Iovance Biotherapeutics Inc (IOVA) 2018 Q2 法說會逐字稿

Good afternoon, and welcome to the Iovance Biotherapeutics Second 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 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 is Dr. Maria Fardis, our President and Chief Executive Officer. 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 June 30, 2018, and recent achievements.

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, regulatory feedback and guidance, licensing and collaboration agreements, future updates and cash guidance. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the 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 on to Maria.

Thank you, Tim, and good afternoon, everyone. During the second quarter, we continued our efforts toward our mission to develop TIL therapy as a treatment option for cancer patients in a global setting. As part of our TIL development program, we are executing to have clinical trials and expanding application of the technology into new indications and earlier lines of therapy.

To that effect, since the last quarter call, we have initiated manufacturing of LN-144 and 145 at Lonza in Netherlands in support of the melanoma and cervical clinical trials in Europe; chose the first melanoma patient with LN-144, also known as lifileucel in Europe, making an important milestone for our global development plan; increased the total number of our participating clinical sites worldwide across our 4 company-sponsored studies to over 70 sites; initiated our regulatory interaction with FDA with a scheduled meeting in third quarter 2018 to define the registration path for lifileucel; activated sites in 5 countries across 2 studies for melanoma and cervical to conduct clinical trials in Europe, and this includes the countries of Netherlands, France, Hungary, Spain and the United Kingdom.

For additional updates on the ongoing clinical trials, let me start with our lead program lifileucel for melanoma. We have dosed patients in Europe and continue enrollment in the global Phase II metastatic melanoma study, C-144-01. Currently, 34 global sites are active, 18 of which are in U.S. and 16 are now active in Europe.

Patient dosing is continuing for C-145-03, our Phase II trial of LN-145 for the treatment of patients with recurrent and/or metastatic squamous cell carcinoma of the head and neck. For C-145-04, our Phase II trial of LN-145 for the treatment of patients with recurrent, metastatic or persistent cervical carcinoma, we have actively screening at sites in U.S. and EU ongoing. We anticipate dosing our first European patients in the near term.

We also are conducting a fourth Iovance-sponsored study in non-small cell lung cancer patients as part of our collaboration with MedImmune, the R&D Arm of AstraZeneca, allowing treatment of patients with TIL plus durvalumab. Given recent changes in the treatment landscape for lung cancer, we intend to modify the study design, although we still plan on seeking to enroll PD-1 or PDL-1 naïve patients.

With respect to expanding our TIL technology clinical development into new indications as part of collaboration program with MD Anderson Cancer Center, we have now activated the first of 2 Phase II clinical studies. In the activated study, 2017-0672, we have -- we will be investigating LN-145 manufactured using our Gen 2 manufacturing process in treating patients with soft tissue sarcoma, osteosarcoma and platinum-resistant ovarian cancer.

For the second study, MD Anderson will begin enrolling patients in the second half of 2018 and will use TIL manufactured by that institution. This different manufacturing method will allow for investigation of the impact of utilization of the 4-1BB agonist antibody or urelumab on the TIL product. I would like to continue to discuss our core IP portfolio. We have a number of patent applications in process, and I would like to outline the IP portfolio around Gen 2.

As many of you know, all ongoing trials are utilizing our Gen 2 manufacturing method that lasts 22 days and yields a cryopreserved product. Iovance owns the associated patent rights for the Gen 2 process. If granted, our patent application should provide protection through 2038. Our license patent rights from the NCI and our own patent rights in combination of our expensive and advanced development program and commercialization plan, lead to our confidence that we are the leader in the field of TIL therapy.

We also continue pursuing next-generation TIL products, both through process development as well as research. The goal of our research work on TIL is to increase the potency of the TIL product. We have been working on modifying the properties of our TIL cells through the addition of different costimulatory factors, such as OX40 or 4-1BB agonist as well as utilization of various cytokines in our growth media.

We also continue our research efforts with RXi and [selective] on investigation of utility of genetically-modified TIL. In terms of new indications, in June, we signed a preclinical collaboration agreement with the Roswell Park Comprehensive Cancer Center. Under this preclinical collaboration, we will explore the potential of TIL therapy in bladder and other oncolytic indication.

On the regulatory front, in early May 2018, the company was granted orphan-drug designation from the FDA for autologous tumour-infiltrating lymphocytes for the treatment of cervical cancer with a tumor size of greater than 2 centimeters in diameter. If approved, the orphan-drug designation provides us with 7 years of marketing specificity in the U.S.

