ImmunoGen Inc (IMGN) 2016 Q3 法說會逐字稿

Good day, and welcome, everyone, to the ImmunoGen third-quarter FY16 financial results conference call. Today's conference is being recorded. At this time for opening remarks and introductions, I would like to turn the conference over to Executive Director of Investor Relations and Corporate Communications, Carol Hausner. Please go ahead.

Thank you. Good morning. At 6:30 this morning we issued a press release that summarizes our financial results for the quarter ended March 31, 2016, the third quarter of our FY16. I hope you've all had a chance to review it. If not, it's available on our website.

During today's call, we will make forward-looking statements. Our actual results may differ materially from such statements. Descriptions of the risks and uncertainties associated with an investment in ImmunoGen are included in our SEC filings, which can be accessed through our website.

In our call today our Chief Executive Officer, Dan Junius, will provide an update on ImmunoGen; our Chief Development Officer, Dr. Charlie Morris, will discuss our wholly owned compounds in greater depth; and our Chief Financial Officer, Dave Johnston, will discuss our financial results and guidance. We'll then open the call to questions. Dan?

Thank you, Carol, and let me add good morning. Today we're at a key stage in our development of mirvetuximab soravtansine, which is our lead wholly owned product candidate. We want to use most of today's call to update you on our plans with this program.

We now have experience with this novel ADC in over 160 patients with fully receptor alpha positive previously treated ovarian cancer, dosing these patients at 6 mgs per kg every three weeks. The findings on the 46-patient Phase 1 expansion cohort will be presented at ASCO on June 6, and shortly after that serve as the basis of our meeting with the FDA on our planned registration trial.

As you recall, we initially had data for 20 patients and were awaiting findings from the expanding cohort before finalizing the design of the second stage of our FORWARD I trial, the stage comparing mirvetuximab soravtansine to current single agent standard of care. Based on the expanded body of data now available in FORWARD I from a two-stage Phase II trial designed to support accelerated approval to a single-stage Phase III trial designed to support full marketing approval of mirvetuximab soravtansine for fully receptor alpha positive ovarian cancer in earlier lines of platinum-resistant disease. There are several reasons behind these changes, which Charlie will be discussing in more depth.

First, the findings in the more recently enrolled patients indicate that the measures we introduced to manage ocular adverse event appear to be working. And thus we no longer need to assess a less intense dosing schedule, which had been the purpose of Stage 1 of the prior design.

Second, increasing the experience base from 20 to 46 patients has allowed us to explore a subset for additional insight into patient selection. A key observation coming out of this assessment is that the confirmed responses were primarily in patients who received 3 or fewer prior treatment regimens. Consequently, we're changing the inclusion criteria for FORWARD I to cap the number of prior regimens at 3 rather than stipulating 3 or 4 prior regimens. This continues to allow enrollment of patients who have received 2 platinum regimens, as well as Avastin in combination with chemotherapy for its approved use in platinum-resistant disease.

Consistent with moving mirvetuximab soravtansine to an earlier line of treatment, we've also changed the primary endpoint of FORWARD I from response rate to a more robust one, progressing free survival. With positive results, FORWARD I is intended to support full marketing approval.

Charlie will now discuss these decisions in more detail and provide additional program update. Charlie?

Thanks Dan, and good morning everyone. As you heard from Dan, we're making substantive changes to the design of our FORWARD I trial based on the findings in the full Phase I ovarian cancer cohort that will be presented at the ASCO meeting on June 6. As a reminder, the reason we expanded this cohort from 20 to over 40 patients was to gain additional experience and increase our confidence in patient selection. We believe the changes we are making give us the best chance for success while only modestly adding to the time line.

