Genocea Biosciences, Inc.
Q2 2014 Earnings Call Transcript

Published: 6 Aug 2014

[Operator:]

Good day ladies and gentlemen. Welcome to the Genocea Second Quarter 2014 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 Deanne Tockey, of Stern Investor Relations. Please proceed.

[Deanne Tockey:]

Thank you, operator. Good morning. This is Deanne Tockey with Stern Investor Relations and welcome to Genocea's second quarter 2014 financial and operating results conference call. This morning, we issued a press release which outlines the topics that 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 will review anticipated upcoming milestones, and then we will open up the call for your questions. Seth Hetherington, Genocea's Chief Medical Officer is also with us today for the Q&A. Before we begin, I'd 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 2013 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 Deanne and good morning everyone. I am very pleased with our progress this quarter. We reported positive results from both clinical stage programs, each derived from our proprietary ATLAS platform, and we remain on track to advance these programs as planned. We announced 12-month follow-up data from our Phase 1/2a trial for GEN-003, our first-in-class immunotherapy candidate, for the treatment of patients with herpes simplex virus-2, an incurable sexually transmitted disease that affects over 500 million people worldwide. Building on the six months data we reported previously from the study, which showed statistically significant reductions from baseline, in both the viral shedding rate, and the genital lesion rate for the 30 microgram dose group. 12 month follow-up data showed that GEN-003 remained safe and well tolerated, and had a durable effect on the genital lesion rate at 12 months following dosing, with a 42% reduction from baseline. Jess Flechtner, our SVP of Research, recently presented immunogenicity data from this trial at the 39th Annual International Herpes Virus Workshop. The data showed the same 30 microgram dose, more than 90% of subjects demonstrated vaccine induced T-cell responses that remain significantly elevated above baseline, even 12 months after treatment. We believe that the magnitude and durability of clinical and immunological responses seen in this study are first in the field of HSV-2 immunotherapy. I am pleased to note, that we have accepted an invitation to show the final data from this Phase 1/2a trial and an oral presentation at the Infectious Disease Society of America or IDSA's ID week in October. Recently, we initiated our plan to Phase 2 dose optimization trial for GEN-003, to confirm the Phase 1/2a efficacy of the 30 microgram dose, and to explore additional combinations of protein and adjuvant, that may provide even greater magnitude of durability of effect on viral shedding and genital lesion rates. This trial will enroll approximately 300 subjects in the U.S., and will study six combinations of two antigen doses with three adjuvant doses, alongside of placebo, including the previously successful 30 microgram protein, 15 microgram adjuvant dose. The primary endpoint for this study has changed from baseline and viral shedding rate, and it will also evaluate the impact on the percentage of days with genital herpes lesions, as reported by patients. We expect to announce initial results from this study in mid-2015. Let me turn to GEN-004, which is our oral vaccine candidate, to prevent infections from all serotypes of pneumococcus, a major cause of infectious disease related death worldwide. This matters, because currently available pneumococcal vaccines are directed toward the minority of more than 90 known serotypes of pneumococcus, and yet drive a $5 billion global market. GEN-004's novel approach is to prevent colonization by pneumococcus in the nasopharynx, by stimulating T helper 17 or TH17, a rare type of T-cell that provides immunity against all pneumococcal serotypes, at epithelial and mucosal surfaces. Colonization in the nasopharynx is the first and necessary step to the development of pneumococcal infection. So GEN-004 is therefore designed to work upstream and independently of conventional vaccines. In June, we announced positive top line results from a Phase 1 study, which showed that GEN-004 is safe, well tolerated, and met its immunogenicity goals including measurable increases in the blood of TH17 cells. We will present the initial safety and immunogenicity data from this trial in a poster presentation at ICAAC in September. Building off these results, we plan to initiate a Phase 2a human challenge study for GEN-004 this quarter, to demonstrate that the vaccine can reduce the magnitude and frequency of colonization by pneumococcus in the nasopharynx of healthy adults. We plan to enroll approximately 90 healthy adults, randomized placebo or GEN-004. Subjects randomized to GEN-004 will receive three doses at one month intervals of 100 micrograms per protein and 350 micrograms of alum. For this trial too, we plan to report initial results in mid-2015. With that, I will now turn the call over to Jonathan Poole, to review our financials.

[Jonathan Poole:]

Thanks Chip. In today's press release, we reported cash at the end of the second quarter of $59.2 million, compared to $65.8 million at the end of the first quarter. Our expenses in the quarter, for R&D, were $4.6 million compared to $4.1 million in the second quarter of 2013. This increase was largely due to higher R&D personnel costs, including increase in stock based compensation, and an increase in GEN-003 external costs related to the recent initiation of the Phase 2 dose optimization trial and the manufacturing material of clinical trials. We also [indiscernible] for GEN-004 this quarter, which was primarily related to lower manufacturing costs compared to last year. G&A expenses were $2.4 million in the second quarter of 2014, compared to $0.9 million in the same period of 2013, and this increase is largely due to additional personnel costs, including increases in stock based compensation, and increased costs of poor public company operations. Net loss for the quarter was $7.1 million, compared to net loss of $5 million for the second quarter last year, and finally, we remain well capitalized and believe we have sufficient cash to fund our operating expenses and capital expenditure requirements, until at least the end of 2015. I will now hand back over to Chip.

