Five Prime Therapeutics Inc
Q2 2020 Earnings Call Transcript

Published: 9 Aug 2020

[Operator:]

Welcome to the Five Prime Therapeutics Second Quarter 2020 Earnings Call. As a reminder, this conference call is being recorded. 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, Julian. Good afternoon, everyone, and thank you for joining us today. The press release for the company's second quarter 2020 financial results was issued earlier today and can be found on our company website. Joining me today from different locations 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'll now turn the call over to you Tom.

[Tom Civik:]

Thanks, Martin. Good afternoon, everyone, and thanks for joining us today to discuss our second quarter results and to provide an update on two important near term data milestones for our bema and 155 program. I've been in my new role for nearly four months now. So I'd like to begin with some comments on my initial experience to Five Prime. What originally attracted me to Five Prime has been confirmed in my short time at the company; Amazing science, talented and skilled people but real commitment and passion to rewrite the cancer story for patient to be better treatment option. Over the last few months, we at Five Prime have adapted to a new work environment and the many challenges of the global pandemic. I'm proud to say that during these unique times our team continues to make substantial progress on key program and we have not experienced any delays in timeline or had any significant business impact. Our team remains focused on delivering two important near term data readouts for the FIGHT and 155 trials and advancing our preclinical program. In my remarks today, I will provide an update on quarterly progress of bema and 155, our preclinical programs and our financials. Then Helen and David will provide additional updates on our clinical programs and financials. Starting with bema, as you will recall, we announced last quarter decision to turn the FIGHT trial into a Phase II study with PFS as the primary endpoint. After getting input from potential partners, scientific advisers and our Five Prime team, we made this change for three reasons. To generate data sooner, to engage potential partners sooner and to quickly reallocate resources to other programs in the event the data are not positive. We are studying bema in frontline gastric cancer. There is a significant need here gastric cancer is the fifth leading cause of cancer death globally. And the last new therapy approved in frontline gastric cancer since more than a decade ago. We've learned a lot of our gastric cancer to the study. When we initiated the study over two years ago and so rapid enrollment globally, which clearly signifies the need for new therapies for this population. We also were able to determine that a significant number of patients for gastric cancer in the frontline study have tumors that overexpress FGFR2b. We now estimate approximately 30%. This is the type of work to drive the patient who desperately need new therapies, where we can leverage our scientific expertise and collaborate globally to evaluate novel treatment approaches. We look forward to sharing the results of the FIGHT trial with you soon. Moving on to 155, our CD80-Fc fusion protein, this novel immuno-oncology molecule was developed Five Prime and has a dual mechanism of action that is both in immune agonists and the checkpoint inhibitors. The potentials were quite significant. The 155 may have broad applicability across many tumors and lines of therapy. I'm happy to report that this program remains on track to generate clinical activity results in monotherapy by the end of 2020. We'll use this information to determine the next steps for the program. That's why we're today. For monotherapy we've completed a 11 safety dose cohorts with no DLP and we are now enrolling patients at a dose, where we expect to see clinical activity. While we are excited to see the monotherapy data, we're also interested in evaluating a combination of 155 and a PD-1 inhibitor. Our preclinical data revealed that when we combined these agents, the results showed synergistic benefit. As a result of this information from what we have learned in the monotherapy study, we are now evaluating the combination of 155 and pembrolizumab. And I'm pleased to report that we dosed our first patient in this course in July. Helen will share more about this in a few minutes. These two important programs bema and 155 are approaching very important milestones. And so far of the work, we've done to advanced the bema program. With that let me turn it over to Helen.

