Jounce Therapeutics, Inc.
Q3 2019 Earnings Call Transcript

Published: 8 Nov 2019

[Operator:]

Good morning, ladies and gentlemen, and welcome to the Jounce Therapeutics Third 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:]

Good morning and thank you for joining us for our third 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 provide an update on our pipeline progress and corporate developments followed by our CMO, Dr. Beth Trehu, who will provide an update on our clinical activities. And lastly our CFO, Kim Drapkin will review our third quarter financial results and provide an update of our 2019 guidance. 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 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 November 7, 2019 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 Jounce team has continued to work diligently on advancing our pipeline and executing on our strategy of developing immunotherapies with the potential to provide long-lasting benefits to cancer patients. Specifically, we're pleased to report the continued progress of our two clinical stage programs vopratelimab or vopra, our ICOS agonist and JTX-4014 our PD-1 inhibitor as well as the further development of our discovery pipeline.The cornerstone of the vopra clinical development program is ICOS hi CD4 T effector cells, a vopra associated pharmacodynamic biomarker, which is not seen with PD-1 inhibitors. Earlier this year, we presented exciting data from the ICONIC study our Phase I/II vopra clinical trial at AACR showing improved responses, PFS and OS directly linked to the emergence of these cells.Based on extensive reverse translational analysis from our ICONIC trial presented at several scientific meetings, we've identified two development paths for the vopra program. In the first development path, we're focused on fully realizing the biology of the ICOS hi CD4 T cells both the induction of the cell population as well as their expansion and sustained activation.To-date the vast majority of IO approaches attempt to enhance CD8 T cells. However, fundamental immunology reinforces the importance of CD4 T cells, their states of specialization and their central role in orchestrating immune responses. Based on this biology, we initiated the Phase II EMERGE trial in mid-June applying a unique dosing and sequencing schedule of the vopra and ipilimumab or ipi combination.In the second development path, we'll focus on the use of a predictive biomarker. In the analysis of ICONIC patients, we were able to identify a biomarker from baseline samples that correlated with the emergence of the ICOS hi CD4 T cells, response rate, PFS and OS in patients treated with vopra alone or in combination with nivolumab or nivo.We plan to use this potential predictive biomarker to select patients in a new trial with vopra and our own PD-1 inhibitor JTX-4014. We will provide more details in the next few months on this clinical trial.At the Annual SITC conference on Saturday, November 9 we will present The EMERGE Trial in Progress poster. The poster will include the scientific rationale for the trial and the combination dosing and sequencing strategy. We believe our strategy optimizes both the kinetics of the induction of ICOS hi CD4 T effector cells by ipi and their expansion in sustained activation by vopra. We spent considerable time with our founders to develop this strategy. With our wholly owned pipeline, we believe we have multiple opportunities for both vopra and our PD-1 inhibitor JTX-4014.Specific to JTX-4014, we'll be presenting new safety and preliminary efficacy data from the Phase I study at SITC tomorrow November 8. We're also excited to announce that these preliminary data support the use of JTX-4014 as the PD-1 inhibitor in the predictive biomarker combination trial with vopra.Turning to our translational science platform, we continue to use this high science approach not only for the reverse translational analysis for clinical development, but also to drive our target identification and discovery pipeline. Our broadening discovery pipeline includes multiple programs targeting T regulatory cells, macrophages and stromal cells.We continue to believe the best approach to identifying novel IO therapies is to build a pipeline of programs targeting diverse immune cell types. Our next development candidate is on track to advance into IND-enabling studies by the end of the year.Moving now to some of our corporate accomplishments. We're pleased to announce key appointments that further strengthened our management team. In September, we announced the appointment of Jacqui Fahey Sandell, as Chief Legal Officer and Corporate Secretary. She brings a wealth of in-house biotechnology and pharmaceutical legal experience and we believe her expertise will be a crucial asset as we continue to progress the company and execute on our mission of transforming the way cancer is treated.Separately, in October we added Dr. Haley Laken, VP of Program and Portfolio Strategy to the management team. Haley has been leading our development programs including the planning and decision-making around the portfolio since she joined Jounce in early 2018.As we head into 2020, we are well-capitalized to continue advancing both our ongoing clinical programs and discovery pipeline. We remain keenly focused on interrogating the underlying mechanistic science of our immunotherapies and identifying the patients likely to respond.I'll now turn the call over to Beth to discuss our pipeline and science in more detail.

