CytomX Therapeutics, Inc.
Q3 2020 Earnings Call Transcript

Published: 7 Nov 2020

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the CytomX Therapeutics Third Quarter 2020 Financial Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host for today, Ms. Stephanie Ascher with Investor Relations. Ma'am, please go ahead.

[Stephanie Ascher:]

Good afternoon, and thank you for joining us on today's call. With me today are CytomX's President, Chief Executive Officer and Chairman, Dr. Sean McCarthy; Chief Development Officer, Amy Peterson; and Chief Financial Officer, Carlos Campoy. Earlier today, CytomX issued a press release that includes a summary of our recent progress and third quarter 2020 financial results. We encourage everyone to read today's press release as well as associated materials, which have been filed with the SEC. In addition, the press release and a recording of this call can be found under the Investors and News section of our website at cytomx.com.

[Sean McCarthy:]

Thank you, Stephanie, and good afternoon, everyone. Thanks for joining us today. I'd like to open today's call with a brief update on our pipeline progress this past quarter. Then I'll hand the call over to Amy to provide context on clinical data we presented to date and where we're heading with our most advanced programs. Finally, Carlos will round out the call with our financial results for the quarter. I'd like to start with a few words about our overarching strategy at CytomX. We are defining a new class of conditionally activated antibody therapeutics with broad potential for bringing new approaches to the treatment of cancer. We aim to leverage our differentiated platform to discover, develop and commercialize a portfolio of new cancer therapies to make a difference in the treatment of many tumor types. Throughout 2020 and despite the ongoing pandemic, we have continued to make steady progress towards advancing our pipeline and building our company. We have five product candidates in clinical development. And together with our partners, we now have eight active Phase II evaluations in seven different tumor types, providing multiple opportunities for potential advancement towards registrational studies as we build our pipeline and company for the long term. Our pioneering work on conditional antibody activation is aimed at changing the way we think about monoclonal antibody treatments for cancer by developing what we call Probodies, a novel class of therapeutic antibodies. The advantage of our Probody approach is that these unique antibody therapies are designed to bind to targets in tumor tissue and minimize binding in normal tissue. Why is this important? Well, traditionally, therapeutic antibody targets have been chosen based on their selective presence in disease tissue. This selected expression is usually critical because conventional antibodies will bind to their targets wherever they are present, even on normal tissues. Unwanted normal tissue expression of targets can lead to undesired toxicities, particularly with potent antibody formats, like antibody-drug conjugates and T-Cell-engaging bispecifics. This has substantially limited the available universe of tumor targets for these increasingly important modalities.

[Amy Peterson:]

Thank you, Sean. I will first start with our CX-2009 program, which we are moving to patients with HER2 nonamplified breast cancer, including those with hormone receptor positive or terminative subtypes. Despite important recent progress with new treatments, including sacituzumab govitecan, there remains a substantial unmet need in breast cancer for safe and effective treatments. We believe that CX-2009, a conditionally-activated ADC, has the potential to address a large population of patients with breast cancer. CX-2009 is a Probody drug conjugate that targets CD-166 and deploys the DM4 payload. CD-166 is highly expressed in over 80% of hormone receptor-positive breast cancer and in 50% of triple negative breast cancer. We presented data at ASCO 2020 as well as other venues, demonstrating compelling activity in these two subtypes of breast cancer, namely, we reported two confirmed PRs in patients with hormone receptor-positive disease, and three unconfirmed, but deep responses in patients with triple negative disease, including a patient who previously had progressed on pembrolizumab and on sacituzumab govitecan. Of the 33 patients with either of these two subtypes of breast cancer, nearly half or 48% had stable disease or better as their best response to CX-2009. We will be providing a further update on our Phase I work on CX-2009, including preliminary translational biopsy data at the San Antonio breast cancer conference later this year. To put our Phase I dose escalation in context, sacituzumab govitecan reported two confirmed PRs in 25 patients with a variety of tumors in their Phase I dose escalation study, one with triple negative breast cancer and one with colorectal cancer. It was not until the expansion phases were enrolled that a more compelling signal in triple negative breast cancer was observed. We are encouraged by what we have seen with CX-2009. As you know, we put enrollment on hold during the shutdown stemming from the COVID-19 pandemic. We have been able to leverage this pause to further hone our investigation of CX-2009 in breast cancer subtypes by initiating a focused Phase II study consisting of three parallel enrolling arms. Arm A will enroll patients who have received 0 to two prior cytotoxic chemotherapy regimens for advanced hormone receptor-positive HER2 nonamplified breast cancer. Arms B and C will enroll patients who have received one to three prior lines of therapy for advanced triple negative breast cancer that expresses CD-166 by immunohistochemistry. Arm C will additionally require that the tumor from patients is positive for PD-L1. CX-2009 will be administered at a dose of seven mg per kg every three weeks as monotherapy in arms A and B, and in combination with CX-072, now with the generic name pacmilimab, our Probody to PD-L1 in Arm C.