[Helen Collins:]

Thank you, Tom. Let's begin with an update on bemarituzumab. Our FGFR2b monoclonal antibody, which we're evaluating in frontline gastric cancer in the FIGHT trial. Advanced gastric cancer and gastroesophageal cancer, the difficult to treat cancer with a median survival of only 10 to 12 months. The standard frontline systemic therapy based on a platinum and fluoropyrimidine chemotherapy hasn't changed in over 10 years. And only provides the progression-free survival in the five to seven months range. Although, distinct molecular profiles have been identified in subset to gastric cancer, we still don't have targeted therapies to benefit many front line patients. The fibroblast growth factor pathway is an important one for several cancers and bemarituzumab or bema for short is a first-in-class antibody, which is specific for the fibroblast growth factor receptor 2b or FGFR2b isoform. In gastric cancer over expression of FGFR2b has been associated with an even worse prognosis than the usual 10 to 12 months. The FIGHT trial is a double-blind study in frontline gastric cancer, where all patients receive standard, modified FOLFOX-6 chemotherapy and a randomized to also receive bema or placebo. In this trial, we screened over 900 patients and found approximately 30% of gastric cancers over-express FGFR2b. This trial was the first trial to prospectively and systematically evaluate frontline gastric cancer for FGFR2b up regulation and we found the frequency of over expression with similar across Asia, the U.S. and Europe. As Tom highlighted in May, we converted the FIGHT trial to Phase II study. And after enrolling a 155 patients, we are on track to a final data read out at the end of this year or early next year. The design of the FIGHT trial remains double blind and placebo controlled. However, the primary endpoint has been changed from overall survival to progression-free survival, consisted with a typical Phase II trial and to support generating meaningful data as soon as possible. When the data are available, we can determine the next steps for Bema and how it might be used to best benefit patients. Bema represents the kind of drug Five Prime wants to work on, a novel drug that if effective will make a big difference to patients. Five Prime is the only company with an antibody directed against the FGFR2b receptor in development and gastric cancer. And it's exciting to know that we'll have this data read out by the end of this year or early next year. I'll now turn to FPT155, our first-in-class CD80-Fc fusion protein. FPT155 the drug that stimulates the immune system to kill cancer cells. It does this in two ways. By binding to CD28 on the T-cell to directly stimulate T-cells, and secondly, by binding to CTLA-4 and working as a checkpoint inhibitor. Our focus in the first half of this year was continuing the dose escalation. With the trial being conducted in Australia and South Korea, we've been fortunate the enrollment has been minimally affected by the COVID-19 pandemic. Now that we have reached the 560 milligram dose based on the predicted receptor occupancy and the clinical PK, we think we are now enrolling patients at a dose with the potential to see clinical activity. With that in mind we're now focusing on enrolling patients with hot and warm tumors. These are patients with tumors which usually have T-cells infiltrating their tumors, which gives them the best chance of benefiting from a therapy like 155. This trial is on track to have clinical activity by the end of the year, which will guide us in determining next steps in this program. As Tom mentioned in July, we started treating the first patients with the combination of FPT155 and pembrolizumab. Our preclinical data shows synergy between anti-PD1 antibodies and FPT155. So the combination may allow for more patients to potentially benefit from treatment. There has been strong interest in this combination arm by the investigators and we are initially focusing on non-small cell lung cancer to more efficiently evaluate the safety and preliminary clinical activity. Finally, we continue to make progress on our three wholly-owned preclinical candidates. These three programs are consistent with our focus on novel, anti-cancer, biological therapies. We expect to advance at least one of these programs into IND-enabling studies by the end of the year. In closing, we're excited to be on the cusp of meaningful and actionable data for our two leading novel cancer therapies bema and FPT155. And we are grateful to the patients, their families, the investigators and the Five Prime team for the hard work and sacrifices to keep these programs on track in these trying times. We look forward to sharing these results with patients, investigators and the community soon. I'll now turn the call over to David.

