CytomX Therapeutics Inc (CTMX) 2017 Q2 法說會逐字稿

Good afternoon, and welcome to CytomX 2017 Mid-Year Update Call. (Operator Instructions) Please be aware that today's conference call is being recorded.

I would now like to introduce the first speaker, Debanjan Ray, CytomX's Chief Financial Officer and Head of Corporate Development. You may begin.

Thank you, operator. Good afternoon, and thank you for joining us for a mid-year update on the CytomX Therapeutics business. Here with me today is CytomX's President and Chief Executive Officer, Dr. Sean McCarthy.

Before we begin, I would like to remind you that we will be making forward-looking statements during this call, including guidance on cash utilization, the evolution of our pipeline and expectations for our collaborations. Because forward-looking statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict and many of which are outside of our control. Important risks and uncertainties are set forth in our most recent public filings with the SEC at sec.gov, including our Form 10-Q filed today on August 7, 2017. We undertake no obligation to update any forward-looking statements whether as a result of new information, future developments or otherwise.

A webcast of this call will be available on the Investor Relations page at CytomX's website at cytomx.com.

I would now like to turn the call over to Sean.

Thanks, Debanjan, and good afternoon, everybody. Very pleased to be here today to provide a mid-year update on our progress here at CytomX. During the first half of the year, we continued to advance a deep and differentiated oncology pipeline of potentially transformative Probody therapeutics that are focused on some of the most compelling targets for the treatment of cancer. Throughout the year, the team has executed flawlessly on our operating plan, setting the stage for several important clinical milestones in 2018.

Before I cover program updates, just a brief reminder that Probody therapeutics are designed to exploit certain unique conditions present in the tumor microenvironment with the goal of more effectively localizing antibody binding and activity, while limiting activity in healthy tissues. Our pipeline built off this unique platform technology includes proprietary cancer immunotherapies against clinically validated targets such as PD-L1 and CTLA-4, and first-in-class Probody drug conjugates against highly attractive targets such as CD-166 and CD-71. These latter targets, having been considered inaccessible to conventional antibody drug conjugates due to their presence on normal tissue, we believe presents some very unique opportunities.

CytomX also has strategic collaborations with several leading biopharma companies, such as AbbVie, Bristol-Myers Squibb, Pfizer, ImmunoGen and I'll provide a few collaboration updates a bit later on today's call.

So now let's turn to our recent accomplishments. I'm delighted to say that we now have 2 wholly-owned product candidates in clinical studies. Most recently, we initiated the first clinical trial of a Probody drug conjugate or PDC that we referred to as CX-2009. PDCs are unique first-in-class molecules that target highly and broadly expressed tumor antigens previously considered inaccessible given their presence on normal tissue. We're extremely excited about the potential of PDC's because they allow us to potentially unlock that entirely new universe of oncology targets to pursue. Accordingly, CX-2009 targets the cell surface tumor antigen, CD166, which is known to be present at high levels on many solid tumor types.

To put this into some perspective, HER-2, a target that you're all very familiar with, the target of (inaudible), is of course highly and selectively expressed on certain breast cancers. Accounting for this drug's activity in that particular indication. CD-166 by comparison is expressed on most solid tumors at HER-2-like levels, similar to the HER-2 level expression in breast cancer. So we think it's a really attractive target.

The payload for this product candidate is the maytansinoid DM4 under license from ImmunoGen. Enrollment began in late June, in the PROCLAIM-CX-2009 Phase I/II trial, evaluating the molecule in multiple solid tumor types that are known to highly expressed CD-166, including non-small cell lung cancer, prostate cancer, cholangiocarcinoma and ovarian cancer. The dose escalation portion of the study is underway and expansion cohorts are planned as we reach the maximum tolerated dose, with the objective of identifying indications with registrational potential. We're targeting the initiation of expansion cohorts in first half of 2018 and we remain on track to deliver initial safety data for CX-2009 in the second half of 2018, together with the potential for an initial read on clinical activity. We will also be presenting a detailed overview of the study design at ESMO coming up in just a few weeks.

