CytomX Therapeutics Q2 2023 Earnings Call Transcript

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August 8, 2023

There are 7 speakers on the call.

Operator

Good day, and welcome to the CytomX Therapeutics Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Ogden, Senior Vice President, Finance and Accounting. Please go ahead.

Speaker 1

Thank you. Good afternoon and thank you for joining us. Before we begin, I would like to remind everyone that during this Call, we will be making forward looking statements. Because forward looking statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict and many of which are outside of our control. Important risks and uncertainties are set 4th and our most recent public filings with the SEC atsec.gov.

Speaker 1

We undertake no obligation to update any forward looking statements whether as a result of new information, future developments or otherwise. Earlier this afternoon, we issued a press release that includes a summary of our Q2 2023 financial results and highlights recent progress at CytomX. We encourage everyone to read today's press release and the associated materials, which have been filed with the SEC. Additionally, in the press release, a recording of this call and our SEC filings can be found under the Investors and News section of our website. With me on the call today is Doctor.

Speaker 1

Sean McCarthy, CytomX's Chief Executive Officer and Chairman. Sean will provide a business and pipeline update before I walk through the financials for the Q2. With that, I'll now turn the call over to Sean. Thanks, Chris, and good afternoon, everyone.

Speaker 2

Thanks for joining us for an update on recent progress at CytomX. Before moving to a review of our pipeline, I'd like to start by taking a moment to welcome our new Chief Medical Officer, Wayne Chu. We're thrilled to have Wayne on board as Chief Medical Officer, in which capacity he will oversee The clinical development of our diversified portfolio of Probody Therapeutic candidates. Wayne's extensive drug development experience over his career to date has contributed to multiple new drug approvals and spans therapeutic modalities including antibody drug conjugates, checkpoint inhibitors and bispecific immunotherapies, making him an ideal fit to lead the development of CytomX pipeline. It's been a pleasure to get to know Wayne and the team and I are Additionally, I'd like to congratulate Dawn Benson on her promotion to Senior Vice President of Quality and Product Manufacturing, announced today.

Speaker 2

Dawn joined CytomX in 2022 as Head of Quality and brings more than 25 years of quality and CMC experience in the biotech industry. Dawn has been a key contributor to CytomX's strong recent execution, and we're delighted to have him moving into this newly expanded role. During Q2, CytomX maintained highly focused and disciplined execution across all areas of our company and pipeline. This is an exciting time for us. We are prosecuting more than 15 active programs across our wholly owned and partnered pipeline.

Speaker 2

We are well financed, our goals have never been clearer, and we're approaching multiple potential inflection points as we look ahead to 2024 and beyond. Before I cover this quarter's progress, I'd like to take a moment to provide some perspective on the evolution of our platform and pipeline and share our optimism to how the current generation of CytomX programs have the potential to make a meaningful difference for patients. As oncology R and D continues to evolve towards increasingly potent formats such as antibody drug conjugates, bispecific immunotherapies and cytokines, at CytomX, we have maintained an unwavering commitment to advancing the field of conditionally active Localized Biologics to Improve Therapeutic Window. We believe that localized therapies will be the future of oncology biologics. The conditional activation field is continuing to grow and mature and is becoming increasingly established as a novel strategy for therapeutic discovery and development.

Speaker 2

The unmatched depth and breadth of CytomX leadership and clinical experience in this field, including more than 10 years of bench to bedside learnings, has informed our design choices for our next generation pipeline molecules. By making judicious experience driven decisions regarding target selection, modality, Effective function and tumor types, we believe our current programs CX-nine zero four, CX-two thousand and fifty one and CX-eight zero one are well positioned. Moreover, our continued forward momentum with our long standing partners And new collaborations with Regeneron and Moderna also reinforce our scientific leadership and support the view that conditionally activated Localized Biologics is of strategic importance broadly in the industry. Now moving to our pipeline, I'd like to T cell engaging bispecific antibodies have demonstrated impressive clinical benefit for patients with certain hematologic malignancies and this modality holds enormous promise for the treatment of solid tumors. However, T cell engagers are highly potent at very low doses, And the potency of this modality can lead to widespread systemic activation of the immune system in the form of cytokine release syndrome and on target off tumor toxicities imposing constraints on therapeutic window.