[Beth Trehu:]

Thanks, Rich and good morning, everyone. I would like to provide more detail on the recent highlights from our pipeline. We are particularly pleased with the progress we have made to date with vopra. Our Phase II EMERGE trial of vopra in combination with ipi in PD-1 experienced patients with non-small cell lung cancer or bladder cancer is underway.These patient populations represent a rapidly growing area of unmet need as PD-1 inhibitors move into earlier lines of therapy with few options and no established standard of care for patients who progress after a PD-1 or PD-L1 inhibitor.PD-1 inhibitors have made great strides but unfortunately the majority of patients do not respond to therapy. As the primary activity of PD-1 inhibitors impact CD8 cells we believe that focusing on the critical role of CD4 cells may help address this unmet need.The open-label multicenter EMERGE trial builds upon the fundamental science by our founders as well as the reverse translational analysis from our ICONIC trial. This science supports the role of ipi in inducing ICOS hi CD4 T cells prior to vopra administration.Our founders demonstrated that ipi induced ICOS hi CD4 T cells and that improved clinical outcomes were seen in patients with sustained levels of ICOS hi CD4 T cells. We also demonstrated that ICOS hi CD4 T cells are not induced by PD-1 inhibitors.In ICONIC, we demonstrated that improved outcomes in patients treated with vopra alone or in combination with nivo were associated with emergence, expansion and sustained activation of ICOS hi CD4 T cells. Additional experiments indicated that vopra can exert its activity only on CD4 T cells that already have high levels of ICOS.The EMERGE trial of vopra and ipi includes a new combination dosing and sequencing strategy based on our understanding of the kinetics of induction of ICOS hi CD4 T effector cells by ipi and vopra.As Rich mentioned, our SITC poster on Saturday will provide the scientific rationale for the study and the combination dosing and sequencing strategy, which we believe optimizes both ICOS hi CD4 T cells and agonist biology. This addresses a critical point in the IO field. Combinations are typically co-administered, but in our view it is critical to understand the mechanistic context and best dosing schedule to optimize the immune response. We are happy to continue to work with our outstanding founders in this regard.In the initial stage of EMERGE, we expect to enroll up to 80 patients with non-small cell lung cancer or bladder cancer. The primary endpoint is overall response rate and secondary endpoints include safety, duration of response, progression-free survival and overall survival. Additional important assessments will include close monitoring of ICOS hi CD4 T cell emergence and a range of other biomarkers. We expect to report EMERGE data, including preliminary efficacy and biomarker relationships to clinical outcomes for up to 80 patients in 2020.As Rich mentioned, we are in the planning stages of additional Phase II studies of vopra, including a trial using a predictive biomarker to identify patients, more likely to benefit from the combination of vopra and a PD-1 inhibitor. This would not have been possible without the intensive reverse translational analysis of the ICONIC data and our dedication to finding the right immunotherapies for the right patients. In ICONIC, we analyze the relationship between several baseline potential predictive biomarkers, the vopra associated ICOS hi CD4 T cells and clinical outcomesWe looked for differences between those patients, who showed emergence of ICOS hi CD4 T cells and clinical benefits and those who did not. Through this analysis, we have identified a predictive biomarker that we believe may identify patients who are more likely to benefit from a combination of vopra and a PD-1 inhibitor. We will provide more details in the next few months on new clinical studies including the biomarker approach.Turning now to JTX-4014, we will be presenting encouraging safety and preliminary efficacy data tomorrow at SITC. We are very pleased to have sufficient data to support the use of JTX-4014 as the PD-1 inhibitor in combination with our other product candidates, including with vopra in the new predictive biomarker trial. The ability to conduct clinical trials for two agents in combination from our wholly owned pipeline is a major step forward for Jounce.The progress, we have made to date across our entire pipeline is a testament to the strength and promise of our translational science platform and reverse translational analyses. We continue to focus on the underlying mechanistic science of our immunotherapies as we work towards bringing meaningful and long-lasting benefits to cancer patients.Now, I would like to turn the call over to Kim for a discussion of our third quarter financial results. Kim?

