Five Prime Therapeutics Inc
Q1 2020 Earnings Call Transcript

Published: 9 May 2020

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the Five Prime Therapeutics Webcast Conference Call. At this time all participant lines are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. I'd now like to introduce your host for today's conference call, Martin Forrest, Vice President, Investor Relations and Corporate Communications. You may begin.

[Martin Forrest:]

Thank you, Michelle, and good afternoon, everyone, and thank you for joining us. The press release for the company's first quarter 2020 financial results was issued earlier today and can be found on our company website. Joining me today are Tom Civik, our President and Chief Executive Officer; Dr. Helen Collins, Chief Medical Officer; and David Smith, our Chief Financial Officer. Today's conference call will include forward-looking statements under the Private Securities Litigation Reform Act of 1995, including statements regarding our research and development programs and financial outlook. Actual results may differ from those indicated by these forward-looking statements due to numerous factors, including those disclosed in the Risk Factors section of our SEC filings. Our expectations and assumptions could change. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so even if our views change. I'd now like to turn the call over to Tom.

[Thomas Civik:]

Thanks, Martin, and good afternoon, everyone, and thanks for joining us today to review our first quarter achievements and previews from upcoming milestones. I'm very excited to have joined Five Prime 3 weeks ago, and I look forward to interacting with you on the call today and in the future. In my remarks today, I'll discuss the corona virus pandemic and how it's affected Five Prime. Our strategic decision to advance the FIGHT trial is a randomized Phase II study and provide an update on the 155 program. Helen and David will also be providing updates on our clinical program and our financials. Let me start with how we're addressing the pandemic. When I joined Five Prime, the entire team had already been working remotely for a couple of weeks. It's important to note that the Five Prime team that started this transition about a week before the shelter-in-place mandate. And as a result, we were able to make sure our teams had what they needed to be safe, comfortable and as productive as possible. This early action by the leadership team at Five Prime likely will have many long-term benefits for our organization and our program. This is an illustration of our concern for the safety and well-being of our employees, their families and our communities. I'm immensely proud of our team who have and who continue to respond with resolve and agility to the many challenges of the coronavirus pandemic. Because of all the great work from the Five Prime team, I'm pleased to report that we do not expect the coronavirus pandemic to have an impact on our 2 lead programs, bema and 155. We are closely monitoring the pandemic, working with our partners to plan, and we will provide an update if our situation changes. Since joining the company, I've spent a lot of time with the Five Prime team reviewing our programs. And as you might imagine, a significant amount of time was spent with bema and 155. So I'll start with bema. There's a significant unmet need in gastric cancer as it is the fifth leading cause of cancer death globally. And unfortunately, the last approval in first-line metastatic gastric cancer was almost a decade ago. And so we at Five Prime remain very committed to advancing therapies like bema that have the potential to address patient groups where the therapies are limited. After discussing our options with potential partners, scientific advisers and our Five Prime team, it became very clear that the best decision for the bema program was to turn the FIGHT trial into a Phase II study with PFS as the primary endpoint. This has the following main benefit. Most importantly, this decision will allow us to generate Phase II data sooner. If the data are positive, it will allow us to reengage potential partners sooner, and it might also allow us or a partner to design a smaller and more efficient pivotal trial. In the event the data are not positive, this decision will allow us to reallocate resources to other programs more quickly. Helen will provide more detail shortly, but let me close my comments on bema by saying that as a new member to Five Prime, I was thrilled to see our team come together on this and make an important decision that's in the best interest for patients, our employees and our shareholders. Now let me move on to 155. This program remains on track to generate monotherapy data at the end of 2020. It's also worth noting that we are closing in on our dose and continue to be encouraged by the results we are seeing. We're also planning to initiate a combo trial with pembro in Q3. Guiding the company through the bema decision and the 155 data readout are key near-term priorities for us, but there are others. I'm also working with the executive team to plan for the development of our preclinical assets and how this influences our long-term vision for Five Prime. We are advancing 3 novel late-stage research programs and expect to bring 1 into preclinical development later this year. We have established strong partnerships with companies like Seattle Genetics, Bristol-Myers Squibb and Zai. And we continue to look to acquire programs that will leverage our clinical development expertise. Before I turn it over to Helen and David, I'd like to thank Bill Ringo, who guided Five Prime through some challenging times over the last 6 months. He and the Five Prime executive team restructured the company in a way that allows us to have the necessary resources to invest in these important programs and our team. Let me close with a comment about the Five Prime team. In my first 3 weeks, I've had the opportunity over video to meet every Five Prime employee. And I've left each one of these conversations convinced. We have the team in place to deliver on our mission, which is to improve the lives of patients with cancer in ways never before possible. I'll now turn the call over to Helen, who will provide more details on our clinical programs.

