Agenus Inc Q3 FY2023 Earnings Call

Good morning. My name is Jeannie, I will be your conference operator today. At this time, I would like to welcome everyone to the Agenus Q3 2023 Earnings Conference Call. Instructions are provided for the call. Zack Armen, you may begin your conference.

Thank you, operator, and thank you all for joining us today. Today's call is being webcast and will be available on our website for replay. I'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 among other updates. These statements are subject to risks and uncertainties, and we refer you to our SEC filings available on our website for more details on these risks. Joining me today are Dr. Garo Armen, Chairman and Chief Executive Officer; Dr. Steven O'Day, Chief Medical Officer; Dr. Todd Yancey, Chief Strategic Advisor; and Christine Klaskin, Vice President of Finance. Dr. Robin Taylor, Chief Commercial Officer, will be participating in the Q&A session. Now I'd like to turn the call over to Garo to highlight our progress and speak to our outlook for the remainder of the year. Garo?

Thank you, Zack. Ladies and gentlemen, as we gather today for the earnings call, let's reflect on the remarkable patient outcomes from our botensilimab trials. As underscored by our leading experts and researchers, we're witnessing sustained benefits in treating some of the most challenging cancers. Based on these observations and for the sake of cancer patients, our urgent mission is to set a new benchmark in cancer care, providing patients with long-term potentially curative benefits with some patients experiencing manageable toxicities. Our BOT therapy is showing promise across various cancer stages and types with benefits seen in some of the most treatment-resistant so-called cold tumors. In addition, recent data presented at our corporate event in Madrid during ESMO revealed BOT's potential in earlier stages of cancer where remarkable rapid responses were observed with the possibility to prevent significant treatment-related morbidities, including the potential need for colostomy. Moving forward, we're concentrating on three key priorities: submitting our first biologics license application for colorectal cancer; prioritizing other clinical programs with the potential for rapid approval; and importantly, reallocating resources to achieve our goals. Accordingly, we're gearing up for our first BOT/BAL BLA submission in mid-2024 with a focus on late-stage colorectal cancer. Dr. Yancey will delve deeper into this topic shortly. The cancer community's enthusiasm and rapid enrollment in our Phase II clinical trial in MSS CRC highlights an urgent unmet need. To address this, we have started a compassionate use program with the aim of broadening it into an expanded access program next year. With very limited options to treat patients with advanced colorectal cancer, the positive trends and lasting responses in our studies strengthen our conviction in BOT/BAL's potential. Our top priority is obtaining BOT/BAL's approval in MSS CRC in order to allow patients access to this important IO treatment, offering them new hope that does not exist today. Our second area of focus is advancing our prioritized clinical programs, which includes refractory pancreatic cancer and neoadjuvant setting in CRC. Dr. O'Day will detail the exciting data that showcases BOT's potential in these cold solid tumors. In addressing our financial capabilities to drive our objectives, we're already taking and continue to take steps to contain costs. These steps are important, particularly given the current challenging environment in the biotech sector. Our immediate prospects for additional cash infusion that does not involve stock issuance include a milestone payment from one of our partnered programs expected by the end of December 2023. In addition to this expected milestone, we are in the process of selling two non-strategic assets and pursuing the partial sale of milestones and royalties due to Agenus from our partnered programs. These three sales are expected to close by the end of the first half of 2024. The potential proceeds from these four transactions are estimated at approximately $200 million in total. With our cash balance at the end of Q3 along with these four planned transactions, we believe we are sufficiently funded through the end of 2024. In addition to these planned transactions, we're also in advanced discussions for a potential structured financing for BOT/BAL as well as a potential corporate collaboration with a large pharma or biotech company. That ends my formal introductory remarks, and now I'll be handing it over to Dr. O'Day to shed light on our latest findings and data updates. Steven?

