Agenus - Earnings Call - Q1 2018

Transcript

Speaker 0

Good day, ladies and gentlemen, and welcome to the Agenus First Quarter Financial Results Conference Call. As a reminder, today's conference is being recorded. Now, I would like to turn the conference over to Doctor. Jennifer Buell, Head of External Affairs and Communications at Agenus. Please go ahead, Doctor.

Buell.

Speaker 1

Thank you, and welcome to Agenus' first quarter financial results conference call. Before I continue, I would like to remind you that this conference call will contain forward looking statements, including without limitation, statements regarding the company's development and commercialization plans and timelines. These forward looking statements are subject to risks and uncertainties disclosed in more detail in our most recent filings with the U. S. Securities and Exchange Commission and that could cause actual results to differ materially.

These statements speak only as of the date of this call and undertakes no obligation to update or revise these statements except to the extent required by law. All forward looking statements are expressly qualified in their entirety by this cautionary statement. When evaluating Agenus' business and securities, investors should give careful consideration to these risks and uncertainties. As a reminder, this call is being recorded for audio broadcast. Joining me today are Doctor.

Garo Armen, Chairman and Chief Executive Officer and Christine Klaskin, our Vice President of Finance. During this call, Garo will provide a corporate update and Christine will provide a financial review. We will then open the call for questions. With that, let me turn the call over to Garo.

Speaker 2

Good morning and thank you for joining us for our quarterly update. As you will see in the next few minutes, we've had a very productive several years, including the substantial progress we made in the past several months. These have been in our clinical programs as well as the substantial number of new discoveries which are about to enter the clinic. I will speak about these in more detail, but in summary, we have made a conscious decision several years ago to pursue two antibodies, which have become the backbone of immuno oncology cancer treatment today. These are antibodies that target PD-one and CTLA-four.

We have advanced them into the clinic individually and in combinations. So far, we have treated 100 patients and observed a number of responses, which will be presented at ASCO this year. We believe these backbone molecules are critically important and we plan on pursuing combinations of them, including with one another to achieve regulatory approvals. But we also believe they will play an important role in combinations with our portfolio of novel antibodies, neoantigen vaccines and cell therapies. How we have accomplished what we have thus far?

Innovation and speed are the basis of our immuno oncology business model with five INDs filed over the past eighteen months, six INDs on track to be filed this year and two additional INDs planned in the first half of next year. Our IND roster for this year includes bispecific antibodies that modify the tumor microenvironment in order to make the tumor more susceptible to immune attack. Tumor microenvironment modifiers are amongst the most desirable next gen immuno oncology approaches. We have at least two antibodies with uniquely desirable properties. In addition to the INDs I mentioned, we expect our cell therapy company AgenTus to also file its first IND for cell therapy next year.

Next, I will provide a partnership update. While I don't have an announceable development just yet, discussions are advancing with various companies. These discussions range from several product licensing deals to potentially much larger collaborations. Our expectations are to bring them to closure within the next two to three months. With respect to progress with existing partnership programs with Incyte and Merck, all are advancing and we expect additional milestone payments including some that will be payable this year.

Also our QS-twenty one stimulant has received increasing interest as the most potent adjuvant available today. QS-twenty one is also an enabling component of our neoantigen cancer vaccine program, which will be entering the clinic in combination with our own checkpoint antibodies very soon. As you're aware, QS-twenty one is a key component in the world's most efficacious shingles vaccine called Shingrix with over ninety seven percent efficacy. Shingrix received approval at the end of last year and this year's revenue estimates have recently been revised to three times what they were earlier in the year. GSK's first full year revenues of Shingrix is expected to top $600,000,000 this year, which is about the same as Merck's Zostavax.

It was tracking last year about the same after fifteen years in the market. Our royalty transaction announced earlier this year has additional revenue milestone payments totaling 40,000,000 which are due to Agenus if specific revenue milestones are achieved. Now I will provide you with an update on our clinical and research programs. Last year, we launched combination clinical trials of our proprietary CTLA-four targeting antibody AGEN1884 with our own PD-one targeting antibody AGEN2034. To date, we have treated as I said more than one hundred patients with our CTLA-four and PD-one antibodies separately and in combinations.