Speaker 2

Efforts in the field to date for solid tumors by many organizations and institutions have built an important foundational knowledge base that highlights the need for strategies to improve therapeutic window. At CytomX, we believe the Probody platform could be ideally suited to addressing this by localizing the powerful anticancer activity of this class of drugs into tumor tissue. Building on our work over the past decade in conditional activation across multiple therapeutic modalities, we now have a broad program of Probody T cell engagers both ourselves and with our partners Amgen, Astellas and Regeneron. Our most advanced program in this area is CX-nine zero four, a clinical stage probody T cell engager targeting EGFR and CD3, partnered with Amgen in a global co development alliance. EGFR is one of the most highly validated and broadly expressed Solid Tumor Targets.

Speaker 2

4 monoclonal antibodies that block EGFR function as an oncogenic driver of tumor growth have been approved for the treatment of various cancer types and many targeted small molecule EGFR tyrosine kinase inhibitors are also in clinical use today. Given its widespread expression in tumor tissue and clinical validation, eGFR has more recently attracted interest as a target for several bispecific strategies, including T cell engagers. CytomX is ideally positioned to unlock EGFR As a T cell engager target, building on the seminal work we published previously that described the 1st protease based Our work demonstrated that masking of an antibody based on cetuximab substantially reduced systemic side effects commonly associated with EGFR antibody therapy, while maintaining antitumor activity, opening a window to explore an EMPOWURED strategy that combines EGFR and CD3 targeting. Our preclinical validation of this Probody EGFR CD3 strategy was also recently published in cancer research. And in Q2 2022, we launched the Phase 1 clinical evaluation of CX-nine zero four.

Speaker 2

I'd like to highlight a few key points from our preclinical work that set a framework for our ongoing evaluation of CX-nine zero four in the clinic. As I mentioned earlier, unmasked T cell engagers can be highly potent. Although cross format comparisons can be challenging owing to affinity, molecular weights and other variables, the pharmacologically In the context of this high potency, it has been difficult to date in solid tumors to show meaningful separation between doses that cause CRS, for example, and those that lead to tumor shrinkage, leaving little room to maneuver from a therapeutic index perspective. Leveraging CytomX's probody technology to mark T cell engagers to reduce target binding in normal tissues, therefore, has great promise. Our preclinical research strongly emphasized this point with the masked EGFR T cell engager showing 60 fold higher maximum tolerated dose and 60 fold less potency for induction of systemic cytokine release in vivo while maintaining strong antitumor activity.

Speaker 2

We're now in the process of translating this preclinical research into the clinic and our Phase 1 program is advancing well. We successfully treated our first patient in May 2022, but we continue to make excellent progress towards our goal of reaching dose levels by the end of this year to facilitate the start of enrollment into backfill cohorts in certain EGFR positive tumors, gaining insights into the clinical activity and therapeutic window of this exciting agent. We aim to share initial Phase I dose escalation data for CX-nine zero four in the first half of twenty twenty four. Also in 2024, we'll be working towards the selection of recommended Phase 2 dose and the initiation of Phase 1b expansion cohorts. These decisions will be taken in conjunction with our partner Amgen.

Speaker 2

I'll move now to an update on our upcoming INDs for the next generation programs, CX-two thousand and fifty one and CX-eight zero one. As I've mentioned, these programs build on the company's collective clinical experience with our 1st generation molecules. Starting with CX-two thousand and fifty one, our wholly owned, conditionally active Probody ADC targeting epithelial cell adhesia molecule or EpCAM, also known as TROKE-one. EpCAM has been regarded as a compelling oncology target for decades and has been clinically validated by others, Well, it has generally been limited to local administration due to systemic toxicities. CX-two thousand and fifty one is tailored to optimize the therapeutic window for EpCAM expressing epithelial cancers by matching the target with payload mechanism of action and with tumor sensitivity.

