CytomX Therapeutics, Inc.
Q1 2020 Earnings Call Transcript

Published: 10 May 2020

[Operator:]

Good day, ladies and gentlemen, and welcome to the CytomX Therapeutics First Quarter 2020 Financial Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Christopher Keenan, Vice President of Investor Relations. Chris, you may begin.

[Christopher Keenan:]

Good afternoon and thank you for joining us. Earlier today, we issued a press release that includes a summary of our recent progress and our first quarter 2020 financial results. This press release and a recording of this call can be found under the Investors and News section of our website at cytomx.com.

[A - Sean McCarthy:]

Great. Thanks Chris and good afternoon everybody. Thanks for your patience since we were getting the call up and running. I gather there is quite a lot of call volume at the moment. Anyhow, once again, good afternoon and thanks for joining us. It's a pleasure to be here to provide an update on our progress during the first quarter of 2020. I'll begin today's call with a brief overview of our business operations against the backdrop of COVID-19, and then we'll review first quarter highlights across the pipeline. I'll then turn the call over to Carlos, our new CFO, you just heard of from Chris, and Carlos will review our first quarter financial results, then I'll wrap-up and then open the call up for questions. Let me start by saying that all of us at CytomX hope that you and your families are well and keeping safe during the ongoing pandemic. The situation is impacting all of us in different ways and it looks like it will continue to do so for some time. We are committed to ensuring the continued well-being of those involved with the conduct of our business. This includes the patients, the staff, physicians engaged in our clinical trials, the vendors and partners who support these trials and, of course, our dedicated employees who continue to impress with a drive and focus during these challenging times. Despite the operational challenges presented by COVID-19, our team remains highly focused and very mindful that as the American Cancer Society has recently reminded us all, cancer is not waiting and so neither are we. At CytomX, we see a major opportunity to more effectively target therapeutic antibodies into diseased tissue, generating new classes of anti-cancer therapies. We believe our unique Probody therapeutic platform represents a fundamental advance in the field of antibody engineering and we are highly focused on using our platform to discover and develop a broad clinical pipeline of novel drug candidates to make a meaningful difference in the treatment of cancer.

[A - Carlos Campoy:]

Thank you, Sean. I'm very pleased to be here. I'd like to review the financial highlights for the first quarter ending March 31st, 2020. Revenue for the quarter was $50 million compared to $29 million in the corresponding period in 2019. The increase is primarily due to the partial revenue recognition of the $40 million milestone earned from AbbVie associated with the CX-2029 project and $10 million related to the milestone earned BMS associated with the initiation of the Phase 2 randomized cohort expansion of BMS-986249. Research and development expenses were $43 million for the quarter compared to $36 million in the corresponding period in 2019. The increase was largely attributed to license and sub-license fees associated with milestones and upfront payments earned in the first quarter of 2020. General and administrative expenses were flat compared to the corresponding period in 2019. We ended the quarter with cash, cash equivalents, and investments totaling $247.9 million compared to $296.1 million as of December 31st, 2019. Our achievements in existing and new partnerships during Q1 have resulted in $130 million in milestone and upfront payments to CytomX that are not reflected in our end of Q1 cash balance. I would like to underscore the company's continued strong track record of executing strategic business development transactions to broaden our pipeline and access additional non-dilutive operating outflow. We expect our strong balance sheet to allow us to comfortably meet projected operating requirements into the second half of 2022, assuming no new collaborations or financing. With that, I'll turn the call back to Sean.

[Sean McCarthy:]

Great. Thanks Carlos. So to wrap-up, CytomX had a very strong first quarter of 2020, with many key achievements across our preclinical and clinical programs in our existing partnerships and in the formation of a major new strategic alliance. We have a strong balance sheet to advance our pipeline and whether market uncertainty, and we're looking forward to ASCO, at which we have multiple presentations that will provide important updates on all of our clinical stage programs. I am very proud of the CytomX team for staying intensely focused in these challenging times, as we drive toward making the biggest difference we can for patients with cancer. So, thanks all for your time today. We wish the very best to you and your families. And Chris, please now open the call up to questions.

