think it will take weeks? But I know it’s hard to tell, but just in your best guess, you guys must have a base case. Second one, your confidence on potential broad label for ROLONTIS. Third is on poziotinib, and I just want you to talk a little bit about why not wait for Cohort 3 data perhaps in addition to the Cohort 2 and then go to the FDA? Thanks.

Francois LebelChief Medical Officer

So…

Joseph TurgeonChief Executive Officer

Go ahead, Francois.

Francois LebelChief Medical Officer

The first question is on ROLONTIS, when do we expect the inspection. Is that correct?

Alethia YoungCantor Fitzgerald — Analyst

Just like if you give a little more color on the timing like months, weeks, like?

Francois LebelChief Medical Officer

So I think, Alethia, I would agree with you that it’s hard to tell. I think we’ve told you as much as we can and as I’ve just mentioned the FDA release yesterday, it’s a Pink Sheet that they were looking actively into virtual inspection. I don’t know how and when that will occur. And we don’t have information at this time. Obviously, we’re actively working to try to make sure that we’re ready, as we’ve indicated, but as well, we are following up with the FDA to make sure that they understand how important this is for us and patient.

Joseph TurgeonChief Executive Officer

Hey, on that part on that question, Alethia, I’ll just add two things for color. We are not going to sit around. We want to try and do what we can to push us forward or nudge it. I’ll tell you that. We’re not going to just sit and wait, I can assure you that. But secondly, yeah, I’ve just mentioned the pandemic in South Korea is doing very, very well. I just — we update with the Hanmi team quite often, and they were saying they’re down to like 100 cases a day in the whole country. They’re really way down.

So, I’m hoping that replace to our favor. And maybe we’ll able to even do it live, but otherwise, it’s good to see the agency moving forward and realizing, hey, like Europe, we’ve got to — just like we’re doing in all our businesses, we have to get better doing these another way. So we won’t sit back. We’ll try and nudge it maybe where we can, and we work with them aggressively to try and do whatever we have to do as well on [Phonetic] Hanmi.

So again, I wish I could give you an exact date, but that’s the best we can give you. But Francois, you want to go ahead with the broad label for ROLONTIS and also the pozi waiting for Cohort 3 [Phonetic] and the other two questions.

Francois LebelChief Medical Officer

So the labeling discussion, I don’t think we can get into the details of it. I assume this is labeling for ROLONTIS because obviously, we’re going to have to wait until — normally when you have a review of a BLA or an NDA, one of the last thing you do once you answered all the questions, you get into a discussion about the label. So I’ve communicated — shared with you that we have been in those type of discussion. So that’s a positive from our perspective. Clearly, we still have this inspection issue that we think we’ll get addressed in a timely fashion, but we don’t have an exact date.

On pozi specifically, Alethia, can you repeat the question?

Alethia YoungCantor Fitzgerald — Analyst

I mean, Cohort 3 is not far behind and like if you hit, it might show that your argument with Cohort 2. So why not just wait and have that meeting in the first quarter maybe than — rather than immediate?

Francois LebelChief Medical Officer

Well, I mean, what I can tell you is that we had agreed a Type C meeting. We agreed it with the FDA some time ago as to what we needed to do to declare victory on a cohort and we’ve achieved this. So, we’re not going to wait. We’re going full ahead. As we’ve indicated to you the schedule, we’re going to have the meeting. Clearly, we have shared with them the timelines around all our cohorts and they are aware that Cohort 3 and Cohort 4 and they are also aware of our exploratory Cohort 5. So, they are fully aware of all of that. And at the meeting, I’m sure it’s going to come up for discussion. And if they want to see it before, well, we may do that, but you have to remember they’re independent though. Cohort 3, positive or negative, should not influence Cohort 2 here.

Alethia YoungCantor Fitzgerald — Analyst

Okay, great. Thank you.

Joseph TurgeonChief Executive Officer

Thank you, Alethia.

