Iovance Biotherapeutics Inc (IOVA) 2018 Q4 法說會逐字稿

Good afternoon, and welcome to the Iovance Biotherapeutics Fourth Quarter and year-end 2018 Financial Results Conference Call. (Operator Instructions) Please be advised that the call is being recorded at the company's request. Now I'd 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 thanks for joining us today. With me on today's call is Maria Fardis, our President and CEO, and Debora Barton, our SVP of Clinical. This afternoon, we issued a press release that you can find on our website at iovance.com, which includes financial results for the fourth quarter and year ended December 31, 2018, and a corporate update.

Before I turn the call over to Maria, I'd 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 or results, potential future applications of our technologies, 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, I will pass the call over to Maria.

Thank you, Tim, and good afternoon, everyone. Over the past year we took great despite forward in our goal of advancing TIL therapy towards approval and bringing this onetime treatment to cancer patients, who have progressed through existing treatment options. 2018 was an excellent year for the company. Some of our highlights are the following: We reported clinical results for lifileucel, our lead program in metastatic melanoma at SITC in November. At that time, 47 patients treated with lifileucel had an objective response rate of 38%.

We held an end of Phase II meeting with FDA and confirmed a path to registration with a single-arm cohort for our ongoing C-144-01 study, now also known as [Inovotel 01] trial. We also received an RMAT designation for lifileucel for metastatic melanoma. We have firmly established our optimized scalable 22-day manufacturing process. And we're well financed, having raised over $400 million in 2 rounds of public offerings just in 2018.

The current cash in hand is expected to be sufficient to complete the registration enabling study for melanoma and to file the Biologics License Application or BLA in 2020 for lifileucel. Since our last call, we continued to make progress on several fronts. In the clinical area, updates include commencement of enrollment in Cohort 4 of Inovotel 01 trial. The clinical for metastatic melanoma study was amended based on the feedback from FDA, during the end of these 2 meetings and provided to the agency. Cohort 4 is expected to enroll 75 patients. The primary endpoint for the study is overall response rate or ORR as determined by blinded IRC or Independent Review Committee. Since our last call, the revised protocol has been provided to FDA and our clinical trials have been initiated.

A few sites are now active under the new amendment. We have enrolled over first patient in Cohort 4 and anticipate their study to complete enrollment in late 2019 up to -- early to 2020. For Cohort 2 of the metastatic melanoma study, the last patient was enrolled in the fourth quarter 2018.

The company anticipates providing a data update for the full Cohort of patients at a medical meeting in 2019. The protocol for cervical carcinoma now also known as a [Inovotel 04] study, has been amended to limit the number of prior therapies to no more than 3, and to exclude patients that have been treated with prior immunotherapy. The company anticipates providing a data update from this study at an upcoming medical meeting in 2019 as well.

The basket study in PD-1 naive patients that are melanoma or head and neck cancers with TIL and combination with pembrolizumab and LN-145 as monotherapy in non-small cell lung cancer patients, is now open to enrollment with 6 sites active in United States and Spain.

This study has received regulatory approval to proceed in 4 countries in addition to the U.S. As announced yesterday, in February 2019, we received fast-track designation from the FDA for LN-145 for treatment of cervical cancer patients, who have progressed while on or after chemotherapy. FDA fast-track designation is process designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill an unmet medical need. The purpose is to get important new drugs to cancer patients earlier. An unmet medical need is defined as providing a therapy where none exists or providing a therapy which may be potentially better than available care.

During 2019, we intent to meet with FDA to discuss the regulatory process for registration of LN-145 in cervical cancer. As part of our 2018 financing, we raised sufficient funds to be able to initiate building an Iovance-owned commercial manufacturing facility. This site selection process for the location of the new commercial manufacturing facility is in the final stages.

The company anticipates an announcement of the final location during the second quarter 2019. As part of the MD Anderson collaboration, we have previously initiated 2 clinical studies. The first study 2017-0672 is studying LN-145 manufactured by Iovance in the treatment of patients with sarcomas and platinum-resistant ovarian cancer.

The second study 2017-0671 is a study of TIL manufactured by MD Anderson in patients with sarcomas and pancreatic cancer. Several patients have been dosed in both studies and enrollment continues. For an update on research, I'm pleased to report that we are also beginning to explore a potential of TIL therapy beyond applications in solid tumor. Under a collaboration with Ohio State University, Iovance has developed a product candidate called peripheral blood lymphocytes or PBL. The company anticipates filing an IND for PBL in hematologic indications in 2019.

