Jounce Therapeutics, Inc.
Q1 2018 Earnings Call Transcript

Published: 9 May 2018

[Operator:]

Good morning, ladies and gentlemen, and welcome to the Jounce Therapeutics First Quarter 2018 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 is being recorded at the company's request. I will now turn the call over to your host, Komal Joshi, with Jounce Therapeutics. Please go ahead.

[Komal Joshi:]

Thank you, operator. Good morning, and welcome to the Jounce Therapeutics first quarter 2018 financial results conference call. This morning we issued a press release which outlines the topics that we plan to discuss today. The release is available in the Investors and Media section of our website at www.jouncetx.com. Leading today's call is our CEO and President, Dr. Rich Murray, who will discuss Jounce's first quarter 2018 clinical and preclinical development activities, followed by our CFO, Kim Drapkin, who will review our first quarter financial results. We will then open the call for your questions. Our Chief Medical Officer, Dr. Beth Trehu, will also be available during the Q&A portion. Before we begin, I would like to remind everyone that today's discussion will include statements about our future expectations, plans, and prospects that constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including the Risk Factors discussed in our SEC filings. In addition, any forward-looking statements represent our views only as of today May 9, 2018, and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. With that, I will now turn the call over to Rich.

[Rich Murray:]

Thanks, Komal, and good morning, everyone. The first quarter of 2018 marked the time of continued progress for our clinical and preclinical pipeline. As you know, our goal is to discover and develop first in class immunotherapies where we aim to match the right therapy to the right patients. We use our Translational Science Platform to advance our programs from target selection to clinical development with biomarker driven approach. To date our platform has informed our target identification, tumor type selection for the ongoing Phase 1/2 ICONIC trial and biomarker analysis from patient samples. This will enable us to development an understanding of the patients in our trial and guide our next steps. With that, let's begin this morning with our JTX-2011 program. We initiated the Phase 1/2 ICONIC clinical trial in August 2016. ICONIC is a four-part adapted design open label trial with a Phase 1 and Phase 2 component. Both portion include JTX-2011 alone and in combination with nivolumab in patients with advanced solid tumors. The Phase 2 portion of ICONIC is evaluating preliminary efficacy across several different tumor types, each chosen based on the prevalence of ICOS expressing immune cells within those tumors. Across all indications the patients enrolled are relaxed or refractory with no standard treatment options. More specifically, in the gastric and triple negative breast cancer cohorts the patients are advanced but are predominantly IO naïve. To date responses to PD-1 inhibitors [indiscernible]. In other cohorts, such as head and neck cancer, melanoma and non-small cell lung cancer, almost all patients enrolled had also progressed on the standard of care PD-1 inhibitors. This is an increasing patient population with limited treatment options and the unmet medical need remains high. Since the start of ICONIC, the overall IO landscape has evolved and become more complex. And thinking about where the greatest unmet medical need exists, several key patterns have emerged, which include, first when IO responses occur they are more durable than previous standards of care. IO responses to improved PD-1 inhibitors can vary significantly by indication. Response rates increase as you move up to earlier lines of therapy in a given tumor type. Advanced relapse or refractory patients are the most difficult to treat, but also represent a significant unmet medical need and potentially a faster path to approval. And finally, using biomarkers to select patients may improve response rates. In the context of the IO landscape we believe that the upcoming ICONIC data and additional ongoing exploratory biomarker analysis will help or inform our clinical development paths in these tumor types. Our ASCO 2018 abstract will be published next week and contains the following

[Kim Drapkin:]