[Kim Drapkin:]

Thanks, Beth, and good morning, everyone. As we reported in this morning's press release, cash, cash equivalents and investments as of September 30, 2019 totaled $185.1 million compared to $195.9 million as of December 31, 2018. The decrease was primarily due to operating costs incurred during the period offset by the $50 million license fee received in July 2019 pursuant to our new license agreement with Celgene.Turning to the P&L, our license and collaboration revenue was $119.4 million for the third quarter of 2019 compared to $14.5 million for the same period in 2018. Revenue for the third quarter of 2019 was comprised of $50 million of cash received under the JTX-8064 license agreement with Celgene and $69.4 million of noncash revenue. The noncash revenue represents the remaining recognition of the Celgene upfront payment received in 2016, under our original strategic collaboration, which was terminated in the third quarter of 2019.During the third quarter of 2019, we incurred $15.1 million in research and development expenses compared to $16.8 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 $6.5 million for both the third quarter of 2019 and the same period in 2018.Net income for the third quarter of 2019 was $98.9 million or net income per basic share of $2.99 and net income per diluted share of $2.90, as compared to a net loss of $7.6 million for the same period in 2018 or a net loss per basic and diluted share of $0.23. This increase was driven by the $119.4 million of license and collaboration revenue recognized during the third quarter of 2019.Based on our operating and development plans for the remainder of 2019, we have narrowed and lowered our guidance on gross cash burn on operating expenses and capital expenditures for the full year 2019 to be approximately $75 million to $85 million. This is compared to our previous guidance provided in January 2019 of $80 million to $95 million.With our strong balance sheet, we continue to have the flexibility to drive our innovative immunotherapy pipeline while efficiently executing against our strategic plans and goals. Furthermore, we also have full strategic flexibility with respect to developing our immunooncology programs, including whether and when to engage new partners. With that flexibility, we will continue to execute on our science-based approach to create the most value for patients and shareholders.With that, we would now like to open the call for your questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from Cory Kasimov of JPMorgan. Your line is open.

[Neena Bitritto-Garg:]

Hi. Thanks for taking my questions. This is Neena on for Cory. Can you talk a little bit about how patient enrollment is going in the EMERGE study, and when we should expect to see that complete? And then also just any context you can provide on how you're defining ICOS hi patients? Has there been any sort of expression levels defined? Thanks.

[Beth Trehu:]

Sure. Hi. This is Beth. So, we're pleased with the enrollment in the EMERGE trial and we remain on track to have data in 2020. We haven't given any more specific guidance than that at this point but we are on track to have data in 2020 from the first stage of that trial.Regarding the ICOS hi CD4 T cells, we internally have a very clear definition of what's required for that. We're measuring them in a validated assay at an outside vendor. I don't believe we've shared the definition that we use in the trial. It's done by flow cytometry. So it's a flow cytometry assay done by an external vendor with a validated assay, and we're continuing to follow those cells very closely in the EMERGE trial.

[Neena Bitritto-Garg:]

Okay great. And then one more question just on OpEx trends. I know you mentioned that you're kind of lowering the burn rate for this year. But any kind of guidance you can help provide on kind of next year, and how we should expect OpEx increase once a new clinical candidate is picked, that would be great.

[Kim Drapkin:]

Sure. This is Kim. So, yes, we did narrow our guidance. We typically do this as we get closer to year-end, just having a better outstanding of where we are. Also with the out-license of JTX-8064 to Celgene earlier this year as well as a conscious effort to really contain costs sort of given where the market is and the current state of the market we have narrowed our guidance.As far as 2020 and going forward, we will give guidance at the start of the year. Typically we do that at your conference, once we have a better sense our budget. I do feel comfortable in saying with the $185 million that we ended the third quarter with that's still approximately two years' worth of cash.

