Arvinas Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
October 30, 2024

There are 18 speakers on the call.

Operator

Thank you for standing by. At this time, I'd like to welcome everyone to our Venus Third Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I will now turn the conference over to Jeff Boyle.

Operator

Please go ahead.

Speaker 1

Good morning, everyone, and thank you for joining us. Earlier today, we issued a press release with our Q3 2024 financial results and a corporate update, which can be accessed in the Investors section of our website at ourvenus.com. Joining the call today are John Houston, Arvennis' Chief Executive Officer, President and Chairperson Noah Berkowitz, Chief Medical Officer and Andrew Staake, Chief Financial Officer. Angela Cacasse, our Chief Scientific Officer will join for the Q and A portion of the call. Before we begin, I want to remind you that today's discussion will contain forward looking statements that involve risks, uncertainties and assumptions.

Speaker 1

These factors are outlined in today's press release and in the company's recent filings with the Securities and Exchange Commission, which I urge you to read. Our actual results may differ materially from what is discussed on today's call. I'll now turn the call over to John Houston, our CEO, President and Chairperson. John?

Speaker 2

Thanks, Jeff. Good morning, everyone, and thank you for joining us for our inaugural earnings conference call. So why are we starting earning calls now, some 6 years after our IPO? Well, we have a truly exciting year ahead of us and we are on the cusp of a huge transition for the company as we await our 1st pivotal data readout coming by the end of 2024 or the Q1 of 2025. In addition, we continue to make significant progress with a novel approach to discover, develop and commercialize a new class of medicines for the treatment of cancers and neurodegenerative diseases.

Speaker 2

As we look now forward to providing updates each quarter as we move closer to our goal of becoming a multi product commercial stage organization with a robust pipeline across several indications. We have a lot to discuss this morning, so I'd like to provide an overview of the topics we'll be covering. I'll begin with a brief overview of our VINIS, our PROTAC discovery platform and an update on our pipeline. Noah will then provide an overview of our expectations for the VVERA TACT II trial and discuss our confidence in the combined ability of vevegastrant or VebDEG with other metastatic breast cancer treatments. And finally, Andrew will provide an overview of our Q3 financial highlights.

Speaker 2

I'll add some closing remarks, including what we believe is the opportunity for bedbag both as a combination and monotherapy before opening the call for Q and A, when, as Jeff mentioned, we will be joined by our Chief Scientific Officer, Angela Cacasi. In the 11 years since our founding, we have taken major strides towards our mission to improve the lives of patients with serious diseases. Our pipeline of proteolysis targeting chimeras or PROTAC protein degraders have been designed to harness the body's natural protein disposal system to selectively and efficiently degrade and remove disease causing proteins. This groundbreaking protein degradation platform has enabled us to create an exciting pipeline driving some of the most significant breakthroughs in targeted protein degradation in the industry. These breakthroughs include designing degraders with drug like properties that are orally bioavailable and when needed able to cross the blood brain barrier.

Speaker 2

Very soon, we'll have in hand the first ever Phase 3 data readout for a PROTAC. While the majority of our call this morning will be focused on our progress with VetDeg, we will also briefly cover the advances we've made with our other clinical programs. In future calls, we will provide a deeper dive into our exciting pipeline that spans oncology and neuroscience. Our most advanced program VetDEG is an orally bioavailable protein degrader specifically designed to target and degrade the estrogen receptor for the treatment of patients with ER positive HER2 negative breast cancer. VetDAG works by degrading the estrogen receptor to block signaling through the ER pathway.

Speaker 2

By degrading the estrogen receptor, we believe VetDAG could potentially benefit patients with breast cancer who have ER positive HER2 negative disease. As a reminder, in 2021, we entered a global fifty-fifty collaboration agreement with Pfizer, develop and commercialize ZEDDAG as a potential next generation ER targeting backbone therapy of choice in breast cancer as both monotherapy and in combination with other therapies. Together with Pfizer, we initiated the first ever Phase 3 trial with the PROTAC, the VERITAC II trial. This is a randomized open label, multicenter trial of VetDAG versus fulvestrant in patients with ER positive HER2 negative advanced breast cancer whose disease progressed after prior endocrine based treatment for advanced disease. The readout of data from this pivotal Phase 3 clinical trial will be a landmark event for Arvenus.

Speaker 2

We are on track to share top line data by the end of 2024 or Q1 of 2025 based on timing of events. If positive, these results will support our 1st new drug application and our potential transition to a commercial stage company. If proven effective, Bevy can offer an oral monotherapy treatment in the second line setting, which could be a promising option for appropriate patients progressing on a CDK4six inhibitor based regimen. For context, approved ER targeting treatments provide a few months of progression free survival in this setting. A once daily oral monotherapy that offers a clinically meaningful improvement in PFS added well tolerated could be an important advance for patients and commercially very attractive in a highly fragmented second line treatment landscape.

Speaker 2

Additionally, we continue evaluating beddag in combination with other agents, including the approved CDK4six inhibitors ribociclib and abemaciclib in the ongoing Phase IbII TACTIVE VIEW umbrella trial. We look forward to presenting initial Phase Ib data from the abemaciclib sub study of TACTIV VIEW in a poster at the San Antonio Breast Cancer Symposium later this year. The TACTOR K trial, which is evaluating VetDAG in combination with Pfizer's CDK4 selective inhibitor, tiramociclib, continues to enroll patients. I will now turn to our earlier stage programs, where we see exciting potential opportunities for Protax across oncology and neuroscience targets. First, neuroscience is an area where the unique properties of Protax degraders are particularly well suited, especially given the potential drawbacks of other drug modalities like antibodies and antisense oligonucleotides.