With the expansion of our data set to 46 patients, we have a better understanding of the tolerability and efficacy of mirvetuximab. On the tolerability side, we have noted a reduction in both instance and severity of ocular adverse events since we introduced a number of proactive prevention and management recommendations into our protocol. In fact, we and our advisors feel this is now at such a level that Stage 1 of the study, which was intended to see if ocular events could be reduced with a full weekly dosing schedule, is no longer necessary. Therefore we are discontinuing Stage 1 and we'll proceed directly to the comparison to physician's choice of chemotherapy using the three weekly schedule.

Based on our latest efficacy data, we also have a deeper understanding of which patients we should be including in the FORWARD I study. You will remember that FORWARD I was designed to look at mirvetuximab efficacy in patients with medium or high FRL [outbreak] expression. At the Triple meeting last fall, we presented data looking at preliminary information on the relationship between the level of folate receptor alpha for expression on patient tumors, high, medium or low, and response to treatment. In the initial 20 patients all of the confirmed responses were in patients with high folate receptor alpha expression, with tumor reductions in all medium expressing patients, though none had reached a confirmed response at that time.

In the more recent data, we have now seen confirmed responses in patients with medium expression, and even in a couple of patients with low expression. On that basis, we plan to continue to include medium and high expresses in FORWARD I. We also plan to do further Phase 1 work in lower expresses to understand whether that is truly a viable population for benefit from mirvetuximab.

The confirmed response rate among the high-plus medium expresses in the expanded patient population is a little below the 30% threshold that we have always felt would be important for single-agent development. Our Phase I population includes platinum-resistant patients who have received as many as 5 trial lines of therapy. And analysis of the data shows that we have observed response rates at the higher in less heavily pre-treated patients. While this is not a surprising finding, the difference was notable enough that we chose to act from it. As a consequence, we are modifying the patient inclusion criteria from patients with medium- or high-folate receptor alpha expression who must have had 3 or 4 prior regimens to patients with medium- or high-folate receptor alpha expression with platinum-resistant ovarian cancer who have had no more than 3 prior regimens for whom single-agent therapy is appropriate.

In the expansion cohort, response rates in this population is well above the 30% level I mentioned a couple of minutes ago, with encouraging preliminary progression pre-survival. We estimate this population to be about 5,000 to 7,000 patients per year in the US, up from 2,000 to 3,000 with the previous criteria. There are approved single-agent therapies for this population, i.e. doxil and topotecan, but the unmet need in this population remains high, given that these agents have response rates in the 15% to 20% range with PFS around 3 to 4 months and challenging tolerability profiles. As before, patients in FORWARD I will be randomized 2 to 1 to mirvetuximab soravtansine or physician's choice single-agent chemotherapy agents, including these two approved agents. We will discuss with the agency whether it is appropriate to include other agents.

As Dan noted, we'll be changing the primary endpoint from FORWARD I to PFS with the trial now intended for full marketing approval. We're sizing the study to ensure we will be able to detect clinically meaningful and statistically significant benefit in progression-free survival. To enhance the likelihood of success, the statistical plan will call for PFS to be separately assessed in high expresses as well as in the combined high-plus medium expresses. All in all we believe this is the more robust strategy from a regulatory perspective. And we plan to meet with the FDA this summer to get their input prior to starting this Phase III trial.

Turning now to other programs. Patient enrollment is going well in our FORWARD II trial evaluating mirvetuximab soravtansine in combination regimens. It's currently being assessed separately with bevacizumab, carboplatin and doxil. We're preparing to add a cohort to evaluate it with Merck's PD-1 inhibitor, pembrolizumab, later this year. Once mirvetuximab dose with pembrolizumab is established, we have planned to open an expansion cohort assessing the combination specifically in the treatment for pembrolizumab-naive patient. And assuming it is well-tolerated with pembrolizumab and carboplatin individually, we plan to assess a triple combination of these agents. We'll be making next-step decisions for the other agents, including pembrolizumab, based on the findings in this initial assessment. We currently expect preliminary findings from one or more of the cohorts from FORWARD II to be reported at ASCO 2017.