[Christopher Keenan:]

Operator, we'll take our first question.

[Operator:]

Thank you. Our first question comes from Peter Lawson with Barclays. Your line is now open.

[Christopher Keenan:]

Peter, are you there? Operator, we can move on to the next question.

[Operator:]

Okay. Our next question comes from Christopher Marai with Nomura Instinet.

[Christopher Marai:]

CD166--

[Operator:]

Christopher, your line is--

[Christopher Marai:]

Can you hear me, okay.

[Operator:]

Yes, sir. You were muted in the beginning. You came on halfway.

[Christopher Marai:]

Okay, I'm sorry about that. So, what I mentioned is toxicity around CD166 program versus the CD71. I'm just curious about the payloads being used here and the internalization profiles of the targets. Given that CD71 is very efficient and internalizing, did that impact the type of payload that you chose to use? I noticed that you use two different payloads for these products. Also for the CD71 PDC, I'm curious about what would some expected on-target toxicities might look like versus toxicities due to the payload in general? Thank you.

[Sean McCarthy:]

Yes. Thanks for the questions. So, first of all, with regards to the payloads, going back several years when we designed the Probody drug conjugate strategy, we made a very conscious decision for the first two Probody drug conjugates to take into the clinic that we would work with the most established warheads or payloads, if you like. And DM4 was selected for CD166 program through an alliance with ImmunoGen and MMAE, which at the time was the second most validated payload. We were able to access that through our alliance with AbbVie via their alliance with Seattle Genetics. And so, frankly, we could have used -- it could have ended up being the other way around. That's just the way they played out at the time. We consider those two payloads to be the most and best validated at that time. In terms of the toxicities with DM4, we've known for a long time that the principal toxicity with DM4 is ocular tox. That's exactly what we saw at the higher doses in our dose escalation in Phase 1. It's something that is manageable in the form of ocular prophylaxis. So, that's something that we're implementing in the ongoing Phase 2 study. With regard to CD71 and MMAE, the principal toxicities with MMAE are a little bit different to DM4. They're more hematologic in nature, and that's what we saw in our preclinical studies and its hematologic toxicities that we're looking out for in the clinic. With regards to CD71, on-target toxicity is very difficult to say. We -- with CD166, just as an example, the target is expressed on most normal tissues, and you could, therefore, infer that you may see toxicity of any kind. In fact, in the clinic, we really didn't see any evidence of on-target toxicity with our reported data on CD166. We'll provide the data on CD71 Phase 1 dose escalation in a couple of weeks at ASCO.

[Christopher Marai:]

Great. Looking forward to it. Thank you.

[Operator:]

Thank you. Our next question comes from Terence Flynn with Goldman Sachs. Your line is now open.

[Terence Flynn:]

Great. Thanks for taking the questions. Maybe just following up on 2029. Based on the animal data, is there any reason to think that the activity would be more robust in lymphoma, let's say, relative to the solid tumor setting? And then can you remind us in the Phase 1 trial, if you only enrolled patients that had high levels of CD1 expression? Was that a cut-off, or are you going to look at that prospectively now when we see the data at ASCO? Thank you.

[Sean McCarthy:]

Yes. Hi, Terence. Thanks for the questions. I'll take the second question first. Patients were not pre-selected for high target levels in the study, but that is something we're looking at prospect -- retrospectively, of course. And with regards to lymphoma, the Phase 1 dose escalation has allowed us to enroll solid tumors and lymphoma. We will obviously report that patient population when we present the data. The preclinical work was mostly focused on the solid tumor side of things.

[Operator:]

Thank you. Our next question comes from Robert Burns with H.C. Wainwright. Your line is now open.

[Robert Burns:]

Hi, guys. Thanks for taking my questions, and congrats on the quarter. Just two questions, if I may. So, the first one is, could you provide some additional color through the indications you're considering exploring in the Phase 2 expansion based on the data you've seen for CX-2029? And my second question is, similar to what you did for CX-2009 with regards to pre-clinical assessments of combining it with CX-072, have you been warned any preclinical assessments evaluating potential synergy for CX-072 plus CX-2029, and if so, are you planning on evaluating that combination in the clinic? Thank you.

