Jounce Therapeutics, Inc.
Q4 2017 Earnings Call Transcript

Published: 8 Mar 2018

[Operator:]

Good morning, ladies and gentlemen, and welcome to the Jounce Therapeutics Fourth Quarter and Full-Year 2017 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, Chrystal. Good morning, and welcome to the Jounce Therapeutics fourth quarter and full-year 2017 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 Web site at www.jouncetx.com. 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 March 8, 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. Leading today's call is our CEO and President, Dr. Rich Murray, who will discuss Jounce's key value drivers for 2018 and provide an update on our clinical and preclinical development activities, followed by our CFO, Kim Drapkin, who will review our full-year 2017 financial results and provide 2018 financial guidance. 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. With that, it is my pleasure to turn the call over to Rich.

[Rich Murray:]

Thanks, Komal. Good morning, everyone and thank you for joining us. 2017 was an important year of execution for Jounce and our first year as a publicly traded company. I’d like to start this morning's call with a quick review of some of our accomplishments from the past year. We launched our IPO in January of 2017, raising $117 million in gross proceeds, and allowing us to maintain a strong financial position to execute on our strategy. We expanded our team, including our Board, as well as our facilities and capabilities to support broader pipeline mission. On the clinical front, we executed on the development of our lead program JTX-2011, achieving several milestones. We established our safety profile, identified our Phase 2 dose, and initiated enrollment of the Phase 2 monotherapy and combination therapy cohorts. We now plan to leverage that great progress and momentum into 2018 around four key value drivers. First, with JTX-2011. We're pleased to announce today that two of our Phase 2 combination cohorts of our ICONIC trial, gastric cancer and triple negative breast cancer have met their enrollment targets with completion of at least one efficacy assessment. This has enabled submission of an abstract for the 2018 ASCO Annual Meeting. Consistent with patient needs, the gastric and triple negative breast cancer tumor types were advanced cancer patients have the fewest options enrolled the fastest. As we previously mentioned, combination cohorts continue to enroll faster than monotherapy consistent with clinical practice and the IO landscape. We’ve also been pleased with the ongoing investigator support to facilitate the overall pace of trial enrollment. For our second value driver this year, we're pleased to announce that we plan to expand our JTX-2011 program beyond the ongoing PD-1 inhibitor combination cohorts and initiate a new JTX-2011 and CTLA-4 inhibitor combination within the adaptive ICONIC trial in 2018. As a reminder, Jounce initially prioritized development of JTX-2011 based on the seminal work on the ICOS target from two of our cofounders

[Kim Drapkin:]

Thank you, Rich. Good morning, everyone. Jounce continues to operate from a strong financial position to support the activities that Rich outlined earlier, including advancing our lead clinical program, advancing our development candidate and maintaining our investments in our discovery platform. As we reported in this morning's press release, we ended 2017 with cash, cash equivalents and investments totaling $257.9 million compared to $257.4 million for 2016. This increase was primarily driven by the net proceeds of $106.4 million from our IPO and was offset by cash used for operating and investing activities throughout the year. Overall, Jounce utilized the $105.9 million in net cash for full-year 2017, consistent with our financial guidance. Turning to the full-year P&L, our collaboration revenue was $71.6 million in 2017 compared to $37.2 million for 2016. This is in line with our previously stated revenue guidance of approximately $70 million to $75 million. Recall that collaboration revenue currently non-cash reflects the recognition of the Celgene upfront payment of $225 million received in July 2016. During 2017, we incurred $67.8 million in research and development expenses compared to $34.9 million for 2016. The increase in R&D expenses was primarily driven by the following

[Rich Murray:]

