Earnings Call: Q2 2019

Aug 1, 2019

Good afternoon, and welcome to the iovance Biotherapeutics Second Quarter 2019 Financial Results Conference Call. All participants are in a listen only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that the call is being recorded at the company's request. Now, I would like to turn the call over to Tim Morris, Chief Financial Officer at Iovance. Sir, please go ahead. Thank you, operator. Good afternoon, everyone, and thank you for joining us. With me on the call is Maria Fardis, our President and Chief Executive Officer and Doctor. Frederick Finkenstein, our Chief Medical Officer. This afternoon, we issued a press release that you could find on our website at iovance.com, which includes financial results for the Q2 2019 as well as the company update. Before we start, I would like to remind everyone that statements made during this conference call will include forward looking statements regarding Iovance's goals, business focus, business plans, clinical trial plans and results, potential future applications of our technology, manufacturing capabilities, regulatory feedback and guidance, licensing and collaboration agreements, future updates and cash guidance. Forward looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected during today's call. We undertake no obligation to publicly update any forward looking statements. With that, I'll pass the call over to Maria. Thank you, Tim, and good afternoon, everyone. Iovance continues to make excellent progress in development of Gil therapy. We are excited to potentially become the 1st company bringing cell therapy products to market for patients with solid tumors. I'd like to briefly highlight a few recent achievements. First, in June, we reported encouraging results from our ongoing studies of Till therapy at the American Society of Clinical Oncology or ASCO Annual Meeting. The results that were reported in both metastatic melanoma and advanced cervical cancer showed objective response rate that represent improvements relative to available treatment options in late stage patient population. The results also show the potential long term benefit of Till therapy as we have not yet observed a limit on the median duration of response in either the melanoma or cervical cancer studies. 2nd, we are working to expand our manufacturing capabilities to prepare to make Till therapy broadly accessible to patients. In May, we entered into a long term lease agreement to build a commercial scale production facility in Philadelphia and in June, we began construction. 3rd, our cervical cancer program is moving forward at an accelerated pace. We are extremely pleased to have received a breakthrough therapy designation from FDA for LN-one hundred and forty five and we now plan to submit a Biologics License Application or BLA for Till therapy LN-one hundred and forty five in late 2020. Now I will discuss these development programs in detail and provide an update on our corporate activities as we prepare to potentially commercialize while we further continue to evaluate the broad potential of Till therapy in clinic. Our pivotal study of Till therapy with lipolusol in the treatment of metastatic melanoma C14401 is progressing well. The results we presented at ASCO showed that lifileucel demonstrated an objective response rate or ORR of 38% in 66 patients. Response rates for current treatments in this patient population are typically between 4% 10%, which means that lifileasil has a strong potential to become an important new treatment option for these patients. As the data continues to mature, we note that the responses appear durable following a one time treatment. At 8.8 months median follow-up, a median duration of response or DOR has not been reached. We continue to expect a BLA submission for lifileucel by end of 2020. We are very pleased with the progress of our study of Till therapy LN-one hundred and forty five in patients with advanced cervical cancer, C14504. At ASCO, we reported early results in 27 patients demonstrating an ORR of 44%. These results are highly encouraging. Available care for this patient population includes chemotherapy. Response rates seen with chemotherapy in second line metastatic cervical cancer is approximately 5% to 13 percent. Responses to LN-one hundred and forty five maybe durable as the median DOR had not been reached at 7.4 months of median follow-up. In May, Iovance received breakthrough therapy designation for LN-one hundred and forty five from the FDA. In June of 2019, we met with the FDA. The agency noted that the ongoing C14504 study may be sufficient to support registration of LN-one hundred and forty five. These developments allow us to plan for regulatory submission using our ongoing study, which is now pivotal registration enabling program. We have recently amended the protocol to increase the number of patients to 75. We plan to include in the BLA patients who have progressed following initial systemic therapy for recurrent or metastatic disease. In addition to the impressive results we have observed with Till therapy in patients with late stage disease, we also believe that there may be a clear potential for Till therapy in the treatment of patients at earlier stages of treatment. Our evaluation of patients at early stages of disease involves the population of patients who have not experienced checkpoint inhibitor therapy. In our study, IOV COM-two zero two, we are enrolling patients that are naive to treatment with PD-one inhibitors. This is a basket study evaluating Till therapy, LN-one hundred and forty five in combination with pembrolizumab in several indications, including PD-one naive patients with melanoma or head and neck cancers. In April, we announced that a new arm of the basket study will be added to allow for treatment of PD-onePD L1 naive patients with non small cell lung cancer