We are on track with the planned FDA interaction to define the registration path for lifileucel in the third quarter of this year. The meeting is scheduled, and we are preparing for this interaction. We will provide further update about this meeting in fourth quarter of 2018.

Looking ahead of the remainder of 2018, we are planning on presenting data from Cohort 2 in the Phase II melanoma trial and one other tumor type at an upcoming medical meeting in the remaining part of 2018, dosing the first patient in our collaboration with MD Anderson, expanding our relationship with academic institutions and corporations in order to broaden our understanding of TIL and new indications, and expanding utilization of TIL in earlier lines of therapy in combination with standard of care.

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

Thank you, Maria. Net loss for the second quarter ended June 30, 2018 was $30.7 million or $0.34 per share compared to a net loss of $23.4 million or $0.37 per share for the second quarter of 2017. Research and development expenses were $24.6 million for the second quarter 2018, an increase of $6 million compared to $18.6 million for the second quarter of 2018 -- '17. The increase in research and development expenses was primarily attributed to an increase in headcount and consulting expenses and an increase in clinical trial costs due to higher patient enrollment and a higher number of clinical sites.

General and administrative expenses were $6.8 million for the second quarter 2018, an increase of $1.9 million compared to $4.9 million for the second quarter 2017. The increase was primarily attributable to an increase in payroll and related expenses.

Net loss for the 6 months ended June 30, 2018 was $57.2 million or $0.65 per share compared to a net loss of $44.1 million or $0.71 per share for the same period in 2017. Research and development expenses were $44.5 million for the 6 months ended June 30, 2018, an increase of $10.3 million compared to $34.2 million for the same period in 2017. The increase in research and development expenses was primarily attributable to a $5.7 million increase in headcount and clinical trial costs.

General and administrative expenses were $13.8 million for the 6 months ended June 30, 2018, an increase of $3.6 million compared to $10.2 million for the same period in 2017. The increase was primarily attributed to a $2.7 million increase in headcount and a $5 million -- sorry, $0.5 million increase in legal expenses, driven by increased intellectual-property cost.

At June 30, 2018, the company held $276.1 million in cash, cash equivalents and short-term investments. This compares to $297.1 million at March 31, 2018. During the second quarter, the company used $24 million for operating activities. The company anticipates that the year-end cash balance of cash, cash equivalents and short-term investments may be between $190 million and $210 million.

Now we'll turn the call back over to the operator for your questions.

(Operator Instructions) Our first question is from Boris Peaker with Cowen.

Great. So I'll start with maybe the pivotal study in melanoma. I'm just curious, I know you're supposed to meet with the FDA soon, but what are your internal assumptions for the target enrollment? And for that target with 34 sites enrolling, how long do you anticipate that would take?

Thank you, Boris, for the question. The sample size would be subject of discussion with FDA. So we would not provide a specific guidance today, but we certainly have a proposal that we have put before the agency to see if we can get agreement from them. I agree that this -- that was the purpose of having a number of sites active to be able to accelerate enrollment and hit those numbers fairly quickly.

Got you. So we will learn this time line in 4Q with post-feedback from the FDA?

That's our intent. If we have clear guidance, yes.

Great. And just my last question, what data do we anticipate to see at ESMO or SITC or any other meeting maybe later this year?

It would be typical overall response rate, duration of response, sort of the waterfall that shows the depth of response and how long the patients might have been on, would be the typically data that any study at this stage could present. Biomarkers would be something that would be of interest as well. We might be able to speak to some of those as well.

Any specific meeting that you could comment right now where you'll be presenting data?

So we haven't commented on the specific venue. It would be in the remaining part of 2018 is still our target.

Our next question is from Mark Breidenbach with Oppenheimer.

So I was wondering if you could expand a little bit more on the changes to the lung cancer trial protocol. I think I heard you say that you're still going to be targeting PD-1 naïve patients. If so, can you just expand a little bit on what changes are being made?

Sure. Mark, the study itself was initially a randomized study with TIL alone and one cohort, and TIL plus durvalumab [another] cohort. Given the landscape shift as of ASCO with checkpoint plus chemotherapy showing fairly strong response in early line patients, what we're trying to do is we're trying to potentially remove the TIL alone cohort to encourage enrollment.