Speaker 2

We've optimized protease cleavability of the mask and designed it to be paired with a capsothecin derivative as the payload, a topoisomerase 1 inhibitor from the TCAN class. We believe that TCAN is the optimal choice for this program Given the tremendous clinical validation we've seen from TCAM conjugated ADCs in multiple cancer types, including, of course, an HER2 and TRIDELDI. In preclinical studies, CX-two thousand and fifty one, when systemically administered, has demonstrated a wide predictive therapeutic index, along with strong activity in multiple tumor xenograft models, including colorectal cancer. We expect the IND submission for this model ADC in the Q4 of this year, and we anticipate advancement of this program to the clinic in 2024. As we near IND filing, we look forward to sharing more details on the early clinical development plan for CX-two thousand and fifty one, which will initially focus on colorectal cancer in order to expeditiously demonstrate proof of concept and clinical relevance for this program.

Speaker 2

Before moving on from our antibody drug conjugate programs, just a brief update on our CD71 ADC program. We continue to evaluate our strategy and we remain on track to provide an update by the end of the year. Moving now to CX-eight zero one, our duly masked interferon alpha-2b, the lead program within our efforts in the cytokine field. Itaviran alpha-2b is an approved immunotherapeutic that has demonstrated clinical activity in multiple cancer types, but that has been limited due to its systemic toxicity. We believe there's enormous potential to harness The powerful anticancer activity of cytokines with our localization strategies to direct their activity towards tumor tissue and Away from Systemic Immune System Activation.

Speaker 2

Interferon alpha stimulates antigen presenting cells and unlock checkpoint refractory and or resistant cancers. Interferon alpha also has direct tumor cell killing activity, providing a dual mechanism of action. Preclinically, CX-eight zero one has demonstrated a wide therapeutic index with an enhanced tolerability profile compared to unmasked interferon along with preferential activity in the tumor microenvironment. The preclinical profile of CX-eight zero one was most recently presented at the cytokine based drug development summit in June. We believe CX-eight zero one has the potential to become a differentiated combination therapy for a wide range of tumor types.

Speaker 2

As with CX-two thousand and fifty one, we identified an IND for CX-eight zero one in the Q4 of 2023 and to initiate clinical trials in 2024. Now continuing with our work in the immunotherapy area and turning to our partnership with BMS. BMS continues to enroll the Phase III study evaluating the non fu cause related anti CTLA-four probody, BMS-nine hundred and eighty six thousand two hundred and eighty eight, as monotherapy and in combination with nivo in solid tumors. Additionally, earlier this year, BMS opened a new study arm evaluating 288 in third line or later colorectal cancer. We continue to be encouraged by BMS investment into 88 given their extensive clinical experience with our Probody platform and leading expertise in anti CTLA-four therapies.

Speaker 2

We're also busy working with BMS on several early stage discovery programs. Finally, I'd like to briefly discuss our ongoing partnerships. As a core component of our business model, We have leveraged strategic partnerships to extend the reach of our sites, broaden our pipeline and bring important non dilutive capital into the company, the latter being particularly important in today's challenging financial environment. These partnerships highlight the continued innovation inherent in the CytomX platform. The value that accrues to CytomX from our partnering strategy is illustrated by the scope of our work in T cell engagers and bispecific immunotherapies.

Speaker 2

In addition to CX-nine zero four and our work with Amgen, The Astellas and Regeneron collaborations also focus on this important modality, and our broad ongoing efforts uniquely position us to play a transformative role in this field over time. Our partnerships are also allowing us to explore new frontiers, including the exciting work we're conducting with Moderna in mRNA based localized biologics that also includes some focus outside of the oncology therapeutic area. We look forward to continuing to make progress across our partnered research activities, and we anticipate translation of multiple programs to the clinic over time and potentially significant milestone flow from this work that is not currently factored into our financial guidance. With that, let me turn the call over to Chris to provide details of our financials for the quarter.

