Agenus Inc (AGEN) 2018 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Agenus Second Quarter Financial Results Conference Call. As a reminder, today's conference is being recorded. Now, I would like to turn the conference over to Dr. Jennifer Buell, Head of External Affairs and Communications at Agenus. Please go ahead, Dr. Buell.

Thank you. Welcome to Agenus' Second Quarter Financial Results Conference Call. Before we provide an update, I'd like to remind you that this call will include forward-looking statements, including statements regarding our clinical development plans, time lines, partnership opportunities, time lines for those and our financial position. These statements are subject to risks and uncertainties and we refer you to our SEC filings for more details on these risks. As a reminder, this call is being recorded for audio broadcast.

Joining me today are Dr. Garo Armen, Chairman and Chief Executive Officer; Dr. Sunil Gupta, Head of Regulatory and Pharmacovigilance; and Christine Klaskin, our Vice President of Finance. During this call, Garo will provide a corporate update, Sunil will summarize our clinical progress and paths to BLA and Christine will provide a financial review. We will then open the call for questions.

With that, let me turn the call over to Garo.

Thank you, Dr. Buell. And good morning, and thank for joining us for our quarterly update today. In 2014, we started the transformation of Agenus with an intent to make it an immuno-oncology engine. In the past 4 years, we have built a company that is delivering innovation with speed. Today, I will describe our progress and achievement in 3 areas, which are of great interest to you and to us.

First, we have made substantial progress in delivering our discoveries into the clinic and advancing our PD-1 and CTLA-4 programs, which are in the clinic and on a path for a potential BLA filing. The evidence for our progress is easy to track. We filed 5 INDs in the 18 months prior to the start of 2018. Our programs are on track for additional 6 IND filings this year, 3 of which have already been filed. Furthermore, we are working to file 2 more INDs in the first half of 2019. All of these represent discoveries from our own research pipeline and are either best-in-class or first-in-class compounds. They also represent products designed to address tumor-resistant pathways with the potential to be the next major breakthroughs in immuno-oncology. In addition, as I alluded to, our proprietary CTLA-4 and PD-1 antibodies are progressing towards a planned BLA filing in 2020.

Second. I will discuss our cash position and balance sheet. Please know that we are aware of concerns related to these issues, and I will address them. As I mentioned, we are progressing our programs and filing INDs at record pace. At the same time, as you will hear shortly, we are prudently satisfying our near-term cash needs.

Third. I will provide an update on our recent progress in establishing new strategic partnerships. We expect these to result in potentially significant cash infusions into Agenus this year. I will start with what I believe is in your mind and something which is very important to us, our balance sheet.

Our cash balance at the end of 2017 was $60 million. At the end of Q1, it was $51 million. And we closed the second quarter with $43 million in cash. We've been managing our cash position prudently, as I said before, with an intent to minimize dilution to shareholders. At the same time, we have been advancing our compelling and exciting pipeline of programs. We expect these 14-plus innovative immuno-oncology candidates to be major near-term value drivers, hence advancing them rapidly is critically important. Until we secure additional cash, which I speak -- I will speak about when I discuss our partnership prospects, we will continue to prudently manage our finances. What this means is that our cash position at the end of our current quarter, that is the third quarter, is expected to be near or above current levels.

Next item, which is pressing in everybody's mind is the status of our partnering activities. I will provide an update on this with transparency, while respecting the sensitivity of these discussions.

I will outline our partnering strategy first and our plans in prior calls, however, we have not yet made an announcement. In spite of the additional time that it has taken to close on a transaction, we are working to maximize value to Agenus and to our shareholders with the right fit.

Let me first speak to what has changed in the I-O landscape, I-O obviously is immuno-oncology, and how this has influenced the prospective partner profiles and transaction types that we're pursuing today.

The first major change is the unanticipated successes and failures in clinic in the past year alone. The complexity of immuno-oncology is better appreciated today than it was even 6 months ago. Most biopharma companies are looking for first in-license assets that belong to one of the following categories; either first-in-class and multifunctional assets to explore complementary biologic pathways or later-stage compounds with clinical safety and efficacy data with an intent to mitigate development risks.