Lastly, we're pleased to announce that our abstract titled,"Persistence of cryopreserved tumor-infiltrating lymphocyte product lifileucel or LN-144 in C-144-01 study of advanced metastatic melanoma" was accepted for presentation at the upcoming American Association for Cancer Research or AACR meeting in March of 2019.

As an update on corporate activities, we continue to grow in anticipation of completing the registration cohort and finding the BLA for lifileucel. And we have begun staffing our commercial organizations, starting with the commercial strategy team. We have also continued to add staff in critical areas, and overall, we now have over a 100 employees at Iovance. In the months ahead, we look forward to presenting and participating at scientific meetings, including an on-call presentation of the Cohort 2 melanoma data at the ASCO-SITC Clinical Immuno-Oncology Symposium in San Francisco. This abstract will be included in the [poster watch] taking place on Friday March 1. And as noted before the data for persistence of TIL after administration in metastatic melanoma patients of our C-144-01 study, trial will be presented at the upcoming AACR annual meeting at the end of March. I would now like to turn the call over to Tim for a discussion of our financial results. Tim?

Thank you, Maria. Net loss for the fourth quarter 2018 was $32.6 million or $0.27 per share as compared to a net loss of $25.9 million or $0.36 per share for the fourth quarter 2017. The increase in the net loss for the fourth quarter of 2018 was driven by higher research and development spending from increased clinical trial activity in the fourth quarter 2018 versus the fourth quarter 2017.

For the full year 2018, the net loss was $123.6 million, or $1.27 per share. This compares to $92.1 million or $1.41 per share for the full year 2017. Again, the increase in net loss was primarily due to increased R&D spending, because of a full year of running clinical trials for melanoma, cervical and head/neck, in addition to the initiation of new trials in 2018.

Please refer to the press release issued earlier today for additional details on the financial results for the fourth quarter and full year 2018. At December 31, 2018, the company held $469 million in cash, cash equivalents and short-term investments. This compares to $145 million held at December 31, 2017. For 2018, net cash used in operating activities was $101 million. At December 31, 2019, Iovance anticipates cash, cash equivalents and investments to be between $310 million and $320 million.

In March, we will participate and present to the following investor conferences: First, the Cowen and Company Annual Healthcare Conference in Boston; next, the Oppenheimer Annual Healthcare Conference in New York; then the Alliance for Regenerative Medicine or ARM annual cell and gene therapy Investor Day in New York; and lastly the China Healthcare Investment Conference in Shanghai. With that, we'll turn the call over to the operator for your questions.

(Operator Instructions) Our first question comes from Mark Breidenbach with Oppenheimer.

Maria, I was wondering if you can tell us a little bit more about the interim analysis that's built into the cohort or protocol, just sort of what events need to happen to trigger the analysis and how close to full enrollment, you would expect it to take place?

Mark. Thank you for the question. We are thinking about how to use that interim analysis because in all reality, we would have to have the patients enrolled 3 months of follow-up and then a BIRC assessment in order to do anything with that data. In the meantime the cohort will be fully enrolled. So chances are high that we would not trigger it in any way because we will not be able to make a decision based on that. The cohort will be fully enrolled at that point.

Okay. So there is no chance that this will be used to revise the -- this type of the cohort. So you're going to hit 75 patients, no matter what?

Yes, yes.

Okay. And with regard to the cervical carcinoma protocol amendment, can you just let us know what you're defining as prior immunotherapy, and so -- just give us some color on why you're choosing to exclude patients who've received greater than 3 prior lines of treatment?

Certainly. As we had noted, we had presented data around our last round of financing in October of 2018, where we had shown an overall response rate of 27% for 15 patients worth of data and mean number of prior therapies was 5. So the patient population was quite refractory in treatment experience. And we wanted to make sure that the patients have an opportunity to survive long enough to be able to benefit from the product and provide some value in terms of data. So we limited the number of prior therapies, so that the patients are slightly healthier, and we're able to get a reasonable follow-up from them. We are able to limit prior immunotherapy, because there is not an approved -- fully approved immunotherapy available for cervical cancer patients. KEYTRUDA has an accelerated approval and that's not considered available care because it does not have full approval. So that opportunity from a regulatory perspective that door is open. And from the fact that we know that the patients who are naive to prior anti-PD-1, specifically. We know that those are better patients and have a better opportunity to survive a little longer and lead to better data. So that's why we limited them, we can. The regulatory door is open and the patient population potentially could benefit from TIL quite a bit.

