Good afternoon, 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. 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 Dr. Friedrich Finckenstein, our Chief Medical Officer. This afternoon, we issued a press release that you can find on our website at iovance.com, which includes financial results for the second quarter of 2019, as well as a 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. Good afternoon, everyone. Iovance continues to make excellent progress in development of TIL therapy. We are excited to potentially become the first 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 TIL 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 rates that represent improvements relative to available treatment options in late-stage patient populations. The results also show the potential long-term benefit of TIL therapy, as we have not yet observed a limit on the median duration of response in either the melanoma or cervical cancer studies.
We are working to expand our manufacturing capabilities to prepare to make TIL therapy broadly accessible to patients. In May, we entered into a long-term lease agreement to build a commercial-scale production facility in Philadelphia. In June, we began construction. 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-145. We now plan to submit a biologics license application, or BLA, for TIL therapy LN-145 in late 2020. 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 TIL therapy in clinic. Our pivotal study of TIL therapy with lifileucel in the treatment of metastatic melanoma, C-144-01, 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% and 10%, which means that lifileucel 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 TIL therapy LN-145 in patients with advanced cervical cancer, C-145-04. 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%-13%. Responses to LN-145 may be 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-145 from the FDA. In June of 2019, we met with the FDA. The agency noted that the ongoing C-145-04 study may be sufficient to support registration of LN-145. 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 TIL therapy in patients with late-stage disease, we also believe that there may be a clear potential for TIL therapy in the treatment of patients at earlier stages of treatment. Our evaluation of patients at early stages of disease currently involves a population of patients who have not experienced checkpoint inhibitor therapy. In our study, IOV-COM-202, we are enrolling patients that are naive to treatment with PD-1 inhibitors. This is a basket study evaluating TIL therapy LN-145 in combination with pembrolizumab in several indications, including PD-1 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-1/PD-L1 naive patients with non-small cell lung cancer indication with a combination of LN-145 and pembrolizumab. This cohort is now active.
Beyond solid tumors, we also see potential for our TIL technology platform in the treatment of hematologic cancers. As part of a collaboration with The 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-2001, as a treatment approach in chronic lymphocytic leukemia. PBL are different than CAR T in that they are targeting multiple antigens associated with the patient's disease. CAR T therapy targets one 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 nine 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 TIL therapy methods with the goal of developing further generations of commercial TIL therapy products that may have improved efficacy. One of these approaches to refinement is to investigate methods of selection of TIL therapy. Iovance believes that this approach to TIL therapy may offer improved potency paired with a good safety profile. Two projects are therefore being pursued in this direction, an internal program as well as a collaboration with CHUM.
In July 2019, we entered into a collaboration with the University of Montreal Health Center, or CHUM, which has agreed to conduct clinical studies with PD-1 positive selected tumor-infiltrating lymphocytes, or PD-1 positive TIL. In addition, this agreement with CHUM represents our expansion into Canada. We 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 Dr. Friedrich Finckenstein 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 TIL therapy. This facility, located in Philadelphia, will be used for commercial and clinical production of autologous TIL products.
We have also expanded our intellectual property portfolio with seven recently granted or allowed US patents for composition and methods of treatment related to the use of TIL technology. In the next few months, we look forward to presenting at several conferences, including the Baird Global Healthcare Conference in New York, the Wells Fargo Securities Healthcare Conference in Boston, the Alliance for Regenerative Medicine's Cell & Gene Meeting on the Mesa in Carlsbad, California, and the Cantor Global Healthcare Conference in New York. 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 second quarter 2019 was $47.6 million, or $0.38 per share, compared to a net loss of $30.7 million or $0.34 per share for the second quarter 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&D and G&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 $39.3 million for second quarter 2019, an increase of $14.7 million as compared to $24.6 million for the second quarter 2018. General and administrative expenses were $10.9 million for the second quarter, an increase of $4.1 million compared to the $6.8 million we had for the second quarter 2018. Enrollment in the pivotal melanoma and cervical studies has increased as compared to last year and over the first quarter this year. We have increased manufacturing capacity to support this enrollment. We have also added 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 second quarter 2019 will continue at this level on a quarterly basis until enrollment in the pivotal studies is completed. Net loss for the six months ended June 30, 2019, was $84.5 million, or $0.68 per share, compared to a net loss of $57.2 or $0.65 per share for the period ended June 30, 2018. The increase in net loss for the first half of 2019 as compared to the first half of 2018 is due to the reasons discussed above: more employees, market research, new IP, and additional manufacturing capacity. Research and development expenses were $70.2 million for the first half of 2019, an increase of $25.7 million compared to $44.5 million for the same period ended in 2018.
General and administrative expenses were $19.9 million for the first half of 2019, an increase of $6.1 million compared to $13.8 million for the same period in 2018. At June 30, 2019, the company held $410 million in cash equivalents, short-term investments, and restricted cash as compared to $440 million that we had at March 31, 2019. During the second quarter, the company used $34 million for operating activities. The company anticipates that the year-end balance of cash equivalents, short-term investments, and restricted cash may be between $310 million and $320 million. I will now turn the call back over to the operator for your questions.
Thank you. Ladies and gentlemen, if you have a question at this time, please press star then the number one on your phone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. To prevent any background noise, we ask that you please place your line on mute once your question has been stated. 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 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 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 are also continuing to work with FDA to assure our cervical sample size is aligned with their 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. Frankly, if they're within a month or two of each other, there's a very good chance that we might want to combine them or that the agency asks us to combine them. Somewhere around that late 2020, I think both of them could possibly be filed.