Speaker 2

Our most advanced neuroscience program ARB-one hundred and two is a novel oral product designed to cross the blood brain barrier and target leucine rich repeat kinase 2 or LAP2, which is a large multi domain scaffolding kinase. We have shown that ARV-one hundred and two achieved deep brain region penetration and degradation of LOCK2 in non human primates. We've also observed differentiation from inhibitors by showing improved effects on lysosomal dysfunction and movement of disease relevant biomarkers in the central nervous system in preclinical studies. We intend to explore the potential of ARB-one hundred and two in 2 severe neurodegenerative disorders that are linked to LOCK2 dysregulation. Progressive supranuclear palsy, a disease with a strong genetic link implicating LOCK2 with faster progressing disease and Parkinson's disease where LOCK2 has been shown to contribute to the pathology of the disease.

Speaker 2

Earlier this year, we initiated dosing in a 1st in human Phase 1 clinical trial of ARB-one hundred and two in healthy volunteers. This ongoing Phase 1 trial is primarily designed to establish the safety of ARB-one hundred and two, but will also measure LOCK2 degradation in the periphery and cerebrospinal fluid or CSF to establish the ability of ARV102 to cross the blood vein barrier and degrade LOCK2 in humans. The learnings from this Phase I trial will be viable as we strive to address the incredibly high unmet need in neurodegenerative diseases. We look forward to sharing initial data for ARV-one hundred and two in 2025. We are also working with the Michael J Fox Foundation's Parkinson's Progression Markers Initiative to identify novel LRP-two dependent proteins that are also in non human primate CSF following administration of ARV-one hundred and two.

Speaker 2

We recently presented at the Michael J. Fox Foundation's Annual Parkinson's Disease Therapeutics Conference, where we disclosed new preclinical biomarker data for ARV102. To our knowledge, this is the first data set to demonstrate that the degradation of LRP2 and just these changes in pathway biomarkers of lives of normal function and inflammation in the CSF of non human primates, and exciting discovery suggesting that the PROTECT mechanism may lead to differential outcomes versus LRRK2 inhibitors. The presentation is posted in the scientific publication section of our website. Turning now to our 3rd clinical program, we are also pleased with the preclinical profile of ARV-three ninety three, our prototype designed to degrade B cell lymphoma 6 protein or BCL-six, a transcriptional repressor and a major driver of B cell lymphomas.

Speaker 2

The BCL6 protein facilitates B cell tolerance of rapid proliferation and somatic gene recombination through the repression of cell cycle checkpoints, terminal differentiation, apoptosis and the DNA damage response, which become dysregulated in several types of non Hodgkin lymphomas. PROTECT mediated degradation has the potential to overcome the traditional undruggable nature of BCL6. We are recruiting patients with non Hodgkin lymphoma in a Phase 1 clinical trial of ARB-three ninety three and look forward to updating you on our progress next year. Finally, we are preparing to file an investigational new drug application in 2025 for our KRAS G12D program. KRAS is a driver oncogene in several major tumor types and is associated with poor prognosis and resistance to standards of care.

Speaker 2

We are also developing a novel pan KRAS degrader and look forward to sharing more about this as we progress this promising program. With that, I'll turn the call over to Noah for a more detailed overview of the BevDEG program. Noah?

Speaker 3

Thanks, John, and good morning, everyone. I'm happy to provide an update on the progress we and our partner Pfizer have made with our BevDEG program. Let me first note that even with the recent advances in treatment options, there is still a high unmet medical need in ER positive HER2 negative metastatic breast cancer. Despite the availability of multiple therapies, as patients move into the late line setting, most will experience disease progression within a few months of initiating treatment. Also, the tolerability and the route of administration of available therapies may adversely affect patients' quality of life.

Speaker 3

We believe BepDeg has the potential to become a best in class backbone ER targeting therapy with superior efficacy and tolerability, which could support it becoming a preferred and valuable treatment option for physicians and their patients. This is why I'm excited to discuss the VERITU trial, our second line plus Phase 3 trial with Bepteg, which is on track for a top line data readout by the end of 2024 or in the Q1 of 2025 with timing driven by accumulation of PFS events. The trial is evaluating the efficacy and safety of VEPTEG compared with fulvestrant in patients with ER positive HER2 negative advanced breast cancer. The patients enrolled in VERITAC-two have previously received and progressed on a combination of CDK4six inhibitors and endocrine therapy. VERITEC-two has 2 co primary endpoints: progression free survival or PFS in the ITT or intention to treat population and PFS in the ESR1 mutation subpopulation.

Speaker 3

PFS

Speaker 2

will

Speaker 3

be assessed by blinded independent central review. Secondary outcome measures include overall survival, anti tumor activity including objective response, duration of response in clinical benefit rate and safety and quality of life assessments. Although important progress has been made in treatment of metastatic breast cancer for patients who have received prior treatment with CDK4six inhibitors, the most recently approved oral agent has an approval limited to patients with ESR1 mutations and has shown a median PFS of 3.8 months. The VERITAC II study of DECTDAG is in CDK4six inhibitor experienced patients and was designed to demonstrate a benefit over fulvestrant in both the ITT and the SR1 mutant subpopulations. Now let's discuss our expectations for the VERITEC-two trial.

Speaker 3

Based on our study design, we expect to show a meaningful improvement over fulvestrant. We look forward to sharing top line data in the coming months and submitting this for review to health authorities. If successful, this may result in the 1st ever regulatory approval of a protactu grader and act as the first step in establishing VepDeg as a backbone ER therapy of choice. In addition to the Phase 3 VERITEC II trial, as John mentioned, we and Pfizer continue to evaluate data from several additional studies to inform the design of the potential Phase 3 combination trials that we anticipate will start in 2025 pending regulatory feedback. One is the 2nd line plus setting and the other is in the first line setting.