Okay. And one final one for me on manufacturing especially, with regard to your in-house capabilities that you'll be building out. How soon might it be before we get a sense for capacity of your new facility and would this primarily support commercial products in the U.S. only, would you expect to rely on a third party for European production?

Thank you, Mark. In terms of capacity, we are planning on building something that has flexible capacity. So there will be an initial capacity that we will build and we will perhaps disclose a later part of this year as to what that might be. But we will certainly have an option to expand the capacity fairly quickly. And there's a very agile, modular plan that we're putting in place together. In terms of whether U.S. or EU could be considered, those are considerations in location selection. So perhaps we can disclose it when our location is better disclosed.

Our next question comes from Boris Peaker with Cowen.

My first question is on the Cohort 2 data. I'm just curious will we see centralized review at that data and if so, when would that possibly be?

Boris, thank you. We are just triggering the central-read process in the next couple of months again. We had halted it because we wanted to be sure that it is aligned with our Cohort 4, read and the process. So depends on when we end up presenting the data. If we end up presenting the data, say around second quarter, this year likely the IRC data will not make it in time. If we end up presenting the Cohort 2 data later part of the year, there may be an opportunity. So I'm not entirely sure quite where we end up presenting the data.

Got you. And also then for me, trial design patient enrollment perspective. If we compare Cohort 4, is there any reason to believe that the efficacy in Cohort 4 should be significantly different from Cohort 2?

We don't think so, it's still exact same patient population, the exact same sites. We haven't changed the actual selection of the patients in any meaningful way. So we don't anticipate any meaningful differences, we anticipate that it would be the same at a minimum. So no, not really.

Right. And my last question, just on your novel peripheral blood lymphocytes. Just curious which specific tumors are you considering? Or is the initial study will just, kind of, be typical basket of advanced liquid tumors?

I think, initially we probably will be thinking about CLL. There is initial data that shows that patients with CLL, particularly in their peripheral blood. There is a method of priming the blood to have better T cells and more T cells. From a regular CLL patient, it's hard to get enough T cells to grow them with the PDL methods that we have. But if you primed the patient with prior exposure to ibrutinib, we do see that there is significantly more T cells available. And this data is published and presented at ASH of 2017. So we likely would focus on CLL, initially.

Our next question comes from Jim Birchenough with Wells Fargo.

This is Nick on for Jim. Just on cervical cancer, then, is the 14% response rate seen by KEYTRUDA, kind of the (inaudible) we should be looking at? I mean, I know you want to see a lot more than that just from a competitive perspective, is that the response rate you want to beat?

Good afternoon, Nick. So I will answer 2 ways. One is the regulatory bar and one would be immediate clinical or a commercial bar. From a regulatory bar given the product has accelerated approval, that's not considered "available care." So available care remains whatever has full approval and that's really chemotherapy. This is precisely why we're able to get fast track designation for patients who have received prior chemotherapy. Because that's available care still. From a regulatory perspective, carrying on with that line of thinking the response rate for available care is around 10% to 13%. The confidence in a role that KEYTRUDA cleared at the low end was 7%. So that's just historical data. From a clinical perspective, we do know that these patients are quite unmet medical need still and really, in second line the response rate for available care, as I noted before, is around 13%. We clearly would like to do a significantly better than that and that's part of the reason we limited the number of prior therapies for cervical cancer patients, and we limited their prior exposure to immunotherapy.

For the PBMC TIL, you'll have to come up with a jazzy name for it. Does this mean it's a Gen 2 manufacturing or is there something bespoke to cover the fact that from hematologic malignancy?

Yes. We definitely need to come over with a smart and if you have one, send me an e-mail. But we are -- it's a different process, it's actually a very short process, the completely novel process.

I mean it's great that it's short, but did you try Gen 2 and this is a better process?

Because we're not starting with tumor, we're starting with blood. We had the opportunity to do a lot more here, so it's an entirely different process on Gen 2.

Okay. And then what should we expect for updates from the head and neck trial?

