ImmunoGen, Inc.
Q1 2017 Earnings Call Transcript

Published: 5 May 2017

[Operator:]

Good day, everyone, and welcome to the ImmunoGen First Quarter 2017 Financial Results Conference Call. Today’s call is being recorded. And at this time for opening remarks and introductions, I would like to turn the call over to Monique Allaire with Thrust Investor Relations. Please go ahead.

[Monique Allaire:]

Thank you and good morning, everyone. Earlier today we issued a press release that includes a summary of our recent progress and our financial results for the quarter ended March 31, 2017. The press release and a recording of this call can be found under the Investor section of our website at immunogen.com. With me today are CEO, Mark Enyedy; and CFO, Dave Johnston. Anna Berkenblit, Chief Medical Officer; and Rich Gregory, Chief Scientific Officer, will join us for the Q&A session. During today’s call, we will make forward-looking statements and our actual results may differ materially from such statements. Descriptions of the risks and uncertainties associated with an investment in ImmunoGen are included in our SEC filings. With that, let me turn the call over to Mark.

[Mark Enyedy:]

Thanks, Monique. Good morning, everyone, and thank you for joining us today. We will start the call this morning by briefly reviewing our progress with the business over the last quarter, providing an update on our portfolio, and highlighting some of our upcoming milestones. Dave will then cover our first quarter financial results, and we’ll conclude by opening the call for questions. Beginning with our operational performance to start the year, we’ve made significant progress towards the strategic priorities we set for the business with a focus on advancing our portfolio, supporting our partners, and driving continued innovation in ADCs. You will recall that our number one priority is complete development and obtain approval for mirvetuximab soravtansine by 2020. Mirvetuximab is our internally developed first-in-class ADC targeting folate-receptor alpha or FRα as we refer to it. This is a marker expressed on a number of tumor types, including ovarian, lung, and endometrial cancers. In January, we achieved an important milestone by treating our first patient with mirvetuximab in our FORWARD I Registration Trial. FORWARD I is the Phase 3 randomized study designed to compare mirvetuximab with the current standard of care and up to 333 patients with platinum-resistant ovarian cancers, whose tumors express folate-receptor alpha at medium or high levels. The eligibility criteria for this trial include patients treated with up to three prior therapies, which represent a market of approximately 12,000 to 14,000 women in the U.S. alone in a similarly sized population in Europe. Since enrolling our first patient, we’ve initiated more than 40 sites in North America and Europe, and are on track to activate, at least, a hundred sites in these geographies before the end of the year. I commend our clinical and medical teams for the work they’ve done to accelerate enrollment in this important study. In addition to advancing FORWARD I, we’ve gained increasing recognition from the medical and scientific communities to a number of data presentations, demonstrating the breadth of our ADC expertise. We presented expanded Phase 1 data from the biopsy cohort for mirvetuximab at the SGO Annual Meeting in March, which indicate that archival tumor tissue can reliably identify patients with FRα-positive platinum-resistant ovarian cancer. More importantly, these data support the patient selection strategy for the FORWARD I trial, We also delivered nine presentations at the AACR Annual Meeting in April, highlighting ImmunoGen’s innovative technology platform and novel ADCs targeting a range of tumor types. Our partners also continue to make notable progress over the quarter. Bayer completed enrollment of its Phase 2 registration trial assessing anetumab ravtansine for the treatment of mesothelioma and Takeda advanced its preclinical development, the first of our novel DNA alkylating payload directed to a solid tumor target. Looking ahead to the rest of 2017, we expect several key data readouts from our proprietary portfolio. At the ASCO Annual Meeting in June, we will be presenting new safety and efficacy data relating to mirvetuximab, which we will cover in greater detail when the abstracts become available later this month. We plan on presenting an initial Phase 1 clinical data in mid-2017 for IMGN779. This is an anti CD33 ADC we are developing for acute myeloid leukemia. This is the first ADC in the clinic to deploy our novel DNA alkylating payload, which we referred to as our IGN program. In the third quarter, we also plan to file an IND for our second IGN program, IMGN632, which is an ADC targeting CD123 that we intend to develop for multiple clinic – multiple hematologic malignancies. Lastly, we expect to advance the first candidate under our collaboration with CytomX into preclinical development this year. So the remainder of the year promises to be rich in data from our proprietary portfolio and we look forward to updating you on our progress with these programs, as well as those of our partners. And with that, I’ll hand the call over to Dave to review our financials.