Speaker 3

We will evaluate data from TACTIVU, TACTIV K and the study lead in portion of Veritek-three to inform our decision about which agents can be combined with VepTek. Preliminary data from the combination of VepTek and abemaciclib will be presented at the San Antonio Breast Cancer Symposium in December. We believe these data will show a manageable safety profile at the full doses of both agents and that the preliminary PK safety and early efficacy will reinforce the potential of DECTEG to be used in combination with standard of care breast cancer agents. With respect to other sub studies within TAKTAVU, enrollment is ongoing and we anticipate that initial data from the ribociclib combination will be available next year. We expect these data will further show Bepteg's potential as an ER backbone therapy of choice.

Speaker 3

We are also making progress in the Phase III ACTIVE K trial, which is evaluating Bepteg plus Pfizer's novel CDK4 inhibitor, atermociclib. We and Pfizer look forward to evaluating data from this trial later this year, which we will use to inform the design of our Phase 3 trial in the first line setting. Overall, we believe DepDeg has the potential to provide superior efficacy and tolerability both as a monotherapy and in combination for patients with breast cancer who are in need of new treatment options. With that, I'll now turn the call over to Andrew for a review of our financials. Andrew?

Speaker 4

Thanks, Noah. I'm pleased to share financial highlights for the Q3 ended September 30, 2024. As a reminder, detailed financial results for the Q3 are included in the press release we issued this morning. As we near our 1st Phase 3 trial readout, we are in a strong financial position with cash on hand sufficient to support our operations into 2027. At the end of Q3, we had $1,100,000,000 in cash, cash equivalents and marketable securities on the balance sheet.

Speaker 4

This allows us to progress all of our key strategic objectives, which include progressing the Beptech clinical program, including 2 expected Phase 3 programs starting later next year, preparing for our first launch of a commercial product and advancing our promising portfolio of PROTECT degraders. Let me now turn to financial highlights from the Q3. During the quarter, we recorded $102,400,000 in revenue. That was compared to $34,600,000 in revenue for the same period in 2023. The increase of $67,800,000 was primarily due to revenue from the Novartis license agreement of $76,700,000 offset by a decrease in revenue from the VepTek collaboration agreement with Pfizer of $7,600,000 and a decrease in revenue from Bayer of $1,100,000 General and administrative expenses were $75,800,000 in the 3rd quarter compared to $22,600,000 for the same period 2023.

Speaker 4

The increase of $53,200,000 was primarily due to the termination of our laboratory and office space lease with 101 College Street of $43,400,000 as well as increases in personnel and infrastructure related costs of $5,000,000 Research and development expenses were $86,900,000 in the Q3 compared to $85,900,000 for the same period in 2023. The increase of $1,000,000 is primarily due to an increase in personnel related expenses of $2,800,000 partially offset by a decrease in program related expenses of $2,200,000 As we embark on a pivotal year for Arvanis, we are focused on making strategic investments in programs that are meaningful to patients and truly differentiated. I'm confident that our strong balance sheet will enable us to accomplish our objectives. With that, I'll turn the call back over to John for closing remarks. John?

Speaker 2

Thanks, Andrew. This is clearly an exciting time for Avinice. We are well on a way to becoming a commercial stage organization with strong leadership and a rich pipeline across multiple therapeutic areas. In partnership with our colleagues in breast cancer at Pfizer, we have an exceptional team of experienced leaders who stand ready to bring VepDeg to breast cancer patients in need of new treatments. We believe that the upcoming top line data from the Phase 3 VERTAK II trial will be the first step in establishing VepDeg as an ER backbone therapy, first as a monotherapy and over the next few years in combination with other treatments.

Speaker 2

Every year, nearly 40,000 patients with metastatic breast cancer are treated in the second line plus setting with approximately 1 third receiving monotherapy treatment. In the first line setting, another 40,000 patients are treated every year and most of these patients will receive an ER therapy as part of their treatment. By establishing VetVeg as a monotherapy in the second line plus setting, we have an opportunity to lay the foundation to potentially change the treatment paradigm for many thousands of patients with advanced ER positive HER2 negative breast cancer. In addition to VetDeg, we're advancing a broad pipeline of product candidates across several therapeutic age areas, including hematology and neurology with our PROTECT discovery engine. Before opening the call to your questions, I'd like to thank the patients and physicians who are participating in our clinical trials.

Speaker 2

I'd also like to thank our talented and dedicated Arvinis team and our partners in breast cancer at Pfizer for the hard work and passion they bring every day. Our progress would not be possible without their commitment. And lastly, I'd like to thank our shareholders for their continued support. With that, I'll now turn the call over to Jeff to begin the Q and A portion of our call. Jeff?

Speaker 1

Thanks, John. Before I turn the call over to the operator, I'll ask that you limit yourself to 1 question per cycle to make sure we're able to give appropriate time to everyone. Feel free to rejoin the queue for any follow-up questions. And with that, operator, can you please open up

Operator

the queue? Thank you. We will now begin the question and answer session. And your first question comes from the line of Akash Tewari with Jefferies. Your line is open.

Speaker 5

This is Manoj in for Agash. Thanks for taking our question. So just one, should investors base case be that price of moves with their CDK4 combo with the web deck, not only for the first line, but also for the second line? Why would Ibrance or any other CDK4six combination be used at all in your pivotal studies if CDK4 inhibition shows meaningfully better heme toxicity?

Speaker 2

Thanks for the question. Could you just repeat the beginning of the question?

Speaker 5

Should be the should the base case be like Pfizer MOSE with the CDK4 inhibitor combo with WebDAG in the first line and like second line?

Speaker 2

Actually, so you're asking whether or not our base case should be in the first line should be CDK4 plus deggastrant? Yes. Yes. And that's a great question. And clearly, first of all, we're very excited about the fact that our data is right on our doorstep.

