Good afternoon, everyone. I'm Sean Laaman, Head of U.S. Mid-Cap Biotech Equity Research here at Morgan Stanley, and welcome to Morgan Stanley Global Healthcare Conference. Before we commence, just to make you aware of some important disclosures, please see those disclosures at the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions on those, please reach out to your Morgan Stanley sales representative. For this session, we have Immunocore, and from Immunocore we have the CEO, Bahija Jallal, and CFO and Head of Corporate Development, Travis Coy. Welcome, both of you, and thanks for your time.
Thank you for having us.
Maybe the first couple of questions just on the macro outlook. How is the rise of China origin innovation changing your competitive positioning, if at all, and does it change your R&D and BD playbook?
First of all, thank you for having us. China has been fastest in areas where the biology is known, for instance, like checkpoint inhibitors, ADCs, and bispecifics against extracellular domain. The pressure is real, and I think if your edge was to get to a known target fast, that edge is very thinning. Where we sit, we are in the TCR, and speed is not the edge that we go after because we are really dealing with something very complex inside the intracellular and that complex of HLA and peptide and how it interacts with the TCR. That means TCR engineering and specificity is very important. The speed is not our problem right now, but really finding the right target is.
I think where it has an impact now is definitely on the business development side of things. I think when you look at the China definitely set the bar for what a phase I asset, for instance, is. With that supply and demand, really when the cost is not an issue, because of that supply and demand, the bar becomes very high and the scrutiny and the judgment of what assets you bring is very important. I would say, I will finish just with this one, the differentiation is no longer how fast you can get there, but how you can have something that's harder to copy, basically.
Sure. Thank you. Are you implementing AI adoption across your business, and has Dory changed a decision, a timeline, a cost, or a POS?
Yeah, I think it's an amazing technology. I would describe it that way. Where it had already had an impact for us is the upstream. Basically, what we used to do is, like I said, the complex of HLA and peptide is really very finicky and how the TCR sits on that is something that we used to do, crystal structure to even know how this is happening. You can imagine that it's tedious, it takes time, and stuff like that. We don't do it anymore. Thanks to AI simulation and things like that, we actually do all that aspect in silico.
I think where I am really excited about, I cannot say that we do it systematically today, is when you look at the whole drug development process, and if you can just focus on compressing time and you improve by 1%, this is the challenge I'm giving my organization. You can improve 1% in every single step. You can imagine how we can reduce that lengthy time. Things like what we do today, for instance, how to answer the RFIs which come from regulatory agencies, how we automate all that, and how we can put AI into work. There is a lot to do, and I'm really excited about that.
Wonderful. Thank you. Last question before we go Immunocore specific.
Sure.
Which policy variable, FDA, Medicare negotiation, MFN, tariffs, or global pricing matters most to your economics? What have you changed, if anything, because of it?
Yeah. I think without hesitation, I would say FDA and predictability. I think that has the huge impact. I think where we sit as a company today, we are with KIMMTRAK, more of a rare disease, so with small populations. So the impact on tariffs and pricing and stuff like that doesn't fall on us the same way as most of the big companies here. Having said that, where it's really we cannot edge is with the FDA, the predictability, because for instance, we have three phase III trials that are ongoing. That's millions of USD. That's also a long time, and what you want to have is that the goal posts don't change by the time you arrive there. So I would say that that's really the big things.
We didn't change anything, and I don't think anyone can tell you that you can change things, especially when it's regards to policies that will change anyway.
Sure.
You have to be prepared. You have to run scenarios for yourself, and that's exactly what we're doing.
Thank you. I've got a question here on the platform, and then I'll go specific.
Sure.
I might put my TEBE-AM questions closer to the front now after this morning. On the oncology side, what still differentiates an ImmTAC bispecific from the growing field of TCR-based and other T-cell engager approaches? Five years post the commercialization of the first one.