[David Johnston:]

Thanks, Mark. Our financials were discussed in some detail in our press release issued early this morning, so I will just review some of the highlights. Revenues for the first quarter ending March 31, 2017 were approximately $29 million, which includes $6 million in partner milestone payments, $13 million in amortization of a non-cash fee related to our license agreement with CytomX, and $7.6 million in non-cash royalty revenues. The balance of our revenues in this period were from research and development support and our clinical materials. Operating expenses in the first quarter were approximately $41 million, driven by $33 million of R&D expenses, the remainder are G&A expenses. For the first quarter, ImmunoGen reported a net loss of about $17 million, or $0.20 a share. Cash used in operations for the period was about $33 million. We ended the first quarter with approximately $127 million of cash and cash equivalents and $100 million of convertible debt outstanding. We expect this will allow ImmunoGen to fund our operations into the second quarter of 2018. Lastly, our financial – guidance for 2017 has not changed. So with that, I’ll turn the call back over to Mark.

[Mark Enyedy:]

Thanks, Dave. Just to wrap up, in 2016, we laid out four priorities for the business; one, completing development and obtaining approval for mirvetuximab by 2020; two, accelerating the development of our early-stage portfolio with an emphasis on our IGN programs; three, building upon our leadership position in ADCs and continuing to drive innovation; and four, levering our platform to support our existing relationships and pursue new collaborations that will allow us to generate revenue, mitigate expenses, enhance our capabilities, and expand the reach of our innovation. We started 2017 with significant progress towards each of these objectives and look forward to updating you as our business evolves over the remainder of the year. And with that, we will open the call for questions.

[Operator:]

Thank you. [Operator Instructions] And we’ll take our first question from Michael Schmidt from Leerink.

[Michael Schmidt:]

Thanks. I had one, Mark, regarding ASCO, can you just help us, or investors understand what expectations should be regarding the upcoming updates there from mirvetuximab? And then I have a follow-up?

[Mark Enyedy:]

Yes. So mirvetuximab will have essentially two data presentations. The first relating to a pool dataset essentially aggregating the totality of our patient experience in the Phase 1b setting. And then the second will be an update on our progress in FORWARD II. And as a reminder, this is a combination – a set of combination cohorts with mirvetuximab combined with Avastin, Keytruda, liposomal doxorubicin, and carboplatin. So what we plan to do, Michael, is provide a greater detail on the data presentations once the abstracts are released in the middle of the month.

[Michael Schmidt:]

Okay, great. And regarding the balance sheet, obviously, you say you have – you guided to cash into the second quarter of 2018. I was just wondering in this context, how you’re thinking about additional sources of maybe non-dilutive capital in term – in that context, just wondering, specifically, how do you think about additional business development opportunities regarding some of your remaining pipeline assets? Thanks.

[Mark Enyedy:]

Sure. So we share your view on the balance sheet. And our focus intensely on – everything is dilutive at one level, I suppose. But fundamentally, it was – we mentioned last fall, we look to prioritize the portfolio, and so we chose to target our b-cell programs for out-licensing. And so there is active interest there, which we are pursuing as we speak. In addition to that, as you know, we have a number of agreements that provide for downstream royalty obligations. And so, we continue to explore the possibility of monetizing those royalty streams for upfront cash. And then finally, we are entertaining interest in our development stage programs with respect to co-development and co-commercialization arrangements for those programs that would enable us to generate upfront cash, as well as mitigate our ongoing expenses, while retaining substantive commercial rights in those programs downstream. And so, we are actively exploring each one of those avenues, as we speak, with a goal of, as you say, improving the shape of the balance sheet.

[Michael Schmidt:]

Thanks. And then one question regarding the AML program. You talked about the IGN payload and, obviously, those two assets you mentioned are in a space that is somewhat competitive. And I was wondering, if you could just highlight potential sources of differentiations from other ADCs that have DNA alkylating payload in development?

[Mark Enyedy:]

Sure. So I’m going to ask Rich Gregory to address that.

