Lumos Pharma Inc (LUMO) 2018 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the NewLink Genetics First Quarter 2018 Earnings Conference Call.

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

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

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 First Quarter 2018 Conference Call.

After the market closed, we issued a press release reviewing first quarter financial results and recent highlights related to indoximod, NewLink's IDO pathway inhibitor.

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

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

And I will wrap up with the first quarter 2018 financial results and comments on our cash position.

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.

The forward-looking statements made during this call speak 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 in our Form 8-K, 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.

I want to begin this call by noting that developments over the 2 months since our last earnings call, and especially the 4 weeks since Incyte announced the failure of the ECHO-301 trial, have both narrowed our choices and have cleared the competitive landscape.

Last month, we announced that we would not pursue our previously announced Phase III study of indoximod and PD-1 checkpoint inhibitors in patients with advanced melanoma.

We made this decision notwithstanding our strong view that indoximod's manifestly differentiated mechanism of action, set forth in detail in our presentation at AACR, has the potential to show efficacy in clinical settings that have not shown promise for direct enzymatic inhibitors.

The science that describes the importance of IDO in immune modulation is extensive.

We believe that indoximod influences the IDO pathway so differently from direct enzymatic inhibitors, that it ought to be assessed separately.

Accordingly, we announced a detailed review of our clinical programs to validate indoximod at lower cost and within our financial horizon.

Those opportunities include high-quality, randomized studies of indoximod in one or more target disease states, for which we have developed promising, single-arm data over the last few years.

Those potential studies include: indoximod in combination with chemotherapy for patients with acute myeloid leukemia and in combination with anti-PD-1 therapy for patients with advanced melanoma.

We are also exploring the potential of a study for pediatric patients with diffuse, intrinsic pontine glioma, or DIPG, a target enthusiastically supported by our investigators at an AACR plenary presentation in April.

We have de-prioritized pancreatic cancer and have mutually agreed with AstraZeneca not to proceed with the Phase II trial.

As you can see, we are working hard to get through our review and choose the most promising setting to validate indoximod.

Our indoximod program continues to show promise.

In April, we presented 2 abstracts at the American Association of Cancer Research Annual Meeting.

The first presentation provided data further characterizing the mechanism of action of indoximod.

The second reviewed encouraging early data of a Phase Ib pilot cohort of indoximod plus

radiation, followed by maintenance indoximod plus chemotherapy for patients with DIPG, a fatal pediatric brain tumor.

These data further support the company's belief that indoximod has a differentiated IDO pathway inhibitor, not an enzymatic inhibitor, may in multiple therapeutic combinations improve the lives of patients with cancer across a broad range of indications.

In addition to these findings, NewLink Genetics is pleased to provide updates on 2 other significant clinical and operational events.

First, after further clinical work, the company has finalized a novel formulation of indoximod.

In keeping with the company's expectations, the observed exposure levels are modestly higher than those observed with the 3 days formulation.

As a result, the pill burden has been substantially reduced.

Accordingly, our goals for the reformulation project were achieved.

Second, NewLink Genetics has announced 2 new appointments to its Board of Directors.

Dr. Matt Sherman and Mr. Chad Johnson.

Dr. Sherman is currently Executive Vice President and Chief Medical Officer of Acceleron Pharma, a clinical-stage biopharmaceutical company.

Previously, Dr. Sherman served as Senior Vice President and Chief Medical Officer of Synta Pharmaceuticals and held various leadership positions in R&D at Wyeth.

In these roles, he was instrumental in clinical development, initiating numerous trials at Synta and leading the process at Wyeth from submission to FDA approval of the first antibody immune drug conjugate for AML.

Mr. Chad Johnson also recently joined NewLink's board.

Mr. Johnson is currently Vice President, General Counsel for the Stine Seed Company where he is responsible for managing the legal affairs of the company.

Prior to his position with Stine Seed, Mr. Johnson was Senior Corporate Counsel for Renewable Energy Group, a supplier of advanced biofuels where he helped advance the company's M&A activities and managed the company's intellectual property portfolio among other responsibilities.

Our new directors add significant clinical and business expertise, further strengthening the company's board.

As we look towards the rest of 2018, the company plans to present data from trials evaluating indoximod in multiple therapeutic combinations for the treatment of patients across different cancer indications.

In June, at the American Society of Clinical Oncology Annual Meeting, the company will present results from its phase II study of indoximod plus checkpoint blockade for patients with advanced melanoma.

