CytomX Therapeutics, Inc.
Q1 2019 Earnings Call Transcript

Published: 9 May 2019

[Operator:]

Good day, ladies and gentlemen, and welcome to the CytomX Therapeutics First Quarter 2019 Financial Conference Call. . As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Mr. Christopher Keenan, Vice President of Investor Relations. Chris, you may begin.

[Christopher Keenan:]

Thank you, Liz. Good afternoon, joining me today are CytomX President, Chief Executive Officer and Chairman, Dr. Sean McCarthy; and CytomX's Vice President of Finance, Robin Knifsend. Before we begin, I would like to remind you that we'll be making forward-looking statements during the call. Because forward-looking statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict and many of which are outside of our control.

[Sean McCarthy:]

Thanks, Chris, and good afternoon, everyone. I'm very pleased to be here with you today to briefly review another very productive quarter for CytomX. At CytomX, we are reinventing therapeutic antibodies for the treatments of cancer. We see a major opportunity to more effectively target therapeutic antibodies into diseased tissue, generating new classes of differentiated anticancer therapies as these are best-in-class molecules against validated targets or for first-in-class molecules against novel targets that we believe our technology can uniquely address. Our innovative approach to antibody localization into diseased tissue is called the Probody platform. Probodies are fully recombinant antibody prodrugs comprised of a therapeutic antibody, a linker and a mask designed in a way that the antibody can't see its target until the mask is removed. Mask removal occurs specifically and selectively within cancer tissue as a function of disease-associated proteases, which clip off the mask in the tumor allowing the underlying antibody to bind target and elicit its biological effect. Probody therapeutics are designed to offer localized target binding in diseased tissue while maintaining potency, reducing side effects and enabling new targets of mechanisms to be translated into novel product opportunities. We see this as a really big idea backed by decades of research by our deep knowledge of the biology of the tumor microenvironment, innovative protein engineering and a robust intellectual property portfolio. We are the leader in this emerging field of therapeutic antibody localization with four clinical stage programs, strong partnerships and recent clinical proof-of-concept. The first quarter saw excellent progress by the CytomX team in developing our differentiated technology platform and our lead product candidates as we continue to build on the first Probody clinical data we presented for our lead program, the anti-PD-L1 probody, CX-072, at ASCO last year. Since then, we presented additional clinical and translational data, including from our second program, CX-2009, at ESMO, SITC, at our R&D Day in February and most recently at AACR.

[Robin Knifsend:]

Thank you, Sean. I would like to review selective financial highlights for the first quarter. We ended the first quarter with cash, cash equivalents and investments totaling $396.6 million compared to $436.1 million as of December 31, 2018. Our strong balance sheet allows us to fund operations well into 2021 assuming no new collaborations or financings. Research and development expenses were $36.4 million for the quarter compared to $22.5 million in 2018. The increase in research and development expenses was primarily attributable to additional cost related to our maturing pipeline, personnel-related expenses and a $5 million charge for acquired technical know-how related to drug conjugate and bispecific technologies.

[Sean McCarthy:]

Great. Thanks, Robin. So now I would like to just briefly wrap up. From this recap of Q1 today, I hope you can see how across our wholly owned and partner pipeline we have a broad range of opportunities with very unique product candidates, enabled by our technology. And in addition to our pipeline progress during Q1, we also made several important additions to the senior organization, including Nick Galli as Chief Business Officer and Leslie Robbins as SVP, Intellectual Property. The additions of Nick and Leslie to our leadership team reflect our ongoing commitment to partnership formation and aggressive protection of our intellectual property as core pillars of our corporate strategy. Nick's proven track record in transformational business development and Leslie's broad and deep IP experience across discovery, development and commercial stages of biologic drug development will be great assets as we seek to maximize utility of our probody technology for patients. I'm also delighted to welcome Elaine Jones back to our Board of Directors. Elaine recently retired from Pfizer after many years leading investments for their corporate venture fund. Elaine worked closely with CytomX in our earlier formative years. She is an accomplished life science industry leader whose broad experience across health care sectors and deep prior experience with CytomX will be a tremendous benefit as we continue to advance our innovative probody platform and clinical portfolio. In conclusion, CytomX continue to make terrific progress during Q1. We further strengthened our leadership in the field of therapeutic antibody targeting with our Probody platform, we significantly advanced our clinical stage pipeline, moved our partnerships forward, and we further built our team. We've finished Q1 with a strong balance sheet, and we look forward to a very productive 2019. On particular note, our lead wholly owned programs, CX-072 and CX-2009, are taking great shape, and we expect to provide detailed updates on next steps for the programs in the coming months. So with that, I'll hand back to Chris for Q&A.

