Agenus - Earnings Call - Q3 2018

Transcript

Speaker 0

Good day, ladies and gentlemen. Welcome to the Agenus Third 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. Welcome to the Agenus third quarter financial results conference call. Before we provide an update, I'd like to first remind you that this call will include forward looking statements, including statements regarding our clinical development plans and timelines, our partnership opportunities and timelines and our financial position. These statements are subject to risks and uncertainties and we refer you to our SEC filings for more details on these risks. As a reminder, this call is being recorded for audio broadcast.

Joining me today are Doctor. Garo Armen, Chairman and Chief Executive Officer Doctor. Anna Viejasvita, Head of Clinical Development Doctor. Sunil Gupta, Head of Regulatory and Pharmacovigilance and Christine Klaskin, our Vice President of Finance. During this call, Garo will provide a corporate update, Anna will summarize our clinical progress and path to BLA 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 everybody. I will update you firstly on our substantial operational achievements, which are unprecedented certainly for a company of our size, but also for the field of immuno oncology. Second, I will provide the latest update on the status of our partnership discussions. And third, I will discuss our financial status and our creative financing strategies that have allowed us to advance our programs while maintaining or growing our cash balances. Recently at ESMO, we reported that of the one hundred and thirty patients treated with our CTLA-four and PD-one antibodies, more than sixty percent have shown clinical benefit.

These include durable responses across multiple solid tumors including cervical cancer, which is the subject of our first registration strategy as you will hear from Doctor. Anna Vieczuk, our VP of Clinical Development, who will cover our discussions with the FDA last week, which have confirmed our path to a planned BLA filing in 2020. Our discovery and innovation engine, which has given birth to our lead clinical stage antibodies, CTLA-four and PD-one will have produced 12 IND filings by the close of this year. This is an industry record. Our innovative portfolio includes first in class and best in class assets.

Today, eight of these programs are in the clinic and also advancing in combination trials. Next, I will address the status of our partnering activities. I will provide an update on this with as much transparency as possible while continuing to respect the sensitivity of these discussions. Clearly, we had hoped that we could close on one of these transactions as early as eight weeks following our last earnings call. However, things have taken a bit longer simply because of process.

Despite these delays, all these prospects are now rapidly advancing towards closure. As mentioned in prior calls, we have sought and identified partners who are best fit to maximize value to Agenus, to them and to our respective shareholders. This includes companies with an understanding of the critical importance of our diverse pipeline that we have built to optimize the possibilities of achieving significant success with clinical trials, as well as commercial activities. It is important to note that we have also made substantial progress with our existing partnerships. We have met or exceeded all research, IND filing and commercialization milestones in our partnerships with Incyte, Merck and GSK.

We triggered $14,000,000 in cash milestones from Incyte and Merck this year for the initiation of phase one trials for LAG-three, TIM-three, and an undisclosed antibody candidate by Merck, all of which were discovered by Agenus. While we are progressing our programs and filing INDs at record pace, as well as progressing our partnership discussions to a closure. We are also prudently satisfying our near term cash needs. We closed this quarter with over $46,000,000 in cash. If you remember at our last earnings call, we had projected that we would be at or above last quarter's cash levels, which was at $43,000,000 So we have achieved that.

We continue to manage our cash positions prudently with an intent to minimize dilution to shareholders to bridge to a partnership transaction. As an example of this and subsequent to the end of the third quarter, we announced the completion of a private financing of $40,000,000 with a single investor netting the company approximately $39,900,000 in additional cash. This will be reflected in our year end numbers. Since our last call, we also announced a royalty transaction with Zoma, which involved the purchase of a minority interest in the royalties and milestones that we are eligible to receive from Incyte and Merck. We received $15,000,000 at closing and retained the majority that is 67% of all future royalties and 90% of all milestones from these products.

