TRACON Pharmaceuticals, Inc.
Q4 2019 Earnings Call Transcript

Published: 28 Feb 2020

[Operator:]

Good day, ladies and gentlemen, and welcome to the TRACON Pharmaceuticals Fourth Quarter and Year-End 2019 Earnings Conference Call. At this time, all callers are in a listen-only mode. After the speaker's prepared remarks, we will conduct a question-and-answer session, and instructions will be given at that time.During today's call, we'll be making certain forward-looking statements, including statements regarding expected timing of clinical trials and results, regulatory activities, future expenses and cash runway, and our development plans and strategy. These statements are subject to various risks that are described in our filings made with the Securities and Exchange Commission, including our Annual Report on Form 10-K, for the year-ended December 31, 2018, and subsequent quarterly reports on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements.Now, I would like to turn the call over to Dr. Charles Theuer, President and CEO of TRACON Pharmaceuticals. Dr. Theuer?

[Charles Theuer:]

Good afternoon, and thank you for joining TRACON's fourth quarter and full-year 2019 financial results and business update conference call. I will begin with an update on our pipeline and recent activities. Following that, our Chief Accounting Officer, Scott Brown, will review our financial results for the three months and year-ended December 31, 2019. Finally, we will conclude by taking your questions.Our primary efforts are currently focused on our recently in-licensed product candidate Envafolimab, a late-stage potential best-in-class, PDL-1 checkpoint inhibitor by virtue of its subcutaneous route of administration. We expect to begin enrollment in a potential pivotal study in sarcoma in the second-half of this year. While we regard Envafolimab as our lead product candidate, we also anticipate significant milestones related to our four other clinical stage assets in the near-term.Let's begin with review of our license of Envafolimab, which we refer to as Enva for the treatment of sarcoma. At ASCO 2019, data were presented from the SAR 28 study demonstrating that the checkpoint inhibitor Keytruda achieved a 23% response rate in 40 patients with Undifferentiated Pleomorphic Sarcoma, or UPS, where the closely related subtype of Myxofibrosarcoma or MFS, irrespective of PDL-1 expression.Data from a separate study in sarcoma indicated that dual checkpoint inhibition with Opdivo and Yervoy was more effective than single agent Opdivo treatment. Notably, while immune checkpoint inhibitors have demonstrated activity in multiple sarcoma subtypes, we are unaware of an ongoing or planned registration-enabling trial with a checkpoint inhibitor in sarcoma.As you know, we develop and maintain close relationships with many sarcoma key opinion leaders as a result of our completed TAPPAS Phase 3 Trial in angiosarcoma. These key opinion leaders have indicated that a successful registration-enabling study of a checkpoint inhibitor in the sarcomas subtypes of UPS and MFS would be valuable to patients, physicians, and payers. Therefore, our strategy is to satisfy this high unmet medical need initially in refractory patients and potentially in frontline patients. Given our TAPPAS study was conducted at 27 sites in the United States and in multiple European countries, we possess the unique experience and capacity to rapidly study a new agent in sarcoma.Subject to input from the FDA, we expect to initiate a potential pivotal trial that will include one cohort of approximately 80 patients who will receive single agent Enva, and a second cohort of approximately 80 patients who will receive Enva in combination with Yervoy, a second checkpoint inhibitor targeting the CTLA-4 receptor that is marketed by BMS. We expect that the primary endpoint in each of the cohorts will be objective response rate, and expect to target a 15% objective response rate in each of the two cohorts.Votrient, which is approved for the treatment of these sarcoma patients, following prior chemotherapy, has a 4% objective response rate. So, a demonstration of a significantly higher response rate in this population of cancer patients would be a meaningful advance in the standard of care.This trial design is similar to the design of the completed Alliance trial that was funded by the NCI and published in Lancet Oncology in 2018. This trial showed that combining Yervoy with Opdivo increase the response rate in sarcoma patients compared to single agent Opdivo. Therefore, we believe our trial design could be the basis for accelerated approval of Enva by the FDA as a single agent, as well as in combination with Yervoy, and the dual-arm design provides for risk mitigation in case combination treatment is required for robust activity.In the near-term, we expect to deliver the following milestones for Enva in 2020

[Scott Brown:]

Thank you, Charles, and good afternoon, everyone. TRACON reported no collaboration revenue for the three months and year-ended December 31, 2019, compared to zero and $3 million comparable periods of 2018 respectively. The decrease was due to the $3 million upfront payment receipts in connection with the prior Ambrx agreement that was recorded as revenue in 2018.Research and Development expenses was $1.9 million for the fourth quarter and $14.5 million for the year-ended December 31, 2019, compared to $5.9 million and $30.5 million for the comparable period of 2018. The decrease was primarily attributable to lower manufacturing and clinical trial expenses related to the termination of the TRC105 program in April last year.General administrative expenses were $1.9 million for the fourth quarter and $7.8 million for the year-ended December 31, 2019, compared to $1.8 million and $7.3 million for the comparable periods of 2018. Our net loss was $3.9 million for the fourth quarter and $22.7 million for the year-ended December 31, 2019, compared to $7.8 million and $35 million for the comparable periods of 2018.Turning to the balance sheet at December 31, 2019, our cash, cash equivalents and investments totaled $16.4 million, compared to $39.1 million at December 31, 2018. As Charles said, we expect our current capital resources, which includes proceeds from additional use of the ATM facility in January, to be sufficient to fund our planned operations in the first quarter of 2021, which may be further centered through use of the equity lines the Aspire capital.With that, I will turn the call back over to Charles.

