Jounce Therapeutics, Inc.
Q1 2021 Earnings Call Transcript

Published: 4 May 2021

[Operator:]

Good morning, ladies and gentlemen and welcome to the Jounce Therapeutics First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder this conference call is being recorded at the company's request. I will now turn the call over to your host Malin Deon, with Jounce Therapeutics. Please go ahead.

[Malin Deon:]

[Rich Murray:]

Thanks, Malin, and good morning, everyone. Jounce has made meaningful progress at the start of 2021, as we continue to advance our two proof-of-concept studies, grow our discovery and development IO pipeline and add to our strong balance sheet. We're at an exciting point in Jounce's development and remain committed to progressing new mechanisms that target different immune cell types in the tumor microenvironment. Our translational science platform and biomarker approach are integral to our commitment to bring the right therapy to the right patients. I'd like to take a few minutes to provide updates from the quarter. At the start of the year, we announced that enrollment commenced in INNATE, our Phase 1 clinical trial of our highest priority program JTX-8064, a LILRB2, also known as ILT4 inhibitor. INNATE is moving quickly through the necessary dose escalation portion of the trial towards the opening of eight tumor-specific expansion cohorts. We plan to include JTX-8064 monotherapy, as well as combination with our own PD-1 inhibitor, JTX-4014, or an approved PD-1 inhibitor.

[Dmitri Wiederschain:]

Thanks Rich. I am thrilled to join Jounce at such a pivotal moment in the company's journey to discover, develop and commercialize important new immunotherapies. After many years of building the oncology and IO pipeline at Sanofi, my goal was to join a vibrant science-oriented and fast paced organization, that understands what it takes to succeed in IO has resources to do so and is ready and able to forward integrate the company. Coming from a large pharmaceutical company setting and seeing many biotech companies through business development activities I believe Jounce is that place. With JTX-8064 and JTX-1811 as good examples, we hope to continue to create new important options for patients and value to Jounce shareholders. At our upcoming R&D Day in late June, I look forward to sharing more about the exciting science behind our pipeline, translational work and particularly the opportunities around the myeloid cell focus as exemplified by LILR family. With that, I'll turn it over to Beth to discuss our clinical programs in more detail.

[Beth Trehu:]

Thanks Dmitri, and good morning, everyone. 2021 is a year of clinical execution for Jounce, and we remain focused on our two ongoing proof-of-concept studies INNATE and SELECT. These trials are key to our belief that novel mechanisms and biomarker strategies are necessary to bring clinical benefit to patients who do not optimally benefit from T cell checkpoint inhibitors. I would now like to provide more detail on both ongoing trials beginning with JTX-8064, a LILRB2 inhibitor. JTX-8064 is designed to reprogram immunosuppressive or M2 macrophages to immune stimulatory or M1 macrophages to enhance or restore anti-tumor immune activity. We view JTX-8064 as a macrophage checkpoint inhibitor with the potential to reverse PD-1 or PD-L1 inhibitor resistance as well as to further improve outcomes in PD-1 inhibitor sensitive tumors, thereby, having the potential to provide clinical benefit to a wide range of cancer patients.

[Kim Drapkin:]

Thanks, Beth and good morning everyone. As we reported in this morning's press release, cash, cash equivalents and investments as of March 31, 2021 increased to $271.3 million, compared to $213.2 million as of \December 31, 2020. This increase was primarily due to the $90.8 million in aggregate net proceeds from sales under our follow-on public offering and our ATM offset by operating costs incurred during the period. Turning to the P&L, we recognized $1.5 million in license revenue during the first quarter of 2021, which was comprised of non-cash revenue related to research and transition services performed under our license agreement with Gilead. No revenue was recognized during the same period in 2020. During the first quarter of 2021, we incurred $20.5 million in research and development expenses compared to $19.6 million for the same period in 2020. The increase in R&D expenses was due to increased expenses from manufacturing and IND-enabling activities performed for our development programs offset by decreased clinical and regulatory costs attributable to reduced spending on vopra.