Thank you, Garo. Together with our investigators and key opinion leaders, we presented updates from the BOT/BAL development program at a corporate event hosted during the Madrid ESMO Congress in October. I'll now briefly describe these data updates, beginning with colorectal cancer. We updated our Phase Ib cohort of 70 evaluable patients with BOT and BAL in refractory MSS colorectal cancer without active liver metastasis. This is the target population for our fully enrolled Phase II study and the population in which we've received Fast Track designation from the FDA. The RECIST confirmed overall response rate was 24%. The duration of response was not reached with 59% of responses ongoing and now a median follow-up updated to 12.3 months. These patients showed a 12-month overall survival rate of 74%, approximately twice that reported for standard of care. With longer follow-up, the median OS previously reported at 20.9 months is now no longer reached. Importantly, the OS curve plateau continues to emerge and strengthen as the data matures with the longest patient now alive at 3.5 years and three other patients who are alive beyond 21 months. We plan to file our initial BLA in this indication in mid-2024. Next, we presented data from an investigator-sponsored trial at WOW Cornell, in which 12 patients with CRC were treated with one dose of BOT and two doses of BAL in the neoadjuvant therapy window of opportunity setting. Surgery was performed, on average, only four weeks after the initiation of immunotherapy. All three MSI-high colorectal patients had complete or near-complete pathologic responses and, even more importantly, six out of nine patients with MS-stable colorectal cancer had pathologic responses of 50% or greater, including two complete pathologic responses. None of the 12 patients had tumor growth during the treatment interval and no surgeries were delayed due to immune-related toxicities. These results represent an important opportunity to move into earlier lines of therapy with curative intent and change the treatment paradigm for MS-stable colorectal cancer, potentially avoiding the morbidity of late-line therapies. In second-line pancreatic cancer, we have treated six patients with the combination of botensilimab, Gemzar, and Abraxane triplet. All six patients had progressed following first-line metastatic FOLFIRINOX therapy, and all six have liver metastasis. Four of the six patients have achieved marked and sustained tumor marker reductions. Two of the four patients have already achieved partial responses at 16 weeks with target lesion reduction of minus 47%, which has been confirmed, and minus 37%, which is pending confirmation scans, and both responses are ongoing. Two other patients showed stable disease at their first eight-week scans with tumor reductions of minus 20% and minus 13%, and they remain on study awaiting the 16-week scan. A randomized Phase II study is currently enrolling and a data update is anticipated in the first half of 2024. Our other Phase II trial is in refractory metastatic melanoma, including PD-1 refractory as well as PD-1 CTLA-4 refractory disease. In a Phase Ib expansion cohort of 10 patients, botensilimab alone showed a 30% objective response rate and a 60% disease control rate in these refractory patients. In the Phase II study, the botensilimab monotherapy cohort is now fully enrolled, and the botensilimab/balstilimab combination cohort is enrolled with approximately 30 patients. A data update is anticipated in the second half of 2024. In PD-L1 refractory non-small cell lung cancer, we reported on nine patients who were treated with the combination of BOT and BAL. Five of the nine patients in the combination achieved RECIST-confirmed partial responses for an ORR of 56% and a disease control rate of 89%. Approximately 50 patients have now been enrolled in two expansion cohorts, including PD-1 refractory as well as TKI driver mutation refractory disease. A data update is anticipated in mid-2024. Dr. Bree Wilky, Director of the Sarcoma Medical Oncology, Deputy Associate Director for Clinical Research at the University of Colorado Cancer Center, presented an update of botensilimab program in sarcomas at ESMO 2023. In 41 evaluable heavily pretreated sarcoma patients, the combination of BOT and BAL demonstrated an overall response rate of 20%, a median duration of response of 19.4 months, and a six-month progression-free survival of 40%. There were differential responses observed by dose level with a 29% response rate in the two-milligram per kilo BOT cohort compared to 15% in the one milligram per kilo BOT cohort. In addition, we observed promising activity in difficult-to-treat subtypes of sarcoma, such as leiomyosarcoma and visceral angiosarcoma. The results we've achieved in cold tumors in both the refractory setting and, more recently, in early disease offers hope for patients and families where current standards of care provide inadequate or limited benefit. The robustness of our data broadly across tumor types resulting in deep and durable responses showcases a potential groundbreaking advancement in oncology for botensilimab. We remain committed to improving patient outcomes and are grateful for the support of our team, trial participants, and stakeholders. I am confident in the positive impact we are making, and I'm excited about the future. Now I'll turn the call over to Todd to discuss our regulatory strategy.