[Christopher Keenan:]

Liz, you can open up the call for questions.

[Operator:]

. Our first question comes from line of Christopher Marai with Nomura.

[Jackson Harvey:]

This is Jackson Harvey on for Christopher Marai. My first question is on CX-072 ASCO data. I realize you're going to update us on Part D. But I'm just curious, will this be in the same tumor types as you presented at R&D Day or will it be additional tumor types?

[Sean McCarthy:]

It will be largely in the same tumor types with the potential for a little bit of additional information as well.

[Jackson Harvey:]

Got it. Also I have to ask if BMS has given you any indication of whether they maybe sharing data at ASCO as well?

[Sean McCarthy:]

They have not.

[Jackson Harvey:]

Okay. And my final question is on CX 2009. Can you share some more details on the dose refinement, what you might be looking for or the status of that, and also, the protocol for the ocular prophylaxis?

[Sean McCarthy:]

Sure. Well, with regards to dose refinement, I think as we've reported previously, the mTPI cohort that we're enrolling, as of the last update, we were enrolling patients at the dose of 8 milligrams per kilogram. The way that particular component of the study is structured, it allows us to either further escalate or deescalate depending upon what we see at that dose. And so one of the advantages, of course, of doing this particular mTPI structure is that it gives us additional information on toxicity and overall therapeutic window over an extended period of doses as opposed to the simple -- the more typical 3-week DLT period within standard dose escalation. So there is a lot of information that we capture in the mTPI. We may only end up doing that at 8 mg/kg, we may end up at additional doses, we'll have to see how it goes, but the point, of course, is as you quite rightly point out is to dose range to allow us to select the optimal dose for Phase II.

[Operator:]

Our next question comes from line of Ying Huang with Bank of America Merrill Lynch.

[Alec Stranahan:]

This is Alec on for Ying. My first one is on the Agensys acquisition. How do you see the conjugate linker-toxin and the CD3 bispecifics contributing to your current or future pipeline? Just trying to get a sense of how you view the assets you got from Astellas?

[Sean McCarthy:]

Yes, certainly great question. So as you all know, for the first two probody drug conjugates that we put into the clinic, we made a very deliberate decision to use linker-payload constructs that were well understood and well presented from a clinical standpoint. And that's very important because as you can see from our interpretation of our 2009 data as we look to tease apart the safety data and attribute toxicity to either payload or potentially later target, we know exactly what we're looking for from the payload. That's an extraordinary helpful in really figuring out a reasonably complex Phase I data set for CX-2009. We -- and that's the DM4 payload. The payload for the 2029 CD71 PDC is MMAE, so we expect that to be a similar kind of situation. With the third, the fourth, the fifth, just keep on going PDC that we put into the clinic over the next several years, I think we will now be in a position to take a little bit more risk on payload and maybe bring some novel payloads forward and we've got quite interested in this chemistry that we've acquired from Agensys, which we think has a lot of potential, is less proven in the clinic, but we would -- what we are evaluating is potentially putting molecules into the clinic with those payloads, which, of course, we now would own outright, but also not come with any downstream economic burden to any kind of partner. With regard to CD3, there is a lot of work going on in the field right now. So I'm sure you know to answer the question what is the optimal CD-3 arm for CD-3 bispecifics and that can vary in terms of affinity, avidity, cross-reactivity, you name it. And so we are just interested in building a big of a portfolio of CD-3 molecules as we can so that we can build large lead series to put into preclinical studies before we select molecules to put into the clinic, so that was just a somewhat opportunistic acquisition that's given us just another tool in the tool kit, if you like, for making CD-3 bispecifics.