Operator

Thank you. Your next question comes from the line of Ed White from HC Wainwright. Your line is open.

Joseph TurgeonChief Executive Officer

Hey, Ed.

Operator

Hi, Ed. If you’re on mute, please unmute. Your line is open.

Ed WhiteHC Wainwright & Co. — Analyst

Yeah, sorry. Sorry. Hi guys. I was on mute. So thanks for taking my questions. I have a few. First on the ROLONTIS launch. Last quarter, when you were getting ready, you said you were looking at hiring in about 60 FTEs for the launch. And I think you’ve commented that 21 were already hired. Are you continuing with the hiring now? Are you getting closer, or you’re putting it off [Indecipherable] hear more about the timing to potential approval?

Joseph TurgeonChief Executive Officer

Yeah, Tom, you are leading that, why don’t you answer that?

Thomas RigaChief Operating Officer

Hi, Ed. How are you? So your recollection is correct. We currently have 21 of the 60 FTEs and the remaining FTEs are gated to that PAI being scheduled. So the 21 that are on board are really focused in the med affairs area, market access, national accounts and field leadership. So, those folks are actively engaged in our preparation efforts. We want to make sure we’re on the ready and can pull that trigger in line with the FDA’s inspection. So, we want to mitigate our burn and spend for the remainder of customer-facing staff, but we do have the 21 FTEs that are actively finalizing our preparation efforts and we’ll be ready to go when the agency get to the facility.

Ed WhiteHC Wainwright & Co. — Analyst

Great. Thanks, Tom. And so, maybe a couple of questions on pozi. One to Francois, just for the Cohort 4, when can we expect to see data? And will that data be on 70 patients at the 16 milligram, or is that going to be data on 70 patients at that 8 milligram BID? I mean they are both 16 milligrams, but I’m just wondering how to think about the data and the timing.

Francois LebelChief Medical Officer

Yeah. So, we — on the basis of the pharmacologic modeling, on the fact that we had seen in Cohort 1 and Cohort 2, fairly high dose interruption and dose reduction, we decided that we would explore some other way of giving the drug and the data is coming in as we speak, if you want. So the original and for Cohort 4, I believe with 70 patients and we were half enrolled, maybe a little more than half enrolled at 16 milligram once-a-day. And we got — we are currently on track to add 70 patient BID, so — on Cohort 4.

So in other words, the same assumption would stand. We will discuss with the FDA at the pre-NDA meeting. If they continue to agree with what we’re doing, or if they would prefer for us to do otherwise. So I can’t answer you today, other than say, we will have definitely more the original and at 16 milligram one way or the other. And if we need to go back to 16 milligram, we will do it after discussing the matter with the FDA.

Ed WhiteHC Wainwright & Co. — Analyst

Okay, thanks. And maybe on Cohort 5, you mentioned you have over 100 patients to date and you stopped the 10 milligram dose sub-optimal. I’m just wondering now looking at the 6 milligram and 8 milligram BID dosing, where do you stand for the number of patients? So when we do see data and if you have any timelines on when we’ll see data, but that would be appreciated, but how many of them were in that 10 milligram dose that was sub-optimal?

Francois LebelChief Medical Officer

Yeah. So, we — you got to remember Cohort 5 started by randomizing patients to 10 milligram, 12 milligram or 16 milligram once-a-day, and then we amended it, stopped enrolling at 12 milligram and random — and 16 milligram once-a-day. And more recently, we’ve been randomized patient at 10 milligram, 12 milligram and then the BID. And I’m sorry, not the 12 milligram, the 10 milligram and the 6 milligram and 8 BID. So, we’re — so that’s what I’m reporting to you here that we have 110 patients. The reason that we’re mentioning the number is simply because the number of company indicated that COVID had affected negatively during enrollment. And we did see a transient impact on our enrollment, but it’s going pretty well now.

