Alpine Immune Sciences Inc (ALPN) 2020 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and thank you for joining the Alpine Immune Sciences second-quarter 2020 financial results and corporate update conference call. Currently, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. (Operator Instructions) As a reminder, this conference is being recorded today, Tuesday, August 11, 2020.

I would now like to introduce Laurence Watts, Investor Relations. Please, go ahead.

Thank you, Sydney. With me on today's call from Alpine Immune Sciences, are Executive Chairman and CEO, Dr. Mitchell Gold; President and Head of Research and Development, Dr. Stanford Peng; Chief Financial Officer, Paul Rickey; and Senior Vice President of Business Development and Corporate Strategy, Remy Durand.

[This afternoon] Alpine Immune Sciences issued a press release announcing the company's second-quarter 2020 financial results and corporate update. If you have not received this news release and would like to read it or you would simply like to be added to the company's distribution list, you can do both on the investor relations page of the company's website at www.alpineimmune sciences.com.

During the course of today's conference call, Alpine's management will make forward-looking statements, including, but not limited to, statements regarding the anticipated impact and timing of the COVID-19 pandemic on Alpine's business, development plans and timelines and results of operations, the company's preclinical and clinical development plans and the timing thereof, expectations regarding the sufficiency of cash to fund operations, including any cash received from potential milestone payments under Alpine's collaborations, the timing of publication of future clinical data, expectations regarding Alpine's ongoing collaborations and potential future collaborations, including the anticipated strategic and financial benefits of the option and licensing agreement between Alpine and AbbVie for the development and commercialization of ALPN-101, Alpine's ability to successfully develop its product candidates and achieve milestones under our collaboration with AbbVie and others, Alpine's future development plans, addressable markets, regulatory success and commercial potential of Alpine's or its collaborators' product candidates and the financial and business outlook for Alpine.

These forward-looking statements are based on the company's current expectations and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties.

Factors that could cause results to be different from these statements also include factors the company describes in the section titled Risk Factors and our planned quarterly report on Form 10-Q for the period ended June 30, 2020 and filed with the SEC on or about August 11, 2020. Alpine cautions you not to place undue reliance on forward-looking statements and undertakes no obligation or duty to update any forward-looking statements as a result of new information, future events, or changes in its expectations.

With that, I would now turn the call over to Alpine's Chief Executive Chairman and CEO, Dr. Mitchell Gold.

Thanks, Laurence, and welcome to our second-quarter 2020 financial results conference call. As many of you are aware, the past several months have been transformative for the company. We have entered into a major collaboration and licensing agreement for ALPN-101, initiated dosing patients with ALPN-202 and secured additional funding from top-tier biotech investors through a private placement, extending our cash runway.

Our option and license agreement with AbbVie for ALPN-101 provided an upfront payment of $60 million and total potential collaboration value of up to $865 million plus royalties. Later in this call, Remy will walk you the key details contained in that agreement. But let me reiterate that in addition to the upfront payment, there are up to an additional $75 million in potential pre-option exercise payments, in addition to the $75-;million option exercise fee.

This transformative collaboration validates the promise of our unique platform using not only ALPN-101 but also ALPN-202, ALPN-303 and multiple other candidates currently under development at Alpine. Following the AbbVie announcement, we received significant inbound investor interest and closed on a private placement, resulting in $60 million in gross proceeds from a distinguished syndicate of new investors. The financing was led by Omega Funds with participation from Avidity Partners, EcoR1, Invus, Samsara, as well as others.

We expect our cash on hand, including potential pre-option exercise milestone under our AbbVie collaboration and proceeds from this private placement to fund development of our pipeline through 2024.

Another major achievement in the quarter was the successful dosing of our first patient in the NEON-1 Phase 1 study of ALPN-202, our first-in-class conditional CD28 costimulator and dual checkpoint inhibitor in patients with advanced malignancies. CD28 is rapidly emerging as a potential key costimulatory pathway for overcoming resistance to checkpoint blockade.