Thank you, Rich. Good morning, everyone. Jounce continues to operate from a position of financial strength. As we reported in this morning's press release, cash, cash equivalents and investments as of March 31, 2018 totaled $237.2 million compared to $257.9 million as of December 31, 2017. This decrease was driven by operating costs incurred during the quarter. Turning to the P&L, our collaboration revenue was $11.2 million for the first quarter compared to $20.3 million for the same period in 2017. Recall that collaboration revenue currently non-cash reflects the recognition of the Celgene upfront payment of $225 million received in July 2016. The decrease in collaboration revenue was primarily due to the adoption of new revenue recognition accounting guidance during the first quarter and not due to a change in our activities under our collaboration agreement with Celgene. Under this new accounting guidance, we have transitioned from recognizing revenue on a straight line basis to recognizing revenue based on our pattern of performance under the agreement. During the first quarter we incurred $18.2 million in research and development expenses compared with $15 million for the same period in 2017. The increase in R&D expenses was primarily driven by the following

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Boris Peaker with Cowen. You may proceed.

[Boris Peaker:]

Good morning. My first question is on ICONIC. I'm just curious, how many monotherapy patients will we see at ASCO and what do you see as reasonable expectations for these group of patients?

[Beth Trehu:]

Hi, this is Beth Trehu, so the abstract will be public next week and so I think we’ll have an more meaningful discussion and provide more information after the abstract has been released and then in a few weeks later at ASCO.

[Boris Peaker:]

Got you, okay. I guess I don’t know if this is going to be in the abstract, but just going to follow up to that question is for the ICONIC patients curious what fraction of those patients were you able to get a fresh biopsy just to assess ICOS level and will you have some of that data as well at ASCO?

[Beth Trehu:]

Yes, so there's some data about that in the abstract and we will be sharing data about that in the ASCO presentation.

[Boris Peaker:]

Great. Thank you very much for taking my questions.

[Beth Trehu:]

You’re welcome.

[Operator:]

And our next question comes from Debjit Chattopadhyay with H.C. Wainwright. You may proceed.

[Debjit Chattopadhyay:]

Hey good morning. Thanks for taking my questions. So just a follow up on Boris’s question on the ICOS level, should we understand that monotherapy perspective it wasn’t really selected or ICOS expression, but on the combo study it is more gear towards, two plus and three plus ICOS expression?

[Beth Trehu:]

Not exactly, so what we did based on preclinical data suggesting that single agent efficacy required higher levels kind of the IHC two plus, three plus for activity. What we did is, in Phase I we had no in enrichment at all. In the Phase 2 part of the study for both monotherapy and combination, we basically we screened archival tissue for ICOS and we kept enrollment of ICOS zero and one patients and then we've kept enrolling as we enroll only ICOS high on the archival then we keep enrolling until we confirm that we have at least 10 patients with ICOS high scores based on a fresh biopsy in each cohort which should target enrollment of 15 patients. So we're looking at the ICOS scores in monotherapy and in combination therapy. In the preclinical studies the activity was not as closely linked to the ICOS score as long as they were some ICOS expressing immune cells in the tumor then we saw activity.

[Debjit Chattopadhyay:]

Great and then just one more followup, in terms of the relationship of ICOS expression on tumor mutational burden, especially somatic mutational burden, obviously TNBC and GC don’t really fall in the upper left corner of that spectrum, so how do you think about using these as your first targets as opposed to some of the more obvious ones? Thank you so much for taking the questions.

[Beth Trehu:]

Sure, so I think, the utility of tumor mutational burden as a selection criteria or an enrichment criteria, that data has actually been pretty recent, particularly within nivolumab data. So there's not a lot of data actually on the relationship between tumor mutational burden and ICOS expression, although if you look at the tumors that we initially identified to TCGA as being more likely to have higher levels of ICOS expressing T-cells in them. They tend to kind of be in that right sided range in terms of mutations, but there's still a lot more work to be done to really understand that relationship.

[Debjit Chattopadhyay:]

Thank you and good luck.

[Operator:]

Thanks. And our next question comes from Jim Birchenough with Wells Fargo. You may proceed.

[Jim Birchenough:]

Yes, hi guys. I'm not sure if you're going to be able answer this, but you think we've got enough patients in ICONIC at this point to validate whether ICOS is useful or not as a biomarker to guide JTX-2011 development?

