Genocea Biosciences, Inc.
Q2 2020 Earnings Call Transcript

Published: 23 Jul 2020

[Operator:]

Good morning. And welcome to the Genocea Second Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for questions. Please be advised that call is being recorded at the Company’s request. At this time, I would like to turn the call over to Dan Ferry, of LifeSci Advisors. Please proceed.

[Dan Ferry:]

Thank you, operator, and good morning, everyone. Earlier today, we issued a press release that outlines the topics we plan to discuss today. This release is available at genocea.com, under the Investors tab. During the call today, Chip Clark, President and CEO, will provide a brief corporate update; and the Company's Chief Financial Officer, Diantha Duvall, will review the financial results. After the prepared remarks, we will open up the call for Q&A, and Chip; Diantha; Tom Davis, Genocea's, Chief Medical Officer; and Jessica Flechtner, Genocea's, Chief Scientific Officer, will then be available to answer your questions. Before we begin, I would like to remind everyone that statements made during this conference call relating to Genocea's expected future performance, future business prospects or future events or plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are intended to be subject to the Safe Harbor protection provided by the Reform Act. Actual outcomes and results could differ materially from those forecasted due to the impact of many factors beyond the control of Genocea. Genocea expressly disclaims any duty to provide updates to its forward-looking statements, whether as a result of new information, future events or otherwise. Participants are directed to the Risk Factors set forth in Genocea's 2019 annual report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. It's now my pleasure to pass the call over to Chip.

[Chip Clark:]

Thanks, Dan. And thank you all for joining us today. Genocea has had an active and productive second quarter, demonstrating important progress across the Company. There is much to recap on today's call and we are especially excited about the path forward for our two differentiated clinical-stage programs, GEN-009, our neoantigen vaccine and GEN-011, our neoantigen cell therapy. First, I'd like to discuss the GEN-009 vaccine program. On July 30th, we will present initial clinical data on the first five patients from Part B of our ongoing Phase 1/2a clinical trial with Dr. Maura L. Gillison, a renowned Professor of Medicine at the MD Anderson Cancer Center and the lead investigator of the trial. Part B of the study is exploring the combination of GEN-009 and immune checkpoint inhibitor-based regimens in advanced solid tumors. To register for the event, please visit the Investors section of our website. We shared long-term follow-up data from Part A of the same trial at ASCO 2020 Virtual Scientific Program, evaluating the duration of immune responses and clinical outcomes for eight participants. We are encouraged by the results. Seven out of eight patients treated are without disease progression at one year median follow-up. In addition, we observed that GEN-009 drove broad, sustained T cell responses to neoantigens identified by our proprietary ATLAS platform, starting after only four weeks and lasting for up to a year after the last vaccination. Now, let me turn to GEN-011, our neoantigen cell therapy that uses T cells taken from peripheral blood and expanded on ATLAS-identified neoantigens. Genocea hosted a virtual KOL symposium, introducing GEN-011 and featuring commentary about the gaps in the existing T cell therapy landscape from Dr. Eric Tran Assistant Member at the Earle A. Chiles Research Institute in the Providence Cancer Institute. Members of the Genocea management team highlighted the potential breadth of response, convenience and cost advantages of GEN-011 over TIL therapy. To provide additional context, TIL therapies are the current gold standard for solid tumor cell therapy, but challenges remain that hinder their widespread use. TIL-based approaches may have limited tumor specificity, cannot avoid the inhibitory or pro-tumor responses we regularly find in cancer patients through our ATLAS platform, require a surgery to extract tumor and TIL and rely on a potentially comparatively exhausted immune cell. By contrast, GEN-011 unleashes billions of neoantigen specific T-cells to an unparalleled breadth of neoantigens, targeting up to 30 relevant ones. GEN-011 also avoids the pro-tumor Inhibigens that may be detrimental to clinical response, which TIL therapy incidentally cannot avoid, does not require extra surgery or collection of viable tumor sample. And unlike TIL, engages non-exhausted T cell populations for potentially superior activity and durability. In sum, GEN-011 may work at least as well as TIL therapy, be accessible to more patients and cost less overall to the healthcare system. Genocea filed an IND application to begin a Phase 1/2a clinical study of GEN-011. The trial will enroll up to 24 patients and will assess GEN-011 in a range of tumor types with a focus on patients who have failed standard of care checkpoint inhibitor therapy. As we recently reported, we have received verbal notification from the FDA that they are placing a clinical hold on the IND until additional information pertaining to certain third-party reagents used in the GEN-011 manufacturing process is received. It should be noted that these reagents are not a component of the final cell therapy product that we expect to receive official written communication from the FDA regarding the hold in the near future, and of course that we plan to work with the FDA to resolve their questions as quickly as possible. Genocea also presented data at the AACR Virtual Annual Meeting II that help explain how inhibitory antigens or Inhibigens function. These results validate previous research shared at SITC 2019, which showed that the presence of an Inhibigen in an otherwise protective immunotherapy can be detrimental to antitumor responses. Our latest analyses demonstrate that in preclinical model, Inhibigens were found to alter the tumor microenvironment and drive tumor hyper-progression, and also abolish both, global and tumor antigen specific T-cell activity to beneficial antitumor antigens. The findings suggest that Inhibigens must be identified and excluded from the rational design of cancer immunotherapies to achieve more favorable patient outcomes. And as a reminder, only ATLAS can identify these Inhibigens. Looking beyond cancer, we know that identifying novel antigens of T cell responses is as important in other maladies, such as infectious diseases. As potential proof, in May, we entered into an MTA and exclusive license option with Shionogi & Company to develop a novel HSV-2 vaccine using Genocea's proprietary HSV-2 antigen from the GEN-003 programs, which the Company discontinued in 2017. As part of this agreement, the Company received $2 million for the exclusive license -- I am sorry, option to evaluate the HSV-2 antigen and to negotiate a license prior to the expiration of the MTA. Upon exercise of Shionogi's option, terms of the license are expected to include an upfront payment, regulatory and sales milestones, as well as tiered royalties. If licensed, Shionogi will assume responsibility for global development and commercialization of the HSV-2 vaccine product. In summary, I am pleased by our ability to remain on track during these uncertain times, meeting our highest priority milestones and working to deliver on the promise of developing effective immunotherapies through our unique and differentiated approach. I'm now going to pass the call over to Diantha to summarize our financials from the quarter before opening the call up to questions. Diantha?