[Sean McCarthy:]

Yes. Hi, Robert. Thanks. Great questions. Not prepared or ready to comment on Phase 2 indications at this stage for 2029. But, of course, they will be guided by -- everything that we know to this point. With regards to the combination, as you rightly point out, we have -- we previously reported preclinical data at AACR last year, showing the potential for CD166 Probody drug conjugate to synergize with PD1/PD-L1, and that work underpins our ongoing strategy to move into the combination of 2009 and 072, which is planned for later this year. With regards to 2029, it's too early to say, but as another drug conjugate, it certainly makes conceptual sense that that could be combined with a PD agent of one kind or another, but we don't have anything more to say about that at this time.

[Robert Burns:]

All right. Thanks.

[Operator:]

Thank you. Our next question comes from Peter Lawson with Barclays. Your line is now open.

[Unidentified Analyst:]

Hi, there. This is Mitchell on for Peter. Can you guys hear me now?

[Sean McCarthy:]

Yes.

[Unidentified Analyst:]

Okay. Sorry, I had to redial in. I don't know what happened. So, I had a couple of questions for you guys. The first one is for your CD71 data at ASCO. What kind of data might we see, how many patients and how might that change from the abstract to the time of the presentation?

[Sean McCarthy:]

Really not able to comment on that right now. Abstract will be published, I guess, next week, and we may be in a position to provide some additional guidance at that point. But had not much more we can say at this point. I'm sorry to say.

[Unidentified Analyst:]

Understood. And then, just wanted to ask about how you guys are thinking about data release in a virtual world, and what that changes in terms of physician engagement and dialog and things like that?

[Sean McCarthy:]

We are going to do the very best we can.

[Unidentified Analyst:]

Got it. Thank you.

[Sean McCarthy:]

I think we're still -- no, seriously, we're -- I think we're all still learning to some extent what the final process is going to be. So, but yes, we'll certainly do the very best we can and we'll make ourselves available to answer questions as well.

[Unidentified Analyst:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from Boris Peaker with Cowen. Your line is open.

[Boris Peaker:]

Great. Can you hear me guys?

[Sean McCarthy:]

Yes, we can.

[Boris Peaker:]

Great. So, my first question on -- the 2009 study that's currently on hold, just curious in terms of patients that are enrolled in the study, how consistent are these patients going through their follow-ups, and just what are the potential concerns about data quality, if they start missing some of their appointments?

[Sean McCarthy:]

Yes. Hi, Boris. I mean, I think that's a question that relates to every one right in this moment in time, and don't have anything -- I don't have anything specific to say about that rather than -- that is a risk, of course, that patients that have been on study may have challenges getting back into the centers at which they're being treated. We're still in the relatively early stages of figuring out what that impact is going to be.

[Boris Peaker:]

I guess, maybe just a follow-up on that, because we've got some questions from that from the investors. Are these patients going to hospitals for follow-up or these in outpatient setting?

[Sean McCarthy:]

I don't want to comment on that specifically, Boris, at this point, but it's going to be a combination of those.

[Boris Peaker:]

Got you. And maybe my last question is with 2009 compound, can you set expectations for data presentation at ASCO? Specifically, what should investors be focused on?

[Sean McCarthy:]

Boris that was 2029?

[Boris Peaker:]

Yes. No, 2009. Yes.

[Christopher Keenan:]

2009. Yes, so tracking back to last year at AACR, that was the last data update on the Phase 1 2009 work. So, this is the -- this will be the first update. And effectively, the completion of the Phase 1 study for CX-2009 with completion of the dose escalation. So, it's going to be additional follow-up. It's going to be additional patients. Most importantly data -- the data that supports our advancement of 2009 into hormone receptor positive HER2 negative breast cancer at the doses seven mg per kg. So, the data should make it clearer to investors what underpinned that decision clear within the dataset that was presented a year ago.

[Boris Peaker:]

Got you. Okay. Thank you very much for taking my questions.