[Helen Collins:]

All right. Thank you, Tom. Let's begin with an update on bemarituzumab, our FGFR2b monoclonal antibody. Bema is under evaluation in the FIGHT trial, which is a randomized, double-blind, frontline gastric cancer study that has enrolled more than 150 patients with tumors that overexpress FGFR2b. As Tom highlighted, today, we announced the strategic decision to convert the FIGHT trial to a randomized Phase II study. We remain optimistic about the benefit bema may provide in the treatment of patients with gastric cancer and remain committed to both the patients and investigators who are participating in the FIGHT study. This commitment to patients, investigators and bema is best realized when meaningful and actionable results are made available as soon as possible. Converting the trial to a Phase II will also allow us to analyze the data in more detail and provide more confidence in the next steps of the bema program. Based on the event rate in the 154 patients enrolled to date, we expect efficacy and safety results to be available by the end of 2020 to early 2021. If the data is positive, there's a clear potential for a smaller, more efficient pivotal Phase III trial. The treatment arms and structure of the FIGHT study will remain unchanged. All enrolled patients will continue to receive modified FOLFOX6 and either bema or placebo in a double-blind design and the trial will continue to be monitored by the independent DMC. As is typical for a Phase II trial, the primary endpoint will become PFS. The patients will continue to be followed for overall survival, which remains a key endpoint. Gastric cancer is a devastating cancer from a patient perspective, life expectancy with advanced stage disease remains 12 months or less in the U.S., and this hasn't changed appreciably in a decade. Many patients do poorly with the frontline treatment and so don't have the opportunity to receive late-line therapies. Newly diagnosed patients desperately need better frontline therapies, and bema remains the only FGFR2b targeted drug in the clinic with the safety profile to be combined with chemo and the efficacy data as a single agent. We're extremely appreciative of the contributions to this trial from patients, investigators and the employees of Five Prime and Zai, our partner in China. The screening of over 900 patients globally in 15 months illustrates both the enthusiasm for bema, the support for this study and the desire for new therapies in gastric cancer. We look forward to the clarity that a near-term data readout will bring to the bema program and remain committed to generating this data with the continued help of the investigators, patients and our staff at Five Prime. Turning now to FPT155. This is our first-in-class CD80-Fc fusion protein that has 2 complementary mechanisms of action directed at the T cell. One, to directly stimulate T cells by engaging CD28, and two, to inhibit CTLA-4 checkpoint activity. FPT155 is different than a CTLA-4 inhibitor like ipilimumab or T-cell agonists like ICOS, GITR, OX40 or 4-1BB that are only expressed on T cells that are already activated. One of the targets for FPT155 is CD28, which is constitutively expressed on both naive and memory T Cells. So FPT155 has the added potential of being able to activate naive T cells. In the Phase I trial, we're seeing dose-dependent proliferation of both central and effective memory T cells in the blood, and based on this data, we think we're now enrolling patients at doses where there is a potential for efficacy. Enrollment so far has been minimally impacted by COVID as the trial is being conducted in Australia and South Korea. So we remain on track to generate the data that should enable us to make a preliminary evaluation of single-agent activity by the end of 2020. We also expect to initiate enrollment in the combination dose escalation of FPT155 and pembrolizumab in patients with PD-1 treated non-small cell lung cancer in the third quarter. Moving on to FPA150, the monoclonal antibody targeting tumors that overexpress B7-H4. We've completed enrollment of FPA150 in combination with pembrolizumab and a Phase Ib cohort of patients with ovarian cancer that overexpresses B7-H4. We do not plan to advance the development of the combination independently. We plan to submit the full data set from both the long-term follow-up of the Phase Ib monotherapy arms and the combination arm at a future scientific meeting. Finally, turning to BMS-986258, an antibody targeting the immune checkpoint receptor TIM-3, based on BMS' monitoring of the COVID-19 situation, we no longer anticipate that BMS may move this trial into Phase II before 2021. I'd like to close by saying we work at Five Prime because of a commitment to discovering drugs with novel mechanisms of action to fight incurable cancers. It's an exciting time right now as we're closing in on having meaningful and actionable data on 2 of these novel therapies

