ImmunoGen Inc (IMGN) 2017 Q3 法說會逐字稿

Good day, and welcome to ImmunoGen's conference call covering operating and financial results for the third quarter 2017. Today's call is being recorded. At this time, I would like to turn the conference over to Sarah Kiely, Director of Investor Relations for introductions. Please go ahead.

Thank you. Good morning, and thank you for joining today's call. Earlier today, we issued a press release that includes a summary of our recent progress and our financial results for the third quarter. This press release and a recording of the call can be found under the Investors' section of our website at immunogen.com. On the call, today are CEO, Mark Enyedy, who'll provide a summary of the key events for the quarter, including our strategic collaboration with Jazz Pharmaceuticals and the steps we've taken to strengthen our balance sheet. Anna Berkenblit, our Chief Medical Officer, will provide an update on our development program, including our lead asset mirvetuximab soravtansine as well as our earlier-stage program.

Dave Johnson, our CFO, is joining us remotely today and will cover our third quarter financial results and our updated guidance. We will then open the call for Q&A and Rich Gregory, our Chief Scientific Officer, will also join the team for this portion of the call.

During today's call, we will use forward-looking statements and 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.

With that, I'll now turn the call over to Mark.

Thank you, Sarah. Good morning, everyone, and thank you for joining us today. We're pleased to be with you to discuss the progress we've made during the third quarter. This was an excellent quarter for ImmunoGen, both operationally and financially as we strengthened the business on multiple fronts and positioned the company for long-term value creation.

Last fall, we set a new direction for the business. We restructured our operations to become more efficient and better manage our cash. We prioritized our portfolio to focus on our highest value programs. And we defined our strategy with a clear set of priorities. First, complete the development and launch mirvetuximab in 2020, accelerate our early-stage portfolio, extend our leadership position in ADCs through continued innovation and strengthen our financial position through strategic partnerships.

For each of these priorities, we developed a set of operational milestones that would reflect material progress in the business, including clinical trial startup, accrual and data generation, manufacturing to support development and commercialization, transaction execution with respect to both business development and financing and cultivating a high-performance culture that fosters continued innovation. Over the last 12 months, we've delivered on these milestones and in the process, generated significant momentum in the business and made material progress towards our strategic priorities.

Focusing on the third quarter. In the clinic, we've activated over 90 sites in FORWARD I, which is our Phase III registration trial for mirvetuximab monotherapy. With this study, we are on track to complete enrollment by the middle of 2018 and readout on the primary endpoint in the first half of 2019. We've also demonstrated clinical proof of concept for mirvetuximab as a combination therapy and have advanced the expansion cohorts with Avastin and Keytruda in our FORWARD II trial, which will provide the foundation for a broader label for mirvetuximab.

In addition, following a review last quarter of our data and the competitive environment, we are moving forward with a triple combination of mirvetuximab with Avastin and carboplatin to address patients with platinum-sensitive disease.

Turning to our heme-focused programs. We've accelerated our early-stage pipeline with 779 in Phase I testing for AML and the filing of the IND for 632 in mid-September. The 632 trial will open for enrollment later this quarter. 779 and 632 form the basis of the strategic collaboration with Jazz that we announced in the third quarter. This partnership generates substantial funding to advance these programs at scale, provides us with access to global development and commercial capabilities, allows us to participate in the late-stage development and commercialization of at least one of these programs, and more broadly strengthens the financial position in the business.

To that end, since May, we've added over $235 million of capital through a combination of the proceeds of the Jazz collaboration and recent follow-on financing in our transactions with Debiopharm and Sanofi earlier in the year. Together with our existing cash, these funds give us at least a 2-year operating run rate, which takes us through a number of important events, including the expected time frame for the results for the pivotal trial with mirvetuximab.

Additionally, we converted roughly $97 million in debt off of our balance sheet, reducing the outstanding amount to just over $3 million. So we have now delivered 4 consecutive quarters of strong clinical, operational and financial execution. We will carry this level of momentum and performance through the end of the year and confidently look forward to a productive 2018.

With that, I'll turn the call over to Anna to review our recent pipeline progress with mirvetuximab 779 and 632.

