Jounce Therapeutics, Inc.
Q1 2019 Earnings Call Transcript

Published: 10 May 2019

[Operator:]

Good morning, ladies and gentlemen, and welcome to the Jounce Therapeutics First Quarter 2019 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 2019 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 & Media section of our website at www.jouncetx.com. Speaking on today's call will be our CEO and President, Dr. Rich Murray, who will discuss our pipeline progress and key milestones for 2019, followed by our CMO, Dr. Beth Trehu, who will provide an update on clinical and preclinical development activities. Lastly, our CFO, Kim Drapkin, will review our first quarter financial results. We will then open the call for your questions. Before we begin, I would like to remind everyone that today's discussion will include statements of 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 May, as of today, May 8, 2019, and should not be relied upon as representing our views as of any subsequent dates. 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.

[Dr. Rich Murray:]

Thanks, Komal, and good morning, everyone. We've made significant progress in recent months with both our ongoing clinical and preclinical programs using our platform in reverse translational analysis. A key hallmark of our approach to discovering and developing novel immunotherapies is the use of our platform throughout the entire process from target identification through clinical development. In 2019, we've already achieved several key milestones, including promising new progression-free and overall survival data in patients stratified by our vopratelimab pharmacodynamic biomarker; preclinical data from our lead tumor-associated macrophage program, JTX-8064, an antagonist antibody to LILRB2; and we're nearing completion of enrollment in the Phase 1 study of JTX-4014, our PD-1 inhibitor. In April, we presented exciting new data from the Phase 1/2 ICONIC trial of vopra at the AACR Annual Meeting. We observed improved progression-free and overall survival in patients with the emergence of ICOS hi CD4 T cells, the vopra-associated pharmacodynamic biomarker. Notably, these cells have the characteristics of activated and proliferating CD4 T effector cells. The observations of improved PFS and OS and the characteristics of these cells strengthens our belief that these cells, stimulated by vopra, may contribute to clinical benefit. We're now in the process of initiating our next set of Phase 2 studies with vopra. We expect to pursue 2 development paths, specifically, vopra in combination with anti-CTLA-4, which is known to induce ICOS hi CD4 T cells, and a biomarker study based on identification of patients who may be more likely to respond to vopra. We're eager to move these studies along and look forward to providing further updates on vopra this year. Now turning to our lead macrophage program, JTX-8064. The preclinical data that we presented at AACR in April supports its development as a novel immunotherapy to reprogram immunosuppressive macrophages and to enhance antitumor immunity within the tumor microenvironment. We expect to file an IND application as well as initiate a Phase 1 clinical trial for JTX-8064 this year. Beyond our development programs, we continue to advance and build out our discovery pipeline and expect to move our next development candidate forward this year. At Jounce, we're building our pipeline to discover and develop the next generation of IO therapies. In particular, we believe success in IO will require, first, identifying the right patients; second, moving beyond a PD-1-centric approach; and third, addressing the unmet need in tumors without T cells. Beth will provide examples of each in today's discussion. We've made significant progress across the pipeline during this quarter. With these key accomplishments in hand, we look forward to advancing our broader pipeline towards 3 immunotherapies in the clinic in 2019. We remain focused on the underlying mechanistic science of our immunotherapies and understanding the characteristics of responding patients in our mission to bring meaningful and long-lasting benefit to cancer patients. With that, I'd like to now turn the call over to Beth to discuss the AACR data, our pipeline and science in more detail. Beth?

[Dr. Beth Trehu:]

Thanks, Rich. We are excited about the progress we've made across our pipeline. For vopra, we now have additional new insights into its mechanism of action based on the reverse translational data we generated, and this knowledge is guiding our development path forward. Our initial observations of tumor reductions associated with ICOS hi CD4 T cells now extend to improved progression-free and overall survival. Importantly, this was seen across multiple solid tumor types, including PD-1-inhibitor-naive and PD-1-inhibitor-experienced patients. All patients who benefitted in ICONIC demonstrated persistent ICOS hi CD4 T cells in the blood. As we presented at SITC 2018, the emergence of ICOS hi CD4 T cells is not observed with PD-1-inhibitor monotherapy. Let me now take a moment to review some of the key vopra clinical highlights that we presented at AACR in April. First, we observed that the emergence and persistence of the ICOS hi CD4 T cell biomarker in the peripheral blood is associated with tumor reductions and improved PFS and OS. The median PFS was 6.2 months for patients with ICOS hi CD4 T cells versus 2 months for patients with only ICOS lo CD4 T cells. Median overall survival for patients with ICOS hi CD4 T cells has not yet been reached, versus a median of 9 months for patients with only ICOS lo CD4 T cells. Additionally, there is no association of ICOS hi CD4 T cells with common predictive biomarkers, including microsatellite instability high, tumor mutational burden or PD-L1 immunohistochemistry. Also at AACR, our scientists described the characteristics of ICOS hi CD4 T cells associated with vopra treatment, including the following key takeaways