Over the past year, with the advancement of our pipeline, we have strengthened our position in both of these categories. To be specific, late last year, we made a deliberate decision to accelerate our 2 first-in-class bispecific programs. This resulted in advancing time lines by 6 months. Since then, these programs have attracted substantial new interest from partners, and why is this? Because they modulate multiple immunosuppressive pathways that address the limitations of currently approved as well as clinical stage immuno-oncology agents of today. We also advanced our PD-1 and CTLA-4 programs. We continued and confirmed that our antibodies are equivalent, if not superior, to competitor agents. This has generated interests from new prospective partners seeking foundational therapies to establish a footprint in the immuno-oncology space and explore combinations of their own novel immuno-oncology agents with these foundational antibodies.

The second major change has been that new and sophisticated players are entering the immuno-oncology field. These companies have invested significant time and resources in specifically understanding the broad and deep immuno-oncology portfolio that Agenus has built. Agenus' pipeline of antibodies, bispecific vaccines and cell therapies is unparalleled in the field. A broad partnership can offer significant financial resources to advance our pipeline, while also retaining commercial rights to part of our portfolio ourselves.

So what does all of this mean to us? Multiple discussions for broad strategic transactions have matured over the last quarter. And we're currently working 24/7 to bring one or more of them to closure with a target announcement date possibly as early as the next 8 weeks.

Next, I will say a few words about the progress we've made with our existing partnerships. To date, we have delivered on all our obligations in our partnerships with Incyte, with Merck and with GSK. We have met or exceeded all research, IND filing and commercialization milestones. In the current quarter, we expect to receive 2 additional payments for milestones that have already been achieved and a third is expected by or around year-end. Our QS-21 adjuvant, as you know, is a component, and, I might add, a very important of GSK's Shingrix vaccine. As you may be aware from media coverage, sales for Shingrix are substantially ahead of earlier forecast, making additional milestones from our recent royalty transaction more likely.

And lastly, before I turn the call to Dr. Sunil Gupta, I will provide a summary of our operational activities in the first -- first half of the year actually. This year, 3 of our discoveries resulted in 3 IND filings. These include filings for LAG-3 and TIM-3 antibodies under our partnership agreement with Incyte. We also filed a third IND, which covers our next-generation neoantigen vaccine, AutoSynVax, we call it ASV. We expect our ASV neoantigen vaccine to be developed in combination with our CTLA-4 and PD-1 antibody. The next IND filing will be for our next-generation CTLA-4 designed to deplete Tregs, while improving Treg -- T-cell priming rather. Our discoveries covering this and other antibodies are published earlier this year in a peer-review publication in the high-impact journal called Cancer Cell.

Our nex-gen CTLA-4 has both potential efficacy and safety advantages relative to approved and clinical stage molecules and is designed to address the limitations of our current immuno-oncology products. In addition to our nex-gen CTLA-4 IND filing, we're also on track to file INDs for 2 of our first-in-class bispecific antibodies. The first of these improves the tumor microenvironment through multiple mechanisms to enable a better antitumor and immune response when combined with standard of care and other immunotherapies. The second depletes Tregs, specifically in the tumor microenvironment, but not in the periphery. We are not aware of any other agent in the immuno-oncology space that is capable of doing this. These 2 tumor microenvironment conditioning agents offer critical solutions to also overcoming the limitations of current immuno-oncology treatments. You will hear more specifics on these compounds as well as enter -- of course, as they enter the clinic early next year, we are more likely to talk about their identity specifically.

As I said before, speed and innovations for meaningful clinical advances are our dogma. Our discovery platforms have enabled our pipeline of 4 therapeutic classes, checkpoint modulating, mono and multispecific antibodies, cellular therapies, neoantigen vaccines and adjuvants. Our cell line development and manufacturing platforms enable fast path to INDs, which give us an advantage in advancing products to BLA filings. We've demonstrated the speed in advancing our CTLA-4 and PD-1 combinations towards potential BLA filing in as early as 2020. This is just 4 years after our first-in-man monotherapy trial commenced. Additionally, earlier this year, we set record for production of GMP-grade products for our lead bispecific programs. Our completed development and at-scale manufacturing of our AGEN1223 compound in under 2 months from research to cell bank is to our knowledge the fastest ever in the industry, surpassing even conventional antibody development time lines of anyone.