Thank you, Steven. The landscape for MSS CRC patients who received one to two prior lines of therapy is challenging. There are limited effective options available, so our focus in our development and regulatory path is to bridge that gap. At present, the available therapies in this setting, including monotherapy with regorafenib, monotherapy with Lonsurf, and the newly introduced combination of Avastin and Lonsurf, offer only marginal reported improvements in survival, and response rates are low with survival curves going to zero. Recognizing this, we've developed a differentiated investigational agent with botensilimab that has already demonstrated significant benefit over reported results for these standard of care therapies with survival curve plateaus consistent with substantial long-term benefit. In our studies, patients with a median of four prior lines of therapy, one-quarter of whom had received prior immunotherapy, experienced a 24% RECIST response rate compared to the standard of care's reported rate of only 3%. Importantly, our median overall survival is currently exceeding 21 months, a significant leap from standard of care at 12.9 months as reported in the ARCAD database. Our regulatory process is well underway, and we, as we have stated, plan to submit our first BLA as characterized in our Fast Track designation in the middle of 2024. This application is robust. It's targeted to include data from approximately 400 patients at two different doses, both one milligram per kilogram and two milligrams per kilogram, and will be supported by safety data from several hundred additional patients across multiple indications where we have observed broad activity. And in this process, we're not leaving any stone unturned. We're conducting a comprehensive and full exploration of dosing schedules ranging from the lowest dose of 0.1 milligrams per kilogram to 3 milligrams per kilogram in our Phase I and Phase II studies. Additionally, we're investigating the contribution of components of the two experimental agents, BOT and BAL, in a randomized fashion within our now fully enrolled Phase II study. As we move forward, we are and we'll continue to proactively engage with regulatory authorities. While we await complete feedback from the FDA and EMEA, we have taken scientific advice from key European countries and are in the process of scheduling meetings with the CHMP and FDA representatives. These discussions are crucial as they regard our path forward toward approval. Our goal is clear. We aim to submit this package for potential approval by mid-2024, and we're optimistic about the opportunity for an accelerated review, which would allow us to bring this innovative solution to patients in need as soon as we can.

Thank you, Todd. We ended our third quarter of 2023 with a consolidated cash, cash equivalents, and short-term investment balance of $100.63 million. This compares to $193.4 million at the end of last year. For the three and nine months ended September 30, 2023, we recognized revenue, which includes noncash revenue, of $24.3 million and $72.5 million, respectively. Including noncash expenses of $28.1 million, we incurred a net loss of $64.5 million for the third quarter. For the nine months of 2023, we incurred a net loss of $208.9 million, which includes noncash expenses of $82 million. I'll now turn the call back to Garo.

Thank you, Christine. I want to express my gratitude for your support during this clinical phase of Agenus. Our striving cancer research, highlighted by botensilimab, signifies a potential new era in cancer care. I also want to express my gratitude to our employees. I am confident in our team's dedication and our ability to achieve our milestones. The success of balstilimab remains our top priority, and I assure you that our diligently managed finances will ensure the necessity for resources to be allocated for this very important endeavor. With your continued support, we expect to meet and exceed our goals with the prospect of bringing hope and healing to those affected by cancer. Thank you for your support once again. Together, we are destined for remarkable achievements for the benefit of cancer patients, which will, in turn, create significant value for all of our stakeholders. With that, I will now open the call for questions. Thank you very much.

Your first question comes from the line of Emily Bodnar with H.C. Wainwright.

First one, just briefly, if you can comment on when we may expect to see initial Phase II data for the MSS CRC study. And then secondly, if you could talk about how you're thinking about strategy in neoadjuvant CRC. Are you looking to evaluate broadly in CRC or just focus on MSS patients and maybe just discuss the regulatory pathway to potentially getting BOT/BAL approved in that setting?