indication with a combination of LN-one hundred and forty five and pembrolizumab. This cohort is now active. Beyond solid tumors, we also see potential for our Till technology platform in the treatment of hematologic cancers. As part of a collaboration with Ohio State University Comprehensive Cancer Center, we are working to develop a cell therapy product for hematologic indications called peripheral blood lymphocytes or PBL therapy. At the Congress of the European Hematology Association or EHA in June, Iovance researchers described the manufacturing and preclinical results for a PBL therapy also called IOV-two thousand and one as a treatment approach in chronic lymphocytic leukemia. PBL are different than CAR T and that they are targeting multiple antigens associated with the patient's disease. CAR T therapy targets 1 tumor cell surface antigen, the CD19. We have now demonstrated the ability to grow PBL cells for therapeutic use from 50 milliliters of blood in only 9 days. Our plan is to begin clinical development for CLL in the population of patients with disease that has progressed following Ibrutinib treatment. We expect to file an investigational new drug application or an IND before end of the year 2019. We also continue to pursue opportunities to refine Till therapy methods with the goal of developing further generations of commercial Till therapy products that may have improved efficacy. One of these approaches to refinement is to investigate methods of selection of Till therapy. Iovance believes that this approach to Till therapy may offer improved potency paired with a good safety profile. 2 projects are therefore being pursued in this direction, an internal program as well as a collaboration with SHOOM. In July 2019, we entered into a collaboration with the University of Montreal Health Centre or SHOOM, which has agreed to conduct clinical studies with PD-one positive selected tumor infiltrating lymphocytes or PD-one positive Till. In addition, this agreement with Xun represents our expansion into Canada. We will look forward to initiation of this collaboration. We also continue to build our corporate infrastructure as we prepare for regulatory submissions and potential commercialization. We have expanded our management team by adding Doctor. Frederic Finkelstein as Chief Medical Officer and expanded our Board of Directors. We have increased our manufacturing capacity with our current CMOs and have now dosed over 200 patients at Iovance. We are pleased to have entered into a long term lease agreement for our own manufacturing facility to support broad access to pill therapy. This facility located in Philadelphia will be used for commercial and clinical production of autologous pill products. We have also expanded our intellectual property portfolio with 7 recently granted or allowed U. S. Patents for composition and methods of treatment related to the use of Till technology. In the next few months, we look forward to presenting at several conferences, including the BERT Global Conference in New York, the Wells Fargo Securities Healthcare Conference in Boston, the Alliance For Regenerative Medicine, Cell and Gene Meeting in Mesa in California and the Cantor Global Healthcare Conference in New York. Finally, our financial position is strong. We believe that we have sufficient operating capital to complete our pivotal studies and file for regulatory approval for products in both advanced melanoma and advanced cervical cancer in late 2020. Now I would like to ask Tim to share an overview of our financial results. Tim? Thank you, Maria. Our quarterly news release contains details of our financial results. Rather than read through all these details, my comments will address a few highlights. Net loss for the Q2 0 point 3 $8 per share compared to a net loss of $30,700,000 dollars or $0.34 per share for the Q2 last year. The increase in net loss for the quarter as compared to last year was due to higher spending as we continue enrollment in the pivotal studies, prepare for the BLA filings and eventually commercialization. Specific higher expenses are due to increased headcount in both R and D and G and A. At quarter end, we had approximately 120 employees as compared to approximately 75 at June 30, 2018 increased spending on market research for both melanoma and cervical additions to the IP estate and patent portfolio in the U. S. And worldwide and an increase in manufacturing capacity in the U. S. And Europe. Research and development expenses were $39,300,000 for Q2 2019, an increase of $14,700,000 as compared to $24,600,000 for the Q2 2018. General and administrative expenses were $10,900,000 for the 2nd quarter, an increase of $4,100,000 compared to the $6,800,000 we had for the Q2 of 2018. Enrollment in the pivotal melanoma and cervical studies has increased as compared to last year and over the Q1 this year. We have increased manufacturing capacity to support this enrollment. We have also had a headcount and begun pre commercial activities in anticipation of BLA filings for these programs in late 2020. We anticipate that the level of spending for the Q2 2019 will continue at this level on a quarterly basis until enrollment in the pivotal studies is completed. Net loss for the 6 months ended June 30, 2019 was $84,500,000 or $0.68 per share compared to a net loss of $0.57 or $0.65 per share for the period ended June 30, 2018. The increase in net loss for the first half of twenty nineteen as compared to the first half of twenty eighteen is due to the reasons discussed above or employees, market research, new IP and additional manufacturing capacity. Research and development expenses were 70,200,000 for the first half of twenty nineteen, an increase of $25,700,000 compared to $44,500,000 for the same period ended in 2018. General and administrative expenses were $19,900,000 for the first half of twenty