Genocea Biosciences, Inc.
Q3 2014 Earnings Call Transcript

Published: 6 Nov 2014

[Operator:]

Good morning and welcome to the Genocea Third Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open 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 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 third 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'm happy to say that in the third quarter we continued to advance our product candidates on schedule and received further external validation both for the promise of these product candidates and for our unique ATLAS platform. All of this reflects the power of the ATLAS discovery platform to discover rapidly novel targets which directs T-cell responses rapidly creating novel products for patients and the healthcare providers who need them. Let me give you more details starting with GEN-003, our first in class immunotherapy candidate for the treatment of patients with genital herpes, an incurable sexually transmitted disease. Several million people with genital herpes infections in the U.S. remain underserved by current treatments which only partially controls symptoms and disease transmission arrest. For patients living with the disease, GEN-003 may represent a welcome treatment option. We recently completed our Phase 1/2a clinical trial and presented them at the IDV 2014. In this remarkable first in man study evaluating GEN-003 in 143 subjects, GEN-003 demonstrated a sustained statistically significant and clinically meaningful impact on symptoms as measured by genital lesion rate or the days with visible lesions present. At six months after dosing, the legion rate was 55% less than baseline in the best performing dose. At 12 months this legion rate was 42% less than baseline in the same dose group. We believe that the magnitude and durability of clinical responses seen in this study are first in the field of genital herpes immunotherapy and would represent a clinically and commercially attractive product profile. GEN-003 also achieved the more typical Phase 1 goals of demonstrating broad immunogenicity and acceptable tolerability. In July, we initiated a 300-patient Phase 2 dose optimization trial to confirm the Phase 1/2a efficacy of the top performing 30 micrograms per protein, 50 micrograms of adjuvant dose and to explore additional combinations of protein and adjuvant that may provide even greater magnitude or durability effect on genital lesions and viral shedding rate. I'm pleased to report that the enrollment is progressing very well for this trial. I believe this reflects the strength of the data we presented from the Phase 1/2a trial, the desire and motivation from the patient and physician community for new therapy for genital herpes and definitely the effectiveness of our clinical team and our partners. We plan to report top line data following the completion of the treatment phase of this trial in the middle of 2015. In September, we announced the publication of a paper on our HSV-2 antigen discovery program in the peer reviewed journal virology. This paper describes how we used our ATLAS platform to identify the antigens for GEN-003. It confirms that the ATLAS platform can rapidly identify novel targets which drive protective T-cell responses unlocking the path to developing new vaccines in immunotherapies for previously intractable diseases. Let me turn to GEN-004, which is our vaccine candidate designed to prevent infections from all serotypes of pneumococcus, a major infectious disease related – a major cause I should say of infectious disease related to deaths worldwide. Current pneumococcal vaccines drive $5 billion global market, but are only effective against around 15% of the strains of pneumococcus. Their effectiveness against these strains is driving so called serotype replacement whereby strains not covered by these vaccines are increasingly responsible for causing pneumococcal disease. GEN-004 has been designed to be a universal vaccine covering all serotypes of pneumococcus thereby potentially providing great benefits over current vaccines. Our novel approach was GEN-004 as to prevent colonization by pneumococcus in the nasopharynx by stimulating so called T helper 17 or TH17 cells, a rare type of T-cells that clears pneumococcus from the nasopharynx. Colonization in the nasopharynx is the first and necessary step prior to the development of pneumococcal infection. Therefore, GEN-004 is designed to work upstream and independently of the existing vaccines. We believe that GEN-004 is the only T-cell directed pneumococcus protein sub-unit vaccine currently in development. In September, we initiated a planned Phase 1/2a human challenge study for GEN-004 to demonstrate that the vaccine can reduce colonization by pneumococcus in the nasopharynx of healthy adults. The trial will enroll approximately 90 healthy adults randomized to 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, the best dose from our previously reported successful Phase 1 trial. We plan to report top line results from this trial in mid-2015. In September, we also presented the safety and immunogenicity data from that Phase 1 trial in a poster presentation at ICAAC. Turning to other corporate milestones, in September, we received a $1.2 million grant from the Bill & Melinda Gates Foundation to continue funding our Malaria Vaccine Discovery Program. This grant extends our existing collaboration through 2015 and supports comprehensive screening of the malaria proteome to identify targets of protective T-cell responses. Also in September, we welcomed Ken Bate to our Board of Directors; drawing on Ken's deep experience both within and on the Board's of successful biotech companies will be invaluable to us as we pursue our mission to advance life changing medicines through the clinic and on to the market. With that, I will now turn the call over to our CFO, Jonathan Poole to review our financials for the quarter.