[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, 2019, totaled $173.2 million, compared to $195.9 million as of December 31, 2018. The decrease was primarily due to operating costs incurred during the period. Turning to the P&L. Our collaboration revenue was $11 million for the first quarter of 2019, compared to $11.2 million for the same period in 2018. Recall that collaboration revenue, currently noncash, reflects the recognition of the Celgene upfront payment received in July 2016. During the first quarter of 2019, we incurred $17.3 million in research and development expenses, compared to $18.2 million for the same period in 2018. The decrease in expenses was due to lower external R&D costs, partially offset by an increase in employee compensation costs. General and administrative expenses were $7.2 million for the first quarter of 2019, compared to $6.8 million for the same period in 2018. The increase in G&A expenses was the result of increased employee compensation costs, including higher stock-based compensation expense. Net loss for the first quarter of 2019 was $12.4 million, or a net loss per basic and diluted share of $0.38, as compared to a net loss of $13 million for the same period in 2018, or a net loss per basic and diluted share of $0.40. This decrease was driven by lower operating expenses. We reiterate our 2019 financial guidance and continue to expect cash burn on operating expenses and capital expenditures for the full year 2019 to be approximately $80 million to $95 million. We also continue to expect noncash collaboration revenue for 2019 of approximately $50 million to $60 million. Our strong balance sheet allows us the flexibility to drive our innovative immunotherapy pipeline plus efficiently execute against our strategic plans and goals. We are focused on executing our next Phase 2 studies for vopra and continue to advance the rest of our pipeline. We are proud of the work that the Jounce team continues to do both in and outside of the labs. While driven to advance our pipeline, we remain focused on addressing the significant unmet medical need still facing cancer patients today. With that, we would now like to open the call for your questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from Steve Seedhouse of Raymond James.

[Timur Ivannikov:]

Yes, good morning. This is Timur Ivannikov, on for Steve. So our first question today is regarding ASCO. Are you going to have any follow-up data at ASCO, since we didn't see the mean overall survival reach for ICOS hi CD4 T cells? And then another question about ASCO is, there is a competitor presentation by Kymab, and they're doing monotherapy and also in combination with Tecentriq. Do you have any thoughts on the competitor in terms of how similar the biologic is and in terms of the stage of development? Thank you.

[Dr. Beth Trehu:]

Yes, thanks. No, we don't plan to have any data at ASCO. The difference in terms of the timing for a data cut for AACR and for ASCO is really too short for us to have anything new and meaningful. So no, nothing at ASCO. We do look forward to additional presentations as data emerges.

[Dr. Rich Murray:]

Yes, and I think, this is Rich. On the Kymab antibody, obviously, we're watching the, that program. In general, we think that there's similarity between the molecules. They, from a top-line view, they seem to be kind of following a path of, the path that we had followed in ICONIC. Beyond that, obviously, we've seen their preclinical data and we think it looks similar to the data that we've been showing over the past few years.

[Timur Ivannikov:]

Okay, thank you very much. And then, I guess we have some, several questions about the progress toward initiating Phase 2 studies for vopra. And so the first question, maybe you could go over some of the gating factors on the way to study initiations and perhaps provide more detail on the biomarker selection predictive study, and will that study start a bit later?

[Dr. Beth Trehu:]

Yes. As we mentioned, the first study that we'll be initiating is the combination with ipi in PD-1-experienced non-small-cell lung cancer and PD-1-experienced bladder cancer. In terms of gating factors for study startup, it's just sort of the typical thing. You have to pick a CRO and pick your sites and do contracts and budgets and pick all the vendors. So nothing unusual or remarkable about that. And in terms of timing, what we usually do is issue a press release once we have dosed the first few patients in the study. So you can stay tuned for that. In terms of the predictive biomarker study, we will be providing more information about that as the year progresses. And there is some sequencing, just really from a, in many ways, from an operational standpoint. There's a lot of work to get a study started, so we stagger them a little bit. So the first one to be opening will be the combo with ipi.