[David Smith:]

Thanks, Helen. Details regarding our financial results can be found in the press release that we issued this afternoon. Turning to our cash position. We finished the quarter with a strong balance sheet. Cash, cash equivalents and marketable securities totaled $142.7 million as of March 31, 2020, compared to $157.9 million as of December 31, 2019. This decrease was primarily attributed to quarterly operating expenses that exceeded quarterly operating quarterly revenues. Collaboration and license revenue for the first quarter of 2020 increased by $3.1 million or 58% to $8.4 million from $5.3 million for the first quarter of 2019. The increase was primarily related to license revenues earned from the Seattle Genetics license agreement signed in February 2020, and collaboration and license revenue from our collaboration with Zai Lab. These increases were partially offset by the completion of our immuno-oncology research collaboration with BMS and progress pursuant to our performance obligation under the original collaboration with BMS. Research and development expenses for the first quarter of 2020 decreased by $13.2 million or 42% to $18.6 million from $31.8 million for the first quarter of 2019. The decrease was primarily related to lower compensation costs resulting from the October 2019 restructuring, lower manufacturing directed towards our FPA150 program, lower preclinical and allocated costs, lower clinical services and specialty lab services related to our cabira and our FPA150 clinical studies, reduced companion diagnostics expenses relate -- directed towards our bema development program and decrease in miscellaneous research and development expenses. These decreases were partially offset by increased clinical trial expenses primarily related to bema. General and administrative expenses for both the first quarter of 2020 and the first quarter of 2019 were $10.5 million. Net loss for the first quarter of 2020 was $20.1 million or $0.57 per basic and diluted share compared to a net loss of $35.4 million or $1.02 per basic and diluted share for the first quarter of 2019. Looking ahead, we expect full year 2020 net cash used in operating activities to be between $77 million and $82 million and estimates ending 2020 with cash, cash equivalents, marketable securities between $77 million and $82 million. I'd like to turn the call back.

[Thomas Civik:]

Michelle, I think -- it's Tom here. I think we can open up the line for questions now.

[Operator:]

[Operator Instructions] Our first question comes from Jonathan Chang of SVB Leerink. Your line is open.

[David Ruch:]

Hi, guys. This is David Ruch on for Jonathan. Thanks for taking our question. First one, I guess, could you just provide an update on how the business development discussions around bemarituzumab were going? And did you get any indication from potential partners in these discussions that a Phase II study might be more attractive to them?

[Thomas Civik:]

David, it's Tom here, and thanks for the question. I guess I'm just going to say this outline once before we start answering questions. We're all in different places right now. So I'm going to do my best to triage the questions to the appropriate person as we navigate sort of the remote working from home places. So let me start, David, with your question. So obviously, this decision was one that we didn't take lightly. And you may recall that in last quarter's earnings, we spent a fair bit of time talking about the options that we had in front of us with the bema program. And so when I joined the team just about a month ago, the team was well underway in thinking through many different options that we had. And as you'd expect, we talked to potential partners. We talk to advisers, and we leveraged the expertise that existed at Five Prime as we contemplated this decision of moving the FIGHT trial to a Phase II study. So to answer your direct question, we did talk to many parties and potential partners. One of them -- the main reason we've taken this decision is we want to be able to reveal the data sooner. So that we can dive into it deeper to better determine the next steps for the bema program. And this clearly is something that allows us to do that. So let me maybe ask Helen, if she'd like to add a little bit to the decision that we've made here.

