Earnings Call: Q2 2018

Aug 6, 2018

Good afternoon, and welcome to the Iovance Biotherapeutics Second Quarter 2018 Financial Results Conference Call. All participants are in a listen only mode. Following the formal remarks, we will open the call for your questions. Please be advised that this 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 Iovance. Sir, please go ahead. Thank you, operator. Good afternoon, everyone, and thank you for joining us today. With me on the call is Doctor. Maria Fardis, our President and Chief Executive Officer. This afternoon, we issued a press release that you could find on our website at iovance.com, which includes the financial results for the quarter ended June 30, 2018 and recent achievements. Before I turn the call over to Maria, 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, let me pass the call on to Maria. Thank you, Tim, and good afternoon, everyone. During the Q2, we continued our efforts toward our mission to develop Till therapy as a treatment option for cancer patients in a global setting. As part of our Till development program, we are executing to our clinical trials and expanding application of the technology into new indications and earlier lines of therapy. To that effect, since the last quarter call, we have initiated manufacturing of LN-one hundred and forty four and LN-one hundred and forty five at Lonza, Netherlands in support of the melanoma and cervical clinical trials in Europe, dosed the 1st melanoma patient with LN-one hundred and forty four, also known as lifileucel in Europe, making an important milestone for our global development plan, increase the total number of our participating clinical sites worldwide across our 4 company sponsored studies to over 70 sites, initiated our regulatory interaction with FDA and with a scheduled meeting in 3rd quarter 2018 to define the registration path for lipileucel, activated sites in 5 countries across 2 studies for melanoma and cervical to conduct clinical trials in Europe and this includes the countries of Netherlands, France, Hungary, Spain and the United Kingdom. For additional updates on the ongoing clinical trials, let me start with our lead program lifileucel for melanoma. We have dosed patients in Europe and continue enrollment in the global Phase II metastatic melanoma study C1440 1. Currently, 34 global sites are active, 18 of which are in U. S. And 16 are now active in Europe. Patient dosing is continuing for 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. For 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 actively screening at sites in U. S. And EU ongoing. We anticipate dosing our 1st European patients in the near term. We also are conducting a 4th iOvent sponsored study in non small cell lung cancer patients as part of our collaboration with MedImmune, the R and D arm of AstraZeneca, allowing treatment of patients with Till plus durvalumab. Given recent changes in the treatment landscape for lung cancer, we intend to modify this study design, although we still plan on seeking to enroll PD-one or PD L1 naive patients. With respect to expanding our Till technology clinical development into new indications as part of collaboration program with MD Anderson Cancer Center, we have now activated the first of 2 Phase 2 clinical studies. In the activated study, 20,172, we will be investigating LN-one hundred and forty five manufactured using our GEN-two manufacturing process in treating patients with soft tissue sarcoma, osteosarcoma and platinum resistant ovarian cancer. For the second study, MD Anderson will begin enrolling patients in the second half of twenty eighteen and will use Till manufactured by that institution. This different manufacturing method will allow for investigation of the impact of utilization of the 4 1BB agonist antibody or urolumab on the Till product. I would like to continue to discuss our core IP portfolio. We have a number of patent applications in process and I would like to outline the IP portfolio around Gen 2. As many of you know, all ongoing trials are utilizing our Gen 2 manufacturing method that lasts 22 days and yields a cryopreserved product. Iovance owns the associated patent rights for the Gen 2 process. If granted, our patent applications should provide protection through 2,038. Our licensed patent rights from the NCI and our own patent rights in combination with our extensive and advanced development program and commercialization plan lead to our confidence that we are the leader in the field of Till therapy. We also continue pursuing next generation Till products, both through process development as well as research. The goal of our research work on Till is to increase the potency of the Till product. We have been working on modifying the properties of our Till cells through the addition of different co stimulatory factors such as OX40 or 41BB agonist, 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. In terms of new indications, in June, we signed a preclinical collaboration agreement with the Roswell Park Comprehensive Cancer Center. Under this preclinical collaboration, we will explore the potential of Till therapy in bladder and other oncolytic indications. On the regulatory front, in early May 2018, the company was granted orphan drug designation from the FDA for autologous tumor infiltrating lymphocytes for the treatment of cervical cancer with a tumor size of greater than 2 centimeters in diameter. If approved, the orphan drug designation provides us with 7 years of market exclusivity in the U. S. We are on track with the planned FDA interaction to define the registration path for lifileucel in the Q3 of this year. The meeting is scheduled and we are preparing for this interaction. We will provide further update about this meeting in Q4 of 2018. Looking ahead of the remainder of 2018, we are planning on presenting data from Cohort 2 in the Phase 2 melanoma trial and one other tumor type at an upcoming medical meeting in the remaining part of 2018, dosing the first patient in our collaboration with MD Anderson, expanding our relationship with academic institutions and corporations in order to broaden our understanding of Till in new indications and expanding utilization of Till in earlier lines of therapy in combination with standard of care. 