[Neena Bitritto-Garg:]

Okay, great. Thank you.

[Operator:]

Our next question comes from Boris Peaker of Cowen. Your line is open.

[Boris Peaker:]

Good morning. Another question on the EMERGE study. For the ICOS expression level, I'm just curious, are you using archival or fresh tissues? And do you have any sense how the two would correlate?

[Beth Trehu:]

Hi. So, this is not the ICOS IHC that -- I know you've been with us since the beginning. So this is not the ICOS IHC on tumor tissue that we started out the study with. When we talk about ICOS hi CD4 T cells this is actually something we measure in the peripheral blood of patients who are on treatment. And what we've seen is that these cells begin to appear on treatment with vopra and increase to a substantial proportion of the peripheral blood C4 cells and remain elevated in the patients who are responding.And we have people ongoing over two years at this point. And we continue to see elevations of these activated CD4 T effector cells in the peripheral blood. So I'm glad you asked that question because I don't want people to confuse this with the ICOS IHC that we started out with. This is a peripheral blood pharmacodynamic biomarker. It's done by flow cytometry and it measures the percentage of CD4 T cells in the peripheral blood that have high levels of ICOS. Rich, do you want to add something to that?

[Rich Murray:]

Yes, yeah. Maybe just to add to that as well Boris, we've seen that. It's quite prominent tracks with clinical benefit. And so we – as we've studied those cells we have done a fair amount of characterization and we think they have all the right features to be truly a pharmacodynamic biomarker of vopra activity not a PD-1 activity. And that includes they're not T regulatory cells they have all the characteristics of effector cells T-Vec positive all the kind of TH1 kinds of science associated with these cells.

[Boris Peaker:]

So is there a rationale for even kind of stopping treatment for patients that don't have this elevated CD4 cells shortly after treatment start?

[Beth Trehu:]

That's a really interesting question. What we've identified in the ICONIC trial is that it can take a while for us – for these cells to reach levels that we can measure in the peripheral blood. And so in general we saw emergence of these cells in monotherapy around the same time that we saw response. So there's no indication right now that if you don't see them you should not continue therapy. I would say it's more the other way. If somebody -- if we see emergence of these cells and the patient may not have responded yet it would be an indication to keep the patient on therapy with the expectation that you might have clinical benefit to follow.

[Boris Peaker:]

Great. And my last question is on the combo study that you're doing with the PD-1 – with your own PD-1 from a regulatory perspective. I mean, the FDA would see two unapproved drugs being combined in single study. Curious, how do you see that would be developed? What kind of study design which you have to do? Would there have to be kind of permutation studies? What are your thoughts on that?

[Beth Trehu:]

Sure. So fortunately for us the FDA has issued very clear guidance on the novel-novel drug pathway. And in general at some point prior to registration they require that you show either drug alone is not sufficiently active or demonstrate in a clinical trial that the combination is superior to either of the drugs as a single agent. So, we have a fantastic Head of Regulatory. We have very good understanding of the guidance for that. And we have mapped out potential registration paths for the combination that we feel are eminently achievable.

[Rich Murray:]

Yes. Maybe I'll just add just to complete that picture for us. In that part of the study that's where we were able to see from ICONIC and pick up the baseline predictive biomarker. So as we go forward with that combination using our own PD-1 inhibitor that's where we'll also be selecting patients that we think are more likely to produce T-cells.

[Boris Peaker:]

Great. Thank you very much for taking my question.

[Beth Trehu:]

Thank you.

[Operator:]

Our next question comes from Mike Ulz of Baird. Your line is open.

[Mike Ulz:]

Hey, guys. Thanks for taking the question.

[Beth Trehu:]

Hey, Mike. Good morning.

