Earnings Call: Q1 2018

May 10, 2018

Good afternoon, and welcome to the Iovance Biotherapeutics First 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 this call is being recorded at the company's request. Now I would like to turn the conference over to Mr. 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 and Doctor. Robert Brown, Executive Medical Director, 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 ended March 31, 2018, recent achievements for the year and brief updates for the remainder of 2018. 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 and results, potential future applications of our technologies, manufacturing capabilities, licensing and collaboration transactions, future updates and cash balance forecasts. Forward looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including 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 started 2018 off with a significant financing in January that left us in a strong position to advance and expand our Till product pipeline. Our focus remains on both manufacturing and clinical aspects of Till development as a viable commercial therapy. And to that end, so far this year we have received orphan drug designation for autologous tumor infiltrating lymphocytes for treatment of cervical cancer with a tumor size greater than 2 centimeters in diameter. Breakd expanded the number of clinical sites worldwide for our 4 company sponsored studies and as of early May, we have had over 50 sites active in our clinical trials, activated one of the 2 studies as part of the MD Anderson collaboration utilizing LN-one hundred and forty five for treatment of sarcoma and ovarian cancers, gain approval to commence clinical trials in 6 countries in Europe for metastatic melanoma and cervical cancers expanded enrollment in our lead melanoma trial C1440 1 from 60 to 85, including enrollment up to 60 patients in Cohort 2 as we may want to use this study to support a potential registration of LN-one hundred and forty five, 144. And lastly, initiated collaboration collaborative research in improving the potency of Till product via transient genetic modification. With respect to expanding into new indications, we initiated a new Phase 2 clinical study, 2017-six seventy two with the MD Anderson Cancer Center. The clinical trial site is currently active and is screening patients with soft tissue sarcoma, osteosarcoma and platinum resistant ovarian cancer. This study will treat patients with LN-one hundred and forty five Gen 2 manufacturing by Iovance. For the second study as part of the collaboration with MD Anderson, a different manufacturing method will be used by MD Anderson, which allows for utilization of the 4 1BB agonist antibody urolumab to improve growth of Till product. Now turning to IVAN sponsored studies, we have over 50 sites active across the Till development program and approximately half of the sites are for our lead Phase 2 trial investigating LN-one hundred and forty four for the treatment of patients with metastatic melanoma. 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 intellectual property for the Gen 2 and this shorter manufacturing process minimizes the duration of time a patient waits to receive their Till product. GEN-two manufacturing also has a lower manufacturing cost than its predecessors. Enrollment in the melanoma study C14401 was expanded from 60 patients to approximately 85 patients. The sample size in this study was increased as Iovance may want to choose this study to use this study to support potential registration of LN-one hundred and forty four. Patient dosing is continuing for LN-one hundred and forty five in our Phase 2 trials for the treatment of patients with recurrent and or metastatic lemic cell carcinoma of the head and neck and for C14504, our Phase 2 trial of LM-one hundred and forty five for the treatment of patients with recurrent metastatic or persistent cervical carcinoma. We are also conducting an IOVAN sponsored study in non small cell lung cancer patients who have not received prior anti PD-one or anti PD L1. In February 2018, the first site was activated for this study. This study is part of our collaboration with MedImmune, the R and D arm of AstraZeneca and will treat patients with Till alone or Till plus durvalumab. We have 4 active sites currently recruiting patients for this study. We continue pursuing next generation Till product both through process development as well as research. The goal of our research work on Till is to increase potency of Till product. We have been working on changing the distribution of Till product through adding different co stimulatory factors such as OX40 or 4 1BB and we'll continue with this pursuit as well as genetic modification work. To this end, we entered into a material transfer agreement with RXI Pharmaceuticals Corporation to evaluate potential uses of FcRxRNA Compounds in the development of Till therapies for a number of cancer types. We have also obtained non exclusive rights to uses of 4 1BB agonists, including urolumab in the manufacturing of Till for adoptive cell therapy through an intellectual property license agreement with Moffett Cancer Center. Before I turn to what's ahead, I want to also touch on manufacturing. We are happy to report that manufacturing in EU and Europe is now fully operational as Pharmacell BV, a subsidiary of Lonza Group in the Netherlands is active. We also continue expanding our manufacturing footprint in EU to assure adequate supply for future patient enrollment. Looking ahead for the remainder of 2018, we are planning to continue enrollment of patients in support of new indications as well as currently ongoing studies, including the studies under the collaboration with MD Anderson, expand our relationship with academic institutions and collaboration in broadening our understanding of unmodified Till in new indications as well as considering genetic modification of Till or selection of more potent Till products. We also continue our dialogue with the FDA in defining our registration plan for LN-one hundred and forty four in metastatic melanoma. 