Yeah. I like to say five years into it, which I really love. From being a pioneer in this area, I would say it is no longer a differentiator that the TCR-based therapies are a category of compounds or how to treat patients, which is great. What it still is, I think, is basically we have the possibility to access 90% of the proteome, the intracellular targets. We can treat cold tumors and hot tumors at the same time. What is true five years into it is we took a molecule from the beginning to becoming a standard of care in a disease that didn't see innovation. So that's really, for me, the five years. I want to finish just with one point that's really important in how we differentiate ourself is the fact that we treated more than 2,000 patients.
We have data not only in the clinic, but in the real world.
What's really important is how we take this information back to research to continue to innovate in that space. That's differentiating and we can basically say that we have that unique to us today.
Wonderful. Thank you. TEBE-AM is a meaningful near-term catalyst. Top line OS possible by year-end, and enrollment down to the teens. In your view, what would a positive result mean for how the audience should value the earlier line expansion story?
Yeah, I think we're very happy with announcing that we finished a trial that will be, for a company like us, the second phase III trial that we did with this team. So I'm very happy with that. I think the answer to your question is two parts, right? So one is the commercial one, which today we treat 1,000 patients in uveal melanoma. If we are in the lucky situation where this is positive, it expands to an additional 4,000 patients. I think that is really that expansion on the commercial level that we look forward to. On the other story for Immunocore, for some reason, I think people think that uveal melanoma was a lower bar. Actually, it was a really high bar because it was no innovation in 40 years or something like that.
That, for me, that was the highest bar for KIMMTRAK. But here it will expand then into cutaneous melanoma. We already showed ovarian, so I have no doubt that this platform will expand even more.
Sure. Thank you. On the bar for success, the one-year OS benchmark in second line has been around 55%. Your phase I-B showed roughly 75%, and you've designed the study for a result that's both stat-significantly and clinically meaningful. What magnitude of OS benefit do you think the community would view as genuinely practice-changing?
Yeah. I've been saying that today that I am not a few months before the data, put any numbers out there. I'm not going to do that. Having said that, I think what's practice-changing in this population is definitely bringing, it depends on where you stand, right? In this population, on second line plus cutaneous melanoma that have basically nothing, bringing an overall survival will be practice-changing because that's basically a very solid and a golden standard in oncology. If we're lucky enough to have that as positive, I think that's practice-changing and that's what we look forward to.
Sure. I'll ask this question, but I think you'll bat me back. Just the three arms, which do you think has the most importance for any commercial label?
I think we can deal with the commercial any way we have that. We have in the trial, we're really in a good position where we have pembrolizumab plus KIMMTRAK and KIMMTRAK by itself. If KIMMTRAK by itself is the best way, we know how to deal with that, and it will be easy. If it's pembrolizumab plus KIMMTRAK, if that's the best for the patients, we'll adapt.
Sure. Moving on slightly, on ATOM in the adjuvant setting. You've detailed around 1,200 annual patients and ATOM being the only active phase III in adjuvant uveal melanoma. How are you thinking about the broader opportunity here, and can you share any detail on the enrollment progress?
Yeah, definitely. I think the adjuvant trial is really a must for us to do because these patients have nothing. Once they, in uveal melanoma, 50% of the patients, after they remove the primary tumor, they basically are at high risk, what we call a high risk of developing metastasis into the liver. But they don't really know. They have nothing to prevent that, so they go through, basically, I call it wait and worry. That means control every three months, basically, if the metastasis is happening or not. We know from our trial that, especially the KIMMTRAK trial in phase III, that when the tumor is very small, the hazard ratio was 0.56 in our trial. But when we look at end, when we look at the small tumors around less than 3 centimeters, the hazard ratio drops to 0.36.
That's really what encouraged us to go into adjuvant, where you're dealing with most probably seeding cells. The population there, the high-risk population would be around 1,200 patients in addition. We talked about the cutaneous, if it works, at 4,000, and we'll be looking at above 6,000 patients in addition if the two trials are positive. It's recruiting. While it's recruiting, we're doing it with the EORTC. It's recruiting in Europe, and we opened sites also in the U.S.