[Helen Collins:]

Yes. I mean I think you covered it well, Tom. I mean so you're right. The short answer is that, that is what we would hear. People would like to see Phase II data. And so I think that was -- but that wasn't the main component. I mean I think as we talked about, it's -- this is the way that we can all see the data and then make the best decision about how to move forward. And as we talked about, I mean, I think one of the things is that certainly, if we see good data, then a faster Phase III trial that's more precisely designed would be possible. So we don't think in the long run, this really change timelines, but we shall see.

[David Ruch:]

Got it. Thanks. And then I guess, second question. Given that most patients of the 150 -- or I guess, all of them are already enrolled, could you talk about other considerations on timing of the readout and what you can expect to see in terms of PFS and OS for all patients? Or would this sort of be an early read on that population? Just, I guess, give some color there and how the current COVID situation might impact that? That would be great.

[Thomas Civik:]

Sure. Let me -- David, I'll start again and then let Helen add a little bit to it. So our plan right now is to be able to share data at the end of this year or early 2021. And as you mentioned, it's an event-based trial. With -- now PFS is the primary endpoint. But clearly, we're going to have OS events that would be extraordinarily meaningful to determine the value of this program. So our plan right now is to reveal the data the end of this year or early 2021. Maybe, Helen, is there anything more you'd like to add to that?

[Helen Collins:]

No. I mean I think you've got the timing right that we've paused enrollment at the end of November except for in Japan. So we've been wanting to get some safety data in Japan. But -- so that's why we have more than 150. But November to now, it's 6 months, and that is about the median PFS on modified FOLFOX. So events are starting to come in, and that's why we're being a bit vague in terms of when exactly we'll have the data. But it is important still, even though PFS is the primary that we will be collecting OS. And I think what we'd like is it won't be a readout on OS on all 150 something patients. Hopefully, they live longer than that. But we should -- we have enough to -- especially 150 patient Phase II trial is clearly enough to power Phase II trial well. So we feel good about this decision.

[David Ruch:]

Got it. That’s very helpful. Thanks, Collin and Tom, nice to meet you over the phone. Thanks guys.

[Thomas Civik:]

Thanks, David. Me too.

[Operator:]

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

[Unidentified Analyst:]

This is Paul on for Etzer. Thanks for taking the question. I have 2 on FPT155. So you mentioned closing in on a dose, can you also remind us of what kind of data we might expect as the monotherapy data update later this year? And then secondly, for the combination of FPT155 with pembro in Q3 initiation. Can you provide more color on the design and possible timing of results for this part of the study? Thank you.

[Thomas Civik:]

Sure. Yes. Thanks, Paul. I'll start and then obviously, Helen has got much more experience with our 155 program that we're quite excited about. So as you know, this is a potential therapy that has a really important dosing window. And so we're making sure that we find the right place. And we've got 10 different doses that we've tried at this point, and we're encouraged by what we're seeing. And then as you mentioned, Paul, we're planning to start the combo trial with pembro in Q3. And let me ask Helen to answer, if she can, the part about when we would expect to see some of that data?