[Charles Theuer:]

Thank you, Scott. To recap, end results for our quest to license an exciting late-stage asset repositions the company to forward integrate and potentially build our commercial capabilities, which we intend to leverage across multiple products over time.Enva is now our lead asset. Given the demonstrated activity of checkpoint inhibitors and sarcoma, which de-risk clinical development, the opportunity to rapidly initiate and complete a potential registration enabling-study in sarcoma, by leveraging TRACON's unique and strong relationships within the sarcoma community, and then the opportunity for commercialization in North America.Of course, our pipeline is broad, with five clinical stage assets at this time, and we expect to deliver multiple potential value-creating clinical milestones in 2020. These include, first to reiterate for Enva, meeting with the FDA, filing an IND and filing orphan drug designation in the first-half, and then dosing in the potential pivotal trial in the second-half of the year. Second, reporting top line Phase 2 AVANTE trial results in wet AMD through our licensee Santen in the first-half of the year; third, delivering top line Phase 2 proof-of-concept data for TRC253 in prostate cancer to Janssen, which will attribute Janssen's option to reacquire in the first-half of the year.We also continue to evaluate ex-U.S. companies with first-in-class potential best-in-class or fast follower clinical-stage assets, who would benefit from accessing the TRACON product development platform through a new corporate collaboration. We look forward to providing further updates in the coming months and remain confident that we have the right strategy in place to deliver on our development and business plans for the benefit of patients and shareholders.Thank you for your time and attention, and we are available to answer your questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Maury Raycroft with Jefferies. Your line is now open.

[Swapnil Malekar:]

Hi, this is Swapnil Malekar on for Maury. Just a couple of questions, so the first one is regarding DE-122, so you said that Santen mentioned in their February 4th earnings call that they're analyzing data. So, do you think we will be able to see any of this data in an upcoming medical conference like at RO maybe?

[Charles Theuer:]

Good question. So, the plan with Santen and TRACON is that they're analyzing the data, and we do expect to release a top line data release around the data in next steps. Beyond that, do expect to see the full data presentation added significant medical conference, although that has yet to be defined at this time.

[Swapnil Malekar:]

Okay. And then, for the Enva, before meeting with the FDA and initiation of the pivotal trial, is there anything else, or like ongoing activities that need to be completed before meeting with the FDA?

[Charles Theuer:]

Yes, our goal currently is to complete the pre-ID package, and then submit that requested meeting with the FDA, which we expect will be in quarter two, and then wet the plan with the FDA. At that time we'll also apply for open drug designation, and then with those items completed, we expect to dose a pivotal trial in the second-half. So, a lot of preparations are going on currently to meet all those milestones around the Enva program.

[Swapnil Malekar:]

Okay, thank you.

[Charles Theuer:]

Appreciate the question. Thank you.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from Bert Hazlett with BTIG. Your line is now open.

[Bert Hazlett:]

Thank you for taking the questions. Certainly a lot to consider in the coming months and quarters, we are excited for the data readouts. Just in terms of the CD73 antibody with I-Mab and that collaboration, is there any particular focus in terms of tumor type that we should be thinking about for next steps, or is just too early to determine at this point?

[Charles Theuer:]

Hi, Brent, great question. So, with respect to CD73, we are currently evaluating not only our own data, but I think the nice thing about that target is there are several other players in the spaces, as you well know. So, we plan to continue to evaluate the competitive landscape and the ongoing trials with our competitors, if you will, which includes BMS, for example, which includes MedImmune AZ to glean some insight into what tumor types might be most responsive, and then we'll look at our own data with that same regard. So, that's an ongoing effort that will continue to evolve as data continues to become apparent both from competitor companies and also within our own database, and it will be an important decision. I think taking not only the right indication, but the right combination is going to be critical for making that a valuable therapy, and then potentially selecting biomarkers that will be the basis for enrollment of patients in that indication could also be critical. Our current focus is, as you know, is combining with the central dose PDL-1 therapy based on solid preclinical data, but the other opportunities to think about including to what combinations with chemotherapy or other targeted agents. So, that's going on as we speak, and we'll have further thoughts around that in the near future.

[Bert Hazlett:]

Thank you for that. Charles, do you expect to announce that strategy as you announced the data, or is that kind of a two-step process?

[Charles Theuer:]

Yes, I think -- it's a good question, I think we will be discussing that and determining that in conjunction with our partner, I-Mab. So, in order for us to really make that a clear public announcement, both companies will want to agree and that may take a little bit longer than -- just at the time of the top line data for the Phase 1 trial.

[Bert Hazlett:]

Okay, and then just -- thank you for that, and then the I-Mab collaboration, the second part of it, what do you expect us to see which ones are actually moving forward initially in terms of…

[Charles Theuer:]

Right, yes, good question. That's an exciting deal for us, and we do expect to be able to nominate and file IND on the initial bispecific by end of this year. So that would be the timeline to expect to know what that product is and our plan around development of that product.

[Bert Hazlett:]

Okay, terrific. Thanks.

[Charles Theuer:]

Thank you, Bert.

[Operator:]

Thank you. I'm not showing any further questions at this time. I'd like to turn the call back over to Dr. Charles Theuer for closing remarks.

[Charles Theuer:]

Thank you, everyone for your attention today, and we look forward to speaking with you again next quarter. Have a good day.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.