CytomX Therapeutics, Inc.
Q2 2020 Earnings Call Transcript

Published: 8 Aug 2020

[Operator:]

Good day, ladies and gentlemen. Welcome to the CytomX Therapeutics Second Quarter 2020 Financials Conference Call. As a reminder, this call may be recorded. I will now introduce your host for today’s conference call, Christopher Keenan, Vice President of Investor Relations. Chris, please go ahead.

[Christopher Keenan:]

Thank you, Valerie. Good afternoon, and thank you for joining us. Earlier today, we issued a press release that includes a summary of our recent progress and second 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. With me today are CytomX President, Chief Executive Officer and Chairman, Dr. Sean McCarthy; and CytomX’s Chief Financial Officer, Carlos Campoy.

[Sean McCarthy:]

Great. Thank you, Chris, and good afternoon, everyone. Thanks for joining us. It’s a pleasure to be here to provide an update on our progress during the second quarter of 2020. I’ll begin today’s call with a brief overview of our recent achievements, including our presentations at ASCO 2020 and the next steps for our lead clinical programs. I’ll also comment briefly on our preclinical discovery progress, and we’ll then turn the call over to Carlos to review our second quarter financial results. We’ll then open the call up for questions. At CytomX, we are pioneering a novel class of therapeutic antibodies designed to target cancer tissue, allowing for the development of an innovative pipeline of novel cancer therapies. Over the past decade, we have built a strong scientific foundation for our mobile technology, which has the potential to change the way we think about antibody therapeutics. Our technology called the Probody platform is designed to direct an antibody’s anticancer activity towards tumor tissue and away from normal healthy tissue, allowing us to attack new classes of targets that have previously been considered inaccessible to conventional antibody approaches. Our primary strategy is to use our technology to make first-in-class anticancer drugs for the potential treatment of a wide range of cancers by targeting these previously undruggable targets. We’re also utilizing our technology to discover and develop potentially best-in-class immunotherapies. We have four clinical-stage programs advancing towards or already in Phase II clinical studies. These are CX-2029, a Probody drug conjugate targeting CD71 that we are advancing into Phase II studies in multiple tumor types, including head and neck and non-small cell lung cancers. CX-2009, a Probody drug conjugate targeting CD166 that we are advancing into Phase II studies in breast cancer, CX-072, a Probody therapeutic targeting PD-L1 that we are advancing in combination with CX-2009 in triple negative breast cancer; and BMS-986249, an anti-CTLA-4 Probody therapeutic currently in a randomized Phase II study in melanoma, which is being run by our partner, Bristol-Myers Squibb.

[Carlos Campoy:]

Thank you, Sean. I would now like to review financial highlights for the second quarter ending June 2019. The revenue for the quarter was $16.6 million compared to $9 million in the corresponding period in 2019. The increase is primarily due to a higher percentage of project completion of CX-904, our Amgen EGFR product candidate. And also the recognition of revenue related to the $80 million upfront payment received under the Astellas agreement that we entered into in March 2020. Research and development expenses were $24 million for the quarter compared to $30.8 million in the corresponding period in 2019. The decrease was largely attributed to onetime licensing fee paid in 2019 and a decrease in clinical trial-related activities in 2020. We ended the quarter with cash, cash equivalents and investments totaling $346 million compared to $296 million as of December 31, 2019. We expect our strong balance sheet to allow us to meet projected operating requirements into the second half of 2022, assuming no new collaborations or financings. With that, I’ll turn the call back to Sean.

[Sean McCarthy:]

Great. Thanks, Carlos. So let me wrap things up here, and then we’ll go to questions. In summary, CytomX made broad progress across our clinical and preclinical programs during the second quarter as we further advanced our technology, partnerships and lead drug candidates to several important inflection points. We have continued to show leadership in defining new therapeutic antibody modalities with potential to address significant unmet medical needs in the treatment of cancer, a mission that remains as important as ever, despite the unprecedented challenges being posed by the COVID-19 pandemic. We have now brought two previously undruggable targets into play in the oncology field with our platform, CD166 and CD71, both of which we believe have broad potential in multiple cancer types. And we’ll be learning a lot more about these product candidates from our Phase II studies that we expect to start to read out in late 2021. We’re further extending our undruggable target strategy with the advancement of our bispecific program targeting CD3 in EGFR. And with the drug conjugate targeting EpCAM, these preclinical programs are taking great shape as our next INDs. We have also continued with our cancer immunotherapy strategy, leveraging clinically validated targets. The clinical data for our wholly-owned anti-PD-L1 Probody CX-072 has continued to mature, affording us unique opportunities to advance innovative combination therapies, starting with CX-072 plus CX-2009 in triple-negative breast cancer. Our collaborative work with BMS on CTLA-4 has also provided important proof points for our platform, both clinical and preclinical, and we’re delighted to see BMS 249 continuing to advance in the randomized Phase II melanoma study in combination with nivo. Our broad partnership strategy has also continued to deliver with $130 million of cash proceeds so far this year, including the initiation of a major new alliance with Astellas and the progression of many additional preclinical programs across our collaborations, adding to the strength and depth of our pipeline. We continue to enjoy a robust cash position and remain highly focused on making the biggest difference we can for cancer patients as we continue to build our company. Regarding COVID-19, CytomX has continued to execute very well, despite the uncertainties and challenges presented by the pandemic. All of us at the company hope that you and your families are well and keeping safe during this time. And I would like to close by thanking our employees, our patients, our investigators, clinical trial staff and everyone involved in helping us continue to drive forward with our mission of developing new medicines for the treatment of major unmet medical needs in oncology. With that, I’ll hand the call back to Chris, and we’ll open up for questions.

