Earnings Call: Q3 2018

Nov 6, 2018

Good afternoon, and welcome to the Lavanese Biotherapeutics Third Quarter 2018 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 conference over to Tim Morris, Chief Financial Officer at Livance. Sir, please go ahead. Thank you, operator. Good afternoon, everyone. Thank you for joining us today. With me on the call is Doctor. Maria Fardis, our President and Chief Executive Officer and Doctor. Deborah Barton, Senior VP of Clinical Science. This afternoon, we issued a press release that you can find on our website at iovance.com, which includes the financial results for the quarter 9 months ended September 30, 2018, and a corporate update. Before I turn the call over to Maria, I'd 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 or results, potential future applications of our technologies, 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, let me pass the call over to Maria. Thank you, Tim, and good afternoon, everyone. We have made tremendous progress in the last several months as we continue our efforts toward our mission in offering Till to cancer patients. Highlights since the last call included, in September, we held an end of Phase 2 meeting with the FDA, after which we unveiled an anticipated fast to market registration path for our lead product candidate Lifileucel from metastatic melanoma. We also announced that we received regenerative medicine advanced therapy or RMAT designation in advanced melanoma. We have new data being presented at SITC, which we announced by press release this morning. We also conducted a successful financing in October, bringing in $252,000,000 This additional funding gives us a strong cash position as we continue all of our continuing ongoing clinical trials and seek to build our own U. S. Manufacturing facility utilizing our proprietary centralized and commercial process known as GEN-two. Let me start with our lead program C1440 1, a global Phase 2 multicenter study for lifileucel for metastatic melanoma. As confirmed during our FDA meeting, the agency acknowledged that a single arm cohort could be supportive of initial registration for lifileucel. FDA also confirmed that conducting a randomized Phase III trial in post-three d1 advanced melanoma patients may not be feasible. Based on FDA feedback, we now plan to recruit a new cohort of patients, which we refer to as Cohort 4 in support of registration. Enrollment in Cohort 4 will be initiated in early 2019 in metastatic melanoma patients post PD-one blocking antibody and if BRAF mutation positive, a BRAF inhibitor or BRAF inhibitor with MEK inhibitor. The primary endpoint of this study is overall response rate or ORR as determined by blinded independent review committee or BIRC. We expect to fully enroll this cohort by late 2019 or early 2020 with a BLA submission expected by end of 2020. We also announced this morning that new data from this trial will be presented at SITC this weekend. The new data will be featured during an oral presentation on Sunday, November 11, 2018 by Doctor. Amod Sarnak from H. D. Moffett Cancer Center. He is the lead investigator in the C14401 study. The data will be shared as a poster on Saturday, November 10th during the conference as well. Highlights of the presentation will include an overall response rate of 38% from 47 consecutively dosed patients. The ORR includes one complete response and 17 partial responses, 4 of which are unconfirmed and pending patients' upcoming second assessment. A median duration of response or DOR of 6.4 months with a range of responses from 1.3 months continuing to 14 months of continuing responses. 10 of 14 confirmed responses are ongoing in this study. This translates to approximately 68% of the responding patients remaining in response. The disease control rate was 77% with over 72% of patients having a reduction in tumor burden. All of the patients had received prior anti PD-one treatment and had a mean of 3.3 prior systemic therapies. Patients also had a higher tumor burden at baseline including 11.2 centimeter mean cell diameters for target lesions. The most common treatment emergent adverse events observed in the cohort to date include chills, febronutropenia, anemia, decreased platelet count, pyrexia and hypophosphatemia. There were 2 Grade 5 events reported. The ORR from the ongoing study in post PD-one metastatic myeloma patients continues to be well above the outcomes from the current standard of care available for late stage melanoma patients. In particular, the DOR greater than 6 months is very encouraging. Literature suggests that available care for these patients offers approximately 10% in overall response rate. Turning to our next program, patient dosing continues in C14503, our Phase II trial of LN-one hundred and forty five for the treatment of patients with recurrent and or metastatic squamous cell carcinoma of the head and neck. In October, we announced preliminary data of 13 patients with a reported overall response rate of 31% with a duration of response ranging from 2.8 to 7.6 months. Safety findings from these studies remain consistent with previous reports. Patients in this