Corvus Pharmaceuticals, Inc. Q2 FY2022 Earnings Call

Good afternoon, and welcome to the Corvus Pharmaceutical Second Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Aaron Beverlyn. Please go ahead.

Thank you, operator and good afternoon, everyone. Thanks for joining us for the Corvus Pharmaceuticals second quarter 2022 update and financial results conference call. On the call to discuss the business updates are Richard Miller, Chief Executive Officer; Leiv Lea, Chief Financial Officer; and James Rosenbaum, Senior President of Research. The executive team will open the call with some prepared remarks, followed by a question-and-answer period. I would remind everyone that comments made by management today and answers to questions will include forward-looking statements. Forward-looking statements are based on estimates and assumptions as of today subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by those statements, including the risks and uncertainties described in Corvus’s quarterly report on Form 10-Q, which was filed today with the SEC and other filings the company makes with the SEC from time to time. The company undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. With that, I'd like to turn the call over to Leiv Lea. Leiv?

Thank you, Aaron. I'll begin with a quick overview of our second quarter 2022 financials and then turn the call over to Richard for a business update. At June 30, 2022, Corvus had cash, cash equivalents and marketable securities totaling $56.7 million as compared to $69.5 million at December 31, 2021. Importantly, as Richard will discuss, we have amortized our clinical stage pipeline plans and extended our cash runway into early 2024. Research and development expenses in the second quarter of 2022 totaled $4.9 million, compared to $9.1 million for the same period in 2021. As you can see, we continue to prudently manage our cash burn rate while advancing our portfolio of product candidates. We are able to achieve this by the judicious utilization of experienced personnel, leveraging external resources and establishing collaborations that help support the development of our products. Examples of these collaborations are Angel Pharmaceuticals, our partner in China, now involved in clinical trials with our ITK inhibitor; and the Kidney Cancer Consortium, who will be conducting our frontline RCC trial with Sephora Dennis. The net loss for the second quarter of 2022 was $8.4 million, compared to a net loss of $11.8 million for the same period in 2021. Total stock compensation expense for the second quarter of 2022 was $0.7 million, compared to $1.2 million for the same period in 2021. I will now turn the call over to Richard who will elaborate on our strategy and plans.