Importantly, we remain eligible to receive up to an additional $445,000,000 and $85,500,000 in potential development, regulatory and commercial milestones from Incyte and Merck. So overall, so far this year, our financial position was enhanced with $97,000,000 in cash milestones from our existing partnerships and strategically executed financial transactions. Finally, as you may know, our QS-twenty one stimulant adjuvant is a critical component of GSK's Shingrix vaccine. Shingrix sales are now running substantially ahead of earlier forecast making additional milestones from our royalty transaction from healthcare royalty much more likely. Agenus is positioned to file a BLA as early as 2020 to become a commercial company so that we can continue to drive innovation with speed.

These are critically important drivers of success in order to deliver the next major breakthroughs in immuno oncology. Our portfolio of first in class and best in class assets including our next generation CTLA-four and bispecific antibodies will be in the clinic in 2019. These we believe will define the next major breakthroughs in the field of immuno oncology, a field which has been relatively dormant with the absence of new agents to drive the next set of advances. Before I turn the call to Doctor. Anna Viatik, I will provide a summary of our important operational achievements.

We set out to file six INDs early this year and we are on track having four already filed and two slated to be filed by year end. These include LAG-three and TYML3 antibodies under our partnership agreement with Incyte. Today, I'm pleased to announce that we have filed an IND for our next generation CTLA-four antibody. We have briefly described our next generation CTLA-four AGEN1181 in our last earnings call. This molecule we believe will have both potential efficacy and safety advantages relative to competitor molecules, including one, enhance potency through increased potential for T cell priming while we also achieve Treg depletion.

This is a very challenging and unique attribute that we have been able to achieve with this molecule. Two, broader benefit to a wider patient population including the approximately forty percent of patients who are unlikely to respond to first generation CTLA-four therapies due to a genetic predisposition. And third, improved safety through Fc engineering to avoid common side effects of first generation CTLA-four antibody and enhanced therapeutic potential to enable broader range of dosing options. All of which have been achieved with eleven eighty one based on the data that we have generated in preclinical models so far. As I said earlier, additionally, we are on track to file INDs for two of our first in class bispecific antibodies this year.

These antibodies were also described in our last earnings call. And as I had mentioned, importantly, these two cure microenvironment conditioning agents, that is the bispecifics that I'm talking about, offer critical solutions to overcoming the limitations of current I O treatment. You will hear more specifics on these compounds as they enter the clinic next year. Today, we are positioned to deliver meaningful clinical advances with innovation and speed. Our discovery platforms have enabled our four therapeutic classes including checkpoint antibodies, cellular therapies, neoantigen vaccines and adjuvant.

Our cell line development and manufacturing platforms enable a fast path to IND and as it has been our track record so far. I want to reiterate that these capabilities have contributed to our record breaking timelines to deliver clinical grade materials from research cell bank two, three times faster than industry average. And also very importantly, registration grade material at commercial scale from technology transfer to our commercial CMO as much as five times faster than industry standard. We've demonstrated speed in our CTLA-four and PD-one programs by enabling the CMC readiness to support a potential BLA filing as early as I said earlier, 2020, just four years after our first in man monotherapy trial commenced. As we secure our BLA filings, our clinical development and regulatory teams are led by industry standard.

Not only that, but also innovators that are energized, who are energized by our pipeline and capability. Doctor. Sunil Gupta, who you met during our last earnings call and now Doctor. Anna Viatik, who will be speaking next. Anna joined Agenus following her tenure as Vice President of Oncology and Global Development Lead in Hematological Cancers at Shire.

She has also held leadership positions at Bristol Myers Squibb, Baxter. Doctor. Wierczak is an expert in delivering programs under accelerated timelines for regulatory approval. Anna will now provide an update on the status of programs and our recent interactions with the FDA, which have confirmed our clinical path forward for as I said again, for a potential BLA filing submission in 2020.

Speaker 3

Thank you, Garo. I am excited to be part of the Agenus team advancing such an innovative portfolio and delighted to give an update on the progress of our lead CTLA-four and PD-one program. As Garo mentioned, we have treated over 100 and 30 patients with our CTLA-four and PD-one antibodies separately and in combination. We have published widely on the pharmacokinetics and pharmacodynamic profile of our agents. We have also demonstrated that our agents are clinically active.