[Sean McCarthy:]

You're welcome. Take care.

[Operator:]

Thank you. Our next question comes from Mara Goldstein with Mizuho. Your line is now open.

[Mara Goldstein:]

Great. Thanks very much for taking my question. I have two questions. One is, just a clarification on cash runway. I believe you said, it doesn't include any other partnerships, but does it anticipate any other milestones from the existing programs that you already have, including any resources that you may use to fund programs? It's the first. And then, also I'm hoping that you might be able to just provide an update on the BMS collaboration. Clearly, you have candidates that are advancing, but memory serves you -- BMS has option for additional targets, and are there any time limit or constraints around those targets in which they might come back to you?

[Sean McCarthy:]

Yes. Hi, Mara. So, regarding cash run rate, I'll comment, then Carlos may want to jump into. But we always make very conservative assumptions around milestones from existing deals. So, while there may be some element of milestones factored into that run rate guidance is going to be pretty conservative. Now that said, we also have a pretty good track record of earning milestones in these deals, as I'm sure you'll agree. So -- but we are, for guidance purposes, pretty conservative. Carlos, anything to add to that?

[Carlos Campoy:]

No, nothing to add.

[Sean McCarthy:]

Great. And then regarding BMS. Yes, you're right, Mara, they do -- going back to the expansion that we did a few years ago, they still do have the ability to select additional targets. We haven't disclosed the timeline under which they need to -- to select those targets, but they don't have forever. There is a backstop on that. And we're in active dialog with them as to additional targets selections and getting additional programs up and running, which we're very excited to do.

[Mara Goldstein:]

Okay. And if I could just ask one other question on CX-2009 in terms of -- the trial has been temporarily paused at this point due to current environment. But can you speak to how many patients actually began dosing within that trial?

[Sean McCarthy:]

No, I really can't. But as I said, our goal is to get 40 patients enrolled into that study. It is -- so -- we really can't say -- can't speak to how many patients have been enrolled, and unfortunately, now we can't speak either to timing of data, because this just got so uncertain, but we're doing everything we can to get that program back on track and be able to provide some clear guidance in the future.

[Mara Goldstein:]

All right. Thank you. I appreciate it.

[Sean McCarthy:]

Take care.

[Operator:]

Thank you. Our next question comes from Etzer Darout with Guggenheim Securities. Your line is open.

[Etzer Darout:]

Great. Thanks for taking my question. Most have been answered, but just wanted to pop in with a couple of questions here. So, first, Sean, maybe for CX-072, just wondering what's next for PD-L1 Probody and what maybe we could learn from the ASCO presentation as far as perspective, sort of, monotherapy or maybe even other combinations beyond, sort of, a CTLA-4 combination for that asset? And, Carlos, maybe if you can talk about the pace of R&D spend throughout the rest of 2020 to the extent that you can -- given the Q1 number? Thanks.

[Sean McCarthy:]

Yes. Great. Hi, Etzer. So, with regards to 072, the ASCO presentation, as I mentioned, will be -- really will round out the Phase 1 -- the Phase 1/2a work that we've done on the program so far. So, if you recall that, the program advanced to enrollment of patients into a number of small expansion cohorts of around 15 patients in a number of different tumor types, some of which were expected to be up -- to respond to checkpoints inhibitors, some of which were a bit more speculative. And -- so the data update for monotherapy will include really the rounded out data and some fairly lengthy follow-up on patients from the monotherapy expansions in addition to some -- an update on the ipi combination Phase 1 dose escalation. In terms of where we go next with the program continues to be an active program at the company. We are -- to some extent, shifting gears toward combinations with our own pipeline assets like to 2009. And that said, we do continued to talk to potential partners, and we also continued to evaluate other emerging combination opportunities. So, there's plenty that we could potentially do in the future, but right now the most immediate next step will be the combination with 2009 with the indication to be disclosed at a later date.

[Etzer Darout:]

Great. Carlos could comment on the R&D?

