Agenus - Earnings Call - Q3 2020

Transcript

Speaker 0

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Agenus Third Quarter twenty twenty Conference Call and Webcast. At this time, all participants are in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Doctor.

Jennifer Buell, President and Chief Operating Officer of Agenus. Doctor. Buell, go ahead.

Speaker 1

Thank you very much, Cheryl, and thank you all for joining us today. Today's call is being webcast and will be available on our website with our accompanying slide material for replay. Before we start, we'd like to remind you that this call will include forward looking statements, including statements regarding our clinical development, regulatory and commercial plans and timelines as well as timelines for data release and partnership opportunities. 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.

I'm Jennifer Buell, President and Chief Operating Officer of Agenus. We're really delighted to provide an update today on our business. Joining me are Doctor. Garo Armen, Chairman and Chief Executive Officer and Christine Plaskin, Vice President of Finance. Now I'll turn the call over to Garo to highlight our key accomplishments and plans.

Speaker 2

Thank you, Jen, and thank you all for your participation in this call. Today, I will begin with a recognition of our team's resolve and commitment to deliver for our patients and their families. We have made excellent progress in advancing our lead programs balstilimab and zolifrelimab to BLA filings and made important advancements with our next wave of innovations, which are in the clinic. This wave of innovations includes AGEN1181, our ST enhanced next generation anti CTLA-four antibody, our differentiated CD137 agonist AGEN2373, AGEN1223, our intratumoral Treg depleting bispecific and our allogeneic NKT cell therapy for patients with cancer and COVID-nineteen. These achievements have set us up for potentially transformative advances in the treatment and cure of cancers.

In the beginning of this year, we hosted an R and D Day in New York. We outlined plans that would bring us to our first BLA filing for our lead molecules, while also advancing our novel pipeline of differentiated first or best in class molecules. We committed to share data readouts from six clinical programs this year. As promised, first having generated positive clinical data from BALI monotherapy trial of 160 patients, we have initiated a rolling BLA filing with the FDA and paid the filing fee of approximately $2,900,000 in the third quarter of this year. Second, we presented impressive data from our BALI plus ZALI 155 patient combination trial.

We are in discussions with the agency regarding a potential BLA filing on this one. Third, we have generated clinical response data in our AGEN1181 Phase one trial. Additional clinical response data will be presented by Doctor. Steven Oday at SITC on November 14. We are particularly excited about this program.

Fourth, clinical data from our AGEN2373 dose escalation trial is maturing. We will provide an overview of these data at SITC and expect to present additional data at upcoming conferences. In addition, we expect to start combination trials of AGEN2373 with our bastilimab soon. Fifth, data from our bispecific antibody AGEN1223 is also maturing and we expect to present upcoming clinical conferences. Sixth, we are delayed in generating clinical data from our very exciting allogeneic NKT cell program due to COVID-nineteen, but we are now screening patients for imminent enrollment.

We are particularly excited about this program because one, the ability of I NKT cells to kill cancer cells directly, as well as by recruiting other components of the immune army. And also two, the ability of iNKT cells to kill cells that are infected with viruses such as COVID-nineteen. While also they regulate or modulate immune over activation. This is a very important property of iNKT cells beyond activating immune response. And unlike many other cell therapies, we expect to deliver potential benefit to both cancer patients and patients with serious viral infections at a much lower cost.

It is also important to note that 13 Agenus discovered clinical stage compounds have cleared through initial safety at multiple doses. Our next steps will be the rapid advancement of a number of these programs to combination treatments with our own agents such as BALI and our next gen CTLA-four antibody AGEN1181. Next, while we are advancing our clinical programs, our innovation engines continue to yield new and exciting products, which are rapidly advancing towards the clinic. This year, we submitted seven abstracts to SITC and all seven were accepted for presentation. Our SITC presentations include four clinical and three preclinical programs.

SITC as you know, has become one of the most notable immuno oncology conferences in the world. And we look forward to our presentations between November 11 and November 14. In a few moments, Jen will provide you with detailed highlights of these presentations. Our full details from these presentations will only be discussed and disclosed at SITC in compliance with SITC disclosure rules. Now let me discuss briefly an important driver of our innovation.

It is the Agenus proprietary vision platform, which is one of our seven presentations at Citi A week ago, I took a half a day to work in our vision laboratories, where we do state of the art research with state of the art equipment and with our exceptional chemo scientists. Here is Vision's value for us and also what it does. Agenus Vision can investigate stages of various types of immune cells, including T cells. Vision allows us to study these T cells in a simulated human tumor microenvironment.

Typically T cells go from their naive state to their activated state, and then to their efficacious state, otherwise known as tumor killing state, and ultimately to their non efficacious or exhausted state. You may have heard the term T cell exhaustion. That is what this refers to. The vision platform enables the investigation of the effect of therapeutic drugs and genetic interventions to determine how they can enhance the efficacious state of T cells. So the objective here is to keep T cells in an efficacious state as long as possible, or to drive them into that efficacious state.

