Genocea Biosciences, Inc.
Q1 2017 Earnings Call Transcript

Published: 8 May 2017

[Operator:]

Good morning and welcome to the Genocea First Quarter 2017 Financial Results Conference Call. At this time, all participants are in listen-only mode. Following the formal remarks, we will open up the call up for your questions. Please be advised that the call is being recorded at the company's request. At this time, I'd like to turn the call over to Rachel Frank of Stern Investor Relations. Please proceed.

[Rachel Frank:]

Thank you, Operator. Good morning and welcome to Genocea's first quarter 2017 financial and operating results conference call. This morning we issued a press release that outlines the topics that we plan to discuss today. This release is available at genocea.com under the Investor Relations' tab. During the call today, Chip Clark, President and CEO and Seth Hetherington, Genocea's Chief Medical Officer; will review the clinical news announced this morning along with the company's recent operational highlights. Chip will then discuss advances in Genocea's Immuno-oncology programs and then Jonathan Poole; CFO will review the financial results. During the Q&A Jessica Baker Flechtner, Genocea's Chief Scientific Officer will be available as well. 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 venture 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 forecast 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 2015 Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. It is now my pleasure to pass the call over to Chip.

[Chip Clark:]

Thanks Rachel and good morning everyone. And apologies in advance for my cold, I hope I don't disrupt the call. Thank you all for joining us today for our quarterly earnings call. The most exciting news is the unexpectedly positive results from our GEN-003 Phase 2 extension study. In the study we saw durable clinical efficacy at 24 months post dosing that was consistent with the significant effects we saw at 6 and 12 month in the same study. I'll remind the audience that our extensive market research has previously suggested that once yearly maintenance dosing is one of the primary drivers of patient excitement in GEN-003. So we believe the potential for once every 2 years dosing will further strengthen the GEN-003 patient value proposition, which in turn bolstered our confidence that GEN-003 can serve as the cornerstone treatment for genital herpes. We also announced a successful end of Phase 2 meeting with the FDA on GEN-003. And as a result of these productive discussions, we continue to plan a Phase 3 program design consistent with previous guidance including the primary endpoint of median genital lesion rate, a safety database with 3,000 patients treated with GEN-003 and a dose of 60 micrograms per protein and antigen and 50 micrograms of adjuvant. I'm now going to turn the call over to Seth to discuss some of the details of these exciting 24 month Phase 2 data. Seth?

[Seth Hetherington:]

Thanks Chip. I am delighted to be able to share today with you some more details of the two-year efficacy data that we announced this morning. First let's put the data in context of the original clinical trial. This was an extension of our Phase 2 trial which was designed as a dose ranging study and was initiated in 2014. That trial enrolled 310 patients with genital herpes from 17 study centers in the United States. I'll refer you to the press release for the detailed protocol, but in short all subjects received 3 initial doses of GEN-003 over 6 week period at the start of the study. There were no further doses given, so to be clear we're looking at a durable impact of the initial dosing schedule of GEN-003 out to 2 years after dosing. We previously announced that in this trial GEN-003 consistently reduced from baseline both the genital lesion and viral shedding rates up to 12 months across multiple dose groups. We now see that the reductions persist after 24 months for both the effect on general herpes clinical disease and viral shedding. But the magnitude that we're seeing is consistent with that scene at the earlier time points. I just note that there are no statistics performed at the 24 month time point given the reduced numbers of patients in each of dose groups. Still we see a very strong differentiated product profile emerging and our market research suggests that this type of sustained effect that we've observed from a single course of rejections is very attractive to patients and addressing the significant unmet medical need. As we previously announced in this trial, GEN-003 demonstrated a safety profile that is appropriate for a therapeutic study and as reported by the Independent Drug Monitoring Committee for the study. Moving on to our current trial as you know, we've already taken the 2 most efficacious doses from the last day into our ongoing Phase 2b trial using a Phase 3-ready formulation for GEN-003. In January we announced the first results from this trial with positive placebo controlled clinical data at 6 months after dosing and what's very important is that the 6 month data show a statistically significant reduction for our expected Phase 3 primary endpoint of median general lesion rates. We continue to anticipate that the 12 month data from the study will be available around the middle of the year. We've also previously guided to the start of the planned maintenance dose study in the middle of this year and we intend to initiate that study for two reasons. First we believe that this is an opportunity to explore safety and tolerability of a single maintenance dose as we move toward a BLA. Secondly, it's also possible that maintenance at this time point could further improve the efficacy that we're seeing with GEN-003. Once we've initiated and begun the enrollment in that trial we'll give you more information on the likely timing of data availability. Finally, I'd like to highlight some of the opportunities we've had recently to share the progress of GEN-003 with a scientific public health and medical communities since our last earning calls. In late March, I had the opportunity to present an overview of the Gen 3 development program and the current data at the World Health Organization's preferred product meeting as part of a discussion on vaccines for sexually transmitted diseases and specifically for herpes. We were also invited to give an oral presentation GEN-003 at the World Vaccine Congress just a few weeks ago where we received this year's vaccine industry excellence award for the best therapeutic vaccine. So on that point, I'd like to just emphasize that this is really a testament to the hard work that everybody at Genocea and the GEN-003 team and the progress that we're making towards -- into the clinic towards helping a large underserved global patient population and we're very honored to have been recognized for the achievement to-date. And lastly, this past week at the National Foundation of Infectious Disease Annual Conference on vaccine research we gave a presentation on GEN-003 to the intending researchers, healthcare professionals, vaccine companies and public health officials in attendance. So with that, I will turn the call back to Chip.