Thanks, Kim. I think what I will do is maybe take a moment to correct a statement that I think I may have said incorrectly about the ASCO abstract. So I’m going to go back through that as to the 2018 ASCO abstract. Phase 2 monotherapy and combination safety data in all tumor types, preliminary efficacy data which includes gastric cancer from both Phase 2 monotherapy and combo cohorts, triple negative breast cancer from the Phase 2 combination cohort. And although we did not have specific gastric and triple negative breast cancer cohorts in Phase 1, we will provide the preliminary efficacy data from the patients with these tumor types who did enroll in the Phase 1. We will also provide available data on ICOS-positive patient enrichment by immunohistochemistry as well as other exploratory biomarkers and methods that we included in the trial. Okay with that correction, I’d like to put some closing comments. Last month marked Jounce's 5-year anniversary. And it's really remarkable to see how far we've come. We opened our labs in 2013 with a focus on great science, building an exceptional team and a strong culture to develop first-in-class immunotherapies, none of which would have been possible without the dedicated group of hard working employees who made Jounce what we are today. In just five years through the establishment of our translational science platform, we’ve successfully developed a differentiated immunotherapy approach and believe that our innovative pipeline reflects that work. As Kim alluded to, we aim to build a sustainable, multiproduct company. Our mission begins with helping cancer patients and our goal first and foremost is to deliver novel immunotherapies to these patients. And of course, I’d like to take this opportunity to thank the patients who have enrolled in our trial. I'm excited about what's to come from our team and our approach at Jounce, and I look forward to sharing more with you in 2018 and beyond. We'd now like to open the call for your questions. Operator?

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Jim Birchenough from Wells Fargo Securities. Your line is open.

[Jim Birchenough:]

Yes. Hi, guys. Congrats on all the progress and looking forward to the ASCO update. Maybe as a bit of a preview to what you might say Monday, could you give us some sense of expectations for what we see with PD-1 inhibition by itself in gastric and triple negative breast cancer, and what do you think the threshold for success is? And then, a second part of the question, just as you’ve gone through the screening for those two cohorts, have you seen ICOS expression levels in line with what you would have expected overall and could you remind us what the rate of ICOS-positive tumors are across those two cohorts? And then, finally, just on the PD-1 program, what triggers are opt-in [ph] by Celgene, and give a general sense of, if they were to do that, when that might happen? Is that more of a 2018 or 2019 event? Thanks.

[Beth Trehu:]

Thanks, Jim. This is Beth Trehu. I will take the first two questions, and then turn it over to Rich. So, we will be providing more color at Cowen as we mentioned, but the response rates as you know, KEYTRUDA is approved in third line gastric cancer based on a response rate of 13%. There is no approval for any PD-1 inhibitor in triple negative breast cancer, but the most recent KEYTRUDA data was about 5% response rate. It’s important to not just focus on response rate, since obviously the importance of immunotherapy is the quality and the durability of the responses. But for us in terms of what success looks like, there are a few key points. We think obviously the drug needs to have an acceptable safety profile. We have to have a demonstration of drug activity, because obviously our biomarker approach, biomarker data that informs and helps to identify response to patients and also enhances our understanding of the mechanism of the drug, and we will be looking for clinically meaningful efficacy compared to the relevant benchmark in similar stage patients. I think that’s what -- those were your two questions. So I will turn it over to, Rich, regarding the 2014 program.

[Jim Birchenough:]

Great.

[Rich Murray:]

Okay, great. For the Celgene, Jim, I think we have mentioned we -- the option is tied to the ICONIC study. The option terms were predetermined in the agreement. We are not providing specificity on that exact timing beyond that. We’ve got a very good relationship with Celgene, and the option criteria has been agreed to in the contract.

[Jim Birchenough:]

And then I just missed it, guys on the rate of ICOS positivity that you would expect for gastric and triple negative and what you saw on screening for ICONIC? Thanks.

[Beth Trehu:]

Yes. Thanks, Jim. Sorry about that. Yes, so the rate in the archival tumor samples which are what we first look at in terms of the patient enrichment have actually been very much in line with our expectations. Some are translational work both looking at RNA and then looking at actual tumor samples from patients not in the trial. We estimated the positivity in gastric cancer to be about 30% to 40% ICOS high and in triple negative breast cancer a little bit lower than that. And the archival tumor samples have been consistent with our expectations and we will be providing information on the fresh tumor biopsies as well in our ASCO data.

[Jim Birchenough:]

Great. Thanks for taking the questions.

[Operator:]

Thank you. And our next question comes from Cory Kasimov from J.P. Morgan. Your line is open.

[Shawn Fu:]

Hey, guys. This is Shawn on for Cory. Thanks for taking my question and congrats on the progress. Can you maybe just provide a little bit more detail in regards to what we will see in the abstract versus the actual ASCO presentation? I know you guys mentioned previously that by cohort, there would be somewhere around 15 to 20 patients per. Would that be 9 weeks to follow up time? So just wondering if that was the data that was submitted to ASCO and that the data that we will see in the abstract?