The platform recapitulates known markers of pathology in the tumor microenvironment and helps discover new relevant markers. With all of this, we can investigate new hypotheses in immuno oncology. Agenus Vision is an in vitro translational model of multicellular interactions seen in the in vivo tumor microenvironment and therefore has potential to direct patient specific therapy by mimicking the tumor biology seen in patient biopsies. In brief, we have designed a proprietary platform where at any given point in time, we can intervene with our molecules and other molecules to modulate a model human system to determine the best therapy option for patients. We believe that our vision platform has the potential to transform cumbersome and lengthy clinical trials into an agile trial matching platform to meaningfully benefit cancer patients.

The platform also has potential utility in studying the immune response to infections. Also, among recent exciting developments are data presentations by companies who we have our licensed molecules to. For example, at ESMO last month, Merck provided an update on MK4830. This is an anti ILT4 antibody that Agenus discovered and licensed to Merck several years ago. The data with this myeloid targeting molecule generated quite a bit of attention with 11 objective responses including two complete responses and nine partial responses in heavily pretreated patients with advanced solid tumors.

Agenus is entitled to an additional $85,000,000 in milestone payments plus royalties from commercial sales of this agent. Also important to note that we have also advanced our own unencumbered myeloid cell targeting program. We have an undisclosed myeloid cell targeting antibody of our own, which we're targeting to file an IND for next year. In the second quarter of this year, we filed two separate cell therapy INDs, both of which were cleared to proceed to the clinic. We made a strategic decision at the time to prioritize our COVID patient enrollment program and having cleared all institutional requirements, we're in the process of screening patients and expect to dose our first patient imminently.

IonKT cells, our invariant natural killer T cells, remember these are T cells, are a unique cell type that combines the features of both innate and adaptive immunity. These lipid ligand binding cells have tumor targeting capabilities without the need for engineering and they also have a natural ability to suppress graft versus host disease. Together, these features underscore the attractive development attributes of ION KTs with the benefit of scalability since they are allogeneic. Finally, turning to our most powerful adjuvant asset in our pipeline. QS-twenty one stimulant adjuvant is in GSK's Shingrix vaccine, the most effective shingles vaccine with over ninety percent efficacy and which has achieved blockbuster sales status in its first two years after launch.

Although there was an interruption in its sales momentum related to COVID-nineteen this year, sales seem to be on track and rising. And if they continue with this current trend, it will trigger our milestone payment of $25,000,000 which could be in 2021. QS-twenty one is clearly the most powerful adjuvant that we know. However, its supply is kept because of the limited supply of its raw material, which comes from a Chilean soap bark tree. Agenus has been working on a more sustainable supply of feedstock for QS-twenty one Stimulant since 2015.

We have addressed this by developing a proprietary renewable source. And recently, we have validated QS-twenty one stimulant quality and biologic activity from this source. Further, we entered a contract this month to scale up the production of QS-twenty one Stimulant from this source material with Phyton Biotech. And now a few words about our manufacturing and supply chain. Now, to some of you, manufacturing supply may be in the background, but it is critically important in advancing programs.

Without it, we certainly could not have achieved the number of IND filings and the advancements in the clinic. On the topic of sustainable supply, this pandemic has heightened everyone's awareness on the importance of access to material. We have now seen firsthand the value of independence in manufacturing and supply. While we didn't anticipate this pandemic, we did anticipate the need for fully integrated capabilities for sustainable supply of goods and materials to complement our innovations, all for the purpose of benefiting patients with a sense of urgency, which requires speed and innovation. Our research productivity and pipeline has yielded more than 20 novel programs with 15 INDs filed in four years.

This productivity would not have been possible without our manufacturing and supply team at Agenus West, especially in this world, when access to manufacturing slots is getting scarcer. Timelines are being delayed and material is more difficult to access. Our internal manufacturing and CNC capabilities give us the freedom and flexibility to accelerate our development programs as well as provide access for our current and future partners. And we have done some of this in the past couple of years, that is manufactured product for our partners. Our REGENEZ West team has delivered more than 11 GMP batches for our own use and for partners in just the last few years alone.

And lastly, an update on our partnerships. As I mentioned earlier, our innovation engine has given rise to 15 clinical stage programs with seven of those advancing through strategic collaborations with Merck, Gilead, UroGen, Insight and most recently with Beta Pharmaceuticals. Beta is a China based pharmaceutical company to whom we have licensed Greater China rights for our PD-one and our first generation CTLA-four, that's val and zau. These partnerships have generated substantial financial value for us with the additional value expanding access to our innovations to patients at an accelerated pace, which would not have been possible with our own capabilities alone. This strategy has allowed us to nearly double the number molecules advancing in clinical development by leveraging the support and infrastructure of our collaborators.