[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 $128.6 million as of June 30, 2020 compared to $157.9 million as of December 31, 2019. This decrease was primarily attributed to quarterly operating expenses that exceeded quarterly revenues. Collaboration and license revenue for the second quarter of 2020 was $3.4 million, which was essentially on par with second quarter 2019 revenue of $3.3 million. Research and development expenses for the second quarter of 2020 decreased by $16.9 million or 57% to $12.6 million from $29.4 million for the second quarter of 2019. The decrease was primarily due to lower compensation costs resulting from the October 2019 corporate restructuring, reduced clinical and research costs and again on sale of laboratory equipment. General and administrative expenses for the second quarter of 2020 decreased by $1.7 million or 17% to $8 million from $9.7 million for the second quarter of 2019. The decrease was primarily due to lower compensation costs, depreciation expense and other miscellaneous general and administrative costs that were partially offset by an increase in allocated costs. Net loss for the second quarter of 2020 was $16.9 million or $0.48 per basic and diluted share compared to a net loss of $34.4 million or $0.99 per basic and diluted share for the second quarter of 2019. Looking ahead, we expect full year 2020 net cash used in operating activities to be between $74 and $79 million, an estimate ending 2020 with cash, cash equivalents and marketable securities between $80 and $85 million. This represents an increase in our year end cash guidance that as a result of our lower year-to-date cash burn. And more importantly, our ability to manage our resources, while investing in our highest priority clinical and preclinical programs. We also announced in our press release today that the company has entered into a sales agreement with Cowen and Company. Pursuant to which the company may from time to time sell-through at the market offerings with Cowen acting as sales agent, common shares with an aggregate offering price of up to $75 million. The companies put this facility in place as part of good financial planning and practice. We may utilize the facility to increase investment in our portfolio. I'd now like to turn the call back over to the operator for the Q&A portion of the call.

[Operator:]

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

[David Ruch:]

Hey, guys. Good afternoon. This is David Ruch on for Jonathan. Congrats on the recent progress and thanks for taking our questions. Really appreciate all the color in the prepared remarks, but I was just wondering if you could help set expectations for the 155 read out later this year in terms of how many new patients you expect to have versus the update last FTSE? And whether we can expect these data at a medical conference or is it possible you just provide this update via a webcast conference call?

[Tom Civik:]

Hey, David. It's Tom here. Why don't -- I'll start with answering the question and also do my best to manage the questions as they come in. I also just got to text to my team that it looks like I cut out there for a second as I would closing up my prepared comments. So I may be close on that when we get down with the call. David your question about 155 is the really important one. We've got a team, it's working really hard to advance this program in 2020 and right now where we finished 11 dose cohorts and without any DLPs and we're starting to expand into tumors where we believe we should see some clinical efficacy and those are on warm and hot tumors. We haven't said how many patients will be in the cohort, but we do know that this will inform our next steps with the program. We also haven't revealed when or where we'll share the data, but clearly what we're saying today is that we'll have -- we expect that this information and how to inform our next step. Let me kick it over to Helen maybe she can add some additional color to where we are in the 155 program.

[Helen Collins:]

Yeah. David, I don't know that I have that much more to add. I mean I think as we said based on our predicted receptor occupancy and the pharmacokinetics that we're seeing again, we think now we're at a dose where we have the potential to see something so we're enrolling as many patients as we can as quickly as possible and as you said we're fortunate that this trial is in South Korea and Australia and again but in terms of the external announcement of the data we haven't committed to anything yet.

[David Ruch:]

Got it. Thanks. And then just if you could clarify a few things on the Keytruda combination study. Was there any read through from the monotherapy portion that allowed you to start at a higher dose of 155 in combination. And just could you clarify for me, are there any modifications to the pembro dose here or is that just as administered in the label.

[Tom Civik:]

Helen, why don't you take down.

[Helen Collins:]

Sure. So, it's full dose pembrolizumab and we are starting at 70 milligram dose. So we did dose down from as you heard where we're enrolling patients at 560 in the monotherapy. So – but the safety profile that we've seen certainly allowed it's not to have to start at that exquisitely low monotherapy dose so we have to start with initially. So potentially again and -- you've probably seen by your questions our preclinical data that have been presented at AACR, so based on that we are potentially starting at a dose that we may see something with the combination, but we will see.

[David Ruch:]

Right, right. Okay. Awesome. And then just you mentioned in the remarks, but I didn't see in the press release, a potential IND filing by the end of the year. I was just wondering, if you could clarify that and just your thoughts on anything else you could share about that program and thanks guys.