Now let's turn our attention to our most advanced program, CX-072. A PD-L1-targeting Probody therapeutic that's currently being evaluated in the PROCLAIM CX-072 Phase I/II study. We launched this trial, the first clinical evaluation of a Probody in Q1 of this year, and we're making excellent progress towards data readouts in 2018. Our vision for the molecule for CX-072 is for it to become a unique and differentiated addition to the PD combination landscape and the centerpiece of our emerging pipeline. The detailed study design was recently outlined at ASCO, and the poster is available on our website.

This trial is evaluating CX-072 as monotherapy and in combination with Yervoy, ipilimumab and Zelboraf (vemurafenib). Of course, we expect to learn a considerable amount about the platform and CX-072 itself as this study advances, including looking for evidence of Probody activation within tumor tissue, maintenance of systemic Probody stability and of course, the safety profile and initial activity of the molecule. Since the study is now well underway, I thought I'd take a few minutes to review the trial design and the rationale in some detail.

Let's start with the monotherapy portion of the trial, which has 3 primary goals. First, of course, to provide initial safety data on CX-072; secondly, to reach dose levels of which we are able to initiate the combination arms; and thirdly, upon completion, to allow us to progress to a monotherapy expansion in PD-responsive tumors at the recommended Phase II dose. Now given the importance of the monotherapy arm in triggering additional arms of PROCLAIM CX-072, we designed this arm to enroll very quickly. Therefore, we are enrolling patients with advanced unresectable solid tumors or lymphomas or, if you like, all-comers, regardless of PD-L1 expression and regardless of whether these patients have measurable disease.

With those criteria for enrollment into this arm, I'm pleased to report that enrollment which began in February has progressed very well with 5 dose levels completed and the 10 milligram per kilogram dose now enrolling in real time. Just for reference, just to remind everybody that dosing started in the study at 0.03 milligram per kilogram, so we've made very rapid progress up to the 10 milligram per kilogram dose, and thus far, no dose-limiting toxicities have been observed to date.

We expect to complete enrollment in this arm in the second half of the year. And importantly, as I mentioned earlier, the completion of monotherapy dose escalation will trigger an initial monotherapy expansion cohort at the recommended Phase II dose to evaluate CX-072's safety and potential efficacy in the tumor type to be disclosed at a later date with known sensitivity to PD-L1 and/or PD-1 inhibitors. So again, very pleased with the early progress in enrollment in the monotherapy.

So now let's turn to the combination arms, which given the rapid enrollment in the monotherapy dose escalation, we're pleased to be able to announce that we have begun enrolling patients in 2 of the 3 planned combination arms in this study. Strategically, we believe that a key potential value proposition for CX-072 lies in its ability to enable combinations that have thus far proven either challenging or impossible to dose due to synergistic toxicities. We are, of course, all very familiar with the demonstrated potential, the PD CTLA-4 combinations and the severe side effects that patients could experience on these regimens. We remain strongly committed to evaluating the safety and efficacy of the CX-072-ipilimumab combination with the goal of ultimately demonstrating efficacy in the context of improved overall safety as the current and potential future studies read out.

Enrollment is open for the ipilimumab combination arm, evaluating at concomitant schedule for CX-072 plus ipi in patients with advanced unresectable solid tumors or lymphomas. So again, in the all-comers setting. Dosing for this study began at 0.3 milligrams per kilogram of CX-072 and 3 milligrams per kilogram, which is the approved dose of ipilimumab. We will be dose escalating CX-072 -- dose escalating in this study throughout the year and into next year. So very pleased with that arm now being open.

And in addition, enrollment is also now open in the vemurafenib combination arm, in which we're evaluating CX-072 plus vem in patients with V600E BRAF-positive myeloma. The usual dose level for this arm is 1 milligram per kilogram for CX-072 and 960 milligram b.i.d. for vemurafenib, which as with the ipi combination is the currently approved dose of vem.