Sure. Thank you. Just going back to KIMMTRAK in U.M. So I think you are at 70% or in excess of in penetration, and how do you think about the underlying growth rate from here?
Go ahead.
Yeah. No, happy to. Thanks, Sean. As you alluded to, something we have been really proud of now that we are in the fifth year in the launch is the penetration we have been able to achieve across all major-
...markets is 70% or higher. That comes from being the established standard of care in those settings. As to be expected with any mature product that has been on the market now, you do begin to see growth moderate. We are starting to see some of that, and we will expect that moving forward. That being said, we continue to expect growth. A few areas that we are focused on, one in the U.S. is continue to increase that penetration into the community setting.
Outside the U.S., it's about two aspects. It's one, continuing to increase market access with additional launches. But then also with the more relatively new markets that we've launched, we continue to see that duration of therapy increase beyond what we saw in the clinical setting, and that was a dynamic we saw in the U.S., and it's nice that we're seeing that OUS as well with those newer markets.
Sure. What's driving that duration?
It's a really remarkable drug because usually in the clinical trials, you get much higher duration of treatment than in the real world, right? The trials are more controlled and so on. Here we see absolutely the opposite, right? The trial, we are at 10 to 11 months, and here we are at 14 plus basically. It came to two things. One is the fact that usually, in a trial, you stop at the radiographic progression, if you will. The clinicians don't stop if the patient is doing very well in the real world, and that's exactly what's happening. This is a new mechanism that's not with the. The investigators are the ones who told us that patients, even with pseudoprogression, I would call them, do very well with this drug and continue to do well. So they continue beyond progression.
The second thing that's really important is we brought the five-year survival for this drug that also gives more evidence for the investigators.
Sure. Thank you. Last question on KIMMTRAK, but as it relates to the competitive dynamics, we have some data coming up on ESMO from IDEAYA, on Daro. How are you thinking about KIMMTRAK's first-line position in HLA positive uveal melanoma being insulated versus potential of share threat over time?
Yeah. I think to talk about the recent data that's coming or the data that were published actually or talked about in a conference, it's a good news for HLA-A2 negative patients. They're not eligible for KIMMTRAK, and that's a good news for them. Any other data, I can't really speculate until I see the data. We have not seen the data yet. It's coming in October, so we'll reserve that. What I can say, anything, here is what any compound that needs to displace or wants to displace the standards of care, which is KIMMTRAK in first line needs to do. One is basically you have to displace the standards of care. It is standards of care in every country where we went. In most of the countries where we went, it's standards of care. It's very well penetrated.
But also, the most important thing for me is the five-year OS. This is a disease that's counted in months. This is not something that takes years. It takes months once you're diagnosed with metastatic. What we've shown in five years, if you allow me, two things that are really important. One is if you were treated with KIMMTRAK, you double the chance to be alive at five years. But most importantly, 44% of the patients who are alive at five years had only KIMMTRAK. What that gives us is really arguing the actual sequencing that to be alive at five years, you have to have had first KIMMTRAK. You can't leave it to later. The second thing is that you have to continue taking KIMMTRAK. Those are backed with data, not with just what we say.
Thank you. Thank you. That's a great discussion on KIMMTRAK. Moving on to brenetafusp and the PRAME franchise. Just sort of measure your confidence on PRISM-MEL-301 and what's your confidence around it clearing the bar?
Yeah. I think there are two things that are important for PRISM-MEL-301. This is basically looking at first-line cutaneous melanoma in combination with the nivolumab compared to nivolumab by itself or nivolumab and relatlimab. From the mechanism point of view, cutaneous melanoma has a high expression of GP100, PRAME. I went into GP100, sorry, has a high expression of PRAME. The other things is that we have shown that PRAME is active as monotherapy, and that was very important for us. If we are going to go into any combination, we have to show that we have monotherapy activity, so we show that we have monotherapy activity in cutaneous melanoma. We also show that basically we have even higher than when we compare to nivolumab and relatlimab.