And the fact that we stopped 10 milligram and we didn’t issue a number, let’s just say that there is enough patients for us to make a decision as to that — with some certainty around the 10 milligram dosing, and we will obviously have what we need in terms of the BID dosing. The exact time of giving you information though probably be before the end of the year, we’ll be able to make comments mostly on the safety side, as efficacy takes a little longer because we want to assure not only responses, but durability of response. So, we’re going to update you in the next two months on what’s going on, what we’re seeing in the various dosing cohorts and including some preliminary information on the BID.

Ed WhiteHC Wainwright & Co. — Analyst

Okay, great. And maybe just last question for Kurt. That $8 million for the drug substance that was tacked on to the R&D expenses this quarter, will that be another charge for drug substance next quarter, or is that really yet we go back to the run rate without that? Thanks.

Kurt GustafsonChief Financial Officer

Yeah. Thanks, Ed. So, we were — we had started and continued to be manufacturing product as we exited the third quarter into the fourth quarter. So, there will be some expenses for ROLONTIS drug substance in the fourth quarter. I can’t give you a number on how big that will be, but as Joe kind of mentioned, we are going through a process right now in evaluating every piece of spend that’s related to ROLONTIS and making sure that, is this an activity that needs to happen now? Should it be gated? When should it happened? So, we’re going line by line to our budget to make sure that we’re going to be prudent with our spending. So short answer is, there will be some spending, but we’re taking a hard look at manufacturing, figuring out exactly how much we need to go to. We obviously want to make sure that plant stays in a readiness mode.

Ed WhiteHC Wainwright & Co. — Analyst

Okay. Thanks, Kurt.

Joseph TurgeonChief Executive Officer

Thanks, Ed.

Operator

Your next question comes from the line of Reni Benjamin from JMP Securities. Your line is open.

Joseph TurgeonChief Executive Officer

Hello, Ren.

Reni BenjaminJMP Securities — Analyst

Hey, Good afternoon, guys. Hey, good afternoon. How are you?

Joseph TurgeonChief Executive Officer

Good.

Reni BenjaminJMP Securities — Analyst

A couple of — I guess a couple of questions. I should probably know this, but how many products does Hanmi manufacture worldwide? And I guess, how many are in the U.S.? And has the manufacturing plant been inspected by the FDA before?

Joseph TurgeonChief Executive Officer

Hanmi, I can’t tell you exactly how many. They have multiple products in South Korea and other places in Asia that I can tell you. It’s a full-fledged manufacturing. They started out for a long time as a generic company, manufactured generics and then they expanded several years ago into drug development and that’s when we got involved with them and got both drugs actually, as you know, Ren, from them. They don’t have any drugs in the U.S. today, but they were inspected. My understanding was for a device with the U.S., but no drugs in the U.S. at this time. But certainly, several drugs that they have throughout the Asia.

Reni BenjaminJMP Securities — Analyst

Got it. And when you mentioned that there are activities that you’re gating to manage the cash, of course, the delay in the hiring the sales force for sure, is there anything else that you are actively managing at least from a, I guess, the ROLONTIS rollout perspective that we should be aware of?

Kurt GustafsonChief Financial Officer

Yeah, Ren, this is Kurt. I think the key things here would be mostly focused on the commercial side of the business. So as Tom mentioned on the sales team, you could think about some pre-launch marketing spend as well. We’re going to make sure that we maintain a state of readiness for the facility. And Francois also spoke a little bit about some of the continued development efforts that we have with ROLONTIS. And those are some activities that will continue.

Reni BenjaminJMP Securities — Analyst

Okay. And then, just one final one on ROLONTIS, ROLONTIS performance and [Phonetic] poziotinib. What’s the kind of cadence of discussions with the FDA right now? Because this is — I think this is one of the [Phonetic] first times I’ve heard of a deferral. Is there a back and forth, or do you just kind of have to wait until they get back to you?