[Jonathan Poole:]

Thanks Chip. In today's press release we reported cash at the end of the third quarter at $52.2 million compared to $59.2 million at the end of the second quarter. R&D expenses this quarter was $6.1 million compared to $3.3 million in the third quarter of 2013 reflecting high personnel costs and a continued advancement of both our clinical programs into Phase 2 trials. G&A expenses were $2.8 million for the third quarter of 2014 compared to $1.4 million in the same period of 2013 reflecting additional personnel costs and decrease costs of both the public company operations. Net loss for the third quarter was $9.2 million, compared to a net loss of $4.8 million for the third 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:]

In closing we are making great progress on all fronts and I'm particularly delighted to have been able to report the rapid enrollment of our Phase 2 dose optimization trial for GEN-003. We look forward to updating you further as we continue to execute on the programs that we have outlined and work toward harnessing the power of our transformational discovery platform to create immunotherapies that directs T-cell responses against serious diseases. So with that, I would like to open up the call to questions. Operator?

[Operator:]

Thank you. (Operator Instructions) And our first question or comment comes from the line of Phil Nadeau with Cowen and Company. Your line is now open.

[Phil Nadeau:]

Good morning. Thanks for taking my question. Just first on GEN-004, could you give us some sense of what you would consider positive proof of concept data to come out of the challenge study, what type of magnitude decrease in infection rates or duration of infection which would service as fellow data set for you?

[Chip Clark:]

Thanks Phil. Let me turn this over to Seth to answer the question for you.

[Phil Nadeau:]

All right.

[Seth Hetherington:]

We see success in the current trial as being able to demonstrate a statistically significant reduction in magnitude or duration or frequency of colonization by pneumococcus. You will recognize colonization is a necessary precursor to infection. So the ability to impact that through TH17 mechanism is very powerful proof of concept. Can't give you a specific number because this is a model, but I think any indication that we are reducing colonization are having an impact is very powerful information and will really allow us to move forward with that program.

[Phil Nadeau:]

Okay. That's very helpful. And then second just on the ATLAS discovery platform. Are you currently implying it to try to identify the next generation of clinical candidates or do you feel like your plate is full now and you need to stick with 003 and 004 maybe once dose – live further long in development, you can move something else into the clinic?

[Chip Clark:]

Thanks Phil. So certainly GEN-003 and GEN-004, we think are very much worthy of the substantial effort we are putting behind each given that they are addressing major unmet needs and we think that they are each first in class. But, we are continuing to work on the next generation of candidates not just the malaria program that we mentioned earlier, but we have Chlamydia program and herpes prophylaxis program both of which – for both of which we have animal proof of concept already. And I think it is desirable to advance another one or both of those to the clinic in the next few years. We're also regularly evaluating the possibility whether on our own or with potential partners to start other programs as well. So we certainly believe that ATLAS can enable us to continue to create a sort of a regenerating self-free generating pipeline of novel candidates.

[Phil Nadeau:]

Great. Thanks for taking my question.

[Chip Clark:]

Thank you.

[Operator:]

And our next question or comment comes from the line of Jonathan Eckard with Citi. Your line is now open.

[Jonathan Eckard:]

Good morning. Thanks for taking the question. My main question on GEN-004 and I was wondering if you could either refresh your memory about what existing preclinical data that you have or potential data that could be collected either in vitro or in vivo, that could test what breadth of GEN-004 effect could be on different streams of pneumococcus?

[Chip Clark:]

So thanks, Jon. You understand that the proposition of GEN-004 is to be a universal pneumococcal vaccine. We have some data from animal and bioinformatics streams that give us confidence of this. And first of all, of course appreciate that we designed GEN-003 using the ATLAS platform meaning that human TH17 responses were important for picking these antigens. But, we have done the analysis to determine that these – each of these proteins is conserved across all sequenced serotypes of pneumococcus. And we have tested these proteins single or in combination against several streams of pneumococcus and in several different types of mouse models, which again gives us some confidence that that there will be a breadth of activity. More importantly of course will be human data which we expect to start to generate in this ongoing challenge study.

[Jonathan Eckard:]

And great, thank you. And then I'm just – I'm not sure that's completely different approach but your partner for your novel metrics M adjuvant Novavax has produced some data in some of their vaccine candidates highlighting the strength of that adjuvant in their different trials. Is there any takeaways that you could use from this that apply to maybe the programs that you plan on using this adjuvant M?

[Chip Clark:]

I'm going to ask Seth – sorry. I will just have Seth answer that question Jonathan.

[Seth Hetherington:]

It's a very good question. We have excellent communications and an excellent working relationship with Novavax and we share a safety data which is probably the most relevant information for our program. It's not the same antigens obviously, but anything that they generate such as their recent flu data and a study of about over 600 subjects which showed a good safety profile that certainly gives some comfort to the metrics and versions that we are using. Efficacy and the ability to generate T-cell responses also works both ways, so it's all been very helpful and I think it strengthens our program.

[Jonathan Eckard:]

Great. Thanks very much for taking the questions.

[Chip Clark:]

Thank you, Jonathan.

[Operator:]

And our next question or comment comes from the line of Alan Carr with Needham. Your line is now open.