nineteen, an increase of $6,100,000 compared to $13,800,000 for the same period in 2018. At June 30, 2019, the company held $410,000,000 in cash, cash equivalents, short term investments and restricted cash as compared to $440,000,000 that we had at March 31, 2019. During the Q2, the company used $34,000,000 for operating activities. The company anticipates that the year end balance of cash, cash equivalents, short term investments and restricted cash may be between 310 $1,000,000 $320,000,000 I will now turn the call back over to the operator for your questions. Thank For your first question, we have Mark Breidenbach from Oppenheimer. Your line is now open. Congrats on this very rapid progress and thanks for taking the questions. Just a first one about timing, relative timing of melanoma versus cervical. These sound like they're both going to be ready for BLA filings toward the end of 2020. If you had to guess which one would come first, could you do that at this point or are they is it too early to tell? Hi, Mark. Thank you for the question. I don't know if I can necessarily say quite yet. I do want to highlight that we're also continuing to work with FDA to assure our cervical sample size is aligned with our expectations. We think we are fairly close with the numbers, but we want to make sure that we continue that dialogue. I can't tell, which is why we sort of said late 2020. And frankly, if they're within a month or 2 of each other, there's a very good chance that we might want to combine them or that agency asks us to combine them. Somewhere around that late 2020, I think both of them could possibly be filed. Okay, excellent. And also another timing question with respect to the new manufacturing facility. Obviously, construction was started relatively recently. Can you just remind us when you expect it to be fully operational? And have you given us any indication on capacity for this facility in terms of number of batches or doses per year it can accommodate? Yes. We had expected it to be operational in about 2 years. And our expectation is thousands of patients can be supported through this facility. It is a butterfly design in a sense that half of the facility is expected to be operational, supporting our initial, a year or 2 of commercialization and then subsequent to that the rest of the facility can also get opened up. So it's capable of increasing capacity as necessary. Okay. And so in the meantime, if you have approved products before that's operational, but they'd be supported by your agreements with 3rd party manufacturers? That's exactly right. So initial manufacturing plan could be done through our existing CMOs while the facility gets ready. Okay. And just one last one for me, if that's okay. Any plans to conduct internally blinded independent reviews of responses either from Cohort 2 in the melanoma trial or the initial cervical data that you presented at ASCO? I can answer the second part maybe more easily. Anything going forward now that the agency has agreed this study is pivotal likely will not be done in a public setting. So the cervical data will be read by BIRC, but probably will initially be disclosed to FDA before further publication. Cohort 2 BIRC is something that we are working on just to make sure that we have a very clear process with our BIRC. We have not made a commitment of timing of disclosing that data given that Cohort 2 is just supportive from a FDA perspective. But yes, we are working on that front as well. Thank you, Mark. Your next question is from Biren Amin from Jefferies. Your line is open. Yes. Hi, guys. Thanks for taking my questions. Maria, maybe if I could just start on the cervical cancer cohort that you presented at ASCO. How many of the 27 patients that were presented at the meeting will be counted towards the pivotal trial? Because I think previously you said that you may have had a very few patients who may not have had advanced disease? Almost all would qualify. We have not broken down. As I noted, when a study is pivotal, we intend to release very little data. Really, we should provide that data to FDA first. So we have not broken it down by specific line of therapy, but almost all of them would qualify with this new patient population definition. Got it. And then just on timelines, I believe you previously commented that the cervical sample size should be aligned with FDA. I just want to ask around that because I think in your press release you tightened enrollment. Previously, it was 75 to 100 patients, and now it's just 75 patients. So I guess what drove this modification? We continue to dialogue with FDA and we want to be sure that we have complete alignment. In the meantime, the study itself had 59 in there. So we wanted to be sure that we have enough runway while we continue the discussion with FDA. So that's why we amended it to 75 while we continue the dialog. Okay. And then maybe one more. I noticed that you plan to complete enrollment for the melanoma cohort in Q1 2020. And given you may have overlapping timelines across both indications, should we assume that the cervical cohort would complete enrollment in Q1 2020? It's a reasonable expectation, Biren. I think it has to do with our completion of the dialogue with the agency whether they agree with the 75 sample size. But that's the high level assumption that we are pursuing right now. But again, it depends on our completion of the discussion with FDA. Got it. Thank you. Thank you. Your next question is from Majid Kumar from R. W. Baird. Your line is open. Yes, thanks for taking my question. So one thing we've been kind of thinking about a lot is how physicians consider the use of IL-two as part of the Till administration procedure. And when you've talked to physicians in your market research, what has been the kind of feedback on the use of IL-two? And to what degree do you think kind of