While we ultimately endeavor to retain all rights to our innovations, In the near term, balancing between retaining rights to some of our agents with an emphasis on US rights and out licensing others with an emphasis on ex US rights is prudent for us fiscally, as well as it's responsible for advancing our innovations into the clinic. Thus partnering collaborations and innovative transactions are core to our strategy. This strategy has generated more than $575,000,000 of income to us in the past five years to help fund our operations. As part of this strategy, to maximize the value of our own IO portfolio, going forward, we will also provide access to others who can advance clinical programs in combination with some of their own agents with our products such as PD-one and CTLA-four, while we retain full rights to these commercialization of our products. This will help accelerate the pace of market expansion of our molecules in addition to IOIO combinations with also non immuno oncology agents, which is a very substantial market.

Today, we announced first of these collaborations with Radopharm Biotech. Radopharm is a leading innovative Italian biotech company dedicated to drug discovery and development with a pipeline of new chemical entities that is small molecules, as well as biotherapeutics. Through this collaboration, Radopharm will evaluate the safety and efficacy of CR-six thousand and sixty eight, Radafarm's potent EP4 receptor antagonist with balstilimab in patients with advanced mismatch repair, proficient and microsatellite stable metastatic colorectal cancer. I realize that's a mouthful, but it's an accurate description of reality for these cancers. A development area of high unmet need that is, and where immune therapies alone have not demonstrated significant clinical benefits so far.

The trial is expected to commence this year. Lastly, as of today, we are in active discussions under CDA with nine major pharma and biotech companies for potential out licensing transactions. This is the most by the way, most breadth of companies that we have had ongoing active discussions with. These could result in the infusion of significant amounts of cash. We will update you appropriately if and when some of these transactions come to fruition.

And now I will turn the call over to Jen to provide you with a summary of data from ESMO, our commercial launch readiness plans and the upcoming data from SITC without violating the disclosure rules, of course. Jen?

Speaker 1

Thank you, Garo. As Garo shared, the productivity of our research and development engine is really profound. We're incredibly proud of what we've accomplished and what our teams continue to accomplish. If you look at our pipeline, you'll see more than 20 discoveries listed with targeting very novel biology. You'll see that we've brought 15 of those to IND and now into the clinic.

These

Speaker 2

are

Speaker 1

being advanced now in our own hands and in the hands of our partners. Gives us an opportunity to actually expand the breadth and reach of our science and our innovation. Here at Agenus, we're advancing eight of these programs and I should highlight that this efficiency is coming out of a company that's just over 200 employees, which is incredibly efficient. And the number of INDs we've shared this with you before, the number of INDs that we filed in the past four years has rivaled our largest competitors, Bristol, Merck, Novartis, others. So again, just to emphasize, all of the capabilities that we have in house with a very efficient team.

And now we're advancing eight of these programs in our own hands. We've already provided clinical updates to you on the first three of these programs so far this year, most recently at ESMO. Those updates included data on balsilimab, our PD-one, zalifrelimab, our anti CTLA-four, AGEN1181, our Fc engineered next gen CTLA-four. And during upcoming SITC in the next couple of weeks, we're going to present an update on an additional four clinical programs and three very novel programs platforms. I'm going to turn to ESMO and summarize some of the data that many of you may be aware, but others may not.

At the recent European Society for Medical Oncology, this is the ESMO meeting, Doctor. Dave O'Malley, he's a Professor of Obstetrics and Gynecology at The Ohio State University College of Medicine. He's also the Director of the Division of Gynecologic Oncology. He presented results from the largest data set of patients with relapsedrefractory or metastatic cervical cancer treated with anti PD-one, arbalstilimab alone or in combination with our anti CTLA-four, zalifrelimab. The more than 300 patients worth of data will support our BLA filing, which is now well underway.

In fact, we've received confirmation that the FDA has commenced their review of our BLA starting with our CMC module. The ESMO presentation is available on our Events and Presentations section of our website. I encourage you to have a good look at that, But I'm going to highlight a few resounding messages from Dave's presentation. Balsilimab has shown activity in both PD L1 positive and PD L1 negative tumors. Notably, Keytruda is approved in PD L1 positive tumors only.

And in the data in cervical cancer from Merck, KEYTRUDA has shown no clinical responses in PD L1 negative tumors. This suggests balstilimab may be a differentiated anti PD-one. In one hundred and sixty patients treated with balstilimab or PD-one as a monotherapy, we reported response rates of nineteen percent in PD L1 positive patients and ten percent in PD L1 negative patients. This compares to commercial PD-one Keytruda with fourteen percent response rates in PD L1 positive tumors and no response rates in PD L1 negative tumors. The durability of this trial and of these responses is quite impressive, exceeding fifteen months and patient follow-up continues.