Speaker 2

So by the end of this year, beginning of next year, we'll have our pivotal data. And we're also excited by the fact that we have a combination ongoing with the teremociclib. Clearly, that's a very exciting asset. I think if we end up choosing as with Pfizer, that that is the combination partner. I think that would be a great step forward.

Speaker 2

But obviously, we've got data ongoing with our cabociclib combination. We'll have that data this year and allow us to make decisions next year with Pfizer and the combination. But, yes, I think we'd be very excited if the data tells us that the CDK4, that degestone combination is the right one. We'd be very excited.

Speaker 6

Yes. Thank you.

Operator

Next question comes from the line of Brad Cagnino with Stifel. Your line is open.

Speaker 6

Good morning and thank you for the updates. Question for me on the upcoming abemaciclib combo data. Could you help frame that expectation relative to the pelbo combo data you presented last year, where you had the 11 month PFS and the strong response rates, activity in both ESR1 mutant and wild type. Is that the bar as we think about additional PDK combos that you will be unveiling over the next several quarters in these pretreated Phase 1b populations? Thank you.

Speaker 2

Yes. Thanks. Great question. Clearly, we were very, very excited about our data set with the palatable combination. I'm going to hand this over to Noah in a second.

Speaker 2

The thing to remember is that data set that was not 100% patients that were CDK4six experience, 86% of patients have CDK4six and then 14% didn't. In this trial with abemaciclib when you see this data is 100% post CDK4six. Foursix. So just with that caveat, I'll ask Noah to make some comments.

Speaker 3

Sure. So we had the benefit when we reported the results of the Palbo Vectic combination last year to have long follow-up of patients. And so that's why I think you referenced the median PFS we observed there. But in addition, as you suggested, we were able to look at response rate and safety in that population. So I would view this smaller data set that we're going to be presenting from abemaciclib with shorter follow-up as a data set that can inform about the efficacy of the drug, but looking at things like the response rate, which can mature further and similar for CBR.

Speaker 3

And then on top of it, the safety profile, which will include actually even more recently treated patients and will be a larger data set. And then you can make that type of comparison.

Speaker 6

Got it. Thank you.

Operator

Next question comes from the line of Etzer Darrow with BMO Capital Markets. Your line is open.

Speaker 7

Great. Thanks for taking the question. Thank you for the updates today. Just a question around the fulvestrant control arm for VERITAT II. We've gotten questions on that sort of if you could maybe frame your expectations and do you think sort of there's anything we can read through to the Lilly upcoming data sets around sort of where sort of that control arm lands and where how it actually could perform for Veritas.

Speaker 7

So anything incremental on your expectations around that? Thank you.

Speaker 2

Yes, great question. And again, I'll be handing over to Noah just to give you some detail in terms of the answer there. Clearly, the Dynabar Vertex II trial was based on standard of care, which was fulvestrant and still is. And our design is to show that we can be superior to fulvestrant. We're also very excited to see what the EMBA 3 data will show when it comes out.

Speaker 2

And clearly, we want to be able to look at the different patient populations there. Again, VERA TYK2 will be 100% CDK4six experienced patients. And when we look at EMBA3 data, you want to be able to look at that data and then be able to do the kind of like for like comparison. Noah, do you want to say any more about the fulvestrant control arm and how that maybe compared to what Lilly may do? Sure.

Speaker 2

Thanks, John, and thanks for the question. So overall, we it's difficult obviously to predict exactly what we're going

Speaker 3

to see from the fulvestrant arm. We expect that given the prior treatment that patients have experienced, it will be somewhere in between what was observed in the EMERALD study and what was observed in the post MONARCH study. So we would expect it to be somewhere in the 3, 4 month range. And by comparison, we would hope to see a few months better for the VepDEG arm. And in terms of your that second part of your question about EMDR3, we don't know exactly what to expect from that.

Speaker 3

What we'll be looking at is what is the safety and tolerability of that combination and also in what patient population. There is some when you look at the inclusion criteria for EMUR3, it looks like patients who were not CDK4six exposed could be enrolled in the study. So we'd have to understand the results in the context of prior CDK4six exposure to draw any comparison to our study.

Speaker 7

Great. Thank you.

Operator

Next question comes from the line of Ellie Merle with UBS. Your line is open.

Speaker 8

Hey, guys. Thanks for taking my question. So I guess into VERITAC-two, how are you thinking about the potential for success in the non ESR1 population? And if you could sort of review the reasons you think that this could be successful? And then what do you think is the minimum threshold for success here on PFS to be able to get this broader label across ESR1 and non ESR1 patients?

Speaker 8

Thanks.

Speaker 2

Thanks, Elia. That's a great question. And again, I'll be handing over to Noah for the specific answer. Clearly, in this second line plus patient population, we are fighting against the biology of the disease. Obviously, a significant part of the disease is driven by ESR1 mutation.

Speaker 2

We think around 40% of the patients who have tumors are still endocrine sensitive. And then there's a large group of patients with tumors that got well type and other driving mutations. And we think a slice of that patient population will also be able to react well to vibegastrant. So just remember that there's that biology there and the disease that we're fighting against. But yes, Noah, do you want to be specific about?

Speaker 2

Sure.

Speaker 3

Not a lot to add there because I think you adjusted, but I would say that our expectation is, as you know, we have co primary endpoints in the study. We're looking at the ESR1 mutant and IPT population. So our expectation is that we're going to be successful with those primary endpoints. Our base case for what will be approved is the ESR1 mutant subpopulation more than anything else because that's the precedent that's been set at regulatory bodies. What we have to see though in the non mutated patients would be some type of I assume regulatory bodies will want to do some post hoc analysis, and we'll be looking at that with them.

Speaker 3

And we'd want to see some benefit, though I'd remind you that the study is not powered for that population. We believe that it would be successful, as John outlined, because the underlying biology of the wild type population is that many of those patients are still endocrine sensitive and don't have alternative driver mutations that might limit their responsiveness to beptagastrant. So we remain pretty confident that we can see a positive result for ESR1 mutant and for the ITT population. Thanks, Elin.