We have shown with our platform that if you move earlier in treatment, basically if you move into first line, you have a much better T cell fitness. The data that I talked about was a late line, so coming into first line, we believe that is going to work even better. Then combining with nivolumab, these are two mechanisms. First, two active agents that should be at least an additive aspect to the combination, and I believe will have also a synergistic effect because these are two complementary mechanism or two different mechanism that can add to each other. The trial is going well, knock on wood.
We hope to finish by end of 2027 the recruitment in that trial.
Wonderful. Thank you. On IMC-P115C, which is the half-life extended PRAME molecule, how are you thinking about less frequent dosing for adjuvant or earlier line patients?
Yeah. We went into the high half-life extension to test the convenience. It's always important, the convenience for the patients, even if we did it differently in PRISM-MEL-301. The nice thing is that the half-life extended molecule is exactly the same as the brenetafusp that's in the clinic, and what we're adding to it is just the Fc to increase the half-life extended. We have the possibility to really compare and contrast and use the data from brenetafusp for the half-life extended.
Thank you. I guess, what are you looking for in the early dose escalation data to decide whether that becomes a go forward PRAME asset, brenetafusp, in some settings?
Yeah. I think two things that I'll be looking forward to. One is, what we predicted for the PK, what we modeled for the PK preclinically, does it really translate into the clinic? That's an easy thing to do in the first dose escalation of the product. The second one is because we are testing it in cutaneous and in ovarian, where we know brenetafusp is active, we can directly compare. I think that's exactly what we're doing right now.
Sure. Thank you. Moving on to the autoimmune and infectious disease. The ImmTAAI.
Yeah.
Yep. Can you walk through why the same platform that activates T cells against cancer can be flipped to suppress them, and why that should be more precise than systemic immunosuppression?
Yeah. I am really excited about that. Maybe it shows. The fact is how the platform, and that is why I came to this organization, to Immunocore, because really the excitement about the platform. If you think the platform has two components, right? The first component is that HLA-TCR complex, and peptide that binds specifically into an organ. The second part is what brings basically what we need to do. Do we bring the T cells? Do we activate the T cells to kill the tumor? Or we use that to actually inhibit the T cells and switch off. I will just talk about the mechanism in HIV, for instance, is the same as in oncology. You want to kill the cells there. But in autoimmune, it is the opposite, which is exciting. Then you would ask me, what is the difference? We have systemic.
As you asked, why we have the systemic. The systemic works, without a doubt. When we think about steroids, they work very nicely. The problem is they work everywhere, even in organs where they are healthy organs, and that is why you see the side effects are happening in the muscle, in the joint, in people having diabetes and so on. The second innovation that was really good in systemic was the biologics. Right? But there, you have a selectivity of the target, but that selectivity, once you inhibit the target, like the TNFs, it is also in healthy tissues. TNFs, they are known, you get also infection. What we are trying to do is a new paradigm. Can we go specifically to the organ that is affected and only treat that organ that is affected?
That is basically in type 1 diabetes is the beta cells, and that is really why I am so excited about that.
Awesome. Thank you. On the diabetes program, strategically, what is the readout you are watching? How quickly could C-peptide give you a real signal of whether you are preserving beta cell function?
Yeah. That is a really great question, because exactly why we went to type 1 diabetes, because it allows us first to test the whole hypothesis of the T cells. The second is because we can go into patients directly, not healthy volunteers. Third is we can get in a single ascending dose and multiple ascending dose, that means smaller trials. We can find out if this molecule works or not. In the single ascending dose, we will answer one question. Does the product, basically the compound, bind to the beta cells and only to the beta cells? We can test that. The second, in the multiple ascending dose, we can actually address the efficacy question right there, and that is because we will be actually following the C-peptide.
We know that the C-peptide has been now accepted by the FDA as a good surrogate for activity in an accelerated approval like for anti-CD3. So we can, with not a huge amount of money or time and everything, find out if this works or not.
