Five Prime Therapeutics Inc
Q2 2015 Earnings Call Transcript

Published: 9 Aug 2015

[Operator:]

Good day, ladies and gentlemen, and welcome to the Five Prime Therapeutics Incorporated 2015 Q2 Quarterly Earnings Call. At this time all participants are in a listen-only mode. And we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] And as a reminder, this conference maybe recorded. And I would like to introduce your host for today's conference, Mr. Aron Knickerbocker, Five Prime's Chief Business Officer. You may begin, sir.

[Aron Knickerbocker:]

Good afternoon and thank you for joining us. On behalf of Five Prime, I'd like to welcome everyone to our conference call to discuss financial and operational results for the second quarter of 2015. Joining me today are Dr. Rusty Williams, Chief Executive Officer; Dr. Julie Hambleton, Chief Medical Officer; and Mr. Marc Belsky, Chief Financial Officer. During today's call, Rusty will begin with introductory remarks on our progress during the second quarter. Julie will then give an update on our clinical programs. I will provide an update on our immuno-oncology research programs. And then Marc will discuss our financial results. Finally, we'll conclude the call with a Q&A session. 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 discussed in the Risk Factor 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 Rusty.

[Rusty Williams:]

Thanks, Aron. Good afternoon, everyone, and thanks for joining us. The key priority for us is Five Prime is actively building a comprehensive and a complementary portfolio of immuno-oncology therapeutic candidates that will impact the tumor micro environment by inhibiting macrophages, immune checkpoints and regulatory T cells and by activating T cell agonist pathways. I'm pleased to say that we've made important progress towards this goal during the second quarter. At our clinical programs we received IND clearance for the Five Prime sponsored Phase 1A, 1B clinical trial to evaluate the combination of our CSF1 receptor antibody FPA008 and Bristol Myers-Squibb' nivolumab in six tumor types. And we plan to initiate dosing this month. In July, we also began dosing patients in our Phase 1, 2 clinical trial of FPA008 and pigmented villonodular synovitis a tumor driven by the CSF1 pathway and it's an orphan indication. On the research side, we added a T cell agonist to our early pipeline with the in-licensing of antibodies to glucocorticoid-induced tumor necrosis factor receptor or commonly known as GITR from inhibrx. Using our protein library and our proprietary in vivo screens, we identified to get our pathways one of the most potent inhibitors of tumor growth. We believe that the inhibrx technology represents potentially best-in-class support for engineering multivalent GITR agonistic antibody, but the property is aimed at enhancing efficacy and combinability with other therapies including those in our pipeline. This candidate adds important mechanisms that the components our existing immuno-oncology portfolio and we have the potential to file an IND in 2017. We also license to bluebird bio, our novel human antibodies to an undisclosed target to develop CAR T cell therapies an emerging approach that is still promising in treating cancer. Aron will cover this and the GITR program in more detail shortly. Looking ahead to the remainder of 2015 we're approaching two important milestones in our clinical pipeline. GSK intends to present initial data from the Phase 1b clinical trial of FP-1039 in squamous non-small cell lung cancer and mesothelioma patients during the World Conference on Lung Cancer next month. Additionally, we plan to report preliminary data from the open label portion of our Phase 1 study of FPA008 in rheumatoid arthritis patients. We're looking forward to sharing these early clinical filings in these two programs. And with that, I'd like to turn the call over to Julie to give a more detailed update on our clinical programs.