Operator

Great. Thanks. Next question comes from the line of Derek Archila with Wells Fargo. Your line is open.

Speaker 9

Good morning. This is Eva on for Derek. One from us. Can you help frame a little bit the market for VASTEG assuming you hit STATZVIG in both ESR1 mutant patients and wildtype? And what have you only hit in the ESR1 mutant patients?

Speaker 9

Are there any good analogs there?

Speaker 2

Yes. Thanks for the question. And clearly, we think there's a significant opportunity here, specifically for monotherapy then even bigger opportunity as we move into second line combination and first line combination. I think as I said earlier, nearly 40,000 patients with metastatic breast cancer are treated in the second line setting. And right now about a third of them are getting monotherapy treatment.

Speaker 2

And then in the first line setting, it's another 40,000 patients are diagnosed every year. And the majority of those patients will receive an ER therapy as part of their treatment. So we believe the game plan of establishing vabegastrant and its potential as a monotherapy in that second line plus setting will give us the opportunity to lay that foundation to potentially change the treatment paradigm for those many thousands of patients who have got positive hair to negative breast cancer. And of course, if we can show a PFS in line with combination therapies, we believe we can grow the monotherapy opportunity significantly.

Speaker 3

I just wanted to follow-up for one comment, not addressing the underlying market question. But you had mentioned STAT sig for wild type and for ESR1 mutant. So again, I wanted to remind that the study design is to look at and we'll be doing our statistics on the ESR-one mutant and for the ITT population. We're not doing stats for the wild type subset of the ITT population. I just wanted to make sure that was clear.

Operator

Next question comes from the line of Leigh Watsik with Cantor. Your line is open.

Speaker 10

Hey, good morning guys and thanks for taking our questions. I guess for the Phase III combo trials in frontline and second line, wondering if you can elaborate a little bit on the key regulatory inputs that you still need before you nail down the final design and how much of that is still dependent on the data that you need to generate?

Speaker 2

Thank you for the question. Yes, the question is about the key regulatory thinking in terms of the path forward for our first line and second line combos. Noah, do you want to talk to that?

Speaker 3

So again, these are ahead of us. So after the Veritec two results, which we're expecting in Q4, Q1, we head into the planning for next year that I think you're alluding to, which is combinations for 1st and second line. Each of those requires a health authority discussion. You've seen in our guidance that we and heard in our conversation a moment ago that we're looking to combine in the second line with Palbo and or a CDK4 another CDK4six inhibitor. And in first line, we can be combining with the dermo or palvo and we've also shared that we're very excited about that opportunity if we can combine with the dermo.

Speaker 3

So those there are different considerations for each. It will be it depends on what is the comparator arm for in each of these studies. We haven't announced that. So that would be a discussion point with regulators, the exact patient population that's being chosen. And particularly in first line, there's no doubt we'd get into a deeper conversation about contribution of components if we're using 2 novel agents.

Speaker 3

But we believe that there are a lot of supportive data that will allow us to navigate that discussion. But at this point, that's probably the most guidance we can offer about what the regulatory discussion might look like for combinations in those settings.

Operator

Next question comes from the line of Ted Tenthoff with BIPEL Sandler. Your line is open.

Speaker 11

Great. Thank you very much and thanks guys for hosting this call today. It's nice to get to hear from you and get the update. I know there's a lot going on. I know most of the questions have been on VEPTIG, but just to ask with Novartis in 766, what's the latest there and how do you and they anticipate advancing that in prostate cancer?

Speaker 11

Thank you.

Speaker 2

Thanks, Ted. Great question. Yes, as you know, we did the out licensing of 766 earlier this year and we spent the last several months in the process of handing over data, materials, all the information that's needed to get Novartis up and running to progress ARV-seven sixty six. Clearly, the excitement for us in terms of doing that outline testing was Novartis' commitment to go into early prostate cancer. And that is the game plan that they still have.

Speaker 2

So they'll be looking at early and late stage prostate cancer using ARV-seven sixty six. And we think based on the interactions we've had, they're well on track for that. Obviously, now with it being out licensed, all of the kind of significant updates will come from Novartis themselves, but we are really pleased with how the transfer of information material went and the game plan that Novartis has actually shared with us on 766. And of course, we will be able to share in the future scenarios for 766 as it progresses and we're looking forward to getting updates from the parties as it does.

Speaker 11

Thanks, John.

Speaker 2

Thanks, Ted.

Operator

Next question comes from the line of Tazeen Ahmad with Bank of America. Your line is open.

Speaker 9

Thanks. Good morning. Maybe to switch topics to ARV-one hundred and two. Can you talk about the size of the PD population that you're specifically examining that have this elevated LRK2? And how are you going to use the biomarker to determine segmentation of the population?

Speaker 2

Thanks, Sathiya. Great question. We have in the room here with us Angela Casey, our Chief Scientific Officer. And I'll hand rightly over to her to talk about the answers to those questions.

Speaker 9

It's a great question. So the estimated size of the population that's believed to have elevation of LARP2 is about a third of the idiopathic Parkinson's disease population, pretty sizable. And so it is still under active investigation how you would actually employ the biomarkers that we've recently described at the Michael J. Fox Foundation Therapeutics Conference. And so we're partnering with that group, so both the Parkinson's progression marker initiative as well as their LARC2 initiative to really understand how do you stratify patients.

Speaker 9

But we're really encouraged by the data that we have that suggests that we can study both inflammatory markers, as well as lysosomal markers to stratify the patients appropriately to conduct a reasonable clinical trial.

Speaker 3

Yes. And I might build on what Angela said. Just reminding you that we are currently running a study with ARB-one hundred and two. We completed the single ascending dose portion of the healthy volunteer study. We're currently in the multiple ascending dose portion.