[Richard Gregory:]

Thanks for the question, Michael. So from the beginning of these programs, what we’ve started to do is differentiate the mechanism of action from some of the other DNA targeting payloads. The key differentiator is that our payload basically modifies one strand of DNA, it doesn’t cross-link. And therefore, we have a different level of toxicity on both tumor and normal cells. And what we see in practice in preclinical models as we have the same level of potency against tumor cells with our payload as you see with a cross-linking drug, such as Seattle. But we find that we have a higher level of tolerability, meaning, we can dose more frequently and more often. We think this will manifest itself as hopefully superior profile in the clinic.

[Michael Schmidt:]

Okay. Thank you.

[Operator:]

And we’ll take our next question from Jessica Fye from JPMorgan.

[Jessica Fye:]

Hey, thanks for taking my question. Good morning, guys. I just wanted to ask about the FORWARD I study. And now that you’re getting kind of sites really up and running, enrolling patients, if that’s affected your view at all on the ultimate time it’s going to take to enroll that trial?

[Mark Enyedy:]

Thanks, Jessica. No. So we’re expecting to undertake the futility analysis in early 2018 and have results from the study in early 2019.

[Jessica Fye:]

Great. Thank you.

[Mark Enyedy:]

Sure.

[Operator:]

We’ll take our next question from Matthew Harrison from Morgan Stanley.

[Cyrus Amoozegar:]

Hi, this is Cyrus on for Matt. Thanks for taking my questions. So, I guess, the first one is for this pooled analysis that we’re going to see at ASCO, what sort of new information can we expect versus the prior cohorts and data in terms of efficacy?

[Mark Enyedy:]

Yes. So the data we shared at ASCO last year was a 46-patient cohort, which was essentially an all comers of – I guess, of the five prior lines of therapy. We then added to that dataset with 27 patients from a biopsy cohort. Again, these were heavily pretreated patients with a different goal. And then finally, we ran a 40-patient cohort in patients – platinum-resistant patients that received three or four prior lines of therapy. And I guess, there were some platinum-sensitive patients in that cohort. So essentially, what we’re doing is taking all three of those cohorts and adding them together and we’ll have both efficacy and safety data from that pooled analysis, and we’ll also have a subset of those patients who would have been eligible for FORWARD I.

[Cyrus Amoozegar:]

Got it. I guess, my next question, for the FORWARD II safety data presentation, are we going to see any preliminary efficacy or we’ll just see the dose escalation safety?

[Mark Enyedy:]

We’ll have preliminary efficacy data in that presentation.

[Cyrus Amoozegar:]

And then what sort of key theoretical toxicities are you guys concerned with for FORWARD II.

[Mark Enyedy:]

I’m going to let Anna address that question. I mean, the – what we’ve been able to see as we’ve dose escalated is that we are proceeding with the – those of the comparable or the combination agents that are used in the ovarian cancer treatment setting. And so, we’re at our preferred Q3 weekly schedule plus what’s regularly used there. And so, we’re pretty excited about the tolerability profile of the combination agents. Anna, if you want to add to that.

[Anna Berkenblit:]

Yes, based on the monotherapy safety profile for mirvetuximab soravtansine, we did not anticipate any significant overlapping toxicities for any of these combinations. In particular, because mirvetuximab soravtansine is targeted to FRα positive cells. It does not have a lot of marrow suppression. So we did not anticipate we would see any sort of synergistic toxicity on the marrow and indeed. As Mark said, mirvetuximab is combinable with full doses of each of these agents. Similarly, we’re not seeing alopecia with mirvetuximab soravtansine like you would with other tubular-directed therapies. And it doesn’t have the hand foot syndrome that you would see with Doxil. So, we are really quite confident around the ability to combine mirvetuximab with full doses to each of these agents. Avastin has its own set of toxicities. We don’t see hypertension, for example, with mirvetuximab And pembrolizumab, of course, has its own immunology-related adverse events and profile. Again, mirvetuximab, yes, it’s an antibody, but it’s targeted to FRα positive cell. So we didn’t expect to see increased stimulation of the immune system and autoimmune problems, so far so good.