And ALPN-202 is the only therapeutic candidate we are aware of combining conditional CD28 costimulation with PD-L1 CTLA-4 blockade in a single molecule. Stanford will talk more about this and other programs later in the call.

With that I will now hand the call over to Remy to remind you the highlights of our collaboration with AbbVie. Remy?

Thank you, Mitch. [Per] the agreement and as highlighted in our 8-K filed at the time the deal was announced, our option and license agreement with AbbVie for the development and commercialization of ALPN-101 is one of the largest immunology-focused partnerships announced in the recent years.

The key terms of our agreement are as follows: Alpine granted AbbVie an exclusive option to exclusively license worldwide rights to ALPN-101, our Phase 2-ready, first-in-class dual CD28/ICOS costimulation antagonist. In return, Alpine received an initial upfront cash payment of $60 million and is eligible to receive up to an aggregate of $805 million for exercise of the option by AbbVie and for potential future development, regulatory, and commercial milestones.

As Mitch mentioned, an important component of the deal is Alpine may receive up to a further $75 million before AbbVie exercises its option for the asset. On exercise of the option, AbbVie would then make an additional $75 million payment to Alpine. In addition to the upfront and potential downstream milestone payments, Alpine would also receive tiered royalty payments in the high single digits to low double digits on future sales of ALPN-101, subject to approval and commercialization.

During the option period, Alpine will be responsible for development of ALPN-101, including a Phase 2 study of ALPN-101 in systemic lupus erythematosus. Details of the study design and protocol are being finalized with AbbVie.

With that, I will turn the call over to our President and Head of R&D, Stanford Peng, to provide an update on our research and development.

Yes, thank you, Remy. The first part of this year has been substantiating for Alpine R&D. The first in-human study with ALPN-101 scientifically validated the feasibility of our Directed Evolution platform to generate novel and potent yet safe immunotherapies while the AbbVie collaboration and successful private placement together provided financial validation, which will provide the basis for our ambitious development and discovery efforts going forward.

For ALPN-101, we particularly look forward to initiating its first Phase 2 efficacy trial in systemic lupus erythematosus later next year. Lupus has long been a compelling target indication for ALPN-101. Not only is it a potentially life-threatening multisystem chronic autoimmune disease with few approved treatment options, but also the C28 and ICOS pathways have been increasingly recognized recently as contributing to disease pathogenesis.

In preclinical and translational studies, APLN-101 appears uniquely promising with immunomodulatory activity superior to a combination of biologics blocking the CD28 and ICOS pathways individually. With clinical safety and potent pharmacodynamic activity demonstrated in healthy volunteers, ALPN-101 seems especially well positioned for further the clinical development.

ALPN-202, our first immuno-oncology candidate has similarly made excellent progress. Scientific enthusiasm remains high here because of the growing translational and clinical interest, specifically in C28 mediated co-stimulation in the setting of checkpoint inhibitors and the unique design of ALPN-202 to impart CD28 co-stimulation in a conditional PD-L1 dependent manner.

Interestingly, at the same time, ALPN-202 may have yet further mechanisms of action, including a favorable skewing of suppressive macrophages in the tumor microenvironment as our scientists presented at the recent AACR Virtual Meeting. In June, the first patient was dosed successfully and safely in the first-in-human trial of ALPN-202.

As previously described, the study will include dose escalation and expansion cohorts and is enrolling adults with advanced solid tumors or lymphoma refractory or resistant to standard therapy, including checkpoint inhibitors when indicated. We intend to continue patient enrollment throughout 2020 and into '21 and look forward to future opportunities to provide updates on this study at the appropriate time and setting, hopefully, in the first half of 2021.