I'll finish by noting that [last Monday] we announced the start of patient dosing with our CD33, targeting IMGN779, a potential new treatment for acute myeloid leukemia. It is the first ADC to utilize one of our new IGN payload agents which have a different mechanism of actions than other DNA acting approaches. We think IGNs are an important innovation in the ADC space, as they are much more potent than (inaudible) and have a different mechanism of action. Over time, we expect them to meet many lower expressing targets, 8033 being a good example [for survival] for IGN ADCs.

Our Phase I trial is designed to efficiently inform IMGN779's [development] pathway and will evaluate 779 in two specific patient populations. Patients with AML and first relapse and patient with relapsed with refractory disease. Our pre-clinical research indicates that IMGN779 may have a very different tolerability profile than other CD33 targeting approaches. And we look forward to gaining clinical experience with it. As you may have noticed, our partner Takeda recently disclosed that they too are developing an IGN-utilizing ADC. Their's targets GCC, which will provide experience in the solid tumor indication.

At this point, I would like to hand it over to Dave for the financials.

Thanks, Charlie. As Carol noted, we issued a press release this morning with our third-quarter FY16 financial results. I'm going to review the highlights of that, as well as updating our guidance for the fiscal year.

Revenues in the third quarter of our FY16 were $19.7 million as compared to $11.4 million for the same quarter of last year. The current period includes $10 million of cash milestones earned from Bayer with their advancement of mirvetuximab soravtansine into a clinical trial that's designed to support registration, while the prior year included a $5 million cash milestone payment from Novartis. Revenue in the current period also includes $7.4 million of non-cash royalty revenue on sales of Kadcyla for the three months ended December 31, 2015. As a reminder, the royalty is passed to the purchaser of the royalty stream, and we report non-cash Kadcyla royalty revenue that is partially offset by non-cash interest expense, resulting in non-cash net income.

Operating expenses for our third quarter of the fiscal year were $47.3 million compared to $32.7 million in the third quarter of last year. Driving the change from the previous fiscal year are increased personnel expenses and increased third-party costs related to the advancement of our product candidates, primarily mirvetuximab soravtansine, as well as some non-cash stock compensation charges resulting from the CEO transition. For the quarter we reported a net loss of $31.9 million, or $0.37 per share, compared to a net loss of $21.6 million, or $0.25 per share for the same quarter last year.

Cash used on operations was $91.6 million in the first nine months of 2016 compared to $26.8 million in the same period of last year. Prior-year benefit from $25 million in upfront payments received, including $20 million in connection with the execution of our right to a test agreement with Takeda in March of 2015, as well as lower operating expenses. Our capital expenditures were $8.6 million in the first nine months of 2016 compared with $4.5 million in the same period of last year.

And lastly, we ended the quarter with $182.9 million of cash and cash equivalence compared to $278.1 million as of June 30, 2015. And we continue to have no debt.

We're updating our guidance for the fiscal year, which ends June 30. Expected revenues are now expected to be between $60 million and $70 million compared to our previous guidance of $70 million to $80 million. And this change is primarily due to the changes in the expected timing of partner events, and is mainly non-cash related. Operating expenses are now projected to be $180 million to $185 million compared to the previous guidance of $175 million to $180 million. I'm sorry, the change is primarily related to greater clinical costs and non-cash stock compensation charges.

Net loss is now expected to be between $135 million and $140 million compared to its previous estimate of $120 million to $125 million, with most of this change being non-cash related as well. Cash used in operations is now expected to be between $110 million and $115 million, which has been previously between $100 million and $105 million. (Technical difficulties). Cash equivalents at fiscal year end to be between $155 million and $160 million compared to previous guidance of $165 million to $170 million.

As you've heard from Dan and Charlie, we're advancing our portfolio of product candidates led by mirvetuximab, and we believe these investments will result in the greatest value for our shareholders and important new therapeutic options for both physicians and patients.

So with that, I'll turn the call back over to Dan.

