Lumos Pharma Inc (LUMO) 2017 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the NewLink Genetics Fourth Quarter and Year-end 2017 Earnings Conference Call.

(Operator Instructions) As a reminder, this conference call is being recorded.

I will now like to turn the conference over to Mr. Jack Henneman, Chief Financial Officer.

Sir, you may begin.

Thank you.

Good afternoon, and thank you for joining Dr. Charles Link, Chairman and Chief Executive Officer; Dr. Eugene Kennedy, Chief Medical Officer; and me for the NewLink Genetics Fourth Quarter and Year-end 2017 Conference Call.

After the market closed, we issued a press release providing updates on our clinical development program for indoximod, NewLink's IDO pathway inhibitor with a distinct mechanism of action, and fourth quarter and year-end financial results.

Dr. Link will review our clinical and scientific priorities for 2018.

Dr. Kennedy will review highlights for our clinical development programs.

And I will wrap up with the fourth quarter and year-end 2017 financial results and updated cash guidance.

Certain statements made during this call are forward-looking statements under U.S. federal securities laws.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.

Additional information concerning factors that could cause actual results to differ is contained in our periodic reports filed with the SEC.

Forward-looking statements made during this call speaks only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements.

Information presented on this call is contained in the earnings release we issued this afternoon and our Form 8-K to be filed later today, which may be accessed from the Investors page of the company's website.

I will now turn the call over to Dr. Link.

Thank you, Jack.

Thank you for joining us today.

In 2017, we presented peer-reviewed data at key oncology meeting that supports the Phase III development of indoximod and announced plans to initiate 2 randomized clinical trials this year.

We presented Phase II data of indoximod plus pembrolizumab in advanced melanoma at the Third Annual International Cancer Immunotherapy Conference with encouraging overall and complete response rates and progression-free survival.

We presented Phase II data from a randomized double-blind study of indoximod plus cancer vaccine for patients with metastatic castration-resistant prostate cancer at the ASCO Annual Meeting, which demonstrated a statistically significant improvement in median progression-free survival compared to monotherapy.

As well, we presented Phase Ib data of indoximod plus chemotherapy in newly diagnosed AML, which suggested the potential for indoximod in treatment regimens beyond PD-1.

These data are encouraging and support the potential for indoximod to improve outcome for patients with cancer across a broad range of indications.

Our priorities in 2018 will build upon this base and focus on expanding our clinical development in 2 key indications, advanced melanoma and metastatic pancreatic cancer.

In melanoma, we announced the design of our pivotal trial, Indigo301.

We are proceeding with the work necessary to initiate the randomized portion of this trial in the second or third quarter of 2018.

In addition, we plan to present the full data set for the Phase II trial of indoximod plus checkpoint blockade in metastatic melanoma at an upcoming medical meeting in the first half of 2018.

In pancreatic cancer, in September, we formed a clinical collaboration with AstraZeneca for a randomized Phase II trial, Indigo201, for patients with metastatic pancreatic cancer.

This study will be a randomized blinded Phase II trial of indoximod plus durvalumab, AstraZeneca's PD-L1 inhibitor, plus chemotherapy and is expected to begin in the first half of 2018.

In addition, NewLink Genetics has completed its own single-arm Phase II trial of indoximod plus chemotherapy in metastatic pancreatic cancer and expects to present those data in the first half of 2018.

Finally, indoximod is an ideal pathway inhibitor with a differentiated mechanism of action compared to that of direct enzymatic inhibitors.

We have continued to do work to determine key aspects of the indoximod mechanism of action and plan to present those data at the AACR Annual Meeting in April.

Now I will turn the call over to Dr. Kennedy, who will discuss our clinical programs in greater detail.

Thank you, Chuck.

As Chuck mentioned, we are working towards commencing 2 randomized trials: Indigo301 in advanced melanoma and Indigo201 in metastatic pancreatic cancer.

Indigo301 is our pivotal trial in metastatic melanoma.

To review, the design includes a 2-arm, randomized, double-blind, placebo-controlled study in approximately 620 patients whereby indoximod will be given in combination with either nivolumab or pembrolizumab at physicians' discretion.

The trial will be conducted at approximately 100 sites in the United States, Europe and Australia.

We are updating the Indigo301 time line due to factors related to our dose determination efforts and additional time spent on manufacturing.