[Mike Ulz:]

How are you? With respect to the second development path for vopra sounds like you're making progress there. I don't know, if you can comment on the baseline biomarker you're using there? And maybe how it's different from your – from that using the sort of peripheral blood for the EMERGE study? And then maybe the status and next steps if possible? Thanks.

[Beth Trehu:]

Sure. So I think yeah, the importance of the link between the predictive biomarker and the ICOS hi CD4 T effector cells is that in addition to – we were looking for potential predictive biomarkers in the ICONIC study. And when you're trying to figure out which one may be the best you always want to link it to clinical outcomes. And so you look at the baseline samples from people who responded who didn't respond and see, if there's anything in the baseline samples that can help you predict the people who had benefit. I think what really strengthens that for us was that we not only linked these potential baseline predictive biomarkers to clinical efficacy, we also linked it to the emergence of our drug-specific pharmacodynamic biomarker.So we're really tying all the pieces together. And so it was really having that biomarker in addition to looking at the clinical outcomes that enabled us to identify this predictive biomarker. We will provide more information more specifics about it over the next few months and look forward to sharing the data that we have with it and talking more about it in the coming months.

[Mike Ulz:]

Great. Thank you.

[Beth Trehu:]

You’re welcome.

[Operator:]

[Operator Instructions] Our next question comes from Debjit Chattopadhyay of H.C. Wainwright. Your line is open.

[Debjit Chattopadhyay:]

Just wondering from a clarification perspective what exactly is being presented at the SITC meeting regarding the EMERGE study? Is it just a sequencing strategy or some early preliminary biomarker data from the patients who have been enrolled in EMERGE?

[Beth Trehu:]

Thanks for that question Debjit. So this is Beth again. So this is a Clinical Trials In Progress poster. So we're not allowed to include any data from the trial. The purpose of the poster is to provide the scientific rationale and design of the study. So as you may recall we've hinted at the fact that we have a new schedule but we haven't provided any details up until now. And we felt that now is the time to reveal the dosing and schedule and sequencing strategy that we're employing in the trial.As I mentioned, we believe this not only optimizes the ICOS hi CD4 T cell biology and the kinetics of induction by ipi and then the sustained proliferation and activation by vopra but we also think it addresses some of the issues of agonist biology that have made them so challenging to develop up until now. So that's included in the poster. So there is some in vitro and preclinical data in the poster but it's providing the rationale for the dosing schedule and the sequence of ipi and vopra in the study.

[Debjit Chattopadhyay:]

Great. And in terms of what you've so far observed in the EMERGE study is there any hints you can throw about or elaborate upon the percentage of patients who have a robust induction of ICOS hi cells following the CTLA-4 induction?

[Beth Trehu:]

So we will definitely be looking at that and presenting that data when we present the clinical data in 2020, but we're not going to give any hints before then.

[Debjit Chattopadhyay:]

And so as far as I understand the subjects being enrolled in the EMERGE study have – they are not primary PD-1 refractory right? They've had some degree of response whether partial response or stable disease right?

[Beth Trehu:]

Sure. We don't actually require that they have responded. They have to have been on a PD-1 inhibitor or PD-L1 inhibitor for at least three months. And we did that to rule out the people who come off in the first month or two because, they're refractory. But we don't require a prior PR. They may have had stable disease. They just had to have been on for at least three months.

[Debjit Chattopadhyay:]

Great. So any data either from within Jounce or through your collaborators regarding the patient's HLA class one genotype especially the heterozygosity because that seems to be very predictive of responses to checkpoints. Does that also go forward and impact ICOS elevation?

[Rich Murray:]

Yes. We haven't made that connection in terms of the assessments of those patients going into that study. We – as more and more of these associations become established we certainly want to look at all those. But there's nothing that's kind of guiding patients into the study along those lines.

[Beth Trehu:]

Right. We're collecting baseline samples to be able to assess that and host of other things, but they're not part of the eligibility criteria.

[Debjit Chattopadhyay:]

Great. And just one last question then. And so in terms of the stagger between the ongoing EMERGE study and the predictive biomarker study, which obviously is in combination with JTX-4014, how should we think about it in terms of keeping an eye on the balance sheet or having a better handle on the emerging data from the CTLA-4 combination? Thank you so much.