Also at ASCO, the company will present results from its single-arm Phase II study of indoximod plus standard-of-care chemotherapy for patients with metastatic pancreatic cancer.

The company will present additional data from its study of indoximod plus radiation and chemotherapy in children with DIPG on July 1 at the International Symposium for Pediatric Neuro-Oncology.

Later in the year, the company intends to present data from its Phase Ib study of indoximod plus chemotherapy for patients with newly diagnosed AML.

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

Thank you, Chuck.

As Chuck mentioned, at AACR, we reported data further supporting indoximod differentiated mechanism of action as well as encouraging early data from a Phase I pilot study for pediatric patients with DIPG.

Indoximod is an orally administrated IDO pathway inhibitor that does not bind directly to the IDO enzymes but acts to reverse the immunosuppressive effects of low tryptophan and high kynurenine that results from IDO activity.

Slide 6 and 7 illustrate key highlights from our AACR presentations, which are available on our website.

We would like to emphasize 3 important effects related to indoximod's mechanism of action.

Indoximod reverses the effects of low tryptophan by increasing proliferation of effector T cells.

Indoximod directly reprograms T-regulatory cells into T-helper cells acting through the aryl hydrocarbon receptor, or AHR.

Indoximod also downregulates IDO expression in dendritic cells, again acting through AHR.

In clinical studies to date, indoximod has shown synergistic activity with checkpoint blockade, chemotherapy, radiation and cancer vaccine.

Also at AACR, NewLink presented encouraging early data from a Phase Ib pilot cohort of pediatric patients with DIPG, a tumor with rapid progression and essentially a 100% mortality rate.

Early results from the pilot cohort of 6 patients given radiation plus indoximod, followed by maintenance indoximod and chemotherapy have demonstrated initial clinical and radiographic improvement.

Dr. Johnson's full presentation is available on our website.

This is an area of great unmet need and the standard-of-care treatment consisting of radiotherapy has not meaningfully changed in 40 years.

Again, findings from our pilot study are early, and the company is in the process of assessing the opportunity in this indication.

Other clinical progress includes the finalization of the formulation of indoximod to be used in all subsequent trials.

We have completed the initial clinical evaluation, including studies in healthy volunteers.

Our pharmacokinetic results from these studies indicate that, as predicted, the exposure levels were modestly higher than those seen with the freebase formulation.

We are presenting the final results from 2 trials at ASCO in June.

The first presentation focuses on indoximod in combination with checkpoint inhibitors for patients with advanced melanoma.

The second presentation provides the results of evaluation of indoximod in combination with standard-of-care chemotherapy for patients with first-line metastatic pancreatic cancer.

Details as to the timing and location of these presentations can be found in today's press release.

Later this year, we intend to present additional data from our Phase Ib study of indoximod plus standard-of-care chemotherapy for patients with newly diagnosed AML.

As you may recall, data presented at the European Hematology Association meeting last June showed that of the 7 patients who achieved morphologic complete response, all 7 had no evidence of minimal residual disease as determined using a sensitive flow cytometry-based assay.

Typically, only a portion of patients who achieved complete response after standard therapy would be MRD-negative as evaluated by various molecular and flow cytometry-based assays.

In summary, looking forward this year, we will present at ASCO, final Phase II data on indoximod plus checkpoint inhibitors for patients with advanced melanoma and final Phase II data on indoximod plus chemotherapy for patients with pancreatic cancer.

Also, we will be presenting updated data for indoximod plus radiation and chemotherapy for children with DIPG in July at the International Symposium for Pediatric Neuro-Oncology.

And we intend to present additional data from our Phase Ib study of indoximod plus standard-of-care chemotherapy for patients with newly diagnosed AML later this year.

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 an overview of key financials for Q1 and comment on our cash position.

NewLink Genetics reported a net loss of $18.3 million or $0.49 per diluted share for the first quarter of 2018 compared to a net loss of $20.9 million or $0.72 per diluted share for the first quarter of 2017.

The company ended Q1 2018 with 37.2 million shares outstanding.

NewLink Genetics ended the quarter on March 31, 2018, with cash and cash equivalents totaling $143.9 million compared to $158.7 million for the year ending December 31, 2017.

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

When we have completed the review of our clinical programs, we expect to have substantially reduced the rate at which NewLink will be using cash.

We intend to update our financial guidance when we report results for the second quarter at the end of July.

We also have the potential for nondilutive financing.

As a reminder, in 2014, the company entered into a license agreement with Merck to develop, manufacture and commercialize NewLink's ebola vaccine candidate.