[Operator:]

Thank you. And our first question coming from the line of Steve Seedhouse with Raymond James. Your line is open.

[Ryan Deschner:]

Good morning. This is Ryan Deschner on for Steve. I just wanted to ask, are you guys seeing any surprises so far in ILT4 treated patients with respect to the pharmacology of the molecule, or is it translating to humans as expected?

[Beth Trehu:]

Thanks for the question. We don't usually report on data from ongoing clinical trials. All I can tell you is, as I said, enrollment's going very well. And I think – as we've said, we think our molecule is more similar than different to Merck's molecules. So we would expect something similar to what they saw in their Phase 1 study.

[Ryan Deschner:]

Okay. And maybe real quick, can you talk about the stopping criteria for SELECT and when the interim analysis is expected?

[Beth Trehu:]

Yes. There isn't an interim analysis in SELECT. Our expectation is to complete the study and report data in 2022.

[Ryan Deschner:]

Okay. Thank you very much.

[Beth Trehu:]

Welcome.

[Operator:]

And our next question coming from the line of Swayampakula Ramakanth with H.C. Wainwright. Your line is open.

[Swayampakula Ramakanth:]

Thank you. This is RK from H.C. Wainwright. I have a couple of questions. Beth regarding the INNATE study, which is going to have about seven different combinations between 8064 and a PD-1 inhibitor and in the press release you have that it could be either 4014 or an approved PD-1 inhibitor, how would you -- what is the criteria in deciding which expansion cohort will get what PD-1 inhibitor?

[Beth Trehu:]

Sure. That's a great question. What we -- as I mentioned we'll have a trials in progress poster at ASCO. That's where we will introduce the specific tumor types that we're including in the study. And then later in June, we expect to have an R&D Day and that's when we'll get into a little bit more detail. We'll describe which PD-1 inhibitor in which cohort the scientific rationale for each cohort more detail about the lines of therapy and that kind of thing for each cohort. So stay tuned. We'll be providing detail on all of that very soon.

[Swayampakula Ramakanth:]

Sure. And then just a follow-up within the trial itself. You are talking about the three subgroups of patients that you're going to be investigating. My question is more on the PD-1 naive subset and also the PD-1 naive, but minimal to poor response subgroup. Within those subgroups I don't know if it is too early in the expansion cohorts, but would you think about how to sequence the combination, or that is not a question now. You'll just want to go ahead and just do a straight combination and then think about sequencing the drugs later.

[Beth Trehu:]

Yes. We believe giving them on the same day makes sense. Merck certainly saw very encouraging data in their study where they were -- the drugs were given on the same day. So we, obviously, as you know we collect a lot of pharmacodynamic biomarkers in our study as well as the potential predictive biomarkers. So we certainly will be analyzing our PK and our receptor occupancy data and the PK of the companion molecules throughout the study to see if there's any suggestion that we would need to do sequencing. But maybe I'll ask Rich to comment on that as well. Rich, I think you're on mute.

[Rich Murray:]

Yes. Thanks Beth. Sorry about that. RK, yes, thanks for that question. Just a follow-up on Beth's a little bit. I think as we continue to study the mechanism, we really believe that there's kind of the simultaneous action of these antibodies. And of course, they'll be onboard in terms of dosing throughout the dosing cycle. So we'll still pursue the mechanistic kind of underpinnings of what we see, but I think all of that work really translates into dosing molecules on the same day.

[Beth Trehu:]

And so that being said, they're both inhibitors. So once you achieve that concentration that maintains inhibition of binding to the ligand at that point, I don't know that sequencing really becomes that relevant.

[Swayampakula Ramakanth:]

Sure. Yes. One last question for me, before I step back into the queue. Beyond 8064 and 4014 and obviously, 1811 will be moving on into the hands of Gilead come second half -- thinking about early stage pipeline, I understand you'll talk more in June in your R&D Day, but not with Jounce's experience of bringing novel molecules to the forefront. What sort of molecules should we expect that you could be unveiling later in the year?

