Iovance Biotherapeutics Inc (IOVA) 2018 Q1 法說會逐字稿

Good afternoon, and welcome to the Iovance Biotherapeutics First Quarter 2018 Financial Results Conference Call. (Operator Instructions) Please be advised that this call is being recorded at the company's request.

Now I would like to turn the conference over to Mr. Tim Morris, Chief Financial Officer at Iovance. Sir, please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today. With me on the call are is Dr. Maria Fardis, our President and Chief Executive Officer; and Dr. Robert Brown, Executive Medical Director of Clinical Science.

This afternoon, we issued a press release that you could find on our website at iovance.com, which includes the financial results for the quarter ended March 31, 2018, recent achievements for the year, and brief updates for the remainder of 2018.

Before I turn the call over to Maria, I would like to remind everyone that statements made during this conference call will include forward-looking statements regarding Iovance's goals, business focus, business plans, clinical trial plans and results, potential future applications of our technology, manufacturing capabilities, licensing and collaboration transactions, future updates and cash balance forecasts.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected during today's call. We undertake no obligation to publicly update any forward-looking statements.

With that, let me pass the call over to Maria.

Thank you, Tim, and good afternoon, everyone. We started 2018 off with a significant financing in January that left us in a strong position to advance and expand our TIL product pipeline. Our focus remains on both manufacturing and clinical aspects of TIL development as a viable commercial therapy, and to that end, so far this year we have received orphan-drug designation for autologous tumor-infiltrating lymphocytes for treatment of cervical cancer with a tumor size greater than 2 centimeters in diameter. Greatly expanded the number of clinical sites worldwide for our four company-sponsored studies. And as of early May, we have had over 50 sites active in our clinical trials. Activated one of the two studies as part of the MD Anderson collaboration, utilizing LN-145 for treatment of sarcoma and ovarian cancers. Gained approval to commence clinical trials in six countries in Europe for metastatic melanoma and cervical cancers, expanded enrollment in our lead melanoma trial C-144-01 from 60 to 85, including enrollment up to of 60 patients in cohort 2 as we may want to use this study to support a potential registration of LN-145 -- 144. And lastly, initiated collaboration -- collaborative research and improving the potency of TIL product via transient genetic modification.

With respect to expanding into new indications, we initiated a new Phase 2 clinical study, 2017-0672, with the MD Anderson Cancer Center. The clinical trial site is currently active and it's screening patients with soft tissue sarcoma, osteosarcoma and platinum resistant ovarian cancer. This study will treat patients with LN-145, Gen 2 manufacturing by Iovance.

For the second study as part of the collaboration with MD Anderson, a different manufacturing method will be used by MD Anderson, which allows for utilization of the 4-1BB agonist antibody, urelumab, to improve growth of TIL products.

Now of turning to Iovance-sponsored studies, we have over 50 sites active across the TIL development program, and approximately half of the sites are for our lead Phase 2 trial investigating LN-144, 40 treatment of patients in metastatic melanoma.

As many of you know, all ongoing trials on utilizing our Gen 2 manufacturing method that lasts 22 days and yields the cryopreserved product. Iovance owns the associated intellectual property for the Gen 2, and the shorter manufacturing process minimizes the duration of time a patient waits to receive the TIL product. Gen 2 manufacturing also has a lower manufacturing cost than its predecessors.

Enrollment in the melanoma study, C-144-01 was expanded from 60 patients to approximately 85 patients. The sample size in this study was increased as Iovance may want to choose a study to use the study to support potential registration of LN-144. Patient dosing is continuing for LN-145 in our Phase 2 trials for the treatment of patients with recurrent and/or metastatic squamous cell carcinoma of the head and neck, and for C-145-04, our Phase 2 trial of LN-145 for the treatment of patients with recurrent metastatic or persistent cervical carcinoma.

We are also conducting an Iovance-sponsored study in non-small cell lung cancer patients who have not received prior anti-PD-1 or anti-PDL-1.

In February 2018, the first site was activated for this study. This study is part of our collaboration with MedImmune, the R&D arm of AstraZeneca and will treat patients with TIL alone or TIL-plus [cervolumab]. We have four active sites currently recruiting patients for this study.

We continue pursuing next-generation TIL product both through process development as well as research. The goal of our research work on TIL is to increase potency of TIL product. We have been working on changing the distribution of TIL products through adding different co-stimulatory factors, such as OX40 or 4-1BB, and we'll continue with this pursuit as well as genetic modification works.

To this end, we entered into a material transfer agreement with RXi Pharmaceuticals Corporation to evaluate potential uses of sd-rxRNA compound in the development of TIL therapies for a number of cancer types. We have also obtained nonexclusive rights to uses of 4-1BB agonist, including urelumab in the manufacturing of TIL for adoptive cell therapy through an intellectual property license agreement with Moffitt Cancer Center.

Before I turn to what's ahead, I want to also touch on manufacturing. We are happy to report that manufacturing in EU, in Europe, is now fully operational as PharmaCell B.V., a subsidiary of Lonza Group in the Netherlands is active. We also continue expanding our manufacturing footprint in EU to assure adequate supply for future patient enrollment.