[Beth Trehu:]

Hi, Jim. Yes, so the cohorts in ICONIC are pretty small and so we see there is a sort of early exploration. The ICOS biomarker in this study thus far is considered exploratory. So I think with the small numbers we don't and we wouldn't expect that that would be enough to tell us yes or no this is the biomarker. If you recall with the early KEYTRUDA and Enevo [ph] studies, I remember very well a plenary session at ASCO where the big discussion was about, is there some link between PD-L1 expression and efficacy. So I think it took really hundreds to thousands of patients before we really even understood the value of PD-L1 as a biomarker. So I think this is still pretty early. We're learning a lot from this study and will continue to learn as we evaluate the incoming data.

[Jim Birchenough:]

And I guess the other question is just in terms of setting context in triple-negative breast and gastric cancer, I think you guys have provided some historical baiter for chemo, but is there a broader context that we should consider here or that you're considering here on what would be positive signal, are you looking at what other investigational drugs have shown in these indications or how should we think about what would be good data?

[Beth Trehu:]

Yes, so I think for us from this early study what we're looking for is an acceptable safety profile, both monotherapy and combo. We're looking for a demonstration that the drug has activity and we're looking for a relationship to a biomarker. And then it's good to know kind of what other drugs are doing in that space, but it's also really important to look at the patient population and a lot of other factors. So we can obviously have a more meaningful discussion about that after the data is presented.

[Jim Birchenough:]

Okay, great. Thanks for taking the questions.

[Beth Trehu:]

You’re welcome.

[Operator:]

And our next question comes from Mike Ulz with Robert W. Baird. Your may proceed.

[Mike Ulz:]

Hi guys. Thanks for taking the question. Just from the perspective of the ICONIC study, I was wondering if you can maybe comment on the level of enrollment in some of the other cohorts, so like head and neck, melanoma or non-small cell lung, and then maybe which one of those is further along just trying to get a sense of when we might see some additional updates beyond ASCO? Thanks.

[Beth Trehu:]

Yes, thanks Mike. So we haven't really given any updates on enrollment to-date. We'll be giving more information in a few weeks at ASCO.

[Mike Ulz:]

Great, thank you.

[Operator:]

And our next question comes from Cory Kasimov with J.P. Morgan. You may proceed.

[Cory Kasimov:]

Hey good morning guys. Thanks for taking the questions. First one is for the gastric cohort, are you able to comment on the relative breakdown of PD-1 naive versus PD-1 experience and even if you can't talk about any specifics now, I'm curious on what you think, this could impact the overall response rate and whether you'd break this out at ASCO? And then I have one followup.

[Beth Trehu:]

Sure, so if you recall the monotherapy cohorts started enrolling last April. The combination cohorts started enrolling in July and I think we've previously said the combination cohorts certainly enrolled more quickly than monotherapy, but they started enrolling in July and KEYTRUDA was approved in third line gastric cancer in September. And the protocol required that once a PD-1 inhibitor was approved in one of our tumor types then patients had to be PD-1 experience, so but we'll provide the details at ASCO.

[Cory Kasimov:]

Okay and then my follow up is kind of a follow up to Jim's question, but in light of recent high profile developments in the IO space, how are you strategically thinking about kind of how much data is enough to get comfortable with moving into pivotal studies or is this maybe not as relevant to your initial relapsed refractory target indications?

[Rich Murray:]

Yes, Cory I think at this point we’re not going to comment on that level of information. I mean obviously it's going to be much easier to have the context of the discussion once our information is released.

[Cory Kasimov:]

Okay, thanks.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. You may now disconnect. Everyone have a good day.

[Beth Trehu:]

Thank you.

[Rich Murray:]

Thank you.

[Komal Joshi:]

Thank you.

[Operator:]

You’re welcome.