[Timur Ivannikov:]

Okay, great. And just one final one. So in terms of the range for the cash burn that you provided, so it looks like $80 million to $95 million. So what is driving the delta there? Is it potential initiation of a study or something else? Thank you.

[Kim Drapkin:]

Sure. So this is Kim. We tend to provide a range. Obviously, just in the clinical development, when you're starting the year and planning your budget, it's the end of the prior year, and not knowing exactly when you're going to start your studies and how enrollment's going to go, so we give ourselves that flexibility. But as the year progresses and we have a better sense once our trials initiate, like we did last year, we may narrow our guidance towards the second half.

[Operator:]

And our next question comes from Debjit Chattopadhyay of H.C. Wainwright.

[Debjit Chattopadhyay:]

Are you going to narrow down the dose of ipi [Technical Difficulty] literature is all over the place in terms of how much ipi, a dose of [Technical Difficulty] to go all the way up to 10, or there's going to be a boost…

[Dr. Beth Trehu:]

Debjit?

[Debjit Chattopadhyay:]

Yes?

[Dr. Beth Trehu:]

You're breaking up.

[Debjit Chattopadhyay:]

Sorry. I was just wondering if you could provide some more clarity on the dose for ipi. Is there going to be a boosting, boost dose, or can you go over the 1-mg or 2-mg dose? Because the literature seems to be all over the place.

[Dr. Beth Trehu:]

Yes. So we will be using a dose that's, that is available commercially, but in terms of details about the trial, we have some insights into the interactions between ipi and vopra, and are not actually disclosing a lot of details about that at this time.

[Dr. Rich Murray:]

You know, though, we have said that, Debjit, I think it's fair to say that we have presented the data back at SITC that we know vopra is active on cells once they have induced the high levels of ICOS. So with that data in hand, of course, we're looking at the kinetics and the timing of how we would optimally administer the two agents in a manner consistent with the data that we've generated.

[Dr. Beth Trehu:]

Right. And doses of ipi that have been demonstrated to induce those cells.

[Dr. Rich Murray:]

Correct.

[Debjit Chattopadhyay:]

So is it still going to be a sequential dosing or do you think you want to prime the patients first with ipi to get to that threshold of ICOS hi cells before you come in with vopra?

[Dr. Beth Trehu:]

Yes, and for competitive reasons, again, we're not giving a lot of details, but again, we've put a lot of work into understanding the kinetics of induction of the ICOS hi CD4 cells and the, looking at the PK and PD for both drugs to try to figure out the best way to administer them together, and that's all I'm going to say right now.

[Dr. Rich Murray:]

I will make one more comment, Debjit, on the, kind of maybe a broader comment on dosing. I think, as we've all witnessed over the past few years, immunotherapeutic, particularly antibodies, have been just dosed together because it's convenient. The patient's receiving an infusion and you do that. But we would argue that mechanistically, you really have to understand what each mechanism is doing, understand the kinetics of that, and we've spent a lot of time ourselves, with our own data, working with our advisors to really look to optimize that.

[Operator:]

And our next question comes from Jim Birchenough of Wells Fargo.

[Unidentified Analyst:]

Good morning, it's Nick on for Jim. Thanks for taking our questions, and we have questions along a similar theme, but I will ask, for the non-small-cell lung and bladder patients, are they required after, your slide has an ipi priming, are they required after ipi priming to demonstrate circulating CD4 ICOS hi T cells to a certain level after this induction? And if not, do you intend to at least enrich, for patients who have high versus low or non-induced T cells, as part of the trial?

[Dr. Beth Trehu:]

Yes, Nick, this is Beth. That's a great question. In this study we will absolutely be looking for those cells. Actually, multiple points along the study. And certainly, after, to see what ipi is doing versus what vopra is doing. In terms of enriching or selecting, that's something that certainly could be potentially done, the way that the study is written. Initially, we're not enriching; we're going to be looking to see what percentage of patients actually develop those cells, and then as things progress, that certainly could be the way that it evolves. Did you want to add anything?

[Dr. Rich Murray:]

Yes. I think maybe I'll also just add to that, Nick, the, as we learn that, we do feel it's important to be looking at that population as a whole as a bit of a kind of a backbone to the study, but there's an obvious relationship of how we can connect that to our biomarker-driven studies. And so we'll be talking much more about this, the, as we're describing this now, the emerge study, and its connection to biomarker studies in the future.