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 quarter was 26,500,000 or $0.31 per share. This compares to net loss of $20,700,000 or $0.33 per share for the Q1 last year. R and D expenses were $19,900,000 for the quarter, an increase of $4,300,000 as compared to $15,600,000 last year. The increase in R and D expenses was primarily attributed to a $2,100,000 increase in payroll related expenses and consulting fees due to higher headcount and dedicated consultants as we expanded our research efforts and clinical development programs and the $2,000,000 increase attributable to higher clinical costs due to an increase in patient enrollment and an increase in number of clinical sites in the LN-one hundred and forty four trial for the treatment of metastatic melanoma and the initiation of clinical trials of LN-one hundred and forty five for the treatment of cervical and head and neck cancers in 2017. These increases were partially offset by a $1,000,000 decrease in manufacturing costs due to higher costs in the Q1 of 2017 related to tech transfer activities. G and A expenses were $7,000,000 for the quarter, an increase of $1,700,000 as compared to $5,300,000 for the same period in 2017. The increase was primarily attributed to a $1,000,000 increase in payroll related expenses due to an increase in headcount and a $500,000 increase in professional fees and legal expenses to support our filing of additional patents. At March 31, 2018, the company held $297,100,000 in cash and cash equivalents. This compares to $145,400,000 at December 31, 2017. The increase in cash balance comes from the public stock offering of common stock in January 2018, which netted $162,000,000 in net proceeds, dollars 7,400,000 from the exercise of warrants and options, offset by cash used in operations of $17,700,000 We anticipate that our year end balance of cash, cash equivalents and short term investments may be between $190,000,000 $210,000,000 On the Investor Relations front, the company will participate and present at the following upcoming investment conferences in New York City, the UBS Global Healthcare Conference on May 21, the Jefferies 2018 Global Healthcare Conference on June 7th, and lastly, the JMP Securities Life Science Conferences on June 20th. I will now turn the call over to the operator for your questions. Thank you. Your first question comes from the line of Boris Peaker from Cowen. Please go ahead. Great. Thanks for taking my question. First, I just want to know, how did you arrive at the increased study size? Was this based on discussions with the FDA or some other analysis? Hi, Boris. Thank you for the question. It was not based on discussions with FDA. As we reach a predefined sample size in the protocol, we certainly increased the study enrollment because we do intend to use this study in support of registration of LN-one hundred and forty four. So that's why we increased the Cohort 2, which we believe is our manufacturing method of choice from 30 patients to 60 patients. And so you think that that would be an adequate amount or to discuss with the FDA or I guess maybe more broadly, what is the plan for regulatory discussion with the agency and when would we kind of hear back a more definitive answer, how big of a study is required to get this approved? It's for discussion with FDA. It's not a final stop. It's possible that we might have to increase this further. The discussion itself is planned for Q3 2018 this year and we will certainly inform once we have had that dialogue and once the final sample size is settled. Great. And my last question, when can we expect additional data updates later this year for melanoma, some head and neck and cervical studies? Yes. So we had disclosed that we intend to have additional follow-up for melanoma and one other indication in the later part of the year. There's upcoming conferences that we certainly would hope to target. We could consider ESMO as well as SITC for example. Great. Thank Your next question comes from the line of Mark Breidenbach from Oppenheimer. Please go ahead. Hey, guys. Thanks for taking the question. Maria, with the expansion of Cohort 2 in the LN-one hundred and forty four trial, what does this mean for the retreatment cohort? Is that still in the cards or are we not going to do retreatments anymore in this Phase 2? Hi, Mark. Thank you for the question. They're independent of each other. The Cohort 2 itself is the registration plan that you're thinking about in terms of mode of administration and the patient population. The Cohort 3 is much more of an exploratory arm in trying to understand what a retreatment could offer to a patient if their original response is deteriorating. They are rather independent in that sense, but I also want to clarify that patients have to qualify still for the protocol in order for them to get retreated. For a very late line patient population, if they start progressing rapidly, we need to make sure that that patient still qualifies in the protocol for that Cohort 3. But they're all ongoing and they're independent of each other. Okay. Thanks for the clarification. With regard to manufacturing, now that you have a site online or manufacturing online in the EU, can we assume that the European manufacturing facility will support all the European trial sites or the European sites also going to be fed by U. S. Manufacturing? And can you comment on the capacity in the EU versus the U. S? Sure. So we are intending to use EU manufacturing for EU patients. We are not intending right now to cross various oceans in order to provide drug for the patients. In terms of capacity, the capacity is certainly adequate for what supply and demand are balanced here. So we are watching what the patient population may be. We are activating sites as we go forward. We recognize that we are heading into summer. So the capacity is adequate currently for what we project our patient population and enrollment may be. If you have additional need, we also have backup plans for contingency in order to increase capacity. We don't have a concern on that front. Okay. Thank you. And I'll just ask one last question if I may. With regard to all the investigator sponsored trials that are being run, are you aware of any plans for partial or more complete readouts from any of these trials at ASCO or medical conferences later in 2018? Sure. Yes, it's definitely their decision as to when they plan on putting the data out. We certainly review their submissions and