[Cyrus Amoozegar:]

Got it. Thank you. And I guess, one last question for 779, what kind of data can we expect by mid-year? And should we expect some sort of response rate data, or could there be enough follow-up for durability?

[Anna Berkenblit:]

Yes. So we expect to present preclinical data for 779, as well as clinical data from the Phase 1 dose escalation study. And we will share all of the data that we have available from dose escalation in terms of safety pharmacokinetics, pharmacodynamics and anti-tumor activity. We’re still in the midst of dose escalation, we have not hit MTD yet.

[Cyrus Amoozegar:]

Got it. Thank you.

[Operator:]

And we’ll take our next question from John Newman from Canaccord Genuity.

[John Newman:]

Hi. All my questions have been answered. Thank you.

[Mark Enyedy:]

Okay.

[Operator:]

And we’ll take our next question from Matthew Eckler from RBC Capital Markets.

[Matthew Eckler:]

Hi, good morning, guys. Thanks for taking the question. So we’re starting to see a changing landscape for the treatment of ovarian cancer with the approval of the PARP inhibitor. So I wondered if you could just talk broadly a little bit about how you think that mirvetuximab did then to this changing landscape? Thank you.

[Mark Enyedy:]

Yes. So I’ll start, but I’m going to quickly hand it over to Anna So, our initial approval is targeted for platinum-resistant disease. And right now the standard of care, there is single agent chemotherapy and we also see combination used with Avastin. But we think there is a substantial room for improvement in terms of response rate progression-free survival and also the tolerability of those agents. And we think on one of those parameters, mirvetuximab will be well-positioned. As you know, we’ve moved ahead with FORWARD II to evaluate mirvetuximab in combination. That will give us an additional leg up in platinum-resistant disease and also give us some early observations with respect to how we might think about managing platinum-sensitive patients either and initial therapy, or even potentially in the maintenance setting. So we think, when we look at the profile of mirvetuximab today, that’s very well-positioned to address both of those segments, again, with an initial approval of monotherapy in the resistant setting. And then I’m going to ask Anna to sort address the whole PARP inhibitor environment. We think this is good news for patients and we think we’ve got a role to play here as well so.

[Anna Berkenblit:]

Thank you, Mark. So let me start with PARP inhibitors in the platinum-resistant setting, because that’s the initial Phase in which mirvetuximab is going to be approved. And the data for PARP inhibitors in platinum-resistant disease even in BRCA mutant patients, which are about 20% of the ovarian cancer population is pretty underwhelming. I mean, it’s about the same as chemotherapy. So, for example, olaparib and rucaparib has about a 25% to 30% response rate in platinum-resistant BRCA-mutant patient, so only that 20% that have mutation. They really have no appreciable activity in the BRCA wild-type setting in platinum-resistant disease with a monotherapy response rate of 4% to 10%. That’s quite different from what niraparib showed in the platinum sensitive maintenance setting in all comers. So we do not think that PARP inhibitors will be used in the platinum-resistant setting. Platinum sensitive, no doubt, they are really changing the landscape and the standard of care is really evolving and I think that is wonderful for patients. We do believe that Mirvetuximab will combine well, for example, with PARP inhibitors and we have an IFT that’s going to start up combining with rucaparib, we and Clovis are co-sponsoring that. So we are using that as a potential combination approach. And then bevacizumab, let me remind you that it was approved, so Avastin was approved in December last year in the platinum sensitive recurrent maintenance setting, so the same setting that niraparib has been approved in. Bevacizumab is used for all comers and it will be really interesting to see how the PARP inhibitors are used in the platinum sensitive setting, you know the greatest benefit is for the BRCA mutant patients, the wild-type patients also benefit. So it’s an evolving landscape and I think Mirvetuximab’s really nice tolerability profile will allow us to move up into that phase potentially in either or both of these combinations. And furthermore, because we are able to combine with carboplatin, there is the opportunity for us to be the preferred doublet for carboplatin based therapy as well. So we have a lot of options, right now our initial focus is on enrolling our first trial and getting the drug approved and then expanding our opportunities.

[Matthew Eckler:]

Okay, great. Thank you.

[Operator:]

And we’ll take our next question from Mara Goldstein from Cantor Fitzgerald.