[Julie Hambleton:]

Thank you, Rusty, and good afternoon, everyone. I'll begin with FPA008. You may recall that this antibody walks a binding of IL-34 and CSF1 ligands to the CFS1 receptor and thus prevent activation and survival of macrophages which play a pathologic role in multiple diseases. In cancer tumor associated M2 macrophages suppress the immune systems ability to kill cancer cells. In joint disease such as PVNS and RA synovial macrophages play a central role in the disease process. As Rusty mentioned we plan to begin patient dosing this month in our Phase 1a/1b trial combining FPA008 with the anti-PD-1 antibody nivolumab in our clinical collaboration with BMS. We are excited to be initiating this multi-arm study, which will be described in detail in a trial in progress presentation at the international cancer immuno therapy conference that takes place in September in New York. In the Phase 1A dose escalation part of the study we will evaluate the safety pharmacokinetics and biomarkers of FPA008 as a monotherapy as well as in combination with the approved 3 milligram per kilogram dose of nivolumab. The dose escalation part will be conducted in patients with advance cancers and both drugs will be administered ever two weeks. During Phase 1b, we will evaluate safety, tolerability and preliminary efficacy of the selective dose of FPA008 in combination with nivolumab in six tumor settings. These include frontline melanoma, second line pancreatic cancer, malignant glioma and squamous cell carcinoma of the head and neck. Second or third line non-small cell lung cancer and third line colorectal cancer. We will be collecting tumor biopsies both pre-treatment and one-month post treatment in a subset of patients. This will allow us to better understand the local immune response within the tumor micro environment to this novel therapeutic combination and will provide valuable information to guide our development of the FPA008 in oncology. By late 2015 or early 2016, we expect to complete the Phase 1a dose escalation portion and expand into Phase 1b. Turning next to PVNS, our Phase 1/2 study of FPA008 is now underway. PVNS is a locally aggressive tumor of the [synosium] [ph]. Over expression of CSF1 recruits macrophages that form the tumor math, so CSF1 directed therapy such as FPA008 is well suited for treating this disease. While the incidence of PVNS is relatively rare, prevalent maybe significantly greater because patients may live decades with the disease. PVNS patients experience a high level of joint morbidity and have no approved treatment options. During the Phase 1 dose escalation part of the trial, we will assess safety, pharmacodynamics and imaging of the joint to determine the dose for expansion. During Phase 2 expansion, we will evaluate tumor response rate and duration and measures a pain and joint function in approximately 30 patients. We plan to complete dose escalation and move into dose expansion by the end of 2016 or earlier 2016. Lastly on FPA008, we are continuing to dose RA patients in the open label portion of our ongoing Phase 1 trial and plan to report preliminary data later this year from this part of the study. These RA patients have active disease and are on a stable dose of methotrexate. We are evaluating safety and biomarker changes following two or three administrations and three dose levels. The primary end points of this part of the trial is safety and key secondary endpoints include clinical signs and symptoms such as ACR scores and magnetic residence imaging. Switching now to FPA144, our FGF receptor 2b selective antibody. We continue to enroll patients with a variety of solid tumors including gastric cancer in the Phase 1a dose escalation part of our study. We will be assessing safety and pharmacokenitics and identifying the optimal dose to move forward into selective gastric cancer patients whose tumors have evidenced of FGF receptor 2b protein over expression or FGF receptor 2 gene amplification. Both setting are associated with a lower all growth survival. I should recall constantly 5% of gastric tumors of FGF receptor 2 gene amplification and additional gastric tumors may have protein over expression without gene amplification. We expect to complete the Phase 1a dose escalation and begin the Phase 1b expansion at a chosen dose and select a gastric cancer patients by year end. We hope to report preliminary Phase 1a data by end of this year or early in 2016. Finally, with regard to FP1039, our FGF ligand trap, GSK is continuing to enroll in those patients in the Phase 1b trial and will be presenting an initial safety and efficacy data during the World Conference on Lung cancer this September in Denver. Patients with newly diagnosed or recurrence squamous non-small cell lung cancer whose tumors have amplification of the FGF receptor 1 gene of being studied in Arms A and B respectively. In Arm C, GSK is setting patients with malignant chloromesothelioma a tumor in which the FGF 2 ligand is over expressed. In each of the arms FP1039 is being administered in combination with standard of care chemotherapy. With that, I will turn the call over to Aron to provide an update on our immuno-oncology research and discovery programs.