Now one thing I'd like to specifically comment on here is that although the standard of care in this particular case is evolving to include the addition of a MEK inhibitor on top of BRAF inhibition, our goal, to be clear, is to evaluate whether the potential activity of the PD-L1 BRAF doublet gives us reason to believe that they could be more effective than that of the triplet. We think this is an important and valuable clinical experiment with the Probody, and we look forward to seeing data from this arm in due course.

So in summary for CX-072, this is a molecule for which we see best-in-class potential in immuno-oncology. Our study is well underway with 3 arms now open, and we remain well on track to report data regarding initial safety and potential efficacy in 2018.

Turning now to our partnerships. Due to the wide applicability of Probodys, both within the field of oncology and potentially in other therapeutic areas, business development has been and remains a key area focus for CytomX. Over the last 4 years, we've secured over $300 million in upfront payments and milestones through entering into alliances with BMS, AbbVie and Pfizer. Several programs in these collaborations are rapidly advancing, and we're looking forward to seeing 2 partnered assets enter the clinic within the next year.

In our collaboration with AbbVie, specifically, we are codeveloping CX-2029. This is a first-in-class Probody drug conjugate targeting CD71 otherwise known as the transparent receptor. As with CD166, the target of CX-2009, CD71 is a highly attractive target but to date has been considered inaccessible and thus, undrugable by conventional antibody drug conjugates given its expression and function in normal tissues.

During the second quarter, we advanced CX-2029 into GLP toxicology studies resulting in a $15 million milestone payment from AbbVie to CytomX, which will be received and recognized in the third quarter. And just as a reminder, CytomX is leading the preclinical and early clinical development of CX-2029. AbbVie will lead later development and commercialization, with global late-stage development costs shared between the 2 companies.

CytomX initially received an upfront payment of $30 million in 2016 and will receive an additional $15 million in the third quarter, as I mentioned, and we're eligible to receive up to $455 million in additional development, regulatory and commercial milestones pending the achievement of predetermined outcomes. AbbVie will lead the global commercial activities with CytomX eligible to receive a profit-share in the U.S. and tiered double-digit royalties on that product sales outside of the U.S. CytomX also retains an option to co-promote it within the United States.

Moving to our foundational alliance with Bristol-Myers Squibb. This collaboration has also made terrific progress in the first half of the year. During the first quarter, we expanded the original 2014 deal to include up to an additional 6 oncology targets and 2 non-oncology targets for a total of 12 targets under the collaboration. During the second quarter, CytomX recognized receipt of the $200 million upfront as part of this expansion. As previously disclosed, BMS is progressing IND-enabling studies for a CTLA-4-directed Probody therapeutic based on ipilimumab and discovered within the collaboration. And BMS expects to initiate patient enrollment in early 2018. We're very excited about that program as is BMS, and they also recently selected a fifth target in the collaboration under the newly expanded agreement and is now -- BMS has now elected 5 of 10 available oncology targets and, I would say, the work overall is going extraordinary well on these programs.

So before turning the call back over to Debanjan, I just want to underscore the impressive clinical and operational momentum and execution of the company during the first half of the year. Still a very strong first half for CytomX. We've continued our evolution from a research-intensive organization to an integrated R&D company, bringing us closer to realizing our vision of transforming the lives of patients with safer and more effective therapies. With our wholly owned programs, CX-2009 and CX-072, now in the clinic, together with our strong partner programs, we're advancing a deep and differentiated pipeline of Probody therapeutics, focused on some of the most compelling targets for the treatment of cancer. And we're well-positioned to continue this momentum, and we expect that our existing capital resources will be sufficient to fund operations into 2020.

So with that, let me turn the call back over to Debanjan just to give a brief summary of 2017 second quarter results.

