Sesen Bio, Inc.
Q4 2016 Earnings Call Transcript

Published: 24 Mar 2017

[Operator:]

Good morning and welcome to the Eleven Biotherapeutics Fourth Quarter and Full Year 2016 Financial Results Conference Call. [Operator Instructions] At this time, I’d like to turn the call over to Michael Schaffzin from Stern Investor Relations. Pleased proceed.

[Michael Schaffzin:]

Thank you, Operator. Good morning and welcome to Eleven’s fourth quarter and full year 2016 financial results conference call. Earlier this morning, we issued our financial results and corporate highlights press release which is available at www.elevenbio.com. Today, on our call, Stephen Hurly, President and CEO, will provide an overview and update on Eleven and its TPT platform. John McCabe, Chief Financial Officer, will review the financial results. And then, we will open up the call for your questions. Before we begin, I would like to caution you that during today’s conference call, we will be making forward-looking statements regarding future events or the future performance of the Company including statements about possible future developments regarding clinical, regulatory, commercial, financial and strategic matters. Actual events or results of course could differ materially. We also refer you to the risk factors section of our annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed with the Securities and Exchange Commission. With that, let me pass the call over to Steve.

[Stephen Hurly:]

Thank you, Michael, and thank you everybody for your time. Eleven Biotherapeutics is focused on developing next generation targeted protein therapeutics to treat patients in areas of significant unmet medical need. In 2016, we continued to make important progress towards achieving this vision. In August, we entered into an exclusive licensing deal with Roche for EBI-031, a potential treatment for ocular diseases. This deal brought us approximately $30 million, consisting an upfront payment and milestone payment in 2016. We could receive an additional $240 million in additional milestones as well as royalties going forward. In September, we acquired Viventia Bio. With this acquisition, we transformed Eleven into a late stage oncology company, developing products based on our proprietary targeted protein therapeutics or TPT platform. Our pipeline now consists of two clinical stage assets Vicinium in a Phase 3 registration clinical trial for non-muscle invasive bladder cancer and Proxinium for which we intend to commence a Phase 1/2 clinical trial later this year, for the treatment of squamous cell carcinoma of the head and neck or SCCHN. As we look to the year-ahead, we are focused on continuing to advance these programs forward, as rapidly as we can while also investing in our broader TPT platform. Since some of you may be new to the Eleven story, I will focus my remarks today first on providing an overview of our TPT platform before walk you through our lead and earlier stage efforts. We developed our targeted protein therapeutics platform from the original concept of the smart missile, a front-end navigating molecule that selectively binds to an antigen or receptor that’s over expressed on cancer cells. These markers are chosen not just for the selectivity of the cancer but also for their internalization properties. Once our agent binds to the target, it is pulled or internalized into the cancer cell where cytotoxic or cell killing payload is released, resulting in targeted cancer cell death. While this concept is also the idea behind antibody drug conjugates or ADC, we’ve designed our TPTs to add specific improvements that we believe will provide a broader therapeutic window. I’ll discuss some of those now. Structurally speaking, our TPTs are fully biologic single protein molecules build by genetically fusing the tumor targeting antibody fragment to a very potent cytotoxic protein; an overview of these antigens we feel they provide include, first with respect to efficacy. The first key is getting the drug to the tumor bed. By utilizing antibody fragments, we believe we are able to deliver significantly more drug to improve the tumor bed. Antibody fragments have shown the ability to travel two tumor beds and much more effectively than full-length antibodies that of the basis of most ADCs. The second key is using the right cytotoxic payload. TPTs utilize powerful protein toxins, not small molecules. These toxins have shown both the ability to kill a broader array of cancer cells and not be affected by multi-drug resistance pumps that cancer cells use to eliminate the small molecule payloads that are commonly used by ADCs. Our payloads are offer differentiated from ADCs based on their mechanism of action. These toxins shut down protein production; this can mediate the killing of both rapidly proliferating but also slower growing cancer cells, potentially including cancer stem cells. In contrast, most ADCs are only effective at killing rapidly proliferating cells. In summary, we believe we get more drug to the tumor through the tumor bed and that our payload has the potential to be much more effective than much more effective drugs. The third key is the synergy with the immune system. We believe our TPTs don’t just directly kill cancer cells with their payloads, but they also operate through a second immunologic mechanism of action by causing specific type of cell death known as immune cell death. They promote a local inflammatory anti-tumor immune response which has the potential to indirectly kill cancer cells. This is very exciting and we suggest real synergy with checkpoint inhibitors and other immuno-oncology products. Let’s talk briefly about safety. Safety is always a critical component of successful drug development. One of the challenges ADC faces is their stability, their structure relies on a two-step more expensive manufacturing system. First, ADC developers need to manufacture both clinical grade antibody and clinical grade small molecule drug payload, and then they need to conjugate the antibody to the payload. There have been significant challenges with some of these products falling apart in circulation, leading the premature release of the payload that is no longer targeted. This has resulted in dose limiting toxicities. We do not face this problem. Our TPs are engineered as single protein molecules that are produced in the single, one step manufacturing system and employ stable, genetically engineered linkers, which allow them to remain intact until they internalize by the cancer cells. This means as less risk of premature drug release in the healthy