Jounce Therapeutics Inc (JNCE) 2020 Q1 法說會逐字稿

Ladies and gentlemen, today's conference is scheduled to begin shortly. Please continue to standby, thank you for your patience.

Good morning, ladies and gentlemen. And welcome to the Jounce Therapeutics First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference is being recorded at the company's request.

I will now turn the call over to your host, Komal Joshi, with Jounce Therapeutics. Please go ahead.

Thank you, operator. Good morning. And welcome to the Jounce Therapeutics First Quarter Conference Call. This morning, we issued a press release, which outlines the topics that we plan to discuss today. The release is available in the Investors and Media section of our website at www.jouncetx.com. Speaking on today's call will be our CEO and President, Dr. Rich Murray, who will discuss our pipeline progress and key milestones; followed by our CMO, Dr. Beth Trehu, who will provide an update on our clinical activities; and lastly, our CFO, Kim Drapkin, who will review our first quarter financial results. We will then open the call for your questions.

Before we begin, I would like to remind everyone that today's discussion will include statements about our future expectations, plans, and prospects that constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including the risk factors discussed in our SEC filings. In addition, any forward-looking statements represent our views only as of today, May 6, 2020, and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change.

With that, I will now turn the call over to Rich.

Thanks, Komal, and good morning, everyone. The start to 2020 has certainly been a reminder to us all why we are in this business and the importance of making an impact to improve patients' lives. It's been inspiring but not surprising to witness our industry coming together collaboratively and swiftly as the world works to combat the COVID-19 pandemic. Specifically at Jounce, we've been operating with an abundance of caution, as we follow health and safety guidelines, including working from home and maintaining our research lab operations for key priority activities. The teams working from home to manage our clinical trials have done an outstanding job of adapting to every challenge thrown at them, and have come up with creative solutions to mitigate risk to patients in trial activities.

However, given these challenging times, the pace of enrollment in the EMERGE Phase 2 trial in the initiation of the SELECT Phase 2 trial, have been modestly impacted by COVID-19. We now expect a delay of approximately 2 months to 3 months for both trials. I'd like to thank our employees for their dedication to our mission of making a difference for cancer patients. In a few moments, Beth will provide additional color on the impact of COVID-19 on our trials. Today, I'll cover how EMERGE and the upcoming SELECT trials focus on critical unmet medical needs of the respective patient populations in non-small cell lung cancer, and the opportunities for Jounce. We continue to analyze samples and generate new translational data from the ongoing patients with highly durable clinical benefit in the ICONIC trial. Based on further mechanistic insights into the role of ICOS and Vopra in long-term immune memory, I'll provide a perspective on where and how Vopra may best help to fulfill these unmet needs. Finally, before handing off to Beth, I'll provide an update on our next potential first-in-class development program, JTX-1811, which is currently in IND enabling studies. As a reminder, both Vopra programs, EMERGE and SELECT, are focused on 2 distinct non-small cell lung cancer populations. Each approach is based on strong scientific underpinnings.

The ongoing EMERGE trial is enrolling second and third line IO experienced non-small cell lung cancer patients, who have progressed on both a PD-1 inhibitor and platinum-based therapy, either in combination or sequentially. For these patients, the standard of care is docetaxel or a clinical trial. What we believe is most important regarding docetaxel in this setting is the uniformly short duration of benefit and low impact to overall survival, the regulatory gold standard of clinical benefit. This creates an opportunity for new and different IO mechanisms in these patients to achieve durable benefit. We believe our EMERGE trial, a new IO combination with a unique dosing schedule, has a strong scientific rationale to bring that durable benefit. Beth will give us a bit more background and review the mechanistic rationale of this combination, including the important pharmacodynamic biomarker for Vopra, ICOS HI CD-4 T-cells.

Turning to our upcoming SELECT trial, we will employ the predictive biomarker, TIS Vopra, which we believe can be used to select the patients more likely to generate ICOS HI CD-4 T-cells on Vopra treatment. We identified TIS Vopra as a potential predictive biomarker based on ICONIC data. SELECT will enroll second line IO naive non-small cell lung cancer patients outside the U.S. As PD-1 inhibitors have become firmly established as a treatment for non-small cell lung cancer, we will bring Vopra on board as a combination in the IO naive TIS Vopra selected patients in a randomized trial. If we achieve proof of concept, Vopra plus a PD-1 inhibitor in TIS Vopra selected IO naive patients could become a combination of choice for PD-1 inhibitors as a class. We believe that the opportunity to bring true benefit to patients isn't durability, specifically, overall survival. Responders from our ICONIC trial continue to show remarkably durable benefit, along with the continued presence of the Vopra specific PD biomarker, for now, over 2 years of ongoing therapy.