[Diantha Duvall:]

Thanks, Chip, and good morning, everyone. We ended the quarter with $22.1 million of cash and cash equivalents. Our operating results for the quarter ended June 30th, 2020 are as follows. R&D expenses were $8.5 million compared to $6.8 million for the same period in 2019. G&A expenses were $3.5 million compared to $3.2 million for the same period in 2019. And our net loss was $11.3 million compared to $6.5 million for the same period in 2019. Yesterday, we announced an $80 million private placement, consisting of common stock and warrants to purchase -- and warrant to purchase common stock, which was led by a leading U.S. public investment fund specializing in life sciences, as well as certain existing and new investors. This important financing further diversified our investor base, extends our cash runway into mid-2022 and enables critical clinical milestones for both, GEN-009 and GEN-011. With that let's now open up the call for questions. Operator?

[Operator:]

[Operator Instructions] Your first question comes from the line of Ben Burnett with Stifel. You may now ask your question.

[Ben Burnett:]

Hey. Good morning. Thank you so much for taking our questions. I want to just ask one first on GEN-011. I guess, can you just -- I just wondered if you could provide a little more color on the vendor that's responsible for producing this reagent. And I guess how critical is this reagent and how easy is it to switch vendors at this stage in the event that you need to?

[Chip Clark:]

Thanks Ben for the question. We can't obviously disclose the vendor themselves. And we also don't know that we need to switch reagents. But, it is the case that in developing our process, we game planned and actually did development work, anticipating a variety of scenarios, including the possibility of replacing such reagents. And so, we feel confident that if we do need to, we could do so quite readily.