When we add Zalifrelimab to balstilimab in the same population refractory metastatic cervical cancer patients, we see an important expansion in response rates into a near doubling in PD L1 positive tumors of twenty seven percent. This represents a benefit that has not yet been observed with any available therapies for patients with cervical cancer. Importantly, we also see an extension in the durability of these responses, where the median duration of response has not yet been achieved after sixteen months. These data underscore not only activity of our molecules and the meaningful potential for patients with cervical cancer, including those who have no effective options such as patients with PD L1 negative tumors, but it also showcases the details supporting our robust BLA filing for balstilimab, which as Garel mentioned, is already underway. We consider PD-one as being an essential component for use with our own pipeline as well as with the pipeline of others.

Although there are several commercially available PD-1s and others in development, there are significant advantages to having our own PD-one. The first is of course affordability and flexibility in developing combination. Our own IO pipeline is highly synergistic with PD-one. This pipeline includes agents such as our first generation Zalifrelimab and anti CTLA-four agent AGEN1181, our next generation Fc enhanced multifunctional anti CTLA-four antibody our Fc enhanced bispecific TIGIT antibody AGEN1777, this is expected to be in the clinic next year. Our differentiated CD137 antibody AGEN2373 and our very exciting intratumoral Treg depleting bispecific antibody AGEN1223 also in the clinic and our allogeneic INKT cell therapy for patients with cancer, which will be in the clinic this year.

This list of compounds are synergistic with our PD-one and we've presented data at AACR and ESMO at ASCO demonstrating the value of the combination of these agents with our PD-one. Another huge advantage of having a PD-one in house is to control pricing of our combinations. Combinations will be required for effective treatment and control of cancer. And pricing will be an important component of the access to these molecules. The advantages offered by having our own PD-one for our own purposes is becoming clear.

And also that other companies who need a PD-one to combine with their own pipeline of agents or their own commercial products may prefer to use our PD-one that is balstilimab versus others for all of the reasons that I've cited above. We plan to follow the BLA filing of balstilimab with the combination BLA in the same population, so adding zalifrelimab to balstilimab in patients with cervical cancer within a few months of our filing. We're preparing for an upcoming pre BLA meeting with the FDA this year to finalize our plans. We see balstilimab as an important addition to therapies for patients with cervical cancer with clinical responses broadly in both positive and negative tumors. And we believe that the combination has the potential to be the first checkpoint combination in cervical cancer with the potential to bring practice changing benefit to patients with high response rates that are durable.

The second line cervical cancer market includes approximately four thousand patients as you know, and about half of which seek treatment. And we're positioning to capture a good proportion of this market. Our commercial and medical plans incorporate a multifaceted approach with three major pillars involving data generation and publication, building awareness of our therapies and educating the market on the unmet need for patients with cervical cancer. Awareness is a critical component of rapid adoption and this is a key area of focus for our teams. We've taken several steps to address this in recent months, including detailed presentation of data at ESMO for both monotherapy and the combination and a preparation of this data for rapid publication in high impact journals.

We've already deployed a team of experienced medical science liaisons or MSLs to engage in the community and scientific exchange. Based on our analyses, we plan to hire a nimble and efficient sales force focused on targeting higher volume gynecologic oncology account. Our fit for purpose commercial launch effort is being managed by an experienced launch team who have led the successful commercial launches for several products in oncology and rare diseases at large pharmaceutical companies such as BMS. Our launch preparations will lay the foundation for the innovation to follow. Our pipeline is built for stacking, for bringing together optimal combinations for patients in ways that no one else can and delivering robust value reproducibly.

As the limitations of PD-one therapies become more obvious and the obsolescence rates of current therapies increase, we are prepared to meet the growing needs of patients and providers with new therapies that can be combined affordably and excessively. Now this is a good time to discuss the innovations that are following the launch of balstilimab and balifrelimab. First AGEN1181. AGEN1181 is our next generation Fc enhanced anti CTLA-four antibody. It's poised to be a transformative CTLA-four asset.

It's rationally designed with Fc engineering to optimize its action and overcome the shortcomings of first generation assets. Eleven eighty one has the potential to increase the therapeutic benefit of anti CTLA-four therapies and expand responses to a broader population of patients. We've previously reported very promising data that we're seeing with this agent and we will continue to present additional data. Complete responses are often rare in Phase one studies. For AGEN1181, we've already seen two reported complete responses, one of those by a complete response by PET scanning.

And these patients both have microsatellite stable endometrial cancer, very hard to treat endometrial cancer, PD L1 negative tumors. They also both have a genetic polymorphism in their CD16 allele. These characteristics make them unlikely responders to anti CTLA-four therapy or most IO therapies, but they have seen complete responses from AGEN1181. And we are thrilled to have Doctor. Steven O'Dea to present the updates on these additional data and clinical responses, as well as some exciting mechanistic findings that have not been observed with first generation anti CTLA-four molecules.

Doctor. Oday has deep experience with CTLA-four. As a matter of fact, he was the first to dose the patients with ipilimumab. He presented his seminal findings at a plenary session at ASCO in 02/2009, which exemplified the curative power of anti CTLA-four and ignited a field we now call immune oncology. Twenty years later, Doctor.

