Bioatla - Q3 2023

Transcript

Operator (participant)

Good afternoon, ladies and gentlemen, and welcome to the BioAtla third quarter 2023 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please be advised that today's call is being recorded on Tuesday, November 7, 2023. I would now like to turn the conference over to Bruce Mackle of LifeSci Advisors. Please go ahead.

Bruce Mackle (Managing Director)

Thank you, operator, and good afternoon, everyone. With me today on the phone from BioAtla are Dr. Jay Short, Chairman, CEO, and Co-founder, and Rick Waldron, Chief Financial Officer. Following today's call, Dr. Eric Sievers, Chief Medical Officer, and Sheri Lydick, Chief Commercial Officer, will join Jay and Rick for a short Q&A. Earlier this afternoon, BioAtla released financial results and a business update for the third quarter ended September 30, 2023. A copy of the press release and corporate presentation are available on the company's website.

Before we begin, I'd like to remind everyone that statements made during this conference call will include forward-looking statements, including, but not limited to, statements regarding BioAtla's business plans and prospects and whether its clinical trials will support registration, plans to form collaborations and other strategic partnerships for selected assets, results, conduct, progress, and timing of its research and development programs in clinical trials, expectations with respect to enrollment and dosing in its clinical trials, plans and expectations regarding future data updates, clinical trials, regulatory meetings, and regulatory submissions, the potential regulatory approval path for its product candidates, expectations about the sufficiency of its cash and cash equivalents, plans to prioritize and focus development on selected assets and indications, and expected R&D and G&A expenses.

These statements are subject to various risks, assumptions, and uncertainties that can cause actual results to differ materially and are described in the filings made with the SEC, including the most recent quarterly report on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, November 7, 2023, and BioAtla disclaims any obligation to update such statements to reflect future information, events, or circumstances except as required by law. With that, I'd like to turn the call over to Jay Short. Jay?

Jay Short (Chairman, CEO and Cofounder)

Thank you, Bruce, and thanks to everyone for joining us for our third quarter 2023 BioAtla earnings call. BioAtla is the inventor and leader in the development of novel therapies using a proprietary Conditionally Active Biologics CABs platform, with improved selectivity for attacking tumor cells while avoiding healthy cells, thereby addressing critical unmet needs in oncology to improve patients' lives. As we approach the end of 2023, we have obtained data to support several value inflection points across our CAB portfolio and continue to focus on further advancing the development of our prioritized CAB programs. We believe that forming one or more strategic collaborations with major pharmaceutical partners can accelerate development of selected assets and maximize their market opportunities. We also believe that our more focused and strategic approach better positions us to enhance value for shareholders.

Additional details related to what I'm going to provide are available in today's press release and our revised company presentation, both of which are available on our website. I will now provide some new updates since our second quarter call in August, beginning with our CAB-AXL-ADC, BA3011. Regarding our BA3011 phase II study in non-small cell lung cancer, we have consistently observed multiple clinical responses in AXL-positive treatment-refractory lung cancer populations. Among patients receiving BA3011 monotherapy, who previously experienced PD-1 treatment failure and were evaluable for efficacy at 12 weeks, the observed objective response rate was 27.8%. In patients with EGFR wild-type non-squamous lung cancer who previously experienced PD-1 treatment failure, 33.3% of the patients had a partial response to BA3011 monotherapy.

Of note, AXL expression in lung cancer defines a particularly poor prognostic group. Also, these patients had experienced the failure of a median of 3 prior lines of therapy. So we believe that observing multiple responses in this treatment-refractory poor prognostic group is clinically meaningful and relevant. In addition to the consistent differentiated safety profile, we continue to observe clinical benefit in patients, including multiple PRs at a TmPS score of 1%. We are exploring the potential clinical benefits in AXL TmPS negative patients, which is important for understanding the market potential of BA3011 in lung cancer. Earlier this quarter, we also received verbal FDA feedback that we believe is supportive of a registrational path forward for BA3011 in lung cancer. We anticipate receiving formal written feedback later this month.