[Christopher Keenan:]

Thank you, Sean. Valerie, please open the Q&A session.

[Operator:]

Our first question comes from Peter Lawson of Barclays. Your line is open.

[Q –Waleed:]

This is Waleed on for Peter. Just maybe initially on the expansion study for CX-2009. Just wondered if you could give us a little bit more color and details on the revised patient enrollment criteria for the study. And also based on your discussions with the FDA, what does the bar need to hit and what would be considered positive results in both HER2 negative breast cancer as well as triple negative?

[Sean McCarthy:]

Yes, great. Thanks for the questions. So regarding patient enrollment, the kinds of things that we’re looking at, obviously, are – given that the Phase I data for CX-2009 was generated in a very heavily pretreated patient population with a median number of prior treatments of 7 or 8, depending upon whether it’s TNBC or hormone receptor positive. Obviously, we’re looking to enroll a substantially less heavily pretreated patient population in the study. So we’ve been fine-tuning that in the recent months. Also, given the evolution of the landscape, giving a little bit more thought to prior treatment regimens that are allowed in the study in regards of the patient population. So those are the kinds of things that we’re doing in this intervening period. Regarding the bar for activity, still, I want to emphasize, this is still a relatively early expiration of CX-2009 in breast cancer. It is a rapidly evolving field, both in hormone receptor positive and triple negative. We haven’t yet had formal discussions with FDA on these types of matters. But the – in triple negative, of course, we’re very well aware of the approval now of the sacituzumab and the activity that we’ve seen with that molecule in hormone receptor positive, where sacituzumab is also active. So we’re mindful of the need to be competitive in this evolving landscape.

[Waleed:]

Great. And then maybe just a question on BMS 249. Do you have any idea of when we can see the next data readout from that study?

[Sean McCarthy:]

Unfortunately, we don’t at this stage. They are actively enrolling. Patients have been – we can’t speak to their time lines, unfortunately, or to impact that COVID may be having on their enrollment. So we’re just going to have to wait and see how that unfolds.

[Operator:]

Our next question comes from Etzer Darout of Guggenheim Securities. Your line in open.

[Etzer Darout:]

The first one for me is a little clarity on the CX-072 combination with CX-2009. Is that what you said was that you plan to sort of initiate a study there in the second half of this year? And then just a quick question on the Astellas bispecific collaboration. Obviously, hematologic malignancies are where we’ve seen sort of the most success, but it’s also kind of more crowded. I wondered if you could talk about – a little bit about maybe where you and Astellas plan to sort of concentrate or focus sort of your energy, if you will, in terms of sort of the bispecific landscape and where you may find indications, I guess, that are more appropriate for the technology?

[Sean McCarthy:]

Yes, great. Etzer, thanks for the questions. So yes, we are actively gearing up to start an expansion cohort or expansion cohorts of CX-2009 in triple negative, both as a monotherapy and in combination with CX-072. I want to reiterate that we have seen single-agent activity for both probodies, CX-072 and CX-2009 in triple negative. So we think this is an exciting experiment to do with the potential for competitive differentiation further down the road. So that study, we aim to get up and running second half. With regard to Astellas, we haven’t guided on the specific focus of the programs there in terms of tumor types. I would just say, broadly speaking, that our strategy in using our Probody masking technology on CD3 bispecifics is from the CytomX point of view, is largely directed at solid tumors where we see the need for substantial improvements because this has been a very tough area to break into for reasons, a very, very narrow and compressed therapeutic window with solid tumor targets. So broadly speaking, we’ve developed the technology to address solid tumors. It certainly could have application in hematologic, I can’t speak specifically for Astellas.

[Operator:]

Our next question comes from Terence Flynn of Goldman Sachs. Your line is open.