O'Dea was the first to dose a patient with our optimized anti CTLA-four agent AGEN1181, a molecule that we believe will be the next major breakthrough in this field. We're looking forward to his presentation. Now, our allogeneic cell therapies or INKTs. Doctor. Birju Yitjat is an expert in the biology of INKT cells.

She's going to be presenting updated data on our program. INKT cells or invariant natural killer cells are unique cell type that combines the features of both arms of the immune system, the T cells and the NK cells, both the adaptive and innate immunity. We believe these cells will have an important role in the elimination of tumors and the elimination of viruses such as COVID-nineteen. We've previously reported that our clinical trials for iNKT cells were in cancer and in COVID were cleared by the FDA. We've successfully opened our first site earlier in and we expect to announce the dosing of our patients with allogeneic INKTs imminently.

The timing of this trial starting of course is in parallel to now another uptick in the spread of the virus and New York is being hit yet again. We're hoping that we can bring benefit to these patients with COVID. Beyond COVID-nineteen, these cells have great potential in mitigating cancer and Agenus is also advancing clinical trials for patients with cancer plan to start dosing also this year. Those trials are also FDA cleared to launch and will be initiated at Dana Farber. Turning to our differentiated CD137 anti CD137 molecule AGEN2373, Doctor.

Claire Galand will be presenting data at SITC. This molecule is designed with important safety and efficacy features as compared to other molecules. HN2373 is a fully human monoclonal antibody that boosts the immune response to cancer cells by enhancing CD137 co stimulatory signaling and activated immune cells, both adaptive T cells and innate NK cells. Dual targeting of both innate and adaptive immunity makes this molecule highly attractive target for cancer immune therapy. I'm very happy to report that two thousand three hundred seventy three has dosed beyond now the one mg per kg dose cohort with no observed liver toxicity.

Previously, toxicity was what hampered or killed one of the competitor molecules. Furthermore, we've observed durable disease stabilization in patients with ovarian cancer sarcoma and non small cell lung cancer in this early trial. Doctor. Ghilan will provide an update on the preclinical and clinical progress and our upcoming combination plans with this molecule. Turning to TIGIT, which will also be presented at SITC, it's shaping up of course to be the next breakthrough therapy for IO.

We've seen this, this conviction supported by the launch of multiple late stage clinical trials by Roche and Merck and others and some recent strategic collaboration. We've learned from data presented at ASCO from Genentech's TIGIT that revealed no monotherapy activity. It suggested that Fc silence is a liability and Fc competence at a minimum is necessary. Now there are a couple of components to think about this with respect to the Fc engineering of an antibody. There is an Fc silent, there is an Fc competent and then there's an Fc enhanced, which is the engineering that we've employed into our AGEN1181.

We have a lot of experience with this enhancement. We've also employed the same technology and technique into our TIGIT molecules, which include our mono specific antibody as well as our bispecific. We published that Fc enhancement is necessary to optimally target TIGIT. Just to reiterate, Fc competence and Fc silent molecules are not enough to optimally target TIGIT biology. You need the Fc engineering, the Fc enhancement.

We've applied our science to the design of two different approaches. This is AGEN1327, our mono specific TIGIT antibody and our bispecific AGEN1777. These molecules unleash T cells, NK cells and have demonstrated superior tumor killing abilities compared to other available TIGIT antibodies. We've shown you that data earlier and we'll share more at SITC. We have the potential to combine these agents effectively with other IO agents such as balstilimab or PD-one.

Now our bispecific molecule seventeen seventy seven has some interesting individual promise. This molecule has shown dramatic tumor control in a PD-one refractory colon cancer mouse model. And we've designed it to be used as a monotherapy. At SITC, Doctor. Rebecca Ward will share important data that underscores the importance of these features for potential best in class biologic activity in in vivo models.

We remain on track to advance novel TIGIT molecule to the clinic in 2021. Zalifrelimab is our first generation CTLA-four showing important activity both as a monotherapy as well as in combination with balstilimab in patients with cervical cancer. We've continued to interrogate a population of patients that are growing. These are populations of patients who have failed PD-one and have nothing else. We have seen activity with Zalifrelimab.

We've also seen activity with this molecule in rare tumors such as angiosarcoma. We presented that data and Doctor. Brie Wilkie at our last earnings call highlighted a couple of key findings related to our anti CTLA-four zalifrelimab and angiosarcoma. We're also seeing this activity in other PD-one refractory tumors. And as the growing population of PD-one refractory cancers expand, zalifrelimab as a follow on therapy may provide the immune catalyst for durable responses.

We've previously reported on two responses in angiosarcoma who failed PD-one and we look forward at SITC to be following up on these promising responders with new reports of single agent activity in rare tumors. And finally, adding to our vast body of knowledge on balstilimab and zalifrelimab in refractory metastatic cervical cancer is new data demonstrating that pseudoprogression, which is somewhat common in immune therapy, essentially it occurs in patients, when there's inflammation around the tumor, it actually appears as disease progression. But in fact, it's actually immune attack on the tumor in many cases. Sometimes patients are prematurely discontinued from therapy because of the perception that their tumor may have progressed. We are the first to demonstrate in patients with cervical cancer that pseudoprogression is phenomenon of radiologic growth in tumor size is not due to the spread of cancer.

