Affimed N.V.
Q1 2021 Earnings Call Transcript

Published: 1 Jul 2021

[Operator:]

Good day, and thank you for standing by. Welcome to the Affimed First Quarter 2021 Financial Results and Corporate Update Conference Call. At this time, all participants’ lines are in listen-only mode. After the presentation, there will be a question-and-answer session. Please be advised that today's conference may be recorded. I’d now like to turn the conference over to your host today, Mr. Alexander Fudukidis, Head of Investor Relations at Affimed. Please go ahead.

[Alexander Fudukidis:]

Thank you, Liz. I'd like to welcome and thank you all for joining us today for our first quarter 2021 results and operational update call. Before we begin, I'd like to remind everyone that we issued the relevant press release earlier today and that it can be found on the Investor Relations section of our website. On the call today, we have our management team, Dr. Adi Hoess, our Chief Executive Officer; Andreas Harstrick, our Chief Medical Officer; Arndt Schottelius, our Chief Scientific Officer; Wolfgang Fischer, our Chief Operating Officer; and Ms. Denise Mueller, our Chief Business Officer; and Angus Smith, our Chief Financial Officer. The whole team will be available for the Q&A session. Before we start, I will quickly go through the Safe Harbor statement. Today's discussion contains projections and forward-looking statements regarding future events. These statements represent our beliefs and assumptions only as of the date of this call. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons why actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. These forward-looking statements are subject to risks and uncertainties and actual results may differ materially from those expressed or implied in these statements due to various factors, including but not limited to those identified under the section entitled Risk Factors in our filings with the SEC, and those identified under the section entitled forward-looking statements in the press release that we issued today and filed with the SEC. With that, I'll turn the call over to Adi. Adi?

[Adi Hoess:]

Thank you, Alex. Good day, everyone, and thanks a lot for joining us today for our first quarter update call. I will provide updates on our pipeline and discuss the progress of our ongoing studies, in particular, for AFM13 and AFM24, and our plans for the remainder of this year. I will also speak briefly about the announcement of our partnered BCMA program with Genentech. I'm very pleased to report that we are maintaining our momentum by continuing to execute well across all of our wholly-owned programs. We’re leveraging the unique features of our innate cell engagers, which we also call ICE across different programs and have continued to publish data that support the multi-pronged approach of our development strategy, which includes development of our ICE as monotherapy, and in combinations with natural killer cells and in combination with PD-1 or PD-L1 checkpoint inhibitors. Our AFM13 and AFM24 clinical programs are on track.

[Arndt Schottelius:]

Thank you, Adi, and good morning, everyone. Also, warm welcome for me. As Adi mentioned, in the past few months, we have generated exciting preclinical data with our ICE molecules, which I'd like to share with you today. On AFM24, we presented a preclinical poster at this year's AACR. In that poster, we were able to demonstrate that AFM24 in combination with adoptive NK cells leads to a AFM24 dose-dependent tumor regression in a mouse xenograft model establishing a strong pre-clinical proof-of-concept for this promising combination. This important finding was further supported by data demonstrating that AFM24's ability to tightly bind to NK cells as well as its cytotoxic potential to kill EGFR-expressing tumor cells was unaffected by the presence of competing IgG. This is in contrast to cytotoxic potential which was greatly diminished by completing IgG. The poster further showed that AFM24 induces a very prominent ADCP response or killing through macrophages against EGFR positive tumor cells irrespective of the presence of KRAS mutations further adding why we believe this is a highly differentiated drug candidate. On AFM13 in a collaboration with Björn Önfelt at the Karolinska in Stockholm, we generated data demonstrating that the addition of AFM13 to NK cells renders these NK cells serial killers. If you look at Slide 6 in your presentation that shows microscopy pictures of a single well containing a single NK cells and multiple tumor cells in the absence and presence of AFM13. On the top row, you can see that the single naked and undirected NK cell, which is shown in blue, is not able to kill CD30-positive tumor cells. Those are shown in red over time period of 12 hours. The video capturing activity at each time point shows that the naked NK cells without the addition of AFM13 moves around in an undirected fashion without killing tumor cells and stark contrast. And as shown on the lower line of pictures, the addition of AFM13 clearly increased the ability of that NK cells not only to kill one, but several tumor cells. They are turning from red to green when they are being killed, demonstrating that the innate cell engager AFM13 effectively directs NK cells to tumor cells and can render these NK cells serial killers. Next, I would like to summarize the key findings of our collaboration with the labs of Katy Rezvani at MD Anderson; Todd Fehniger, Washington University School of Medicine, which was recently published in Clinical Cancer Research. In this paper, we were able to show that AFM13 strongly binds to NK cells, including cytokine-activated or cord-blood derived NK cells, resulting in enhanced tumor recognition and ADCC, antibody-dependent cellular cytotoxicity. This exciting data formed the basis for the successful IND of the ongoing Phase I study with pre-complexed cord-blood derived NK cells at MD Anderson in patients with CD30-positive lymphomas.