they remain under embargo until the titles are released. So we are aware of maybe one at least that might be considering potential data release in the remaining part of the year, but I wouldn't be able to comment on it until I have confirmation that they're in fact proceeding. Okay. Thank you. Your next question comes from the line of Jim Birchenough from Wells Fargo. Please go ahead. Good afternoon. It's Nick on for Jim this afternoon. Maria, congratulations on all the progress, exciting times here. So just you said there's a balance between supply and demand with 50 sites online. How easy is it for you to meet the demand? I mean, if they're all producing 1 patient a month, that's obviously going to be hard to meet that kind of demand. So are you at risk for having to turn patients away yet? No. Hi, Nick. Good afternoon. Thank you for your question. We don't project for such a low demand. We project certainly for a much higher demand just so we are ready and stand by should it be necessary. We also project for being able to increase and ramp up the demand very quickly. So we stay on the manufacturing front, we stay well ahead of what we think clinical might need not to run into this scenario that you're talking about in turning patients away. In medial region, that's what we are trying to do. Okay, good. And can you just comment on success rates, if there have been any unexpected barriers that you've run into supplying now what's a lot more patients than you've done historically? Are you asking about manufacturing success rate? Is that question? Yes. Okay. So we have disclosed that we actually have our manufacturing success rate has been around 90% and improving. And a lot of that had to do with having adequate SOPs in place and being able to see what issues come up and being able to proactively address them. So the success rate remains quite high. Manufacturing success rate remains quite high. It's well north of 90%. Okay, good. And then last one for me. On LM-one hundred and forty five and the cervical, obviously, good news on the orphan drug designation. Can you state whether you've crossed the Simon two stage boundary yet for cervical? We have not. Okay. Thank you very much. Sure. Your next question comes from the line of Madhu Kumar from B. Riley FBR. Please go ahead. Thanks for taking my question. So in thinking about this Q3 discussion with the FDA, I feel like the natural question that emerges is what line of melanoma therapy do you want to go after? I mean post PD-one, post PD-one and CTLA-four. So how are you thinking about that? And when will you kind of get a sense of which line you think is kind of the best line of therapy to pursue for an initial registrational study in advanced melanoma? Hi, Madhu. Thank you for your question. Certainly, and not only we have thought about it, but we had some preliminary discussions. And you might recall that around a year ago, we optimized and fine tuned our inclusion criteria for our LN-one hundred and forty four study based on a dialogue with FDA. The current inclusion criteria, it notes patients that are metastatic melanoma subsequent to therapy with anti PD-one as well as if they are BRAF mutant subsequent to BRAF inhibitor. We continue with that inclusion criteria. That doesn't necessarily mean that's the patient population we are going to propose to FDA. But as part of Fast Track, we also had a discussion with them about the patient population. We think we have a pretty good idea, but that is definitely a subject of discussion as part of upcoming discussions with FDA. Great. And how does the Merck PD-one chemo data presented at AACR affect the kind of bigger strategy in non small cell lung cancer? It certainly offer a separate option for the patients in frontline. I have to say the patients we were seeing are all post anti PD-one, a number of them have seen chemo already. So now they would be seeing them together. So I don't know if our strategy necessarily in the late line patient population would matter. In the early line, of course, it offers a very good option for patients. So we recognize in early line pre PD-one and pre PD L1, that's a tough patient population to recruit and it certainly would make it more difficult. There's a lot of good options for frontline non small cell lung cancer. I recognize that. However, we still very much firmly believe that CHIL therapy in general in early line does quite well. We think the response rates that Rosenberg has seen are a great indication in case of melanoma when you don't have patients that have seen prior numerous rounds of immunotherapy, what the product can do and we remain excited about potential move of Till into earlier lines. Okay, great. Thanks. Sure. Your next question comes from the line of Biren Amin from Jefferies. Please go ahead. Yes. Thanks for taking my questions. Maria, when do we get duration response data from the head and neck top line data that you presented earlier this year? Hi, Viren. Thank you. So that's part of our publication strategy that we talked about. We do intend to put melanoma in one other indication and we haven't quite decided what that other indication would be for the remaining part of the year. So as part of our next data cut whenever we put that data out, the DOR would be one of the parameters that we will report on. And then can you talk a little bit about this RXI Pharma agreement where you've accessed some of their rxRNA compounds. What are you hoping to achieve with that? Yes, certainly. So as I've mentioned before on the research front, we are moving into further modifying the Till in order to gain further potency. We are looking into selection of various type of Till's. We are looking into shifting equilibrium to get a different product from Till growth and we are looking into genetic modification and some of the genetic modifications may be transient genetic modification. So we are looking at RNAi technology in order to prepare better TILs, we have considered potentially modifying the PD-one landscape in these particular TILs. In general, co inhibitory receptors impacting immune regulation would be of interest to us. That's the scope of the agreement. Got it. Thank you. Sure. We have no more questions. So thank you all for attending today's call. The call will now disconnect.