improving the perspective of treating oncologists will occur through education versus technology, say newer methods that don't rely upon kind of the use of high dose IL-two even if it's at a different dosing duration than the kind of standard approved usage? Thank you, Madhu. Maybe a couple of points before sort of talking about the hospital experience. The median number of doses for both melanoma and cervical, 1 was 5.5 and 1 was 6. So administration of IL-two didn't seem to be an issue both from a patient tolerance perspective as well as the hospital infrastructure. It's important that we note that we are in hospital setting for just about all of our clinical trials sites are hospitals. Most of these sites have already been using IL-two and in fact many more sites have been using IL-two in the past 5 years. The footprint of IL-two has been at 100 and 150 or so different sites as late as about 5 years ago. So there's a lot of trained staff at most of the hospitals that have administered IL-two and they're comfortable with it. So we have not really run into an issue where we wanted to activate a site and they had no staff that had been trained on IL-two. We also definitely help with any refreshments in terms of training to administration of IL-two as well. So that hasn't really come up as a showstopper issue for us. It seems like most of the hospitals that you're in have the trained staff to support that administration. Okay, great. And then our other question is, are there any expectations for data in the next 6 to 12 months that would be reasonable? I mean, obviously, you can't speak hard and fast, but would there be any more data from any of the kind of ongoing clinical programs over the next year or so? Yes, we do have other studies besides the 2 pivotal programs. We certainly could have data on Cohort 2 if there's any new information to be shared. There are other indications that are all ongoing. So we have not excluded a possibility of trying to put some data out, particularly if the window is more like the 12 month timeframe. But we haven't committed to anything. That's I guess that's how to look at it. Okay. To follow-up on that last point, when you said you would have more presentation on Cohort 2 melanoma data if there's new information, what would you define as new information from that cohort? I can define a couple of at least 2 different directions if we have, for example, a DOR that is reached, if we have specific biomarkers that may be appearing upon further investigation or thinking about, for example, even in the case of cervical, the clonality of distribution of clonality of cervical, all of those are interesting exciting things that we still continue looking at. There is a combination of how much data may be coming as well as what venues are available that may be interested in hearing about them. I know the investor community is very interested in the details of the data. Academic institutions are more interested in putting brand new sort of directions for research out in various conferences. The conferences are receptive to something that may be more different than just ORR, DOR that we have published before. So there needs to be a venue where we feel is appropriate to disclose the data. But there is definitely ongoing investigation in Cohort 2 as well as our other indications that we think are exciting and we learn something new about them every day. We could put that information out. Okay. So to be a little cheeky, would the absence of disclosures from cohort 2 then support the opposite corollary that the DOR has not been reached, the meeting DOR has not been reached? It could also be that we might have considered a conference and the conference did not think just adding a DOR was adequate enough to get into that conference. So I wouldn't read too much into it. Okay, great. Thanks very much. Sure. Your next question is from Joe Catanzaro of Piper Jaffray. Your line is open. Hey, thanks for taking the questions. Maybe I'll follow-up and just ask the question a little differently and thinking more about near term data disclosure. So I believe today is actually the deadline for SITC regular abstract submission. Have you guys submitted anything to SITC? I usually don't comment on what we have submitted or we intended to submit until the titles or the abstract itself is released. Sorry, Joe, I prefer that we know what we can talk to. If that's okay, we'll wait until the titles come out. Fair enough. Just thought I'd ask. My next question, so I believe you had mentioned maybe later last year, the idea of taking an interim look at Cohort 4 of melanoma and whether the FDA would agree to that. Was that ever built into Cohort 4? And then along those lines, is there a similar opportunity in cervical to take an interim look if you believe your 95% confidence intervals will exceed that lower bound hurdle? Yes, we just think about it for a moment in time. I think that as cervical is becoming potentially a component of this package, we prefer to try and put all of them together not to have multiple cuts on the data. So today's preference for me would be to read both studies, both cohorts of the studies at the same time and try and see if we can provide FDA with the totality of the data. That would be a more preferred path for us. Okay, got it. And then maybe just one more quick one here. I'm wondering if you've noticed any pickup in enrollment into your cervical trials since the ASCO data disclosure? The operations of a study typically we see waves of patients coming and going. So we have definitely seen increased enthusiasm. I think one of the points that Tim made in our increased spend is reflective of our increase in R and D. There has generally been a lot more enthusiasm recently into our Till program. That I can say. Okay, great. And maybe I'll just squeeze in 1 more here along the same lines. Just