Speaker 3

And the but the take home message is that in this study, we're looking at full comers and these are healthy volunteers. They don't necessarily have elevated LRRK-two. We're going to move next and look in patients who have Parkinson's disease. You heard from Angela that we expect a third of patients who have elevations. There's going to be no selection at the start of that study, but we're going to learn from doing these from looking at our degradation of LARK2 at various doses of the drug and looking at those downstream biomarkers, what our overall approach.

Speaker 3

And I think at this point, there's a wide open field. We can end up being not selective of patients at all or we could end up choosing to look at patients with elevations. It will all depend on the data that we generate and how we interpret it.

Operator

Next question comes from the line of Michael Smith with Guggenheim. Your line is open.

Speaker 12

Hey, thanks for taking my question. I just had a follow-up on ARV102 and the Phase 1 study. How should investors interpret the Phase 1 data in healthy volunteers next year? Are there specific PD markers perhaps other than LRRK 2 degradation that you're assessing? And how predictive are those for potentially improving outcomes longer term?

Speaker 3

Right. So the healthy volunteer portion of the study is really designed to understand the PKPD relationship of the drug and track what we're doing peripherally and more importantly in the central nervous system is monitoring the drug and the LARK2 expression in the CSF. We don't expect that healthy volunteers will have elevated downstream biomarkers that are associated with the neurodegeneration that's seen with this disease. That's something that we'll be looking at more confidently, obviously, when we move to patients as opposed to healthy volunteers. But I think that what we can walk out of this confident about if things move are successful is that the modeling that we did to predict dosing of the drug and its impact in the CNS compartment, the modeling we did in the SYNOS that is so promising that that can be recapitulated in human beings that this can drive the right dose selection.

Speaker 3

And then that sets us up for success when we move to when we're looking for this on target activity at the right dose in patients with PD. And I think that's helped quite a lot right there.

Operator

Next question comes from the line of Tyler Van Buren with TD Cowen. Your line is open.

Speaker 13

Hey guys, thanks for hosting the call. I just want to follow-up on your response to an earlier question for the VERITAC-two trial readout. So if the control fulvestrant arm does 3 to 4 months on medium PFS and you hope to see a few months better per your earlier comment or a 3 month plus delta in the ITT population or a near doubling, how do you expect medium DFS to improve for both arms for the ESR1 population analysis?

Speaker 2

Thanks, Tyler. No, I do want

Speaker 3

to ensure. Well, I just want to going back to the earlier comments, I think what we said I said part of that, but I'm not sure all of it. Our expectation is 3 or 4 months in the fulvestrant arm, a few months better on the treatment arms. We haven't differentiated what we're going to see for the ESR-one mutant or for the total population. We would expect that ESR1 mutant patients will do a little better because they have this dependency on the ligand independent estrogen receptor driven binding estrogen receptor driven proliferation for their tumors.

Speaker 3

So, we just haven't gotten into those specifics or gone through the operating characteristics of the statistical plan. But suffice it to say a few months better as I outlined.

Operator

Next question comes from the line of Jonathan Mealor with Evercore ISI. Your line is open.

Speaker 6

Hi guys. Thanks for taking the question. I'd like to talk more about the VepDAG combo Phase 3s that you're talking about getting started next year. Can you contrast VERITAC III, Phase 3 portion with these new Phase 3s that you're talking about? And it seems like the PR suggests you're focused on palbo and CDK4.

Speaker 6

It seems like you're not pursuing ribo or bema combos in first line, at least it wasn't called out. So can you talk a little bit about how the data from what you're still waiting for from the TACTIVE trials to make the decisions about ultimate combo partner, A. And B, given the CDK4 combo data you mentioned will be available internally this year for use in deciding about those combination Phase 3. Is it fair to expect that you'd give some key details on the CDK4 VepTEG combo data when you decide on a Phase III course? Because I noticed you don't you haven't given guidance on when we could see that ActiveK update.

Speaker 2

Yes. Thanks, Doug. Yes, great question. And I think clearly there's a number of different trials we have ongoing that is going to generate data that is going to really influence our decision making. We have VeriTAC 2, we have the Abema combo, we have the Atiromo combo, we have the Talbot SLI.

Speaker 2

We also have the ribo combo ongoing as well. So there are a whole bunch of data that's coming out now and in through into the early part of next year that sitting down with our colleagues with Pfizer, we'll be able to decide what is the right combination. Obviously, there's preferences there, but we'll wait for the data to actually drive that decision. But Noah, do you want to go into any more of the specifics? Yes, maybe we could dive in a little more

Speaker 3

and thanks for the question, Jonathan. So where so let's look at first line and then we can look at second line. So first line, I think the original intent some years ago was to go with Aveptech Palbo in first line and that was an obvious choice.

Speaker 14

Talbo

Speaker 3

was the most prescribed drug in that CDK4six in that setting. Pfizer is our partner and so they could supply it. And unfortunately, we weren't able to roll straight into that because we were challenged to find a lower dose of palbo that would satisfy benefit risk from the perspective of health authorities. And so we started the VERITEC-three, which is the SLI portion of his reading out, as John mentioned. But in the meantime, we have we will have the fullness of that data set, but also have now done the work for a thermo.

Speaker 3

And we're very excited about it in the thermo combination for the first line because it would be a very differentiating combination, possibly a best in class CDK4 or CDK4six drug combined with what we believe would be a best in class PROTAC in this setting, which would be superior to the CIRD alternatives. And it would fit perfectly in this partnership as well. So, we're waiting for that study. But we weren't considering things like ribo and abemma because I think they don't really solve for those problems, right? Thermo gives us that differentiation and Palbo was ease of use.