Patients being treated with immunotherapy may discontinue prematurely if this progression or pseudo progression is not properly identified and delineated. Stopping treatment too early can be detrimental to patients. Using our knowledge and identification of pseudo progression patterns in recurrent metastatic cervical cancer, we plan to optimize treatment and care for these patients. And finishing up with platform, as Garo has mentioned earlier, our Vision platform is a proprietary platform designed to recapitulate the human tumor microenvironment in a system that allows us or enables us to interrupt with or intervene with therapeutic intervention and reinvigorate T cells to fight cancer. Our data set of responding and non responding patients have given rise to improve matching of patients to our clinical trials and dosing protocols, whether it's combination or sequential and information on molecule design to optimally address tumor escape mechanisms or revive immune fighting cells.

At SITC, we'll be presenting data on how we use this system to identify novel PD-one biomarkers. The expression of PD L1 on tumors has been used as a standard predictive biomarker for anti PD-one therapies. We've utilized our vision system by driving T cell dysfunction in vitro to identify a biomarker that may call into question the reliability of PD L1 expression and identify other more reliable predictor response predictive molecules. We're looking forward to a very exciting SITC program with our seven programs that will be presented there. And I'm now going to turn the call over to Christine Klaskin to review our financials.

Christine?

Speaker 3

Thank you, Jen. We ended the 2020 with a cash balance of $114,000,000 as compared to $62,000,000 at December 3139. This compares to a cash balance of $79,000,000 at the end of the second quarter of this year. For the third quarter ended 09/30/2020, our cash used in operations was $32,000,000 Net loss for this quarter was $52,000,000 or $0.28 per share and includes certain non cash expenses of $18,000,000 This compares to cash used in operations for the same period in twenty nineteen of twenty eight million dollars and a net loss of $46,000,000 or $0.33 per share, which included $9,000,000 of non cash expenses. Our cash used in operations for the nine months ended 09/30/2020 was $104,000,000 with a net loss of $145,000,000 or $0.88 per share compared to cash provided by operations of $13,000,000 and a net loss for the same period in 2019 of $81,000,000 or $0.58 per share.

For the nine month period ended 09/30/2020, we recognized revenue of $57,000,000 which includes revenue related to the upfront license fee from our transaction with Beta in addition to non cash royalties earned. For the same period in 2019, we recorded revenue of $116,000,000 which includes revenue related to the upfront license fee from our transaction with Gilead in addition to non cash royalties earned. I now turn the call back to Garo for his concluding remarks.

Speaker 2

Thank you, Christine, and thank you, Jen. So there's a lot, as I've said in my last call. And you are wondering how one will make money with all of this. And we of course are determined to embark on our strategy to build a highly, highly successful company in our industry and beyond. And that's based on five important pillars.

And I will go through them one by one very briefly. Pillar number one is to manage to continue to manage our cash position relative to our cash requirements. As you can see from this quarter's report and our performance over the last few years, we have done this well. That is until we can bridge to an infusion of significant amount of cash from either one or more transactions. And that's what we're working on diligently.

So that's number one. Number two, very importantly, position our first generation products with building of a commercial presence in order to optimize the revenues of these products. And I'm talking about specifically Bali and Zali. And how do we do that? By bringing in a very competent first class launch and commercial team, which we have brought in a team from outside now that has provided us with a turnkey operation and are in the process of building our own team for our needs going forward.

Now, once we launch our first generation products, we will optimize their revenue potential for the approved indications. But most importantly, beyond approved indications in combination with our products, and as I explained before, in combination with other products, including non IO agents. Thirdly, embark on our strategy of sprinting towards approval for our pipeline of clinical products that in our opinion has very, very exciting potential, in fact, blockbuster potential. Among those included in that category, as Jen described, eleven eighty one, our next gen CTLA-four molecule and also importantly, our 2,373, our CD137 antibody that we're starting to see some data on this that we believe will be particularly exciting when we start our combination trials with 02/1973. And also very importantly, our IonKT cells.

We believe if IonKT cells work the way we expect them to work, the commercial potential of this modality is quite significant. Fourthly, we will continue to innovate with our pipeline soon to be in the clinic. They include AGEN one thousand seventy seven that is our TIGIT bispecific molecule and are also undisclosed myeloid cell targeting antibody. We expect both of these molecules to be in the clinic next year. And lastly, we believe given the breadth of transactions and the breadth of molecules that we have partners to third parties, we believe by helping them optimize their potential for products that we have licensed them, we believe we can generate over time a cash annuity to fund our businesses.

So with that, I will stop and turn it to the operator to see if there are any questions we can answer. Cheryl?