[Aron Knickerbocker:]

Thank you, Julie. As Rusty alluded we expanded our immuno-oncology research efforts with two new programs since the first quarter. The in-license inhibrx novel agnostic GITR anybody program which is currently I believe in the last stage. Inhibrx has selectively expressed on a surface to a factor T cell and regulatory T cell and activation of GITR is believed to enhance the immuno response against tumor cells. The treatment of those study agnostic antibody have shown the ability to conduce tumor regressions particularly when combined with other immuno oncology therapies. Inhibrx is multivalent antibody scaffolds are designed to multimerize and activate GITR independent of Fc receptor binding. We believe this differentiating property still provide advantages over conceding data programs which are likely to require Fc receptor binding for optimal activity. We are excited about this program as it has the potential to create a potent best in class GITR agonistic. We believe it could have broad therapeutic application as a monotherapy or in combination with the proved checkpoint inhibitors or other therapies including those in our own pipeline. Additionally in May, we granted an exclusive license with bluebird bio to research, developed business like CAR T cell therapy leaving our proprietary human antibody to an undisclosed target for hematologic malignanices and solid tumors. We received $1.5 million upfront payment and are eligible for development regulatory and commercial milestone payment of up to $131 million per licensed product as well as tiered royalties and future product sales. During the quarter, we continued to advance our other immuno-oncology discovery programs toward preclinical development. We had fully human antibody campaigns underway with Adimab and Vaccinex directed to multiple immuno-oncology target. We plan to present updates with scientific conferences and remain on track to deliver one new IND per year from our research programs beginning in 2017. This goal does not include potential IND filing by our partners with BMS, GSK or UCB. With that, I will turn the call over to Marc to discuss our financials.

[Marc Belsky:]

Thank you, Aron. In the second quarter of 2015, Five Prime had a net loss of $11.5 million or $0.45 per basic and diluted share compared with a net loss of $9.9 million or $0.46 per basic and diluted share for the second quarter of 2014. The increase in net loss was primarily related to advancing the FPA008 development program into additional indication and expanding internal immuno-oncology research and preclinical activities. Collaboration and licensed revenue was $6.3 million for the second quarter of 2015 compared to $5 million for the second quarter of 2014 primarily due to the $1.5 million upfront license payment from bluebird bio. Research and development expenses were $13.3 million for the second quarter of 2015 compared to $11.9 million for the same period in 2014. This increase was primarily related to advancing the FPA008 development program into additional indication and expanding our internal immuno-oncology research and preclinical activities. General and administrative expenses were $4.6 million in the second quarter of 2015 compared with $3 million for the same period of 2014. This increase was primarily due to increases in personnel-related expenses including stock-based compensation and facility cost. Cash, cash equivalents and marketable securities as of June 30, 2015 were $207.4 million compared with $149.1 million as of year end 2014. This increase was primarily attributable to Five Prime's January 2015 public offering of common stock offset by cash used in operations. We are updating our financial guidance to account for the addition of the GITR antibodies to our portfolio including the $10 million upfront payment made to inhibrx in July 2015 and the expense was required to successfully move this program into clinical trial. We now expect full year 2015 net cash used in operating activity to be between $65 million and $70 million and estimate ending 2015 with between $158 million and $163 million in cash, cash equivalents and marketable securities. We now expect to have cash to fund operations through 2017 without entering into any additional collaboration or license agreement or receiving any future milestone payment. This provides a sufficient run rate to move all three of our clinical program beyond efficacy data read out and to move one or more new immuno-oncology candidates into clinical trial. And with that, I would turn the call back over to Rusty.

[Rusty Williams:]

Thanks Mark. Really pleased with the progress that we have made during the first half of 2015 and all of our clinical discovery programs and I look forward to delivering on our milestones throughout the remainder of the year. We are now happy to take your questions, in addition to those of us you probably heard from here, we also have our Vice President of Global Clinical Development, Dr. Bob Sikorski here for our Q&A session. So operator please open the Q&A session now. Operator are we connected to questions on the queue, are we connected to these questions?