in regards to the head and neck trial, I know you guys had sort of struggled with enrollment there. And I know it's still the early days of the recent KEYTRUDA label expansion in the frontline setting. So the window is short, but I'm just wondering if you have any comments around what you're seeing in head and neck right now? Yes, very good observation. I agree that I believe the landscape of head and neck is changing and hopefully for the better for the patients. Ideally, the patients would have seen chemo immunotherapy in the frontline and hopefully then the patients would come into study as opposed to 3rd or 4th line where the patients are quite late line at that point. So we are beginning to see that trend, although it is as you noted, it is early in that landscape shift in a meaningful way. But yes, we are beginning to see that Your next question is from Rua Lipjit from Chardan. Your line is open. Congrats again on the progress and thanks for taking my question. So kind of touching on the same theme with the potential BLA filing timeframes for melanoma and cervical in place. Could you speak a bit to the kinds of preparation that you're making for the filing and to what extent there's overlap for the 2 programs? And then I have a follow-up after. Thank you, Gula, for your question. It's a little hard to hear you, but I think I understood that you're asking what kind of preparations the organization is going through in anticipation for filing. Thank you. There's quite a bit that an organization that may be thinking about if finding next year has to go through, both from an infrastructure perspective, short term and long term, both procedurally as well as from a growth perspective. So you can imagine that from a procedural perspective various documents need to be finalized, need to be put in place. A lot of different hiring needs to be had, including the team members in commercial medical affairs being expanded, market access, market research is undertaken. So significant amounts of activities are undertaken in anticipation of both filing as well as potential commercialization. And we are certainly on track for initiation of many of those work streams. Great. And then now that we have a sense of the regulatory plans in the U. S, you've mentioned that kind of Europe is on the horizon. Is there any further visibility in terms of next steps towards putting together a path in Europe? And what are some of the considerations that might be different there versus U. S. For the 2 programs and whether you plan to kind of advance them together or separately, etcetera? Definitely. So we have been thinking about engaging the EMA in a more centralized procedure. But we want to make sure that we wrap up all of our FDA discussion around cervical sample size agreement around the protocol before we engage EMA. It's always easier when we have a thesis set of agreements in 1 health authority before we go to the 2nd health authority. It's very much on our horizon and we are very excited about the fact that we have a fairly broad footprint in our clinical program in Europe. But for a centralized procedure, we think that's likely more toward later part of this year and earlier part of 2020. Great. Thanks again on the progress. Thank you for your questions. Your next question is from Boris Peaker from Cowen. Your line is open. Great. So first question I want to have is on the cervical indication. I'm just curious what specific patient or oral criteria that the FDA want to see in the pivotal study that ended up excluding some of the patients that we saw at ASCO? Hi, Boris. Sure. Our initial enrollment criteria was patients who have received one prior systemic therapy. And while bulk of these patients are in the metastatic setting, not everybody necessarily has seen a systemic therapy in a metastatic setting. So the definition was a little tighter after the discussion with FDA. I assure that they have seen that one prior systemic therapy in the metastatic setting. That was the clarity. And what's a non systemic therapy? Does it just mean just localized surgery without adjuvant treatment? Is that what that is? A localized therapy can be applied in a curative setting, for example. It could have been a surgery combined with radiotherapy, for example, or it could be surgery along with a systemic therapy. So the definition here is stay in the metastatic setting and not in the curative setting. Got you. My next question is on the manufacturing facility. Once it becomes operational and you've outlined time on about 2 years, would Lonza still be involved in any way or is that when your Lonza relationship ends and you kind of break off on your own for manufacturing? Thank you for that. So Lonza is our manufacturer in EU. So if I may rephrase your question, I presume you're asking about Bouygues? Yes. So WuXi, I forgot. That's for the U. S, that's right. Sure. We intend to continue the relationship with WuXi. We find it particularly They will cover our initial commercial landscape and I would like them to stay engaged with Iovance, for the commercialization Great. Thank you for taking my questions. Thank you, Boris. Thank you, Boris. Thank you, Great. Thank you for taking my questions. Thank you, Boris. As we have no more questions, we would now like to return to Maria Firders for closing remarks. Thank you, operator. We are glad to have this opportunity to reflect on our progress. We would like to extend our sincere appreciation for the many individuals who support our work, including our shareholders, dedicated and talented employees, patients, clinical investigators in our ongoing studies and researchers at our partner institutions already working with us through the final application of Till therapy. And thank you for all of you joining us on this call today. Operator? Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may now disconnect.