[Rich Murray:]

Yes. Sure. I think what we'll give as Dmitri alluded to in late June is, the kind of direction of where we anticipate new programs to come from. We've been stating we're very interested in the myeloid related cell biology. LILRB2 and 8064 is our first example. But there are other LIL family members, other mechanisms associated with overall myeloid cell function that we think are very important areas to pursue. So we'll provide a bit of depth on that. And Dmitri has hit the ground running here and will provide that update in late June. And then we'll stick to our kind of pattern of how we identify specific molecules. Once we're at the stage of a development candidate then we will kind of announce that kind of progression as things move into the IND-enabling stages. So stay tuned. A lot of focus on the myeloid cell biology. We're very excited about that. And again stay tuned for late June on that one.

[Swayampakula Ramakanth:]

Thank you, Rich and the team. Thank you.

[Rich Murray:]

Sure. Thanks.

[Operator:]

And our next question coming from the line of Colleen Kusy with Baird. Your line is open.

[Colleen Kusy:]

Hi. Good morning. Thank you very much for taking our questions. Is there any update you can provide on how many escalation dosing cohorts you've cleared? And then for the ASCO update, can we expect any safety data from the INNATE study or will that just be focused mostly on the trial design? And then I have a follow-up.

[Beth Trehu:]

Yes. Hi, Colleen. It's Beth. So in terms of the dose escalation cohorts, I think what's important is we are still on track to open the expansion cohorts both monotherapy and combination in the second half of the year. So other than that I'm not going to go into detail on those, but we're doing really well. We are on track. We will be opening expansion cohorts in the second half of the year. And regarding the trials in progress poster, ASCO does not allow inclusion of any data in these posters. They really have to be strictly a description of the scientific rationale the study design that kind of thing.

[Colleen Kusy:]

Great. That makes sense. That's helpful. Thank you. And in light of the interesting data that you guys presented at AACR, can you comment on how you're thinking of incorporating potential biomarkers into the expansion cohorts of the INNATE study? I guess could some of those expansion cohorts potentially use biomarkers as a screening criteria or will that still be more exploratory?

[Beth Trehu:]

Sure. That's a great question. So at this point in all the expansion cohorts, we're collecting both archival tumor tissue and a fresh biopsy pre-treatment. And we will be screening those for a whole panel of potential predictive biomarkers that; include both RNA signatures some of which we've commented on in our prior posters and also some IHC. So we have -- I think, we're in a great position because we have a number of these biomarkers that we've already identified. So we're going to be testing them retrospectively looking back at the samples and doing analyses to see if they correlate with clinical outcomes. If we see something that looks like it correlates the next step would be to either enrich for select. So I would say what you could look at these expansion cohorts now is the hypothesis generating. And then the next stage would be something where we would either enrich or select with whichever one of those biomarkers looks the most promising. Rich, did you want to add anything?

[Rich Murray:]

Yes. Yes. Just as a reminder that biomarkers that Beth is speaking to that really is a kind of a collected set of what we think are the appropriate either PD or potentially predictive biomarkers that have come directly from our mechanistic and tumor-related work within Jounce. So we kind of serve up that set that we think are worthy of being tested coordinated to the trial as Beth mentioned. And should we find those correlations with clinical data then we move to the next stage.

[Colleen Kusy:]

Great. That's really helpful. And if I can just add on one more quick one. Are there any other potential combination regimens that you think could be interesting with 8064 beyond PD-1?

[Beth Trehu:]

Sure. And that's something that our -- I think you know Colleen even after we're in the clinic our research teams are still very, very active on the same program. So that's an active area of investigation. Thank you for that question.

[Colleen Kusy:]

Great. Thank you.

[Operator:]

Our next question coming from the line of Boris Peaker with Cowen. Your line is open.

[Boris Peaker:]

Great. Thanks for taking my question. My first one is on 8064. You mentioned that your drug is relatively similar to Merck's drug. Just wondering if you could also maybe compare in terms of the patients you're enrolling in the INNATE study how that may differ from the patients that Merck is enrolling in their initial studies?