Speaker 3

In the second line setting, we have we've guided to either using a palvo combination because we have great results in this setting that we've already shared, or and maybe offering some choice to prescribers or to investigators in this case by allowing another CDK4six, which could be presumably something like bema. We're not guiding specifically to this. But the idea is that we may end up doing it. And you should just look forward to the San Antonio breast cancer data to make your evaluation of this abemaveteg combination and the viability of that in the second plus setting. What we really like, of course, about all of these opportunities is that VepTIG is a very combinable drug.

Speaker 3

While we did see that there was more neutropenia for the with full dose Palbo and VEPTIG, at the in the original data set we performed, we will now be sharing more data about the broad combinability of this drug. You'll see the ABEMET data set. You'll see some work about better understanding of metabolism with the midazolam study. And then as we've said, next year, we'll provide some updates as the data mature for the ribociclib portion of the taktivu as well as the termociclib combination seen in taktivu.

Operator

Next question comes from the line of Paul Choi with Goldman Sachs. Your line is open.

Speaker 15

Hi, everyone. This is Kaleo calling in for Paul. Thank you so much for taking our question and congratulations on the first earnings call. I guess a quick modeling question from us is, one I guess real quick is, as you have a lot of these earlier stage assets entering the clinic or IND filings, how should we think about the cost ramp for next year, maybe the year after? And then just on the Novartis agreement, given the revenue recognition that you had this quarter, are we correct in thinking there's about $930,000,000 in additional payments?

Speaker 15

Or is that like how do you how should we think about like the cadence of that going forward? Thank you so much.

Speaker 2

Yes. Thanks for the question. I'll hand over to our CFO, Andrew, to answer these questions.

Speaker 4

Yes. Thanks for the question. Yes, look, we haven't given specific guidance on our expense structure and we're not planning on doing that in the near term. Obviously, the mix of projects that we have, programs going out is changing, right? So previously the company had the 2 Phase 3s.

Speaker 4

We've out licensed the one to Novartis. That was done consciously by the company to manage expenses and manage our burn. As we have these other programs coming through the clinic, clearly they're going to start costing a little bit of money. We're well aware of what we're going to be spending on them and we're very confident in the guidance that we've given in terms of cash into 2027 with our current balance sheet. I think you had another question on Novartis.

Speaker 4

Can you just repeat that? I'm not sure if I heard that.

Speaker 15

Yes, of course. So just given that, we assume that the $150,000,000 upfront payment has already occurred and then you reported today like $67,000,000 or so in revenue from that agreement. Our understanding is that there's a total of about $1,000,000,000 ish in payments that are contingent on certain milestones. Obviously, those I don't think have been disclosed, but we were just wondering if you could share any color on how we should think about the cadence of revenue from that agreement like in 2025?

Speaker 4

Yes. So the revenue that you're seeing on our P and L right now is all deferred revenue from the upfronts. So that doesn't have anything to do with future milestones, etcetera. We amortize the upfront from the Novartis agreement over this year because that's period during which we were handing over responsibilities for the trials and so we still have responsibilities. With Pfizer, it's much longer.

Speaker 4

So we obviously had the large upfront from them and that's a cope that's a deal that's a fifty-fifty. So we're actively engaged in that. So we're amortizing those revenues over a longer period of time. So you'll actually see the Novartis drop off this year, the Pfizer will continue on for some years.

Speaker 15

Got it. That's really helpful. Thank you so much.

Operator

Next question comes from the line of Yigal Nochomovitz with Citigroup. Your line is open.

Speaker 14

Hi, thank you for taking the questions. And I just wanted to follow-up on some of the questions regarding the frontline strategy and the comments Noah was making on contribution of components. So if it turns out that you pick and you and Pfizer pick a thermo plus VepDEG, are you going to be able to do a trial where it's a thermo VEPTEG versus palbo fulvestrant or given the consideration of contribution of components, is it going to potentially be more complicated with including a palbo, VEPTIG arm as well as in a thermo fulvestrant arm? I'm not sure how that would work, if you could comment. And then I'm just also curious if you've generated data today to support the fact that you won't have a DDI with etermo and VEPTEG?

Speaker 14

Thanks.

Speaker 2

Thanks, Yigal. Great questions. Noah?

Speaker 3

Okay. I'll try and tackle this. Let's jump in with a follow-up, if I missed part of that. So first of all, so in first line, we're not guiding to the exact design of the study, but I think we're going to be I think you can be confident that we would be focusing more on an AI combination in that setting rather than fulvestrant. So that's the initial.

Speaker 3

Whether it's palvo alone or CDK4six choice on the part of physicians, these things are not defined, haven't been resolved with regulatory authorities yet. In terms of but I think that's kind of addresses what you asked, is

Speaker 2

there something else that That's related to the design part. I think Yigal had a secondary question related to do we have any idea we have a DDI with a dermacycline. I mean what you guys what I would say about that is we believe that the data which will you'll start to see from the San Antonio Breast Cancer Symposium and onward will show that the vegastron is the compound that is going to be very broadly combinable with any of the kind of medications in the breast cancer space. That would include a tiramacycline. But clearly in all of the studies we're tracking this now.

Speaker 2

And as I say the data will come out and show that this is a non issue from a clinical perspective.

Speaker 14

Okay. Appreciate it. Thank you very much.

Speaker 2

Thanks, Shikam.

Operator

Next question comes from the line of Bila Jangangiri with Truist Securities. Your line is open.

Speaker 16

Hi. Thanks for the call. This is Bill on for Crippa. We were wondering what's going to be the final deciding factor or maybe factors on choosing which combo to take forward? Is it strictly on efficacy?

Speaker 16

Or is there some sort of strategic IP factor involved too that you're thinking of as well? Thanks.