study had a median of 3 prior therapies. These results include patients from GEN-1 and GEN-two manufacturing process. We will continue to enroll patients in the trial who will be treated with Till manufacturer with GEN-two process. In C14504, our Phase II trial of LN-one hundred and forty five for the treatment of patients with recurrent metastatic or persistent cervical carcinoma, we have initiated dosing patients in Europe. We also announced that we crossed the first stage of the SIMON2 stage design. Enrollment in this study continues with a target enrollment of 47 patients. In October, we announced preliminary data for 15 patients with a reported overall response rate of 27% with an early look at the DOR ranging from 2.4 to 2.5 months and continuing. Patients in this study had a median of 5 prior therapies. The safety findings from these studies remain consistent with previous reports. The protocol for this study has been amended to limit the number of prior therapies to no more than 3 and to exclude patients who have been treated with prior immunotherapy. We anticipate reporting early data from this study at an upcoming medical meeting in 2019. We are also conducting a 4th Iovance sponsored study in non small cell lung cancer patients as part of our collaboration with MedImmune, allowing treatment of patients with Till plus zervolumab. As we announced on our previous call, given recent changes in the treatment landscape for lung cancer, we modified this study design to eliminate the Till alone cohort. Patients will now be enrolled for treatment with LM-one hundred and forty five and durvalumab. There are currently 9 sites active for this trial and we look forward to enrolling our first patient soon. Our 5th study is in PD-one naive melanoma and head and neck patients with Till in combination with pembrolizumab and LN-one hundred and forty five as monotherapy in non small cell lung cancer patients who have previously reported or received systemic therapy with checkpoint inhibitors. This study, IOV COM-two zero two is now open to enrollment with 2 sites active. With respect to expanding our Till clinical development into new indications as part of our collaboration program with MD Anderson Cancer Center, we have 2 Phase 2 clinical studies currently being conducted at MD Anderson. The first of the 2 studies, 2017-six seventy two is investigating LN-one hundred and forty five manufactured using our GEN-two manufacturing process, treating patients with soft tissue sarcoma, osteosarcoma and platinum resistant ovarian cancer. For the second study, MD Anderson has begun enrolling patients and will use Till manufactured by that institution using 41BB agonist antibody or urolumab during the manufacture of the Till product. Turning now to manufacturing, it is our intent to build our own U. S. Manufacturing facility utilizing our proprietary centralized and commercial process. The site selection process for the facility is underway and we anticipate finalization of the site selection in the first half of twenty nineteen. Regarding European manufacturing, in October, we announced a new 3 year manufacturing service agreement with Mastercell SA, a dedicated facility to manufacturing cell therapy products. Mastercell will manufacture Till for our late stage clinical trials in its commercial ready GMP manufacturing suite, which allows for an increase in our capacity for manufacturing Till in Europe. As it relates to our IP portfolio, 2 U. S. Patent applications covering therapeutic methods based on generation 2 manufacturing, which was developed at Iovance were recently allowed and provide protection through 2,038. As many of you know, all ongoing Iovance sponsored trials are utilizing our Gen 2 manufacturing method that lasts 22 days and yields a cryopreserved product. We continue our research efforts here at Iovaz. Under a collaboration with Ohio State University, we developed peripheral blood lymphocytes or PBLs and PBLs can be successfully expanded from PBMCs of lymphoma and leukemia patients. This may offer treatment options for patients who are in need of new therapeutics. PBLs developed at Iovance have a similar lytic activity in leukemia as TILDO in melanoma, which includes higher interferon gamma release and post in activity against autologous tumor cells or CD19. A clinical program is expected to begin to administer PBLs in chronic lymphocytic leukemia or CLL in 2019. We are also pursuing next generation Till product both through process development as well as research. Our goal of our research and work on tills is to increase the potency of Till product. We have been working on modifying the properties of our Till cells through selection of better Till from our cocktails in addition to different costimulatory factors such as OX40 and 41BB agonists as well as utilization of various cytokines in our growth media. We also continue our research efforts with RXI and Selective on investigation of utility of genetically modified Till. Preliminary results from our Selected Till program will be presented at SITC as a poster. Looking ahead, we look forward to the presentation of new melanoma data this weekend