Speaker 0

Your first question is from the line of Mayank Mamtani.

Speaker 4

Thanks for taking my question and great to hear so much progress across the pipeline, including wholly owned and partnered programs and congrats on the interest externally, including from the investigator community at SITC and hopefully from your future partners. So I have a few questions. Obviously, you have a lot going on. So for VALIZALI combination filing, Jen, could speak to what we are sort of waiting there for? Is it duration of response?

Or is it longer term safety tolerability data in regards to your NDA filing?

Speaker 1

Mayank, I wasn't able you said are we waiting for duration of response? So we don't yet have the median duration of response achieved, but we this may take quite a bit of time. Patients are particularly with the combination are staying on therapy and they're having really quite lengthy and durable responses. So that won't hold us up from any of our regulatory issues with the combinations. That's just something that we'll follow and continue to report on.

Speaker 2

I mean, theoretically, and practically, the longer it takes for us to reach duration of response, the better the patients are doing, right?

Speaker 4

Right, right. Okay. So what would you say then is the gating step here? Is it you just are taking it sequentially given agency has a lot going on non oncology, COVID specific stuff. So are you just taking it sequentially, the two BLA filings?

Is that basically?

Speaker 1

That's right. There are a few reasons for that, Mayank. And we have as we've mentioned, we have some partnership activity with access to BALI. It's a very straightforward filing. And just technically, there was an opportunity to engage the agency, develop our relationship with them through the monotherapy filing.

The trials were run-in parallel. The data were collected essentially in parallel. And the submission will be semi parallel. So we're still in the preparation phase for the combination. There are some advantages to just pushing the balsilimab filing in this year as a monotherapy and following.

But we expect and we're in the process of speaking with the agency on the total package requirements, etcetera, that the combination will be just a couple of months behind the monotherapy.

Speaker 4

Right, great. Thanks so much for that explanation. So my next question kind of cuts across your multiple checkpoint programs for TIGIT and CTLA-four also. So the importance of Fc engineering, as you highlighted, the Fc depleted version of TIGIT, for example, is being looked at Gilead and AstraZeneca also started their Phase III study today. Like you said, Merck and Roche have the Fc competent.

So maybe just talk to me about how you think about eleven eighty one when we see that clinical data, how much derisking it is to other programs that you have and this entire concept of Fc enhanced. Again, conceptually makes a lot of sense, but just in the clinic, as you highlighted, there are different approaches that different companies are taking.

Speaker 2

Let me just make a couple of general comments and I'll let Jen answer the rest of the question. But one thing that I think is important for everyone to realize is that there is a defined strategy of pursuing leads and programs that have an advantage over anybody else's agents. In other words, if we have a TIGIT molecule, the only way we justify advancing that molecule is if we can clearly demonstrate superiority over other molecules that we either internally generate that is we generate other molecules to test ours against or we procure it to test our molecules against. So unless we can demonstrate that rigorously, we don't take programs forward. And so when we come up with leads such as 2373 or 01/1977, these have been validated by our systems, including the use of vision technology when applicable in order to justify our further investment to take it forward.

We don't do it because a target is fashionable. So Jen, perhaps

Speaker 1

maybe a few points Mayank. So eleven eighty one, why did we choose the route that we chose and we presented these data published them in cancer cell in 2018. And it was really sort of field shaking and that we're getting we've had quite a bit of interest particularly in this molecule and the features have played out in the clinic quite well. And the differentiating features of doing the Fc enhancement versus other approaches like the AFU cost related approach are a few fold. And I'm just going to highlight, the most important is that through the Fc engineering enhancement, we avoid complement mediated toxicities.

These are the hypothesitis and neuroendocrine disorders that actually have hampered these are irreversible toxicities. We see them in about fifteen percent of patients who are treated with first generation CTLA-four. And we very much wanted to be able to take advantage of all of the value of CTLA-four, which we know and it's the data are out there. It's really the only molecule where we see the tail of the curve phenomenon, these long, durable, curative responses. So we wanted to be able to expand and broaden the populations who could have that experience without some of these irreversible toxicities.

Fc enhancement has allowed us to do that and we have not seen any neuroendocrine disorders or toxicities in our trial to date. The other features, of course, though, are to broaden the population of responders to those who may have a polymorphism in their CD16 allele, and that's more than forty percent of the population. Those patients do not respond to first generation CTLA-four, these are data presented by us and others. And we are seeing responses with those patients on our trial, patients who have these mutations. So it's acting as designed.

And then finally, of course, and we've presented this and this is mechanistically driven, it's the enhanced immunogenicity that we see. And we've shown that those data with eleven eighty one, with eleven eighty one in combination with balstilimab, as well as with our TIGIT molecule. And these data are all available publicly on our website. And just two days ago, Doctor. Dan Chen, Head of our Discovery Group here presented at the TIGIT conference.