Clinical evaluation of the indoximod salt formulation is being addressed in ongoing trials, including the dose determination portion of Indigo301 in healthy volunteer study.

Initial data from these trials suggests that the tablets of indoximod manufactured to the original specification achieved a different exposure level of indoximod in humans than we had anticipated from the preclinical work.

We have therefore made minor modifications to those specifications and the manufacturing process.

We have accordingly extended the clinical evaluation to test the modified tablets in healthy volunteers.

We expect the results of the evaluation of the new indoximod tablets within approximately 2 months.

And those results will determine how quickly we could begin the randomized portion of Indigo301.

Because of the cumulative impact of the CMC refinements and the related regulatory requirements, we have updated our expectation for the initiation of the randomized portion of Indigo301 to the second or third quarter of 2018.

We still expect to complete enrollment during 2019.

Our work also continues towards the commencement of Indigo201.

Indigo201 is our randomized, blinded, Phase II trial of indoximod plus durvalumab plus chemotherapy in metastatic pancreatic cancer.

We still expect to initiate that trial by the end of June.

As Chuck mentioned, we are doing preliminary work to determine other indications where focused trials might reveal potential for indoximod in combination therapy.

For example, at AACR, we will present early data describing the effect of indoximod in combination with radiotherapy in the treatment of certain pediatric brain tumors.

We continue to make progress on our clinical development of indoximod and look forward to updating investors as information becomes available.

Now I will turn the call over to Jack to discuss the financials.

Thanks, Gene.

Before we move to the Q&A, I want to provide a quick overview of recent financial events, key financials for Q4 and year 2017 and guidance for 2018.

In 2017, NewLink Genetics raised approximately $74 million from a successful underwritten offering of $55 million in October as well as additional funds from an ATM.

With these transactions completed, we believe the company's cash position is sufficient to fund operations in the near and medium term.

NewLink Genetics ended the year on December 31, 2017, with cash and cash equivalents totaling $158.7 million compared to $131.5 million for the year ending December 31, 2016.

And we expect to end 2018 with approximately $75 million in cash on hand.

NewLink Genetics reported a net loss of $13.7 million or $0.37 per diluted share for the fourth quarter of 2017 and a net loss of $72 million or $2.30 per diluted share for the year ended December 31, 2017, compared to a net loss of $13.5 million or $0.46 per diluted share for the fourth quarter of 2016 and a net loss of $85.2 million or $2.94 per diluted share for the year ended December 31, 2016.

The company ended 2017 with 37.1 million shares outstanding.

Please refer to the press release that we put out this afternoon for more detail on financial results.

As we look ahead, NewLink Genetics plans to participate in the Oppenheimer 28th Annual Healthcare Conference held March 20 and the William Blair 8th Annual Cancer Immunotherapy Conference on April 4, both in New York City.

Now I'd like to turn the call back over to Chuck before we open the call up to questions.

Chuck?

Thank you, Jack.

The key takeaway from this call is that we are making significant progress in our clinical development program.

2018 will be a year when we initiate 2 important randomized trials: Indigo301 for patients with advanced melanoma and Indigo201 for patients with metastatic pancreatic cancer in collaboration with AstraZeneca.

In addition, we will be presenting the full data sets from our Phase II trial in melanoma and from our Phase II trial in pancreatic cancer.

Most importantly, data from these and other trials continue to support the opportunity for indoximod to improve the outcomes of patients with cancer in different combination therapies and in different cancer indications.

With that, we will open up the call for questions.

Operator?

(Operator Instructions) And our first question comes from the line of Ying Huang from Bank of America.

This is Jenny on for Ying.

We just want to follow up on, I guess, where you are currently in the process of the dose determination.

And what conviction you have around initiation of the randomization portion of your Phase III in 2Q.

And do have the option to go back to a non-salt formulation if you are unable to get the exposure levels that you want in humans?

And then, secondly, with the delay of randomization, how do you think enrollment may be affected by the results of ECHO-301?

Gene?

Thanks, Jenny.

So to begin with, with your questions there.

As we've been discussing for some time, as our indoximod program evolved from early development to a randomized Phase III study with potential commercialization, there was -- it was necessary to change manufacturing from indoximod free base and gel capsules to indoximod salt formulation and compressed tablets to decrease the pill count and optimize PK.