[David Smith:]

Yeah. I think, David, let me take this one, Tom. So we're making really good progress with our preclinical assets and we haven't announced the timeline for when we'll show the information except for that as well. We'll make some announcement on our research assets this year.

[Helen Collins:]

So, yeah, and I'll just clarify, what I meant to say and hopefully said was that it's IND-enabling studies by the end of this year.

[David Ruch:]

Got it. Okay. Thank you so much for clarifying and congrats again on all the progress.

[Tom Civik:]

Thanks, David.

[Operator:]

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

[CJ Zopf:]

Great, thank you so much. This is CJ Zopf on for Chris tonight. Thanks for taking the question. Just wanted to ask a couple of questions on the financials. Interesting to see that the cash burn is coming down, guidance has gone up for the end of the year. When I look at our projections and consensus, both considerably higher than it looks like where you guys are planning on being. Can you give us a sense of sort of the shape of what's going to be going on with R&D and SG&A. Should we expect R&D to be coming down, mostly?

[Tom Civik:]

Yeah. Let me, CJ, I'll get started at this time here again and then I'll kick it over to David. But I think this is a really important story we've – I think this playing a really strong set of financial discipline here to ensure that were investing in the most important assets that we've got at Five Prime. We went through a major reorganization to ensure that we had the resources to advance our most attractive assets and get them to the milestones that are most important. So I'm glad that you're picking up this improved financial discipline that were – which I maybe David can jump into some of the specific to your question.

[David Smith:]

Yeah, CJ. Our guidance – we did bring our guidance up. I mean one of the ways we were able to do that when we provided guidance with the beginning of the year. We didn't include the benefit of the license payment from SeaGen and only had half of what we ended up realizing from the equipment sale for our lab related equipments. So that's something that doesn't reoccur in the second half of the year, but that provided some uplift. And it's also – I think reasonable to assume that as we have with bema, bema spend would be stronger in the first half of the year and then in the second half of the year. And then, G&A is a function of just kind of where the allocated costs go. We're allocating a less to our research, because of the restructuring, so that number – but it's relatively consistent on a year-over-year basis as well.

[CJ Zopf:]

Great, thanks. And could you maybe just give us a sense of where partnering discussions might be. Obviously, I think you commented, the partners are interested in seeing the final data from the FIGHT trial before anything finally agreed upon. Have discussions basically come through scenario analysis where as soon as the data is available. You'll be able to execute R&D or you expect process can take a little longer than that. Thanks.

[Tom Civik:]

Yeah. Hey, CJ. It’s Tom, again I'll take this one too. We're really excited about the opportunity to see the FIGHT trial later on this year or early next year. As you can imagine, we've had quite a bit of inbound interest in this program. As I mentioned in my comments, the gastric cancer of the fifth leading cause of death globally. So there is a lot of patients that need new therapy. Helen has mentioned many times, and I'll reiterate it. This is a really well done Phase II trial with 155 patients and that so it likely will give us information that we'll be able to dig into and help inform what the next steps are for the bema program. So no news to announce at this point about partnerships except for consistent with what we've said in the past that we believe this is a program that could benefit from a global partner, gastric cancer is a disease that affects people especially outside the United States.

[CJ Zopf:]

Great. Thanks so much.

[Tom Civik:]

Yes.

[Operator:]

Your next question comes from Robert Driscoll from Wedbush Securities. Your line is open.

[Ashiq Mubarack:]

All right. This is Ashiq Mubarack on for Rob. Congrats on the progress. And thanks for taking my questions. I just – I was wondering, if you could any share any further details on the FPT155 combo study in terms of what type of patients you're looking to enroll. Are you looking at PD-1 status, etcetera, and maybe how refractory are these patients. And, yeah, any other details would be super helpful, thanks.

[Tom Civik:]

So I think Helen probably the best one to answer that question.