Thanks, Mark. During the third quarter, we continued enrolling patients in FORWARD I, our Phase III trial evaluating mirvetuximab in patients with platinum-resistant ovarian cancer. The trial is designed to support full approval.

We began enrolling patients in FORWARD I in January of this year and expect the trial to be fully enrolled by the middle of 2018. Our clinical team has been busy opening sites in the U.S., Canada and Europe, and we are on track to have more than 100 sites opened by the end of the year. We are pleased with how the study is progressing, and as previously mentioned, expect to have an interim analysis for futility-only in the first quarter of 2018.

Based on the antitumor activity and tolerability profile we've demonstrated thus far, we believe mirvetuximab monotherapy has the potential to displace chemotherapy in the platinum-resistant setting. In addition, the promising combination data we have generated thus far in the FORWARD II trial positions mirvetuximab for development in earlier lines of treatment, further expanding the opportunity for our lead candidate.

We've demonstrated that full dose mirvetuximab combines safely with full doses of Avastin, carboplatin, pegylated liposomal doxorubicin, or Doxil and Keytruda. We are currently enrolling patients in expansion cohorts with Avastin and Keytruda combinations. And we are planning a triplet, evaluating mirvetuximab in combination with Avastin and carboplatin in recurrent platinum-sensitive ovarian cancer.

In parallel with our mirvetuximab program, we are continuing to advance IMGN779 and IMGN632, which are ADCs for hematologic malignancies that use our novel DNA-alkylating IGN payloads. At the upcoming ASH annual meeting, we will have presentations highlighting clinical and preclinical data for IMGN779 and preclinical data for IMGN632.

As a reminder, 779 is a novel CD33-targeted ADC that we are evaluating in patients with acute myeloid leukemia. We are continuing to dose escalate on an every-other-week regimen, and we have recently initiated a weekly dosing schedule as well. At ASH, we'll present updated clinical data for 779 from the dose escalation portion of the ongoing Phase I study in patients with relapsed/refractory CD33 positive AML.

We will also present preclinical combination data for 779 with cytarabine, a commonly used chemotherapeutic for the treatment of AML.

The poster will describe the mechanism, anti-leukemia activity and tolerability of the combination using in vitro and in vivo human AML preclinical models. Additionally, at ASH, we will present preclinical data with 632, our novel CD123-targeted ADC, demonstrating anti-leukemia activity in acute lymphoblastic leukemia cell lines and patient samples. These initial data are very encouraging, and we look forward to sharing more details at the meeting next month.

With regard to 632, during the third quarter, we filed an investigational new drug application to support clinical testing of 632 in patients with CD123-positive hematologic malignancies, including AML and blastic plasmacytoid dendritic cell neoplasm or BPDCN. We announced last month that the FDA completed the safety review and the IND is now active. We are rapidly moving this compound to the clinic and expect to open the Phase I study before the end of the year.

In summary, we've made significant clinical progress. Our Phase III mirvetuximab trial is on track. We have multiple combination assessments in progress for mirvetuximab. And we have a second clinical program, 779, progressing nicely through Phase I. And we will have a third novel program, 632, entering the clinical development before the end of the year. We look forward to sharing further progress with these programs with you. Now I'll turn it over to Dave.

Thanks, Anna. Our financials were discussed in some detail on our press release issued this morning. So I'm going to review the highlights and talk about our updated guidance for 2017.

We continue to operate with financial discipline focused on executing against our strategic priorities and this is reflected in our operating expenses in the third quarter of 2017, which were approximately $40 million, driven by $32 million of R&D expenses with the remainder being G&A. Revenues for the third quarter were approximately $8.5 million, which includes approximately $6.5 million in noncash royalty revenue, with the balance of our revenue for research and development support and clinical materials.

Importantly, the $75 million upfront payment from Jazz that we received in the third quarter is being handled as a deferred revenue and will be recognized as the options are taken. For the third quarter, ImmunoGen reported a net loss of about $57 million or $0.61 a share, which included the noncash charge of just over $22 million in connection with the conversion of the debt. We ended the third quarter with approximately $195 million of cash and cash equivalents and just $3 million of convertible debt outstanding.