We presented compelling data on the pharmacodynamic activity of our anti CTLA-four and anti PD-one antibodies at AACR recently. As I mentioned earlier, at ASCO this year, there'll be clinical data presented on both of these antibodies. In our trials with both compounds, we have seen partial and complete responses, as I mentioned, in patients with advanced cancers. We plan to develop, register and launch our CTLA-four and PD-one antibodies. This year, aggregate revenue for antibodies targeting CTLA-four and expected to be $15,000,000,000 Hence, we believe that despite the current players, our antibodies represent a significant commercial opportunity for Agenus.

Very recently, we shifted our strategy of first approval to cervical cancer from non small cell lung cancer. We will be developing the combination of our own two antibodies for cervical cancer. The reasons for our strategy shift include increasingly crowded lung cancer opportunities and Merck's recent data with KEYTRUDA in combination with chemotherapy in first line non small cell lung cancer, which has set the bar higher for any future approvals. PD-one has also emerged as an important driver of our of improved efficacy when used in combination with standard of care, chemo or radiation. We are opportunistically exploring such combinations with our own PD-one and CTLA-four antibodies.

We continue our commercial launch readiness efforts. We have supplied our clinical programs and have successfully manufactured commercial grade CTLA-four and PD-one antibodies. We acquired our California manufacturing facility three years ago and it has proved to provide us with independent, speedy and cost efficient manufacturing capabilities today. Also lastly, before I get into our pipeline, this year we're planning triple combination studies of our proprietary vaccine in combination with both our CTLA-four and PD-one antibodies. So far, I have discussed our antibodies which are in the clinic and touched on our future clinical and product registration plans.

I will now shift to our pipeline of a slate of exciting immuno oncology agents expected to enter the clinic soon. Our novel pipeline is advancing, as I mentioned earlier, and we are on track to file six INDs this year and an additional two or additional two INDs in the first Amongst them is our next gen CTLA-four. Our scientists have discovered a novel mechanism that enhances the function of the today's CTLA-four molecules. These findings are expected to be published shortly.

With this feature, our next gen CTLA-four is designed to deplete Tregs and importantly improve T cell priming. We and increasing numbers of others experts in the field believe that depleting Tregs is critical to overcoming the limitations of current immuno oncology treatments and successfully depleting Tregs could expand the market for current treatments significantly. We're also planning IND filings for our bispecific agents this year. These Agenus bispecific antibodies are designed to selectively deplete this time the intratumoral regulatory T cells as well as condition the tumor microenvironment further. We believe these compounds address tumor escape mechanisms in solid tumors as well as hematological tumors like B cell lymphoma.

Lastly, as you all know, cell therapy has shown lifesaving potential for patients and has created significant value for shareholders. In spite of this, current approaches have limitations that are well known, including manufacturing and logistical challenges and very high costs of production. We believe AgenTus, our cell therapy company has the technologies and capabilities to potentially address these limitations. Last week, Doctor. Herwitz presented at Specifically, our proprietary platform has generated high quality T cell receptors, libraries of those receptors designed to target solid tumors.

In addition, our allogeneic cell format is designed to address manufacturing and logistical challenges, scalability as well as costs. We also have a very exciting targeting mechanism for both vaccines and cell therapy. It is our proprietary library of phosphorylated targets designed to optimize efficacy with improved safety, potentially with an off the shelf targeting mechanism as well. One of the most compelling advantages for our cell therapy business includes access to de novo discovery platforms, core capabilities in bioinformatics, structural and computational biology, molecular and cell biology, and very importantly, a pipeline of validated checkpoint antibodies and bispecific tumor microenvironment conditioning agents to rapidly develop first in class combinations. These are capabilities all of which we possess in house, which gives us the ability to innovate and advance programs rapidly.

In summary, given our long history in the field of cancer immunotherapy and the key acquisitions we've made in the past four years, along with our extraordinarily talented team, we have transformed Agenus into a company with one of the most exciting and extensive pipelines in the field. Also importantly, our capabilities, have generated our exciting pipeline, are now advancing next generation opportunities beyond those slated to enter the clinic in the next twelve to fourteen months. As I alluded to earlier, also we believe and other experts believe that new mechanisms such as the ability to modify the tumor microenvironment will be the next generation drivers of successful treatments and cures for cancer. We believe we have amongst the best products to accomplish this. In addition, our ability to combine these molecules with first generation immuno oncology antibodies, our neoantigen vaccines, our cell therapies and adjuvants provide us unique advantages in the immuno oncology field, which are very rare.