[Carlos Campoy:]

Thank you, Amy. I'd like to review the financial highlights for the third quarter ended September 30, 2020. We are in a strong financial position to continue to advance our Probody platform and drive our broad and deep pipeline to key value-driving inflection points over the next one to two years. As you've heard Sean mention, we have a strong record of major alliances, which have allowed us to broaden our pipeline, advancing three programs from concept to clinical stage and working through multiple discovery stage programs while generating significant nondilutive capital. We've already received $130 million from partners this year, and we are eligible for significant milestones around future development and regulatory achievement. Revenue for the third quarter was $17.8 million compared to $10.7 million in the corresponding period in 2019. Research and development expenses were $24 million for the quarter compared to $28 million in the third quarter 2019. General and administrative expenses were $8.6 million for the third quarter 2020 compared to $8.5 million in the same period in 2019. Total operating expenses for the third quarter 2020 were $32.7 million as compared to $36.4 million for the corresponding period in 2019. As of September 30, 2020, cash, cash equivalents and investments totaled $321 million. We anticipate that our balance sheet will allow us to comfortably meet projected operating requirements into the latter part of 2022 without considering additional receipts of partnership milestones or new business development deals. With that, I'll turn the call back to Sean.

[Sean McCarthy:]

Great. Thank you very much, Carlos. Before we open the call up to questions, I'd like to emphasize a few key points from today's update. Firstly, we continue to see the preclinical and clinical weight of evidence building for the Probody approach to conditional antibody activation and with an increasing focus on undruggable targets. Secondly, our clinical pipeline has advanced considerably in 2020, with Phase II studies underway for four programs across seven cancer types. Thirdly, our partnerships are strong and remain an important component of our overall business plan through the advancement of key programs, including the BMS-986249 ipilimumab Probody and the generation of nondilutive capital through alliance upfront and milestone payments. Fourth, we are well-funded through important clinical inflection points we aim to reach in late 2021 and into 2022. We're on track with our goal of building an enduring oncology-focused company based on the unique therapeutic approaches that we're pioneering. We'd like to thank our entire team, our partners and our investors for their continued support, and we look forward to updating you again soon. With that, I'll turn the call back over to the operator, and we can open it up for questions. So, operator?

[Operator:]

And our first question comes from Terence Flynn with Goldman Sachs. Sir, please proceed.

[Terence Flynn:]

Hi, thanks for taking the questions. Maybe two for me. I was just wondering, in terms of CX-2029, I appreciate the data update today. Anything that as you looked at the patients that progressed, any similarities about those patients in terms of what might be driving that progression? It sounds like maybe it's not adherence, but anything in terms of pathways or anything you identified on that front? And then, I guess, as you think about - maybe for Carlos, as you think about the balance sheet, are there additional partnership opportunities as you guys think about it? I know, Sean, you mentioned there's been a lot of interest in ADCs, but as you think about further partnership opportunities, is there anything that you're considering near-term or you feel like you're going to drive to these kind of Phase II proof-of-concepts next year and then that would be the pivot point to make a decision there?

[Sean McCarthy:]

Great. Thanks for the questions, Terence. Let me kick them both off and then be happy to hand over to Amy and Carlos for additional comments as well. With regards to the clinical question, we're still early in characterizing this drug candidate. This is a really big idea. And the - I'll give you one example of something that we need to do more work on, of course, which is the relationship between target level and response. So we're very early in our assessment of that particular biomarker, if you like. I would also just remind you and everyone on the call that is a Phase I study with late-stage patients brought into a dose-escalation setting. So it's still early days there as well. Let me just comment on the partnering and balance sheet, and then again, I'll hand over to Amy and Carlos. You're right, of course, partnering is - has been and will continue to be an important part of our plan moving forward. We do enjoy a robust balance sheet at the moment. We have - within our existing alliances, we do expect over the next couple of years to earn additional milestone payments in those alliances, which are not counted of course in this current cash balance. And we continue to be interested in additional alliances. Your question was, I think, alluding to some extent as to whether we would want to go to actually get the Phase II data before we partner the assets. That may very well be the case. But I would remind you that we've also been quite successful over the years in platform partnerships as well in which we've been able to generate significant upfronts for partnering a handful of targets with partners. So we've got a lot of flexibility, I think, on the partnering front over the course of our cash runway. But let me ask Amy if she has any other comments on the progression question.

[Amy Peterson:]

Sure. Just briefly. Thanks, Sean. Your entire - you're right, the patient population that we enrolled, unfortunately, progression of disease is the expected outcome. I will note that in all patients, when we did the waterfall plot across all patients treated at biologically relevant doses, we did note that those patients whose tumors don't typically respond to microtubule inhibitors were the ones who progressed is their best assessment. So for example, colorectal mesothelioma. If you're asking about the head and neck or the squamous, I'd say, again, unfortunately, we're in the metastatic setting and all patients, the expectation is ultimately that they will progress. However, we are very encouraged that we have the durability of response that we did of 2.5 months in one, almost six months in another and getting close to that in the third. And so we're encouraged that we can actually get durable responses despite the refractory nature from these patient populations.