[Carlos Campoy:]

Yes, absolutely. So we're not guiding full-year spend, but beyond our cash run rate that we mentioned, but I do want to point out, as I mentioned during the formal remarks, that Q1 included a series of one-time expenses associated with licenses and sub-licenses that are related to the milestones and upfront payments that we earned during the quarter. So, that's the extent of the guidance I can give you.

[Etzer Darout:]

Great. Thank you. And congrats on the progress.

[Carlos Campoy:]

Thank you.

[Sean McCarthy:]

Thanks a lot. Take care.

[Operator:]

Thank you. Our next question comes from Joe Catanzaro with Piper Sandler. Your line is now open.

[Joseph Catanzaro:]

Hey, guys. Thanks for taking my questions here. Just maybe one quick one from me on 2029. Would you be able to detail the dose escalation scheme used in this study as it compares to the 2009 dose escalation, specifically, where single patient dose escalation cohorts initially use, were you able to start at a higher dose giving any learnings from 2009 things along those lines? Thanks.

[Sean McCarthy:]

Yes. Hey Joe. The only thing I would say is -- I believe, I said previously on this particular program is that, we actually started at a pretty low dose given the nature of the target. CD71 is a -- this is a -- is a big idea, and is a tough target to try and drug. So, -- and we know from preclinical work that we've done, that's engaging CD71 in cynomolgus monkey is lethal at quite low doses. So, for various reasons, including those we began dose escalation, had a -- I think its fine to say, had a lower dose then 2009. I can't say anything more than that right now, but a lot of this will be shared -- and is being prepared to be shared at ASCO.

[Joseph Catanzaro:]

Okay, got it. And maybe just one quick one, I'm not sure if you have any insight into this, but the Phase 2 randomized portion of the Bristol study, would you happen to know if the nivo/ipi dosing they're using is consistent with CheckMate 067 or have they, sort of, switched to the three plus one that they've used in other studies?

[Sean McCarthy:]

Can't give any specifics there. The dosing and schedules, there are five arms in that study. And the doses and schedules being evaluated have, of course, been informed by what was observed in the Phase 1 dose escalation. That data -- the Phase 1 data will be presented by BMS in post to form at ASCO. And we'll -- that's really all we can say right now about the doses and schedules that they're using. But some -- the goal, of course, of this program, the masking of ipi -- the goal of marketing ipi is to effectively give enough of this agent in the clinic to get to more effective outcomes for patients, and the doses and schedules that they are moving forward in the Phase 2 are consistent with that.

[Joseph Catanzaro:]

Okay, got it. Thanks so much for taking my questions.

[Sean McCarthy:]

You're welcome.

[Operator:]

Thank you. Our next question comes from Mohit Bansal with Citigroup. Your line is open.

[Mohit Bansal:]

Great. Thanks for taking my question, and congrats on all the progress you have made this quarter and last quarter as well. So, couple of questions from my side. So, 2009, if I remember correctly from the last data set, the activity was there, but there was a little bit of like, obviously, safety issue was there, but the responses were not durable until the last update. Now that you are moving with the monotherapy arm in the subset of breast cancer, is it fair to assume that you have tackled the durability issue here?

[Sean McCarthy:]

Yes, hi Mohit. And -- so you're right to say that as of AACR last year, so we reported at that time seven unconfirmed PRs, and one of the challenges at the time with the study was that -- because we have not -- for good reason, we have not instituted ocular prophylaxis from the outset, because we really wanted to get a full view of the safety profile of the drug candidate. What that meant was that the upper doses -- the mid-levels of upper doses, many patients came off. Patients were coming off, of course, with disease progression. Certain patients were coming off for ocular toxicity. So, -- and that is in large part why dose responses were not ultimately confirmed. So, we do have additional experience with the drug candidate now in Phase 1 that will be shared at ASCO coming up soon. And in Phase 2, we are actively mandating ocular prophylaxis. And we've also picked a dose 7 mg per gig, where we see clinical activity, of course, and also where we are confident that ocular mitigation can be effective. So, that -- the Phase 2 study is set up to give us the best opportunity to keep patients on drug for extended periods of time to really see what this drug candidate can do in a more focused less heavily pre-treated patient population.