[Terence Flynn:]

Was just wondering on CX-2029 regarding the Phase II program. I know you ran through, it sounds like three different tumor types you’re focused on there. Can you maybe just give some insight in terms of how many patients you think would be eligible if you look at U.S., EU5 and Japan for treatment here with CX-2029? Just trying to kind of think about the potential market opportunity.

[Sean McCarthy:]

Yes. Terence, great question. So let me just run through the four expansions again for clarity. So squamous head and neck, squamous non-small cell lung, squamous esophageal and then DLBCL. The first two indications we demonstrated confirmed partial responses in Phase I dose escalation. Squamous esophageal, we’ve shown preclinical activity in xenograft models. Similarly, DLBCL, strong preclinical activity in that indication. That’s the first hematologic indication. That’s one that has arisen through our discussions with our collaborator AbbVie, they have a strong interest in hematologic malignancies as you know. In terms of penetration of the patient population and the market size and the line of therapy, it’s really too early to tell at this stage. We are optimistic based on the Phase I data, of course, that we have a very unique, active single agent against a previously undruggable target that has shown in some of the case studies that we presented previously at ASCO, some pretty profound tumor regressions in patients with very late stage, very heavy tumor burden. The therapeutic window is clearly there at 3 mg per kg. We need to do more work to establish how wide that therapeutic window is, which will dictate ultimately how far forward in lines of therapy we can bring this exciting drug candidate. So Terence, we just have a lot more work to do there. But we’re excited, and we think this program is going to have broad potential.

[Operator:]

Our next question comes from Biren Amin of Jefferies.

[Biren Amin:]

So on CX-2029 for the dose expansion cohort, have you made any adjustments in this cohort that could lead to lower grade 3 or higher anemias and neutropenias that you observed in the dose escalation part?

[Sean McCarthy:]

Yes, Biren, well, I would just say that we’re – a couple of things on the hematologic side with CX-2029. The – as we’ve discussed previously, these are anticipated adverse events with this payload and to some extent with this target. We are doing more work to understand the etiology of the anemia over time. But in terms of steps that we’re taking, they will include treating patients with red blood cell generating growth factors like EPO derivatives. And that’s really all we can say right now. But I want to just remind everybody that the Phase I experience demonstrated that we were able to manage the anemia with red blood cell transfusions. This is something that oncologists are very used to doing, given many decades of experience with chemotherapies. And we’re continuing to get a handle on the overall therapeutic window, and will continue to get a handle on the therapeutic window of this target, and this agent as time goes on.

[Biren Amin:]

And on the dose expansion, are you enrolling for patients with high CD71 expression?

[Sean McCarthy:]

We’re not – let me answer the question this way. We don’t believe we have enough data yet, either preclinical or clinical, to draw any conclusions regarding the target level versus response. One of the things to consider is that CD71 is such an interesting target because it cycles so rapidly off the cell surface and then back, is an unusual target where expression level may or may not ultimately correlate with response, and so we’re not drawing – we’re not making too many assumptions about this at this stage, and so selection strategies will be developed over time.

[Operator:]

Our next question comes from Mara Goldstein of Mizuho. Your line is open.

[Mara Goldstein:]

I had a question on CX-072 and the environment for triple-negative cancers, triple negative breast cancer therapies. And if you should decide that, that is not the best indication, given the competitive landscape, is there a sort of plan B of what you might look at – what other trials you might look at? That’s first of all. And second of all, I do have a question on CX-2029 and the decision to focus on squamous tumors rather than nonsquamous? And is there’s something in the biology that we should be aware of?

[Sean McCarthy:]

Yes, Mara, great questions. So with regards to CX-072, a lot of this is about follow the data. And as our data has continued to emerge and mature over time for CX-072 monotherapy and CX-2009, the concept of combining the two of these agents, which, as I mentioned earlier, both have single-agent activity in TNBC, combining them in that indication, we think, makes a lot of sense in the context of the current competitive landscape on the assumption that the activity of the 2 together has the potential to do something interesting, really interesting. So we’ll see. We’ll run this expansion, and we’ll see what we get. You’re right. The landscape is evolving. It’s not a huge patient population, but we’re really interested to see what this combination can do in TNBC. The question of squamous tumors. And actually, I’m sorry, let me answer the second part of your question on CX-072, which really relates to the program strategy overall, which is, as I said, we continue to follow the data where we’ve evolved towards a combination strategy, as you know, rather than driving the monotherapy to registration. That’s where the competitive landscape we see is just too – way too crowded for us to – at this point, without a partner to invest in driving the monotherapy to registration at least at this stage. We do remain interested in potentially finding a partner for this asset over time. And that could help inform future strategy as well. Regarding squamous tumors in CX-2029, again, follow the data. The clinical observations are really interesting. And the kind of thing you keep your eyes open for when you run Phase I studies. We are intrigued by the activity that we’ve seen in squamous head and neck and squamous lung. Why might that be? And is it a real signal in terms of that relative to other tumor types? That’s why we need to run the expansions. Why might it be the case? It could relate to target. But as we just discussed, we have a very early understanding of target versus response for CD71, we need to learn more there. Could it relate to the microenvironment, possible. So we just need to do more work. But we think it’s an intriguing clinical hypothesis and sometimes Phase I studies give you these great opportunities to all of the data into Phase II, and that’s exactly what we’re doing. So we’ll be learning more.