[Sean McCarthy:]

And Carlos, anything to add on the financial side?

[Carlos Campoy:]

No, nothing to add. I think you highlighted it well that we are absolutely focused on our Phase II, but we continue to be interested in new alliances, and we are still working with our existing partners in earlier stage candidates as well.

[Operator:]

And our next question comes from Mara Goldstein with Mizuho. You may proceed.

[Mara Goldstein:]

On - sorry, 2029 on the breast cancer studies and that redesign trial where you'll have the three arms there. Do those expansion studies have the ability to convert into registrational studies?

[Sean McCarthy:]

Amy, you want to take that one?

[Amy Peterson:]

Sure. I'd be happy to. Hi Mara, thanks for your question. So we do know that response rate can be a mechanism for accelerated approval in triple negative breast cancer that is very much on our minds, and we are going to be keenly interested in the results that we get from that. Whether or not we observe a registrational enabling - well, the studies that we designed for the hormone receptor-positive HER2 nonamplified subgroup should inform a registrational study. Whether or not it directly could be converted to a registrational study remains to be seen based on the data that we get.

[Mara Goldstein:]

Okay. And if I could also just ask another EpCAM-targeted drug recently went into the clinic. And I'm wondering if maybe you can talk a little bit about that program and what are the differentiating features for your own asset?

[Sean McCarthy:]

Yes. There - I mean, EpCAM has been on people's radar screen for a long time, and multiple approaches have been tried. And certain approaches are being tried right now, including certain antibody approaches, even cell therapy approaches. And so there are a variety of different agents being evaluated. We have the view that it's going to be hard to get - it's going to be challenging to get a workable therapeutic index for EpCAM without some kind of tumor-targeting strategy like ours. And so this is a target, in many ways, that was almost uniquely designed for our approach of masking. And as you saw - maybe you saw, if you haven't, please take a look at the triple meeting update that we just gave, the masking substantially improves the tolerability of the EpCAM drug conjugate. In Sinos, we were able to dose up to nine mg per kg safely, whereas three mg per kg of the unmasked is not tolerated. And yet we retain potent anticancer activity with the mask version of the ADC. So in some ways, quite similar to the progress we've made with CD71, but we do think some kind of localization is going to be important to successfully target EpCAM.

[Mara Goldstein:]

Okay, thank you. I appreciate it.

[Operator:]

And our next question comes from Etzer Darout with Guggenheim. You may proceed.

[Etzer Darout:]

Thanks for taking my questions. I have one about the EGFR CD3 with Amgen. Just kind of wanted to get a broad view on where you see this program playing a role in EGFR cancers. Any indications that seem particularly interesting for this mechanism for targeting EGFR? And also wondering if there's been any kind of preclinical data to suggest potential advantages for addressing or overcoming TKI resistance.

[Sean McCarthy:]

Could you just repeat the last part of the question? It was what resistance?

[Etzer Darout:]

Yes, for addressing or overcoming TKI resistance type kind of the got it.

[Sean McCarthy:]

Got it. Yes, sure. Yes, let me take that one. I mean, obviously, given that the programs partnered with Amgen, we're not communicating at this stage on potential indications, but we are gearing up to get this program into the clinic. It's an exciting program. And really, given how broadly expressed EGFR is on a range of solid tumors, we see a number of potential opportunities. And mechanistically, of course, the concept of using EGFR to target tumors and recruit and activate T-Cells is so fundamentally different to TKI inhibition that provided that the target is on a tumor cell, and the target is - well, simply put, provided the target is present on the tumor cell, whether or not the target is inactive for any mutational reason or whatever should not be relevant. So we just need the target to be on the cell surface to bind the bispecific and recruit the T-Cells. So there's a lot of potential. I think we're going to be informed by the data. We'll go signal seeking in early clinical development. And that said, there are some specific ideas that we have. We're just not ready to disclose them just yet.

[Etzer Darout:]

All right. That's helpful.

[Sean McCarthy:]

Thank you.

[Operator:]

And this concludes our Q&A portion of today's conference. I would now like to turn the call back over to Sean McCarthy for any closing remarks.

[Sean McCarthy:]

Great. Thank you very much, and thank you all for taking some time to listen to our update today. We're very pleased with the company's progress, particularly during this very challenging year for all of us in the pandemic, but team has continued to do a terrific job, and we are looking forward to 2021, which has the potential to be a very important year for our company as we continue to advance these multiple Phase II expansion cohorts, both ourselves and with our partners. So, thank you very much for your time.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.