[Angus Smith:]

Thank you, Arndt. Affimed consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board or IASB. The consolidated financial statements are presented in euros, which is the company's functional and presentation currency. Therefore, all financial numbers that I will present in this call, unless otherwise noted will be in euros. We ended the first quarter of 2021 with cash and cash equivalents of €240.7 million compared to €146.9 million on December 31, 2020. The cash balance includes the net proceeds from our January 2021 underwritten public offering and the €10 million we received from the first tranche of the Silicon Valley Bank loan. Based on our current operating plan and assumptions, including the proceeds from the recent financing, we anticipate that our cash and cash equivalents will support operations into the second half of 2023. Net cash used in operating activities for the quarter ended March 31, 2021 was €16 million compared to €16.5 million in the first quarter of 2020. Total revenue for the first quarter ended March 31, 2021 was €11.7 million compared with €5.1 million for the quarter ended March 31, 2020. Revenue for the first quarter of 2021 mainly comprised of collaboration revenue from Genentech and Roivant. Research and development expenses for the first quarter of 2021 remained flat at €11.4 million compared to the first quarter of 2020. General and administrative expenses for the first quarter of 2021 increased to 27.3% to €4.5 million from €3.5 million in the first quarter ended March 31, 2020. The increase relates largely to higher personnel expenses, higher premiums for our D&O liability insurance and higher legal and consulting expenses. Net finance income for the quarter ended March 31, 2021 increased by 242% from €1.6 million in the quarter ended March 31, 2020 to €5.5 million. This increase is largely due to foreign exchange gains related to assets denominated in U.S. dollars as a result of the strengthening of the U.S. dollar against the euro during the first quarter. Net income for the quarter ended March 31, 2021 was €1.4 million or €0.01 per common share compared with a net loss of €8.3 million or a loss of €0.11 per common share for the quarter ended March 31, 2020. The weighted number of common shares outstanding for the quarter ended March 31, 2021 was 116.2 million. I will now turn the call back to Adi for closing remarks. Adi?

[Adi Hoess:]

Thanks a lot Angus. So the second half of 2021 could be rich with data based on our pipeline and outreach. We are focused on execution and have the financial strength to bring our programs forward with cash runway now into the second half of 2023. Key upcoming milestones for our pipeline are as follows

[Operator:]

Our first question comes from Maury Raycroft with Jefferies.

[Maurice Raycroft:]

Hi. Good morning, everyone, and thanks for taking my question. So first question is just if you can talk more about where you are at with PD in cohort 4 for AFM24. I guess if you use a positive control or think about maximum NK cell activation markers in CD16A occupancy, where are you at for with the PD for dose level 4 and how much more room do you have to go?

[Adi Hoess:]

Andreas, can you take this question, please?

[Andreas Harstrick:]

Yes. Sure. So what we have said is that we see significant increases in exposure, which is more than dose proportional and that the activation markers that we are looking at that include CD16 receptor occupancy, but clearly not limited to CD16 receptor occupancy or – show a good correlation with the exposure. So as we go up, we expect to get into the range of pharmacodynamically optimal dose. That was one of the reasons why we decided to go to – in a smaller step now. So instead of a 100% increase, we selected to go with a 50% increase. Again, we are very happy with the safety profile. As we have announced, we have not seen any of the typical organ toxicity, most notably skin toxicity or any other medically relevant toxicity. So we are titrating the dose to really define the optimum biological dose. And this was the reason why we decided to go into smaller steps.

[Maurice Raycroft:]

Got it. That's helpful and makes sense. And based on your objectives for AFM24 to pick a recommended Phase II dose based on the demonstrated ability to improve outcomes, I guess, can you clarify if you plan to continue exploring higher doses until you see a safety issue or see exhaustion of NK cells or are there specific efficacy parameters that you're looking at with the monotherapy?

[Andreas Harstrick:]

Yes. Good question. So as we have said previously based on the mechanism of action and the preferential activation of NK cells in tumor tissue. We would not expect and also in line with our cynomolgus monkey data, we would not expect to encounter any classical dose limiting toxicity. So we will probably not escalate to see toxicity because this is probably a very unrealistic high dose. What we will monitor closely are the pharmacodynamic markers. As we said, we have a mixture of markers that indicate activation of cNK cells looking at CD16 receptor occupancy, but also monitoring NK cell exhaustion and we will titrate the dose that we get a maximum increase in the activation marker, while maintaining a functional NK cell, so minimizing the exhaustion markers, and this will guide us in our selection for our dose that goes forward into the Phase II and then to the expansion cohorts.