[Beth Trehu:]

So I think I'll start with that and Kim may want to add. So we expect starting with the EMERGE, there will be data rolling out over the next few quarters after we start -- after we first release the EMERGE data with data from additional studies. And as I think you know we are very conscious of being -- taking good care of our balance sheet and making sure that we're not spending money without very good reason and with very specific goals in mind. So, maybe I'll turn it over to Kim.

[Kim Drapkin:]

Sure. So Debjit, this is Kim. We'll give more color as we roll out our specific plans and get our budget finalized for 2020. But when we do our own long-range planning and when I give comments about how long I think the cash runway will last that includes this full Phase 2 program that we have in front of us for vopra and 4014 together. So it's the EMERGE, it's biomarker and a few other things we'll talk about in the future, but we have all of that built into our planned runway over the next couple of years.

[Rich Murray:]

Yes, including the -- just in the script that we spoke to the IND-enabling studies that we have planned for kind of the next novel candidate that we'll bring to the clinic.

[Debjit Chattopadhyay:]

Great. I appreciate the color. Thank you.

[Beth Trehu:]

Thank you.

[Kim Drapkin:]

Okay. Thanks.

[Operator:]

Our next question comes from Jim Birchenough of Wells Fargo Securities. Your line is open.

[Nick Abbott:]

Good morning. It's Nick on for Jim this morning.

[Beth Trehu:]

Hey, Nick.

[Nick Abbott:]

Good morning. I have a couple of questions on the biomarker then a follow-up. So can you provide some background on whether there was a final series of candidates or was this biomarker fairly obvious from the start? And then in terms of sensitivity and specificity can you give us some idea of the false-positive rate, false-negative rate and whether you need to develop a companion diagnostic for this biomarker?

[Beth Trehu:]

Thanks Nick. This is Beth. So we had a pre-specified list of potential predictive biomarkers from the very beginning of the ICONIC study that included a range of both IHC type things genomic analyses. And so this is one of the things that we had identified. And we're very pleased to see the correlation as I mentioned with not only clinical outcomes, but also the vopra-specific PD biomarker ICOS hi CD4 T cells.So linking all of that together has been very important. And so, yes, I mean it was one of the things we had intended to look at and it proved to be something that we think may help to identify patients more likely to benefit. In terms of the sensitivity and specificity, as I mentioned we'll be giving more information about this biomarker over the next few months. And we look forward to presenting the data from the ICONIC study that supports it and hope to do so in the future, and then we'll be able to answer your questions in more detail. Rich may want to add something?

[Rich Murray:]

Yeah, sure. I'll add maybe a comment to that. So I think, Nick, we have had on our posters kind of the standard panel you'd look at PD-L1 staining with this all MSI-high patients and we can kind of rule those out. So those have been on our posters over the past few meetings.The key for us just to emphasize it again that, I think Beth also emphasized is for us we really wanted something that would help capture the vopra-specific PD activity. And in that sense, we believe we're kind of capturing that PD activity linked to CD4 cell biology.So that was kind of the key element of the biomarker search and assessment. Others that we tested, you may have seen something here or there, but nothing that we felt operationally we could really put into play until we've come out with this result which we'll be disclosing more in the coming months.

[Nick Abbott:]

Thanks guys. So, just as a follow-up and perhaps, I am digging a little too hard on this but is it a biomarker there. If you need to screen several hundred patients, so if we're to look for de novo biomarker, as you say operationally that's going to be very challenging in the clinic. If it's really looking at something that perhaps is in the patient record that you need to confirm or build from that operationally makes it much easier to run this study.

[Beth Trehu:]

Sure. So -- and I actually didn't answer the last part of your question so.

[Nick Abbott:]

Yeah.

