Genocea Biosciences, Inc.
Q3 2018 Earnings Call Transcript

Published: 1 Nov 2018

[Operator:]

Good morning. My name is James and I will be your conference operator today. At this time, I'd like to welcome everyone to the Genocea Third Quarter 2018 Financial Results Call. All lines have been placed on mute to prevent any background noise, and after the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. I'd now like to turn the call over to Managing Director at LifeSci Advisors, Paul Arndt. Please go ahead.

[Paul Arndt:]

Thank you, James, and good morning, everyone. This morning we issued a press release that outlines the topics we planned to discuss today. The release is available at ir.genocea.com under the Investor Relations tab. During the call today, Chip Clark, President and Chief Executive Officer, who will provide a corporate update and review the financial results. After his prepared remarks, we will open up the call for Q&A and Chip; Jessica Flechtner, Genocea's Chief Scientific Officer; and Tom Davis, Genocea's Chief Medical 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. All 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 2017 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, go ahead.

[William Clark:]

Thanks, Paul and good morning, everyone. Thank you for joining us today to discuss our third quarter activities and results. Let me begin by putting this quarter in context. We undertook a strategic pivot just over a year ago with two core beliefs. First, we believed and continue to believe that our novel and proprietary ATLAS platform was both radically different and potentially meaningfully better for antigen selection. That approach is being used by our peers in the cancer vaccine and cell therapy fields. Specifically, ATLAS uniquely uses patients' own T cells to identify each patient's optimal antigens, while our peers all rely on assumptions and software to make educated guesses about such antigens. To us, it seemed obvious that no software or AI program to possibly disturb the complexity of human biology in a way that would lead to optimal antigen selection. Second, we believe that our decade of investment in both the ATLAS platform and in building an immunotherapy development capability would allow us to pivot quickly to drive potential best-in-class immunotherapies into the clinic. In the year since this pivot, we've made significant progress both in advancing our first neoantigen vaccine candidate into the clinic and in generating data both to highlight the potential ATLAS platform advantages and to advance our understanding of neoantigens. On the scientific side of things, we continue to participate regularly in scientific and medical conferences. Importantly, we will have several poster presentations highlighting our ATLAS platform at the upcoming Society for Immunotherapy of Cancer Conference or SITC conference taking place next week. We can't say much about our presentations today due to SITC's strict embargo policy, but I will point out a couple of the poster titles. One, the empiric profiling of neoantigen-specific T cell responses in non-small cell lung cancer patients with ATLAS reveals unexpected neoantigen and inhibitory antigen profiles. Two, ex vivo ATLAS identified inhibitory neoantigens promote mouse melanoma tumor progression. Each of these highlights so-called inhibitory antigens, which are those shown buy ATLAS to associate with and potentially drive T cell responses that may work against immunotherapies and which only ATLAS can identify. We look forward to sharing the data and implications when the embargo lifts next week. On the clinical development side, I'm very proud with our progress, with our lead neoantigen cancer vaccine candidate GEN-009. For the ongoing Phase 1/2a clinical trial, we believe we remain on track to see the first immunogenicity data in the first half of 2019. In this trial, we are studying GEN-009 first in a handful of cancer patients with no current evidence of disease, examining the safety and immunogenicity of GEN-009 in patients with a variety of cancer, indications for which immune checkpoint blockade drugs have been approved. Upon favorable results in this initial patient cohort, we plan to proceed using GEN-009 both in combination with immune checkpoint blockade drugs in patients with advanced or metastatic solid tumors and as monotherapy in patients who have failed their checkpoint inhibitor treatment. For each patient in our clinical trial, we will use ATLAS to identify both the patient's true neoantigens to be included in their personalized therapy and importantly the inhibitory neoantigens to be excluded from their therapy. We believe that using ATLAS could lead to more efficacious therapies and that it could become the gold standard in identifying neoantigens and developing cancer vaccines and T cell therapies. On the operational side, we recently strengthened our leadership team. Dr. Thomas Davis joined us as our Chief Medical Officer and brings with him more than 20 years of academic and industry experience in immuno-oncology and cancer vaccine development. Derek Meisner joined us as our General Counsel, a new a new position at Genocea. In addition to overseeing all of our legal affairs, Derek is providing counsel on our business strategy and implementation. He has extensive experience as a Corporate Attorney and he has been an asset to our team already. We're thrilled to have both on our team. In summary, I'd just like to say again how proud I am of the entire Genocea team for all that we've been able to accomplish in the past year. We are working hard to advance our pipeline to continue to present results of our ground-breaking research at upcoming medical and scientific conferences and of course to pursue business development discussions to maximize the value of ATLAS and our pipeline. One last thing I'd like to note is that we will be hosting a KOL event in New York City at the end of November. Our program will feature Dr. Chuck Drake of New York Presbyterian/Columbia University Medical Center. Chuck is one of the most influential leaders in cancer research with a focus that includes anti-tumor vaccines and immunotherapies. This event will be webcast for those who can't attend and available for replay on our website as well. Let's now move on to our financials. As detailed in today's press release, we ended the third quarter with cash and cash equivalents of $34.5 million. Our guidance remains unchanged and we expect our current funds to meet our operational needs into the fourth quarter of 2019. Our R&D expenses this quarter were $6.4 million, a decrease from $10.2 million in the third quarter last year. This decrease was largely due to reduced headcount, external development, clinical, and consulting costs. Our G&A expenses this quarter were $4.1 million compared to $3.8 million in last year's third quarter. This increase was primarily due to increased professional services costs offset by decreases in consulting costs. Finally, our net loss this quarter was $7.8 million compared to $16.9 million in the third quarter last year. With that, we'll now open the call up for questions. Operator?