Beyond Vopra, we're also excited to continue the advancement of our next product candidate, JTX 18-11. I'm pleased to announce today that the target for JTX 18-11 is CCRA, the chemokine receptor enrich on intra-tumoral T regulatory cells. CCR8 was one of our top choices of key regulatory targets, coming from our systematic interrogation of the tumor microenvironment using our discovery engine. As a reminder, JTX 18-11 is a monoclonal antibody intended to selectively deplete tumor resident T regulatory cells in the tumor microenvironment. To do so, the program has 2 key elements. First, the target would be optimally expressed at high levels on the majority of intra-tumoral T regulatory cells, and more minimally expressed elsewhere. Second, the antibody would impose a functional impairment on the tumor T regulatory cells, and, or be able to selectively deplete them. When JTX 18-11 binds to CCR8, it targets the T regulatory cells for depletion by enhanced antibody dependent cellular cytotoxicity. We believe T regulatory cells impose immunosuppression onto an active immune response that may be distinct from the PD-1 axis.

To that point, JTX 18-11 is active in some preclinical tumor models where there is no PD-1 inhibitor activity, and it can reverse PD-1 inhibitor resistance in those models when in combination. We are looking forward to presenting scientific data supporting the development of JTX 18-11 at the June portion of the AACR Virtual Annual Meeting, and we expect to file an IND for this exciting program in the first half of 2021. JTX 18-11's development, coupled with translation of our key learnings from ICONIC into EMERGE and SELECT, represent our commitment to bringing novel programs into clinical testing for patients who are not sufficiently benefiting from today's IO therapies.

With that, I'll now turn the call over to Beth to further discuss our clinical activities in more detail.

Thanks, Rich, and good morning, everyone. As our lead program, Vopra, advances, we continue to believe that the role that ICOS and CD-4 T-cells play is critical to a more comprehensive immune response to cancer beyond the current CD-8 focus of PD-1 inhibitors. Resting T-cells that have not been exposed to any antigen express low levels of ICOS, and they are not active. However, once CD-4 T-cells are primed by exposure to antigens, they become activated and express high levels of ICOS. We refer to these cells as ICOS HI CD-4 T-cells. As we have further characterized these cells, which emerged due to Vopra and not PD-1 inhibitors, we have learned that they actually include 3 distinct subpopulations. One subset isCD-4 T helper cells or T H1 cells that either kill tumor cells directly or encouraged tumor cell killing through their influence on CD-8 T-cells. A second subset is CD-4 T follicular helper cells, which play an integral role in antibody production by B cells. The third subset, which we think is very important for durable benefit from IO therapy, is key central memory cells. We believe that by expanding these cells that produce long-term immune memory, Vopra may be able to extend the durability of responses.

When ICOS is up-regulated through priming, its presence is increased on all 3 of these cell populations, all of which play an important role in the comprehensive immune response separate from, but perhaps complementary to, PD-1 inhibitor activity. The central role that these cells may play and our demonstration in ICONIC that their proliferation and sustained activation is associated with durable clinical benefit led to the 2 development paths for Vopra represented by the EMERGE and SELECT trials.

I would like to spend a few minutes to provide an update on the EMERGE trial. The EMERGE trial employs induction of ICOS HI CD-4 T-cells with ipilimumab, followed by administration of Vopra in PD-1 experienced patients with non-small cell lung cancer. As Rich mentioned, there has been an impact on EMERGE enrollment and data release, owing to COVID-19. Our clinical operations and medical affairs teams have done an outstanding job, and have come up with creative solutions to minimize delay, including virtual site initiation visits and virtual training on PBMC processing for our critical ICOS HI CD-4 biomarker. Due to their efforts and the high unmet need in the EMERGE population, the study continues to progress, and we saw no impact on enrollment until very recently when the number of patients in screening started to decrease somewhat. We are therefore currently projecting a modest delay to completing the targeted enrollment for the interim analysis, but still expect to complete enrollment mid-year 2020.