With $101 million net proceeds from our public stock offerings last month and the collaboration with Jazz in the third quarter, we're updating our guidance for 2017. We now expect to end the year with between $260 million and $265 million of cash compared with previous guidance of between $90 million and $95 million. Our guidance for revenue is unchanged and expected to be between $115 million and $120 million. And we expect operating expenses to be between $170 million and $175 million, which is $5 million lower than previous guidance.

We've been diligent about evaluating all available options to ensure we have adequate funding to continue advancing our programs in a meaningful way. As you heard from Mark, in the last 6 months our transactions with Debiopharm, Sanofi and Jazz along with our financing have added over $235 million to our balance sheet, giving us a 2-year cash runway into the fourth quarter of 2019.

So with that, we stand very well financed today. And as we look forward, we continue to evaluate all mechanisms to maintain our financial strength and execute on our development programs to bring these to market. So with that, I'll turn the call back over to Mark.

Thanks, Dave. I'm encouraged by the tremendous progress we've made over the course of 2017 and look forward to a number of important upcoming events. As Anna mentioned, we'll have several poster presentations at ASH this year, which included updated clinical data from the dose escalation portion of the 779 AML trial, preclinical data evaluating the mechanism anti-leukemia activity and tolerability of repeated dosing of 779 and cytarabine in combination, and preclinical data generated in collaboration with MD Anderson for 632 looking at the prevalence of CD123 expression in acute lymphoblastic leukemia and the effect of 632 in ALL assays.

Before the end of the year, we will also open the Phase I trial for 632 and AML and BPDCN. As we look forward to the first half of 2018, we anticipate presenting additional data from ongoing Phase II trial -- our FORWARD II trial with the Keytruda and Avastin cohorts. We plan to report the dose escalation finding from mirvetuximab and Keytruda combination, including efficacy data at the Society of Gynecologic Oncology meeting in March. And then we're planning to submit the data from the Avastin expansion cohorts for presentation at ASCO in June.

So we will exit this year with significant momentum generated to sustain the operational execution and enter 2018 with confidence as we look to complete enrollment in our registration study in ovarian cancer, generate additional data assessing mirvetuximab's potential as a combination therapy, accelerate our IGN clinical programs and advance our research program, all with a strong balance sheet to finance these efforts.

This is an exciting time for ImmunoGen. And with that, we'll open the call for questions.

(Operator Instructions) We'll go to our first question with Biren Amin with Jefferies.

Maybe if I could just start on 779 and the ASH abstract and what additional data points, we hope to see at ASH. Will we get additional patients for the ASH, additional follow-up on the ASH abstract patients?

Biren, yes at ASH, we will present data from all of the patients that have been enrolled in the trial thus far. We presented initial data at EHA earlier this year from patients who dose Level 7. And since then we've enrolled additional patients on that schedule, the every-other-week schedule, at additional dose levels without seeing any DLTs. And over the past few months, we've opened up a weekly schedule as well.

And then just on the abstract itself, there was one patient that died in Cycle 2. It was stated that the cause was unrelated. Can you tell us what the cause of death was? And then I think on the hepatotoxin, bilirubin elevations, when did those occur? Did they occur in the first cycle? Is there any correlation to dose? Just trying to get further insights into those adverse events.

None of the deaths that have been observed in the trial with relapsed/refractory AML patients have been attributed to drug. There has been, as expected, some deaths related to infections, including respiratory infections. And again, that's common in this population that is pancytopenic, essentially, and at risk for infections. With regard to hepatotoxicity and elevated bilirubin, we are monitoring patients closely, and we have not seen any drug-related hepatotoxicity or VOD. Again that is something that we are quite vigilant about, Biren.

And we'll go to our next question with Michael Schmidt with Leerink.

I had one regarding the planned triple combination study in platinum-sensitive patients. And I was just wondering so far in the resistance setting, you've obviously steered clear of PARP inhibitors, but in the sensitive setting, there will obviously be some overlap with the market for PARP inhibitors. Just wondering how you see the triple combo fitting into that portion of the ovarian cancer market?