[Beth Trehu:]

Sure, Boris. Hi, it's Beth. So in the dose escalation phase like Merck we're enrolling all comers. No specific tumor types, no kind of enrichment or selection. So I would say the dose escalation parts of the study are probably very similar. Then we are doing these expansion cohorts in specific tumor types and we're being very specific there. It's down to the line of therapy, the type of prior therapies allowed for each of those. Merck is also doing expansion cohorts in their study. They opened nine expansion cohorts in January of 2020. And we don't know as much about those as we know about the dose escalation patients. What I can say is in the dose escalation, we will have far fewer patients than Merck did because we were able to leverage some of their data and reduce the amount of dose escalation cohorts. However, once we get into the expansion cohorts those are really dictated by the specific eligibility for each cohort. Merck has theirs. We have ours. So they're -- unless we do cohorts that are in exactly the same patient population, I would expect them to be potentially different. And I'll finish just by saying, since the molecules do appear to be quite similar, we believe that the way that we can differentiate is through the tumor types that we're exploring, as well as our biomarker strategy.

[Boris Peaker:]

Got you. And maybe speaking about biomarker switching to VOPRA, for the TIS VOPRA biomarker what clinical development would you have to do in order to get the diagnostic test for the biomarker approved?

[Beth Trehu:]

Sure. When you develop a drug that's with a companion diagnostic, he companion diagnostic is actually developed by the company that makes the biomarker, but it's a very collaborative process. This is done on the NanoString platform, so it's a well-recognized process. And we know what the development takes. There's a whole path through a different part of the FDA that's well mapped out. So if that's what we do going forward there's no particular extra complications there. We know what we need to do to take that forward. Rich did you want to add anything?

[Rich Murray:]

Yes. Yes. Maybe just to add to kind of on the business side of that. There are kind of different stages of investment that one would take in the kind of journey to get to a companion diagnostic. So clearly, we're at the clinical stage. We're running the assay in a manner that's consistent and appropriate with that. But we'll be able to stage gate our investment on that kind of path which would then go to the next stage should the data warrant of kind of readiness for starting on the route to readiness for commercialization of that biomarker and assay.

[Boris Peaker:]

Great. Thanks very much for taking my questions.

[Operator:]

Our next question coming from the line of Nick Abbott with Wells Fargo Securities. Your line is open.

[Nick Abbott:]

Good morning. Thanks for taking my questions. And Dmitri welcome to the team. I look forward to meeting you virtually later on in the year. A couple of questions for me first on SELECT, so can you remind us if there's a correlation between the TIS vopra signature and any oncogenic drivers in lung? I'm just sort of thinking of maybe that control arm. Obviously you have one variable which is -- it's in TIS vopra positive patients for which we don't know what a PD-1 inhibitor will do in that subset of patients. But then on top of that, I'm wondering what spectrum of different oncogenic drivers you might expect to see?

[Rich Murray:]

Yes. I think I can take that one Nick. I think -- we don't have a TIS vopra related kind of correlation to specific oncogenic drivers. However, we know of course that there are oncogenic drivers in these patients and they will follow that route to a specific therapy should they have the right kind of driver and mutation and such. But as we look at that kind of potential overlap with TIS vopra, TIS vopra is really telling us much more kind of the state of activation of the CD8 cells and we believe the CD4 cells. So that's really kind of the uniqueness about this biomarker. We're kind of getting both angles on that CD8 and CD 4. And then whether that kind of overlaps with mutations or not we think the TIS vopra score makes the patients more likely to be benefiting from this combo therapy. So we don't have that kind of direct correlation to the oncogenic drivers. Of course, if those patients have those drivers, they will be going down the route of a particular line of therapy for that particular drug.