Thank you, Emily. So let me answer the question broadly, and I'll ask if Dr. O'Day has any additional comments. What I've said publicly is that we have clearly disclosed the data on the first 70 patients, not because the rest of the data isn't satisfactory but because the rest of the data needs to be cleaned up, and we need a little bit of work to do. But our look at the data both in the second cohort and in our Phase II studies indicate that we should have a sustainable response rate, perhaps even an improving response rate as we disclose and analyze these data for regulatory and beyond purposes. So that is going to be more of a regulatory decision, when to disclose it, and the ideal circumstance for us will be certainly to publish the data at around the time of a potential BLA submission. To publish the data in a peer-reviewed journal would be part of our plan. Now with regard to the neoadjuvant plans, we haven't quite crystallized it yet. Of course, the typical response for neoadjuvant studies is the fact that large studies take time. But we believe that depending on what patient populations we go after, we may be able to look at a subset of patients that would be the subject of high morbidity with standards of care. And as you know, in these patients, even though the treatments are largely curative, they're not 100% curative. Standard of care is not 100% curative, but they cure a quite substantial number of patients. But those cures come at a very high cost to the patients, and that includes the potential use of colostomy bags, it involves sexual dysfunction, and also involves the loss of muscle function in the area of the abdomen. Particularly, if you are a patient in your 30s, 40s, you don't want to be subject to these morbidities. So we're going to take a little bit of time, not too much time, to determine exactly what the patient population and the trial design would be with the aim of achieving a very rapid trial execution and potentially rapid filing and approval. So I think we'll disclose some of these details in the first half of next year.

Your next question comes from the line of Colleen Kusy from Baird.

Congrats on the progress. For the randomized CRC study that's fully enrolled, can you just give us a sense of the regulatory bar there? Does the combination need to be better than the individual drug arms and standard of care and by what margin?

If I may ask Todd to answer that question.

I think there are really two questions there. One is what do we expect in terms of performance versus standard of care, and the second is really what do we expect to see in terms of incremental contribution in the doublet. So just to remind everybody about the design of the trial, the five arms, of which one is standard of care. Patients are randomized across these arms. The other four arms all have botensilimab, which as monotherapy we know to be active from the Phase I dose escalation. Two of those arms have botensilimab combined with balstilimab. As we've been observing in the data set that we've been presenting for the MSS CRC patients on active liver metastasis for the last almost 18 months, there is a substantial benefit in the combination. As it relates to the first question versus standard of care, standard of care for patients with one to two prior lines of therapy offers a 3% overall response rate and an expected median overall survival of 12.9 months, as reported in the ARCAD database of over 18,000 patients. Currently, we're showing 24% versus 3% for response and over 21 months for median overall survival. So we need to be obviously meaningfully better than currently available standards of care. So looking at 3% versus 24% or 12.9 months versus over 21 months, I think it's clear to everyone that you could drive a truck through that. Now as it relates to the incremental contribution of balstilimab to botensilimab, given our mechanism of action, which is really multifactorial, we have our optimized engagement with CTLA-4 and a receptor-ligand interaction. The back-end engineering is resulting in suddenly inactivation of both innate and adaptive immune responses, creating a hot tumor environment, and we expect to see a substantial improvement in the combination, certainly at least a doubling of response when we add balstilimab. Just for comprehensiveness, we also remind everyone that in that same clinical trial, we are looking at two active doses, one milligram per kilogram and two milligrams per kilogram. At the time of regulatory submission, we anticipate having approximately 175 patients in each of those two doses. So we'll be able to have a robust perspective on the activity of those doses, as well as their tolerability.

That's super helpful. And at the time of BLA submission, would you expect to have any sort of overall survival early data from this study?

I think we would have certainly evident trends for patient benefit. What we've observed pretty consistently in the Phase I database, which is not small—remembering we've got 101 patients in total for safety and we have 70 patients in the MSS CRC on active liver metastatic patient population for efficacy adjudication—we are seeing that responses for patients translating to durable responses and very substantial overall survival. So I expect that we'd be able to demonstrate point estimates for response, durability of response for patients with stable disease or better, and that is trending toward a survival benefit. Remember also that the timing of submission is not a moment in time that's frozen, because we will be required to provide updates on safety and efficacy during agency review, allowing time for additional maturation of the dataset. Again, as has been consistent since we began to show data in June 2022, the longer the study goes, the more mature the observations have been around the durability of response and its translation to survival. So I think we have a robust set of data to present to the agencies for their review.

