Genocea Biosciences, Inc.
Q1 2015 Earnings Call Transcript

Published: 7 May 2015

[Operator:]

Good morning and welcome to the Genocea First Quarter 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open up the call 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 Sarah McCabe of Stern Investor Relations. Please proceed.

[Sarah McCabe:]

Thank you, operator. Good morning. This is Sarah McCabe with Stern Investor Relations and welcome to Genocea’s first quarter 2015 financial and operating results conference call. This morning, we issued a press release which outlines the topics we plan to discuss today. The release is available at www.genocea.com under the Investor Relations tab. Today on our call, Chip Clark, President and Chief Executive Officer will review the company’s recent business and clinical highlights, then Jonathan Poole, the company’s Chief Financial Officer will review the financial results. Chip Clark will close by reviewing Genocea’s anticipated upcoming milestones, and then we will open up the call for your questions. Seth Hetherington, Genocea’s Chief Medical Officer will also be with us today for the Q&A. 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 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 2014 Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. With that, let me pass the call over to Chip.

[Chip Clark:]

Thanks Sarah, and good morning everyone. 2015 is an important year for Genocea with significant clinical readouts upcoming for our two lead programs, GEN-003 this quarter and GEN-004 in the fourth quarter. Positive data would advance each program and would provide further evidence that as we say targets matter in the development of the effective T-cell vaccines and immunotherapies. I’ll put it another way, it’s the specificity of T-cell responses that drive protection against diseases. Our ATLAS platform gives Genocea an unique tool for identifying the specific T-cell antigens which people protect themselves naturally against diseases are responding to. These antigens then become the core of our product candidates which are focused on addressing on or under-served diseases. Let me start with GEN-003, our first-in-class candidate for the treatment of patients with genital herpes and incurable sexually transmitted disease that affects more than 400 million people worldwide. Genital herpes is characterized by recurrent painful genital lesions and can be transmitted to sexual partners even when there is no sign of the infection. Current genital herpes therapies only partially control the infection in some patients who continue to experience clinical symptoms and viral shedding, which drives disease transmission. In complete control of genital lesions, transmission risk and the inconvenience of taking a daily medicine are hurdles for effective long-term disease management. Through the profile that emerged from our Phase 1/2a trial, we believe GEN-003 offers a strong value proposition to patients, physicians and payers, and represents a greater than $1 million potential revenue opportunity in the U.S. alone. This January we announced the completion months ahead of schedule of enrollment in our Phase 2 dose optimization trial for GEN-003. Later this quarter, we expect to report the viral shedding and genital lesion rate changes from baseline for each dose group for the 28-day monitoring period after vaccination. The goal of this trial is to explore and justify the protein and adjuvant dose for Phase 3. The study enrolled 310 subjects at 17 institutions across the U.S. Subjects were randomized into one of six dosing groups of either 30 micrograms or 60 micrograms per antigen paired with one of three adjuvant doses, 25 micrograms, 50 micrograms or 75 micrograms. A seventh group received placebo. Note that the 30 micrograms per antigen and 50 micrograms of adjuvant dose which was the best performing dose group in the previous clinical study increased this study. Subjects received three doses of GEN-003 or placebo at 21-day intervals. Positive results would enable us to advance the optimal dose of GEN-003 into further clinical trials. And we expect to conduct our End of Phase 2 Meeting with the FDA in the middle of next year 2016 assuming positive results and to commence Phase 3 trials for GEN-003 in early 2017. I will now turn to our second lead candidate GEN-004 which is designed to prevent infections by all serotypes of pneumococcus, a major cause of infectious disease related deaths worldwide. Current pneumococcal vaccines drive a greater than $5 billion global markets but are only effective against a small number of historically the most prevalent serotypes of pneumococcus Their effectiveness against these serotypes is driving so called serotype replacement in which types not covered by these vaccines are increasingly responsible for causing pneumococcal diseases. GEN-004 is designed to be a universal vaccine covering all serotypes of pneumococcus thereby potentially providing significant benefits over current vaccines. GEN-004 is using mechanism of action designed to generate a TH17 T-cell mediated immune response preventing or reducing pneumococcol colonization in the nose and throat. This colonization is a necessary precursor to infection caused by pneumococcus. We recently announced that we completed enrollment in our Phase 2a human challenge study for GEN-004 to evaluate its effect on the frequency, magnitude or duration of colonization by pneumococcus in the nasopharynx of healthy adults. We enrolled 98 healthy adults in the trial randomized to placebo or GEN-004 at one site in the U.K. Subjects received three doses of either placebo or GEN-004 at 100 micrograms per protein and 350 micrograms of adjuvant. All subjects are challenged with pneumococcus after the third dose of the assigned treatment and subsequently tested for the establishment of colonization. This study follows positive Phase 1 results demonstrating that GEN-004 met at safety, tolerability and immunogenicity goals including increases in blood TH17 cells. We expect to report top-line data from this trial as I said in the fourth quarter of this year. Now, let me turn to some additional corporate highlights. In March, we closed a public offering of approximately 6.3 million shares of common stock including the exercise by the underwriters of their four over-allotment option. The net proceeds from this offering were approximately $48.4 million. Our strength in balance sheet provides greater flexibility and capital strategy in advance of our clinical milestones and a strong foundation for ongoing BD activities. We also plan to commence two new discovery programs this year to further broaden the sources of value in Genocea. In February, we appointed Michael Higgins to our Board of Directors. Michael is currently an entrepreneur at residence with Polaris Venture Partners and previously served as COO and CFO at Ironwood Pharmaceuticals. His experience in building companies and then bringing products through clinical development to commercialization will be extremely valuable to us. With that, I will now turn the call over to Jonathan, to review our financials.