[Helen Collins:]

Yes. So Paul, as we're doing the dose escalation, and you've heard me describe the trial previously that we do a standard 3-plus-3 on our monotherapy dose escalation. And then now that we're in a dose level where we think we'd see some activity, we're doing, for lack of a better word, backfill, our terms exploratory, patients that we think specifically have tumor types that are more likely to give the answer we want. The reason we're saying the end of the year is because as we enroll these patients, and again, knock on wood, COVID hasn't affected our time lines to date, then you can imagine these patients will enroll over the next couple of months, and then we need a few months to get those scan results. And we want to be clear. This will be data that we will be looking at before the end of the year, and we will be making strategic decisions about where to go next. We don't want to promise that we'll be saying anything publicly because we're always committed to presenting our data at a scientific form in general. But again, how we might communicate something at the end of the year externally, and we haven't committed one way or the other. In terms of the combination, this is a combo that we think will have synergy, both efficacy, but that also likely could be toxicity. So it does mean we need to start at a lower dose so this will be a 3-plus-3 dose escalation. So we expect escalation in the combination to move into 2021. As you also heard me say -- yes, one other thing that's probably worth it on the call is that the doses -- the combo is specifically limited to non-small cell lung cancer, because we do want to be able to interrogate that data for efficacy as well in conjunction with safety. But again, we expect that to go into 2021.

[Unidentified Analyst:]

Go it. Thanks very much.

[Operator:]

Our next question comes from Chris Shibutani of Cowen & Company. Your line is open.

[Unidentified Analyst:]

Hi, good evening. This is CJ on for Chris tonight. I wanted to dig a little deeper on the non-small cell lung question. Just in terms of what was the data driving the decision to look there, maybe with the combination in the post checkpoint inhibitor setting. Obviously, this is an easier place to start enrolling. But in terms of preclinical mechanism or clinical data, perhaps biomarkers you've seen so far, kind of what was supporting that decision? Is that to be the first expansion? And when might we see that data, if I missed that?

[Thomas Civik:]

Yes, yes. CJ, thanks for the question. Yes, obviously, lung cancer remains, unfortunately, a really significant unmet need. And there's a lot of, I think, really valuable information already in the marketplace about the value of a PD inhibitor and potentially combining it with our product 155 makes a ton of sense that this would be an area that we would pursue. So for someone that's like me that's been working in lung cancer for quite some time, there still remains such a significant unmet need there, that I'm excited that this is an area of focus for us with this program. And excited that we're going to start moving forward in the third quarter with the combination of pembro plus 155. Helen, you can probably go a little bit deeper on CJ's question, no? Helen, did we lose you?

[Helen Collins:]

Sorry, it's difficult through the phone. So CJ, we presented some data at AACR, and it's -- our preclinical data does suggest that treatment with FPT155 will cause or can lead to up regulation of PD-L1. So there is a scientific rationale behind this. The main reason we wanted to stick with lung cancer is, I think, also when you're going into the PD-L1, I think you hit on this, the PD or PD-L1 treated patient population, there's a lot of data about what to expect if you were to retreat those patients with the PD-1 alone. And I think whenever you're in the combo setting, we recognize that it's really important that people are, us and external world, able to look at the data we generate and be able to make a decision or really understand that data. So we thought having a homogeneous patient population was important. And then just like Tom said, I think the obvious if this is a place where you can see synergy and tolerability through that combination, I think it's a clear path forward to much earlier lines of therapy in a very -- in a big disease, right? So that's kind of a 3-prong reason.

[Unidentified Analyst:]

Great. Thanks.

[Thomas Civik:]

Thanks, CJ.

[Operator:]

Our next question comes from Tony Butler of Roth Capital. Your line is open.

[Tony Butler:]

Yes, thanks very much. So the first question is in FIGHT. I'm just curious if you could also discuss what the interaction with Zai labs may have been when you all made the decision to move to that Phase II trial, I'm curious how they may adjust if they are anything that they want to get out of bema? That's question one, if I may, and then I'll state question 2. Helen, on 155, if do you -- if you affect CD28, do you -- and so you get -- whether it's naive or activated T cell, do you also get activation of Tregs as well? Thank you.

[Thomas Civik:]

Helen, I think you should probably take both of those questions, both the Zai Lab question and the 155 question.