[Beth Trehu:]

Thanks. So, yes, the target enrollment for the cohorts for the combination cohorts was 15 patients per cohort. Although we did have some over enrollment to try to make sure we had sufficient ICOS high subjects. So what drove the data for the abstract was the completion of the target enrollment for the gastric and triple negative breast cancer combo patients. So we will have at least 15 patients with at least one efficacy assessment, that’s what drove the abstract. The single agent cohort as I think, Rich mentioned, and as not surprising since they’re in the same patient populations, the enrollment in the single agent cohorts was not as robust as the combination. But we think it's important to include a single agent data that we have in gastric cancer, because it's very complementary to what you see with combination. And then as Rich mentioned, just to be complete, we will include data from any gastric or triple negative breast cancer patients who enrolled in either the mono or the combo parts of the Phase 1 study. And then by the time of the presentation, if it's accepted, we will have additional data -- we will have longer-term follow-up data on the patients and concluded in the abstract and we will also have data from additional patients because as I mentioned some of these cohorts have over enrolled as we wanted to make sure we had a sufficient number at least 10 actually ICOS high patients based on the fresh biopsy. So you can expect more than the 15 patients of target enrollment by ASCO itself.

[Shawn Fu:]

Okay, perfect. And then just sort of curious, given that the seminal work for ICOS would sort of done in the backdrop of CTLA-4 initially, I am kind of curious why the initial clinical foray [ph] then was decided to go forward in combination with PD-1 versus CTLA-4 initially?

[Beth Trehu:]

Yes, that’s a good question. I think a lot of that was driven initially by the fact that there were more concerns about the safety profile with CTLA-4 inhibitors, and we wanted to make sure that we were giving our drug the best possible chance in terms of the safety, a safe combination. I think, secondly, when we started the trial, the PD-1 inhibitors, we're already clearly dominating the market, and so we thought that was important. And then very importantly we had preclinical data that suggested that the combination could be beneficial. So we really wanted to start with PD-1 inhibitors. I think we always intended to look at a combination with the CTLA-4 inhibitor, but wanted to make sure that we were comfortable with the safety profile in combination with PD-1 inhibitors before embarking on any new combinations.

[Shawn Fu:]

Okay, perfect. Thanks, guys. Thanks for taking my question.

[Operator:]

Thank you. Our next question comes from Mike Ulz from Robert W. Baird. Your line is open.

[Mike Ulz:]

Hey, guys. Thanks for taking the question, and thanks for all the color on what to expect at ASCO. And just in terms of the ASCO data, you mentioned providing some data on a number of biomarkers. Just curious if you can maybe give us a little more -- give little bit more specific on what biomarkers we should expect?

[Beth Trehu:]

Yes. So in addition to the ICOS IHC, we've had some pharmacodynamic biomarkers in the trial. But true to our biomarker driven approach, we had certain biomarkers that were included prospectively in the trial, but as data emerges, we are always doing what we call reverse translation and taking the data and interrogating it and going back to see how we can learn more about our drug. So we actually have developed some new biomarker methods that we will be sharing at the meeting. And I'm not going to go into any more details than that, but yes things that we were -- that we’ve talked about before, but then also some new things.

[Mike Ulz:]

Okay. Got it. And then, just with respect to the ICONIC study and the additional cohorts in lung melanoma and head and neck, do you think we can get that some preliminary data in 2018 or is that, that sort of slip into 19? And then, as you think about next steps, will you be waiting to see data across all cohorts before you make any decisions on moving forward?

[Beth Trehu:]

So, we’re not guiding right now as to exactly when that data will be available. It's really driven and as Rich mentioned, by when we meet our enrollment target and also have at least one efficacy assessment on all of those patients, so that we've a sufficient set of data to preferably submit to a medical meeting. And then in terms of next steps as we talked about the ICONIC trials has an adaptive design, so we can make modifications to the trial based on emerging data, example of which is the addition of the cohorts with the CTLA-4 inhibitor. So it allows us a lot of flexibility and we will continue to react and adapt based on emerging data from the study and we will give more guidance as things progress.