This work has been done.

Tablets have been evaluated in a variety of clinical situations.

As we said, the results we obtained to date have been different than what we predicted based on preclinical studies.

Therefore, we've made some minor tweaks in manufacturing.

That's done.

And we'll have results from clinical testing in the next 2 months.

As far as our confidence at this point, it remains high.

So this is Jack.

You also, I think, asked about the potential impact of ECHO-301 on enrollment.

I think the important thing to remember as a starting matter is the tremendous amount of both basic science and increasingly clinical data around IDO as a target.

And these big commitments, many companies, not just us and Incyte, but others are making the IDO field.

Obviously, it would be great for our trial if ECHO-301 were positive.

But I think if it weren't, the question would be, what was the nature of the miss?

And how would the communications around that influence our ability to enroll?

Obviously, under certain circumstances, we'd be forced to take a hard look at the design of our own clinical trial program.

But pending that and pending understanding how that trial would work out, we feel pretty confident in our own ability to show the effectiveness in indoximod in the Phase III trial we've designed.

And our next question comes from the line of Stephen Willey from Stifel.

Just wondering if you can maybe speak to the, I guess, the delta and exposure levels relative to what you were seeing versus what you were expecting.

And maybe just as kind of a follow-on to the prior question, I guess, your confidence is high, but I guess, how well do you feel you understand what's driving the difference here?

And I think maybe more importantly, how confident are you that you're going to be able address these issues based on the manufacturing changes that you've made?

Thanks for the questions, Steve.

I think that when we moved to the new formulation, there were some goals that we had including trying to decrease the pill count.

We had a high pill count with the gel cap, we had total pill count of 6. And so one of our goals is to optimize the reduction in pill count and then optimize the exposure at the same time at reducing the total pill count to make it easier for patients to take.

So we remain sort of committed to that goal of reducing the pill count and getting solid exposures after we reduced pill count relative to large pill burden that we used in the Phase II trial.

We think that that's very achievable.

Okay.

And I guess, just given the fact now that it's -- that the initiation of the randomized portion is likely to occur after an ECHO disclosure, do you feel that, that kind of gives you now maybe a little bit more flexibility around your statistical plan in terms of, I guess, how you may choose to weight each of your co-primary endpoints from an alpha perspective?

Yes.

So as you know the trials, our trial and Incyte's -- BMS, as far as I know, have not reported how they're using the alpha on the prespecified endpoints that are planned.

Ours are the same as the Incyte trial and have the overall survival and progression-free survival as the 2 main endpoints.

But you do make a good point that there could be information that we gain from the results of that trial that might be informative to us that could give us an advantage in terms of tweaking things.

Okay.

And then just lastly, is it safe to assume that Indigo201 trial will also be using the novel indoximod formulation and that the end of June trial start date there is dependent upon the manufacturing resolution as well?

That is correct.

So we're keeping the guidance that we think that we'll be able to do that -- start that trial by the end of June.

Yes, there is only one formulation in the drug, which is the new salt formulation.

And our next question comes from the line of Mike Ulz from Robert W. Baird.

In terms of the full Phase II data for indoximod, you mentioned targeting first half '18.

Should we be thinking ASCO?

Or is there still a chance for AACR?

Or is there something else I'm missing?

So until we have final abstracts accepted, I can't tell you exactly which meeting.

But I think that you're probably guessing in the right direction.

Okay.

Got you.

And then just with respect to NLG919.

If you can just give us an update on the current status there.

And then your current thinking in terms of plans going forward with that asset.

So we're still in the process of completing the return of NLG919, which is our specific enzymatic inhibitor of IDO from Genentech.

And so that sort of is in process.

So as that has been going on, we've been sort of working on our planning and strategy around 919.

We still think that there is potential value in NLG919.

And we'll sort of roll out those plans once we get a lot of the operational work completed on getting the asset returned.

And our next question comes from the line of Peter Lawson from SunTrust.

Just probably a couple of questions around just timing of data like when we'd see AML data and then, kind of, I guess, the pancreatic PD-1 -- PD-L1 chemo study.

Would that be -- do you think that's positioned for accelerated approval?

So you're asking if those data sets are putting us in a position for accelerated approval?

For the -- yes, maybe I should start again.