Thanks, Dave. As you've heard, we have a lot going on. And we look forward to continued progress and steady news flow. Our anticipated events for single agent mirvetuximab soravtansine include abstracts being public for ASCO in the middle of May. With those we'll provide data updates when the embargo lifts. The ASCO presentation on findings from the expanded Phase I cohort will be on June 6 at ASCO. And we'll be meeting with the FDA this summer on the design of the FORWARD I Phase III trial that you heard Charlie just describe. And from that we would expect to start dosing patients in the Phase III FORWARD I study by year end.

Going beyond mirvetuximab as a single agent, we look for the initiation of the IMGN 529 combination study in combination with rituximab to start very shortly. Phase I data will be presented at ASCO for three programs in development by our partners: Bayer's anetumab ravtansine, and from Sanofi both isatuximab as well as SAR-566658.

We also look to achieve the pembrolizumab FORWARD II cohort targeting early in the second half of 2016, so sometime later this year, as well as discussing our next wholly owned product candidate. We'll be disclosing that sometime in the back half of this year. Finally, we expect there'll be partner progress or events on various compounds over the course of 2016. The partner pipeline continues to be quite active.

Before we go to the Q&A and I'll turn it back to Carol, a couple of comments from me. As many of you are aware, I'm going to be retiring soon as ImmunoGen's President and CEO. That will take place roughly in the middle of May. I'd just like to take the opportunity to thank all of you for your interest in ImmunoGen. The Company has developed and is advancing an important technology, one that I'm convinced will be a key part of cancer therapy going forward. I'm grateful for the opportunity that I've had to be part of that for the past 11 years, and 7-plus years as ImmunoGen's CEO. It's truly been an honor to be associated with such a dedicated group of people who are driven to find better cancer therapies.

Mark Enyedy will be taking over as President and CEO on May 16, I think is an excellent candidate to lead ImmunoGen. I've been impressed with Mark, getting to know him through the recruiting process. I'm excited by the capabilities he brings to the Company, and I'm confident he will lead ImmunoGen to many, many future successes.

So with that, Carol, let me turn it over to you to moderate the Q&A.

(inaudible) Thanks, Dan. We are about to open the call to questions.

(Caller Instructions)

Operator, we are now ready to open the lines for questions.

(Operator Instructions)

It appears our first question comes from Michael Schmidt with Leerink Partners.

Hi. Good morning. Thanks for taking my questions. I just wanted a clarification, Charlie.

You made some comments regarding response rate, and I may have misunderstood that. But you said the response rate in the expanded Phase 1 study for mirvetuximab was lower than 30%. Is that correct?

So in the overall population regardless of the number of prior lines of therapy, the response rate is a little below 30%. So what we observed was that there was clearly a higher response rate in those patients who had had the lower numbers of lines of therapy, which is one of the reasons for the change.

I see. And so on the updated FORWARD I trial design, can you just help me understand the powering assumptions here in those slightly earlier stage patients? What is the hurdle in terms of response rate and PFS compared to standard of care?

Well, I think the thing to really be focusing on based on the design of the study will be progression-free survival. Progression-free survival generally in these studies seems to be in the 3.5- to 4-month range. So I think that's something upon which we can improve.

Response rate tends to be 15% to 20% range, but response will now be a secondary endpoint, not a primary endpoint. We believe that if we can move the progression-free survival to six months or higher, then that would be a substantial improvement, both clinically and statistically. And that's the kind of thing we'll be powering for.

Okay. And then you made some comments on the managing the ocular side effects better now than previously. I was wondering if you could provide some more information on some of those measures?

Yes. You may remember from previous calls, we've had a little bit more restriction on patients based on their history of any eye conditions. We try -- we ask patients not to wear their contact lenses during the study. We use lubricating eye drops as part of the therapy. And we've also been using interventions including corticosteroid eye drops as an option in treatment.