We plan to share more details and interim phase II data to be presented at the IASLC conference and our KOL event in early December. Our phase II potentially registrational study for undifferentiated pleomorphic sarcoma, or UPS, is ongoing, and we continue to enroll the 2Q3W dosing regimen for up to 20 patients. We have decided not to further advance the 3Q4W dosing regimen across any cohorts in either the BA3011 or the BA3021 studies due to suboptimal compliance with this dosing regimen, which is consistent with a lack of meaningful difference in efficacy observed with BA3011 in leiomyosarcoma. In regards to other bone and soft tissue sarcoma cohorts, we are pleased to have hit our internal go criteria for several sarcoma subtypes, including synovial sarcoma, liposarcoma, and osteosarcoma.

As a reminder, our internal go criteria is defined as achieving greater than or equal to 1 complete response/partial response, or a progression-free survival rate of greater than or equal to 40% at 12 weeks. All cohorts are now completed, and we plan to submit available data to a medical meeting in 2024. As previously communicated, our highest priority is to deliver innovative, life-changing therapies to cancer patients with significant unmet medical needs. We have now observed multiple clinical responses in several treatment-refractory solid tumor populations with our CAB-AXL ADC asset, BA3011. We have also recently received feedback from the FDA on the BA3011 lung cancer registrational study design.

Taken together, we continue to believe that BA3011 is an active agent in treatment-refractory tumors and has the potential to become a first-in-class treatment for a significant number of patients who experience the failure of at least one prior line of therapy. Now turning to our second CAB ADC asset, BA3021, a CAB-ROR2-ADC. For our ongoing phase II trials, we have completed enrollment of approximately 20 patients at the Q2W dosing regimen in both lung cancer and melanoma, and anticipate to complete enrollment of up to 20 patients at the 2Q3W dosing regimen in head and neck cancer before year-end. In treatment-refractory patient populations, there are encouraging early responses in the phase II melanoma study at the Q2W dosing regimen that are consistent with our phase I expansion study.

In particular, among the eight evaluable monotherapy patients to date, with reported first scan across phase I and phase II clinical studies, we have observed four responses: two stable disease, one of which was a 17% tumor volume reduction in uveal melanoma, and two with progressive disease. Notably, we have now observed a PR in a ROR2 TmPS-negative patient, which is likely to expand the applicable patient populations. We are continuing to collect data in the ongoing study, and the remainder of patients in the targeted melanoma cohort will have had the opportunity to have first scan by year-end. There are also encouraging early responses in head and neck cancer at 2Q3W, also with a new PR observed in a ROR2 TmPS-negative patient, which makes two out of two responses at the 2Q3W dose across phase I and phase II.

We are on track to complete all dosing regimens enrollment by year-end and will continue to collect data in the ongoing study. The ROR2 melanoma indication recruitment has been assisted by enrolling target-agnostic patients, followed by a retrospective target expression analysis, both of which resulted in quicker enrollment and the opportunity to target a larger melanoma patient population. In the case of head and neck cancer, ROR2 is expressed in a significant portion of these patients and therefore is also not anticipated to benefit from a biomarker assay, particularly in view of the observed 2Q3W PR in a ROR2 TmPS-negative patient, which maximized the potential applicable patient population.

For ROR2-positive lung cancer patients at Q2W, while we observed clinical benefit in terms of substantial stable disease and tumor volume reduction, there are no responses to date, and thus we did not meet our internal criteria for advancing at this dose. Further, in view of these results and our supportive AXL lung cancer data, we currently do not plan to internally explore the more frequent 2Q3W dose for this indication. Regarding the ovarian IIT, interim analysis of 10 patients in each of the BA3011 and BA3021 Q2W cohorts demonstrated modest disease control but did not meet our internal criteria for advancing at this dose. We currently do not plan to internally explore additional dosing regimens at this time for this indication. Now on to our other promising CAB assets.