[Operator:]

Yes, sir. Thank you. [Operator Instructions] Our first question comes from Kennen Mackay from Citi. Your question please.

[Kennen Mackay:]

Hi. Thanks so much for taking the question.

[Rusty Williams:]

Hi, Kennen.

[Kennen Mackay:]

I'm in your parking lot actually.

[Rusty Williams:]

Okay. Go ahead.

[Kennen Mackay:]

So first question is on PVNS, I was wondering how do you register by filing that, if there any sort of additional clarity about sort of defining the potential market opportunity there?

[Rusty Williams:]

I want to be sure I understand your question. The reception is not great. The question is about the market opportunity and the we have from most –

[Kennen Mackay:]

Potential registry in PVNS and so when you guided around the market opportunity there.

[Rusty Williams:]

Got you. Okay. Yes. I'm going to turn this to Bob Sikorski.

[Bob Sikorski:]

Thanks. It's an excellent question. This is a rare, it's not an ultra disorder. We are very interested in how many of those subjects exist. The studies we seeing are quite old. So I think we reported on this. We have done our own study, an epidemiology study of a registry. We haven't released much detail on this. But, what I can say is, the study we have designed for order interested in sharing that once we get the data with the general public and that study is underway. We are going to use that study to answer your broader question, I think but the data from our clinical trial to assess the market and the movement of this drug forward. So we put a lot of effort into not only understanding the drug but market and the patient population itself.

[Rusty Williams:]

Yes. The key issue there of course is the prevalence of the disease because people will have this disease as we've discussed before for decades. And so we need to get data on the prevalence not just the incidence about the stuff we hope to achieve in the studies. And it's done in a ideal setting in a place where we can actually get the data.

[Kennen Mackay:]

Got you. Terrific. And then just couple of questions, in the GITR study have you identified any patients that are in the [indiscernible] portion of the study that are FGR amplified. I mean when might the sort of know that if you haven't yet screened for that?

[Rusty Williams:]

So the question is, in our gastric cancer study we are in a dose escalation part of this trial, FDA-144. And the dose escalation part is in unselected patients that is not selected necessarily for FGR Part 2b application. And so it's not our expectation to get a large number of maybe even any patients that have amplification in that study, of course, we will take patients if they have it. But the goal of this is to get as quickly as possible through the dose escalation to doses that we think are tolerable and in an efficacious level. So that we can then move quickly to the selected patient part of the trial and that should be towards the end of 2015 or 2016.

[Kennen Mackay:]

Got it. Okay. Thank you. I will hop back in the queue to get others to call. Thank you.

[Rusty Williams:]

Okay. Thanks again.

[Operator:]

Thank you. Our next question comes from Tony Butler [Guggenheim]. Your question please.

[Tony Butler:]

Yes. Thanks very much. Rusty or Julie, two questions if I may. One is around the combination with nivolumab and 1a or the dose escalating component of the study. And forgive me if you said this Julie, I just – literally just didn't catch it. But, would you – would the dose be every three weeks for your compound plus the three mix for kicking of nivolumab and I guess question really is around – obviously, isn't another anti-PD-1 is given, I'm sorry every two weeks. But, there is another anti-PD-1, it's given every three weeks, do you think that wouldn't matter when you have optimal dose, I just want to understand how you think about that. And then the second question maybe more for Rusty and it's around GITR. If GITR is clearly a very nice asset. But, you alluded at the beginning of your prepared remarks or at least seem to allude to a collection of assets in the TME. Are there other areas which maybe of interest? Thanks very much.