[Mohit Bansal:]

Got it. And then, one other question on the CD71 program. Since AbbVie has opted in for the program -- sorry, opted in for the program. Is it -- so can you just comment on the criteria behind the milestone payment and what went into -- what kind of data they had to see for you for them to actually move forward with the program?

[Sean McCarthy:]

Obviously, the milestone is a significant milestone, the $40 million payment. That milestone is intended to fund the ongoing work that we'll be doing, as we run the clinical program and move into the expansion cohorts. In terms of the criteria that trigger the milestone that what we call the dose escalation criteria that were specified at the time that we put the agreement in place, a few years ago. And while those criteria have not been disclosed, essentially they are -- they were designed to mark the completion of Phase 1 -- successful completion of Phase 1 dose escalation to point the way to Phase 2 expansions in select tumor types at a specific dose. So, that's what we needed to achieve and that's why the milestone paid.

[Mohit Bansal:]

Awesome. Thank you very much Sean. Really appreciate it.

[Sean McCarthy:]

You're welcome.

[Operator:]

Thank you. Our next question comes from Biren Amin with Jefferies. Your line is open.

[Biren Amin:]

Yes, hi guys. Thanks for taking my questions. Maybe if I could just start on 2029, Sean. On clinicaltrials.gov, if I look at the exclusion criteria for the Phase 1/2 trial, there seems to be some criteria related to iron metabolism disorders and use of iron chelators. So, maybe can you just talk about the CD1 target and how it interferes with anemia or chelators?

[Sean McCarthy:]

Well, CD71 is by definition the transparent receptor functions to internalize iron complex to transfer and get iron into dividing cells. So, it's a fundamental component of iron metabolism, and so that was something that was done as a precautionary measure in Phase 1, really not knowing what we would see in the clinic. So that's really all we can say about that.

[Biren Amin:]

Okay. And then, I guess, in the cynos study, if I look at that data from a few years ago, I think you tested 2029 along with some other Probody mass antibodies. And I think the reason to choose 2029 is that the other compounds saw some weight loss. So, I guess, my question is, how well do you think the lack of weight loss in cynos with 2029 translates in the human study, given I think that cyno model, dosed animals twice at three weeks apart? And so do you think there might be safety issues that may arise in patients receiving several cycles of therapy?

[Sean McCarthy:]

I must admit, I'm not exactly sure what data you are referring to there -- maybe we could take that offline. What I would say is that, that's the cyno data that we have for the most part discussed -- there are two components to it. One is, we demonstrated, I think pretty convincingly that in a head-to-head comparison of antibody drug conjugates or Probody drug conjugate that the -- if you take neutrophil count as a surrogate of hematologic talks that in the unmasked version that is a very toxic molecule in cynos with neutrophil counts plummeting and animals not surviving for much more than a week, whereas with the Probody neutrophil counts do fine. And so -- and remember, as I mentioned on -- earlier on the call, the principal -- the principal toxicity from MMAE would be expected to be hematologic. So, that -- those experiments will be very important in showing that masking in preclinical studies has the potential to open a therapeutic window for the target. We did present an update on data at World ADC in London earlier this year, and update including some of the non-clinical studies looking at toxins in a bit more detail, which again emphasized that the principal toxicities in cyno are indeed hematologic. I'm not sure about that you're referring to regarding weight loss. We should maybe look at that offline.

[Biren Amin:]

Okay. I mean, we can certainly touch upon it later today when we talk. And, I guess, I have a last question, separate program under EGFR, the IND filing, kind of 2021; can you just talk about whether you're pursuing indications with that program?

[Sean McCarthy:]

I can't talk about that at this point.

[Biren Amin:]

Okay. All right. Thank you.

[Sean McCarthy:]

Take care, Biren.

[Operator:]

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back to management for any closing remarks.

[Sean McCarthy:]

Great. Thanks very much. Well, just to summarize again, it was a very strong quarter for the company despite the macro-environments, and we look forward to catching up with all of you guys next quarter. Take care.

[Operator:]

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.