[Helen Collins:]

Yeah. So, again this is a Phase I trial, right so safety is it's primary endpoint. Because the investigators are so interested and I really hats off to the team that's running this in their close relationship with the investigators they built over time. The inclusion criteria are fairly broad. So it's non-small cell lung cancer. But certainly, we are collecting all of the details that, I think are going to be extremely important to understand any efficacy data that we get out of this, and certainly in this day and age, even in Australia and South Korea, the patients are expected to have seen prior PD-1 therapy so.

[Ashiq Mubarack:]

I guess, I had a quick follow-up. Are there other inflamed tumor types make sense with same regimen that you think you might be able to follow-up quickly with.

[Helen Collins:]

Certainly, and we wide our protocol in a flexible way so that we could do that, but again I think what we are trying to do if possible enroll patients where we can fairly quickly determine whether or not we're seeing some efficacy in addition of course to the safety, but certainly this could be expanded.

[Ashiq Mubarack:]

Okay. Thank you very much.

[Tom Civik:]

Yeah. Ashiq, Tom, here. I think obviously this is a program that we're quite interested in investing, and we think that it has the potential to have broad applicability across many tumors in multiple lines. And as Helen mentioned, we're going to start where we think it's most likely for us to see clinical activity and depending on what we see will influence of a next step with the program.

[Ashiq Mubarack:]

Okay. Make sense. Thank you very much.

[Operator:]

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

[Unidentified Analyst:]

Hey, good afternoon. This is Paul on for Etzer. Thanks for taking our questions. I wanted to add on a question on 155. Can you provide a little context on the bar for advancing in a PD-1 refractory setting for non-small cell? Understand this is pretty early stage still and kind of where you see 155 fitting into the treatment landscape.

[Tom Civik:]

Yeah. Hey Paul, it's Tom again. I think this is exactly what I was just saying. We're really excited about the broad applicability of this program, as it relates to sort of the future plan for 155. I think what you've seen from Five Prime will take a discipline sequential approach to making decisions about where to try to advance the science. And so as we continue to dose escalate in the combination study, we'll use that information to determine where else to go. It is a Phase I study, and I think I want to make sure that we set the right expectations here. We're trying to get the dose right now as we learn information from the study that will inform next steps with the program.

[Unidentified Analyst:]

Great. So I guess one more. Can you comment on any combinations that you kind of explored beyond PD-1 where you see an opportunity for 155.

[Tom Civik:]

Right now, Paul, we've got our focus on our two near-term events, which is bema and the FIGHT trial 155 and monotherapy. Both of those before the end of the year or early next year, and we are quite excited to be able to kick off this combination trial with pembrolizumab. So, right now our focus Paul is on those areas to make sure that we execute them flawlessly. We get to a place where the data reveals for the next step for us, and we can plan to apply on the ground and pivot quickly and with precision on what those next steps might be.

[Unidentified Analyst:]

Got it. Thanks a lot.

[Tom Civik:]

You bet.

[Operator:]

Your next question comes from Jim Birchenough from Wells Fargo Securities. Your line is open.

[Jim Birchenough:]

Good afternoon. This is Birchenough Jim. And thanks, thanks for taking my questions. Just on going back to 155 following up on an earlier question. So, if we want to have two scans available for patients give a chance to confirm a response, how many of these warm/hot tumor patients do you think you could report on at year end or early 2021 with time for response and then two scans.

[Tom Civik:]

Yeah. Maybe one I get started Helen and then you can fill in the gap base. I think it's probably important to know what we haven't said is the exact number of patients. But what we have said is that we believe we'll have enough patients to be able to determine the clinical efficacy of 155 and monotherapy by the end of the year to determine next step. And so, we believe the number of patients that we are planning to enroll, and so far enrollment has gone quite well. Thanks to our clinical team our investigators. We're very fortunate to be enrolling exclusively in Australia and South Korea at this point. So we've got confidence a lot of enough patients in how before the end of the year to determine, if we're seeing the clinical efficacy that we hope to do get the 560 milligram dose.