[Ben Burnett:]

Okay. Okay, great. And maybe just one more on the design of GEN-011 Phase 1/2. Can you just remind us how the cohorts A and B will be enrolled? And I guess, are these going to be completely staggered? In other words, if this cohort A needs to mature before moving onto the high dose and really, I guess what I'm trying to get is when we get the first look at data from this program, do you anticipate being able to disclose some of this high dose data by then?

[Chip Clark:]

Yes. So, I'll ask Tom to handle that question. Tom?

[Tom Davis:]

Sure, Chip. Hi, Ben. The design, as you suggested, contains two cohorts, group A and group B, one giving a higher dose and the other a lower dose that's given repeatedly. As you obviously can tell, that's basically a dose escalation. In our initial discussions in a pre-IND with the FDA, they agreed that we would start treating two patients at the low dose and then could escalate. So, we actually can get to higher doses fairly quickly if we need to, which we think gives us a flexibility to approve both cohorts in parallel, if the science suggests we should be doing that; and, of course determining whether a low dose that is going to be less toxic to patients could be affecting the situation or whether we need to go to the higher dose. I think it is a very flexible design and should serve up quite well to provide information from patients in both cohorts in the timeframe we predicted, which would be data the middle of next year.

[Ben Burnett:]

Okay, fantastic. Thanks for that color.

[Tom Davis:]

Sure.

[Chip Clark:]

Thanks for the question, Ben.

[Operator:]

And your next question comes from the line of Daina Graybosch with SVB Leerink.

[Daina Graybosch:]

Hi. Thank you for the questions. I wonder if you could give us some more color on why you chose to talk about the first five patients first, rather than waiting for a larger cohort for GEN-009.

[Chip Clark:]

Thanks Daina for that question. I think there's an important consideration there which is that the enrollment in the clinical trial essentially took place in two waves. And so, for the vast majority of the patients, the data will be rolling in, in August and September, so enabling us to deliver as previously disclosed, a larger data set toward the end of September. But, I think that having a clear sort of discrete set of data from one group of patients, gives us an opportunity to provide a glimpse of what may be or may not be happening in the clinical trial. And in the context of [Technical Difficulty] the Company, the timing makes sense.

[Daina Graybosch:]

Can you maybe add a little more color on why it was in two waves? Is there something particular, like a certain site or a certain tumor type that's common in the first five patients versus the broader set?

[Chip Clark:]

Yes. There was nothing such as that, either site or patient types specific. Sometimes these things just happen this way. And it would be probably a little bit too simplistic to blame it on coronavirus. But, yes, there's nothing that we think is particularly indicative. And therefore, we think that the Phase -- the five patients for whom we’ll present data would be in many ways broadly representative of the larger data set.

[Daina Graybosch:]

Okay. And then, one more question for me. You should have had a maybe a disappointing summer for neoantigen vaccines or at least some points versus some competitor programs to go back and translate for more. I wonder, if you have any thoughts of what you've learned from Genentech, BioNTech and Gritstone, results have come out that you would think about for your own program, any implication?

[Chip Clark:]

Yes. So, maybe I’ll ask Jess first to comment on some of the observations we have from the competitive data. And then after that, I will have Tom comment on perhaps the similarities and/or differences in our clinical trials that may inform what we hope to present. So, first to Jess.

[Jessica Flechtner:]

Thanks, Daina for the questions. You know we agree that the results that have been presented so far have been a little underwhelming, which is unfortunate because there is so much promise for neoantigen vaccines and cell therapies. But, I think what we learned is that what we have been saying all along is the key. It's really that the targets matter. And I mean that in two ways. One is that with ATLAS, we are showing both that the person can make a T cell response to the neoantigen that is included in their vaccine prior to their vaccination. And secondly, we know that the tumor has expressed that antigen because otherwise they would not have made a preexisting response to it. And you can make very high frequency T cell responses against mutations. But, if the tumor is not expressing that target, they won't have any function. And so, we're really encouraged by the fact that we approached the neoantigen vaccine and cell therapies very differently that we focused on what to target the immune response on. We chose to focus on avoiding Inhibigen, and we look forward to seeing the data. Tom?