Joseph TurgeonChief Executive Officer

Francois, you can add to this, but obviously, we’re not going to sit back and wait. They have the authority to do things. So like in anything else, you contact the agency. They have so much time to get back to you, kind of that’s all laid out. And then, we certainly could have discussions on what’s next, how can we work with you, we’re willing to do whatever it takes.

As Dr. Francois said, just yesterday, they issued — you can see movement on their part for the first time and this is new to them. And they issued a statement on moving forward. Europe is doing it, as you heard already. So I think they’re going to have to just start moving forward. And I’ll tell you, we will do anything we can to, I’ll use the word, nudge them. You have to do it properly, but we have every right to talk to them. We’re ready to go and try and figure out how to do this as quickly as possible.

Reni BenjaminJMP Securities — Analyst

Got it. And then just one…

Francois LebelChief Medical Officer

Look, they have given us the deferral. We have had, let’s just say some representation to them to seek clarification. I’m not going to get the details of how many communication, etc. But clearly, we’re working closely with them. Obviously, it’s a problem. We’re not the only manufacturer here who has that problem and the FDA is very aware. As I’ve indicated, they’ve issued some new information about development of guidance yesterday. So, we think it’s a very active topic, subject. And clearly we will — as Joe has stated, we will continue to follow up with them as to what to expect here and especially in timelines.

Reni BenjaminJMP Securities — Analyst

Got it. And just switching gears to pozi real quick. The FDA meeting that’s coming up, I maybe incorrectly just assume that with the trial being a registrational study and the endpoints kind of agreed upon that there likely wasn’t much more discussion needed until you’re just going to file the application. So what exactly — I guess, the long-winded way of asking, what exactly kind of looking for here? What additional clarity do you think we could possibly get?

Francois LebelChief Medical Officer

Yeah. So this is standard. Whenever you think you’re going to file an NDA or BLA, it’s usual to call a meeting with the FDA and then you go over either your plan like you agree on the dataset. So I’ll give you a specific example. We obviously would provide the efficacy and safety on Cohort 2. But the question would be, for example, OK, how much additional data on safety do they want to see? Do they want to see all human exposure? For example, in our case, that’s over 1,100 patients — human beings whoever receives the drug. So we have an extensive database of safety.

We need to know from them, do they want to see all of the studies that we have done, that our partner has done? Do they want to see — so it’s details like that, then you have pre-clinical work like safety, toxicology and animals. We clearly have done quite a bit of it. We need to know, OK, do they agreed that what we’ve done is what they want or they want something else. And then, you go to pharmacology. And so, in a way, it goes on and on.

So, and then you can ask them very specific question about anything in the submission. Then you agree on the format. As you know, there is — for these mutation-driven tumors, you need to develop a companion diagnostics. So you have to come to an agreement with them as to what kind of companion diagnostic you’re going to have etc. So, there is lots of questions. And that’s what we’re going to be discussing. And — but there is nothing unusual. This is standard for a pre-NDA or pre-BLA meeting.

Joseph TurgeonChief Executive Officer

Yeah, Ren, our goal is to file.

Reni BenjaminJMP Securities — Analyst

Thank you guys very much.

Operator

Thank you so much. Your next question comes from the line of Mayank Mamtani from B. Riley. Your line is open.

Joseph TurgeonChief Executive Officer

Hi, Mayank.

Mayank MamtaniB. Riley — Analyst

Hi, Dean. Thanks for taking my question and the length of the appropriate word. And I understand we are very far from being down for the year. So my first question, if I may, on — the term you used about pozi dosing strategy update by the end of the year. Could you just talk a little bit more in detail about that? I think you said that in the context of Cohort 4. And I’m trying to understand if your Cohort 3 does not have the kind of limitations we saw with Cohort 1. I mean you can really move along with the 16 mg dose with the higher confidence level through the rest of the program. So, I’m just trying to connect the dots in follow-up to all the questions that have been asked before, and try to understand what can we learn from you by the end of the year that boils down to pozi dosing strategy update?