at SITC and hosting our IR event with KOL on Friday night, presenting and participating at several conferences this month, including the Cowen IO Conference in Washington, D. C, the Tumor Target and Lymphocyte Summit in Boston, the Credit Suites Healthcare Conference in Scottsdale, the Jefferies Healthcare Conference in London and Evercore Biopharma Catalyst or Deep Drive Conference in Boston. Most importantly, we plan on beginning our enrollment in Cohort 4 in early 2019 and prepare for BLA filing in 2020. I would now like to turn the call over to Tim for a discussion of our financials. Tim? Thank you, Maria. Net loss for the Q3 2018 was 33,800,000 dollars or $0.36 per share. This compares to a net loss of $22,100,000 or $0.35 per share for the Q3 last year. Research and development expenses were $27,900,000 for the Q3 of 2018, an increase of $11,300,000 compared to $16,700,000 for the Q3 2017. The increase was primarily attributed to an increase in clinical trial costs due to a higher enrollment and an increase in the number of sites in the LIKI LUCEL trial for the treatment of metastatic melanoma, a general increase in enrollment in the cervical and head neck LN-one hundred and forty five clinical studies and the initiation of clinical studies in 2018 for new indications. General and administrative expenses were $7,100,000 in the Q3 of 2018, an increase of $1,400,000 compared to $5,700,000 for the Q3 of 2017. The increase was primarily attributed to an increase in stock based compensation due to an increase in the number of full time employees and higher stock prices during the quarter as compared to the Q3 2017. Net loss for the 9 months ended September 30, 2018 was $91,000,000 or $1.01 per share. This compares to a net loss of $66,200,000 dollars or $1.06 per share for the same period ended September 30, 2017. Research and development expenses were $72,400,000 an increase of $21,500,000 compared to the $50,900,000 for the same period in 2017. The increase was primarily attributed to increases in clinical trial costs for ongoing and newly initiated studies and an increase in payroll and payroll expenses. General and administrative expenses were $20,900,000 an increase of $5,000,000 compared to $15,900,000 in 2017. The increase was primarily attributed to an increase in payroll and related expenses, again, including stock based compensation due to a higher number of full time employees and higher stock prices in 2018. At September 30, 2018, the company held $260,000,000 in cash, cash equivalents and short term investments. This compared to $276,100,000 that we held at June 30, 2018. During the Q3 of 2018, the company used $28,200,000 for operating related activities and received $12,100,000 of proceeds from the exercise of warrants and stock options. In October 2018, the company received $236,600,000 in net proceeds from the issuance of common stock. The company anticipates that the balance of cash, cash equivalents and short term investments at year end may be between $460,000,000 $465,000,000 With that, I'll turn the call back to the operator for your questions. Thank you. And our first question comes from Mark Breidenbach from Oppenheimer. You may proceed. Hey, guys. Thanks for taking the questions. So, Maria, assuming an accelerated approval of liso lucel in, let's say, 20 20 or so 2021, has the FDA given you any indication of what confirmatory trial they would want to run for transitioning from accelerated approval to full approval? Hi, Mark. Thank you for the question. No, we have not talked about a confirmatory trial nor are we done thinking that a single arm could be supportive of a full approval. There is precedent for that in the cell therapy space, for single arm being supportive of full approval. So that dialogue is yet to be had. Okay. Okay. And can you give us a little bit more color on those 2 Grade 5 events? Can you elaborate all on where whether you think these were related to the lymphodepletive chemotherapy or to the IL-two 2 infusions themselves? Sure. So we had 2 events. 1 of them was intra abdominal hemorrhagic event and one was acute hypoxic respiratory failure. The intra abdominal hemorrhagic event was possibly associated with LM-one hundred and forty four, given that it's a single arm study that correlation could not be ruled out. That acute hypoxic respiratory failure was not related to LN-one hundred and forty four. Okay. All right. That's actually it for me. Looking forward to seeing the data at SITC. Thanks for taking the questions. Thank you, Mark. Have a good afternoon. Our next question comes from Boris Peaker from Cowen. You may proceed. Great. My first question is on the cervical indication. I'm just curious, what do you need to see in terms of response and durability or response to really move this forward into a pivotal trial? Yes, good question. Thank you, Boris. So available care right now for patients that are late line, 2nd and third line, through an accelerated approval KEYTRUDA was recently approved in June of 2018 for cervical cancer. The overall response rate was 14% per the label. I know that they continue monitoring the patients and the DOR was