Great question. Thank you. So as you point out, PARP inhibitors are not particularly effective in platinum-resistant disease. In platinum-sensitive disease, they are effective. But remember that they are difficult to combine with other agents because of their safety profile. And thus far PARPs have really only been able to demonstrate activity as monotherapy in the platinum-sensitive recurrent setting as maintenance. Mirvetuximab is different because of our tolerability profile and our antitumor activity. Thus far we've been able to combine full dose MERV, with everything that we've combined with. And therefore, we believe MERV will be the preferred partner for platinum-based combination therapy. And remember that these patients who do benefit from PARPs, all of them wind up initially getting platinum-based combination therapy. Also, please remember that before the PARPs were approved in the U.S. for maintenance, bevacizumab or Avastin was approved December of 2016 as part of therapy for recurrent platinum-sensitive disease. So carboplatin, chemotherapy plus Avastin is approved in the recurrent platinum-sensitive setting. And Genentech Roche just filed for a supplemental NDA in the first-line settings for ovarian cancer. So we believe that the future is bright for a platinum-based triplet therapy with mirvetuximab and Avastin.

Great. And then a question on the FORWARD II combination arms with Avastin and Keytruda. Just wondering what you're looking for there in the -- on the efficacy side next year to make a go-forward decision for additional pivotal studies?

So for the Avastin combination, we've already demonstrated pretty remarkable activity in a very heavily pretreated population. You may remember that only one of the patients from dose escalation had 1 to 2 prior lines. Everyone else had at least 4 prior lines of therapy. 2/3 have prior bevacizumab. And we saw a 29% response rate there with nice progression-free survival of around 9 months. So if those data hold up in the expansion phase, we certainly could consider pivotal development for the MERV Avastin doublet in the platinum-resistant setting. I should also mention that in the coming months, there will be an ovarian trial readout looking at bevacizumab -- continued use of bevacizumab after progression. And if that turns out to be positive, there might be a resurgence of use of bevacizumab in the platinum-resistance setting even after patients benefit from it in the platinum-sensitive settings. So I think there's opportunities for further development of MERV's Avastin as a doublet. With regard to Keytruda, ideally, we would love to see the response rate that we've seen with mirvetuximab of around 40%, with a duration of response that is seen in the minority of ovarian cancer patients that do have some benefit from PD-1s. At least 3 of them have been looked at as monotherapy in platinum-resistant disease and they only have about a 10% to 15% response rate. But it is a durable response. As a reminder, from a mechanism-of-action perspective, mirvetuximab and soravtansine based on its tubulin-directed payload activity activates dendritic cells, priming the immune system and that should enhance the antitumor activity seen by the immune system when you release the brake with a checkpoint inhibitor. So again those data will be available later next year.

And we'll take our next question from Boris Peaker with Cowen.

My first one is on the CD123 targeting. I mean it's become a competitor's space, and we'll likely have the first drug approved in the middle of the next year for BPDCN. I'm just curious how do you see 632 differentiating from the competition?

This is Rich Gregory. I'm the CSO here. And the primary -- well, I think we're actually going to differentiate in both aspects of the therapeutic index, meaning we have a drug, which at least preclinically, has demonstrated ability to treat a wide range of CD123-positive malignancies including AML. And if you look at the stem line program, particularly, which I think is what you're referring to, they've had some very good responses in BPDCN, but much less impressive data in AML. So we think we're actually going to win on the potency end. The other aspect of this, of course, is the safety issue with vascular leak syndrome. It's associated with that particular agent, which is a toxin conjugate. And we don't believe we're going to have anything near that level of toxicity. So broadly speaking, I think we're going to broaden the therapeutic index on both ends of the spectrum. Safer drug, but better potency allowing us to treat a broader range of CD123-positive malignancies.

Got you. And also, on CD123, you've shown an abstract of -- looking at expression of CD123 in ALL, with relatively high expression in this indications. Do you plan to start a study, specifically focused on ALL?

Our initial efforts will be in BPDCN and AML. However, once we've established a dose and schedule, we have already taken steps to build that into the Phase I trial as an expansion cohort. And certainly, wherever CD123 is expressed in heme malignancies, we would be quick to go once we understand the dose and schedule and safety profile.

And we'll take our next question from Mara Goldstein with Cantor Fitzgerald.

I just wanted to ask a follow-up on the Keytruda discussion. Is -- if indeed, ovarian cancer patients, if PD-1 status is not a great indicator of efficacy in ovarian cancer patients, which I think the literature suggests it's not -- and you're seeing the durable responses, only about 10% to 15% of the population. I'm just curious as to the number of patients you think you'll need to really look at in order to be able to figure out if you've got this observable effect.