tissue and as result less risk of off target toxicity. I also want to point out that our one-step manufacturing process doesn’t just produce a more stable product, it also has significant cost advantages, and results in the production of a much more homogenous product than ADCs. We practice what we call fit for purpose design. We design product candidates focused on specific diseases that we feel take the fullest advantage of our platform. Our approach to clinical development is simple, rather than develop drugs, build them against targets to see what works, instead we first identify indications with areas of high unmet medical need that have targets that will work with our system and then leverage our in-house protein engineering expertise to design molecules that are fit for specific purpose. Our lead drug Vicinium is a prime example of this approach. After recognizing that EpCAM is over expressed in more than 98% of high grade non-muscle invasive bladder cancer and has minimal or no expression on normal bladder cells, our team developed Vicinium, a locally administered single protein anti-EpCAM antibody fragment fused with Pseudomonas Exotoxin A or ETA, very potent cytotoxic payload. Vicinium is administered directly into the bladder where it seeks out the cancer tissue. After binding the EpCAM on the cancer cells, Vicinium is internalized into these cells where it releases the toxin. The toxin in turn interrupts protein synthesis and selectively drives cell death. Vicinium is currently in the Phase 3 registration trial for non-muscle invasive bladder cancer. Bladder cancer affects over 79,000 new patients in the U.S. annually with non-muscle invasive bladder cancer making up 70 to 80% of all bladder cancer and carrying very-high per patient treatment costs. There really have been no major advances in this space for four decades. The first line, standard of therapies, BCG, it does deliver good initial efficacy but suffers some significant failure rates. Upon relapse, unfortunately there are no good alternatives and patients typically undergo bladder removal, a major surgery with significant risk and complications, routine hospital stays post surgery and major impact on quality of life. Vicinium, we hope, can eventually provide these patients with the choice. In Phase 2 clinical trials, Vicinium showed promising safety and efficacy in 46 post-BCG refractory and intolerant carcinoma in situ or CIS patients. The trial had two arms, one where patients received -- remain in the induction phase for trial six weeks where they remained -- or they remained in the induction phase for 12 weeks. If the patients achieved a complete response in three months, they moved into a maintenance dosing for upto 12 months as long as they remained disease free. At three months, 40% of the patients across both arms achieved a complete response. At one year 17% of the patients in 12-week arm remained at a complete response, 13 of the patients in the six-week arm. Importantly, all of those CR patients on the 12-week arm remained disease free at last follow-up after 25 months. And 73% of the non-complete responder showed a reduction in tumor size or stable disease. Median time to recurrence was 408 days for the 12-week arm and 274 days for the six-week arm. Based on these results, we initiated our Phase 2 registration trial in the third quarter of 2016. Our ongoing trial is designed to enroll 134 patients with BCG refractory or relapsed high-grade non-muscle invasive bladder cancer at over 65 centers in the U.S. and Canada, including 77 CIS patients. Here patients will receive twice weekly dosing for the first six weeks, then once weekly dosing for 7 through 12 weeks. Patients with no evidence disease at week 12 will then enter the maintenance phase of the trial where they receive drug every other week for up to two years as long as they stay disease free. The primary endpoint of this trial is complete response in those CIS patients. Secondary endpoints include time disease recurrence and event-free survival. We expect enrollment to complete this year and report topline data in 2018. Importantly, this trial is designed in accordance with recently published FDA draft guidance on drug development in non-muscle invasive bladder cancer. The draft guidance was important for us as evidenced as it advised single arm trial is appropriate in this space. In fact, the guidance also suggested new medicines in this space can be awarded full approval versus conditional approval, which was guided before. I’ll now turn to our second program, Proxinium. Like Vicinium, Proxinium is a single-chain anti-EpCAM fragment fused with ETA. We are developing Proxinium for patients with squamous cell carcinoma of the head and neck or SCCHN. SCCHN affects more than 650,000 patients annually. Surgery to treat this disease is highly invasive and associated with significant morbidity. The five-year survival rate is 40% to 50%, depending on the stage of advancement. In the second half of 2017, we planned to initiate a Phase 1/2a trial evaluating Proxinium in combination with checkpoint inhibitors. The decision to pursue combination trial is based on the prior mentioned synergy with the immune system. In earlier studies, Proxinium induced significant reductions in injected tumors; we also saw responses in uninjected tumors as well. Again, we believe this is evidence of a dual mechanism of action. The payload kills cancer cells directly, but also the treatment generates an anti-tumor immune response. This mechanism we believe is highly complementary with checkpoint inhibitors. Moving beyond Vicinium and Proxinium, we developed a pipeline of de-immunized systematically administered TPTs as well, utilizing our next generation proprietary payload deBouganin. deBouganin is a highly potent plant toxin which has picomolar, avoids multi-drug resistance and may potentially induce an effect against cancer stem cells. Moreover, its safety profile provides a broad therapeutic window, which suggest that deBouganin based therapies may be effective against wide spectrum of different cancers. We intend to finalize preclinical development this year and file an IND with the FDA in the Q1 2018. To summarize, we’re very excited to advance our TPT platform in 2017. We plan to complete enrollment in our Phase 2 registration trial of Vicinium, initiate a Phase 1/2a trial of Proxinium in the months ahead, and we look forward to reporting our Phase 3 data on Vicinium next year and also filing our IND for our first de-immunized systematically administered TPT VB6-845d. With that I’ll turn the call over to John.