The pancreatic cancer data really is the basis for the randomized trial -- forms one of the bases for the randomized trial that we're doing with AstraZeneca with durvalumab plus indoximod plus gem plus ABRAXANE.

And that's sort of how we feel, is that was sort of the basis for initial data to consider pushing that further by doing a combination of checkpoint blockade in that trial.

The AML trial has been used now in part to treat patients with the new salt formulation to get ideas of PK effect.

So we sort of interrupted the Phase Ia portion of that trial in combination with chemo.

And we are sort of assessing the plans for how we would move that further into development, working and discussing things with key opinion leaders in the AML field and that sort of stuff.

But we haven't been accumulating more data at full dose in terms of responsiveness because we've employed that trial in part to speed the salt formulation to get the randomization open on the melanoma trial.

And then just on the manufacturing changes.

How far through that process do you think you are?

Do you think you are a couple of weeks to finding a solution?

I think overall we're pretty far through the process because I mean, we're obviously at the point of manufacturing that the tweaks that we've done to the tablet can be used clinically that we would have results we expect within the next 2 months.

So that can give you a sense of that.

This is Jack.

It should be said that these are fundamentally simple changes.

I don't want to go into greater detail, but they're not hard to implement.

And our next question comes from the line of Biren Amin from Jefferies.

Just on the formulation changes.

Do you need to see similar AUC levels?

Is that what the gating item is before you start 301?

So it's really a combination of the AUC levels that we see, whether they are equivalent or better, and the choice of pill count relative to those AUC levels.

So we're trying to both optimize exposure and optimize pill count and sort of making a judgment about that.

Originally, it was the gel capsules, it was 6 gel capsules at a time.

And ideally the lower the pill count is, the easier it would be in terms of commercial venture going forward.

And obviously the Phase III drug should be the same as our commercially prepared drug.

We're trying to be attentive to choose the exposures relative to pill count that we feel comfortable forward -- to move forward for the Phase III randomization portion.

And do you have a specific number on that pill count that you would move forward with?

Is it instead of 6, are you trying to get to 1?

Yes, we haven't put out a specificity about that.

But sort of giving you a judgment call, we look at all the data at the different pill counts and what the exposures look like at each pill count level.

And Chuck, is there an option to just maybe wait for the prodrug formulation given this delay?

The prodrug is in -- is still in Phase Ia development.

So that's not far enough along, and we really think of that as a next-generation compound.

And so I think that with the situation we're at right now with the CMC, we fully anticipate that we'll be able to get going on the Phase III randomization on the relative near term and that the issues that we have, we think, are eminently solvable if it takes -- this takes the steps we've already taken to tweak the manufacturing process.

Got it.

The (inaudible) tablets are already prepared in manufacturing, obviously, ready for the clinic with that -- with the changes.

And I think you mentioned a couple of data sets at AACR.

Is it -- I guess, should we assume that the Phase II melanoma data is likely slated for ASCO as a result, given you didn't mention that, that would be at AACR?

That's probably a reasonable assumption, Biren.

Okay.

And then, I guess, for the Phase II melanoma data, will we also get the biopsy cohort at ASCO as well?

Yes.

There is a biopsy cohort as well.

We're trying to look at the physiology of the tumor and how it changes after the checkpoint blockade is given to the patient, the pre and post-biopsy.

Sort of a mix-up.

Got it.

And then, maybe one last question.

Do you have cash through the readout of 301 as a result of this delay?

So right now, we have cash, I'll say, significantly past the enrollment or the planned enrollment of Indigo301.

If we pursue all the programs we have laid out internally, we would not have cash through the readout.

If push came to shove, there are steps we could take to dramatically extend, but the -- at the end, our sort of guidance is our guidance we expect to complete this year with $75 million in cash, assuming no financing, no incremental dilutive or nondilutive sources of cash.

And you can sort of run the timing from that.

It would be challenging to get through readout without having something more come in.

(Operator Instructions) And I am showing no further questions in the queue at this time.

I'll hand the call back for closing remarks.

Well, we thank you very much for your interest and look forward to seeing you at investor conferences throughout 2018.

Obviously, it's another important year for NewLink in pushing indoximod forward into further development.

Ladies and gentlemen, thank you for participating in today's conference.

This concludes today's program, and you may all disconnect.

Everyone, have a great day.