[Dr. Beth Trehu:]

Yes, and in all of our studies, we include a lot of potential predictive biomarkers, so yes, we'll be looking at the ICOS hi CD4 cells and their emergence as the study progresses, but always looking at baseline tumor and blood samples so that we can explore other things that might contribute to their emergence.

[Unidentified Analyst:]

Okay, thank you. And then as far as the biomarker study, I mean, how close are you to identifying a novel biomarker or panel of biomarkers you think are predictive of emergence of this subset of CD4 T cells?

[Dr. Beth Trehu:]

Yes, we'll provide more information on that as the year progresses.

[Unidentified Analyst:]

Okay. So you're close, then. Getting close. And then just the last one from me...

[Dr. Rich Murray:]

A very competitive area.

[Dr. Beth Trehu:]

Yes, we have to [indiscernible].

[Unidentified Analyst:]

Yes, that's true. That's true.

[Dr. Rich Murray:]

Yes.

[Dr. Beth Trehu:]

Yes.

[Unidentified Analyst:]

And just the last one from me, I mean, I know that you had announced these tumors a while back, selected tumors a while back, but obviously in ICONIC, if I recall correctly, probably the most prominent signal was in gastric cancer patients. Is there a reason that you're not doing a gastric trial?

[Dr. Beth Trehu:]

Yes, a lot of it has to do with the standard of care, what's feasible in gastric cancer. The recent KEYTRUDA data was, unfortunately, somewhat disappointing, but after a lot of consultation with key opinion leaders in multiple tumor types, we decided the best opportunity for this ipi combination was in non-small-cell lung cancer and bladder cancer. We still, we agree with you, the gastric cancer data was very encouraging, and we look forward to opportunities to explore that in the future.

[Dr. Rich Murray:]

Yes, it's worth mentioning that, because at the, within the ICONIC study, in the patients generating the ICOS hi CD4 cells, were representative patients from PD-1-experienced non-small-cell lung cancer patients. Part of our founding group and advisors, Jim Allison and Pam Sharma, they've done a large body of work in bladder cancer. So we have kind of a good understanding of this, of the science, in translational science, from bladder cancer. So those 2 kind of features helped, as well as other, just general KOL input, helped us really prioritize the lung and bladder.

[Operator:]

And our next question comes from Cory Kasimov with JPMorgan.

[Unidentified Analyst:]

Hi, this is [indiscernible] on for Cory. I have 2 questions for you. My first question is related to your PD-1 inhibitor. Can you please discuss your overall strategy to develop this inhibitor? And how do you plan to differentiate it from the current other PD-1 inhibitors in the market given that their long-term safety data and efficacy data is going to come by the time 4014 is going to make it to the market?

[Dr. Beth Trehu:]

Sure. So I think we've stated before that it's not particularly differentiated as a molecule, it's just a well-characterized PD-1 inhibitor. And our primary reason for developing it is that access to the approved PD-1 inhibitors for clinical trials and for development has really become quite restricted and very costly. And we felt that strategically it made sense for us to have our own PD-1 inhibitor so that we could combine it with the other agents in our pipeline. And even though we've talked about moving beyond the PD-1-centric approach, as we move into the colder tumors, the tumors where T cells are not as dominant, it is quite possible that the mechanism of some of our other pipeline agents will be to induce a T-cell infiltrate in those tumors. And at that point, you may need to combine with a PD-1 inhibitor. So we feel it's important strategically to have an access for PD-1 inhibitors. And the general treatment paradigms for, include PD-1 inhibitors in most settings at this point. So again, strategically, it's important for us to have it to be able to combine with the other drugs in our pipeline. And we're not seeking to differentiate it. And then finally, I think we've also stated, having a monotherapy registration path for the drug is not required for us to be able to still use it in combination with the other drugs in our pipeline. We haven't ruled that out, but our primary strategy is to have a PD-1 inhibitor that we can combine with the other agents in our pipeline and, as I said, we would, we expect to have the recommended Phase 2 dose this year, positioning it to be able to use in that context.

[Unidentified Analyst:]

Okay, thank you. And my second question is related to 8064. Could you please help me with the timelines, when we can see initial data from 8064, now that the trial is expected to begin in 2019?

[Dr. Beth Trehu:]

Sure. So the Phase 1 trial is expected to begin this year. So in general, a Phase 1 trial takes a certain amount of time. You can only enroll each dose cohort at certain intervals. So if you think back when we started the ICONIC study in 2016, we presented our first Phase 1 safety data over a year, about a year later at ASCO. So at least a year before any data is available from that program after we start.

[Operator:]

Our next question comes from Mike Ulz of Baird.