Merck is currently working toward a BLA filing for approval.

An FDA approval of that ebola vaccine would trigger the issuance of a priority review voucher owned by Merck and in which NewLink Genetics has a substantial interest.

Thereafter, NewLink would have the right to monetize its interest in the voucher.

Recent open market transactions have valued priority review vouchers at over $100 million.

We do believe the FDA will recognize the clinical value of this vaccine and approve the drug, given the recurrent risk this deadly disease poses to global public health.

As we look ahead, NewLink Genetics plans to participate in the 43rd Deutsche Bank Annual Health Care Conference on May 9 in Boston and the Bank of America Merrill Lynch Global Health Care Conference on May 16 in Las Vegas.

Now I would 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 indoximod possesses a differentiated mechanism of action and data presented thus far support its potential to enhance multiple therapeutic modalities and improve patient outcomes across a broad range of cancer indications, including AML, DIPG, melanoma and others.

We look forward to presenting additional clinical data at ASCO and later this year, and we'll provide updates on our clinical priorities as they evolve.

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

Operator?

(Operator Instructions) Our first question comes from the line of Mara Goldstein with Cantor Fitzgerald.

So since you will be presenting final Phase IIb results in melanoma at ASCO and also the pancreatic cancer data in indoximod plus chemo, one would assume that you would be in a position to make plans as to whether you would continue to develop those in those indications.

And so some of the statements are a little bit incongruous.

So maybe if you can perhaps refine the timing of when you think you might be in a position to discuss further what the actual development plans of indoximod will be, that would be helpful.

Thank you for the question, Mara.

The data that we're going to be presenting the final results of the melanoma trial in combination with checkpoint blockade or the advanced melanoma patients -- advanced pancreatic cancer patients in first line in combination with chemotherapy, both provide datasets that we believe are encouraging to support the idea that indoximod can have potential activity across a number of different tumor indications.

And in those 2 particular indications, you have one in combination with checkpoint blockade and one in combination with chemotherapy.

So that's sort of 2 different combinations in terms of modalities.

Because of the situation that we're in currently, we have to rank order the things that we think are most important and most probable to hit within the budget and time line that we have to be able to show proof of concept for indoximod in a definitive way that will allow us to sort of build and expand the company and have an opportunity to exploit other indications.

So what we're doing is basically soup to nuts, we're going across all of our programs that we have.

And as you know, we have multiple clinical programs.

And we are rank ordering those in terms of priority for what we're doing.

The pancreatic cancer data -- as you know, we previously published some data on pancreatic cancer going down a couple of years ago now.

These final results are going to be consistent with what we published previously and suggest that there is a benefit to adding indoximod in that setting, but we have chosen -- our decision is that doing a trial with combination with another checkpoint blockade is probably not the optimal first place for us to go to look for final proof of concept.

And so we're trying to assess the other programs, including DIPG, including AML and including melanoma and potentially even prostate cancer and talking and deciding which one of those are going to give us the easiest, most cost-effective path to validation.

And we don't believe that we can do them all given the limited resources and the time frame that we would think that we would have to accomplish all this.

So we want to take time and be very purposeful and thoughtful about those decisions, and so the only one that we've decided on definitively is not to proceed to Phase II with pancreatic cancer.

But it doesn't mean that we don't think that data still shows promise.

It just means that as we rank order these and decide where our resources have to go, we have to make decisions as a company.

Okay.

I appreciate the clarity.

And if I could just ask, on priority review voucher, you have a -- the rights are shared with Merck, correct?

Correct.

So if you monetize that with the rights that you have, is it only to Merck?

Or can you do it to somebody else who would want it?

I'm just trying to understand the practicality of how that would work.

Mara, this is Jack.

The contract with Merck, which is subject in part to a confidential treatment in the filings, that contract creates a mechanism by which the -- one party could buy out the other party or the parties could agree to sell the voucher to a third party.

So there is a defined mechanism by which it can be monetized.

And our next question is from Stephen Willey with Stifel.

I guess, just one for me.

Chuck, I guess, as you think about the next study that you have to run in order to kind of establish this proof of concept with indoximod or even the next-gen novel salt formulation, how big of a trial do you think that you need to conduct in order to establish enough of a robust signal in a randomized controlled way in order to have enough confidence to invest in the program to move forward?

And is it still you are thinking here that combinations with checkpoint inhibitors are going to rank order higher than perhaps an indoximod chemo combination?