[John McCabe:]

Thank you, Steve, and good morning to all. For the fourth quarter of 2016, we reported a net loss of $3.5 million or $0.15 per share compared to a net loss of $10.3 million or $0.53 per share for the same quarter in 2015. Net income for the full year 2016 was $1.9 million or $0.09 per share compared to a net loss of $33.5 million or $1.76 per share in 2015. Total revenue for the fourth quarter of 2016 was $800,000 compared to $600,000 for the same period last year. Total revenue was $30 million for the full year 2016 compared to $1 million for the same period in 2015. This increase was related to revenue recognized from our license agreement with Roche, partially offset by reduced fees under our former collaboration agreement with ThromboGenics. Research and development expenses for the fourth quarter of 2016 were $2.8 million compared to $8.1 million for the same period in 2015. The decrease was primarily due to a decrease of isunakinra-related development expenses for which development activities are no longer ongoing as well as decreases in EBI-031 related development expenses due to our license agreement with Roche. These decreases were partially offset by increases in Vicinium related development expenses following our acquisition of Viventia. Research and development expenses were $13.5 million for the full year 2016 compared to $26.3 million in 2015. G&A expenses for the fourth quarter of 2016 were $2.8 million compared to $2.3 million for the same period in 2015. This increase was primarily due to accounting and legal fees related to the integration of Viventia. General and administrative expenses were $14.7 million for the full year of 2016 compared to $9.9 million for the same period in 2015. We ended 2016 with $25.3 million in cash and cash equivalents. Based on current operating plans, we believe that we have sufficient cash and cash equivalents to fund our operating expenses into early 2018. I’ll now turn the call back over to Steve for concluding remarks. Steve?