As you may recall, our interim analysis is planned to include clinical response data through at least 18 weeks on all patients, plus biomarker data which means that the complete dataset will not be available until approximately six months after the last patient is enrolled. We have been on track to deliver that in the second half of 2020. Now due to the recent impact of COVID-19, our timeline to complete the interim analysis of preliminary efficacy and biomarker data has shifted into early 2021. Again, this will allow us as planned to have a robust dataset with all the valuable patients having at least 2 on treatment scans.

As this EMERGE data is our next clinical milestone we thought it would be helpful to provide some context that starts with understanding the outcomes with docetaxel and with PD-1 inhibitors in second-line non-small cell lung cancer and focusing on the nature of the benefit that checkpoint inhibitors have brought to patients. From the approval of the first checkpoint inhibitor, immunotherapy has brought significant clinical benefits to cancer patients through the durability of clinical benefit and improvement in overall survival. PD-1 and PD-L1 inhibitors were approved in second-line IO naive non-small cell lung cancer based on comparison to docetaxel. In this setting, docetaxel provides response rates of approximately 6% to 14% median overall survival of six to 9.6 months and significant toxicity. Single-agent PD-1 and PD-L1 inhibitors without biomarker selection produced marginally better response rates than docetaxel but were approved based on meaningful improvements in overall survival.

Now, let's turn to outcomes for patients in second and third line non-small cell lung cancer who are PD-1 experienced like the patients in EMERGE where docetaxel has become standard of care by default. There is no randomized clinical trial data to provide response and survival benchmarks in this population. However KOL feedback suggests that clinical benefit from docetaxel especially overall survival in this population is likely no better and probably worse than in the PD-1 naive patients I just referenced as one would expect in a later line of therapy. Based on the durable responses in ICONIC, we believe that Vopra in combination has the potential to improve outcomes for these patients, including the durability of clinical benefit and overall survival. The duration of follow-up built into our interim analysis will allow us to share data from EMERGE on these critical measures of efficacy for immunotherapy.

I would now like to turn to the second Vopra development paths represented by the SELECT trial using biomarker selection and what we believe is a move towards precision medicine in IO. TIS is an 18 gene signature originally developed as a predictive biomarker for PD-1 inhibitor that includes genes associated with CD-4 T cell activation and TISvopra has been optimized for prediction of ICOS HI CD-4 T cell emergence in patients treated with Vopra and the PD-1 inhibitor. We expect to enroll approximately 75 immunotherapy naive second-line non-small cell lung cancer patients who will be selected using the predictive TISvopra biomarker and randomized to Vopra plus JTX-4014, our PD-1 inhibitor, versus JTX-4014 alone.

We estimate that approximately 20% of second-line non-small cell lung cancer patients will be above the TISvopra threshold and potentially eligible for the trial. With the selected biomarker, we expect results with JTX-4014 to be better than those for PD-1 inhibitors in unselected patients, but even better for Vopra plus JTX-4014 because TISvopra is predictive for the Vopra specific ICOS HI CD-4 T cell emergence. The trial is therefore powered to demonstrate the superiority of Vopra plus JTX-4014 to JTX-4014 alone. We believe that a positive result may position Vopra as the combination partner of choice for PD-1 inhibitors with TISvopra selection in multiple tumor types and lines of therapy.

As Rich mentioned, COVID-19 has resulted in a 2 to 3 months delay in initiation of the select trial. Despite this shift, we still expect to report select clinical data in 2021. Before turning the call over to Kim, I would like to reiterate how proud I am of our team and their dedication to helping patients and our community despite these unprecedented and challenging times. Now more than ever, it is imperative to execute on our mission of delivering long-lasting benefits to patients and we believe that our translational science coupled with precision medicine approach to IO brings us closer to achieving this. We look forward to our continued progress in 2020 and execution on our important upcoming milestones.

Now, I would like to turn the call over to Kim for a discussion of our first quarter financial results. Kim.

Thanks, Beth, and good morning everyone. As we reported in this morning's press release, cash, cash equivalents and investments as of March 31, 2020, totaled $148.6 million compared to $170.4 million as of December 31, 2019. The decrease was primarily due to operating costs incurred during the period.

Turning to the P&L. During the first quarter of 2020, we incurred $19.6 million in research and development expenses compared to $17.3 million for the same period in 2019. The increase in R&D expenses was due to external clinical and regulatory costs associated with the EMERGE and SELECT clinical trial and increased employee compensation costs, partially offset by lower IND enabling expenses.