Francois LebelChief Medical Officer

Sure. Let me try to address that. So, let’s start with Cohort 2. So Cohort 2, we had agreed prior to doing this study. We had agreed with the FDA as to what we needed to show to make it a meaningful outcome, and we have met that. So that was done at 16 milligram once-a-day. So in other words, you have a positive trial at a 16 milligram once-a-day. So — and that is the main discussion point for the pre-NDA meeting. In other words, we are saying, look, we had an agreement, we’ve met what we needed to do and now we would like to discuss what kind of data do you want to see, etc.

And then, the dosing strategy is simply because we knew in Cohort 1 that had — we had analyzed before Cohort 2, we knew that we had a fairly high level of dose interruption and dose reduction. So we decided we did some pharmacy modeling and we decided that we probably could reduce what’s called a Cmax and still stay above the EC50. So in other words, it’s not that 16 milligram once-a-day doesn’t work, it’s just that we may be able to improve on it.

And that’s why we’re doing the BID and will provide data in near-term, but also we have looked at 10 milligram a day, 12 milligram a day, simply because we know what dose is effective and as some degree of toxicity, and that’s 16 milligram. But what we don’t know is what is the minimal effective dose like how low can you go. In other words, you might be able to reduce some of the toxicity, but still maintain anti-tumor activity.

And what we’ve announced to you today is that 10 milligram as a starting dose is just possibly a little too low to start. In other words, it has to be higher than that. So that’s great news. I mean, we’re learning what is the minimal effective dose. And remember, we have done 12 milligram. We have data that’s maturing. And we — and we have 12 milligram once-a-day and we have 6 milligram and 8 milligram BID that will be maturing as well, right. We’re enrolling. We need more data and a little more time to analyze that data.

So, all of that together will obviously be discussed with the FDA. They will see 16 milligram once-a-day works, and they will see that maybe we can improve on it and we’ll have that discussion with them. I hope it answers your…

Mayank MamtaniB. Riley — Analyst

It does. And I really appreciate you’re laying it out. So just to clarify, so we will have some sort of apples-to-apples same population data between 16 mg a once-a-day and then 12 mg once-a-day, and then also it 8 mg BID at some point in first quarter or by the end of the year. Is that fair?

Francois LebelChief Medical Officer

So I think what I said is we’re going to definitely be able to make some statement about safety. The efficacy, you have to follow patient longer. So we may not — we’re not going to have a…

Mayank MamtaniB. Riley — Analyst

Understand.

Francois LebelChief Medical Officer

[Speech Overlap] on the efficacy on some of these cohorts in the next two months because we have to follow patient longer, but we’ll get a very good indication, if we’re on the right track with BID.

Mayank MamtaniB. Riley — Analyst

Yeah. And safety is obviously the most important question because we know the drug works. So then my next question on ROLONTIS same-day dosing. Could you just give us a little bit color. It seems like it might be important for commercial purposes. So could you just let us remind me how does that read in your longer-term plan of including differentiating against biosimilars?

Francois LebelChief Medical Officer

Joe, I assume you want to take that.

Joseph TurgeonChief Executive Officer

Yeah. You broke up. Could you ask the question again. I was trying to make sure I answer the right question. You kind of broke up. I’m sorry man.

Mayank MamtaniB. Riley — Analyst

Sure. No worries. So on the same-day dosing for ROLONTIS, I was just curious — two parts to the question. One is, how does this fit in your longer-term plan to compete in a market that will have biosimilars? And then, the second part of the question was, what do you expect to learn before the end of the year that will really give you confidence that you really need to run off — run with this formulation, and again, keeping the commercial implications in mind?