Looking ahead for the remainder of 2018, we are planning to continue enrollment of patients in support of new indications as well as currently ongoing studies, including the studies under the collaboration with MD Anderson, expand our relationship with academic institutions in collaborations in broadening our understanding of unmodified TIL in new indications as well as considering genetic modification of TIL or selection of more potent TIL product. We also continue our dialogue with FDA in defining our registration plan for LN-144 in metastatic melanoma.

I would now like to turn the call over to Tim for a discussion of our financial. Tim?

Thank you, Maria. Net loss for the quarter was $26.5 million or $0.31 per share. This compares to net loss of $20.7 million or $0.33 per share for the first quarter last year. R&D expenses were $19.9 million for the quarter, an increase of $4.3 million as compared to $15.6 million last year. The increase in R&D expenses was primarily attributed to a $2.1 million increase in payroll-related expenses and consulting fees due to a higher headcount and dedicated consultants as we expanded our research efforts and clinical development programs, and a $2 million increase attributable to higher clinical cost due to an increase in patient enrollment, an increase in number of clinical sites in the LN-144 trial for the treatment of metastatic melanoma and the initiation clinical trials of LN-145 for the treatment of cervical and head and neck cancers in 2017. These increases were partially offset by a $1 million decrease in manufacturing costs due to higher costs in the first quarter of 2017 related to tech transfer activities.

G&A expenses were $7 million for the quarter, an increase of $1.7 million as compared to $5.3 million for the same period in 2017. The increase was primarily attributed to a $1 million increase in payroll-related expenses, due to an increase in headcount. And a $0.5 million increase in professional fees and legal expenses to support of our filing of additional patents.

As of March 31, 2018, the company held $297.1 million in cash and cash equivalents. This compares to $145.4 million at December 31, 2017. The increase in cash balance comes from the public stock offering of common stock in January 2018, which netted $162 million in net proceeds, $7.4 million from the exercise of warrants and options, offset by cash used in operations of $17.7 million. We anticipate that our year-end balance of cash, cash equivalents and short-term investments may be between $190 million and $210 million.

On the Investor Relations front, the company will participate and present at the following upcoming investment conferences in New York City; the UBS Global Healthcare Conference on May 21; the Jefferies 2018 Global Healthcare Conference on June 7; and lastly, the JMP Securities Life Science Conferences on June 20.

I will now turn the call over to the operator for your questions.

(Operator Instructions) Your first question comes from the line of Boris Peaker from Cowen.

First, I just want to know, how did you arrive at the increased study size? Was this based on discussions with the FDA or some other analysis?

Hi, Boris, thank you for the question. It was not based on discussions with FDA. As we reached a predefined sample size in the protocol, we certainly increased the study enrollment because we do intend to use this study in support of registration of LN-144. So that's why we increased the cohort 2, which we believe is our manufacturing method of choice from 30 patients to 60 patients.

And so you think that, that would be an adequate amount or to discuss with the FDA? Or I guess maybe more broadly, what is the plan for regulatory discussion with the agency and when would we kind of hear back a more definitive answer, how big of a study is required to get this approved?

It's for discussion for -- with FDA, it's not a final stop. It's possible that we might have to increase this further. The discussion itself is planned for third quarter 2018 this year. And we'll certainly inform once we have had that dialogue and once the final sample size is settled.

Great. And my last question, when can we expect additional data updates later this year for melanoma, head and neck and cervical studies?

Yes. So we had disclosed that we intend to have additional follow-up for melanoma. And one other indication in the later part of the year, there's upcoming conferences that we certainly would hope to target, that we could consider as [more advanced], SITC, for example.

Your next question comes from the line of Mark Breidenbach from Oppenheimer.

Maria, with the expansion of cohort 2 and the LN-144 trial, what does this mean for the retreatment cohort? Is that still in the cards or are we not going to do retreatments anymore in this Phase 2?

Hi, Mark. Thank you for the question. They're independent of each other. The cohort 2 itself is the registration plan that we are thinking about in terms of mode of administration and the patient population. The cohort 3 is much more of an exploratory arm in trying to understand what a retreatment could offer to a patient, if their original response is deteriorating.

They're rather independent in that sense, but I also want to clarify that patients have to qualify still for the protocol in order for them to get retreated. For a very late-line patient population, if they start progressing rapidly, we need to make sure that, that patient still qualifies in the protocol for that cohort 3. But they're all ongoing and they're independent of each other.

Okay. With regard to manufacturing, now that you have a site online or manufacturing online in the EU, can we assume that the European manufacturing facility will support all the European trial sites or that the European sites are also going to be fed by U.S. manufacturing? And can you comment on the capacity in the EU versus the U.S.?

Sure. So we are intending to use EU manufacturing for EU patients. We are not intending right now to cross various oceans in order to provide drug for the patients.

In terms of capacity, the capacity is certainly adequate for what -- supply and demand are balanced here. So we are watching what the patient population may be, we're activating sites as we go forward. And we recognize that we are heading into summer. So the capacity is adequate currently for what we project our patient population and enrollment may be. If we have additional need, we also have backup plans for contingency in order to increase capacity. We don't have a concern on that front.