Got it. Got it. It sounds good. And with regard to LN-144, I was just wondering, in your discussions with the FDA and from the perspective of a safety database, do you think the FDA would view the Gen 1 and Gen 2 products as conceptually similar enough to group together into a BLA filing for LN-144? Or do you think they view these as 2 entirely separate products?

That's a good question and typically subject to a pre-BLA meeting with agency. I do want to highlight that because we have other studies ongoing, and again, this is very early in the dialogue, but typically, FDA would like to have visibility to other studies as well. And if you pool all of these studies together, that's a respectable number of patients as compared to other cell therapies. So I don't have a concern in terms of safety set. I think we will have sufficient numbers to provide to the agency.

Okay. And just one final one from me. I note there are 2 trials at MD Anderson and basically, they're in the same indications. One is using MD Anderson's TIL, one is using your TIL. What's the rationale behind conducting 2 separate trials as opposed to just having an extra arm in one trial?

Correct. So there are 2 different particular products, and we wanted to be able to report them slightly separately. As a matter of fact, if it comes time to a BLA, the study that might have the LN-145 might need to be summarized and provided to the agencies. So there are some benefits in having them separated. It's more operational than anything else.

Our next question is from Gbola Amusa with Chardan.

Two sets of questions. And the first set is kind of related to the last question. I just wanted to understand a little bit more about the TIL manufacturing process from MD Anderson Cancer Center? And how that compares to your process in terms of the time or any other relevant metric? And can you confirm that from a regulator's perspective that is considered a different product?

We're not planning on making the claim that our process is the same as MD Anderson. Their process is more similar to our Gen 1. And in fact, the closest analogue to their process is the NCI method. There is an in-process cryopreservation. And they also, at times, have used what is called a tumor banking model, and they recently put a publication out on their process. So I won't go into too much detail, but there is a difference between their process and our Gen 2 process, Gbola.

Okay, great. And then, intrigued by the preclinical program in bladder cancer and then obviously, there are other cancers, but are there any updates on the likely specific target subpopulations there that make the more sense to treat with TILs?

So our general strategy has been looking at diseases that are starting from a high mutational load end of the spectrum, you might have seen the Schreiber article and we also look at diseases that are highly immunogenic. So bladder fits that description sort of criteria very well. When we start looking at our indication, the first activity always is to look at the growth of TIL, the properties of TIL, investigating how the interferon activity of the TIL that is manufactured. So we look at them very carefully, and this is the first step in that direction. So we are looking at bladder. And in order for us to do that, we always set up a preclinical agreement with an institution who may be interested.

Okay. So it remains to be determined how broad, let's say, bladder cancer, how broad that indication is that you might go for at this point?

That's a fair statement. Yes, that's a fair statement.

Our next question is from Biren Amin with Jefferies.

Maria, what data do you hope to have and share with FDA when you go into the Q3 meeting? And also should we expect that you would wait for the minutes before you disclose details of the meeting?

Let me answer your second question that, yes, I would like to wait for the minutes before we disclose the outcome to the public. We, of course, cut the data to the degree we could as late as possible and we have provided to the agency. So that's the most mature data we could provide to them.

Got it. And then are you also planning to speak with the European Medicines Agency regarding this program?

We actually have had a interaction with a local health authority in EU last year, and we certainly intend to expand upon that as well. That's part of our EU strategy as well. This is why we expanded our clinical trials into the European region, yes.

And then, I guess, on cervical, can you just give us a status on that trial? And when we can expect to have that trial move into the second stage of the study?

Yes. So what we have noticed is that the patient population that were enrolled into the cervical study were highly refractory patients, very, very treatment-exposed. We have since amended the protocol to include patients that have 1 to 3 prior therapies and ideally that they are not exposed to prior anti-PD-1. So we are hoping to get more patients that are similar to the NCI patient population. That's our goal.

Our next question is from Madhu Kumar with B. Riley FBR.

So my first one has to do with what line and kind of post check [brain] melanoma would you likely focus on your initial discussions with the FDA?

So patients that are post-anti-PD-1, and if they have a BRAF mutation post-BRAF inhibitor are clear unmet medical need. There is nothing approved for them. We also -- I'd like to -- I mean, this is obviously a question that would end up -- what patient population would end up on label, and it's subject to discussion at the pre-BLA meeting. But I also would point out that the patients that we have enrolled are as a median of 3 prior therapies. So combination of what patient population we enrolled as well as what was our inclusion criteria in the protocol ends up defining the patient population that would be the label. What I just want to highlight one more time that the unmet medical need is post-PD-1 patients, and if [BRAF mugent], post-BRAF inhibitor.