[Operator:]

[Operator Instructions]. And our first question comes from the line of Phil Nadeau from Cowen & Company.

[Philip Nadeau:]

Chip, a question on the data from GEN-009 that we're going to get in the first half of next year. Can you talk about what measures in particular you'll be likely to read out and how -- what we should expect, what type of -- that we set to conclude whether you're seeing what you had hoped or expected to see?

[William Clark:]

Hi, Phil, thanks for the question. Let me set a little bit of context and then I'll ask Jesse to provide some of the details. The context is that a few of our peer companies including BioNTech and Neon have reported their first-in-human immunogenicity results over the course of the past year. And what they have shown is really underwhelming frequency of CD4 and CD8 T cell responses to the neoantigens in their vaccines. What we want to do is to be better, and I'll have Jesse explain the specific measures that we will use to allow you to gauge whether we've succeeded against that benchmark or not.

[Jessica Flechtner:]

Thanks. In this study, we will look in the peripheral blood for ex vivo T cell responses to each of the antigen in the vaccination with an Interferon Gamma and Granzyme B FluoroSpot assay. We will also do cultured ELISpot and we have exploratory assays to look at other markers in the blood of the effect of the vaccine. And the expectation is that we will have a high proportion of the antigens in the vaccine eliciting a measurable T cell response in the patients who receive the vaccine.

[Philip Nadeau:]

And then second question is just on HSV. Are there still ongoing -- any ongoing dialog with potential partners for that program?

[William Clark:]

Yes, Phil. There are ongoing discussions. We remain frustrated that we were not able to advance GEN-003 further on -- in a timely way. We continue to believe that the GEN-003 profile, I guess potential profile is one that patients and clinicians would welcome and we continue to explore ways in which we can advance GEN-003 crucially without Genocea providing anything more at this point than just the drug and the game plan forward. It would not be something we would propose to spend money on.

[Operator:]

And the next question is from the line of Mike Ulz from Baird.

[Michael Ulz:]

Just a follow-up on the Phase 1 GEN-009 study. You mentioned rolling a handful of patients in the first cohort. Just curious if you could maybe comment on how many patients you've enrolled so far. And then maybe secondly you mentioned initial data is on track for the first half of '19. Just curious should we be thinking more of ASCO is the venue or another -- or potentially maybe another medical meeting earlier in the first half?

[William Clark:]

Hi, Mike. Thanks for the question. We haven't yet said publicly where we are in the enrollment status, but suffice it to say for now that we're trying to enroll somewhere in the order of six to ten patients in this initial cohort of the clinical trial, which for context is very similar to the initial patient cohorts that our peers had in their clinical trials' initial cohort. I think that ASCO is of course a very exciting forum. Our aim would be to present results when we have them at an appropriate medical meeting. Whether it will be ASCO or not is something that we will not speculate yet today.

[Michael Ulz:]

And then maybe with respect to the pipeline, can you just comment on GEN-10 and how that's different from GEN-009 and then what's the current status of that program?

[William Clark:]

Yes, Mike, thanks for the question. Let me speak both to GEN-10 and GEN-11. As you know, GEN-10, we think of as a next-generation neoantigen vaccine and the point here is this -- that we have spent a couple of years really evaluating a range of technologies with which we might be able to drive even better immune responses than we may with GEN-009 and potentially also see advantages in either speed of production or cost of production. We want to see how GEN-009 reads out before we make, I would say, major investments in GEN-10. And so I think our plan would be to be more open about the nature of GEN-10 no later than sort of simultaneous with the results from the immunogenicity readout that we have been talking about already in the first half of next year. With respect to GEN-11, this is very different therapy. This is a T cell therapy, where we would be expanding T cells on neoantigens identified again using ATLAS. And so this is a therapeutic approach that we see us having potentially significant advantages over other T cell therapies. This is something that we are beginning to invest in now and the investment in this program is not gated on progress in GEN-009 the way GEN-10 would be.

[Operator:]

[Operator Instructions]. Your next question comes from the line of Joe Pantginis from H.C. Wainwright.

[Joseph Pantginis:]

Thanks for taking the question. Regarding the ongoing study, I know you really can't say much, but can you, I guess, give any color with regard to the overall conduct and how patient screening is going, are there any rate-limiting steps or sort of general screening comments as I mentioned?

[William Clark:]

Thanks, Joe. I'll have Tom handle this question.