Joseph TurgeonChief Executive Officer

Yeah, OK. First of all, let’s — just to make sure I clarify. The trial is that we did — the two Phase IIIs and we’re trying to get a label that is non-inferior. I want to be clear on that, as you well know Mayank. So that will be the launch label, so to speak. What same-day dosing would be expanding the label down the road and what Dr. Francois was saying is, by the end of the year, we will know if we get to expand this to go further with a bigger trial to try and get something like that on the label. We would launch without that. And what having a — say dosing would mean. And I can tell you that in the past, other companies have tried to do this and it didn’t work.

What the advantage would be is when you — what — now what happens is when you get your chemo, the next day is when you get your white blood cell factor, you can’t do it the same day. It would be a tremendous advantage and a differentiating factor from all the other white blood cell factors in the market today, the biosimilars and the innovator product. If our product works and we were able to say, listen, this is the one drug you can give your chemo and on that same day inject the patients, the nurses, the patients and the physicians would really love that and it would be a point of differentiation. So what Francois Lebel was saying is later this year, we’ll know, where we go with the program. I think Francois, is that all you want to say on that part of it?

Francois LebelChief Medical Officer

Yeah, exactly. I mean, the submission that we have in front of the FDA that we’re waiting for the inspection of the plan. As — what’s called traditional dosing, which is you give the growth factor the day after the chemotherapy. And so, that’s what the data that was positive and in front of the FDA. Separately, because this is not a biosimilar and it has difference in what’s called pharmacodynamic, that means that particular — our drug, ROLONTIS, goes preferentially to the bone marrow and stay there — stays there longer. So, that opens up some opportunity for us.

So the first, we are exploring, can we leverage those pharmacodynamic advantage? And we’re trying to give the drug the same day. So it’s important for management or patient, but obviously, we need to test this and that’s what we’re doing. We’re in the process of testing that. And that would be a very important differentiator, but it has nothing to do with the current submission if you want, and the approval that we hope to obtain very soon. This would be further down, modifying the BLA later on.

Mayank MamtaniB. Riley — Analyst

Understood, and thank you. And my last question, just a quick reminder on the status of the Phase 1 open-label FIT study in lymphoma patients. Is that up and running, or is that impacted by COVID?

Francois LebelChief Medical Officer

Yeah, so — we — good question. So, this is obviously an early asset. So as we have discussed today, we’re obviously very focused on our lead asset, but nonetheless, we remain very excited about the FIT technology. We’ve added a number of regulatory hurdles that we had to resolve, updating various documentation. And as we are going forward here at sites, we had to deal with COVID-19. As you probably know, most IRB and many centers are dealing with COVID-19 and they are not particularly enthusiastic right now about the new Phase 1 study. We’re getting there. We’re making progress, but it’s obviously a lot slower than we want.

Mayank MamtaniB. Riley — Analyst

Great. Thanks for taking my questions, sir.

Francois LebelChief Medical Officer

Sure.

Joseph TurgeonChief Executive Officer

Thank you, Mayank.

Operator

Thank you so much. Speakers, I am showing no further questions at this time. I would like to turn the conference over back to Mr. Joe Turgeon, President and CEO.

Joseph TurgeonChief Executive Officer

Thank you, operator, and listen, this concludes the call. I want to say thank you to everybody for your interest in Spectrum. And if you have any further questions, please feel free to contact us in between. And again, I’ll mention we’ll be dealing — being part of some upcoming financial conferences, and we hope to connect with many of you at these.

So with that operator, we’ll conclude the call. I’d like to say thank you for everybody’s interest in Spectrum.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Kurt GustafsonChief Financial Officer

Joseph TurgeonChief Executive Officer

Francois LebelChief Medical Officer

Thomas RigaChief Operating Officer

Maury RaycroftJefferies — Analyst

Charles ZhuGuggenheim — Analyst

Alethia YoungCantor Fitzgerald — Analyst

Ed WhiteHC Wainwright & Co. — Analyst

Reni BenjaminJMP Securities — Analyst

Mayank MamtaniB. Riley — Analyst

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