[Mara Goldstein:]

Okay. And if I could just also squeeze one more in. And just – I know, obviously, Bristol is in charge of the program for BMS 986249. But can you just remind us what is maybe the next financial milestone for that program?

[Sean McCarthy:]

So for BMS 986249 for the ipi Probody, it would likely be the initiation of a registrational study, but I’d have to go back and check that.

[Operator:]

Our next question comes from Mohit Bansal of Citi Your line is open.

[Mohit Bansal:]

So I just wanted to probe a little bit further on the cost-related Probody approach. If I’m – so can you please help us understand what fucosylation actually, what difference does that make to the Probody or antibody? And if I’m not mistaken, it seems like if these nonfucosylated version was also tested in clinic, so is there anything we have learned from that compound, which could be used in here.

[Sean McCarthy:]

Yes. Mohit, thanks for the question. So the concept, and this is articulated in the AACR poster that CMS presented a few months back. The concept is that nonfucosylation of ipi increases its ability to deplete intratumoral T-regs based on the way that it interacts with the target and Treg cells in the tumor. So the basic idea is that increased intratumoral Treg depletion by the nonfucosylated antibody results in more potent anticancer activity because many believe that Treg depletion is the principal mechanism through which CTLA-4 blockade works. Challenge is that the more potent you make ipi by making the NF version, the more toxic it gets because it activates immune cells peripherally, more effectively as well, in part by – again, by more powerfully down regulating immunosuppressive Tregs. So if you look at the AACR poster, what it shows – it’s actually really beautiful work. It shows that the underlying – the potency of the underlying antibodies for each – for ipi and for the NF is maintained with the Probody despite the mask. So that’s consistent with unmasking in the tumor. From a toxicity standpoint, they demonstrated that the HNSTD, the highest nonseverely toxic dose for ipi and for the NF Probody were five and threefold higher based on the masking that we achieved with the Probody. And in the case of the nonfucosylated, you can see from the data how much nontoxic the NF Probody – the antibody is and how the Probody protects. So the basic idea is with the NF Probody is we’ve got a more – we’ve got a more active antibody, but it’s more toxic, if we can improve the therapeutic window of NF, we can further improve on the BMS-986249 ipi Probody. So it’s kind of a next-generation ipi Probody, if you like. I hope that makes sense.

[Mohit Bansal:]

No, this is very helpful. And if I ask one more, it seems like your R&D expense quarter-over-quarter has declined significantly. So maybe a question for you, Carlos. I mean, how should we think about the expense, especially in R&D going forward, especially when you are starting some more trials and probably the enrollment will speed up now.

[Carlos Campoy:]

Yes. That makes sense. You noticed that we had a significant number of expenses that happened in Q1 that are onetime, particularly around licensing fees that were associated with the milestones that we’ve received in Q1. So Q1 was the aberration, not Q2. And you should see it continue at a lower level than what you saw in Q1, but we haven’t really guided for the full year R&D expense line.

[Operator:]

Our next question comes from Joe Catanzaro of Piper Sandler.

[Joe Catanzaro:]

Maybe just one quick one. Just wondering if you have any thoughts or whether the recent AdCom for the BCMA ADC and the ocular tox discussion provides any insight or future plans around CX-2009 around whether it’s collecting the data or just how the FDA thinks about that toxicity in the context of an advanced cancer population?

[Sean McCarthy:]

Yes, Joe, great question. Certainly something that we’re looking at. And at the time being, we have and continue to remain confident that we can manage ocular toxicities with the regimens that have been used previously with DM4 conjugates, but we’re certainly going to learn everything we can from those discussions and make any additional modifications or improvements that we may be able to make, but work in progress.

[Operator:]

I’m showing no questions at this time. I’d like to turn the call back over to Dr. McCarthy for any closing remarks.

[Sean McCarthy:]

Great. Thank you very much. Once again, I’d like to thank everyone for listening in today. We had another very strong quarter. And as I said, despite the many challenges presented to all of us by the COVID-19 situation, very proud of the team and proud of our progress as we move the pipeline and platform forward. So I hope everybody stays well, stay safe, and we’ll look forward to talking to you all again soon.

[Operator:]

Thank you. Ladies and gentlemen, this does conclude today’s conference. Thank you all for participating. You may have a great day. You may all disconnect.