Speaker 1

Thank you, Sean. I'm pleased to be able to share an update on our Q2 2023 financial results with you today. As of June 30, 2023, we had $181,000,000 in cash, cash equivalents and investments, which does not include the $30,000,000 received in July as a result of the private placement financing with BVF. We expect our current cash resources to fund operations into the second half of twenty twenty five. In terms of our overall capital formation progress in the last year, the recent financing further builds upon our business development success and illustrates the company's strategy and track record of funding the company through a balance of equity based and partnering strategies.

Speaker 1

Now let me spend a few minutes on cash for the quarter and our expectations moving forward. Cash burn was $23,600,000 for the Q2 of 2023. This compares to a cash burn $34,000,000 in the Q2 of 2022 or a year on year decrease in cash burn of approximately 30%. Looking to the company's go forward cash needs, we expect overall cash burn to continue to moderate down over time for the full year of 2023 versus 2022 given the company's restructuring in July of last year. These cash expectations also include higher expected reimbursed R and D work from collaborations in 2023 versus Now moving to revenue and operating expenses for the quarter.

Speaker 1

For the Q2 of 2023, revenue was 24 point $7,000,000 compared to $12,900,000 for the corresponding period in 2022. The increase was driven primarily by a higher percentage of completion for research programs in the Bristol Myers Squibb collaboration, partially offset by reduction in revenue from the AbbVie collaboration as a result of the termination of the CD71 agreement in the Q1 of 2023. R and D expenses decreased $10,500,000 to $20,700,000 during the 3 months ended June 30, 2023. The decrease was primarily due to decreases in personnel related expenses, laboratory contract services and certain clinical study activities, partially offset by an increase in laboratory contract services related to IND enabling activities. G and A expenses were $7,400,000 during the Q2 of 2023, a decrease of $4,300,000 over Q2 2022.

Speaker 1

The decrease was primarily due to lower personnel related expenses as a result of the workforce reduction in 2022 and patent related legal expenses. With that, I'll turn the call back to Sean. Thanks, Chris.

Speaker 2

We appreciate everyone's time in joining us for this update today. Now well into the second half of twenty twenty three, CytomX is With the continued progress of CX-nine zero four, BMS' ongoing investment in the CTLA-four Probody program and our 2 upcoming INDs, We anticipate multiple inflection points over the next 12 to 18 months that have the potential to further solidify the importance and value of conditional activation and biologics localization in the treatment of cancer. Our exceptional PYD's dedicated team remains focused on our vision and mission. And as we've said before, we care for every patient, we learn from every patient, And we deeply thank everyone involved in our efforts to make the biggest difference in the treatment of cancer that we can. With that, operator, please open up the call for Q and A.

Operator

Thank you. At this time, we'll conduct a question and answer session. One moment for our first question. Our first question comes from Roger Song with Jefferies. Your line is open.

Speaker 3

Great. Thanks for taking the question. So a couple from us, maybe start from this now for, So you guided towards the Phase 1 data in first half next year. So what will be the Expectation from there in terms of the patient number, tumor type and since you're going to get your dose expansion based on that data, What will be the key criteria you will look for to be able to say going forward towards the expansion cohort? Thank you.

Speaker 2

Yes. Hi, Roger. Thanks for the question. So let me just maybe just describe In a little more detail, our objectives for the 904 program and That looks over the 2023, 2024 time period. So right now, as we've discussed, we're in Phase 1a, we're in Dose escalation, safety assessment, getting an early look at how the drug is functioning in patients, principally from a safety standpoint.

Speaker 2

As I mentioned in my remarks, we all know that T cell engagers are, of course, very potent agents in dose escalation. Early Phase 1 assessment needs to be done thoughtfully and carefully in order to meet the primary objective, which is to get to Safe doses for further exploration and we're on track there. Our goal by the end of this year, as we've communicated, Is to initiate backfill cohorts, so to start expanding in a limited way, still in the context of Phase 1a in EGFR positive tumor types to get a bit more experience of the drug in terms of obviously its safety, Likely more than one dose level and also be looking in the context of those backfills of course for early signs of clinical activity. Now taken together, that data will inform in 2024 our Discussions with our partner Amgen regarding the move from Phase 1a to Phase 1b, which would be a 2024 event. And that would be the Phase 1b being, of course, the formal expansion phase of the study.