[Alec Stranahan:]

Great. That's really helpful. And then in terms of the overall cost of bringing this asset in-house, most of the expenses that hit R&D accounted for this quarter, I guess, what I'm trying to get at is, should we see R&D expense go down to normal level next quarter and onward?

[Sean McCarthy:]

Yes, that's a onetime charge that you're seeing, that we're taking $5 million this quarter.

[Operator:]

Our next question comes from line of Peter Lawson with SunTrust.

[Waleed Abdel-Naby:]

This is Waleed on for Peter. A question on CX-072 combo study with vemurafenib. Can you give us an update on how the enrollment is progressing for that study and perhaps when we can potentially see some initial data?

[Sean McCarthy:]

Yes, study continues, and we are -- we haven't yet decided exactly where we'll present data, but we are still actively considering sharing preliminary data from that arm before the end of the year.

[Waleed Abdel-Naby:]

Great. And just do you have any additional perhaps clarity on when we may expect the expansion phase to begin for CX-2009?

[Sean McCarthy:]

Well, we are certainly optimistic that we'll have that underway second half of this year. It really does depend, of course, on the ongoing dose optimization work we are doing and to some extent, as you can appreciate, as I commented earlier in the mTPI cohort, how much dose refinement we elect to do there. But we would -- we're certainly shooting together up and running second half of this year.

[Operator:]

Our next question comes from the line of Geoff Meacham with Barclays.

[Unidentified Analyst:]

This is Olivia Barone for Geoff. Just two quick ones from me. The first is, one, have there been any further developments in terms of CX-188 from a potential partnership perspective? Whether that's in the form of conversation with companies that have shown maybe initial interest on their part or maybe a more active approach on your end? Or should we be thinking about that as more of a downward event if at all? And then just one on 072, recognizing it's still very early days, but can you give us a sense of what your internal discussions have been around registrational studies down the road and also maybe if you could help us better understand how you're thinking about the Zelboraf combination as far as pipeline prioritization goes?

[Sean McCarthy:]

Hi Olivia. Thanks for the questions. I'll see if I can answer. With regards to partnerships, on 188, I would kind of take a step back and say that if we think about the 072 program and our PD program as a whole, which would include PD-1 plus PD-L1, obviously, we have some interest in time in potentially forming a partnership there, but we can't comment on any specifics in terms of any ongoing discussions as I'm sure you will appreciate. With regard to 072 registrational strategy, the strategy is to really play out the monotherapy expansions and again, we'll have additional data at ASCO, as I mentioned, where we're looking at this dose of 10 mg/kg in multiple tumor types to really get a fingerprint of how this monotherapy looks, best we can in the kinds of patients that we can enroll into these types of studies today. And then at that point, look at the data and evaluate the potential for moving into a full stage registrational study for the monotherapy in one or other of those indications. It, of course, will depend upon what we see. If we see robust enough data in any of those indications to drive into a single-arm registrational study, that would be one option, moving into potentially randomized studies could be another option. We're just going have to see what the data delivers for us around the middle of the year. With regard to the Zelboraf combination, we continue to think that's an interesting experiment. We've been committed to that combination. It has taken some time to enroll. I would say the same thing. Let's see what the data tells us. The field has evolved a lot since we initiated that study. There is no question about it. So again, I don't want to make a specific comment on portfolio strategy, but it's not lost on us how much the field has evolved externally since we started our study and that may well read on decisions that we make in the future, but let's see what the data shows.

[Operator:]

Our next question comes from line of Mohit Bansal with Citigroup.

[Mohit Bansal:]

Just wanted to understand, so the three programs which you're still under collaboration, how are you thinking about the future for those programs? Do you think there will be any partnership opportunity there as well?

[Sean McCarthy:]

You're talking about the three targets for which research was stopped?

[Mohit Bansal:]

Yes.