[Mara Goldstein:]

Thanks for taking that question. I had a question, I guess on FORWARD II, which is collecting or plans to collect biopsy data, and I’m curious as to how much biopsy data you intend to have for this trial and when we may see that data?

[Anna Berkenblit:]

So, Mara, that’s a nice question. We did present the biopsy data from our initial biopsy cohort at FTO a couple of months ago. So that’s that 27 patient cohort that Mark mentioned, where patients had archival tissue for screening and patient selection and then they had a pre-treatment biopsy and a post-treatment biopsy. What the data at FTO showed was that archival tissue is really sufficient for patient selection and that’s the strategy that we’re using in our Phase III trial. In our combination study FORWARD II where we’re combining with those four different agents, the only arm in which are doing some exploratory biomarker work is actually the pembrolizumab arm. Merck has supplied pembrolizumab for that study and we are quite interested in those translational medicine of exploratory objectives, but we won’t have any of that data at ASCA.

[Mara Goldstein:]

Okay, and I also noticed, I think assuming it’s an investigator sponsored trial, in triple negative breast cancer, was Mirvetuximab and I’m just curious as to the rationale for that?

[Anna Berkenblit:]

That’s a great question Mara, thank you. We have partnered with the NCCN and we have committed $2 million in that partnership for them to run several pre-clinical studies, as well as three clinical studies, two of which are neoadjuvants triple breast cancer study. The rationale for that is that FRα expression is over expressed in triple negative breast cancer, not as highly frequent adds in ovarian cancer, so it’s not our initial indication, but certainly we’re quite interested about exploring triple negative breast cancer. What I like about these NCCN studies is that they are neoadjuvant studies, so we’ll have pre and post biopsies and we’ll get a readout rather quickly from a proof of concept perspective.

[Mara Goldstein:]

Okay, and if I could just ask, if you don’t mind, a non-clinical question and that is, can you just remind us of the economics on buyer agreement for anetumab ravtansine?

[Mark Enyedy:]

Sure, Mara. There is significant amount of milestones, I don’t recall the exact number, but it’s into the high – like it’s north of $150 million, and the royalties are 4% to 7%.

[Mara Goldstein:]

Okay, all right. Thank you, I appreciate it.

[Operator:]

And we’ll take our last question from Boris Peaker from Cowen & Company.

[Boris Peaker:]

Great. Thanks for squeezing me in. Just wanted to touch base regarding the biz dev opportunities, specifically you’ve earlier mentioned, potentially licensing from non-core assets to build up the cash balance. I’m just wondering, I think previously you’ve discussed potentially out licensing Mirvetuximab ex-U.S. Is that still on the table? If there are specific datasets, you think for potential partners waiting for prior to closing the deal? Just want to kind of get a sense of where that might stand?

[Mark Enyedy:]

Yes, so we’ve had inbound interest with respect to the ex-U.S. rights to Mirvetuximab and so we’re evaluating those proposals in light of where we are with the program today and as you say, the data that’s worth coming and what impact that might have in terms of the value that we could come-in in one of those transactions. I’d be reluctant to comment further on that other than it’s inbound interest and our view is we need to lead commercialization of the product in the U.S., ex-U.S., this is still a relatively concentrated market even outside the U.S., particularly in Europe and so this is something that a company at ImmunoGen’s size could effectively manage. That said, if there’s an opportunity to generate some near-term cash, reduce the ongoing expenses of development that’s something that we need to consider and as I say, are entertaining at this point.

[Boris Peaker:]

Great. And on your CD123-targeting ADC, I’m just curios given the competitive nature of the space now. What immunological – specifically if you’re thinking of targeting?

[Mark Enyedy:]

Sorry, CD123, Boris?

[Boris Peaker:]

Yes.

[Mark Enyedy:]

Yes. So, I think the potential indications there are AML, MDS PTDCN, and BALL are the other things that we are contemplating, as we speak. And we will make a decision on that in the next really couple of months, as I mentioned, we expect to file the IND. But before the end of the third quarter and have our first patient and before the end of the year.

[Boris Peaker:]

Great. Thank you very much for taking the question.

[Mark Enyedy:]

Sure. Thanks.

[Operator:]

And we’ll take our next question from Biren Amin from Jefferies.