[Mark Vignola:]

Hi, guys. This is actually Mark on for Alan. Thanks for taking our questions. I was just wondering if you were expecting any updates from either the GEN-003 or GEN-004 program sort of between now and middle of next year when we expect to see data.

[Chip Clark:]

Thanks Mark. So we certainly aren't planning interim analyzes, but certainly as we have meaningful things to report such as completion of enrollment and events such as that we would plan to update you.

[Mark Vignola:]

Great. And I just want to piggyback off on Jonathan's question although I know you guys say that you have data to support that you think you are going to be sort of pan-serotype for GEN-004. In order to make that claim you're pan-genotypic, what you guys see happening inside the clinical trial you just – is it just sort of enroll people with all genotypes or serotypes rather, how you see that being structured to be able to make that claim.

[Chip Clark:]

Yes. That's a great question, Mark. Let me hand it over to Seth.

[Seth Hetherington:]

I believe that the preclinical data we have so far is sufficient to go to the next level of evidence for the universal applicability of our vaccine. But that means is that, following our current trial which is a challenge model replicating potentially the animal data that we have already generated. We would go to a highly colonized population and look for the ability of the vaccine to impact total colonization. You may know that with the introduction of Prevnar there has been serotype shift and the total amount of colonization among high-risk population remained relatively unchanged. And until there is a strategy to reduce total colonization, we think there will always be the risk of pneumococcal invasive disease as well as localized disease. So our next step following the challenge study would probably be going into a pediatric population which is the ultimate target population and who have a high level of colonization across a wide variety of streams some including – including some of those that are in Prevnar, but these days primarily colonization is occurring with non-vaccine serotypes. So that really is the next step.

[Mark Vignola:]

Great. Thanks very much for taking my questions.

[Chip Clark:]

Thanks Mark.

[Operator:]

(Operator Instructions) And our next question or comment comes from the line of Stephen Willey with Stifel. Your line is now open.

[Stephen Willey:]

Yes. Good morning guys. Just with respect to GEN-003, I know there has been some kind of competitive chatter out there with regard to potentially kind of fast tracking Phase 1, Phase 2 data kind of into a Phase 3 program. And I'm just kind of wondering if – based on your regulatory conversations to-date, if that's kind of something that you would deem to be I guess possible or reasonable just based on FDA interactions? Thanks.

[Chip Clark:]

Thanks Steve. We won't – we don't think it's necessarily appropriate to comment on somebody else's program directly we don't have the information about their program that they have. But I can tell you that we designed our program with what we think is an appropriate balance of speed and risk mitigation. We want to understand as much as possible about dose – adjuvant dose, dose regimen, manufacturability of the final product et cetera before entering pivotal studies. So we are attempting to check-off as many of those boxes as possible. But, of course, the more we learn about GEN-003 including potentially the results of the ongoing dose optimization study those are inputs that can influence our ability to potentially compress the timeline. But for now, we are very comfortable with our strategy.

[Stephen Willey:]

Okay. And then just – maybe just as a follow-up, I guess with respect to I guess endpoint selection on the shedding front is it – as the agency kind of pointed you towards longer duration data i.e., on the order of 3 to 6 months or is something kind of less than 3 months been – I guess “adequate” from a regulatory perspective in terms of future endpoint of the pivotal study? Thanks.

[Chip Clark:]

Let me give you a commercial answer and then I have Seth give you a regulatory answer if I may. We've done as I think you know Steve substantial market research with theoretical profiles and actual profile of GEN-003 testing these types of things with patients and physicians and what we have heard consistently is that adorable response is something that's going to be off importance. And so that's why we are excited about the six months data and the 12 month data that we have generated thus far with GEN-003. So we think there is some durability is going to be important but I can have Seth speak to the specific conversations that we had with the agency.

[Seth Hetherington:]

Right. So the issue on durability of response really buds up against what's the clinical utility of any immunotherapy such as GEN-003. That's generally not a question or an issue that's discussed with the agency upfront, but I can become an advisory committee discussion point as to what is clinically relevant. We feel confident that we have already passed that point having six month durability. We think that as Chip as pointed out represents something that is attractive to physicians, they would find it useful. Patient would find it compelling. So I think we are beyond that point. The issue really is to come as to what about booster doses as we've mentioned before. The booster doses and the ability to maintain response over a prolonged period of time something that's going to be tested in future clinical trials. Once we have the optimal dose and the optimal dose regimen. So we think this is less of a critical issue at this point in time. And again, we think we have already passed the hurdle or the bar for establishing a relevant durability effect.

[Stephen Willey:]

Okay. Thanks guys.

[Chip Clark:]

Thanks Steve.

[Operator:]

And I'm showing no further questions or comments at this time. So with that said, I would like to turn the call back over to Chip for any closing remarks.

[Chip Clark:]

My closing remark is simply to thank everybody for your attention and for the questions. We look forward to continuing the dialog on the advancement of what we continue to think is a very important set of first class products. Thank you everyone.

[Operator:]

Ladies and gentlemen, thank you for joining us today. You may now disconnect.