We continue enrollment in head and neck, and this is also one of the indications that the patients have a very poor survival subsequent anti-PD-1. So we try to limit the number of priors to assure that we are able to get patients who are able to survive long enough, so we can report data. So we're considering increasing the sites to perhaps increase enrollment and trying to extend our efforts in improving enrollment. But we haven't really committed to providing that data this year. I really would like to be able to have sufficient number of patients with Gen 2 only before we report that data. That's what is our hold up so far.

(Operator Instructions) Next question comes from George Zavoico with B. Riley FBR.

Couple of questions. First I guess for Maria, regarding the PBLs. You said it comes from blood obviously, peripheral blood lymphocytes. I guess, I mean that your access to potential cells to transform this is pretty much unlimited, which I mentioned is why you've been able to do so much with it. So my question is, you had a -- you said it was much shorter, the preparation time. Is there as many steps, is it just shorter, are you growing out the cells or just modifying them? And maybe it's too early for you even to answer those, but I'm just curious about that.

We -- I think what has happened is we've learned a significant amount about how to grow T cells over the course of time. So we've figured out how to do this better and again, we have other generation of products even in the TIL space that we intend to bring into the clinical landscape. PBL just happens to be in the front of some of our other efforts, so our research pipeline has significantly more options in terms of how to grow TILs. And we took advantage of that collective knowledge to date in growing the PBLs and shortening the process. So a lot has gone into it. We haven't really disclosed the details of how we manage to do that, and we're hoping to be able to provide that information in an upcoming medical conference in 2019 as well.

And also just as a follow-up to that question. By having access to the blood, this opens up how much better possibility for a multiple treatments, is that something you considering for this, as opposed to the solid tumor TILs as well?

It's certainly an opportunity that we can consider, our initial study certainly, would be a dose-ranging in the sense that because it's first in human, we're considering of course how to start the program. We can disclose a little bit more about it maybe in quarter 1 and Q2 timeframe in terms of details. But yes, that opportunity definitely presents itself. It's an option to consider.

Okay, cool. And with regard to Cohort 2, you've got -- the responding patients not even including the standard, the stable-disease patients, some of which may or may not have gotten to a PR since your last update. You've got patients on the look at the chart in your presentation from 2 months to 17 months, they're still on therapy. So for Cohort 4, you've got ORR as the primary endpoint, is durability of response going to play into this, primary endpoint or is there going to be secondary endpoint? How important do you feel the durability of response, because it certainly looks good in Cohort 2?

Yes, I agree. Yes, the ORR is a secondary endpoint, it's also hugely important of course, commercial endpoint for us. So it is part of our protocol and we will monitor that space very closely. As you noted, our patients had a pretty broad distribution in terms of timeline study within 2 months and 17 months exactly as you noted. So we will be monitoring follow-up from Cohort 2 and the lessons learned from Cohort 2, certainly are very much applicable to Cohort 4.

Okay, great. And final for Tim, what you're projecting for the end of 2019, is somewhere in the neighborhood of $50 million more for burn in '19 versus '18. I imagine there's a lot that goes into that including the -- building out the manufacturing space. In that regard, what fraction of that if you can say, maybe you can't say yet, would be the potential cost for the manufacturing facility? And also how long do you think it would take to reset an existing plant for example, or build one from scratch?

Yes, George. So in terms of the breakdown of the potential burn for 2019 of about $150 million, the majority of that is going to be the increase -- would be R&D. We now have the 5 studies up and running and obviously, with the new Cohort 4 coming on board. So I would expect the bulk of the increase to be predominantly R&D. There is some monies in there for the new facility, mainly, some engineering and some other initial monies. There's not a lot of bulk in there. Most of the bulk for the new facility will come next year, as we're looking just to break ground and do design this year as well. So I don't know if that helps or not. That's where we'll end up in -- obviously, as we get closer and start talking about the facility and stuff, we could probably get more details there.

And I'm showing no more questions. So I will now like to return to Maria Fardis for any closing remarks.

Thank you, operator. We're encouraged by the progress and growth that we have seen over the past year, and we would like to acknowledge the contribution of the patients, who participate in our clinical trials, the investigators who support these trials. And the stockholders who have provided the resources that enable us to make TIL therapy a broadly accessible treatment option. We appreciate those of you who are able to join the call today and look forward to providing you further update in the remaining quarters of the year.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude your program, and you may all disconnect. Everyone, have a great day.