[Chip Clark:]

Thanks Jonathan. Let me close by reminding you of the value generating milestones we expect over the coming months. We plan to initiate the Phase 2a human challenge study for GEN-004 this quarter as previously mentioned, to demonstrate a reduction of colonization by pneumococcus in the nasopharynx of adults. We will present initial data from the GEN-004 Phase 1 trial and a postern presentation at ICAAC in September. We will present data from the GEN-003 Phase 1/2a trial in an oral presentation at IDSA's IDWeek in October, and by the middle of next year, we expect to have results from both, the Phase 2 dose optimization study for GEN-003, and from the Phase 2a human challenge study for GEN-004. We would now like to open up the call for your questions. Operator?

[Operator:]

Thank you. (Operator Instructions). Our first question is from Phil Nadeau of Cowen and Company. Your line is open.

[Phil Nadeau:]

Good morning. Thanks for taking my questions. First, Chip, just a general question on 003 data there, we saw the 12 month data. The symptom improvement at 12 months was persuasive, but there was a bit of a fall off in the impact of viral shedding. How do you rectify those, how can you continue to have an impact on symptoms, even though the viral shedding impact was somewhat less?

[Chip Clark:]

Thanks for the question Phil. Seth's here, and I will ask Seth to address that question.

[Seth Hetherington:]

Sure. Phil, this was not unexpected, the same pattern has been seen in numerous animal studies. Remember that there are different triggers for symptoms, as there are for decreases in viral shedding. So viral shedding is controlled by any viral cytokines, and the symptoms themselves are a reflection of the inflammatory response due to inflammatory cytokines. So it's not unexpected, and we may see this pattern in the future, and it may change, as we test some additional doses in the next study.

[Chip Clark:]

Let me just reinforce, excuse me Phil, that from our market research, polling both physicians and patients, we believe that even six months -- every six months of dosing, with the efficacy profile that we have demonstrated thus far would be quite compelling to both audiences.

[Phil Nadeau:]

Okay. On the doses that you're testing in this new trial, is there any preclinical trial, or any way to kind of predict which doses or combinations maybe more effective, or is it -- you just have to kind of put in people and see what happens?

[Seth Hetherington:]

Yeah, there are no models that allow us to scale up to human doses, so it is an impaired finding. The good news is that we found an exceptionally good dose on our first clinical trial, so we can build around that in this study, by first testing that dose, in combination of protein and Matrix-M management, and then bearing both the Matrix-M management and the antigen, in combinations around that anchored dose.

[Phil Nadeau:]

Okay. And the data we get next year, is that three month data or six month data, midyear next year?

[Seth Hetherington:]

It's going to be data that is obtained, basically three months. It looks like shedding over a period of 28 days immediately following the third dose of vaccine.

[Phil Nadeau:]

Okay. And how long would you be following the people in total, will it go out to 12 months?

[Seth Hetherington:]

It will go out to 12 months. We will follow patients out to 12 months in the second study in a similar manner as we did with this last study.

[Phil Nadeau:]

Okay, great. And then one last question that's on the 004 challenge study. How will you define success in that trial, what decrease in magnitude or frequency of colonization would be persuasive?

[Seth Hetherington:]

I think in general that we have to look at the magnitude of the reduction, as well as the frequency of the reduction. So I hesitate to hit a number on there, but I think it’s the data in aggregate that we will assess. But clearly, we want to see a reduction overall in the frequency of colonization, we will also look at the magnitude as well.

[Phil Nadeau:]

Okay, good. Thanks for taking my questions.

[Seth Hetherington:]

Thanks.

[Operator:]

Thank you. And next question is from Jonathan Eckard of Citi. Your line is open.

[Jonathan Eckard:]

Thanks guys for taking the questions, and I want to thank Phil for asking all the good ones for me. Anyways, I have been juggling between calls, so I apologize if you addressed this, but when would be the first time you could potentially see boosting data for 003, mainly, how much of an impact the second quarter of dosing or boosts -- how much of an impact both shedding and symptoms could have? When can be the first time we have that, and then with regards to 004, maybe if you could talk about some of the other parameters outside of -- just reduction in colonization from that initial data, that could be quite telling on, what the vaccine is actually doing with regards to again, the T-17 cell population. What are some of the other endpoints that will be crucial from at least your point, about the [indiscernible]?