[Mark Enyedy:]

Hey, Biren.

[Biren Amin:]

Hey, thanks for setting me in.

[Mark Enyedy:]

Sure.

[Biren Amin:]

So just on your CD33 program, with the SGEN program, they ran into some issues with FDA temporarily, and we’ve gotten clearly some transparency around that program in the last few months. What I guess key considerations have you incorporated from learnings from, I guess, at least, safety learnings from that program into your Phase 1/2 trial?

[Anna Berkenblit:]

Thanks, Biren. So this is Anna. So our drug is, as you heard from Rich, has a slightly different mechanisms from the other CD33-targeted ADCs, Mylotarg and Seattle genetics CD33-redirected ADCs cross-link DNA. So they cause profound damage, that’s difficult for cells to repair. That’s probably playing into the renal occlusive disease that has plagued both compounds in AML patients, particularly those in the peri-transplant setting. The fact that, this is also seen within Inotuzumab CD22-directed ADC with calicheamicin the same payload as Mylotarg suggest that it’s not target-related. So we think that, at least, theoretically our drug has a potential safety advantage. And therefore, we are proceeding with our Phase 1 dose escalation trial, of course, we are monitoring patients for potential DoD. But we’re not, at this point, excluding patients, because they had a prior transplant. We are proceeding with AML patients. And typically, in Phase 1 trials, you enroll patients who have relapsed refractory disease and who may be data flows [ph] transplant.

[Biren Amin:]

Got it, great. Thank you.

[Operator:]

And we’ll take our next question from John Sonnier from William Blair.

[John Sonnier:]

Hey, thanks for taking the question. Mark, you’re about a year or so into the new role, and I’d love to hear you talk about how it’s gone? He came in obviously with a set of expectations. And what’s gone better and what’s gone worse, you obviously have to make some difficult structural decisions kind of right out of the gate. But just want to hear how you’re thinking about the job now versus a year ago? And again, what’s gone better and worse over the past year? Thanks.

[Mark Enyedy:]

Yes, thanks for the question, I appreciate it. Yes, so first anniversary is on the 16. And obviously, there has been some things that were different. The Board of Directors asked me to join ImmunoGen to really oversee a transformation of what had been a very productive research organization that it often translated that into early-stage development to a company that could deliver products to the market and commercialize on its own bottom. And I would say, the things that I had hoped for on upside and materialize in the way, which I’d hope. So, success in this business begins with great people and I inherited a great team. And that team has really rallied over the course of what’s been a challenging year to advance the business. And so in terms of moving mirvetuximab into pivotal study that came as we had expected it to. And then we’ve got a good design, good correspondence with the agency and are well-positioned to deliver on the timeline that we’ve projected for you. When I look at the platform, we continue to be very productive in terms of innovating new ADCs and moving those into the clinic. So we’re making great progress with the CD33 program and the profile that drug is emerging, as we had hoped, it would, both in terms of efficacy and importantly in this setting the tolerability. And we’re on track to file our next program within next quarter. And so, as I look at it, our principal challenges will be around capital that’s been the focus of some of the questions on this call. I think we’ve got a good handle on that in terms of looking at our assets and devising different strategies to raise capital whether it’s out-licensing, monetizing royalties or pursuing co-development relationships. And so, I think, we articulated four priorities for the business, which I reviewed at the end of my prepared comments today. And we’re very much on track to do that. And importantly, as we’ve gone about executing on those objectives, I really have seen the transformation in-house in terms of the agility of the organization, the level of focus and discipline and really turning our attention to what it means to bring a product to market and be responsible for delivering the patients around the globe. So I’m excited about our prospects. I was excited to join the company. We had a few challenges for sure. We will certainly have more to come, but quite sanguine about our prospects, but appreciate the opportunity to talk about it.

[John Sonnier:]

Absolutely. Thanks for taking time to answer. I appreciate it.

[Operator:]

That concludes today’s question-and-answer session. I’d like to turn the conference over to Monique Allaire, for additional or closing remarks.

[Monique Allaire:]

Thanks, everyone, for joining us today. Don’t hesitate to reach out if you have any follow-up questions.

[Operator:]

This concludes today’s presentation. Thank you for your participation. You may now disconnect.