[Chip Clark:]

Thanks Seth, great progress report on GEN-003. It's important to be taking advantage of these many opportunities to increase GEN-003 visibility in the scientific and physician communities, which we hope will drive clinical trial enrollment and product awareness down the road. So to conclude on GEN-003 we believe the positive data announced today continue to strengthen the product profile of the vaccine. And to reiterate our considerable market research suggests that the sustained effect we have observed from a single course of injections is not just very attractive to patients but in fact drives their preference for GEN-003 to oral antiviral so further extending the intervals between doses can only make GEN-003 more attractive to patients suffering from this terrible disease. As Seth mentioned, we expect additional importance to GEN-003 clinical data as we advance to Phase 3-readiness with the 12 month Phase 2b data expected in the middle of the year. We also have a number of presentations upcoming at important conferences. In July the International Herpes Virus workshop, and also later in the year the IB meeting for [indiscernible], and finally we plan to be at IB week again in the fall. Now let's turn to immune-oncology. Our emerging IO efforts are gaining a lot of visibility. We've recently presented for the first time at a number of scientific meetings. The Keystone Symposium on immuno-oncology in March where we presented two posters on the application of our antigen identification platform ATLAS to identify cancer vaccine antigens and also at AACR, the American Association for Cancer Research for the first time in March. We are continuing to advance our neoantigen or personalized cancer vaccine GEN-009 toward IND by the end of the year. Let me remind this audience targets matter and we'd happily put our ATLAS platform which enables us to led a patient's own T cells tell us what their neoantigens are against the predictive algorithms which poorly predict CD8 T cell antigens and essentially do not predict CD4 T cell antigens. That plus our vaccinology expertise gives us the confidence that we'll offer a differentiated neoantigen vaccine affording better outcomes for patients in this exciting space. Finally, we have also made very interesting progress on our Epstein-Barr Virus discovery program. In fact data on our EBV program will be presented for the first time next week at AAI, Immunology 2017 Conference in DC where we will highlight that ATLAS has identified unexpected antigens of T cell responses in this widely studied cancer causing virus. Together with our illustrious immune-oncology scientific advisory board we reviewed our ongoing programs and together further refined our development plans for Gen-009. This group also provided invaluable feedback on the potential application of ATLAS as a diagnostic tool for patients taking checkpoint blockade therapies. Our excitement continues to grow about ATLAS's potential in the IO space and we look forward to reporting on our progress in the coming months. With that, why don't I turn it over to Jonathan to discuss the quarters financial?

[Jonathan Poole:]

Thanks Chip. In today's press release we reported cash, cash equivalents and investments as of March 31 of $48.7 million compared to $63.4 million as of the end of 2016. Our guidance remains unchanged. We expect our existing cash; cash equivalents and investments that is sufficient to support our operating expenses, capital expenditure requirements and debt obligations into the first quarter 2018 without assuming any receipt of proceeds from potential business development partnerships or equity financings. As we said previously, this guidance assumes commencing Phase 3 trials for GEN-003 for genital herpes in fourth quarter 2017 and filing an IND for GEN-009 for cancer by the end of the year. However, it's our strategy to secure additional sources of financing in advance of starting GEN-003 Phase 3 clinical trials. Moving to P&L. R&D expenses for the quarter ended March 31, increased $2.4 million to $9.7 million from the same period in 2016. The increase was driven by higher compensation consulting and professional services costs in support of the GEN-003 program and increases in the manufacturing costs relates to supply for anticipated Phase 3 clinical trials. Spending increases on GEN-009 and immuno-oncology were more than offset by lower costs on our deprioritized infectious disease programs. G&A expenses for the first quarter of 2017 were $3.6 million, compared to $3.9 million for the same period in 2016 reflecting improved operating leverage and our net loss was $13.7 million for the quarter compared to a net loss of $9.8 million for the first quarter of 2016. I'll now pass the call back to Chip to wrap up.

[Chip Clark:]

Thanks Jonathan. We got another quarter of great progress on GEN-003 with the data showing 24 months durability of clinical and virologic effect and our successful FDA interactions maintaining momentum in the program. Our progress on cancer continues and we expect it to be an increasingly important driver of shareholder value. Looking ahead, we have some important data coming up for GEN-003 around the middle of the year with the 12 month placebo controlled data from the ongoing Phase 2b study. We'll now open the call for Q&A. Operator?