[Chip Clark:]

Jon, this is Chip. So we actually have not addressed the booster question. You didn't miss that. I will first reiterate that, we think that even if we were dosing at every six months, the proposition of GEN-003 would be attractive. The purpose of the next trial is to find the right next dose, the right dose, which could be even better performing than this 30 microgram dose from the first study. I think we would start to evaluate boosters after that, because it could be that, when I say better, the outcome could be even greater durability of response, and/or increased efficacy.

[Seth Hetherington:]

Yeah I think that's exactly right. We really can't begin to address the booster dose, until we know what the optimal dose and what the durability of that dose is, then we can consider what the interval might be between the primary series of immunizations and booster doses. So its going to be the pure finding, but again as Chip said, we are off to a good start, and we hope to improve on the profile we have currently in the next study. Your second question was about other endpoints for the human challenge pneumococcal vaccine study. In addition to looking at impact on the frequency of colonization and magnitude of colonization, obviously we will be looking at safety, which is always an ongoing theme in the clinical development program, but we are also investigating additional ways to look at TH17 responses. You know, that we measure TH17 responses in the blood of the first study. We are very interested in what's happening in the nasopharynx, and we are looking at some ways to explore that. We are also looking in an exploratory manner at other related cytokines that might be important for the control of colonization.

[Jonathan Eckard:]

That's great. Thanks so much for answering the questions.

[Chip Clark:]

Thank you, Jon.

[Operator:]

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

[Stephen Willey:]

Hi. Thanks guys. I know in the 12-month presentation for GEN-003 that was recently made, it looked like there was a fairly substantial impact in terms of HSV-1 sero status on the B-cell antigen targeting IGT responses, and I am just wondering if that's something that you would now subsequently plan to stratify for, as you think about initiating this next iteration of dosing cohorts?

[Chip Clark:]

I think you're referring to the immunogenicity data from IHW that are available on our web site. I will have Seth address that point.

[Seth Hetherington:]

I think it's an interesting finding. It needs to be repeated with regard to what the impact is. I don't believe that stratification is necessary, because we don't see an impact on viral shedding or on lesion rates, according to HSV-1 sero status. So it's just an interesting finding. We will follow-up on it. But currently there is not plans to require stratification.

[Chip Clark:]

In fact Steve, its likely that in the future, we will study GEN-003 in the HSV-1 genital herpes population. We have theoretical reasons for believing reinforced by this immunogenicity data, that our vaccine could provide relief in that population as well.

[Jonathan Eckard:]

Okay. Interesting. And then on GEN-004, I know you talked about TH17 and I think we have maybe previously talked about some of the assays out there to detect the TH17 cells systemically are a little bit, or maybe not so sensitive, and I am just wondering if that sensitivity improves when you're trying to measure TH17, the intranasal swaps? Thanks.

[Seth Hetherington:]

We are working on a methodology to be able to study TH17 responses in the nasopharynx. But currently, there is no assay that has been developed to do so. Its not sensitive enough. You can't get enough cells. So we are working on that.

[Chip Clark:]

As in many other ways Steve, Genocea is pioneering T-cell immunology.

[Jonathan Eckard:]

Perfect. Thank you guys.

[Operator:]

(Operator Instructions). Next question is from Alan Carr of Needham and Company. Your line is open.

[Alan Carr:]

Hi. Thanks for taking my questions. While looking beyond GEN-003 and GEN-004, can you give us an update on prioritization of earlier stage programs?

[Chip Clark:]

Sure Alan. We have a couple of additional programs in preclinical development, the Chlamydia program and the HSV-2 peripheral access, or sometimes we call it internally, 2.0, each of these is -- in preclinical development, each, we have some animal proof of concept, indicating that we are on the right track. And so, I would say that for now, those are the two candidates for next -- for being the next to enter into the clinic. But of course, you are aware of our efforts in malaria, and more recently announced in oncology that are of interest and we intend to advance as well.

[Alan Carr:]

All right. And then I guess, coming back to GEN-004, any planned meetings with the FDA around either one of those programs at this point or?

[Seth Hetherington:]

We always have submission of ongoing information of the FDA. Study reports, updates on manufacturing, we occasionally float a question or two to them if we need some clarification, but we have no requirement or need for a meeting in the immediate future. You know, that we have had meetings in the past. We have recently, as of last December, had an overview of our program with them, to make sure that we are on track, and we do believe that we are on a correct path to approval. But we don't have any specific questions at this point, that would require a meeting with them.

[Alan Carr:]

All right. Thanks very much.

[Chip Clark:]

Thank you, Alan.

[Operator:]

Thank you. There are no further questions at this time. I will turn the call over to management for any closing remarks.

[Chip Clark:]

Thank you all for your continued interest, and your great questions. We look forward to updating you in the near future.

[Operator:]

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