I think that the -- let me take the second question first.

I think that the combination with other checkpoint blockade inhibitors, where those drugs have a high level of activity on their own, makes it more difficult and probably require larger scale of trials in order to discern those benefits.

In melanoma, the effectiveness of PD-1 inhibitors as single agents is certainly a background that you have to do.

So I think in melanoma, I think, an assessment of biomarker data or subsets or trying to get a clear indication of what the best place to approach melanoma is important.

But if you're doing into the background of another checkpoint inhibitor, I think those trials would have to be larger Phase IIs, I can't really give you an exact number, than less.

In ultra-orphan indication like DIPG, it might take substantially smaller trials.

When you're doing a combination study with chemotherapy, it really depends upon -- like in AML, it really depends upon the magnitude of the differences that you can establish between what you're seeing in Phase II single arm and historic or contemporaneous control patients to help you better inform and design that study.

So we have work to do in terms of that analysis.

But it could range in size from fairly modest size trials to trials that are more robust larger Phase IIs.

Our next question comes from the line of Ying Huang with Bank of America Merrill Lynch.

Quick one on the manufacturing of the new formulation.

It sounds like you're making progress on the new formulation, but have you sorted out the manufacturing for that formulation yet?

And then another quick one on the readthrough from the Incyte trial?

So we're still waiting for the subgroup and biomarker analysis from the Incyte trial.

What could potentially change your way of thinking or your next step from the inside?

So couple of things.

On the biomarker side, I think that differential effects in PD-L1 positive and PD-L1 negative subgroups might be interesting.

Differential effects in IDO positive and negative subgroups or groups that are both negative for both of those markers or one or the other.

I'm very curious to see if we get to see much of that data and have much of that to review.

The first question -- this is Jack.

You asked a question about manufacturing.

And we have sorted all of that out.

We're working through it.

But you saw from our disclosure that we feel pretty good about the salt formulation and how it's being absorbed.

I mean, I would say that we've sort of established a near commercial-grade manufacturing process, and it's working well.

And our next question is from Peter Lawson with SunTrust Robinson Humphrey.

This is Max Lewin, in for Peter.

So I'm wondering if you can clarify for us on the AML readout in the second half.

What it might look like in terms of patient number and the average follow-up that we would see from those cancer patients?

We really haven't projected or are ready to project exactly what data we'll be able to put out at that time.

But it will be more patients treated in the upfront setting.

So these are newly diagnosed AML patients that are getting 7 plus chemotherapy, where indoximod is added into that regimen.

Gene, I don't know if you wanted to comment any further about the nature of the patients that we're treating.

No, these are newly diagnosed patients, and you can see that we expanded the top dose cohort in the dose expansion study that's on clinicaltrials.gov.

So we hope to have data on clearly more patients than we presented previously.

When did enrollment with the new salt formulation begin again?

Can you just remind us?

Well, there's no one answer for that because we have multiple studies, obviously, including healthy volunteer studies but...

I mean, in the AML study?

In the AML study?

The AML study is being switched over to the new formulation.

The data generated today is with the base formulation.

Okay.

And then can you just give us any updates on the NLG802, the prodrug?

How has recent developments in the IDO space affected?

How are you treating that program?

And when we could see that move forward?

So NLG802 is a prodrug of indoximod that in preclinical and animal models, including primate models, demonstrated a three to fivefold increase in the total indoximod.

It basically functions as a pseudodipeptide that has active transport that allows it then to be hydrolyzed in the liver and released.

And you can get to levels and concentrations that are greater than what can be absorbed, either with our original formulation or the novel formulation that we just completed the development work on.

So we consider it a next-generation molecule in the indoximod program.

And there may be benefits so long as it can be done safely to pushing the total dose of indoximod in the bloodstream.

And it may allow experiments in groups of patients you might not have originally thought of with current formulation of indoximod.

That has been going through a classic dose escalation Phase I trial.

We're getting in dosing information and exposure levels in that trial.

And I think it's up to somewhere on the third dose level, something like that, and that project is going very well.

But we haven't projected when we're going to put out the first data on the Phase I part of that trial, and nor have we done projections yet about what Phase Ib trials we might start to conduct with that next-generation product.

And I'm not showing any further questions.

I will now turn the call back over to Charles Link for closing remarks.

Well, we thank you for your interest and look forward to seeing you at investor conferences throughout the year.

Happy spring, everyone.

Ladies and gentlemen, this does conclude the program.

You may now disconnect.

Everyone, have a great day.