Okay. And I'll just ask one last question, if I may. With regard to all the investigator-sponsored trials that are being run, are you aware of any plans for partial or more complete readouts from any of these trials at ASCO or medical conferences later in 2018?

Sure. Yes, definitely their decision as to when they plan on putting the data out, we certainly review their submission. And they remain on their embargo until the titles are released. So we're aware of maybe one, at least, that might be considering potential data release in the remaining part of the year, but I won't be able to comment on it until I have confirmation that they're, in fact, proceeding.

Your next question comes from the line of Jim Birchenough from Wells Fargo.

It's Nick on for Jim this afternoon. So just as I -- you said that there's a balance between supply and demand with 50 sites online, how easy is it for you to meet the demand? I mean, if they're all producing one patient a month, that's obviously going to be hard to meet that kind of demand. So are you at risk for having to turn patients away yet?

No. Hi, Nick, good afternoon. Thank you for the question. We don't project for such a low demand, we project certainly for a much higher demand, just so we are ready and stand by, should it be necessary. We also project for being able to increase and ramp up the demand very quickly.

So we stay on the manufacturing front. We stay well ahead of what we think clinical might need, not to run into the scenario that you're talking about and turning patients away. In [neither] region, that's what we are trying to do.

Okay, good. And can you just comment on success rates? If there have been any unexpected barriers that you've run into supplying now what's a lot more patients than you've done historically?

Are you asking about manufacturing success rates, is that the question?

Yes, yes.

Yes. Okay. So we have disclosed that we actually have -- our manufacturing success rates has been around 90% and improving. And a lot of that had to do with having adequate SOPs in place and being able to see what issues come up and being able to proactively address them. So the success rate remains quite high. Manufacturing success rate remains quite high. It's well north of 90%.

Okay, good. And then last one from me. On LN-145 on the cervical, obviously, good news on the orphan-drug designation. Can you state whether you've crossed the Simon's Two-Stage boundary yet for cervical?

We have not.

Your next question comes from the line of Madhu Kumar from B. Riley FBR.

So in thinking about this third quarter discussion with the FDA, I feel like the natural question that emerges is, what line of melanoma therapy do you want to go after? I mean, post-PD-1, post-PD-1 and CTLA-4, so how are you thinking about that and when will you kind of get a sense of which line you think is kind of the best line of therapeutic to pursue for an initial registrational study in the advanced melanoma?

Hi, Madhu. Thank you for your question. Certainly, and not only we have thought about it, but we've had some preliminary discussion. And you might recall that around a year ago, we optimized and fine-tuned our inclusion criteria for our LN-144 study, based on a dialogue with FDA. The current inclusion criteria notes patients that are metastatic melanoma, subsequent to therapy with anti-PD-1 as well as if they are BRAF mutant subsequent to BRAF inhibitor.

We continue with that inclusion criteria, that doesn't necessarily mean that's the patient population we're going to propose to FDA. As part of fast track, we also had a discussion with them about the patient population. We think we have a pretty good idea, but that is definitely a subject of discussion as part of upcoming discussions with FDA.

Great. And how does the Merck PD-1 chemo data presented in the AACR affect the kind of bigger strategy in non-small cell lung cancer?

It certainly offer a separate option for the patients in frontline. I have to say that patients you were seeing are all post-anti-PD-1, a number of them have seen chemo already. So now they would be seeing them together. So I don't know if our strategy necessarily in the late-line patient population would matter. In the early-line, of course, it offers a very good option for patients.

So you'll recognize in early-line pre-PD-1 and pre-PDL-1, that's a tough patient population to recruit. And it certainly would make it more difficult. There's a lot of good options for frontline non-small cell lung cancer, I recognize that. However, we still very much firmly believe that [cell] therapy, in general, in early-line does quite well. We think the response rates that Rosenberg had seen are a great indication in case of melanoma when you don't have patients that have seen prior numerous rounds of immunotherapy, what the product can do. And we remain excited about potential move of TIL into early-lines.

Your next question comes from the line Biren Amin from Jefferies.

Maria, when do we get duration response data from the head and neck top line data that you presented earlier this year?

Hi, Biren, thank you. So that's part of our publication strategy that we talked about. We do intend to put melanoma and one other indication. We haven't quite decided what that other indication would be for the remaining part of the year. So as part of our next data cut, whenever we put that data out, the [DUR] would be one of the parameters that we will report on.

And then can you talk a little bit about this RXi Pharma agreement where you've accessed some of their rxRNA compounds. What are you hoping to achieve with that?

Yes, certainly. So as I've mentioned before on the research front, we are moving into further modifying the TIL in order to gain further potency. If you are looking into selection of various types of TILs, we're looking into shifting equilibrium to get a different product from TIL growth. And we are looking into genetic modification. And some of the genetic modifications may be transient genetic modification.

So we are looking at RNAi technology in order to prepare better TILs. We have considered potentially modifying the PD-1 landscape in these particular TILs. In general, co-inhibitory receptors impacting immune regulation will be of interest to us. That's the scope of the agreement.

We have no more questions. So thank you all for attending today's call. The call will now disconnect.