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 Q2 ended June 30, 2018 was $30,700,000 or $0.34 per share compared to a net loss of $23,400,000 or $0.37 per share for the Q2 2017. Research and development expenses were $24,600,000 for the Q2 2018, an increase of $6,000,000 compared to $18,600,000 for the Q2 of 20 eighteen-seventeen. The increase in research and development expenses was primarily attributed to an increase in headcount and consultant expenses and an increase in clinical trial costs due to higher patient enrollment and a higher number of clinical sites. General and administrative expenses were $6,800,000 for the Q2 2018, an increase of $1,900,000 compared to $4,900,000 for the Q2 2017. The increase was primarily attributable to an increase in payroll and related expenses. Net loss for the 6 months ended June 30, 2018 was $57,200,000 or $0.65 per share compared to a net loss of $44,100,000 or $0.71 per share for the same period in 2017. Research and development expenses were $44,500,000 for the 6 months ended June 30, 2018, an increase of $10,300,000 compared to $34,200,000 for the same period in 2017. The increase in research and development expenses was primarily attributable to a $5,700,000 increase in headcount and clinical trial costs. General and administrative expenses were $13,800,000 for the 6 months ended June 30, 2018, an increase of $3,600,000 compared to $10,200,000 for the same period in 2017. The increase was primarily attributed to a $2,700,000 increase in headcount and a $5,000,000 sorry, dollars 500,000 increase in legal expenses driven by increased intellectual property cost. At June 30, 2018, the company held $276,100,000 in cash, cash equivalents and short term investments. This compares to $297,100,000 at March 31, 2018. During the Q2, the company used $24,000,000 for operating activities. The company anticipates that the year end cash balance of cash, cash equivalents and short term investments may between $190,000,000 $210,000,000 Now, I'll turn the call back over to the operator for your questions. Our first question is from Boris Peaker with Cowen. Your line is open. Great. So I'll start with maybe the pivotal study in melanoma. I'm just curious, I know you're supposed to meet with the FDA soon, but what are your internal assumption for the target enrollment? And for that target with 34 sites enrolling, how long do you anticipate that would take? Thank you, Poresh, for the question. The sample size would be a subject of discussion with FDA. So we would not provide a specific guidance today, but we certainly have a proposal that we have put before the agency to see if we can get agreement from them. I agree that with the that was the purpose of having a number of sites active to be able to expedite enrollment and hit those numbers fairly quickly. Got you. So will we learn this timeline in 4Q with post feedback from the FDA? That's our intent. If you have clear guidance, yes. Great. And just my last question, what data do we anticipate to see at ESMO or SITC or any other meeting maybe later this year? It would be the typical overall response rate, duration of response, sort of the waterfall that shows the depth of response and how long the patients might have been on would be the typical data that any study at this stage could present. Biomarkers would be something that would be of interest as well. We might be able to stick to some of those as well. But any specific meeting that you could comment right now where you'll be presenting data? So we haven't commented on the specific venue. It would be in the remaining part of 2018. It's still our target. Got you. Great. Thank you for taking my questions. Thank you. Thank you. Our next question is from Mark Breidenbach with Oppenheimer. Your line is open. Hi, Maria. Thanks for taking the questions. I was wondering if you could expand a little bit more on the changes to the lung cancer trial protocol. I think I heard you say that you're still going to be targeting PD-one naive patients. If so, can you just expand a little bit on what changes are being made? Sure. Hi, Mark. The study itself was initially a randomized study with Till alone in 1 cohort and Till plus durvalumab another cohort. Given the landscape shift as of ASCO with checkpoint plus chemotherapy showing some fairly strong response in early line patients. What we are trying to do is we are trying to potentially remove the Till alone cohort to encourage enrollment. Got it. That sounds good. And with regard to LN-one hundred and forty four, I was just wondering in your discussions with the FDA and from the perspective of a safety database, do you think the FDA would view the GEN-one and GEN-two products as conceptually similar enough to group together into a BLA filing for LN-one hundred and forty four or do you think they view these as 2 entirely separate products? That's a good question and typically subject to a pre BLA meeting with the agency. I do want to highlight that because