not quite reached. So I think a response rate anything above 15% is quite respectable for this patient population. By the way, KEYTRUDA was approved under accelerated approval. So a full approval is to come for that particular product as well. Got it. So you don't think you need a higher margin just given the complexity of given TILs versus KEYTRUDA? Not particularly. I think the patients are very late line and they're really out of options. And I think that given that there's really not a whole lot that offers patients a better response, I think the response rate bar is fairly low. Got you. And my second question is on manufacturing. I'm just curious, why do you need your own manufacturing? I think you had an agreement with Lonza that would be able to certainly support clinical development and commercial. Yes. It's always nice to have control over your own destiny. I did not want to spend a lot of our resources earlier on until we had a registration path defined between at least Iovance and FDA at a minimum. And also I wanted to make sure that our patient population is defined. In other words, we know what our capacity needs to be. Both of those are now defined. And so it really allows us to move forward with our own manufacturing. There's always a certain amount of overhead that you pay a CRO in long term and that adds up quite a bit over time. So that's the reason to think about our own manufacturing facility to minimize the spend in that front. And so yours is not just a clinical study, this is for commercial as well, you'd move out of Lonza if he gets approval? It's actually exactly for that. It's for commercial facility and it has the capacity of course to be used for clinical as needed. But it is a commercial manufacturing organization that we are trying to build. Great. Thank you very much for taking my questions. Thank you very much, Boris. Our next question comes from Jeff Birchenough from Wells Fargo Securities. Your line is now open. Hi, guys. Thanks for taking the question. First question just on durability of response. As you look at the melanoma data that will be presented at SITC, are there things you're learning in terms of what defines a short response duration patient versus longer duration response? And anything that you can learn that could help in your pivotal study? Good question. Thank you, Jim. We don't see a particular correlation right now between what could be the definitive predictor of the duration. It's possible that as we have more and more responders, we start seeing a pattern. But right now, there doesn't seem to be a pattern. You've seen this in our previous cohorts that we also have patients that the target lesions are nicely reduced, but a non target lesion appears. So the power of Till can control only so much that the landscape of the patient's mutation also is a determining factor. There's multiple factors at play here. And then maybe just another question on this manufacturing, Maria. Could you remind us with your current Gen 2 process, what the turnaround time is for a patient to get a Till therapeutic from the time that they have the biopsy taken? And I guess maybe remind us what things you're doing to further optimize that? Good question. Thank you. So from biopsy to infusion, it's probably as short as 24 days. 22 days is manufacturing and one day each direction for shipment. Typically, our infusion, because the product cryopreserved product has flexibility with patients and site availability. So if the schedule changes is based on availability, not based on product itself. The product itself can be infused in as early as 24 days. We are working in our research organization in shortening the timeframe for our subsequent generation of manufacturing of the product. And in fact, we already have Gen 3 and Gen 4, for example, in the queue with shorter manufacturing process. We felt that this is adequate enough and the patient population is late line enough to address them with the existing Gen 2 manufacturing. But we certainly can optimize the manufacturing process further. We know that already. Just a final, if you'll allow. Post SITC, you've got a lot going on. What is the could you maybe go through the calendar of data flows as you look into 2019? When should we see the next data from cervical, head and neck, lung? Maybe give us a sense of how that plays out from a data flow perspective. From a data flow perspective, I think that the key piece that we definitely are planning on putting out is a cervical data in 2019. At some point in 2019, we are happy to update the Cohort 2 data once it's fully enrolled with follow-up. We have not made any commitments as to what venue that would be yet. I think the rest of it is going to have to be opportunistic as we get more data and we have visibility to it. We certainly would be happy to put it out. Great. Thanks for taking the questions. Thank you, Jim. And our next question comes from Madhu Kumar from B. Riley FBR. Your line is now open. Yes. Thanks for taking my question. So thinking about Cohort 4 in melanoma, how much better than standard of care do you all have to do in the Cohort 4 trial to kind of win with