Speaker 2

Well, obviously, it's going to be based on all the data that we're going to be generating and are generating. As I mentioned earlier, we have ongoing combination trials with bimecyclib, with atirmociclib, with ribociclib, that type of and the SLI data in palbociclib, all of that data will be in our hands till end of this year, first half of next year. And that will really drive the data driven aspect of the decision making, won't all just be looking at the efficacy or we're looking at safety tolerability. So we'll get a true gestal view of our overall data set. So I think we'll actually be in an incredibly good position to make a really smart decision about the combinations.

Speaker 2

As I said, there's clearly we have some biases, but the biases will be influenced completely by the data set.

Speaker 3

Yes. And I would just add a small point on that. When it comes to efficacy, look, we're sharing data about what we see in the second line setting. And I think the efficacy there is characterized by things like ORR and CBR. In first line, the efficacy that would be at our disposal is probably those are probably those type of data points.

Speaker 3

We're not going to wait for medium PFS. Obviously, in first line where you have medium PFSs that can exceed 2 years, one wouldn't wait for that. We would use other signals when looking at efficacy and obviously then safety to make a decision.

Speaker 16

Great. Thanks. And is there any sort of

Operator

Next question comes from the line of Matt Bigler with Oppenheimer. Your line is open.

Speaker 17

Hey guys, thanks for squeezing me in. I realize we're at the top of the hour. It's like covering a large cap with the number of analysts here. I just wanted to ask about the statistical plan for Veritec 2 to the extent you can tell us, is it hierarchical testing or are the co primary endpoints like effectively the alpha split between them between the ESR1 and the ITT population? And secondly, do you think a 0 point 7 hazard ratio would be good enough for an all comers label?

Speaker 17

Thanks.

Speaker 3

Okay. So thanks for the question, Matt. The in terms of the hierarchy, we have 2 co primary endpoints and we can win on either one of them. We're going to but for all purposes, we think that the ESR-one mutant is obviously going to be even more likely than the ITT. That's just the nature of the disease where we're treating it.

Speaker 3

There is some hierarchical testing that goes on from there, the specifics of which we haven't defined yet. In terms of what was the second part of your question? Remind me about the hazard ratio. Yeah. So we haven't gone to the specifics of the hazard ratio.

Speaker 3

I will say that we would expect a better hazard ratio or are expecting to achieve a better hazard ratio in the ESR-one mutant than in the ITT population. And but more specific than that, I won't go into.

Speaker 1

Appreciate it.

Speaker 9

Thank you.

Operator

Next question comes from the line of Michael Smith with Guggenheim. Your line is open.

Speaker 12

Hey, guys. Thanks for taking the follow-up. I just had a clarification question regarding your earlier comments on VERITEC-two. I think you said you expect about 3 to 4 months PFS for Provesterant in the control arm. And yes, I was just wondering, what are or are there any major differences in enrollment criteria relative to the post MONARCH trial where fulvestrant obviously did much better than that?

Speaker 3

Yes. Well, the fulvestrant didn't do much better than it, a little better. There was 4 months in the interim analysis and I think 5.3 months in the final analysis. People are hard pressed to understand why the median PFS improved and was there a change in the patient population between those two analyses, which are both presented at the same time at ASCO. But the differences are that we have the ability to have patients that were treated like with an endocrine therapy twice.

Speaker 3

They may have had an exemestine, let's say, after an initial treatment with the CDK4six and an AI. So we will have some patients that are 3rd line technically, not so not all our patients will be second line, but I think the large majority will be and they were a pure second line study. Is

Speaker 2

that helpful, Michael? Great. Thanks.

Speaker 12

Yes, it makes a lot of sense. Yes, I really appreciate the clarification.

Speaker 2

Thank you.

Operator

Next question comes from the line of Jonathan Miller with Evercore ISI. Your line is open.

Speaker 6

Hi, guys. Thanks so much for squeezing in my follow-up here. I figured since nobody's asked about it, I'd love to ask one question about the upcoming KRAS ProTek programs that you're working on, the G12D and the PAN KRAS that you discussed during your prepared remarks. Can you compare these programs to other G12D or pan KRAS approaches? And how do you think a degrader is going to be better suited than some of the other approaches, notably the inhibitors?

Speaker 6

How will a degrader compare to like a rev med like molecular glue pan RAS approach?

Speaker 2

Yes, great question and thanks. And yes, we're very excited about our KRAS programs, GWLT and the PAN KRAS. And Angela and Noah can discuss the answers to the question you're posing in terms of the profile and what it looks like in terms of the competition.

Speaker 9

Sure. We've been actively comparing our both our G12D protac lead degrader to the inhibitors that have been described and have shown superiority and we've disclosed some of those data. But we've been also actively comparing both our G12D and our pan protac degraders in a range of non clinical models to examine the known inhibitors that are out there. And so, generally, we're looking really very favorable with respect to our non clinical profile and we're very encouraged to pursue these molecules in clinical studies. So I'm going to hand it over to Noah for further commentary.

Speaker 3

Thanks, Angela. So I guess I can address just the comparative part. But look, we haven't entered the clinic yet. That's forward looking and something we're excited about for next year. But I think what we've seen from the competition suggests that there still is opportunity.

Speaker 3

So when we look at the first data, for example, I won't adjust the revolution, but you look at Astellas' KRAS G12D degrader and we see that there's modest ORR and there are some liver toxicities at higher doses. These are opportunities for us to catch up, differentiate and demonstrate 1st in class, which would be needed in this space. And I think we could go through those types of specifics for other agents, but probably a little premature for us right now.

Operator

And this concludes our question and answer session. I will turn the call back over to John Huston.

Speaker 2

Thank you and thanks everybody for calling into our first ever earnings call. And hopefully, we'll be able to give you updates over the coming months of the very rich data sets that we'll be getting from the various clinical trials. Thank you for your time this morning. Appreciate it.

Operator

This concludes today's conference call. You may now disconnect.

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Earnings Conference Call
Arvinas Q3 2024
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