I want to highlight these accomplishments, even though they may not sound exciting to you, because without them, it would be impossible for us to be filing so many INDs in a 4-year span.

Let me now turn to our progress in the clinic. To date, we have treated a total of approximately 115 patients with our CTLA-4 and PD-1 antibodies, separately and in combinations. This year, we presented compelling data on the pharmacodynamic activity of our anti-CTLA-4 and anti-PD-1 antibodies at both AACR and at ASCO. We reported at ASCO that our PD-1 monotherapy AGEN2034, that is the CTLA -- I'm sorry, PD-1 molecule, generated clinical benefit in more than 40% of treated patients. We look forward to presenting updated data later this year. We anticipate clinical benefit to be even more robust and, importantly, more durable. We have reported exciting results from our CTLA-4 monotherapy trial at ASCO with 31% of treated patients with refractory cancers showing clinical benefit. An angiosarcoma patient, who was refractory to multiple prior treatments had a complete and durable response to the lowest dose of our AGEN1884, that is our CTLA-4 molecule. This patient remains disease-free today over 1 year later. Our CTLA-4 and PD-1 programs are advancing in 3 active clinical trials today designed to take advantage of accelerated pathways for approval, BLA filings in as early as 2020.

My colleague and Head of Regulatory and Pharmacovigilance, Dr. Sunil Gupta, will describe our plans in more detail in just a bit.

In summary, our active clinical trials include, PD-1 monotherapy in patients with refractory cervical cancer; two, CTLA-4 plus PD-1 combinations that are -- we anticipate will further expand response rate and durability of responses in the same cervical cancer setting to monotherapies alone; and three, and this is an important indication, CTLA-4 monotherapy in patients refractory to PD-1 because this is a significant unmet clinical need today. All of these trials require relatively small numbers of patients for approval and short-term endpoints for the same.

In our trial so far, we have observed particularly exciting clinical benefit in gynecological cancers. These findings impressed key opinion leader experts and catalyzed our recent engagement with the Gynecologic Oncology Group, called GOG. This is a group that has had a terrific track record for patient enrollment and trial successes, including the approval of topotecan and later Avastin for patients with cervical cancer.

Our initiatives to advance programs in second-line cervical cancer exemplify our commitment to provide access to effective agents, our agents specifically, where current treatment options have limitations. At the same time, these efforts represent important commercial opportunities for us. This year alone, aggregate commercial revenues for antibodies targeting PD-1 and CTLA-4 are expected to reach $15 billion. And there are forecasts that in several years, these numbers will be as much as $30 billion. We have defined several development paths, including the second-line cervical cancer, which we expect will enable us to capture a meaningful portion of this large market. There are 13,000 new cases of cervical cancers annually and 4,000 deaths, unfortunately in the U.S. alone. As we aggressively engage regulators and secure our BLA filings plans, our regulatory team is under the guidance of an industry veteran, Dr. Sunil Gupta. Dr. Gupta is a superb regulatory strategist with a thorough medical background, who I might say, is one of the most understated individuals I have met. Dr. Gupta is trained -- as I said, a trained oncologist with nearly 30 years in senior leadership positions. He joins us from Sanofi, where he had a distinguished 22-year career, which included leading the filings of anti-PD-1, a PARP inhibition or inhibitor and approval of oxaliplatin and cabazitaxel. And it's my pleasure to turn the call to Dr. Gupta. Sunil?

Thank you, Garo. I'm very excited to be part of a very talented team at Agenus. And furthermore, I'm awed by the prolific pipeline, and I aspire to rapidly take these programs into market in the next few years.