the regulator? Very good question. Thank you, Madhu. So we believe that the standard of care for this patient population gives you a response rate of around 10%. It is chemotherapy and post PD-one patient population with very little data, we think that ORR is around 10%. The sample size, the better the response rate in our own cohort, the lower the sample size would need to be. So depending on where we land with our final ORR in the cohort, the sample size can be adjusted to a smaller sample size. So the sample size is not necessarily a fixed number that says what it needs to be. If we are at the higher the response rate, the sample size can go lower. Does that help? So at 80, what would the response rate have to be to stop at 80? What is the more the response rate have to be to get to 100? If you're asking what confidence interval you would clear, is that what you're asking? Yes. Basically, what is the percentage if you're at patient 80 and you've gotten to and you've gotten to X percent response rate, would you what is the cutoff where you would stop enrolling basically? Why don't I answer it slightly differently? With 80 patients, there is sufficient with the existing response rate and assuming it all holds as is. With 80 patients, there is ample power to enroll in Cohort 4 and be able to completely clear the 2 confidence intervals of our response and the point estimate of available care, which is 10%. In fact, with a much smaller sample size, you might be able to do that and therefore we are proposing an interim analysis to FDA as well as part of our Cohort 4. And what is the cutoff of the interim analysis? How many patients in the study? It is less than 80. We have not disclosed exactly what number it is. We would like to get agreement from the agency before we disclose it. Okay. And then a question for Tim. Thinking about the kind of cash runway, how much of the current cash position would be kind of set away towards the manufacturing facility versus the kind of current and future set of clinical trials? Yes, that's fine. Madhu, we haven't come up with an estimate for the facility just yet. We're actually looking at various sites and we can determine the actual cost for that. We will try to give an update once that's final, but I don't have an estimate for you right now. So it's safe to say that I mean the burn rate that we had this quarter at about $28,000,000 with all these active studies, I think that's probably a decent guide for what the burn rate will be in the future for clinical studies. But then obviously on top of that, we'll have the cost of the facility. And as you know, that will come later and it could come through a combination of rent and leasehold improvements and or some type of financing around that. Okay, great. Thank you very much. And if you have it, everyone please co vote. And our next question comes from Biren Amin from Jefferies. Your line is now open. Hi, guys. Thanks for taking my questions. Maria, I just want to confirm in your prepared remarks that you stated that in Cohort 2 that you had 10 patients that are continuing with ongoing responses or 68% of confirmed responses? That's correct. Okay. So that would, I guess, assume that the 6.4 month median duration response is likely going to improve over time? And if so, when would we get the next update post SITC? Yes, great question, Biren. Thank you for that. There certainly is an opportunity. Of course, we don't know what the patients will do, but there's certainly an opportunity for the 6.4 months to improve. It's certainly not mature. That I can tell you. It's not a mature median DOR. We haven't decided where in 2019 we would follow-up with our data, but we are thinking about following up our data in 2019 once the full cohort is enrolled that would be the best time to put the totality of the data out. Got it. And then just for Cohort 4, how are you thinking about pace of patient enrollment in this cohort given you already have the trial sites up and running? Are there any new additional sites that you need to have up for this cohort? Yes, great question as well. Thank you. We did have other sites planned for activation and because the cohort 2 enrollment was expedited, we did not activate them. So yes, we are in preparation for activation of additional sites both in U. S. And EU that we could activate for Cohort 4. As I noted, we were not able to activate them because enrollment in Cohort 2 reached its predefined number more quickly than we thought it would. Got it. And then just for head and neck, with the RMAT designation that you have now, which was previously not available to you with the Cohort 2 melanoma data, do you think you could go to the FDA after treating maybe, let's say, another dozen or so patients with 1 to 3 prior lines, which would enable then a discussion on the regulatory path forward for head and neck? Yes. We are very encouraged with that designation and 145, they are the same process. So we intend to engage them to give a full program overview in 2019. Okay, great. Thank you. Thank you. We have no more questions. So thank you all for attending today's call. The call will now disconnect.