We've made that publication presentation available for you on our website. And it will showcase that the features that we've leveraged into our eleven eighty one that's given us the benefit that we're seeing right now in patients, we've engineered into TIGIT. The difference in the approach is that we've taken, I believe maybe because of the timing of development. Some of these earlier TIGIT molecules were designed a few years ago and did not benefit from some of the science that we know today and that we published on as well. Now, the world is waiting to see how some of these data will play out.

And Ira Melman from Genentech in his own words believes that Fc competence is critical. Fc silence is going to be problematic. And now we believe that it's one step more than that, that Fc engineering or enhancement will be even better than Fc competence alone. So that's why we've pursued the approach that we've pursued. We're following the science here and the data will continue to play out.

But I think that the TIGIT conference is very informative and I think Dan's contributions to that will help to better elucidate why we've chosen the path that we've chosen.

Speaker 4

That's great. Really appreciate the detailed explanation. So my last question, if I may, on 02/1973, As you know, you said you're thinking about combinations there. Could you just kind of share your thoughts based on what you've seen, whether it's going to be a more traditional PD-one combination? Or are you also thinking CBLA -four?

And my the second part of that question is, do you also record a payment from Gilead like you had from Merck for the ILT4, if this goes on to the next stage of development? Thanks so much for taking my questions.

Speaker 1

Okay. So maybe I'll so first with respect to the combination approach and you've hit some very important points. And there is some science that's less well adopted by the community, but that we believe is really opportunistic. And that includes combinations beyond PD-one. Now that's us.

What we know molecules that we've seen in the clinic in tumors like melanoma and lung cancer and others, we have seen the combinations of CD137 agonists and PD-one have great value for patients. The problem has been the liver toxicity that we've seen with those other molecules. So the inability to safely dose or tolerably dose these molecules in combination. The design of our CD137 molecule allows us to get around that. We have not seen hepatotoxicity.

So but we're not averse to a more traditional combination to start. We have a lot of data on balstilimab and there's a strong rationale for the combination with PD-one. That said, those combinations will essentially be traditional and base case in your words, and I agree with you. We will add on other very novel compounds that we can deliver and others cannot. And CTLA-four is one really important complementary agent to CD137 agonism.

And we've got some really impressive preclinical data to support some of the plans that we have for this molecule. And we'll be more public about it as we continue to expand this trial. The protocol amendment is underway. So you'll start to see the updates on what our clinical plans are with CD137 just in the next couple of weeks. With respect to the option programs, these I have pre negotiated financials with Gilead.

And I'll turn it over to Garo to highlight a couple of those points.

Speaker 2

So with regard to milestones for the balance of this year, next year and beyond, you can expect perhaps one milestone, we would term that as a minor milestone this year from one of our partners. There will be the most significant milestone expected for next year will be the GSK $25,000,000 royalty milestone. But in terms of transaction income for either balance of this year or next year, those will come from medium or large transactions that will be characterized as new transactions as opposed to from existing milestones. Those will be the more meaningful components of income for next year.

Speaker 4

Fantastic. Appreciate the update. Thanks for taking my question.

Speaker 1

Thanks, Lana.

Speaker 0

Your next question is from the line of Matt Stipps with William Blair.

Speaker 5

Good morning, thanks for taking my question. Just kind of one for me. Just curious if in conjunction with this SITC meeting, if you'll be able to start giving some more concrete plans for November, you guys have talked about a lot of different ways you can go with the next steps for that molecule, whether it's expansion into individual tumor types in the current trial or kicking off some Phase II trials. Then just again kind of balancing that versus advancing the XALI, which I know you guys just posted a trial in angiosarcoma. So good to see that, but just kind of the balance of moving those two assets forward.

Thanks.

Speaker 1

Hi, Matt. Thanks very much for your question. Yes, the answer is yes. We will give more clarity. And I'll tell you a few reasons.

We very recently met with our Scientific Advisory Board. And just to reiterate, they're on our website. But these are and really astute group of scientists that we're thrilled to be working with, and it includes Mario Snow and Kurt Schelper and Pat LaRusso and Don Van Hoff, Benoit Hidalgo, Steven O'Dea, real experts in drug development and specifically in immune therapy development. And we went through all of the data, the preponderance of data that we have to date. And we've actually agreed on the fact that we have a very active dose and a very active combination dose that we will now pursue with the trial that we believe will be designed to support a very rapid BLA filing.

Our next wave, our clinical expansion for November will be very, very important for us and will be designed for to interrogate activity in a few different target tumors of interest, where we believe that we have a differentiated and superior approach in large market opportunities. So we will be disclosing these plans with you this year.

Speaker 2

All the questions, Cheryl, we can promptly end the call. We are about nine minutes over.

Speaker 0

There are no further questions at this time, sir. Are there any closing remarks?

Speaker 2

Thank you very much everybody. I think we've covered quite a bit and we look forward to communicating all the excitement in coming weeks, months and year.

Speaker 0

Ladies and gentlemen, this concludes today's teleconference. Thank you for your participation. You may now disconnect.