General and administrative expenses were $7.5 million for the first quarter of 2020 compared to $7.2 million for the same period in 2019. The increase in G&A expenses is primarily the result of increased professional service fees.

Net loss for the first quarter of 2020 was $26.4 million or a net loss per basic and diluted share of $0.78 as compared to a net loss of $12.4 million for the same period in 2019 or a net loss per basic and diluted share of $0.38. The increase in net loss was primarily attributable to no license and collaboration revenue in the first quarter 2020 and an increase in operating expenses.

We continue to monitor any changes in impact to our business given the COVID-19 pandemic but currently continue to expect gross cash burn on operating expenses and capital expenditures for the full year 2020 to be approximately $80 million to $95 million. We have always maintained a strong balance sheet and as such, we are also reiterating our previous guidance and expect our existing cash, cash equivalents and investments to be sufficient to enable the funding of our operating expenses and capital expenditure requirements through the end of 2021. Additionally, we continue to have the flexibility to drive our innovative immunotherapy pipeline while efficiently executing against our strategic plans and goals.

With that, I'll hand the call to Rich for final thoughts.

Thanks, Kim. We believe our trials reflect the scientific progress that stems from our translational science platform, driving new IO therapies to the clinic so that we can continue to envision a future with longer and broader durable benefits for patients who do not have those options today. We remain excited for what lies ahead for Jounce with critical milestones laid out for the remainder of this year and beyond. To reiterate, we plan to present preclinical data on our CCR8 program, JTX 18-11 at the 2020 AACR Meeting in June. While also continuing IND enabling activities with an expected IND filing in the first half of 2021, initiate the select Phase 2 trial of Vopra and JTX-4014 using our TISvopra biomarker, complete EMERGE enrollment mid-year 2020 and conduct the interim analysis, a preliminary efficacy and related biomarker data in early 2021 and continue to work on advancing multiple new targets from our discovery pipeline.

With that, we would now like to open the call for your questions, operator.

(Operator Instructions) Our first question comes from Steve Seedhouse from Raymond James.

This is [Daniel] on for Steve. Thank you for taking the question. I just have a couple in relation to JTX-1811, obviously the target is now disclosed. And I know it might be too early, but I just want to ask, what do you expect to share, which oncologic indication might be target or will it most likely, it starts with the basket trial? And another one is, do you see it being investigated as a more therapeutic combo, and if later combo which compound?

Sure, I'll take that. As we have evaluated CCR expression on T-regulatory cells across a variety of tumor types, all that data will be coming up in our AACR poster presentation. So we'll kind of direct everyone towards that, so that we can really talk about the data and how we're looking at which tumor types are the most relevant. So I don't want to kind of short circuit that particular information that will lay out. Let's say-- remind me the next question. So that was the tumor-- that was the tumor type.

If it's going to be skills level just model.

Yes, sorry. We have shown in the data that we have disclosed that there is monotherapy activity in preclinical tumor models that are PD-1 resistant. So we think there is an opportunity there. What we have also shown is that this mechanism of depleting T regs seems to work well in concert with PD-1 inhibitors. So both of those directions makes sense for us and we'll be pursuing those clinically.

And our next question comes from Debjit Chattopadhyay of H.C. Wainwright.

This is Earl DeSouza in for Debjit. I hope everyone is staying safe and healthy. We just had one question since cohort one in the EMERGE study was completed a while back, have you observed any biomarkers signals which give you confidence on the likely activity profile for the combination? Thank you.

This is Beth. We actually-- we're not really doing a lot of looking at data or doing any analysis. We enrolled the cohorts sequentially but we plan to do all of the analysis at the very end, so that we make sure we have the complete picture. When we do report the data though, it will be clinical data and all the relevant biomarker data.

And our next question comes from Cory Kasimov of JP Morgan.

This is Timur Ivannikov for Cory. So for the EMERGE interim analysis, I'm just curious if any of those delays are going to have an impact on the quality of the data, just being able to maintain appropriate follow-up scans, receive therapy, et cetera?

Sure. That's a great question. As of now, actually we're collecting almost all the samples, some CT scans may be delayed a little bit, but as far as we can tell right now, we don't believe there will be any impact on the quality of the data.

And our next question comes from Boris Peaker of Cowen.

Just following up on the impact of COVID-19, I'm just curious for the EMERGE, as well as the SELECT study, how frequently do these patients need to visit the physicians, how often do they have to go to the doctor? I just want to understand kind of the burden on the patient and any kind of a risk of exposure.