[Beth Trehu:]

Regarding a companion diagnostic, I think from the very beginning that's something that we would hope to do to be able to develop companion diagnostics for our drugs so that we can match the right immunotherapy to the right patient.Regarding the biomarker, again, I can't get into too much detail right now, but we are definitely cognizant of all the challenges of using a screening test and we have a strategy to address that, and members of my team have done this before. We have a lot of experience in-house with the predictive biomarkers with screening patients for drug-related biomarkers. So we believe that we have a good strategy in place to address any challenges.

[Nick Abbott:]

Okay. Thank you. And then just sort of moving to EMERGE. So you spent a lot of time getting this immunologic train moving and moving in the right direction. You say vopra is going to sustain that. Is both sufficient to sustain that? Or from all of the analysis you've done now you've begun to identify additional levers that you might be able to address to further amplify the vopra response. Obviously, one obvious one might be 4014, but should we be expecting that -- so that EMERGE II, which looks at okay now how do we amplify this response, I mean, deepen the response?

[Beth Trehu:]

Sure. Sure. That's a great question. I think the complexity of the immune response to cancer and getting all the different pieces right is certainly one that we think about a lot. We decided for EMERGE to really focus on the biology between ipi and vopra because it's the cleanest way to test our hypothesis.That being said, it's great that we have our own PD-1 inhibitor. So at relatively low cost if we decide that a PD-1 inhibitor could be added to the mix that's something we could do. And -- but at this point we feel it's important to test the hypothesis as cleanly as possible without muddying it by adding another compound. But it's certainly something we could do.

[Rich Murray:]

The EMERGE patients, of course are PD-1 experienced patients.

[Beth Trehu:]

Exactly.

[Rich Murray:]

And so that was part of the rationale of the setting to try to keep that as kind of clean as possible.

[Beth Trehu:]

Yeah.

[Nick Abbott:]

Okay. And then just a last one from me, and I think in your prepared comments Rich you -- when talking about future studies you used the plural trials not a biomarker trial. So can you just elaborate on what additional trials timing number that you're thinking of?

[Beth Trehu:]

Yeah. We'll give more clarity on that in the next few months.

[Nick Abbott:]

Fair enough. Okay. I will see you at the post.

[Beth Trehu:]

Okay. Thanks Nick.

[Kim Drapkin:]

Thanks, Nick.

[Operator:]

Our next question comes from Steve Seedhouse of Raymond James. Your line is open.

[Steve Seedhouse:]

Hi. Good morning.

[Beth Trehu:]

Good morning.

[Steve Seedhouse:]

The biomarker that you identified to predict emergence of the ICOS hi T cells do you think it's specific to vopra or would it work for any ICOS agonist. And relatedly have you or could you protect it with IP as a companion diagnostic.

[Rich Murray:]

Yeah. Those are great questions, Steve. But I think until we reveal that I probably don't want to pick apart those individual pieces of the question.

[Steve Seedhouse:]

Okay. Okay. Well, maybe I'll ask about the -- some of the data in your deck. The corporate deck that's online.You're showing persistence. There's a nice chart that shows sort of relationship between durable, partial responses and persistence of the ICOS hi CD4 T cells above 5% threshold.It looks like that 5% is referring to percent of CD4 T cells that are ICOS hi. Just wondering why, 5% is the critical threshold there? And how that was determined?

[Rich Murray:]

Yeah. So that was determined somewhat empirically, Steve, so when we identify the ICOS hi cells from patients retrospectively from ICONIC, we -- it was clear that was treatment emergent. And so as we look at that assay the kind of empirical data is that the 5% or below, we can't really distinguish the noise of that.But once you start to see the cells emerge and climb in percentage of the CD4 compartment and sustained over multiple testing periods, that's when you see those trajectories go up. And so that's really kind of a baseline, underneath that, is too hard to call. So the empirical evidence is, when you're above that, those are the patients that benefit.