Okay. Yes, so while there are no [proofs] there with post-PDL-1, there are obviously several Phase III trials that are going on in this post-PD-1 setting. So what can we glean from these existing clinical trials either guide your discussion or guide some of the potential confirmatory trial you would have to run even with some accelerated approval path?

So with an accelerated approval path and this is just more of a regulatory discussion, they -- if there is a need for confirmatory trial, that doesn't have to be in the same indication as your initial label. And I also would like to highlight that the 2 other cell therapies that have received a U.S. approval for other indications in hem, both have not had a requirement for a full approval to be -- to use the Phase III to receive that full approval. They received full approval on the Phase I on the context of the single-arm Phase II trial. So these are subject to negotiations with the agency that -- SBIR has been particularly open-minded, and I'm very pleased to see the outcome of other companies' negotiations with them.

So that's interesting. Do you think that then is there going to be technology differentiation where if you're a cell therapy, kind of how the drugs are evaluated is more of a guider versus the kind of indication space you're operating in?

I'm not sure if I understand your question, Madhu. Would you mind rewording it a little bit?

Sure. So you discussed how the CAR T drug got approval -- got full approval on Phase II single-arm study. We know like in post-PD-1 melanoma, other companies (inaudible) on Phase III trials competing against some kind of existing agent. And so ultimately, the question I have is, does -- as you mentioned, if SBIR is kind of more open to this kind of shorter time frame for approval, is that an advantage that's kind of T Cell therapy technologies might have over other drugs in the solid tumor setting?

I certainly can't comment on what SBIR may do in the future. All I was highlighting was that they were particularly receptive of the last 2 BLAs for 2-cell therapies, both Yescarta as well as Kymriah. So I'm pleased to see that they have been open to that dialogue. And I think that what exactly would be an accelerated approval path as well as what would be terms for turning that into confirmatory program is all subject to an end of Phase II meeting discussion as well as a pre-BLA discussion. So both remain open. I think we have to be very open-minded that FDA is within their rights to be asking all sort of pre-submission or post-marketing requirements.

One last one. So how do you think the treatment landscape for cervical cancer has changed with the first approvals of checkpoint drugs in the space?

Yes. Very good. Thank you. So that particular product, Kymriah, just received approval from the agency in cervical and PD-1 high-expressors as well as the patient population that were post-chemotherapy. It was an accelerated approval, and therefore the regulatory door for that patient population remains open.

Our next question is from James Birchenough with Wells Fargo.

Nick in for Jim this afternoon. So maybe first off Maria, in terms of the head and neck trial, obviously, that met the criteria in the Simon's Two-Stage criteria a while back, so should we expect another end of Phase II type meeting in 2019 for that program?

Nick, thank you for the question. We continue enrolling, and we are certainly looking at the data to assure that there is enough superiority in -- and at line that we are in. As you might recall, the patient population we had, had a median of 4 prior therapies. So they were even more progressed -- further progressed along than our melanoma patients are. So I cannot comment. It really depends on the data, and we're continuing to monitor that data.

Okay. And then just going back to the 2 trials that you're running in the sarcomas and platinum refractory ovarian. Obviously, you have prepared a number of clinical sites to run this trial. MD Anderson traditionally runs their own trials, and obviously, they would be very restricted in terms of enrollment. Is their trial going to roll out across a number of sites as well?

Both studies are being conducted at MD Anderson alone for now. This is part of a broader collaboration we have with them, which has preclinical agreement, clinical agreement, which includes the 2 studies as well as certain access to IP rights around their method of manufacturing, should that prove to be better. So currently, the both studies are planned for MD Anderson alone. We also have certain time frame around that. And if they are not able to enroll fast enough, this is a subject we can approach them should that need arise. At the moment, we are just trying to get them activated and started.

Okay. That makes sense. And then just in terms of looking forward, I think in your prepared comments you mentioned study TIL in the early lines of treatment as a milestone for the second half of this year. Can you expand on that, please?

Yes, certainly. And this is part of our broader undertaking that we are thinking about how can we move TIL potentially to an earlier line. We have already started within in the lung setting, and we also will be looking at additional indications in earlier line. We have not really provided much information, but the information that I provided during the call is all I can speak to. But we intend to move TIL into earlier line and potentially in combination with available care.

Thank you, and I'm showing no further questions. I would like to thank everyone for joining today's call. Everyone may disconnect. Have a great day.