Beginning with our CAB CTLA-4 antibody, BA3071, which is applicable in areas of high unmet need in treatment-refractory patients, represents a sizable commercial opportunity. We have encouraging phase I observations to date, and we continue to follow these patients' progress. In contrast to approved and earlier-stage CTLA-4 blocking antibodies, BA3071 is designed to be conditionally and reversibly active in the tumor microenvironment. We believe this unique design enables our CAB CTLA-4 antibody to have the potential to deliver efficacy with a manageable safety and tolerability profile. In particular, a safety profile with less immune-related adverse events across multiple tumor types may allow patients to stay on therapy for longer and achieve clinical benefit from this important immunotherapy.

The phase I/2 trial is being conducted in tumors known to be responsive to CTLA-4 treatment, and we are continuing to evaluate safety and tolerability of BA3071 in monotherapy and in combination with nivolumab. As part of today's brief update, I'm happy to report that we have initiated the phase II expansion cohort enrollment and remain on track for the phase I data readout, which will be highlighted at our upcoming R&D Day on December 13. Next, on to our potentially first-in-class dual CAB bispecific T-cell engager antibody, CAB EpCAM, CAB CD3, or BA3182. We previously announced FDA clearance of our IND for the treatment of advanced adenocarcinoma, and last quarter we announced that the phase I study was actively enrolling patients.

The study is progressing nicely through the dose escalation part of the phase I study, and we anticipate completion of the phase I study with a full data readout remaining on track for next year. We believe that our dual CAB design has potential to address tremendous unmet need across multiple tumor types, with the most common subtypes of adenocarcinoma, including colon, lung, breast, pancreas, and prostate. I'd like to round out today's talk with a corporate update. First, in addition to our leadership team, recently, Dr. Ben Zheng joined BioAtla as Senior Vice President, Head of Clinical Development and Operations. Ben brings over 20 years of experience in clinical practice, early and late-stage drug development, and asset management, with a focus on oncology drug development.

Prior to joining BioAtla, he held leadership roles with increasing responsibilities, including at Bristol-Myers Squibb, Ipsen, and most recently as Senior Vice President, Head of Clinical Development at Pyxus Oncology, where he oversaw clinical development activities of all oncology assets. His regulatory interaction experience, coupled with his known track record of leading cross-functional teams, will be instrumental as we advance clinical development efforts and strategic collaborations. We are thrilled to have Ben on board with BioAtla. Finally, I'm pleased to report on progress with the medical and scientific communities with an additional abstract on BA3011, alone or in combination with nivolumab in patients with lung cancer, which was accepted for presentation at the upcoming IASLC conference this December. We also look forward to sharing these data and additional details around our CAB-AXL-ADC asset at our upcoming KOL event on December fourth.

Moreover, we will present our phase I CAB CTLA-4, BA3071 study data at our upcoming R&D Day on December 13. With that, I would now like to turn the call over to Rick to review the third quarter of 2023 financials. Rick?

Rick Waldron (SVP and CFO)

Thank you, Jay. Cash and cash equivalents as of September 30, 2023, were $141.3 million, compared to $215.5 million as of December 31, 2022. We now expect current cash and cash equivalents will be sufficient to fund planned operations, including prioritized CAB programs into the second half of 2025. Research and development expenses were $28.4 million for the quarter ended September 30, 2023, compared to $19.8 million for the same period in 2022. The increase of $8.6 million was primarily driven by a $6.3 million increase in our clinical product development expenses, primarily related to the launch of our AXL UPS, potentially registrational trial and a $1.8 million increase in additional product development expenses.

We expect our R&D expenses to remain variable from quarter to quarter as we continue to advance our clinical programs, then decreasing after we complete enrollment and focus development on selected high-potential indications. General and administrative expenses were $6.6 million for the quarter ended September 30, 2023, compared to $6.3 million for the same quarter in 2022. The $0.3 million change was attributable to an increase in professional services and consulting expenses for the 2023 period. We expect our G&A expenses to remain flat to moderately increasing to support development of our prioritized CAB programs. Net loss for the third quarter ended September 30, 2023, was $33.3 million, compared to a net loss of $25.8 million for the same quarter in 2022.

Net cash used in operating activities for the nine months ended September 30, 2023, was $74.1 million, compared to net cash used in operating activities of $66.1 million for the same period in 2022.