[Sean McCarthy:]

Yes, well, see I mean, the targets will come back to us, which is great. I would say that, as you well know, all question of target selection in immunooncology has gone through kind of a transformation over the last 3, 4 years, and targets that we viewed as attractive a few years ago by leaders in the field such as BMS are viewed differently in many cases today for lots of different reasons it. And so those targets do come back to us, but we are not commenting at this stage on whether we plan to advance them or not. We certainly could, but we also have a ton of other stuff going on that we are excited about in our pipeline.

[Mohit Bansal:]

Got it. And then coming back to the PDC target, CD166 as well as 71, could you help us understand how, when you decide that this is the target we need to go after? What the process is? I mean, I understand that it has to be a target on cancer tissues. But I mean, like how do we make sure that this is the right target before actually getting into clinic?

[Sean McCarthy:]

Well, that's a big question for the field isn't it, Mohit? But I'll give you my answer. No, to be serious, with regards to the PDCs, the way we've thought about this for the last two years is as follows

[Mohit Bansal:]

Got it. And then last one, I mean, you did comment on -- a little bit on Amgen collaboration. So when can we see more from that side in terms of now they are getting to clinics or something like that?

[Sean McCarthy:]

Yes, no guidance there at this point, Mohit. It continues to be research. What I can tell you is that we're very well positioned with Amgen given that, they're obviously very, very strong in this field at the molecular biological level. We have -- we're pooling resources in terms of our molecular toolkits to -- including CD3 molecules, this was just assessed to build a wide range of different formats and molecules to evaluate in preclinical studies and it just takes time. So that's what all I can say at this point. But we are on the right track, the research is first class, the relationship with those guys is terrific and our decision to partner with each other, I think, has been very well received by both companies.

[Operator:]

Our next question comes from the line of Boris Peaker with Cowen.

[Boris Peaker:]

Great. So my first question is on 072. I'm just curious what biomarkers are you monitoring in these patients and have you observed any correlation between biomarker responders versus nonresponders?

[Sean McCarthy:]

Boris, good question, important question. We continue to look at PD-1 status. We're not -- in the Part D in the expansions, we're not biopsying patients prospectively. So -- we did that as you know in the A2 arm, where we collected a good deal of translational data, including immune cell infiltrates, PD-L1 status, we looked at cytokine mRNA expression so on and so forth. In the -- the monotherapy expansions are really aimed principally at getting the efficacy fingerprint. So there's not going to be as much translational data so that's what all I can say at this point.

[Boris Peaker:]

Right. And for 2009, I'm just curious for the CD166 space in general, is there any competitive developments that you or we should be paying attention as investors, anything we expect at ASCO, outside of your programs?

[Sean McCarthy:]

Nothing that we're aware of at this point.

[Boris Peaker:]

Right. And lastly, any -- I mean, you have seen a couple of partnered programs. Any time line for potentially when we see results from those, any partner program?

[Sean McCarthy:]

Well, ImmunoGen has presented some quite beautiful data on the EpCAM probody drug conjugate preclinically. That data looks very strong. With regards to clinical data, it's too early to tell and that's what all we can say at this stage.

[Operator:]

Our next question comes from the line of Joe Catanzaro with Piper Jaffray.

[Joseph Catanzaro:]

Just two quick ones for me. Maybe the first one with regards to 072-ipi combo. How are you thinking about the indications in the expansion cohort of that trial? Did your plans have sort of you've done a dose 072 and picked these checkpoint refractory-type tumors or pick indications were nivo-ipi has demonstrated clear activity or perhaps a mixture of both?

[Sean McCarthy:]

Joe, great question. A very, very topical question at CytomX at this exact point in time as I'm sure, you can appreciate. We will be guiding on this as the year progresses. And the only thing I would say is that, we are -- we're gearing up to do -- we want to make sure that the next step for this combination is a meaningful next step that will really show us what this combination can do. So I would just ask you to stay tuned.

[Joseph Catanzaro:]

Okay. Fair enough. And then my second one. So It sounds like you could potentially get another look at 2009 data in 2019. Should we expect that to just be additional follow-up for the A2 patients or could we potentially see data from the dose ranging portion of the study that's ongoing?