[Operator:]

[Operator Instructions] Our first question comes from Mark Swam [ph] from Cowen and Company. Your line is open.

[Unidentified Analyst:]

Hi, thanks for taking my questions. I guess this is for Seth. It sounds like you settled on general lesion rate as the Phase 3 endpoint. I know of handful of other ones who are under consideration like [indiscernible] lesion free, so maybe you could talk a little bit about the rationale for why that one endpoint is still that you selected?

[Seth Hetherington:]

Sure, yes. We believe that lesion rate gives the best and those comprehensive measurement of disease, because it includes the two most important factors to patients and that is the frequency of recurrences and the duration of each and consequently this is the end point that we expect to have in Phase 3. Obviously there are a number of secondary endpoints most, almost all I think which we have included in our prior trials and will also be included in the Phase 3 program as well.

[Unidentified Analyst:]

Okay. And then maybe talk a little bit about the truck where you are -- are you still planning two simultaneous trials; one, that it's versus placebo and one that looks like if you kind of dosing regimens in terms of two doses, three doses?

[Seth Hetherington:]

I think our most recent guidance is that there would be two Phase 3 trials, placebo controlled. We would not be incorporating different regimens in those trails and coming out of the end of Phase 2 meeting, our guidance is still consistent with those plans.

[Unidentified Analyst:]

Okay. Where is the FDA current thoughts on kind of size of the safety database and relative to that how much of that do you expect to come from the Phase 3 verses what you already have in your various Phase 2 and maybe some other Phase 2's that are planned?

[Seth Hetherington:]

Coming out of the end of the Phase 2 meeting our assessment of the safety database size unchanged than what we've guided before and we believe that all the trials from Phase 2 and two pivotal Phase 3 studies will be sufficient to achieve that database size.

[Unidentified Analyst:]

Okay.

[Chip Clark:]

Seth, this was big number.

[Seth Hetherington:]

I'm sorry, we have guided previously that we thought 3,000 exposed patients would be the right number and we still believe that's true.

[Unidentified Analyst:]

Okay. Thank you very much.

[Chip Clark:]

Thanks Mark.

[Operator:]

Our next question comes from Stephen Willey from Stifel. You line is open.

[Stephen Willey:]

Yes, good morning guys. Thanks for taking the questions. I was wondering if you can maybe just provide a little bit of commentary around where you may be in terms of your strategic discussions regarding finding a potential partner for the Phase 3 program.

[Chip Clark:]

Yes, Steve we off course guide people to expect a specific outcome at a specific time, but we remain confident and based on today's data, even more confident that the GEN-003 product profile and the de-risking in the clinical program and the size of the commercial opportunity all make for a compelling proposition for potential partners. And so, we were just finding the right way to finance in advance this program remains a key priority of ours and we'll keep you posted.

[Stephen Willey:]

Got it. And then can you confirm on the 24 month data that you presented this morning that the genital lesion rate reduction is still derived to be as the older I guess the other non-electronic questionnaire that was originally used but then subsequently changed. These patients weren't switched over to the electronic dairy version at 24 months were they?

[Chip Clark:]

Yes, that is correct. This is again with paper calendars during the times of swapping.

[Stephen Willey:]

Got it.

[Chip Clark:]

Because that doesn't undermine in any way our confidence in the robustness of the data, we had a very nice compliance in this trial with that paper diary. But we of course expect it to be strong with the electronic one going forward.

[Stephen Willey:]

Got it. And then just lastly, I guess what are the current thoughts around the initiation of a combination antiviral study?

[Chip Clark:]

Yes, that's also a priority and something we would expect to be initiating in parallel with the Phase 3.

[Stephen Willey:]

Okay. Thanks for taking the questions.

[Chip Clark:]

Thank you, Steve.

[Operator:]

Our next question comes from Alan Carr from Needham and Company. Your line is open.

[Danielle Brill:]

Hi guys, this is Danielle on for Alan. Just one quick one on GEN-009, have you made any progress on thoughts of initial indication of the vaccine?

[Chip Clark:]

Hi Danielle, we haven't specified the initial indication I think that the initial dosing of patients will be in a - patients with a variety of cancers. And as we see progress and emerge from the clinical trial, I think we will likely narrow the target patients and this I think is very consistent with how new cancer therapies, especially these immunotherapies are being dosed at the beginning of their programs.

[Danielle Brill:]

Great.

[Chip Clark:]

Thank you.

[Operator:]

I show no further questions at this time. I would now like to turn the call back over to Chip Clark for any closing remarks.

[Chip Clark:]

My closing remark is simply two things. First of all, we remain delighted with the data that we've shared with you today and we thank you for your continued detention.

[Operator:]

Ladies and gentlemen, thank you for joining us today. You may now disconnect. Have a wonderful day.