[Beth Trehu:]

Yeah. There are other elements to our definition of the ICOS hi CD4 cells. So that's not the only thing we're using. It's a very, very rigorous definition. But I think, to Richard's point it's -- that's the minimum.But I think what's really clear from that graph is that most of these patients over 50% of their peripheral blood CD4 cells are ICOS hi. And then you also mentioned their connection with the durable PRs.One of the things that we've been very excited to see is that’s in three out of the four responders their target lesions have actually completely disappeared. So although they are still technically PRs because of some residual, non-target lesions, they've had a very, very nice response to the drug.And just for people who aren't aware of the difference. So target lesions are the lesions that are easily measurable, that the investigators use to satisfy the resist criteria. You measure the percent change from baseline in the tumor.Non-target lesions tend to be, small lesions that aren't easily measurable that could be a representation of the cancer. So the fact that, the target lesions disappeared in three out of those four responders, we think is very encouraging. And that that correlated with the sustained presence of the ICOS hi CD4 T cells.

[Rich Murray:]

And slightly larger picture on that, Steve, I think, there's considerable weight now behind the idea that with PD-1 inhibitors. You unlock the CD8 cells in the tumor. But they already have to be there. That's what you get is unlocking that population, out of that therapy.So then the question becomes with the immune system. How do you provoke that kind of continued immune response? And so we're encouraged to see that, the cells stay there, the durability, continue the response is deepened.

[Steve Seedhouse:]

Okay. I had two. Thanks that's really helpful. I had two quick follow-ups just on the kinetics of the T cells for that chart specifically. One is the one gastric cancer patient on 0.1 mg per kg of vopra plus Opdivo.So they reached sort of by like day 100 about 30% ICOS cells. And then measured zero a few days or weeks later and then started to go back up over subsequent measurement.So they are positive clearly and then totally negative and then positive again. I'm just wondering, why that might be? Is that a technical limitation of either sample collection or the assay, or is that a real biological result? And if so, what does the waxing and waning of the cells, sort of at earlier time point say about the biology? So that's question one, on just that one patient.And then the second question is, the sort of broader trend is that, these cells are increasing really out to one year or even 1.5 years and sort of peaking? So it's a really gradual build. Obviously, you get responses pretty early on. So what is that trend sort of over the full one year 1.5 years of increasing these cells to peak, say about the biology? Thanks.

[Rich Murray:]

Yeah. It's a great question Steve. We're -- we and our founders are certainly thinking about that. Our view is that supported by this data. And the kind of the continued pharmacology we can do in studying the mechanism in the lab is, a view that to get these cells you need ICOS hi cells to start, you need vopra on board, and you need antigen in the system.So when you have those three things correctly in the patient, that's when you see this kind of pronounced expansion of these cells into the CD4 compartment. Importantly, the CD4 compartment doesn't expand itself. It just turns over into ICOS hi cells.Selective T cell receptors are being expanded. It has all the right characteristics to it. So we think the, kind of the interplay of the biology really is starting with the ICOS hi cells vopra on board. And it seems to be sustainable, to be able to do this.But of course you've got to have the antigen. And beyond that, we will continue to kind of tease apart this mechanism which we can now do in the lab, in kind of cell culture and animal studies.

[Beth Trehu:]

Maybe the second part of the answer to your question is the assay -- well collection of the cells making sure we have enough viable cells to do the assay, can be challenging. So there may be time points that we are missing …

[Rich Murray:]

Yeah.

[Beth Trehu:]

… where the sample is not as good.I don't have a great explanation for the fact that that one time-point dropped out.

[Rich Murray:]

Right.

[Beth Trehu:]

…but other than that you can see clearly that the patient has had sustained high levels of the cells.

[Rich Murray:]

Yeah. Yeah. I think there's too little data to try to link that to a dose if that, was part of your question Steve.

[Beth Trehu:]

Right.

[Rich Murray:]

And in that particular patient at least we didn't have the earliest -- the early samples.

[Beth Trehu:]

Yeah. And we've gone to great lengths to make sure that we have good sample collection in the EMERGE study, since this is something we think is very important to follow.

[Steve Seedhouse:]

Great, thanks. Really I appreciate it.

[Rich Murray:]

Sure.

[Beth Trehu:]

You're welcome.

[Operator:]

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