Speaker 2

So those are our goals. Yes. Of course, it's a continuum. So hard to say right now exactly what that data is going to look like in the first half of next year, But we would expect it to be a meaningful update and we'll provide further guidance as the year goes on.

Speaker 3

Excellent. Thank you. So maybe just another question related to the CD71. You say you will provide update by the end of this year. I'm just curious what have you done and maybe any learning you can share with us Right now and by the end of this year, will that be our decision or something you will share and then make decision later?

Speaker 3

Thank you.

Speaker 2

Yes. Thanks. Great question. 1 of the New developments in that regard is, of course, our recruitment of Wayne. And he's just joined the team a couple of weeks ago.

Speaker 2

And as I mentioned, we're absolutely delighted to have Wayne on board. One of the many things that we're tasking him with is to do his own assessment Of the CD71 program and his evaluation of course together with others will lead to the development of our Strategy for the program on a go forward basis. So we'll have more to say about that over the next few months.

Speaker 3

All right. Thanks for that. Okay, great. That's it from us and really appreciate taking the questions. Thank you.

Speaker 2

You're welcome.

Operator

One moment for our next question. Our next question comes from Anupam Rama with JPMorgan. Your line is open.

Speaker 4

Hi, guys. This is Priyanka on for Anupam. We just had a quick question. If most of the preclinical work needed for the CX-eight

Speaker 2

Yes. So we're right on track with IND enabling activities, including, Of course, CMC and Manufacturing. So all of the various components are moving along well and We remain on schedule to get these INDs in by the end of the year.

Speaker 4

Got you. Thank you so much.

Speaker 2

You're welcome.

Operator

One moment for our next question. Our next question comes from Peter Lawson with Barclays. Your line is open.

Speaker 5

Hi, good afternoon, everyone. This is Alex. Thank you for taking our questions. I wanted to come back Something earlier this year you received a $5,000,000 milestone from the Astellas collaboration and they nominated a bispecific candidate. Was wondering if you could say anything about the target here.

Speaker 5

And also just remind us the economics from this collaboration And if you could be when could you be eligible for additional milestones? Thank you.

Speaker 2

Yes. Thanks for the question. So yes, we were delighted to earn that milestone earlier this year following some really terrific work by the Astellas and CytomX teams. We're not at liberty to disclose the target identities from the collaboration, but we're really delighted to see that program now In IND enabling studies, we haven't disclosed the structure as is typical of the milestone structure For the deal, but as the program makes its way through Phase 1, Phase 2 and beyond, we would expect over the course of its natural history to receive additional payments for that and other programs in that alliance And of course, our additional alliances as well. So I'm glad you brought it up though, because I think that milestone Those reinforce a comment that I made in our prepared remarks, which is that if you look across the alliances that we have With so many partners and as I mentioned more than 15 active programs including Partnered and wholly owned programs.

Speaker 2

I think that the milestone with Astellas along with A significant amount of milestones that we've earned milestone flow that we've seen in past years, we do see significant potential For additional milestone payments over the next 2 to 3 years, but it's not currently factored into our cash runway guidance. And so Astaris is just the latest example of the team's productivity and our demonstrated track record in earning milestones under our collaborations. Hey, Alex, this is Chris. The other thing I would note specific to Astellas is

Speaker 1

we do have select Commercial rights in the U. S. For a certain number of programs.

Speaker 4

So I think that's again, glad you brought it up Something that tends to not be

Speaker 1

a focus, but could create a lot of long term value.

Speaker 6

Great. Thank you.

Operator

One moment for our next question. Our next question comes from Dipesh Patel with H. C. Wainwright. Your line is open.

Speaker 6

Thank you. Hi, Sean. Hi, Chris. Deepesh Patel standing in for Mitchell Kapoor. When can we expect to hear more about the Phase 2 program of BMS-nine hundred and eighty six thousand two hundred and eighty eight.