Increasing knowledge of these capabilities and our pipeline have been the key drivers of partnership interest from companies with which we are in discussions today. Thank you very much for your time and interest in our company. We look forward to your questions and the conclusions of our discussion.

Speaker 3

Christine? Thank you, Garo. Cash and cash equivalents balance was $52,300,000 at March 3138. This compares to a balance of $60,200,000 at December 3137. For the 2018, we reported research and development expenses of $29,400,000 as compared to $32,600,000 for the same period in 2017.

Our net loss for the three months ended March 3138 was $54,300,000 or $0.53 per share compared to a net loss of $17,100,000 or $0.18 per share for the first three months of twenty seventeen. This increase in our net loss in the first three months of this year was due to several one time items as well as non cash charges. These items in aggregate affected this year's quarter unfavorably and prior year's quarter favorably. In the first quarter of this year, we recorded a loss on the extinguishment of our debt and had increased non cash charges. Whereas during last year's first quarter, we recorded a large accelerated milestone payment we received from Incyte.

Notwithstanding these items, our total R and D and G and A expenses were lower for the first quarter of this year compared to the 2017. I will now turn the call back to Garo.

Speaker 2

Thank you, Christine. I'd like to turn it back to our operator, Rocco, to begin questions.

Speaker 0

Thank you. We will now begin the question and answer session. And ladies and gentlemen, at this time, we have Matt Phillips from William Blair. Please go ahead. Hi.

Speaker 4

Yes. Thanks for taking my question. Gary, you previously said that, I think the time line for a potential BLA in second line cervical cancer was 2020. Is there any way to accelerate that now that's your primary focus?

Speaker 2

It is possible. I think it would be perhaps overreaching it to accelerate as early as in 2020. But it's possible because we are looking at a number of opportunities in patients who are refractory to current treatments, including IO treatments that can potentially give us readouts very rapidly. And we also believe that particularly in those patient populations, the availability will be much greater than in highly competitive areas such as first line non small cell lung cancer, hence shifting our strategy as you alluded to Matt.

Speaker 4

Great, thanks. And then could you also just update us on kind of where the current cash you think gets you as far as runway? I know there's a number of discussions ongoing to hopefully extend that, but just as it

Speaker 2

let me point out to everyone that so far we have managed our cash versus spending pretty well. I mean, the level of activity that you'll go that's going on in the company and the progress that we've made on a number of fronts with almost unprecedented number of IND filings planned for this year and for the first half of next year, our cash position because of our creative structures that we have come up with has dropped only from $60,000,000 three months ago or at the end of last year to $52,000,000 and change. So that takes obviously, the ability to manage cash properly. Now having said that, as you alluded to Matt, there's no question we will need cash going forward. And if I look at our prospects for cash, they certainly include partnership prospects and because we have a number of active discussions, not just one, our probabilities of success to bring one of these deals to closure is higher than it would have been if it was just one or two companies.

So that's one issue. And the second one is we are looking at number of geographic opportunities for Agenus and AgenTus that could bring in cash in addition to what we're talking about or in place of what we're talking about. And we're also talking to potential synergistic private investors in the company. So all of these prospects are being pursued in parallel and our very last resort would be an equity offering.

Speaker 4

Sure. Gale. And I guess one last thing for me. When do you believe you will be able to disclose the bispecifics that you plan into the clinics, it will be at IND filing at first patient dosing somewhere in that timeframe?

Speaker 2

So I will ask Jen to answer that question because she's intimately familiar with the timelines in these programs. Jen, go ahead.

Speaker 1

Thanks, Garo. Hi, Matt. I will share with you that we had hoped and could take advantage of the opportunity to disclose these targets. However, these antibodies, particularly the bispecific antibodies are of great interest and undergoing some of these partnering discussions. So for the sake of protecting the IP around these assets both for our own purposes as well as those for potential partners.

We're not disclosing them at this time.

Speaker 2

And also Matt, it's not just IP, but also know how of targets and structures of these antibodies that we would like to keep, I hate to say this in the new world of blockchain transparency, but it is best to keep it secret at this point.

Speaker 4

Okay. Thanks for taking my questions.

Speaker 0

This concludes our question and answer session. I'd like to turn the conference back over to Garo Armand for any closing remarks.

Speaker 2

Thank you very much everybody for your attentiveness. We have covered quite a bit in our session today. And if you have any questions beyond those that were asked during the session, please do not hesitate to contact Jen and our team. We're always available for you. Thank you.

Speaker 0

And thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.