Let me share some of my observations on the regulatory environment. CTLA-4 and PD-1 is the only validated I-O, I-O combination. In fact, this is the only immuno-oncology combination with approvals in 3 distinct indications, 2 of which were secured this year. Today, the regulatory landscape is changing rapidly and is focused on science, adaptive and clinical -- seamless clinical trial methodology, including acceptance of surrogate or early markers of activity. Recently, the acting commissioner has outlined a plan for modernizing drug development to keep pace with the rapidly advancing science and to ensure that innovation remains affordable for patients. We intend to leverage these initiatives to take our Phase I, Phase II trials to product registration. The FDA Oncology division has been particularly progressive and has taken actions to promptly approve products that provide greater clinical benefit to patients in relatively small trials. In some cases, in single-arm trials using surrogate endpoints in a few dozen patients and in a few years of first-in-human studies.

From a regulatory perspective, we are positioned to take advantage of this more progressive landscape and accelerated pathways for approval. We intend to have early and frequent interactions with the FDA in this endeavor.

Of note, CTLA-4 and PD-1 antibodies have been such programs with accelerated approvals granted for these products in less than 4 years after first-in-human studies. In cervical cancer, our AGEN1884 and AGEN2034 regimen represent the most clinically advanced combination with registration potential in second-line cervical cancer. This is an indication for which there is still a large unmet medical need for a durable treatment option.

In June of this year, pembrolizumab was approved in patients with cervical cancer via the accelerated approval pathway in a small trial with fewer than 100 patients. This reported response rate was around 12% to 14%. We at Agenus have an opportunity to pursue a similar path of securing fast, accelerated approval with our PD-1 AGEN2034 with comparable data as monotherapy in this indication.

Early signals from our trials provide support that this is a viable approach and we are moving quickly to take advantage of this pathway. Where PD-1 is active, particularly in tumors with some baseline immune recognition like cervical cancer, we expect that the addition of CTLA-4 will improve both response rates and, particularly, durability of response compared to PD-1 monotherapy. We have most recently seen this combinations approval in MSI-high colorectal cancer, where PD-1 was approved initially. The label for the CTLA-4 plus PD-1 combination regimen has a higher response rate with greater durability than PD-1 monotherapy. We have upcoming discussions with a regulatory scheduled for later this year for this combination, and I look forward to providing further updates at a relevant time.

Going beyond CTLA-4 and PD-1, I would like to share a glimpse as to how we will advance other programs in our pipeline, for which we will -- we have or we will be filing INDs in 2018. As Garo mentioned, our next-generation neoantigen vaccine is advancing in the clinic. Clinically, we have demonstrated that vaccines are important to expose tumors for immune attack, and we have outlined our findings in recent presentations and our latest newsletter. We are positioned to combine our vaccine with proprietary CTMs and/or bispecific antibodies and further take advantage of accelerated pathways such as the RMAT or Regenerative Medicine Advanced Therapy designation of CBER. RMAT designation is equal to breakthrough designation at CBER and allows sponsors to have frequent interactions with the FDA.

I must note that our neoadjuvant vaccines are a prime example of individualized medicine. Our next-generation CTLA-4 and tumor microenvironment condition specified -- specific agents, AGEN1223 and AGEN1423 have unique mechanisms that are definable. Our translation scientists will validate these mechanisms and in clinical trials will allow us to selectively, I emphasize selectively, recruit patients most likely to benefit from this treatment. We will bring meaningful and effective therapies to patients quickly, and we'll leverage innovation at the bench, in the clinic and in partnership with regulators to do so. Thank you very much. And I hand over to Garo.

Thank you very much, Sunil. And I will now turn it over to Christine Klaskin, VP of Finance to provide financial highlights.

Thank you, Garo. And I'm happy to review our second quarter 2018 financial results.

Let me first update you on our cash position. At the end of 2017, our cash balance was $60 million. We closed the first quarter with $51 million and closed the most recent quarter with $43 million. As you can see from these numbers, we have managed our cash prudently from quarter-to-quarter. As Garo said earlier, based on our current plan, we expect our cash balance to be similar to or higher than the end of the current quarter. For the second quarter ended June 30, 2018, we reported a net loss of $25 million or $0.24 per share compared to a net loss for the same period in 2017 of $32 million or $0.32 per share. In this second quarter, we recognized net revenues of $16 million, which includes milestone achievements and noncash royalties earned.