[Beth Trehu:]

Yes, that's right. In addition, Nick, we actually -- we exclude patients with EGFR mutations, that being the biggest class of oncogenic drivers that generally patients with those mutations don't do as well with PD-1 inhibitors. So, we're excluding them. And then as Rich mentioned, the patients with other drivers would be likely to go down a different path of therapy targeting the mutations.

[Rich Murray:]

Yes. I think what we'll also learn, Nick, as we get these larger data sets from all the patients enrolled, how all these things kind of overlap or not with each other. So that kind of data will emerge as these -- as the data set fills out.

[Nick Abbott:]

Okay. Thanks. And then on 8064 for that PD-L1 experienced set of tumors, do you think there's a difference in the role of myeloid cells in the settings of primary or acquired resistance to a PD-L1 inhibitor? And how do you think about studying both those populations potentially in the expansion cohort in INNATE?

[Beth Trehu:]

Yes. I think that's a great question. I'm not sure there's enough data right now to know the difference between which cell types are playing a primary role in primary and acquired resistance. And that's why we're planning to study those two groups of patients. So, you could -- the PD-1 resistant -- the patients, who have failed a PD-1 inhibitor, you could say some of them might be primary, some of them might be secondary, and we'll certainly be collecting that data. And then the tumor types that are PD-1 naïve that where PD-1 inhibitors aren't approved, you could think of those as kind of primary PD-1 resistance. So, we think it's important to look at both, and we'll be analyzing the data based on what kind of resistance they have.

[Nick Abbott:]

Okay. Thank you very much.

[Beth Trehu:]

You’re welcome.

[Operator:]

Our next question coming from the line of Zegbeh Jallah with ROTH Capital. Your line is open.

[Zegbeh Jallah:]

Good morning, guys. Thanks for taking my question. The first one here is just on the enrollment for SELECT. I know you can't say much but I was just wondering, if you're finding second line IO naive patients as easily as you thought you would by going ex-US? And then, another follow-up to that is that, I know that there's not too much that can be done, but I was just wondering if you could perhaps while we wait for this data look at archival tissues from tissue banks to learn a little bit more about the TIS vopra signature, because I believe most of the original analysis was done based on tissues from the ICONIC study.

[Beth Trehu:]

Yes. That's a great question Zegbeh. We also worked with NanoString to get some additional TIS data. But to your point, first of all, we did have some setbacks related to COVID. I really think the COVID impact is really the only negative impact on the study. In terms of the screening rate, we're quite happy with that. And also we've been very pleased that as we predicted 20% of these patients, are TIS vopra positive. So, that was our prediction based on prior analyses and that's what we're seeing in the study. So the patients are definitely there. There are a lot of places where patients don't have access to PD-1 inhibitors. We have to screen five patients to find one. But that's actually not too bad when you think about the rates of some of the other target – the biomarkers for targeted therapies, which are in the single-digits.

[Zegbeh Jallah:]

Thank you. And just another follow-up…

[Rich Murray:]

Yes. Sorry, Zegbeh. Maybe to the other part of your question, there is TIS data available and thus, we can kind of dial in the TIS vopra specific cutoff point in other types of tumors as well. So kind of more to come on that in terms of the science, but it's not unlike the sense you get. Certain tumor types are more highly infiltrated have more activated immune cells. Other tumor types are on the other end of the spectrum and may not have that. So that's kind of the way to think about TIS vopra.

[Zegbeh Jallah:]

Thank you. Very helpful. And then just a follow-up here regarding your comment about multiple tumor JTX8064. Just curious because I got excited when you said multiple cohorts. I was thinking multiple shots on goal here. But in terms of the cohorts, I know you can't say too much now because you have the trials in progress poster. But from a risk perspective, I was just curious, how much are you pushing the envelope with some of the cohorts in terms of how much you really think you have data to support it versus the other sort of just like run of the mill things that people typically do with cohort expansions?