[Rusty Williams:]

Yes. Sure. Let me take the last question first and then I will turn it over to Julie. And hi, Tony, good to hear from you. So the last question about the GITR, you familiar with our screening platform and when we screen the platform – when we screen our collection there are two things we do. One is, we look for new hits novelty, new things and but at the same time, one of the key aspects of our platform is very broad. So include everything. So our collection of domain includes PD-1, CTLA-4, PD-01 all of that – all of those things. And when we did a screen – an in vivo screen, GITR pathway came up very high on our screen and so that's why it captivated us. It was just one of the things, we have to have a handful of things that really were striking. And some of them were known, some were not. The GITR came out really here at the top. We wouldn't have gotten into the program had we not felt that through inhibitor we have a better opposed than what's already out there. And that's due to the multivalency of their scaffold. So that's the reason we went for this. Now, and your question is, how do we look at the tumor micron environment and just we view is the teeth of the puzzle and we view the tumor micron environment as selling multi-cellular but several of our mechanisms going on at once. So we have the tumor associated macrophage the so called M2 macrophages addressed by our FPA008. And now we have a T cell agonist one that we feel could be best in class addressed by GITR. So already have substituted another cell in the micron environment, so we are specifically continued to work on TDA T cell regulators. We are in the midst to that now on our discovery program and we are also working on T reg cells that's a key important cell type for us. So we have – we do view it as a puzzle and that we are working on different pieces of this puzzle and the GITR sort of fit in with our vivo all of that. Now, I will turn this over to Julie to answer your question about the combination trial nivo.

[Julie Hambleton:]

Yes. Hi, Tony. Thanks. So just for clarification, we are combining with nivolumab, which is standardly given every two weeks as opposed to [indiscernible] which is given every three weeks. When we identified the optimal combination of our drug and dose, which nivolumab every two weeks. We would actually target a given exposure, we are using a lot of biomarker data in that escalation part of the trial goes blood based and tumor based as well as looking at safety and tolerability for defining the optimal FPA008 dose to combine with nivolumab. And then certainly be looking at efficacy as we expand out into the tumor time. When we identify this optimal combination we will know the exposure of 008 and that we want to target. We also have information coming in from the PVNS trial and of course, the open label RA trial. That gives us the some target exposures. And then certainly, if we were to combine FPA008 within another drug that's given every three weeks for example, we would just model our approach to dosing based on what our target exposure is. So when you combine drugs with other drugs, you can just model it based on what exposures you need to achieve to maintain efficacy that you are shooting for. Does that make sense?

[Tony Butler:]

Yes, ma'am. It's incredibly helpful Julie. Thank you for that commentary. And Rusty thank you for yours as well.

[Rusty Williams:]

Welcome Tony.

[Operator:]

Thank you. And we have a follow up question from Kennen Mackay from Citi. Your question please.

[Rusty Williams:]

Hi, Kennen.

[Operator:]

Kennen, your line is open. Please check your mute button.

[Kennen Mackay:]

Sorry. I was on mute. Follow-up question was on PVNS and what additional data you would need in order to new at FDA and potentially started a pivotal trial there. Thank you.

[Rusty Williams:]

Yes. The question is, what data would we need to start a pivotal trial, we have given a lot of thoughts to that. I'm going to let Julie take this one.

[Julie Hambleton:]

Yes. Thank you. In the expansion Phase 2 portion of this trial, we will be looking at tumor response rate as determined by MRI. We also will be looking at pain and joint function using tools that will be applied to this patient population. We also during the dose escalation, even though we maybe going through some lower doses because of this CSF1 driven disease, we anticipate we may have some tumor response data as well as joint and pain function data some of the escalation portion as well. So we will be able to put together a package and try and meet with the FDA to talk about why the registrational pass forward would look like in this particular disease setting.

[Kennen Mackay:]

Terrific. Thank you so much. And nice talking.

[Julie Hambleton:]

All right.

[Rusty Williams:]

Thanks Kennen.

[Operator:]

Thank you. [Operator Instructions]

[Rusty Williams:]

Okay. Well, first of all, I would like to thank everybody for joining us today and for your interest and support Five Prime. And we look forward to keeping you updated our next quarterly call or at points in between. So thank you.

[Operator:]

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