... The increase in net cash used in operating activities for the first nine months of 2023 is primarily due to an increase in research and development expenses related to our program development efforts as compared to the first 9 months of 2022. Now, back to Jay.

Jay Short (Chairman, CEO and Cofounder)

Thank you, Rick. BioAtla is dedicated to delivering innovative, life-changing therapies to cancer patients. We observed that the CAB platform continues to demonstrate compelling clinical efficacy and safety across multiple therapeutic targets and formats in the most challenging cancer cases. As a result, we believe that there are mutually compelling opportunities for forming one or more strategic collaborations with major pharmaceutical partners that both accelerate and maximize a therapeutics opportunity. In addition to advancing collaboration discussions, we will continue to advance selected CAB assets that can address significant unmet medical needs in order to maximize shareholder value. With that, we will turn it back to the operator to take your questions.

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your telephone keypad. You will hear a 3-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please keep the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Brian Cheng from JP Morgan. Your line is open.

Brian Cheng (Equity Research Analyst, Biotechnology)

Hey, guys. Thanks for taking my question this afternoon. Given the responses that you saw here now, for AXL and EGFR wild-type and the PD-1 treatment failure patients, to the extent that you can, can you give us a sense of the verbal feedback that you receive on the registrational path forward from the agency? What are the expectations that we could get in terms of, you know, the path forward at the December event?

Jay Short (Chairman, CEO and Cofounder)

I'll start, maybe Eric can add if he has anything to add. You know, they gave us some very clear and actionable items, both either in second- and/or third-line therapies. We're just waiting for the written confirmation of the verbal communication. As soon as we have that, we expect that a little later this month, and we'll be communicating that in far more detail in December. But hopefully that's helpful, and we think it's very promising.

Brian Cheng (Equity Research Analyst, Biotechnology)

Okay. And then, related to the IASLC conference presentation next month, can you talk about just, you know, what we should expect in terms of the level of details regarding to response? And, can you also comment on the durability of the response that you've seen so far in non-small cell?

Jay Short (Chairman, CEO and Cofounder)

Eric, do you want to lead off on this one?

Eric Sievers (Chief Medical Officer)

Sure. I think, we'll be having a pretty standard poster presentation of the datasets, including spider plots, swimmers plots, and so you can anticipate that. Jay?

Jay Short (Chairman, CEO and Cofounder)

Also, I would add, we'll also have, while monotherapy obviously is our focus, we will provide, the data on the combo, the updated data on the combination therapy, and also our initial look on a more frequent dosing, data, up to 10 patients for that as well, and, you know, maybe more. We'll see how that goes, in the next few weeks. And we'll also remember, the day after, have a, a KOL event, with an expert in lung cancer and also has been treating patients in some of their direct experience.

Brian Cheng (Equity Research Analyst, Biotechnology)

Great. Thank you for taking my questions.

Operator (participant)

Your next question comes from the line of Kaveri Pohlman from BTIG. Your line is open.

Kaveri Pohlman (Director and Biotechnology Analyst)

For taking my question. So for non-small cell lung cancer, Trodelvy has a phase II EVOKE-01 trial ongoing, and in their most recent press release, Seagen also announced that they will be initiating a phase II trial for their integrin beta-6 targeting ADC. So I was just wondering if you could tell us how you're thinking about the competition here, and what level of target expression overlap do you expect to see between Trop-2, beta-6, and AXL?

Jay Short (Chairman, CEO and Cofounder)

I'll start off, and then maybe Eric or Sheri can add to this. So first off, I think, you can look at both pieces of data. We've seen now multiple responses at 1% TmPS level. We're not seeing a strong correlation in responses and stable disease to the level of AXL expression, and this is, I think, observed by a number of different ADC groups, at least in groups with ADCs studying lung cancer. We're also, you know, reporting responses in ROR2 as well, from ROR2 negative patients. So we're in the process right now of evaluating the frequency in the AXL negative patients, based on an IHC assay. And I think I'll just remind everyone that an IHC assay has its own sensitivity.