[Beth Trehu:]

Sure. So I think actually all of the cohorts are really grounded in the science. So I think they all have an equal potential to show good results. And then what we've done is as we've described, of those seven combination cohorts, some of them are in the PD-1 experienced, some of them are PD-1 naive. And some of them are in tumor types that respond to PD-1, some are in tumor types that typically don't. So I think we've got a really good distribution. And the goal is to really cast a wide net but all based on the science. All of these are absolutely rooted in the science and then they're just exploring different settings in which that mechanism might work.

[Zegbeh Jallah:]

Thanks. And I think this is even related to a follow-up question as well, just regarding – just trying to understand what cells might work and things like that what cells might drive resistance and things like that. So I think at times you do have to go really large exposure. Just wondering, if you're going to be doing such large studies in the future because you're just trying to like you said cast a wide net. Is that what we're going to expect from your other programs just really huge studies? And then just so I can hop off follow-up here. You guys seem to still be the only one that's focused on really going after novel biomarkers. So a follow-up to Boris's question is just, how complex is the biomarker strategy from a development and what you anticipate from a commercialization perspective? Because I'm just wondering why not a lot of people are still actively pursuing novel biomarkers beyond the ones that we typically know like PD-1s?

[Beth Trehu:]

Sure. So I think PD-1 is a good – PD-L1 is a good example of where a biomarker made a huge difference. It's really what catapulted pembrolizumab or Keytruda forward. If the data is strong enough without a biomarker, that's fine. If a large percentage of your patients respond and do well then you don't need a biomarker. We just think it's really important to incorporate it early on in case you really do need it to find the patients that benefit. And obviously, you don't want to treat people with something that's not going to provide benefit to them. So you want to find the right patients; the right therapy for the right patients. Rich, did you want to add to that?

[Rich Murray:]

Yeah. Maybe Zegbeh -- another way to think about this is the biomarkers that we now take for as being relatively common, we're all directed at PD-1 inhibitors, CD8 cell biology, T-cell activation and such. And as you know many of our discovery programs are pointed at different immune cell types. And so, there's a set of biomarkers that maybe become more established for the myeloid cells and for the macrophages and perhaps other cell types. So I think that's perhaps the way to see this kind of cascade of biomarkers. They link to certain cell types and behaviors and in biology of the different cell types.

[Beth Trehu:]

And then in terms of the clinical development program, Zegbeh for a molecule like this, it is possible that it could be active in multiple different tumor types, if you look at the PD-1 inhibitors. So this could develop into a very large development program, yes. We're planting the seeds in all these different cohorts now. There are additional things that we might want to look at in the future. We could expand these within the study. We could do additional studies in these tumor types. I think we're planting the seeds for a potentially very large development program.

[Zegbeh Jallah:]

Thanks guys, and congrats again on the progress.

[Beth Trehu:]

Thank you.

[Rich Murray:]

Thanks.

[Operator:]

Our next question coming from the line of Ted Tenthoff with Piper Sandler. Your line is open.

[Ted Tenthoff:]

Great. Thank you very much. So quick question. I'm very much looking forward to the poster at ASCO as well as the R&D Day. I think that's going to be a great update. Is the plan with respect to the 8064 or INNATE expansion studies to do signal finding? And would those cohorts be able to be expanded on success and potentially inform registrational paths?

[Beth Trehu:]

Great question, Ted. Yes. These are initially for signal finding, but each expansion cohort is actually designed as a Simon two-stage design. So we have particular triggers that would lead to further expansions. And if we see encouraging data, then the next step to see if they could potentially become registration trials would obviously be discussion with FDA, but we do think some of them may have that potential, if the data is strong enough.

[Ted Tenthoff:]

Great. And I like the new name pimi.

[Beth Trehu:]

Did you have another question?

[Ted Tenthoff:]

No. I was just saying I like the new name for the PD-1 pimi.

[Beth Trehu:]

Oh pimi. Yes.

[Ted Tenthoff:]

Thanks guys.

[Beth Trehu:]

Okay. Thank you.

[Rich Murray:]

Thanks.

[Operator:]

That's all the time we have for our question-and-answer session today. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may now disconnect. Have a good day.

[Rich Murray:]

Thanks.