Thank you, Sean. Prior to turning the call over for questions, I'd like to review selected financial highlights from the second quarter. We ended the second quarter with cash, cash equivalents and investments of $335.9 million. As Sean mentioned, the strong balance sheet allows us to fund operations into 2020 and gives us ample opportunity to advance CX-072 and CX-2009 to clinical proof of concept. Revenue was $8.8 million for 3 months ended June 30, 2017 compared to $3.1 million for 3 months ended June 30, 2016. This increase was primarily attributable to recognized revenue from the upfront payment received from the BMS in connection with the expansion of the existing collaboration.

The $200 million upfront received from the expanded collaboration will be recognized over the next 8 years. In addition, we will receive a $15 million milestone from AbbVie, which will be recognized -- received and recognized in the third quarter of this year.

Research and development expenses were $28.1 million for the 3 months ended June 30, 2017, compared to $12.7 million for the 3 months ended June 30, 2016. This increase was primarily attributable to a $10 million sublicense payment made to UCSB, which was triggered by the receipt of the $200 million upfront payment from BMS in connection with the expanded collaboration. The $10 million sublicense fee to UCSB also caused our loss per share to increase to $0.69 this quarter versus $0.39 in the comparable period last year.

With that, operator, we would now like to turn the call over for questions.

(Operator Instructions) First question is from Ying Huang of Bank of America.

A couple of quick ones. First, on the enrollment of the lead program CX-072. Can you talk a little bit more about the enrollment and also whether you're seeing more competition for enrollment, because I noticed that now we're expecting data to first be reported next year instead of late 2017? And then, I have a question on the 2 clinical programs next year. I assume that the AbbVie and the Bristol CTLA-4 program, can you talk about where the status is for the AbbVie program? Is that also expected to enter clinics next year?

Yes, Ying, how are you. Good to hear from you. So with regard to enrollment, as I said, we're very pleased with how enrollment has been going. We've taken a fairly aggressive approach with regard to site initiations. We have more than 20 sites open now in the U.S. and ex U.S. And enrollment, frankly, is tracking ahead of schedule. I think we've been guiding for some time that the study readout for 072 and also for 2009 will be 2018 events. I think that we do, of course, have broad-based translational program in place and still possible something could emerge from that over the course of this year, but I think it's really best to think about data emerging for the study in 2018. But again, we're very pleased with how enrollment has progressed with the monotherapy to allow us to open up those 2 combination cohorts. With regard to the partner programs, yes, you're right, the 2 partner programs that I alluded to are indeed the CTLA-4 Probody with Bristol, which is making terrific progress; and the AbbVie-partnered CX-2029 CD71-targeting PDC. That AbbVie program, we are planning a 2018 IND. We're not in a position to guide more specifically just yet but we're very pleased with the progress and, obviously, have announced have entered into GLP toxicology studies, so the program is moving forward very nicely.

Our next question is from Boris Peaker of Cowen.

The first one, I'd like to focused maybe on the 072 program, specifically, the BRAF combo arm. You mentioned that you believe that the doublet combo could potentially be better than a MEK triplet. I'm just curious what we'd need to see from this arm of the study to kind of confirm this thesis? And also if you may have any plans to actually run a triplet with a MEK inhibitor?

Boris, great question. So as I said, yes, clearly, the field is evolving quickly in this context. Just to rewind a little bit and outline the rationale going into this particular arm, the -- you'll recall that the initial clinical experience with PD-L1 with atezo and vemurafenib has shown considerable potential in terms of activity, but very severe toxicity such that full dose of that combination is not achievable in patients. And so our objective is to -- we're asking the question of -- and bear in mind that vemurafenib alone does not display the types of toxicities that were seen in those patients. So there seems to be something about putting them on top of a PD-L1 backbone that amplifies this toxicity. So the experiment that we're doing, the hypothesis is that, in the context of a targeted, more systematically quiescent PD-L1, in other words the Probody, then can be tolerated in patients and the full dose given, and therefore, the full benefit realized by patients. We believe that the potential benefit of that doublet could be meaningful and potentially superior to the emerging data for the triplet, the atezo-vem-cobi triplet, which is read out in terms of initial data, but still we have been still waiting on overall survival data.