[Stephen Hurly:]

Thank you, John. I’d like to take a moment to recap the key program milestones we anticipate for the remainder of this year, which will continue to advance our pipeline forward. Starting with Vicinium, later this year, we expect to complete enrollment in the Phase 2 registration trial in BCG refractory or relapsed high grade non-muscle invasive bladder cancer with topline data in 2018. Moving to Proxinium, we plan to initiate the Phase 1/2a trial in combination with checkpoint inhibitors later this year for the treatment of squamous cell carcinoma of the head and neck or SCCHN. And finally our earlier stage pipeline, we plan to finalize pre-clinical development this year and file and IND for a first de-immunized systemically administered TPT, VB6-845d in early 2018. In closing, I’d just like to first thank all the employees for the hard work. We continue to be excited to bring these product candidates forward in the hopes of helping patients. We intend to continue working very hard to continue to serve those patients as well as our shareholders. Thank you for listening today and we look forward to keeping up updated on our progress. With that, I’d like to open the call up to any questions. Operator?

[Operator:]

Thank you. [Operator Instructions] Our first question comes from the line of Yi Chen of H.C. Wainwright. Your line is now open.

[Yi Chen:]

Hi. Thank you for taking my questions. Regarding Vicinium, in a Phase 2 trial, you have once weekly escalation during the induction phase while in the Phase 3 you have twice weekly for the first six weeks. Is that correct?

[Stephen Hurly:]

That is correct.

[Yi Chen:]

And how do you expect that to affect the complete response rate?

[Stephen Hurly:]

Thank you for your question and good morning. We saw significant responders -- beyond the 40% complete response rate, we saw significant partial responders and stable disease in that Phase 2. With this carcinoma in situ cells which rapidly multiply, being able to get ahead of that doubling period in the first six weeks by treating twice a week given our safety profile from prior trials, we felt we could allow ourselves to sweep more patients from partial response and stable disease all the way to a CR at that three-month point. Reminder that in this disease, complete response is the critical endpoint versus in most cancers where a partial or complete response -- I mean a partial or a stable disease would be meaningful; here you have to sweep as many patients as you can during that critical three-month period all the way to a complete response. That was the motivation behind the doubling of the induction period in the first six weeks.

[Yi Chen:]

Got it. Thank you. And also, just to clarify, do you -- for this Phase 3 trial, are you enrolling relapsed/refractory patients after the BCG treatment or are you enrolling patients who simply did not respond to the BCG treatment?

[Stephen Hurly:]

We’re both enrolling patients that received BCG and rapidly relapsed post-BCG as well as those that never achieved a complete response both the -- post-BCG.

[Yi Chen:]

Okay, got it. Thank you.

[Stephen Hurly:]

Thank you.

[Operator:]

[Operator Instructions] I’m showing no further questions at this time. I’d like to hand the call over to Mr. Steve Hurly for any closing remarks.

[Stephen Hurly:]

Thank you everybody for your time. I appreciate on behalf of the entire Company. And we look forward to a productive 2017.

[Operator:]

Ladies and gentlemen, this concludes today’s presentation. Thank you once again for your participation. You may now disconnect. Everyone, have a great day.