[Sean McCarthy:]

Well, I think the -- obviously, for us the main objective of the dose ranging work is to pick our dose for Phase II so once we -- which obviously we're going to want to communicate as soon as we can to you guys. To the degree that we'll be in a position to actually share the underlying data and whether we decide to do that at a medical conference this year or next year or at a more ad hoc basis, we're just going to have to wait and see. But for us, we're really focused on getting to a data set that will allow us to pick the dose and then move on. So we'll have to see.

[Operator:]

Our next question comes from the line of Robert Driscoll with Wedbush Securities.

[Ashiq Mubarack:]

This is Ashiq Mubarack on for Robert. Just a couple quick ones. I guess regarding CX-2009, how confident are you in the ocular profile being dose responses, especially in this mTPI cohort, any commentary there? And then just a quick second one on revenues associated with the Bristol-Myers collaboration. Any modeling thoughts for us for the next couple quarters?

[Sean McCarthy:]

Got it. So with regards to 2009 and ocular prophylaxis, I mean, we -- I think there's pretty good evidence from others and I think in our data as well that ocular toxicity for the DM4 payload is dose dependent. And in our study, we definitely pushed the envelope with the dose escalation. We were able to get to doses that were significantly higher than we had originally thought when we designed this Phase I study. We're not entirely clear why that is, whether it relates to some property of the probody or not. But to the effort, 9 mg/kg and 10 mg/kg doses was a little bit unexpected for us frankly, and not surprising those doses, we see fairly significant ocular toxicity all the more so because we weren't actively prophylaxing patients in the early stages of dose escalation, so -- watching through most of dose escalation. The literature evidence and the work that ImmunoGen has done and is reported has shown I think pretty clearly that steroidal eyedrops given appropriately with a high degree of compliance can actually be very effective in mitigating this type of toxicity. And we're using a somewhat similar regimen, but a further modified regimen based on consultation with our own consultants. So we're going to have to wait and see. We're optimistic. But it's going to also be a function, of course, of the dose that we actually end up picking for Phase II as well. So we'll know more as the year progresses. Second question on BMS revenues. We don't have any additional guidance at this point on revenue from BMS or actually from any of the other collaborations at this stage.

[Operator:]

Our next question comes from the line of Biren Amin with Jefferies.

[Biren Amin:]

Sean, maybe I can just start on 2009. When can we expect, I guess, an announcement on which tumor types you would go after with the Phase B portion of the study? And I guess, what would you consider in terms of just factors in evaluating which tumor types? I think you looked at seven tumors in the Phase I portion.

[Sean McCarthy:]

Yes. Hi Biren. Well, let's just recap what we know so far as I mentioned in my comments. We -- as we said at ASCO, we've seen evidence of activity for 2009 in a number of tumor types, which we know expressed target breast cancer, ovarian cancer and head and neck. We've also seen, as you can see in the waterfall plot from the poster presentation at AACR, some activity in lung cancer as well. It's still early days, of course, but our vision for the program has always been that it has the potential to be active in most tumor types and that does seem to be the case. What we're working to right now is for the expansion phase as we move into expansions in Phase II. Should we take a laser shot in one indication? Should we move into more than one indication? We haven't made that decision yet. So as I said earlier on, I'm very much hopeful that we'll get through the dose ranging work in the coming months and be in a position second half of the year to pick dose and indication -- maybe there will be more than one indication and hopeful that will happen second half of the year, but that does require that we don't spend too long in dose refinement in the coming months. So a little bit of a moving target, but I think we have a lot of opportunity here.

[Operator:]

I'm showing no further questions in queue at this time. I'd like to turn the call back to Dr. Sean McCarthy for closing remarks.

[Sean McCarthy:]

Well, thanks, everyone, for your time, I very much appreciate it. It's been another strong quarter for CytomX. We're super excited about where we are as a company and very much look forward to providing additional updates as the year progresses. So enjoy the rest of your day or evening.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, you may now disconnect. Everyone, have a great day.