Okay, excellent. Also another timing question with respect to the new manufacturing facility. Construction was started relatively recently. Can you just remind us when you expect it to be fully operational? Have you given 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 two years. 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 year or two of commercialization. Then subsequent to that, the rest of the facility can also get opened up. It's capable of increasing capacity as necessary.
Okay. In the meantime, if you have approved products before that's operational, they'd be supported by your agreements with third-party manufacturers?
That's exactly right. Initial manufacturing plan could be done through our existing CMOs while the facility gets ready.
Okay. 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. 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 an FDA perspective. Yes, we are working on that front as well.
Okay, fantastic. Thanks again for taking the questions, and congrats on all the progress.
Thank you, Mark.
Your next question is from Biren Amin from Jefferies. Your line is open.
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? I think previously you said that you may have had 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. 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. 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 75-100 patients, and now it is just 75 patients. 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. That's why we amended it to 75, while we continue the dialogue.
Okay. Maybe one more. I noticed that you planned a 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. That's the high-level assumption that we are pursuing right now. Again, it depends on our completion of the discussion with FDA.
Got it. Thank you.
Thank you.
Your next question is from Madhu Kumar from R.W. Baird. Your line is open.
Yeah, thanks for taking my question. One thing we've been kind of thinking about a lot is how physicians consider the use of IL-2 as part of the TIL administration procedure. When you've talked to physicians in your market research, what has been the kind of feedback on the use of IL-2, and to what degree do you think improving the perspective of treating oncologists will occur through education versus technology? Say, newer methods that don't rely upon the use of high-dose IL-2, 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, one was five and a half, and one was six. Administration of IL-2 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 or hospitals. Most of these sites have already been using IL-2, and in fact, many more sites have been using IL-2 in the past five years. The footprint of IL-2 has been at 100 and 150 or so different sites as late as about five years ago. There's a lot of trained staff at most of the hospitals that have administered IL-2, and they're comfortable with it.
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-2. We also definitely help with any refreshments in terms of training too, administration of IL-2 as well. That hasn't really come up as a showstopper issue for us. It seems that most of the hospitals that we are in have the trained staff to support that administration.
Okay, great. 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, 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. Our other indications are all ongoing. We have not excluded a possibility of trying to put some data out, particularly if the window is more like the 12-month timeframe. We haven't committed to anything. 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 of 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 two 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 cervical. All of those are interesting, exciting things that we still continue looking at. There's 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 directions for research out in various conferences. Conferences are receptive to something that may be more different than just ORR/DOR that we have published before.
There needs to be a venue where we feel is appropriate to disclose the data. 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. To be a little cheeky, would the absence of disclosures from cohort two then support the opposite corollary that the median 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. I wouldn't read too much into it.
Okay, great. Thanks very much.
Sure.
Your next question is from Joe Catanzaro of Piper Jaffray. The 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. 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? 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 did 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. Today's preference from me would be to read both studies, both cohorts of the studies at the same time, and try and see if we can provide the FDA with the totality of the data. That would be a more preferred path for us.
Okay, got it. Maybe just one more quick one here. I'm wondering if you've noticed any pickup of enrollment into your cervical trial since the ASCO data disclosure.
In operations of a study, typically we see waves of patients coming and going. We've definitely seen increased enthusiasm. I think one of the points that Tim made in our increased spend is reflective of our increase in R&D. There has generally been a lot more enthusiasm recently into our TIL program. That I can say.
Okay, great. Maybe I'll just squeeze in one 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.
Yeah. A 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 chemoimmunotherapy in the front line, and hopefully then the patients would come into the study as opposed to third or fourth line, where the patients are quite late line at that point. We are beginning to see that trend, although it is, as you noted, it is early in that landscape shift in a meaningful way. Yes, we are beginning to see that pattern.
Okay, great. Thanks for taking my questions.
Thank you, Joe.
Your next question is from Geulah Livshits from Chardan. Your line is open.
Congrats again on the progress, and thanks for taking my question. 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 two programs? I have a follow-up after.
Thank you, Geulah, 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.
Yes.
Thank you. There's quite a bit that an organization that may be thinking about a filing 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. 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. A significant amount of activities are undertaken in anticipation of both filing as well as potential commercialization. We are certainly on track for initiation of many of those work streams.
Great. 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 the U.S. for the two programs and whether you plan to kind of advance them together or separately, et cetera?
Definitely. We have been thinking about engaging the EMA in a more centralized procedure. 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 at least a set of agreements in one health authority before we go to the second 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. 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. Yeah.
Thank you for your question.
Your next question is from Boris Peaker of TD Cowen . Your line is open.
Great. First question I want to is on the cervical indication. I'm just curious what specific patient enrollment criteria did 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. While bulk of these patients are in the metastatic setting, not everybody necessarily has seen a systemic therapy in a metastatic setting. The definition was a little tighter after the discussion with FDA to assure that they have seen that one prior systemic therapy in the metastatic setting. That was the clarity.
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. It could be surgery along with a systemic therapy. The definition here is stay in the metastatic setting and not in the curative setting.
Gotcha. My next question is on the manufacturing facility. Once it becomes operational, and you've outlined timeline about two 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. Lonza is our manufacturer in EU. If I may rephrase your question, I presume you're asking about WuXi?
Yes, WuXi. I forgot. That's for the U.S. That's right.
Sure. We intend to continue the relationship with WuXi. We find that it particularly is helpful for our tech transfer, process development, and our clinical program. As of now, there's no reason that I see for us to discontinue that relationship. They will cover our initial commercial landscape, and I would like them to stay engaged with Iovance for the commercialization landscape as well. I don't see this program ending just because we're commercial. We will always have a development program behind it.
Great. Thank you for taking my questions.
Thank you, Boris.
As we have no more questions, we would now like to return to Maria Fardis 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 to refine the application of TIL therapy. 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.