[Unidentified Analyst:]

Hi, this is Colleen on for Mike. Thanks for taking our question. To follow up on 8064, can you speak broadly about how you're thinking about this Phase 1 trial design and monotherapy versus combination in the early cohorts, or, and any sort of specific tumor types you think would make sense there?

[Dr. Beth Trehu:]

Yes. We actually, we haven't spoken about that yet. We certainly have considered all of those things, but we'll provide more information about the trial when we get closer to its initiation. So we'll be happy to share all of that with you, but it's a little early. We'll do that later.

[Unidentified Analyst:]

Okay, thank you. And then, now that the Bristol-Myers/Celgene has been voted to pass, is there any update on the Celgene collaboration? And can you just remind us what the next trigger would be on that?

[Kim Drapkin:]

Sure. Hi, Colleen, this is Kim. So yes, we were, obviously, saw that the vote had passed, and we continue to work with Celgene. It's sort of business as usual at this point. And we look forward to, once the deal closes, continuing forward with BMS. But in terms of, if you recall, how the deal is structured, it's strictly options, and each of the programs has a particular opt-in time. And so we haven't given clarity on when the next one would be, but we did receive the large upfront as well as the equity investment, and then we're responsible to move the programs forward until we reach opt-in point.

[Operator:]

And the next question comes from Boris Peaker of Cowen.

[Boris Peaker:]

My first question is on vopra. I'm just curious, do you have a sense of how long these ICOS hi CD4 T cells persist? And how important is this persistence?

[Dr. Beth Trehu:]

Sure. So in Pam Sharma's original data with ipi, it was only, the patients who benefitted were the ones who had persistence of the ICOS hi CD4 T cells. The data that has been published there, it's a relatively short-term follow-up in terms of measurement of those cells. In our patients, we've had patients on for quite some time now, and they continue to persist. So we continue to measure the cells in the responding patients who remain on, all of whom remain on study, and therefore, we're seeing the persistence of these cells, and we believe that the fact that we've seen improved progression-free and overall survival and persistence of these cells is all tracking together. So we believe that they do play a role in this durable antitumor activity based on all of the data that we've generated. And that's certainly something we'll be continuing to test going forward. Rich?

[Dr. Rich Murray:]

Yes, maybe just a further comment, Boris, on that. Where we see patients kind of well into, probably, 2 years now, where there's, or coming up to there, where there's persistence of the cell population in the blood, there's a considerable percentage of the CD4 cells are maintaining those characteristics. As Beth mentioned, the measurement from just the ipi-alone studies of inducing these cells was a much kind of shorter-duration study, and we think an advantage here for vopra to maintain and sustain these cells is the safety profile of vopra is quite, we're pleased with that, continue to be pleased with that safety profile. So for sustainability and just the, kind of the numbers of cells that we can see in the bloodstream, we're encouraged by the ability to keep vopra on board and keep those cells cycling in the patients.

[Dr. Beth Trehu:]

Year and a half.

[Dr. Rich Murray:]

Year and a half.

[Boris Peaker:]

Got you. Okay, that's useful to know. And just my last question, on 8064, I'm just curious, are there any other competitor macrophage-activating drugs in the clinic in general, perhaps even targeting different macrophage pathways, that just may be informative to both you and investors as you continue to advance 8064? Anything particularly that you're looking towards? Any data sets in the near future that you think would be helpful in just, in general, macrophage activation?

[Dr. Rich Murray:]

Yes, this is Rich. Probably the closest on that is, there is a Merck program that was announced at SITC, an antibody targeting, also, LILRB2. We're not aware of any other molecules hitting that target in the clinic or heading to the clinic, so that Merck program is clearly the closest analogy we could look at. As you know, there are other macrophage agents. There's certainly the CSF1R agents, which we think are different in terms of their mechanism. In that case, some of those are depleters, and you are trying to deplete the bad function of that lineage. We're not looking to do that. We're looking to switch the behavior of that lineage. So there's, I think, a distinct difference there. And of course, CD47, which is more the ingestion of the cancer cells kind of mechanism, which again, we think is distinct from kind of switching the inflammatory phenotype. So in our view, there's a number of kind of, call them leading mechanisms pointed at the same cell type. I think they're distinguishable in what is trying to be accomplished on the cells. And clearly, for our program, the closest is the Merck program.

[Operator:]

Thank you. Ladies and gentlemen, thank you for your participating in today's conference. This does conclude the program. You may now disconnect. Have a great day.