[Helen Collins:]

So I'll start with the FIGHT, probably on Zai Lab. So we have a have -- they have been great partners, both in terms of getting the trial up and going and rolling, and we've worked side-by-side with them, our team and their team from the beginning. So they've been involved in the discussions all along the way about different options. And I can honestly say they're very supportive of this decision. I think -- so there really was not any difficulty with that. And again, they understand the reasons. And I think they, just like us, would like to get some data. So I think we're all aligned on that. In terms of 155, and I hope I didn't -- it's the effect on Tregs, I think is, as you know, in humans, somewhat controversial. I specifically mentioned in our call that we -- what we have right now back are the blood PD markers. So we have -- we are just now getting back our tumor samples and our tissue samples, and then we should have some more information about that. So right now, I don't have anything to share with you about that.

[Tony Butler:]

Thanks very much, Helen.

[Operator:]

[Operator Instructions] Our next question comes from Jim Birchenough of Wells Fargo. Your line is open.

[Unidentified Analyst:]

It's Nick on for James this afternoon, and Tom, welcome to the team. So my first question is going back to FIGHT. So did the futility analysis happen? Or has that been postponed now or canceled now with a decision to make this a Phase II trial?

[Thomas Civik:]

Hey, Nick. Nice to meet you. Yes, I think the decision here that we've taken is to convert the FIGHT trial to a Phase II study. And the timelines that we've articulated are data at the end of this year or early '21, with the really significant benefit of being able to look at the data much more deeply. So we have not, and we do not plan to do a futility analysis. That is -- we're not -- it's not something we're pursuing any longer.

[Unidentified Analyst:]

Okay. Thank you. And then on 155, so these immunologically hot and warm patients that you're going to be enrolling. Is that to a single dose? Or are you going to do a dose escalation but obviously, starting at whatever it is, dose level 10?

[Thomas Civik:]

Yes. I think, Helen, why don't -- I think you can answer that question.

[Helen Collins:]

Yes. Yes. Nick, so the way we're doing the trial is as we're dose escalate, which is 3-plus-3 additional patients if we clear a cohort. So you can say, as we clear 280 milligrams, the next 3 patients go in at 560 and additional patients go in at 280, and we continue up as we do that. And we want to do that probably for the reasons you're getting to because we want we want to get some -- we'd like to get a better sense of the therapeutic window. And we also want to make sure that this is an IO drug, that we have a certain number of patients at each dose level to get some longer-term safety data. We really want to finish our dose escalation with the data that will really inform well the next steps in terms of that therapeutic window safety so...

[Unidentified Analyst:]

That's clear. Thank you. And then just on FPA150, one-time you said you're going to communicate the data by mid-'20. On today's comments, you said we'll be submitting for publication. So are you going to do both? Or have you decided not to just release top line data and submit the data just for publication or presentation at a meeting?

[Thomas Civik:]

Helen?

[Helen Collins:]

Yes. So I think what -- you're right, what we heard today was that we are not taking this forward anymore, and that was what we committed to the state whether or not we were going to continue with the 150 program. And right now, there's no plan to do that alone. You've heard me say before, and it's still true. We still have patients that are on treatment. So there are some patients who are getting benefit, and that's the data that we would like to present in a scientific form.

[Unidentified Analyst:]

Great. Thanks, Helen. Thank you.

[Operator:]

There are no further questions. I'd like to turn the call back over to Tom Civik for any closing remarks.

[Thomas Civik:]

All right. Thanks, Michelle, and thanks for all the questions today and for joining us on the call. I'd like to close by thanking the Five Prime team for their focus and agility during these challenging times. As you heard today, we're pleased to report we've converted the FIGHT trial to a Phase II study with results available on late 2020 or early '21. Our 155 program is on track. We're closing in on a dose and expect to have monotherapy data before the end of this year and our research programs are progressing nicely. Our continued financial discipline allows us the resources to advance these important programs, and we continue to strive to improve the lives of patients with cancer in ways never before possible. So thanks for joining us today, and stay safe.

[Operator:]

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