So the 10% to 15% response rate that you're quoting is for PD-1 monotherapy. But PD-1 monotherapy is really not being developed in ovarian cancer. Avelumab has a Phase III trial in platinum-resistant disease as monotherapy versus Doxil monotherapy versus the combination. And if that trial turns out to be positive, I would be pretty certain that it would be the combination. But I think, proof of concept really has not been achieved for these PD-1s. What we're hoping to see, Mara, is levering the activation of the immune system with our taxane-directed payload from our ADCs to enhance the immune system's response and fighting of the ovarian cancer. So I would expect to see a higher response rate, more in the lines of 40% and a durable response. And by the way, if we do achieve that in a platinum-resistant population, that would form the basis potentially for accelerated approval.

Okay. And if I could just ask for an update on the potential license -- outlicensing for coltuximab and the thought around the timing of that?

Yes. I mean, the interest there has been tepid, frankly. And so we've got an active conversation there. But I would say, the interest is tepid, given the competitive environment there. And so there's no predictive time frame for completing a transaction there. We had significantly more interest in the CD37 program, which resulted in the relationship with Debiopharm, which we're completing the tech transfer as we speak, which will generate a $5 million milestone. But the CD19 -- for coltuximab, the interest is limited.

And we'll take our next question with Andy Hsieh with William Blair.

I'm just curious about the weekly dosing for 779. Is that stemmed from the half -- biological half-life observation? Is it potentially maybe you can optimize on the efficacy? Just maybe talk a little bit about that decision?

Sure, Andy. We had actually built the weekly schedule in at the very beginning of the trial based on the CD33 receptor turnover kinetics. So it really had more to do with the biology of the CD33 receptor than anything that we knew about the pharmacokinetics of our antibody drug conjugate. But given this was the first time we put this new toxic -- excuse me, potent payload into patients, we wanted to make sure it wasn't toxic initially. And therefore, we started with a conservative every-other-week schedule really from a safety perspective. And our plans all along have been, once we've understood the safety profile and had some initial PK to move into a weekly schedule. I hope that's clear.

And we'll take our next question with John Newman with Canaccord.

I'm just curious in terms of the plan going forward for 779 and the next study. Are there things that you have learned from the CLL genetics experience from a clinical trial perspective? We know that your compound has a differentiated mechanism. But I'm wondering if there are things that you can do from a clinical trial perspective going forward to give yourself additional layers of assurance that you can really keep that safety as clean as possible.

Great question, John. So I think there's 2 components here. One is around the VOD signal that they saw and then the other was really around the fatal infections that cause them to stop their Phase III trial early. So around the VOD perspectives, we are following patients closely, monitoring for LFTs and working closely with investigators. Again, it's not a target-related phenomenon. It's probably more a class effect, if you will. So we're monitoring patients closely. That being said, we are not restricting eligibility to patients who have not, for example, had a transplant. We have enrolled a handful of patients, who have had a transplant and so far, folks have done fine from that perspective. So I think vigilance there. With regard to the excess of fatal infections, I haven't seen their data. But right now, based on what we learned from the press release, it had to do with an excess of fatal infections and one can imagine that based on their known prolonged myelosuppression, that puts patients at risk for a longer period of time with a low white count, so that they can't fight infection and the longer your white count is low, the more likely you are to have something bad happen in terms of an infection that your immune system can't fight. So for us the most important thing that we're monitoring is the blood counts in the patients treated on our trial. And right now, we're focused on relapsed/refractory patients who are coming in with pretty much wiped out bone marrows and they are based on their prior therapies and their leukemia, but as we continue developing our drug, we'll move into first relapse and then into first line. So we should be able to, as the program progresses, monitor the blood counts carefully. And if we are not seeing that prolonged myelosuppression, which we shouldn't base on our mechanism of action, we don't anticipate having the excess fatal infections in our program.

It appears that there are no further questions at this time. I'd like to turn the conference back to today's speakers for any additional or closing remarks.

Great. Well, thanks again for joining us today and for your interest in ImmunoGen, and we look forward to seeing you at ASH.

And this does conclude today's call. Thank you for your participation. You may now disconnect.