[Jonathan Poole:]

Thanks, Chip. In today’s press release, we reported cash, cash equivalents and marketable securities at the end of the first quarter were $84.5 million compared to $47.1 million at the end of the fourth quarter of 2014. The increase was due to the offering in March which as Chip said, raise in the proceeds of approximately $48.4 million. R&D expenses for the quarter were $8.5 million compared to $4.4 million for the same period of 2014, reflecting higher personnel costs, the manufacturing and trial costs associated with the continued advancement GEN-003, increased clinical trial cost associated with the ongoing Phase 2 clinical trial of the GEN-004 and increased investment in Genocea’s preclinical pipeline. G&A expenses were $3.4 million for the quarter compared to $2 million for the same period of 2014, reflecting higher personnel costs and increased costs to support Genocea’s operations as a public company. Net loss for the quarter ended March 31 was $12.1 million compared to a net loss of $7.3 million for the same period in 2014. Finally, we believe our current cash position will be sufficient to fund our operating expenses and capital requirements through the third quarter of 2016. I’ll now hand the call back over to Chip.

[Chip Clark:]

Thanks, Jonathan. In closing, we look forward to reporting top-line GEN-003 data shortly. For GEN-004 we remain on-track to report top-line results in the fourth quarter of 2015. And we’re extremely excited about these upcoming data readouts and the overall development of our pipeline of novel vaccine and immunotherapy programs. And look forward to updating you on our progress soon. We would now like to open up the call for your questions. Operator?

[Operator:]

[Operator Instructions]. Our first question is from Ted Tenthoff with Piper Jaffray. Your line is open.

[Ted Tenthoff:]

Great, thank you very much. And congratulations on the success so far this year, I know it’s going to be a busy year with data readout. What kind of preparations are you guys doing for continuation of HSV in terms of assuming a, positive trial readout? What would next steps be? And how ultimately does partnering fit into your larger strategy?

[Chip Clark:]

Thanks Ted for your question. As you said there is much preparation to be done and we are planning for success. We’ve already updated our guidance on when we intend to go into the End of Phase 2 meeting. Previously we had talked about doing so in 2017 but our confidence in the profile has prompted us to invest principally in the manufacturing work that we brought forward that will allow us to get into the End of Phase 2 meeting in the middle of next year. All of this is underlined by our belief that GEN-003 is a program that we can develop and ultimately launch in the U.S. And so, the work that we have been doing both clinically and from a manufacturing perspective reflect that. I think in that context, we have the opportunity built also on the fund-raising that we’ve completed to look at partnering in a very strategic way. We of course are on the radar of companies with interest in infectious disease and immunotherapies. But we would only do a deal or deals that provide the right balance for Genocea of the usual mix, capital capability build-out potential to expand or accelerate the profile of GEN-003. And but if, only when such deals are available to us will we do so. We like that we have the option to hold on to this program for as long as possible in other words.

[Ted Tenthoff:]

Perfect, yes, I agree. I think that’s the way you’ll retain the greatest value. Thanks very much.

[Chip Clark:]

Thanks Ted.

[Operator:]

And again, next question is from Mark Firm [ph] of Cowen and Company. Your line is open.

[Mark Firm:]

And first, in answering the last question, you mentioned you’re planning for success. And can you maybe put some bound on what you’re defining as success?