we have other studies ongoing, and again, this is very early in the dialogue, But typically FDA would like to have visibility to other studies as well. And if you pull all of these studies together, that's a respectable number of patients as compared to other cell therapies. So I don't have a concern in terms of safety set. I think we would have sufficient numbers to provide to the agency. Okay. And just one final one for me. I know there are 2 trials at MD Anderson and the rationale behind conducting 2 separate trials as opposed to just having an extra arm in one trial? Correct. So there are 2 different particular products and we wanted to be able to report them slightly separately. As a matter of fact, if it comes time to a BLA, the study that might have the LN-one hundred and forty five might need to be summarized and provided to the agency. So there's some benefits in having them separated. It's more operational than anything else. Okay. All right. That's it for me. Thanks for taking the questions. Sure. Thank you, Mark. Thank you. Our next question is from Gabriela Musa with Chardan. Your line is open. Hi, thanks for taking my call. I have 2 sets of questions. And the first set is kind of related to the last question. I just want to understand a little bit more about the pill manufacturing process from MD Anderson Cancer Center and how that compares to your process in terms of the time or any other relevant metrics? And can you confirm that from a regulator's perspective that is considered a different product? We were not planning on making a claim that our process is the same as MD Anderson. Their process is more similar to our GEN-one and in fact the closest analog to their process is the NCI method. There is an in process cryopreservation and they also at times have used what is called the tumor banking model and they recently put a publication out on their process. So I won't go into too much detail, but there is a difference between their process and our Gen 2 process, Cibola. Okay, great. And then intrigued by the preclinical program in bladder cancer and then obviously there are other cancers, But are there any updates on the likely specific target subpopulations there that make the most sense to treat with TILs? So our general strategy has been looking at diseases that are starting from a high mutational load end of the spectrum. You might have seen the Shriver article. And we also look at disease that are highly immunogenic. So bladder fits that description and sort of criteria very well. When we start looking at our indication, the first activity always is to look at the growth of Till, the properties of Till, investigating how the interferon activity of the Till that is manufactured. So we look at them very carefully and this is the first step in that direction. We are looking at bladder and in order for us to do that we always set up a preclinical agreement with an institution who may be interested. Okay. So it remains to be determined how broad, let's say, flatter cancer, how broad that indication is that you might go for at this point? That's a fair statement. Yes, that's a fair statement. Okay, great. Thank you. Thank you. Thank you. Our next question is from Biren Amin with Jefferies. Your line is open. Yes. Hi, guys. Thanks for taking my questions. Maria, what data do you hope to have and share with FDA when you go into the Q3 meeting? And also, should we expect that you would wait for the minutes before you disclose details of the meeting? Let me answer your second minutes before we disclose the outcome to the public. We of course cut the data to the degree we could as late as possible and we have provided to the agency. So that's the most mature data we could provide to them. Got it. And then are you also planning to speak with the European Medicines Agency regarding this program? We actually have had a interaction with a local health authority in EU last year and we certainly intend to expand upon that as well. That's part of our EU strategy as well. This is why we expanded for our clinical trials into the European region, yes. And then I guess on cervical, can you just give us a status on that trial and when we can expect to have that trial move into the 2nd stage of the study? Yes. So what we have noticed is that the patient population that were enrolled into the cervical study were highly refractory patients, very, very treatment exposed. We have since amended the protocol to include patients that have 1 to 3 prior therapies and ideally that they are not exposed to prior anti PD-one. So we are hoping to get more patients that are similar to the NCI patient population. That's our goal. Got it. Thank you. Sure. Thank you. Our next question is from Madhu Kumar with B. Riley FBR. Your line is open. Yes. Thanks for taking my questions. So my first one has to do with what line in kind of post checkpoint melanoma would you likely focus on in your initial discussions with the FDA in 3Q? So patients that are post anti PD-one and if they have a BRAF mutation, post BRAF inhibitor are clear unmet medical need. There is nothing approved for them. We also I'd like to I mean this is obviously a question that would end up what patient population would end up on label and it's subject to discussion at the pre BLA meeting. But I also would point out that the patients that we have enrolled are as a median of 3 prior therapies. So combination of what patient population we enrolled as well as what was our inclusion criteria in the protocol, ends up defining the patient population that we and a BRAF mutant post BRAF inhibitor. Okay. Yes. So while there are no proof there