So what we're seeing now is that the event rate has really improved quite a lot with that. And we continue to do more work. But it really has improved to the level that we were hoping to show by looking at different schedule. So we felt that if the question had been answered, then we may as well get right into the efficacy part of the study and really get the most robust design going where we could.

Yes. Okay. And then regarding the folate receptor alpha expression levels, remind me what percent of patients fall into the low, medium and high expression category that you have seen enrolling in the Phase I so far?

So in the studies that we've been conducting about 80% of patients had eligibility based on being at least a low expressor, i.e. 25%, a two-plus or higher. Of those, about 50% were high and the rest were pretty evenly split between medium and low.

Our next question comes from Mara Goldstein with Cantor Fitzgerald.

Thanks very much. Just on the redesign of the trial moving into a Phase III, can you just talk about timing assumptions and how long you think it will take to complete the trial? And then secondarily on the data that is expected at ASCO, will all of those, the group of 46, be confirmed responses in that trial?

In terms of -- the exact timing obviously will depend in part on reaching an agreement with the FDA on whether they think we have the right design and the right trial size. If they like what we have currently put together, we should be able to start recruiting before the end of this year.

And we anticipate that this would probably make the study about six months longer than we had previously projected because it will be a larger study for PFS. PFS requires a longer follow-up. And we require some more patients to do it.

In terms of the data at ASCO, the focus of everything in terms of response will be on confirmed response rate. So any comments I made today about response should at least be interpreted as being as being unconfirmed response rates.

All right. Thanks so much.

Our next question comes from Jessica Fye with JPMorgan.

Hey, there. Thanks for taking my question. I guess I'm trying to understand why, if your response rates have come down, that moving to a PFS endpoint would help your probability of success? Is the main sort of improvement in the study design here the cutting out the later lines of the later stage patients, or is it changing the endpoint?

Addressing slightly disconnected things. So in terms of the overall confirmed response rate in the population that we are now targeting, i.e. platinum-resistant, three or fewer lines of therapy, I would not describe the response rates as having come down. They're very much in the ballpark of where we've described previously and in an area where we would be very comfortable to go forward.

The difference is, of course, that we're in an area where I think, although they are clearly high unmet needs, they are approved agents. And we feel that since we'll be having to go head to head with approved agents, that the likelihood of being able to get an accelerated approval on response rate is probably less and probably unnecessary if we can get a full approval on PFS without any great movement in the time line.

So we felt that the best way to go was to target that population where the results remain robust. As I said in my remarks, the preliminary view of the PFS is it's early, but it's preliminary view of the PFS is very encouraging. We felt that was the best way to go.

Okay. And the patients that you're enrolling now, will they all have had prior avastin, or will be avastin be an option for patients on the control arm?

It won't be an option for patient on the control arm. So they will either have had it or not be considered eligible for it. But we will compare it to single agent chemo.

Okay. Got it. Thank you.

Our next question comes from Simos Simeonidis with RBC Capital Markets.

Thanks for taking my questions. Charlie, I just want to understand the difference in the FORWARD I population from what you were planning to enroll and what you're going to enroll. Is the only difference in the population the exclusion of patients with a fourth line, that have taken a fourth line regimen?

That's the major difference. We didn't actually specify the words platinum-resistant in what we had said previously, because I think there was that -- by the time you had entered that those who had four or five prior lines of therapy -- sorry, three or four prior lines of therapy, that became less of a consideration. So the key difference is that it could be three. In theory it could be two or one prior line of therapy. But it's now no more than three.

Okay. And then the number you referenced, the slightly lower than 30% response rate, what are we supposed to compare that with in your prior guidance? Is it the 35% overall response rate in the 20 patients that were of all levels of expression of the folate receptor low, medium or high? Is that would be appropriate comparison?

Yes, yes.

Okay. Great. Thank you.

Our next question comes from John Newman with Canaccord.

Good morning, guys. Thanks a lot for taking my questions. I just have one question this morning, which is the 46-patient data set that you'll be presenting at ASCO, should we expect that would be stratified by both receptor level expression and prior lines of therapy? And also should we expect to see duration of response data from that 46-patient data set? Thanks.