[Maurice Raycroft:]

Got it. That's very helpful. And then last question, based on the PD data from cohort 4 and the PK data from cohort 5. Can you say if it's possible that cohort 5 dose level could be sufficient to start the combo studies in the second half of 2021?

[Andreas Harstrick:]

I think it's a little bit too early. As we said, we believe that we should be able to define the recommended Phase II dose second half of this year versus cohort 5 or maybe one dose cohort above, we'll still depend on the data that we are seeing.

[Maurice Raycroft:]

Got it. Okay. Thank you for taking my questions.

[Andreas Harstrick:]

You're welcome.

[Operator:]

Our next question comes from Daina Graybosch with SVB Leerink.

[Daina Graybosch:]

Hi, thank you for the question. I'd like to talk more about the Genentech decision. And I guess one logistical question or process question, and one science question. So I'll start with the process question. Do you – can you – do you plan to take this program back as AFM26 and will we – will Genentech present the dose escalation results for the medical conference?

[Adi Hoess:]

Yes. Thank you, Daina. I will hand over to Denise, she is mostly in contact with Genentech team.

[Denise Mueller:]

Yes. Hi, Daina. Thanks for the question. This is really early news for us, and we haven't discussed with Genentech what the future of the program could look like, including whether or not rights could revert back to Affimed. It's just too early on that. But what we do know is Genentech will be planning on publishing the data at a medical conference later this year.

[Daina Graybosch:]

That's helpful. And scientifically, it struck us to remember that we've seen or we haven't seen promising results of NK cell therapy, adoptive cell therapy in multiple myeloma. I believe the Gamida cell had a cohort of their NK cell therapy combined with elotuzumab that they never presented, but suggested that the results weren't particularly promising. I wonder if you could scientifically put this in context for what we've seen for other NK cell, either NK cell therapy or NK cell-directed therapies in multiple myeloma?

[Adi Hoess:]

Yes. I’ll turn this over to Arndt and Andreas. Andreas, I think, you could start.. You could address, please.

[Andreas Harstrick:]

Yes. I think it's a good question. I think what is important to note is that we do not know anything about the efficacy in the Phase I study. So we have not seen the full dataset other than our exchange of safety information. So this is probably a little bit too early to speculate about efficacy or loss of efficacy. In general, I would agree multiple myeloma appears to be a difficult area for immune-based therapies. It's not only in NK cell approaches so far where we're not so successful. We also can recall the failure of PD-L1 in multiple myeloma. So it appears to be a very specific biology really – probably differing a little bit from biology and other lymphoid malignancies. But again, as we do not have the full dataset, it would be premature to speculate really, yes.

[Daina Graybosch:]

Got it. So we should not assume – go ahead. Sorry.

[Arndt Schottelius:]

No, no, Daina, please you go ahead.

[Daina Graybosch:]

I'd like to hear what you were going to add. And I just wanted to summarize that we really shouldn't assume the efficacy results?

[Arndt Schottelius:]

Yes. I mean, just the one thing I would add, the Gamida, it's interesting, I would say, it's probably except elotuzumab is not one of those stronger antibodies kind of in the field with NK cells, so that could have a bearing there and really nothing to add what Andreas has beautifully explained about also immune function in multiple myeloma.

[Daina Graybosch:]

Okay, great. And then one last question here. Do you have any sense of when we could learn the target or when you will announce the targets for other programs in the Genentech collaboration?

[Denise Mueller:]

Hi, Daina, it’s Denise. We're prohibited from disclosing anything related to the targets with Genentech, and I guess it would become apparent when they take one of the next molecules into the clinic, at which point in time it will be apparent. But unfortunately, we're not able to disclose any of those. What I can tell you is it's a mix of solid and hematologic targets that we're working on with them.

[Daina Graybosch:]

Great. Thank you very much for answering the question.

[Operator:]

Our next question comes from Nick Abbott with Wells Fargo.

[Nicholas Abbott:]

Good morning. Thanks for taking my question. On AFM24, I seem to recall in preclinical models at least in and this is – I guess a general observation with innate cell engagers that you see cleavage of CD16 after binding. And so as you look at the data that you're accumulating the PD data, and I don't know, I can't remember if that leads to soluble AFM24 CD16 or soluble CD16 AFM24 complex. But – are you seeing this, are you able to look at this and look at that expected cleavage event? And then allied to that, do you seeing evidence of any NK cell margination and how do you think about total NK cells versus circulating NK cells or the circulating pool as you think about optimizing that pharmacodynamic endpoint?

[Adi Hoess:]

Arndt, can you take that question?