[Tom Davis:]

So, with respect to the clinical trials that have been performed to date, there is of course a mix of approaches. Some people in the States have used a delayed vaccine design and others have started simultaneously. I think, the data that have come from our competitors have shown promise, there is certainly relative data and prolonged PFS reported from those studies. But of course they were not specifically designed with a control that allows us to fully understand that. And that's been a difficulty in this space. For our study, we are very focused, not on the entirety of the population, but looking for a signal of antitumor activity with each patient serving as their own control. And key to that is this staggered design where the patients define their outcome on the checkpoint inhibitor based therapy and then start the vaccine. I would say that this is quite a hurdle. People would be skeptical that one could shrink tumors after three to four months of a checkpoint inhibitor. But, those are the kinds of readouts that we're very focused on. And if we see those, we would consider that to be a very strong signal.

[Operator:]

Your next question comes from the line of Mike Ulz with Baird. You may now ask a question.

[Mike Ulz:]

Hi, guys. Thanks for taking the question. Just to start maybe a quick follow-up on GEN-011 and the partial clinical hold. I'm just curious if you guys have some data available that you think might be able to address some of the FDA’s questions there. And then, secondly, and I realize this may be difficult to kind of predict, but where you think the ultimate impact is on timeline to sort of enrolling patients in the GEN-011 study?

[Chip Clark:]

Yes. I think, -- so thanks for the question, Mike. I think, the answer to both questions is somewhat difficult to predict. You asked first, whether we have in hand the data to address their concerns. And every indication is that we do. As we've indicated, they have contamination concerns about what could arise from one of our vendors. And so, we've done extensive testing. We would propose to do -- continue to do extensive testing. And as hinted in the response to the previous question, I think we've contemplated, we've prepared for and could easily implement even more significant changes in order to respond to the FDA's concerns. But, we need to see the letter in order to confirm exactly which of those options we have to implement. So, we feel very adequately prepared. But, the specific task that we'll take will depend on what we see in the letter, which in some ways feeds into the response to the second question about the timeline impact. I think, in so far as we believe that we understand the issue and therefore have a bunch of different paths that we can implement. We think it's simply a matter of getting the letter, responding to the agency with measures for which we already have data and/or could very readily implement, and then given the FDA, the mandated 30 days to respond. So, somewhere in the ballpark of a couple of months seems like a reasonable estimate. And, that's sort of the operating assumption we have. We're sort of very eager to get the letter and to move forward, regardless, because under any circumstance, we feel very comfortable that we have put boundaries around the issue, can overcome it, and obviously we're excited about GEN-011.

[Mike Ulz:]

Got it. That's helpful. And then, maybe another question on GEN-009, considering we're expecting some data next week. Just broadly, obviously we're in a pandemic, and just curious, if there's been any impact on your ability to collect the data from those patients and how we should think about that.

[Chip Clark:]

Yes. Tom, why don't you take that question with regard to the clinical trial?

[Tom Davis:]

So, obviously, the pandemic has had impact across the board. Particularly when there are very few hospital beds, our clinical sites generally tend to cut back on any of the elective procedures. However, these patients do require their standard of care treatments. They are having their images, their scans taken at appropriate times because that is part of standard of care. There may be a few samples that don't come in that we would like to see. But overall, we're able to capture the critical data pretty much on time for these patients. So, I'm certainly not saying that there is no problem. But, I do think that with the design of this study, we're able to capture what we need when we need to do it.

[Mike Ulz:]

Okay, great. Thank you for taking the questions.

[Tom Davis:]

Sure.

[Chip Clark:]

Thank you for them, Mike.

[Operator:]

Your last question comes from the line of Gil Blum with Needham and Company. You may now ask your question.