Just a few weeks ago, we provided the latest clinical update at ESMO. As monotherapy, our PD-one agent, AGENT-two thousand and thirty four showed the clinical benefit of sixty eight percent in evaluable patients with metastatic or locally advanced solid tumors. This data also includes confirmed responses in three out of seven evaluable patients with refractory cervical cancer. Agenus has long understood the criticality of anti CTLA-four. Today, there is growing evidence that the addition of CTLA-four to PD-one therapy improves response rates and durability of responses in several solid tumor cancers.

Agenus is unique in being one of the few companies with both anti CTLA-four and anti PD-one antibodies in its own portfolio along with robust data showing their activity. Ours is the most advanced clinical stage combination with registrational potential in patients with second line cervical cancer. We endeavor to expand the response rates and durability responses beyond anti PD-one alone in this setting. Our combination trial has completed dose escalation. We have initiated the expansion phase in patients with cervical cancer.

Our global enrollment is actively underway. We presented an early glimpse of our combination data at ESMO and reported disease control in forty four percent of patients. In a data update since ESMO, we have shown improved disease control. In fact, in patients with refractory solid tumors, we see a clinical benefit in over sixty three percent of patients with ovarian, breast and soft tissue sarcoma. Our clinical results also include an objective durable response in a patient with ovarian cancer.

I want to emphasize that the follow-up period for this study has been shorter than for our PD-one monotherapy trial and therefore we expect this data to mature further with additional follow-up. The particularly pronounced clinical benefit we have seen in gynecologic cancers has generated the interest of the Gynecology Oncology Group, GOG. This catalyzed our recent engagement with the GOG with whom we are now collaborating to drive accrual in our current and future Agenus sponsored CTLA-four and PD-one trials. This is a group that has been has had a terrific record, including the approval of Topotecan and Avastin for patients with cervical cancer. During our last call, my colleague, Doctor.

Gupta explained that the FDA Oncology Division has been progressive and has acted to promptly approve products that provide substantial clinical benefit with relatively small trials. CTLA-four and PD-one antibodies have been such programs with accelerated approvals granted for this product in less than four years after first in human study. We recently met with the FDA to review our collaborative discussion, we confirmed that we are positioned to take advantage of accelerated pathways for approval with relatively small numbers of patients and surrogate or short term endpoints in our trial. We anticipate filing for accelerated approval as early as 2020. In summary, our CTLA-four and PD-one programs are advancing in three active clinical trials designed to take advantage of accelerated pathways for rapid approval.

These trials include PD-one monotherapy in patients with refractory cervical cancer, CTLA-four plus PD-one combination that we anticipate will further expand response rates and durability of response in the same cervical cancer setting. And CTLA-four monotherapy in patients who are refractory to PD-one representing a significant clinical need. I am delighted to be associated with the company with such an extensive pipeline of products in the clinic and soon to be in the clinic. I will now turn the call once again to Farrow.

Speaker 2

Thank you, Anna. There are thirteen thousand new cases of cervical cancer annually and four thousand deaths in The U. S. Alone. Our initiatives to advance programs in second line cervical cancer exemplify our commitment to provide effective agents where current treatment options have significant limitations.

At the same time, these efforts represent important commercial opportunities for us. This year alone aggregate commercial revenues for antibodies targeting PD-one and CTLA-four is expected to reach $15,000,000,000 in annual revenue. We have defined several development pathways including, as I said, second line cervical cancer, where we can make a meaningful difference to patients while also capturing a portion of this very large market. Next, Christine Klaskin, our VP of Finance will provide some financial highlights. Christine?