Just because you don't see AXL by that kind of assay, doesn't mean you have no AXL expression. It's just at a much lower level. So we think that this has a chance of broadening the AXL market opportunity here. It also, because of the AXL being a poor prognostic indicator, meaning the patients have a very difficult time, and these may be some of the most difficult patients to treat, remembering that all our entire study, all the patients had a median of 3 prior lines of treatment, and they were AXL positive. So there's a, you know, a real, there's some significant likelihood that we're gonna see responses below the 1%. We're gonna find that out and add that to the data sets, which could have a substantial impact on the market opportunity of our drug.

So, we think a cross-trial comparison is a little difficult when the others haven't gone into an AXL-positive data set. And so we're gonna look more broadly, and I think we'll have more data on that as we go forward. Sheri or Eric, want to add or clarify anything? If not, Christian, I hope that answers your question.

Rick Waldron (SVP and CFO)

Yeah, Jay, I think you characterize that very well. Thank you.

Kaveri Pohlman (Director and Biotechnology Analyst)

Okay, thank you. And just if you could provide any more details about the assay you're using for AXL expression assessment, and how are you thinking about its use? Sorry. How are you thinking about its use, like, when moving from early stage to pivotal trials?

Jay Short (Chairman, CEO and Cofounder)

Well, I think it's an immunohistochemical assay using an antibody against AXL. It's not our therapeutic antibody, but it's one that was specifically selected for detecting AXL expression on cancer cells. And of course, we've been looking, you know, a lot of people are used to the H-score, where you look at the level the amount of expression on each cell versus the number, the amount on the, on the membrane, number of cells that have expression on the membrane. And so it has an inherent sensitivity. So, the fact that we're seeing responses, you know, at such a low AXL expression level is hinting that AXL may well be behaving like we're seeing in ROR2 and that others are seeing with some of their ADCs.

So, it's quite possible, and we'll let the data speak for itself, but it's quite possible that we won't need a companion diagnostic going forward. But as of this moment, we believe we validated at the level of 1% or greater with the TmPS score in these refractory patients with three prior lines of therapy, and show that we have a path forward here with these, and that's in third line. So we think we'll do even better in second line. But for the moment, we're going to look to see if we can have similar or even potentially greater impact in ones that are less than 1%, given that poor prognostic indication of AXL expression, with AXL expression.

So, what's nice about this strategy is that the recruitment now is uncoupled from having to require, at least to finish off this analysis, we can admit all patients to our study and, do a retrospective analysis. This allows us to look at those patients with less than 1%, as well as some, a few additional ones, with 1% or greater. We're gonna add that data very quickly, to our current data sets and, as we, go forward with some of our partnering discussions.

Kaveri Pohlman (Director and Biotechnology Analyst)

Thank you. That's very helpful.

Operator (participant)

Your next question comes from the line of Kelly Shi from Jefferies. Your line is open.

Jay Short (Chairman, CEO and Cofounder)

Hello?

Operator (participant)

Kelly Shi, you might be on mute.

Speaker 8

Hello, can you hear me?

Jay Short (Chairman, CEO and Cofounder)

Now we can.

Speaker 8

Hi, this is Dave on for Kelly Shi, and I have a question on 3021. Do you plan to share a non-small cell lung cancer data that you generated? If you can share an insight that you can draw from the data, such as patient baseline or expression, which contributed to low responses. Also for CTLA-4, can you set expectation on data details such as patient number or dose level we should expect at R&D Day? Thank you.

Jay Short (Chairman, CEO and Cofounder)

Yeah. We will definitely share the data on the non-small cell lung cancer data. We're going to link that to a meeting. We may also include data from the more frequent dosing with some of the other indications, like head and neck cancer and melanoma. So be looking for an upcoming meeting on that. You know, it's still quite possible that, you know, 'cause we saw responses in lung, I'll remind everyone, in phase I, but what we've basically shown that we're not driving responses with a Q2W level. We're also, you know, seeing responses with 2 Q3W in head and neck, but we... So we think that potential, there's potential to go to a higher dose.