Speaker 6

Can you provide any additional update on what the future development timeline and

Speaker 2

Yes. Thanks for the question, Dipesh. So no real update there in terms of timing at the moment. We are, As we mentioned, excited about the continued investments that BMS is making in 288, the non fucoxylated CTLA-four Primody, it's we think a very interesting and very competitive molecule in A growing field of next gen CTLA-four out there. We are in dialogue with BMS regarding Potential future communication strategies, but not much more we can say today.

Speaker 6

Okay. And then can you Kind of contextualize the reason for a pivot away from the FU cost related version, which is the BMS 986-two forty nine.

Speaker 2

Yes. So just to that's right. So just to recap then, and thanks for the question. We've had 2 programs with BMS and CTLA-four. One is the masked version of ipilimumab itself, AKA the fucosylated version, the other being 288, which is the non fucosylated.

Speaker 2

And I think if you look at how the field It's unfolding in CTLA-four. First of all, continued conviction from BMS and other organizations that there's something pretty unique About CTLA-four blockade in terms of its immunobiology that leads to deep and durable responses, particularly in combination with other checkpoint inhibitors And maintained interest in finding ways to get more value and impact for patients In multiple tumor types, leveraging CTLA-four. The second point being to try to improve Efficacy and the noncucosulated strategy appears to be able to do that. The mechanistic hypothesis, I think it's still that is the hypothesis, but the view is that The non fecalization enhances antigen presentation, which leads to more diversity In T cell clones that leads to deeper and more durable responses and that's taken together with the Accessory costimulatory effects of CTLA-four blockade leads to a unique mechanism of action compared to ipi alone. Now one of the challenges that has come along with that more potent version of it is that it is expected to be More toxic and less tolerated, less well tolerated, hence the value of the Probody Platform.

Speaker 2

So yes, we're very interested to see how this all plays out with BMS. We're excited that they're focusing on 288. We think it makes sense Based on the way the immuno biology is developing and the field is unfolding, we anticipate that data when they're ready to share it.

Speaker 6

Great. Thanks. I appreciate the additional color there. Just a couple more questions. I know we talked about CX-nine zero four a little.

Speaker 6

Is this on track to complete by year end of 2023? And can you discuss any current thoughts on the back swelling portion into the selected eGFR positive cohorts in 2024.

Speaker 2

Yes. Just to reiterate my earlier comments And restate, I guess, the temporal aspects of the program. So The goal that we've stated for all of this year is to by the end of this year initiate backfill cohorts. So we're exploring this drug at various dose levels. We will likely want to be in the future expanding per Project Optimus and Just kind of best practice these days in exploring T cell engagers and solid tumors.

Speaker 2

We'll want to be exploring likely more than one dose As we move later into the program, and so the selection of those doses is really a critical success factor for This asset, so we're being thoughtful about this. And Right now, we're focused on dose escalation, assessing safety, beginning to select doses for initiation of backfills by the end of the year And then transitioning once that backfill data is in hand, which will start to become available in the first half of next year, Use that combined data set of the dose escalation and the initial backfills to then inform our Phase Ib Formal expansion strategy and as I mentioned in my comments, the move to Phase Ib expansions is a decision that we'll take in collaboration with our partner Amgen sometime in 2024. So I hope that helps set the timeframe for the program.

Speaker 6

Got it. Thanks so much. And then last question, can you provide an update on the Regeneron and Moderna collaborations and when we can expect these programs to enter the clinic?

Speaker 2

Yes. So continue to be super excited about these new partnerships And we're very busy with both Regeneron and Moderna, with Regeneron in Bi specific immunotherapies for cancer with Moderna for investigating mRNA encoded localized biologics in oncology and also outside of oncology, the programs are Still relatively early and it's really too early to comment on timelines at this stage. But thanks for the question. Really appreciate it.

Speaker 6

All right. Thanks very much, Sean and Chris. Appreciate your time.

Speaker 4

You're welcome.

Operator

That concludes the question and answer session. At this time, I would like to turn it back to Sean McCarthy for closing remarks.

Speaker 2

Thanks everyone for your time this afternoon and your interest in CytomX and our progress. Certainly hope this update in our broad pipeline has been helpful. Please feel to reach out to our Investor Relations team should you have any additional questions and we look forward to Keeping in close touch.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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