Speaker 4

Thank you, Garo. As Garo mentioned earlier, we closed this quarter with a cash balance of $46,000,000 At the 2017, our cash balance was $60,000,000 and at the end of the second quarter, our balance was $43,000,000 As you can see from these numbers, we continue to manage our cash prudently ending this quarter as we projected with a cash balance above that of the end of the second quarter. For the third quarter ended September 3038, we reported a net loss of $34,000,000 or $0.29 per share compared to a net loss for the same period in 2017 of $37,000,000 or $0.37 per share. In the third quarter, we recognized revenue of $13,000,000 which includes a milestone achievement and non cash royalties earned. For the nine months ended September 3038, we reported a net loss of $113,000,000 or $1.04 per share compared to a net loss for the same period in 2017 of $86,000,000 or $0.88 per share.

The increased net loss reflects reduced revenue during 2018 due to accelerated milestones received during 2017 from Incyte and the 2018 loss on early extinguishment of our debt. I will now turn the call back to Garo for his closing remarks.

Speaker 2

Thank you, Christine. In closing, our key milestones over the next twelve months include one, to complete accrual of our CTLA-four and PD-one trials. These results are expected to support our pathway BLA submission and enable us to commercially launch our CTLA-four and PD-one antibodies within the prescribed timeline for IO antibodies of four years from first in men to registration. Two, advance new discoveries to patients, including our two first in class bispecific antibodies and our next generation CTLA-four. Three, initiate combination trials of our neoantigen vaccine with our CTLA-four and PD-one antibody.

Four, close at least one of our ongoing partnership discussions. Five, with AgenTus, we expect to complete a private placement as well as partnership transactions. We're also advancing our lead AgenTus cell therapy program into the clinic and are on track to file an IND within the next twelve months. We continue to expand our communication efforts as we talked about this briefly last time through significant visibility at major oncology conferences, high profile publications, and through the publication of our newsletter, which I hope you are all enjoying. The newsletter as you know is published every other Monday and summarizes key advances in our progress and highlights details related to our differentiated capabilities.

Along with this, we have also increased our presence in social media. We have bolstered our communications efforts to showcase our rare and diverse pipeline with four different therapeutic classes. The perception of investors seeing us as a vaccine only company is changing. However, those of you who have followed us will know that Agenus transformed in the last four years to become a diverse immuno oncology company with very unique attributes. We take responsibility for educating investors and others going forward and we anticipate that our enhanced efforts of our performance and our performance of course will provide the impetus to understand our company better and generate a greater following by serious investors.

Thank you very much. And I think we are ready for questions.

Speaker 0

We will now begin the question and answer session. The first question is from the line of Matt Phipps with William Blair. Please go ahead.

Speaker 5

Thank you. Thanks for taking my question. Nice update today. Just two questions for me. First, have you identified any potential indications beyond second line cervical cancer that may allow this rapid development path for the PA1C2LA4 combination?

And then secondly, how do you see advancing these two separate CTLA4 assets over time? Obviously, an interesting preclinical publication on the Fc gamma receptor 3A that you recently published. But is there a point at which you would if AGEN, what is it, November looks good that you would almost kind of stop development of AGEN1884 in lieu of further progressing AGEN1181?

Speaker 2

Okay. I will just briefly comment on the last part of your question and then pass it on to Jen to address the rest. So the question of will we stop developing CTLA-four, the first generation CTLA-four, it's probably unlikely that we will do that because the first generation CTLA-four has proven utility in a number of indications and it is growing particularly in combinations. However, as Jen will address, sliding our eleven eighty one in trials and in indications where patients may not be responding to the first generation strategy. But Jen, why don't you go through Matt's questions?

Speaker 1

Sure. Hi Matt, thanks for the questions, both very important. So to answer your first, we have actually observed clinical benefit across a number of different solid tumors as we publicly presented. And with the data that we're seeing so far, we are exploring developing our lead antibodies and other indications. However, we have not yet disclosed those indications, of course, for competitive purposes, but we have engaged key opinion leaders and we are continuing to interrogate those tumors in which we see more robust clinical signals of activity.