[Tom Davis:]

So, we're very pleased with how accrual is going at this point of time. As always, the early stages of a trial are somewhat challenging as you ramp up, but I think things are going very well, and having been here now for about a month, I think everything is in place that needs to be in place in sets we accrue the study. I can only reinforce what Chip said earlier. We seem to be doing very well to meet the time lines as predicted and would expect to have data in the second half of next year -- I'm sorry, first half of next year before second half of next year.

[Joseph Pantginis:]

And maybe, Tom, since you're on the line, based on your long-term experience in this industry, I was just wondering maybe can you provide maybe a couple of high-level comments about what ended your decision to be able to bring you towards Genocea like the lead-attracting factors.

[Tom Davis:]

Well, I've been in the space for quite some time and we've made huge progress over the past 20 years, which is very satisfying, but there is still a long way to go. We've had great success at the tail end of an immune response with the checkpoint inhibitors, which have made a big difference for a minority of patients. Clearly what's missing is some greater activity on the front end. The concept of personalized medicine has been important now for quite some time. But when you look at the neoantigen space, most companies are just personalizing to the tumor, not to the patient. So by identifying antigens in the tumor, one comes up with potential target, but only by matching them with the patient's own immune responses, are you truly personalizing it. So for me, what Genocea is doing just makes sense. It's going to be the best way to identify the best vaccine for patients moving forward and that really is the key component of this clinical trial, is to show that by selecting the right antigens, we should get greater immunity.

[Operator:]

Your next question comes from the line of Gil Blum from Needham & Company.

[Gil Blum:]

Thanks for the update. Just a question about the arm of GEN-009 of treating GEN-009 to CPI failures, would you expect maybe in the future to treat CPI failures with GEN-009 and the CPI again, maybe there could be some re-sensitization effect?

[William Clark:]

Thanks for the question, Gil. I'll have Tom answer this as well.

[Tom Davis:]

Sure. The basic concept that patients who are not responding to checkpoint inhibitors are simply lacking the ability to generate an effective immune response. So whether they've been pre-treated with checkpoints or not, the ability to generate those tumor-specific immune responses should be able to make a significant difference likely in the context of checkpoint inhibition. So a key part of our development moving forward is to test both in checkpoint inhibitor-naive patients as well as refractory ones, where we will look to see whether or not we truly are changing outcomes. So it's a comprehensive Phase 1b portion to the current study and brought it well beyond that. We certainly closed in both areas we see anything promising.

[Operator:]

We do have an additional question from the line of Chad Messer from Needham & Company.

[Chad Messer:]

You guys hear me okay?

[William Clark:]

Very well now, Chad.

[Chad Messer:]

All right. I don't know what -- I apologize I don't know what technical issues we were having before. Maybe I just have couple questions on these inhibitory antigens. I think this is actually very fascinating finding. First of all, can you remind us how frequent they are? And then a more speculative question, any guesses as to like a biological function for these, they seem counterintuitive to me that they exist at all?

[William Clark:]

Thanks for the question, Chad. For fans of our previous calls, you'll know we are in no position to criticize for technical issues with sound. I will have just tried to address your questions about the frequency and function of inhibitory antigens.

[Jessica Flechtner:]

You're right, I think these responses are fascinating. We find them in nearly every subject that we screen both in the neoantigen space as well as in common antigens, the non-mutated forms of tumor antigen. And often they are in equal proportion or greater proportion than to the stimulatory antigens. Interestingly, they are predicted by algorithm occasionally, but of course the algorithms would not be able to identify that they have this inhibitory phenotype. As for the mechanism, you can imagine that we are very interested in getting to the bottom of this and it's exactly why we created the mouse ATLAS model and we presented the data from the screening last year at SITC and we have new data that Chip introduced the title of the poster today that will be presented next week at SITC. And so I think we are moving closer to identifying what the mechanism is and what their phenotype might be and stay tuned, because I think there's a lot work left to be done, but I think that we believe that they are real and that they have a biological function in vivo.

[William Clark:]

And critically, Chad, we think that this is -- this will end up being one of the most important ways in which our ATLAS platform differentiates Genocea from our peers in the personalized vaccine and cell therapy fields. it's one thing for us to make, I think, a very logical case that biology should be better at identifying antigens than software. It's another for us to be able to present evidence that there are actually antigens that people should want to rule out, not just because -- not only because they may be irrelevant for the patient, but they -- because they may actually work against an immunotherapy. And so we think that the fact that we can identify such antigens is today and hopefully with more data and we'll speak more about this next week when we unveil the SITC data. This will provide sort of a crucial point of differentiation from our peers.

[Chad Messer:]

Thanks for that answer. And no, this does seem to be a potentially very important science you guys are tracking down here.

[William Clark:]

Thanks, Chad.

[Operator:]

And there are no further questions at this time. I'd like to turn the call back over to Chip Clark.

[William Clark:]

Thank you, Operator. In closing, let me reiterate that I'm really pleased with all the progress we've made this quarter. We believe we remain well positioned to continue executing and developing our pipeline, and we look forward to updating you again very soon. So, thank you, everyone, for joining us today, and thank you for your continued support.

[Operator:]

This concludes today's conference call. You may now disconnect.