So our objective is to do a simple experiment with the doublet rather than overcomplicating the experiment by now putting on a MEK inhibitor. There's one additional reason to not put on a MEK inhibitor, which is that there's evidence that the MEK inhibitor itself is somewhat immunosuppressive, which could complicate things even further. So we think this is a clean experiment. We believe the rationale is still very solid and, as I mentioned, the arm is open and enrolling at this point in time.

So it sounds, just to make sure I understand you, that the key here is to focus more on kind of the dose reductions or a fraction of patients that may need it or may not need it more so than perhaps making conclusion based on any kind of specific response rates?

Yes. Our objective would be to avoid -- again, the hypothesis here is that we would avoid dose reduction and, therefore, be able to maximize the benefit for patients.

Our next question is from Christopher Marai of Nomura.

Just wondering actually if you can elaborate a little perhaps on plans going forward with the Probody technology in the -- in the T-cell redirecting bispecific space. We've seen obviously some posters you guys have put up and some interesting data in the solid tumor settings recently from various competitors. So I was wondering if you can perhaps comment on the use of your Probodys in a solid tumor versus non-solid tumor or liquid tumor setting, and then progress that you've been making there with Probody to redirect T-cells?

Great, Chris. Thanks for the question. Yes, we remain very excited about this application for the technology. We think there's a very clear need for safe and more effective T-cell-engaging bispecifics in the solid tumor setting. We have made great progress. Some of this work, as you've seen, has been published that you alluded to with an EGFR CD-3 format where we've been able to expand therapeutic window very substantially pre-clinically, and we're currently thinking through our next steps for that and other molecules in terms of advancing into our pipeline. You mentioned recent progress. I think, I would point to the Roche CEA CD-3 data at ASCO, which I think was encouraging for sure, a level of proof of concept that T-cell redirection can be effective in -- early data, but it can be effective in solid tumors. We again -- a bit like with our Probody drug conjugate strategy, we believe that we can unlock a new universe of targets for solid tumors for this important and emerging modality, and we remain very committed to this research at this time.

And then maybe just one quick follow-up. Can you remind us the BMS extended collaboration, does that include any T-cell redirecting Probodys or am I mistaken?

So again, the expansion of the relationship, 6 additional oncology targets, 2 additional nononcology targets, and they are able to select the T-cell bispecific format for certain targets, should they wish.

(Operator Instructions) Next question is from Biren Amin of Jefferies.

CX-072, can you just discuss the immunogenicity profile that you've seen to date from the ongoing trials?

Too early to tell, Biren, and hi, by the way. Thanks for the question. So we're ready to say at this point is no DLP is observed to date. We'll be doing comprehensive PK analysis in the coming months.

Okay. And Sean, I think you mentioned that you wanted, at least with the 072, proceed into a monotherapy study with a tumor type that's sensitive to PD-1. I'm pretty sure you're probably not going to discuss what that tumor type is today, but is one of the considerations that you could file a regulatory filing on Phase II data when you choose that tumor type? And secondly, are you developing a companion diagnostic? And if so, are you currently using that in the current monotherapy and combo studies?

Great questions, Biren. With regard to the first, I mean, of course, indication selection is intimately linked with -- in this area of clinical development, is intimately linked with potential registration strategies. It's too early to comment any further on that. With regard to companion diagnostics. Just make sure I understand the question, you're asking about PD-L1 levels? Are you're asking about something else?

Yes, correct. Are you evaluating PD-L1 levels currently in the ongoing monotherapy in the ipi combo studies?

We are. We are certainly measuring PD-L1 status. We're not selecting patients in these early arms of the study. That's something that we'll consider doing a bit further down the road.

There are no further questions at this time. I'd like to turn the call over to Debanjan Ray for any closing remarks.

This concludes our call and Q&A session. Thank you very much.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.