[Arndt Schottelius:]

Sure. Yes. Nick, great question. Thank you. First of all, we can to some degree. Look at cleavage not so clearly in the patient, but what we have seen as you noticed in preclinical models that is not affecting. First of all, it doesn't really – we don't see that to a certain degree. It's not affecting the efficacy of the molecules acquired in contrast and we have commented previously, we believe that some degree of cleavage that we have observed is probably good biologically because it enables also the NK cell to disengage and engage again. Again, when we look at what we have seen in our – really describing with Björn Önfelt, and this is just a preview of something we want to publish more substantially towards the end of the year, we see the ICEs render the NK cells serial killers. And that again, I think has also to do to some extent with the ability to disengage and some amount of cleavage. Now to your question about margination of NK cells overall numbers and what we have seen, let's start with the preclinical studies. If you may, you recall the monkey data, we have seen that the peripheral levels transiently go down. We believe that is most likely margination with the cells coming back. It also, we believe is a sign of the NK cells actually being led into the tumor. So also more generally we think there's two mechanisms of action. Of course, that would be expected. One, the innate cell engager leading the NK cells from the periphery into the tumor, and the innate cell engager also taking the NK cells in the and really engaging them to kill the tumor. Let me stop here just to make sure that I'm answering your questions.

[Nicholas Abbott:]

Yes. I think we're definitely getting a lot of good information. But as you sort of think about that threshold that you want to see in PD, are you able to account for these different pools, the tissue RET, the NK cells in tissue versus circulating NK cells and that movement presumably between those two pools?

[Arndt Schottelius:]

Yes. We are – I think we have said that we're looking at as we look at the activation markers, exhaustion markers, of course, look at all of the NK cell populations very actively in this study, we will also be able to some extent looking at and see what kind of infiltration we get into the tumor. So there will be an evolving overall picture in terms of distribution of NK cells.

[Nicholas Abbott:]

Okay. Great. Thank you very much.

[Arndt Schottelius:]

Thank you, Nick.

[Operator:]

Our next question comes from Yale Jen with Laidlaw & Company.

[Yale Jen:]

Good morning, and thanks for taking the questions. My first question is that a little bit forward-looking one. In terms of AFM13 monotherapy, once you complete a current study, my understanding is that you later conducted a confirmatory study. My question is that, would you potentially start a confirmatory study before you have the readout of the current study or you would do that afterwards?

[Adi Hoess:]

Andreas, that's a question for you.

[Andreas Harstrick:]

Yes. We have not finalized this. As you know, we are targeting an accelerated approval with 202, which would require us to start or to have a confirmatory study at the time of CLA submission. So this was something I think where we started to engage with FDA into discussions, not only about the monotherapy program, but again about the broader AFM13 development strategies that could include NK cell-based therapies as well as monotherapy. So it's something that we need to do as we are approaching the completion of the enrollment phase, but we have not made a final decision here.

[Yale Jen:]

Okay. Great. And maybe two quick questions. The first one is that although I understand the AFM13 combo – NK cell combo that is still ongoing, but given that today the open label one, so is there any read through at this point for your design for the AFM24 NK cell combo study at the moment?

[Adi Hoess:]

At the moment we are pursuing two different strategies. As you know, AFM13 uses allogeneic product, and we are employing our preloaded NK cells. Now for AFM24, we use autologous NK cells. So the SNK-01 product from NKGen, which has already established safety profile has also shown some preliminary activity. Here we are really looking at co-administration, so parallel infusion. We are giving the NK cells much more frequently. We're giving NK cells on a weekly basis. We also have a significantly higher total number of NK cells. So if you will, we are more or less exploring the broad spectrum that you could think about from one NK cell infusion allogeneic preloaded to multiple NK cell infusion autologous and co-administration and really see how these disease strategies will differ, which would guide us in all the way forward. But currently they are quite different, testing really two different strategies.

[Yale Jen:]

Okay. Maybe the last question, you mentioned about checking the NK cell exhaustion, probably marker, probably it’s an important one across the board at this point. Would you provide a bit more color in terms of what specific sets of biomarkers are the key to pay attention – for investor to pay attention to? Thanks.

[Adi Hoess:]

Arndt, do you want to take that question?

[Arndt Schottelius:]

Yes. Happy. So Yale, I know as NK cell expert, you will be interested in like everybody else. We are not disclosing that at this time. Also, please understand that could have also IP implications. And of course, we want to share that entirely. We can tell you that, of course, we all – that's a pretty broad panel and includes all of the markers that you would traditionally expect in terms of activation and all exhaustion. So that's as much as we can say at this time.

[Yale Jen:]

Okay. I really appreciate that, and I really fully understand that. And again, congrats for heading into the second half of this year.

[Adi Hoess:]

Thank you, Yale. Thank you.

[Operator:]

I'm showing no further questions in queue at this time. So that will conclude today's question-and-answer session. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.