who's post PD-one, there are obviously several Phase III trials that are going on in this post PD-one setting. So what can we glean from these existing clinical trials either guide your discussion or guide the potential confirmatory trial you would have to run even with an accelerated approval path? So with an accelerated approval path and this is just more of a regulatory discussion, if there is a need for a confirmatory trial that doesn't have to be in the same indication as your initial label. And I also would like to highlight that the 2 other cell therapies that have received a U. S. Approval for other indications in heme, both had not had a requirement for a full approval to be to use a Phase 3 to receive that full approval. They received full approval on the Phase 1 on the context of the single arm Phase 2 trial. So these are subject to negotiation with the agency that the CBER has been particularly open minded and I'm very pleased to see the outcome of other companies' negotiations with them. So that's interesting. Do you think that then is a kind of technology differentiation where if you're a cell therapy, kind of how the drugs are evaluated is more of a guider versus the kind of indication space you're operating in? I'm not sure if I understand your question, Madhu. Would you mind rewording it a little bit? Sure. So you discussed how the CAR T drug got approval, call full approval on Phase 2 single arm studies. We know like in post PD-one melanoma, other companies had to run Phase III trials competing against some kind of existing agent. And so ultimately, the question I have is, does as you mentioned, if CBER is kind of more open to this kind of shorter timeframe for approval, is that an advantage that kind of T cell therapy technologies might have over other drugs in the solid tumor setting? I certainly can't comment on what Sever may do in the future. All I was highlighting was that they were particularly receptive of the last 2 BLAs for 2 cell therapies, both Yescarta as well as Kymriah. So I'm pleased to see that they have been open to that dialogue. And I think that what exactly would be an accelerated approval path as well as what would be a terms for turning that into confirmatory program is all subject to an end of Phase 2 meeting discussion as well as a pre BLA discussion. So both remain open. I think we have to be very open minded that FDA is within their rights to be asking all sort of pre submission or post marketing requirements. Cool. One last one. So how do you think the treatment landscape for cervical cancer has changed with the first approvals of the checkpoint drugs in the space? Yes, very good. Thank you. So that particular product, Kymriah, just received approval from the agency in cervical and in PD-one high expressers as well as the patient population that were post chemotherapy. It was an accelerated approval and therefore the regulatory door for that patient population remains open. Okay, great. Thank you. I think it's KEYTRUDA, not Kymriah. Thank you. Our next question is from Jim Birchenough with Wells Fargo. Your line is open. Good afternoon. It's Nick in for Jim this afternoon. So maybe first off, Maria, in terms of the head of neck trial, obviously that met the criteria in the SIMON 2 stage criteria in a while back. So should we expect another end of Phase II type meeting in 2019 for that program? Hi, Nick. Thank you for the question. We continue enrolling and we are certainly looking at the data to assure that there's enough superiority in a line that we are in. As you might recall, the patient population we had, had a median of 4 prior therapies. So they were even more further progressed along than our melanoma patients are. So I cannot comment. It really depends on the data and we are continuing to monitor that data. Okay. Thank you. And then just going back to the two trials that you're running in the sarcomas and platinum refractory ovarian. Obviously, you have prepared a number of clinical sites to run this trial. And MD Anderson traditionally runs their own trials. And obviously, they would be very restricted in terms of enrollment. Is that is their trial going to roll out across a number of sites as well? Both studies are being conducted at MD Anderson alone for now. This is part of a broader collaboration we have with them, which has preclinical agreement, clinical agreement, which includes the 2 studies as well as certain access to IP rights around their method of manufacturing should that prove to be better. So currently, the both studies are planned for MD Anderson alone. We also have certain timeframe around that and if they are not able to enroll fast enough, this is a subject we can approach them should that need arise. At the moment, we're just trying to get them activated and started. Okay, okay. That makes sense. Thank you. And then just in terms of looking forward, I think in your prepared comments, you mentioned studying Till in early lines of treatment as a milestone for the second half of this year. Can you expand on that, please? Yes, certainly. And this is part of our broader undertaking that we are thinking about how can we move Till potentially to an earlier line. We have already started this in the lung setting and we also will be looking at additional indications in earlier lines. We have not really provided much information, but the information that I provided during the call is all I can speak to. But we intend to move Till into earlier line and potentially in combination with available care. Okay, great. Thank you very much. Thank you. And I'm showing no further questions. I would like to thank everyone for