Got it. That makes sense. And on the cash guidance, can you provide a little bit more color on what's included in that in terms of the ongoing and planned studies?

If you can repeat the question on the latter part of your question?

Yes. Just on the updated cash guidance?

I got it, I think. So as you know, we finished the quarter with a little over $100 million. My guidance for the fourth quarter burn is approximately $40 million. Beyond that, as we've said earlier, we will have a milestone payment due to us by the end of this year. And we will sell two nonstrategic assets expected to be completed in the first half of next year. This will include a third-party royalty transaction, which will require external investors. We had done that five years ago; in fact, about five years ago we consummated a transaction for third-party royalties and we did this with XOMA Corporation. So we're talking about a transaction that will be multiples of that transaction for a much larger and more attractive portfolio, and we have received encouraging comments from our partners. With these, we expect to bring in approximately $200 million of cash between now and the middle of next year. That is through non-stock issuance transactions. Without stock issuance, we expect to bring in approximately $200 million, and that will take us to where we are at the end of next year.

Mayank Mamtani, your line is open.

Helpful recap of ESMO-driven data. So maybe just to clarify on the second-line plus CRC accredited approval, are you able to talk to the specific guidance you may have on the design of the Phase III confirmatory study and maybe timing of initiation to round out the other updates you provided? And then I have a follow-up.

I'll just make a broad comment on the confirmatory studies, and then I'll ask Todd to provide additional color. With regard to confirmatory studies, we have two choices. One is to do a confirmatory study in the second or third-line setting. The other one is to do a confirmatory study in the first line. We have not made that decision yet. We've had discussions with the FDA on the latter-line confirmatory study, but we have not yet had discussions on the first line. We are awaiting data from an ongoing study that we expect will be available in the first quarter of next year, which will inform us better about whether we go first line or third line. Todd, would you like to add any additional color on this?

Yes. I just had a couple of points to that. Now that we have a clear understanding of how to preemptively manage or intervene early on GI toxicity, we have a higher level of comfort with our ability to combine in the front line with 5FU and oxaliplatin-based regimens, which have associated GI toxicity. That level of comfort is rising. We are conducting a study to determine what the best management paradigm would be for the combination. In addition to that, I think we have greater strength of evidence for incremental benefit in earlier lines of therapy derived from the preliminary dataset we're seeing in the neoadjuvant setting. So I think our objective will be to optimize the development program to accelerate access for patients in a broader patient population. There is regulatory precedent for doing a confirmatory trial in a broader patient population than the accelerated approval indication and/or in an earlier line. At the end of the day, the decision regarding the design of the confirmatory trial will require alignment with both U.S. and European authorities, and we are looking at two potential options that we would present for their review.

Very helpful. And then on the new pancreatic cancer BOT chemo data, could you clarify what number of patients you are targeting in the randomized control cohort? And if you are seeing any uptick in enrollment similar to what occurred in other colorectal cancer expansion cohort last year? And for the relatively warmer tumors in lung and melanoma, it seems like you have both mono and BOT/BAL combination data. So how are you sort of thinking across tumor types where you may pursue BOT stand-alone versus maybe combination? If there's a view on that you could share? And I have one more financial question after this.

Thank you. Dr. O'Day, would you like to take that first part of the multi-part question?

Yes. Mayank, can you repeat the very first part of it? I have the melanoma part, but...

The pancreatic cancer BOT chemo data, number of patients you are targeting in the randomized control cohort. And if you are seeing any uptick in enrollment like what occurred with the colorectal cancer expansion cohort last year?

Yes. We have a lot of enthusiasm around the data so far with both our PIs on the pancreas study and more broadly KOLs. We are expanding that, and it is accruing, and we plan on treating another 60 patients in randomization in the coming months. In terms of melanoma, obviously, we have single-agent activity in melanoma in PD-1 and PD-1 CTLA-4 refractory that we've reported in our Ib trial. We've now accrued a large number of patients to monotherapy in both the PD-1 refractory and PD-1 CTLA-4 refractory at two different doses. As I said today, we're combining it with BAL, and that data will be maturing, and we look forward to presenting it in 2024.