Yes. Thanks, John. Yes, obviously we intend to present the data in a way that clarifies who we believe would be appropriate patients are for the mirvetuximab and should allow an understanding of the way that the trial is being designed. And I forgot what the second half of the question --

Duration ratio.

Yes. Yes, we'll include both duration and progression for each survival information.

Excellent. Thank you.

Our next question comes from Biren Amin with Jefferies.

Yes. Thanks for taking my questions. Why wouldn't FDA require OS as a primary endpoint, given you're now going to earlier lines of therapy?

If we look at the most recent precedent, and perhaps the most obvious one being avastin, progression-free survival has been seen to be an acceptable endpoint and there are other Phase III trials underway where we see progression-free survival being used an endpoint.

I think obviously we'll need to capture our overall survival data. I think they will want to see a trend for overall survival. But I think there are precedents now that suggest that progression-free survival may be -- should be the appropriate endpoint. But obviously that's part of the reason that we go to have the conversation with them.

And then I guess on this expanded cohort of patients, it seems that the response rate degraded significantly. What are the reasons why you observed this, given the first 20 patients you saw a 35% response rate?

Well, I'm not sure I would call it significant. Clearly it is not as much. We do have more heavily pretreated patients in the population that we've seen since ASCO. And I think the other thing is we now have more information. We can get a more robust idea and we can look at the data more intently and get a deeper understanding of who is in there. I think it's just one of those factors of what happens as you start to get more patients, start to understand it more.

And to say again, everything that we've mentioned today really speaks to the confirmed response rate. And these things are not major moves. But I think there's enough information there to say, look, there is a population where there is a response rate meaningfully higher than 30%. And that's the one we're going to pursue.

Got it. Thanks.

Our next question comes from Chris Marai with Oppenheimer.

(Technical difficulties) we see at ASCO. What sort of duration of follow-up? And then two, how many patients will be high folate receptors expression levels?

Chris, you're breaking up. Could you try again? We didn't hear you.

I apologize. (Technical difficulties). I'm just wondering in terms of the ASCO data. Could you (technical difficulties) how many patients would be high expressing patients and how many might be medium folate expression patients in that data set? And what's the duration of follow-up?

Okay. You're breaking up pretty badly there, Chris. But I think I got the question. First one was the high and medium expression. In the population that you'll see, I don't have the exact numbers in front of me. But it's about 50% of the patients will be high and about maybe about a third of the patients will be medium.

And in terms of the duration of follow-up, the median -- I don't actually know that number, I got to be honest with you. But all patients will have been on sufficiently long to have had a number of assessments and been assessed for whether they can have a response.

Okay. Great. And then with respect to pretreatment, does that in any way correlate, or is it related to, folate expression levels? Are you aware of any data that might suggest that?

And then finally, do your new enrollment criteria for the Phase III, does the new Phase III design in any way speed enrollment of that trial? Thank you.

In terms of the impact of prior therapies on folate levels, we don't have data at this point. As you know, we do have a biopsy cohort which is at least looking at the consistency between archival samples and fresh biopsies. And as those data mature, we'll present those data in time. The final --

Does the design speed up enrollment?

All right. We -- I mean, there are more patients. We intend to open more centers. And it will be not this sort of two-stage that we've done before, but it will be straight into a Phase III portion. So I think after the ramp-up, yes, I would expect a pretty rapid recruitment.

It is more than twice the patient population. So that alone, I think, would afford us the opportunity to see more patients more quickly.

Thank you.

And it appears we have no further questions in the queue at this time.

Great. I want to thank you, Dan, for your tremendous contribution to ImmunoGen over the past 11 years. I want to thank everyone for their interest in ImmunoGen. And if you have any subsequent questions, please don't hesitate to call. Have a great day.

That does conclude today's conference. Thank you for your participation.