[Mike Ulz:]

Great. Thanks for taking the questions.

[Operator:]

Thank you. Our next question comes from Boris Peaker. Your line is open.

[Boris Peaker:]

Good morning. My first question is how many patients, I’m just curious will have fresh biopsy at ASCO? And will you have data comparing the ICOS expression level in archival versus fresh biopsy?

[Beth Trehu:]

Yes. So, we expect to have fresh biopsy data on all of -- well, most if not all of the patients on whom we report. Sometimes there are challenges just with the quality of the biopsy. So we will have data on everybody for whom we have a valuable tissue. And, yes, we will be presenting the correlation between the archival in the fresh biopsies.

[Boris Peaker:]

Got you. And in terms of monotherapy patients, we haven't talked much about that, but how many monotherapy treated patients do you anticipate to see? And is -- are you planning to continue monotherapy in general or is going forward only in combo?

[Beth Trehu:]

So as I mentioned, the monotherapy cohorts have lagged a bit behind the combo cohorts in terms of enrollment. I think we will have sufficient gastric cancer monotherapy data to -- as I said, its complementary I think to the combination therapy data. And again, we will provide more guidance about our future plans as the data emerges and as we present data.

[Boris Peaker:]

Great. Thank you for taking my questions.

[Operator:]

Thank you. [Operator Instructions] And we do have a follow-up from Jim Birchenough from Wells Fargo Securities. Your line is open.

[Jim Birchenough:]

Yes. Hi, guys. Thanks for taking the follow-ups. So just want to make sure I understand for the ASCO presentation. At the time of ASCO, would we expect repeat scans on all patients? And then the other part of it is, to the extent different patients are going to be further along the treatment course, do you expect response rate to improve over time based on what you’ve seen preclinically? And then just a final question, just to confirm, is your a priori hypothesis that we will see higher response rates in the ICOS-positive patients? Thanks.

[Beth Trehu:]

Okay. So we certainly would have longer-term follow-up data on the patients who are included in the abstract. There may [indiscernible] patients who enroll later who may not have two efficacy assessments, but certainly most of the patients will have at least two efficacy assessments by the time of -- at ASCO. And I think it's too early to talk about what we expect to see over time. So I think we will wait until we see what we actually present at ASCO. But I do want to reiterate what we actually present will have more data than what you can expect to see in the abstract, and that’s particularly true on the biomarker front because we did not have a lot of the fresh biopsy biomarker data by the time of the ASCO abstract submission, but we will in time for ASCO. So I think we will have a much better picture of the relationship between archival and fresh as I mentioned and also the relationship to response. Regarding our hypothesis, we certainly -- our hypothesis has been that biomarker enrichment can help to improve response rate. But as you know we've incorporated a number of bio -- potential predictive biomarkers in the study. And so as we previously stated, there's a point in the study when we have sufficient data that we will make a determination about which is potentially the best predictive biomarker. We start with IHC, but we have a lot of other investigation going and I think we will learn a lot from the exploratory biomarkers that we’ve included in the study.

[Jim Birchenough:]

And then maybe one final question and that is on ICONIC in the flexibility of design, the adaptive design, is one of the possibilities to expand further these cohorts if you’re seeing a signal, and could you potentially convert ICONIC to registration enabling study, not saying -- not asking if you’re going to, but just is that one of the options or would you need to start a whole new study?

[Beth Trehu:]

Sure. So, absolutely we can expand existing cohorts, that's written into the study and has been since the beginning. I think, in terms of the potential to convert into a registration study, a lot of that depends on which cohort and the line of therapy and which path you pursue. So in a PD-1 inhibitor failure population, if you feel there's no relevant control group that’s the situation we could potentially move towards a registration path. Any situation in which a control group is required, it's more likely to require a new trial. But the ICONIC trial thus give us the flexibility to do that, to enable us to move forward quickly in relapsed refractory patients, if that’s the path that we choose or to move into earlier lines of therapy within the ICONIC trial.

[Jim Birchenough:]

Great. Thanks for taking the follow-ups.

[Beth Trehu:]

You’re welcome.

[Operator:]

Thank you. And I’m showing no further questions from our phone line. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Have a wonderful day.