Wonderful. Thank you. Still on autoimmune, thinking about your HIV program, thinking to a readout next year, in 2027, obviously. What would it need to show you that a functional cure is within reach?
Yeah. It's really in steps. I think the bar there is much higher. We know that the bar for cure in HIV is much higher. We are dissecting, looking at the mechanism, looking at how things are working. We have, in multiple ascending dose, we presented some data showing that actually something is happening, that we can at least delay some of the rebound of the virus. We showed two weeks ago, or something like that, the translational work and understanding the biology so that we did not believe that we reached the dose that we can, so we are continuing to dose escalate. We did actually escalate to 1,200. Now it's looking at can we continue to see dose response and then understand more. There, it's really trying to understand that mechanism and how we can tackle it with this molecule.
Wonderful. Thank you. For Travis Coy as Head of Corporate Development, how important is BD for you today? Are you primarily focused on internal R&D?
Yeah. Thanks, Sean Laaman. Bahija Jallal referenced the need to continue innovation. For us, business development is part of accomplishing that need to continue innovation. As we look for opportunities, that's just as important as it is alongside internal R&D. So we look for opportunities to enhance the platform, look for opportunities that build upon our clinical capabilities and expertise. We look for opportunities to expand market access.
All of those things are sort of right there alongside internal R&D, while making sure we are cognizant of the fact that we do not want to jeopardize the execution of internal R&D. We do not want to distract from that, while complementing it with those capabilities and expertise that we have built. It's part of our DNA.
Sure. I guess, can you walk us through your capital allocation framework? You're sitting on around about $880 million, I think, with three phase III trials running. When it comes to execution, how are you thinking about capital allocation, and can you remind us of how you're thinking about the cash runway?
Yeah. Happy to do so. Three key buckets for us with respect to capital allocation. One is making sure we maximize KIMMTRAK. That includes both the current uveal indication that we have, as well as the potential for upcoming cutaneous melanoma indication.
The second is making sure we continue to invest and execute on the three phase III studies. The third ties back to actually what Bahija and I have both highlighted, is making sure we're not complacent around the platform and continuing to bring the platform forward. That includes early stage R&D as well. To your point, we are well capitalized with $880 million on our balance sheet as of the end of Q2. That really allows us with KIMMTRAK revenue being cognizant about capital allocation and making sure we're disciplined with our SG&A, making sure we're data-driven by the R&D investments that we make. That allows us to fund the portfolio really for the foreseeable future.
Cool. Thank you. Your platform now spans oncology, HIV, and autoimmune. How are you thinking about the balance between spend on the oncology side versus the infectious disease or autoimmune programs to focus capital? How do you think about partnering as a corporate development lever versus doing it all in-house?
Yeah. As you break down, this is another way to break down the capital allocation question that you just asked. If you look at where we are spending today, our footprint is most established in oncology. It is where we have a development and commercial footprint. As we think about the HIV and infectious disease programs, and Bahija was alluding to this a little bit, we are likely to pursue a partner to maximize the value of those programs. But we want to do so at the right time and in the right way. I think because of the relative capital efficiency that is needed in order to be able to take those programs to the next inflection point, that is when we will begin to look for opportunities to partner those programs.
Wonderful. I have a final question, and that is there anything that I did not ask that I should have, or is there a message you would like to leave investors with, or both?
No, I think we did a tour of what we have. I think, again, very, very much excited about KIMMTRAK and what is doing with the patients, and I think these stories are really what brings us to work every day. But I think KIMMTRAK is not stopping there. I think we have a lot of possibilities with KIMMTRAK. But the platform as a whole is not only in oncology, it is just the start, frankly. But also outside of oncology, we are extremely excited about that. But right now it is about execution. We finished a trial today. We still have two phase III's to go. So I think that is about that, and what you are going to hear from us always is execution and focus until we bring the second phase of growth of the company.
Well, wonderful. It might be time to call close to things, give everyone a couple of minutes back. But thank you. Thank you so much.
Thank you.
Thank you.