So you'll be hearing more about our development our expanded development plans beyond cervical cancer in the future. With respect to our next generation CTLA-four and just to remind you that this was a discovery that we made here at Agenus and one that you noticed was published earlier this year in cancer cells. It's a highly sophisticated mechanism in which we have applied this engineering to our next generation CTLA-four that allows us what we see is in addition to Treg depleting we also see very significant enhanced T cell priming. We see an opportunity to develop this antibody both independently because of its potential improved potency. There are some independent development paths that are quite rapid that we plan to pursue as well as some redundant indications where CTLA-four now is active and we believe the next generation CTLA-four may be more active.

So we have the opportunity, our clinical trials will be starting in the impending weeks, and we will through dose escalation and expansion, we'll have the opportunity to evaluate our next gen in both cases, both new applications for the agents where we think we can have robust rapid readouts as well as some of the redundant areas where first gen CTLA-four is already approved and the next gen may have enhanced response rates.

Speaker 2

Thank you, Jen.

Speaker 0

Mr. Phipps, are you done with your questions?

Speaker 5

I can ask another one if you'd like.

Speaker 0

It's up to you, sir.

Speaker 5

Sure. I'll ask one more. I appreciate the financial responsibility of getting some milestone payments and able to really kind of send your cash runway. But I guess how do you balance advancing all these additional clinics into the pipeline versus ensuring you have the capital to I guess at least get across the finish line with the initial PD-oneCTLA-four combo in cervical? And I guess how do you just kind of balance these two things especially with some of the more ancillary things that seem to be kind of still hanging around like the auto Synvax and Nagentis which I'm just not sure how capital intensive those are at this point.

Speaker 2

So Matt, that's an excellent question. And I go to sleep every day and wake up every morning thinking about these issues of course. And the way we balance it is with prudence. As I mentioned earlier, we are increasingly entering a period where innovation and speed will drive future success. There is no ambiguity about it.

Obsolescence rates will increase. So without innovation and speed you may be stuck with yesterday's products. Now we have the blessing of having not just a fantastically diverse pipeline, but also very importantly, do the ability to continue to innovate. And I think that is absolutely critical. And so to your point, we balance these options prioritizing programs that are mission critical for us until as I said earlier, a transaction that will alleviate our cash needs near term.

And that transaction is expected to be completed very soon.

Speaker 5

I guess just a quick follow-up on that. I don't really I know you don't really have guidance, but you've managed to keep R and D expenses pretty flat year over year from last year to so far this year. With more things entering clinics next year, how much of an uptick would one expect on the R and D burn?

Speaker 2

So when we enter into the kind of partnership that we're anticipating, some of the costs will be deferred to the partner, not all, but some of the costs will be deferred to the partner. And you can expect a modest uptick in our spending because of all of what you are articulating, but it will not be a substantial uptick in spending.

Speaker 5

Thanks, Carol.

Speaker 0

The next question is from the line of Frank Simmons with Majestic. Please go ahead.

Speaker 6

Good morning. Thank you for taking my call. I have a few questions. First, is it safe to say that one of the reasons for the delay in delivering these partnerships is because Agenus leadership is renegotiating terms with these potential partners?

Speaker 2

It is not safe to say that. As I said in my earlier comments, it is process related and I can tell you that we are beyond negotiating financial terms with at least two of the prospects that we expect to come to closure soon.

Speaker 6

Okay. And you still expect at least one of those by the end of the year? Yes. Okay. 2018 just to make sure?

Speaker 2

Yes.

Speaker 6

Okay. Thank you. And then the other question I have is for you Garo. I know you're getting close to the retirement age. What is your intentions on staying with Agenus and leading the company in the near term?

Speaker 2

I have no intentions of retiring.

Speaker 6

All right. Thank you. I appreciate that. That's all I have.

Speaker 0

This concludes our question and answer session. I would like to turn the conference back over to Doctor. Garo Armen for any closing remarks.

Speaker 2

Thank you very much for your participation and attendance. We always enjoy speaking to you and updating you. And I think going forward also your questions are very informative for us to think about how to articulate particularly with our communication strategies. And as I said earlier, we are for sure upgrading our efforts to communicate on a more regular basis and you will see the results of that in coming weeks and months. So thanks once more and I believe there will be a recorded version of this transmission.

Speaker 0

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.