[Chip Clark:]

Yes, sure Mark. Thanks for your question. Success to us is to replicate the profile from the first study that’s based on the conversations that we’ve had with KOLs as well as the extensive market research that we have done that tell us that the existing profile is quite compelling either as a replacement for oral anti-virals or as potential additive to oral anti-virals for the millions of patients for whom existing oral anti-viral therapy remains at best a partial solution. So, as finding the dose that worked the best in this clinical trial will be the primary outcome and the primary definition of success. The possibility exists that we may see better efficacy emerge but to us that is not something we necessarily need but would obviously be a phenomenal outcome.

[Mark Firm:]

Okay, great. And then on the GEN-004 readout beyond the primary end-point of colonization, you mentioned a handful of things and I think most of what you were mentioning was in the blood. Is there any plan to collect mesocoel samples and look at TH17 there as well as just is there a way to x-EVO analyze the ability to neutralize a wide range of serotypes?

[Chip Clark:]

I’ll start this off and then I’ll hand it over to Seth, Mark. But, you’re right in saying that the primary focus of this trial is to understand if we are having an effect on colonization of pneumococcus in the nose. If we can do so in terms of the frequency, the durability, the magnitude of such colonization, it would be a real breakthrough for the field and therefore very important. But Seth can comment on other things that we might measure.

[Seth Hetherington:]

Right. I mean, ultimately the measure is a reduction of total colonization. As you know, for Prevnar that vaccine has reduced colonization of the serotypes that are represented in the vaccine. But total colonization which is a risk factor for disease has not been reduced. So consequently we think that the measure for success is demonstrating reduction in total colonization, that’s best accomplished in our LAN Pediatric study that would begin next year. Now, along with that we will be exploring other cytokine readouts that might allow us to link TH17 responses to efficacy. But the current tactical limitation that we have is that there is no good way to assess TH17 activation in the nasopharynx mesocoel, it’s just not technically feasible because we’re literally looking for needle in a haystack. Efforts are going on to try to solve that problem but as I mentioned, we’re looking some other methods as well.

[Chip Clark:]

And ultimately this readout of colonization is an end-point that I think the field would understand well and that’s where our primary focus is Mark.

[Mark Firm:]

Okay. And then, finally just a housekeeping. Moving on the Hercules line, there was another traunch, $5 million traunch that was available up until June. Have you guys drawn on that and if not, are you planning to tap that?

[Jonathan Poole:]

Hi Mark, we’ve not drawn on that traunch. We like the fact that that flexibility remains from a capital strategy perspective. And we’ll be assessing whether or not to draw that traunch over the time between now and when our option to draw that traunch lapses.

[Mark Firm:]

Okay, thank you.

[Chip Clark:]

Thanks Mark.

[Operator:]

Next question is from Stephen Willey of Stifel. Your line is open.

[Unidentified Analyst:]

Good morning, this is Prakar [ph] on for Steve today. Thank you for taking the questions. So on GEN-003 I just wanted to know if you have any regulatory feedback on a path forward in HSV-1 if you can combine, if you can do one trial to combine both HSV-2 and HSV-1 if you can comment on that.

[Chip Clark:]

Prakar [ph], thanks for the question. I will turn that over to Seth.

[Seth Hetherington:]

Yes, it’s a very good question. You may know that recently we have had some presentations in scientific meetings demonstrating the neutralizing antibodies we generate with GEN-003 are active against both HSV-1 and HSV-2. So, that combined with what we know about the commonality between two strains, bridged by our antigens lead us to believe that it will be effective against HSV-1. We’ve not had specific discussions with the agency on how to achieve that. And just basically watch the space it is an area that we think is important. And we have again confidence that at the end of the day, this vaccine will be applicable to both serotypes. But how we get there I think is a matter of discussion with the agency we’ve not had those discussions yet.

[Chip Clark:]

It’s a natural question to be asking in the End of Phase 2 meeting for example as we plan Phase 3, Prakar.

[Unidentified Analyst:]

Okay. And one more question on 003, you previously indicated that you’ll move into the next file once you have 20-year data from the dose optimization trial. Would you also include a booster dose in the trial or you would need to see six-month and 12-month time points data for that?

[Chip Clark:]

Well, what we said is that it’s in future trials that we might explore the booster dose. I think we need to see something about the durability in the current study before we made definitive call about when exactly we would do it. But I don’t know Seth, if you have additional comments?

[Seth Hetherington:]

Yes, expand on that until we know what the best dose is, we really don’t know what the total durability is. We know that we have durability after six months and that is a very attractive profile for physicians and patients, if we can improve on that that’s a huge upside. We won’t know the answer to that until later on in the current clinical trial. However, we do believe we can start subsequent trials knowing what the early data is from our current trial and that will allow us to select the best dose and then go on with additional studies beyond that. But the application booster dose is still going to be an empirical activity but we believe that we will be able to get there.