But as part of our prioritization process, which is, you know, has to factor in a very encouraging data out of the AXL lung data, and we decided that it was best to prioritize AXL lung for that particular indication while we continue to advance melanoma and head and neck, especially given the very high unmet need in those particular indications. So we will give it, and we'll have quite a bit more data that we'll be putting together for that release. With respect to CTLA-4, we're on track to give quite a bit of detail on our phase one dose escalation, and we'll be giving an update on the phase two results.

But suffice it to say that the fact that we've already kicked off phase two and that we have our first patient in on phase two, that we think that it's heading in a very good direction. And I'll remind you that we've been studying patients that are known to be responsive to CTLA-4 with a basket of eight different indications that include things like melanoma, non-small cell lung cancer. So we'll be discussing all of that in December. And so I would just invite everyone on December thirteenth for that R&D day, so we can give you a lot more detail around those studies.

Speaker 8

Thank you for taking our question.

Operator (participant)

And once again, if you would like to ask a question, simply press star, followed by the number 1 on your telephone keypad. Your next question comes from the line of Arthur He from H.C. Wainwright. Your line is open.

Arthur He (Equity Research VP)

Hey, good afternoon, Jay, Rick, Sheri, and Eric. Thanks for taking my question. So, I just wanted to push the envelope a little bit further on the 3011. These 33.3% ORR, that also including both the Q2W and the more intensive dose regimen, or it's only for the Q2W?

Jay Short (Chairman, CEO and Cofounder)

No. Only Q2W. We haven't reported out on any more frequent dosing yet.

Arthur He (Equity Research VP)

Okay, thanks for that. And then regarding the program for the BRAF-negative melanoma patient which shows response, is that patient is in the phase II study, or it's from the phase I study? Could you remind that?

Jay Short (Chairman, CEO and Cofounder)

For head and neck, you mean?

Arthur He (Equity Research VP)

No, for the melanoma, I believe.

Jay Short (Chairman, CEO and Cofounder)

For melanoma, we have one response from phase I that's included, and we have three responses from phase II.

Arthur He (Equity Research VP)

Okay. And so far, so you said you're completing enrollment. So, how many total patients we could expect the next data update?

Jay Short (Chairman, CEO and Cofounder)

Well, I don't know. I don't know what the evaluable patients will be, but we've we had targeted 20 patients.

Arthur He (Equity Research VP)

Okay.

Jay Short (Chairman, CEO and Cofounder)

So we'll see where we go on that, and we've reported on eight evaluable patients today, where we saw four responses out of eight, two with a stable disease and two with progressive disease. So quite encouraging at this stage.

Arthur He (Equity Research VP)

Gotcha. So my last question is for the BA-3182, your bispecific candidate for the EpCAM. So could you give us some more color about the enrollment status for that, for that trial?

Jay Short (Chairman, CEO and Cofounder)

I think it's going well. I mean, it takes, you know, about a month, plus or minus a week, you know, to kind of get from patient to patient. So I think we're on track here and continue to dose escalate, and yeah. You know, I think it's early, but all good so far. And, you know, this is a particularly interesting drug, and I get why I would be asking the same question, Arthur, that you are, because this is one of those pan-cancer opportunities with very high selectivity, with a very potent mechanism that is enabled by cabs with this T-cell recruiting capability. And so, we're very eager to push it along.

So it's gonna, it's gonna move quickly, and we'll have a lot more to talk about it, and we have only seen positive things so far.

Arthur He (Equity Research VP)

Awesome. Thanks for taking all my questions, and congrats on the program. Talk to you soon.

Jay Short (Chairman, CEO and Cofounder)

Thank you. Thank you. Look forward to it.

Operator (participant)

Thank you. There are no further questions at this time. I would like to turn it back to Jay Short for closing remarks.

Jay Short (Chairman, CEO and Cofounder)

Thank you everyone for your attendance. We're really looking forward to continuing our discussions, especially with our medical experts in early December. It's only a few weeks away, and we're looking forward to speaking with many of you at that time. Take care now, and all the best.

Operator (participant)

Thank you, presenters. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.