For the 6 months ended June 30, 2018, we reported a net loss of $80 million or $0.76 per share compared to a net loss for the same period in 2017 of $49 million or $0.51 per share. The increased net loss reflects reduced revenue due to an accelerated milestone received during 2017 from Incyte and the loss on the early extinguishment of our debt.

I will now turn the call back to Garo.

Thank you, Christine. In closing, let me outline our key milestones expected over next 12 months.

Number one, complete approval of our CTLA-4 and PD-1 trials, which are expected to support our path to BLA and our endeavors to develop, register and launch our CTLA-4 and PD-1 antibodies. Two, advancing 6 new discoveries to clinical trials for patient benefit, namely, our 2 first-in-class bispecific antibodies, our next-generation CTLA-4; our TIGIT, which is a differentiated molecule and our CD137 antibodies as well as our personalized neoantigen vaccine, particularly in combination with immuno-oncology agents that we control. Three, initiate combination of neoantigen vaccines with our refractory TLA-4 and PD-1 antibodies. And four, close at least one of our ongoing partnership discussions. And five, with AgenTus, we expect to complete a private placement followed by a potential public offering in an ex-U. S. territory. We're progressing our lead AgenTus cell therapy program into the clinic and expect to file an IND within approximately the next 12 months.

And that concludes my formal remarks, and I believe we're now ready to take questions.

(Operator Instructions) Our first question comes from Biren Amin of Jefferies.

Garo, you mentioned that you're hoping to get 2 milestones this quarter. Can you just detail for us what the amount would be for those 2 milestones? And what's the amount for the third milestone that you're expecting by the end of the year?

For the first 2, it will be approximately $10 million and for the third one, another $5 million, specifically for these transactions or these milestones payments. We also potentially expect, which we have not outlined, a number of other proceeds from several other transactions, including potentially additional royalty capturing transactions that we are actively pursuing at the moment.

Got it. And then what about the Shingrix? You mentioned, Shingrix sales are currently ahead of forecast and that you could potentially anticipate milestones from that royalty transaction. What would those amount to, if any, this year?

So those milestones will not be this year. Even though, as I mentioned earlier, Shingrix sales are tracking 3x what the initial estimates were in the beginning of the year, we expect the milestones that I was referring to, which are revenue performance milestones, and they are in the billions or certainly over $1 billion, those not to be achieved during the course of 2018.

Got it. Okay. And then as it relates to the second-line cervical cancer trial, can you just update us on enrollment and when we can expect the next date -- update from that study?

Okay, Jen, if you could, would you like to -- Sunil will be updating you on these things going forward. But as you know, he has been with the company only for a few weeks now. So I will defer to Jen on this until the next call.

Hi Biren. As we had mentioned, we anticipate sharing data out on our 3 programs at upcoming conferences -- major conferences this year. So accrual is advancing. We're seeing some very good signals of activity, as Garo mentioned during the call, and we'll be providing detailed updates at major conferences.

And also for your benefit, this trial got initiated very, very recently. So we will have more meaningful accrual numbers for you, I'd say, by October, November of this year.

Any other questions?

This concludes our question-and-answer session. I'd like to turn the conference back over to Dr. Garo Armen for any closing remarks.

Thank you very much, Andrea. I think, this call will be broadcast on our website and via webcast. And please, if you have any questions subsequently, don't hesitate to contact us. We have a very active communications effort ongoing, as you can see, recently following with the publication of our newsletter, which will be a regular publication that we publish every other Monday, and also our presence in social media. One of the reasons that we've undertaken this bolstered effort of communications is because we get a lot of questions from investors and others about our vaccine programs. And the world still perceives us as an only vaccine company or vaccine-only company. And as I said earlier, those that have followed us have witnessed the fact that the company has transformed itself in the last 4 years to be a very versatile oncology player. And as such, we take the responsibility for educating investors going forward, and so we will have a much more aggressive stance to provide you with information that you need to understand our company better.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.