Got it. And maybe for Garo, this concept of structured financing or even corporate partnerships. I was just curious if there's any sort of segmentation you're thinking by indication or geographies? Are there any sort of constructs and new strategies that are more preferred versus less? If you could provide some color there, that would be helpful.

The kinds of discussions that we're having, and some of them are in advanced stages, really encompass both global collaboration across all indications as well as specific indication collaborations for which infrastructure exists at some companies to be able to segregate products by indication. That's new technology, and we've been proposed the potential option of segregating certain indications that are of greater interest to some partners. We're looking at all of these options simultaneously, and I think a good deal for us would be driven by several things. Number one, the appropriateness of the collaborator, their conviction that our product could be a significant player in the immuno-oncology and broader oncology field. Number two, the partner needs to make the appropriate financial commitments, not just for compensating us in terms of upfront and milestones but also a substantial financial commitment for the development of this product. Development has to be rapid because, as we've said before, we have seen clear clinical activity in nine different cancers. You can't lie about that—it's real. It's been presented at major conferences. There are regulatory and other questions about whether overall response rates translate to longer-term benefit; we know they do. We need to demonstrate that with numbers, but our CTLA-4 binding antibodies, which are multifunctional molecules, need rapid development across all indications. If you pay attention to my quadrant slide, you will see that the opportunity for cancer patients is enormous. The partnership has to be based on a commitment—financial commitment for rapid development and other cultural compatibilities to allow our team to work with the partners' team to bring this into a harmonious conclusion.

Your last question comes from the line of Kelly Shi with Jefferies.

This is Claire on for Kelly. So just one question for the plan for CRC. So can you remind us what's your plan for those CRC patients with liver metastasis at the Phase III confirmatory study specifically in patients without liver metastasis? Or is there an option to look at all-comer patients as well?

So I will take a shot at it, and I'll ask Dr. O'Day to also comment on this. As you know, liver metastasis is a sort of a black box right now for everybody. There's no clear answer as to why liver metastasis patients don't respond. There is speculation about why they may not respond. The liver is a privileged organ with a lot of immunosuppressive components. We are looking at a number of ways of determining how to overcome this. For example, in our pancreatic data, all patients treated had liver metastasis, and all patients who have responded also had liver metastasis. We don't know if any of the other chemotherapy components are contributing to this. There is some speculation that gemcitabine may play a role. We don't know that. In the coming months, we plan to have a deliberate action plan to try and answer this question with small trials, possibly investigations that will capitalize on what we have observed in pancreatic cancer. Right now, we're working with limited knowledge, but this is an area that needs to be explored very diligently.

Yes. Obviously, in the refractory colorectal patient population, the IO combination of BOT/BAL has its most profound signal to date in the non-active liver metastasis patients. These are patients who've never had liver metastasis or who have had treated liver metastasis. However, depending on the alignment of the Phase III trial, as Todd mentioned, if we do move to first line, we will treat all-comers. We will be aligning our Phase III trial in the coming weeks and months.

There are no further questions at this time. Garo Armen, I turn the call back over to you.

Thank you very much, everyone, for your attentiveness to our developments. This is a very exciting time, I believe, for cancer patients, certainly patients that are in desperate need of effective therapies, not just therapies that extend their life by a month or two at a very high cost of quality of life but potentially expand life much longer with potential curative outcomes in some patients, and with a much more acceptable, more dignified quality of life with some gastrointestinal side effects typical of overactivation of the immune system, but they are reversible. If you look at our record, our physicians have learned that reversibility is a function of rapid intervention. As our trials progress from early Phase I trials for extended patients to Phase II trials, we will see a significant improvement in the management of our transient toxicities. It's a very exciting time for patients. Other than the obligations we need to fulfill to bring these products to patients very rapidly, I believe the future looks brighter than it has ever looked in our company's history and my career in this business. Thank you very much.

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