[Gil Blum:]

Good morning, everybody. And thank you for taking our questions as well. Maybe first one on the design of the GEN-011 study. Could you discuss a little bit the significance of looking at patients that are not receiving lymphodepleting pretreatment?

[Chip Clark:]

So, Gil, thanks for the question. And obviously, I'll have Tom answer that.

[Tom Davis:]

It's a good question. Lymphodepletion is considered standard with certain therapies, including the CAR Ts as well as the TIL therapy approaches. And there's a lot of data suggesting that it can be effective, but it does bring with it significant toxicity. So, we were very interested to explore whether a less toxic regimen could be successful in the context of a very broad range of immune responses. We've noted that we can generate up to -- or we can use up to 30 targets in our cell therapy, and you could almost consider that 30 different drugs in one, so that we believe that this could be much more potent. And by starting with a less toxic regimen and still substantial doses of cells, we will be able to test that. The key feature though is that it's built into dose escalation and we can rapidly get to full lymphodepletion with high dose IL-2 in the second cohort fairly quickly, if we feel that that's going to give us better results. Does that address your question?

[Gil Blum:]

Yes, absolutely. And kind of going back to evidence around TIL efficacy and other work that's been previously done, has there any preclinical work looking into the appearance of Inhibigens and patients that failed ex TIL therapy?

[Chip Clark:]

That's a great question for Jess.

[Jessica Flechtner:]

So, you asked if there's any relationship with Inhibigens and patients who failed TIL therapy?

[Gil Blum:]

Yes. If there is work being done into this?

[Jessica Flechtner:]

No. So, the work that we're doing in terms of the profiling Inhibigens almost as a biomarker is currently all related to checkpoint blockade failures. But, it is a good question of whether or not, this could also be used to predict TIL failures. We just haven't broadened our search into that path. But, it is true that currently in the work that we had done previously that is ongoing in the GEN-009 trial and a collaboration that we have ongoing also from a research perspective that we think that we can identify subjects who may fail checkpoint blockade, based on the proportion of inhibigens that we find in the screens.

[Gil Blum:]

Got you. And kind of a last one, going back to the infectious disease, the deal that you guys announced back in May with Shionogi, is there any maybe potential business development around other infectious viruses, especially one that's pretty much on everyone’s mind these days?

[Chip Clark:]

So, first of all, we're a cancer company. And our focus is of course on the various ways we can be advancing and even doing business development around the BD -- around the cancer applications rather of the ATLAS platform. Yes, we certainly field inbound inquiries regarding other infectious diseases. With regard to COVID specifically, I think, we've been taking a little bit more of a wait and see approach. And Jess can speak a little bit to what's known about the immune responses to that virus and why it has -- I mean, it’s why people have rushed into the clinic with their vaccines, but why it's not entirely clear that we can be helpful in the fight against COVID. Why don’t you take that, Jess?

[Diantha Duvall:]

Right. So, as you probably know, the majority of vaccines today are focused on one particular protein from the virus to generate neutralizing antibodies, which is a correct approach of course, because that is how the virus gains and changes itself. But we also know that it may provide incomplete protection. And there are more and more papers emerging, showing the importance of T cells also in protecting subjects against this virus. And what is interesting is that in the SARS, the earlier respiratory virus, individuals have published that T cells persist up to a decade, for example, and may protect patients in the long-term. But, antibodies go away in a year or two years and perhaps wane. So, there's certainly compelling arguments for exploring T cell immunity to the virus. I think, we are looking very carefully at the field and understanding what is there, and let's see what happens.

[Gil Blum:]

Thank you very much for that color.

[Chip Clark:]

Thank you, Gil.

[Operator:]

At this time, there are no further questions in the queue. I will now turn the call back over to Mr. Chip Clark, CEO, for closing remarks.

[Chip Clark:]

Thanks very much, operator. I want to thank everybody for joining the call. And more importantly, I want to thank everybody at Genocea for all of the hard work that we are always, so privileged and grateful to have the opportunity to represent. We look forward to speaking to you all again in the near future.

[Operator:]

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participation and have a wonderful day. You may all disconnect.