[Jim Birchenough:]

Great, thank you. And then just going back to bema, obviously a holding pattern, but is there anything you could be doing or not doing that could make the assets more attractive a biomarker, for example, in terms of the ability to initiate a Phase III rapidly. Is there a sufficient product manufactured. For example, do you have to make more product?

[Tom Civik:]

Yeah. This is an area that we've been spending a lot of time on which, you probably heard it in my last comments about 155. The team is investing a lot of time to ensure that when we see the results we can pivot with speed and precision. And so the questions you're asking about product, what the protocol would look like or all things that the team is working hard to ensure that we are well positioned to do. Should we see great results from the FIGHT trial? We're in a really unique situation where the FIGHT trial has designed was a Phase III trial that we enrolled globally and enrolled extraordinarily quickly. So, we've got that of the roadmap to used as we think about what could be the next Phase III trial. Clearly we're going to wait to see the data from the Phase II trial and that will help inform, could we do it more efficiently, could we do it more specifically. Obviously, we're going to leverage that information. And then as it relates to a biomarker, we've actually made great progress here right. So, we've been working really closely with Ventana and Roche on an ICSA. We screened over 900 patients also included ctDNA and so we have quite a bit of information on a population that hasn't been studied prospectively before. And we plan to interrogate that thoroughly as we moved into the next phase for bema should we be in a FIGHT trial is positive. So, lots of information and I'm really happy to report that we're doing the work right now before we see the data so that we can move quickly into the next step with this program should the results be positive.

[Jim Birchenough:]

Terrific. Thank you very much and look forward to the next update.

[Tom Civik:]

Yes thanks Jim.

[Operator:]

[Operator Instructions] Your next question comes from Tony Butler from ROTH Capital your line is open.

[Tony Butler:]

Yes. [Technical Difficulty]

[Tom Civik:]

Julian -- or -- we're having a little bit of a connection issue. It seems like maybe you've got the same one I had earlier. You could join -- or start again maybe. [Technical Difficulty]

[Tom Civik:]

No. Operator, may we go to the next question and maybe we can come back to this one.

[Operator:]

We have no further questions in queue at this time.

[Tom Civik:]

Let's try one more time.

[Operator:]

[Operator Instructions] Hey Tony Butler from ROTH Capital, your line is open.

[Tony Butler:]

Tom there we go [Technical Difficulty] Hello.

[Tom Civik:]

I heard a hello.

[Tony Butler:]

Can you hear me now?

[Tom Civik:]

Yes.

[Tony Butler:]

Yes?

[Tom Civik:]

Yes, I can hear you.

[Tony Butler:]

Okay. So, my apologies and I'm literally screaming. But [Technical Difficulty]

[Operator:]

I'm sorry; Mr. Butler your line is breaking up.

[Tony Butler:]

[Technical Difficulty] The posting schedule of 155 for [Technical Difficulty]

[Martin Forrest:]

Hey Tony. I'm sorry it's Martin here. You're really just breaking up. So, what I think we'll do is we'll call you afterwards and see if we can respond to your question that way. I do apologize. It's been a great call. I mean we've been calling in from all across the state and Tom in Boston, but we have had a couple of technical difficulty. So, Tony, you'll be first on our list of calls for after the call. Operator, I think we'll move to closing comments from Tom.

[Operator:]

Thank you.

[Tom Civik:]

Good. Thanks Martin. Thanks Julian. And yes and thanks for all the question today and for joining us. I'd maybe just like to make a couple comments I'd like to thank the Five Prime team for their commitment and focus during these challenging times. I'm extraordinarily proud to be representing the work for you today. As you've heard today we're pleased to report that for bema, we're on track to have Phase II results late this year or early next year so 155 monotherapy. We're now enrolling patients with warm and hot tumors at 560 milligram and expect to have monotherapy data in-house by year end. This is obviously a very important time for Five Prime. We remain focused on delivering this important data very soon and being prepared to execute on strategy to advance our most promising asset. With that, I just want to say thanks for joining us today and I hope that you all stay safe.

[Operator:]

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