[Unidentified Analyst:]

Okay. And just lastly, last year you announced a collaboration with Dana-Farber do you have any update on that or when might we see data from that collaboration?

[Chip Clark:]

That continues to progress Prakar, thanks for the question. And when we have something that we can announce we certainly will do so.

[Unidentified Analyst:]

Okay, thank you.

[Chip Clark:]

Thank you.

[Operator:]

Thank you. [Operator Instructions]. Next question is from Alan Carr of Needham. Your line is open.

[Alan Carr:]

Hi, thanks for taking my questions. I guess, can you give us an update on the planning and time around the dose regimen trial? And then also on Phase 3 start, you mentioned 2017 is a bit of a gap from the End of Phase 2 meeting. I wonder if you could comment on that. And then, also can you give us any insight on the discovery programs, which pathogens you’re looking at? Thanks.

[Chip Clark:]

So, let me take the questions and somewhere reverse order Alan, thanks for the questions. The discovery programs when we have selected them we will certainly expect to share the rationale and the path forward. Regarding GEN-003 and the start of the next study, I think obviously it depends on the, what we see in the ongoing 002 study but we believe that the next study would likely start in Q4, I think that’s been consistent with our guidance. And maybe Seth, speak to the six months between end of Phase 2, six month-ish between end of Phase 2 and?

[Seth Hetherington:]

Sure. When we set out our development plan, we use certain criteria for establishing what intervals are. I think if you look historically at any development program, six months between end of Phase 2 and start of Phase 3, it’s pretty typical. You have to have agreement with the FDA, what the end-point is going to be, what the analysis plan is going to be. Finally what the safety database is going to look like, we have estimates for all of those. But until we have more specifics which won’t be defined until we get data from our current trial, it’s tough to call it anything other than what is usual and customary for an interval between end of Phase 2 and start of Phase 3.

[Chip Clark:]

Yes. And I’m remind you Alan, and I know of course you appreciate this that when you’re in Phase 3, you’re typically wanting to use the manufacturing process that you would use as commercial scale which is a considerable investment and we would not want to fully undertake that I would say until we have clarity on exactly the topics that Seth mentioned from our End of Phase 2 meeting.

[Alan Carr:]

Okay, thanks very much.

[Chip Clark:]

Thank you, Alan.

[Operator:]

Next question is from Christopher James with FBR & Company. Your line is open.

[Christopher James:]

Hi, good morning and congrats on your progress this quarter, and thanks for taking my questions. First question on GEN-003, just given the results seem with the 30 microgram dose. Do you expect the higher adjuvant to drive the incremental efficacy or the higher 60 microgram dose? I’m just trying to understand what could potentially drive incremental efficacy, the dose or the adjuvant.

[Chip Clark:]

Christopher thanks for the question. I think I would say generally that the reason we’re doing the trial is to learn these answers, it’s always risky to extrapolate from animal models. And so I think it would be hard to speculate whether one or the other or the combination would be a potential driver of efficacy but I would simply reinforce that showing the same profile that we saw in the first study would be a phenomenal outcome for us.

[Christopher James:]

Okay, great. Thank you. And then, just a second question, are there any observational data to correlate shedding rate and lesion rate with reduction in rate of transmission, is that something that the FDA is interested in seeing or are they satisfied just with shedding and lesion rate?

[Chip Clark:]

Seth.

[Seth Hetherington:]

Yes, through the transmission there has been no data generated by anybody indicating what level of shedding corresponds to some risk of transmission, measurable risk. And you can probably guess the complications of how that will be hard to really discern. But as a general rule, it makes sense that if you shed at a higher rate or high frequency or both that you’re more likely to transmit. This program will probably be one of the first to collect some data that may solve some of those questions. But that’s going to be a long-term question. And we don’t expect it to be answered with our initial PLA.

[Christopher James:]

Great, that’s helpful. And then maybe just a quick follow-up to that. Are you, are there any plans to do a vertical transmission rate in pregnancy or is that something that you would explore with a partner?

[Seth Hetherington:]

That’s a fabulous question and something we thought about. Again, that’s not something that we anticipate would happen during our current development program into the initial PLA, but it’s something with which we have a high degree of interest and many others as well, many physicians out there introduced in this problem. It’s something that needs further discussion and there is just no information right now to share.

[Christopher James:]

Great. That’s helpful. Congrats again and look forward to the data.

[Chip Clark:]

Thank you, Christopher. I appreciate your questions.

[Operator:]

Thank you. No further questions. Thank you for joining us today. You may now disconnect.

[Chip Clark:]

Thank you all.