We're particularly excited about a third development candidate, ALPN-303, a dual B-cell cytokine antagonist for the treatment of B cell-mediated inflammatory diseases. This program reflects a particularly unique application of our platform to the TNF superfamily of proteins, resulting in a single variant domain that potently inhibits the B-cell cytokines, BAFF and APRIL. This is a clinically validated pathway thought to play key roles in a number of autoimmune and inflammatory diseases, particularly lupus.

ALPN-303 potently suppresses disease activity in a mouse model of lupus as a scientist recently presented at EULAR e-Congress. But even more intriguingly, it appears to have superior activity compared to other available antagonists of this pathway suggesting the potential to be best-in-class. We have initiated appropriate development activities to enable clinical trials, which will hopefully begin late next year.

I will now hand the call over to our CFO, Paul Rickey, to discuss our financial results for the quarter. Paul?

Thank you, Stanford.

Turning to our financial results for the second quarter, Alpine's cash equivalents and marketable securities totaled $90.5 million as of June 30, 2020, which includes the $60 million upfront payment received from AbbVie, but does not include the $60 million of gross proceeds from our private placement we received in July. Taking the recent private placement into account, we ended July 31, 2020, with $147.5 million [next to] our cash balance of $36.1 million as of March 31, 2020.

Revenue recognized under our collaboration agreements was approximately $700,000 in the second quarter 2020 compared to approximately $600,000 recognized in the second quarter last year and primarily relates to our collaboration with Adaptimmune. Research and development expenses for the second quarter of 2020 were $7.1 million compared to $10.2 million for the second quarter last year. The decrease primarily related to a reduction in CMC-related costs to support 101 and 202 development.

General and administrative expenses for the second quarter 2020 were $3.3 million compared to $2.6 million for the second quarter last year. The increase primarily relates to legal costs to support licensing and our intellectual property portfolio. Alpine recorded a net loss of $9.9 million this quarter compared to $11.9 million for the second quarter of 2019.

In terms of our cash runway, we expect that our cash on hand, including the recent proceeds from our July private placement combined with the potential $75 million in pre-option exercise milestones under our collaboration with AbbVie, are sufficient to fund Alpine's planned operations through at least 2024.

With that, I will turn the call back to Mitch.

Thanks, Paul. I'm delighted with the significant progress Alpine has made in the second quarter and subsequently, on three fronts. Strategically, our collaboration with AbbVie validated our platform technology, providing meaningful upfront payments and potential downstream milestone payments, and most importantly, secured an ideal development partner for ALPN-101 long term.

Financially, we filed the AbbVie collaboration with a $60 million financing, further extending our cash runway and broadening our institutional shareholder base. And clinically, we are now in a position to independently develop our wholly-owned ALPN-202 program through a significant value inflection points and expand our development pipeline with ALPN-303 and potentially other preclinical candidates.

We believe these two candidates, along with ALPN-101, and our discovery pipeline provide significant value-creation opportunities for the company going forward.

I believe that the steps we have taken over the last few months put Alpine in a unique position of strength to execute on our mission of creating novel biologics [to] modulate the immune system. I look forward to further updating you on our progress in the coming months. With that, operator, we'll open the lines for questions. Thank you.

Thank you. (Operator Instructions)

Our first question comes from Boris Peaker with Cowen. Your line is open.

Good afternoon. Thanks for taking my questions. Maybe we'll start with the 202. As the Phase 1 study is enrolling patients with advanced malignancies, I'm just curious, are there any specific tumor types that you think would be better targets to show this drug's activity? And what specific tumor types should we expect to see within the trial?

Yes. Hi, Boris. Stanford, you want to take that?

Sure. The trial is taking essentially all comers or all solid tumors plus lymphoma. So, we expect to see a variety of tumor types. That being said, we're particularly interested in tumors that have been resistant to PD-1 or tumor types that historically have been resistant to or unresponsive to PD-1 since that would support the hypothesis of our mechanism of action.

I think, at least during dose escalation, we don't intend to specify. But during the expansion phase, we'll be opening specific cohorts.