Sure. So, through the first 4 doses of Ipi, they're doing Ipi and Vopra in an alternating sequence, so they come in for treatment every 3 weeks and that's the only visit required other than getting their CAT scan. Then, once the Ipi is done, then they come in every six weeks for Vopra. So we've tried to keep it-- we always try to keep the burden to a minimum so they're basically coming in once every 3 weeks for their treatment, plus a CT scan.

Got it. And is this all done in the outpatient setting or do they have to go to the hospital for any visit?

That's a great question. Yes, it's all in the outpatient setting. And I think we've been fortunate, not all of our sites are located in hospitals, there are some-- a lot of cancer centers actually are kind of on their own campus or separate. So most of the patients don't have to go into a hospital, they're able to go to the cancer center or their physician's office without going to the hospital.

(Operator Instructions). And our next question comes from James Birchenough of Wells Fargo.

It's [Nico] on for Jim this morning. So, quick question on SELECT and that virtual training you mentioned. How hard is it to qualify the sites, and just more generally, how do you ensure compliance? Obviously, it's critical to identify the right patient here. So do you send them spike samples, flow cytometry, assay into using; can you just sort of describe how these patients get corrected and how you're qualifying in versus having somebody show up?

Sure, of course, so maybe just 2 different things what I referred to. With respect to EMERGE, we're doing virtual training on the PBMC processing, which is what we use to assess the ICOS hi CD4 T cells and that's actually been going really, really well. We have a video that we've created where our staff show people exactly how to do it and then they are on the phone, while the people are on the Zoom call watching the people in the lab do the processing, so that's gone extremely well and we've had very positive feedback from the labs. Now, going to SELECT, the predictive biomarker TISvopra is something that is obtained from archival tumor samples.

So these are samples that are already in existence at the hospital or the patients doctor's office and so, we ask for those to be sent to a central testing lab, and that's where the analysis is done on the NanoString platform and then a result is sent back to the physician. So every single -- there's no issue of quality control or processing at the site. They just send either slides or tissue block and then it's analyzed by one central lab on the NanoString platform and they provide a result back to the site. So, that's very helpful.

And then in terms of the different CD4 subsets. Obviously, you mentioned follicular helper and central memory and Th1s, so what about the -- there are other helper subsets -- Are they just sort of rare and so too exploratory that like Th17 for example. I think that's a fairly well-described subset. So in terms of these other subsets, what happens to those?

Yes, I'll take -- I'll take that Nick. Yes, for your question, we -- the way we kind of panel the analysis of these cells, which we've been calling them ICOs hi CD4 cells for some time now is to take that down a level or 2 in granularity. So, there is a certain set of markers that we've characterized on the Th1s as an example, you had mentioned the Th1s and that's the expression of a transcription factor called T-bet, and I think universally that would be accepted as a marker of the Th1 lineage.

Within that, there may be various flavors of that Th1 lineage, and we don't have all that -- all that information again. And likewise for the memory cells and the T follicular helper cells, there's always kind of -- at least in our view kind of a leading edge of markers that are being evaluated, debated -- typically starting in the academic community and we follow suit in characterizing all those. So we're not excluding any of these other subsets of subsets. But what we can say for now is that the CD-4 cells are really specializing into a kind of a highly orchestrated set of cells that we can really start to understand their function, TH-1s, cellular immunity, T-follicular helper cells, humeral immunity, T central memory, which we believe is so pivotal for that long durable effect that we've come to appreciate for IO.

Okay. And then just last one for me. In terms of CCR8, can you remind us what the ligands for that receptor and if there have been any therapeutic interventions targeting height of the receptor or the ligands?

Yes, sure. There's small molecules against the -- so there is a chemokine ligand that binds to CCR8. There have been small molecules against the CCRA. Not that surprising. It's a G-coupled protein receptor. But what really distinguishes our approach here is making an antibody. It's not always simple to make antibodies against the receptor. And so, because the receptor is so enriched, it's not selective to T regulatory cells in the tumor. We can also supercharge the antibody for the property of depletion. So we think that's the -- kind of the extra step, if you will, that will create a very, very different kind of therapeutic hypothesis as to what we're doing to these cells. So the program is really kind of based on the antibody having that property and the really highly, highly enriched nature of the receptor being on the T-regs in the tumor.

Thank you. And ladies and gentlemen, this does conclude our question and answer session. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may now disconnect. Everyone, have a great day.