Got you. And a question on 101. Now that AbbVie has stepped in, when do we anticipate clinical updates or any kind of material updates on this drug?

Yes. I think, Boris, I'll take that one. We're just now finalizing what the trial design looks like in SLE with AbbVie, and as that gets finalized, we'll be able to give more clarity on when we expect data to come out of that trial. But it will be a standard global lupus trial that'll have robust data associated with it. Stanford, if you want to add onto that at all.

No, that's right. And as Mitch said, we're still finalizing the design. Once we have that finalized, we'll have a better estimate of timing and so on.

Great. Thank you very much for taking my questions.

Thanks, Boris.

Thank you. Our next question comes from Mark Breidenbach with Oppenheimer. Your line is open.

Hey, good afternoon and congrats on the recent progress. Thanks for taking my questions. I'm just wondering now that you have plenty of cash on hand compared to earlier in the year -- I'm wondering if we can expect an expansion of clinical operations around 202? Or is the focus really going to be primarily on getting PSO retrial [at the clinic] for 101 and maybe 303 as well?

Yes, I think -- Hi, Mark -- I think for us what was exciting for the AbbVie collaboration and then the follow-on financing and, as I mentioned in my prepared comments, it allows us to execute on our broad-based development plan for the company, well beyond just 101.

We're obviously super enthusiastic about what we're doing [with] 202 and immuno-oncology and for very enthusiastic about what we're doing, targeting the APRIL and BAFF pathways with 303. So, no, we see it as really giving us the -- when we give you that cash guidance out [through] 2024, that's assuming a very aggressive, and as Stanford said, ambitious development plan for all of our candidates going forward.

Okay, got it. And just curious when we could realistically expect the first development milestone from AbbVie. Would this be linked to the initiation of the SLE study next year?

We haven't said exactly what those milestones are based on. Yes, I have said in prepared comments when we announced the AbbVie collaboration, that the $75 million is spread roughly equally across three milestones. And we expect the first one to occur sometime next year. So, obviously be meaningful for us.

Okay. That's helpful. Thanks for taking my questions and congrats, again.

Yes, thanks, Mark.

Thank you. And our next question comes from Ted Tenthoff with Piper Sandler. Your line is open.

Great. Thanks, guys and congrats on all the progress. It's really pretty -- it's been a great year for you, especially in light of everything going on, but really great progress.

Trying to get a sense in terms of what this does for the organization even beyond currently reported programs. And how does this enable you to take the [VTID] and other technologies further? And maybe what are kind of some other [interests] you're thinking about pursuing? Thanks so much.

Yes, thanks, Ted. Stanford, do you want to take that one?

Sure. No. It's allowed us -- it's going to allow us to explore a number of novel targets or therapeutic approaches with the platform. Part of what was -- what's particularly encouraging to us is seeing the ability of the platform to expand to other protein families such as in the case of 303 or the two -- TNF superfamily. This will allow us to continue to explore that as well as other protein families in the future. So, we're quite excited about that.

The one thing I'd add to that, and I think you probably [gave good base to answer that]. I think the only thing I'd add to that is I think the AbbVie collaboration as well as the inbound investor interest, I think really allowed us to kind of focus on -- we've been able to generate three potential products or product candidates off of the platform.

And so, we're pretty confident that we can flex the platform in other areas where we get multiple targets combined into a single molecule. We're kind of exploring that right now and in the areas that we have deep interest in.

Awesome. Really cool stuff. Excited to hear more.

Thanks, Ted.

Thank you. And I'm not showing any further questions at this time. I'd now like to turn the call back to Mitchell Gold for any further remarks.

Thank you, operator. We do plan to attend virtually the upcoming Wedbush Conference tomorrow, and we welcome your request for any upcoming meetings with our team. Feel free to reach out to either Paul or Laurence, if you'd like to schedule some time with us.

With that, I'd like to thank you all for participating in today's call and have a great day. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, and have a great day.