Thank you, Leiv, and good afternoon, everyone. Thank you for joining us today for our second quarter 2022 business update. In the first half of 2022, we made considerable progress with our three clinical stage programs, which are all well positioned to move into mid-stage trials. We are excited about their potential to bring new therapeutic approaches to a range of diseases by modulating activity in the tumor immunity access. As we continue to advance our pipeline, we remain mindful of the current environment in the biotech industry and are adapting accordingly. Portfolio prioritization is an ongoing part of our development process. And in order to extend our cash runway, we are focusing on the development of our programs that provide the best opportunity to deliver value by generating meaningful near-term clinical data. Based on recent clinical data and preclinical research, we have made the strategic decision to focus greater resources on our CPI-818 ITK inhibitor program. We feel that this drug may have diverse opportunities across oncology, autoimmunity, and allergic diseases. We also plan to advance Ciforadenant into a Phase 2 front line renal cell cancer trial in partnership with the Kidney Cancer Consortium. We will pause on initiating the previously planned randomized blinded Phase 2 trial in lung cancer for mupadolimab, given the timeline to data and the increasingly crowded CD73 landscape. To be clear, we still believe mupadolimab has great potential and look forward to advancing its development in the future. We continue to believe that mupadolimab's activation of B-cells and immunomodulatory properties make it stand out among competitors. I will now provide an update on each of these programs, starting with CPI-818, our ITK inhibitor. In May, we hosted an R&D symposium in New York that provided a thorough background on the clinical and preclinical data that has us so excited about 818's potential to treat T cell lymphomas along with a variety of indications across autoimmunity and allergy. A replay and slides from this event are available on our website for anyone who has not had the opportunity to view it. Here are a few of the key points and updates from the symposium. CPI-818 is a covalent ITK inhibitor and binds to ITK similar to the way ibrutinib binds to BTK. It is well known that ITK is involved in T cell receptor signaling homologous to BTK's involvement in B cell receptor signaling. Less well appreciated, but clearly shown by others in preclinical animal models, is that ITK has a crucial role in T cell differentiation. In our ongoing Phase 1 clinical trial in T cell lymphoma, we have been able to demonstrate that ITK also plays a vital role in differentiation of normal human T cells. These findings were anticipated by the Corvus team and indeed were one of our motivating factors for pursuing this drug. The findings that we can modulate T cell differentiation on one hand and at higher doses block T cell receptor signaling now provide us with an opportunity to develop a very important new medicine. Starting with lymphomas provided us an opportunity to evaluate a myriad of immunologic properties. Our T cell lymphoma trial gives us the information and supports the rationale to expand into other immune diseases. With this strategy, we see many similarities to the development of other immunologically active agents such as Rituxan and ibrutinib, which also started in lymphoma and then expanded into other diseases. As you may know, anti-CD20 antibodies like Rituxan and BTK inhibitors are now widely used in the treatment of B-cell lymphomas and members of the Corvus team played crucial roles in the discovery and development of these agents. Rituxan is approved for several autoimmune diseases and BTK inhibitors are in various phases of testing for these diseases as well. Data from our global Phase I/Ib trial in T-cell lymphomas has led to the identification of 200 milligrams twice a day orally as the optimal dose of CPI-818 for modulation of T cell differentiation, and we are expanding enrollment in that dose cohort of the trial. The study is ongoing, together with our partner in China, Angel Pharmaceuticals. We have submitted an abstract to present an update on this data at the ASH meeting in December if accepted. As reported in our press release today, 12 patients have been enrolled and eight are evaluable for response. There has been one complete response lasting 25 months, one novel complete response lasting 16 months, one partial response ongoing at two months follow-up. Five patients had stable disease. Two of these have been on therapy for approximately 12 weeks and continue on study. Two additional patients on treatment have not yet had their disease monitoring assessments. An additional patient in the 600-milligram cohort also had a partial response. I should point out that the published overall survival of first relapsed T-cell lymphoma is reported to be a median of 5.6 months and progression-free survival is less than three months. Obviously, this is a very serious disease. The median number of prior therapies in our patients is four. A significant importance are the correlative lab studies on the blood and on the tumors of responding patients which showed: One, evidence for Th1 skewing; two, an increase in T effector cells in blood and tumor; and three an increase in activation of T cells in the blood and tumor. These findings are the hallmark of effects on T helper cell differentiation. Very simply, CPI-818 blocks so-called Th2 cells leading to what is known as Th1 skewing. Th2 cells are the cells often involved in autoimmunity, fibrosis, and allergy. Th1 cells are key to production of cytotoxic T cells which are involved in the killing of cancer cells and virally infected cells. These findings support a novel mechanism of action for the eradication of malignant T cells. We believe we may be inducing a normal host antitumor or anti-lymphoma response. It is possible that this approach could be utilized for other tumors as well. If this is the case, then the strategy of T cell modulation with 818 could become a new paradigm in tumor immunotherapy for other cancers including solid tumors. Preclinical studies in animal models are underway to test this possibility. In addition, we've made other observations in our ongoing Phase 1 study that are pertinent for allergy. It is known that Th2 cells are the culprits in diseases like asthma, atopic dermatitis, fibrotic diseases, such as idiopathic pulmonary fibrosis and others. A key biomarker of Th2 hyperactivity is eosinophilia. High eosinophil counts in the blood are due to the secretion of various cytokines by Th2 cells. The eosinophils, our white blood cells that play a role in allergic and autoimmune diseases and they are often elevated in patients with T-cell lymphomas. In our ongoing lymphoma study, we have seen 818 causes reductions in circulating eosinophils in several patients with high baseline pretreatment counts. These findings motivate us to consider using 818 in allergic diseases. We also are generating encouraging preclinical data with 818 in autoimmunity. Some of this has been previously presented at ASH in 2020 and ASH in 2021. In order to expand and enhance our ability to advance these opportunities, we hired Dr. James Rosenbaum, our new Senior Vice President of Research, in late July. Jim is a board-certified rheumatologist and preeminent immunologist with deep clinical and research experience specific to inflammation, autoimmunity, arthritic diseases, and the role of the microbiome in immunity. He comes to us from Oregon Health & Sciences University where he served as Professor of Medicine and Cell Biology and Chair of the division of arthritis and rheumatic diseases. Jim's initial focus will be on the development of CPI-818. I will pass the call to him now for a brief introduction, and he will be joining us in the Q&A portion of the call. Jim?

Thank you, Richard, and good afternoon, everyone. I am excited to be joining you here today, and I look forward to meeting many of you virtually and in person in the coming months. As Richard noted, my career is focused on the study and treatment of inflammation and autoimmune disorders. I became very excited about Corvus after learning about the immunologic properties of CPI-818 and looking at the early findings in lymphoma patients. Although the ITK target has been known for some time, Corvus is the first group to determine that this target could have valuable therapeutic possibilities in a range of diseases. While I am still early in my time at Corvus, there are several key reasons why I am optimistic about 818 and our broader pipeline. First, CPI-818 is unique. I am not aware of any other ITK inhibitors currently in clinical development. A key characteristic of CPI-818 is its exquisite specificity for ITK, which turns out to be crucial for affecting differentiation of T cells. Second, CPI-818 clinical and preclinical data are encouraging and speak to its broad potential. We have the opportunity to help a significant number of patients with T-cell lymphomas, immune-mediated diseases, or allergies and also to enhance understanding of some fundamental immunologic principles. Third, Corvus is a leader in research and development related to the adenosine axis. Our programs cifo and mupa have unique properties relative to other programs in development and are Phase 2 ready. Together, the Corvus portfolio of product candidates creates exciting new opportunities to potentially impact several important areas of medicine. And with that, I will turn it back to Richard.

Thank you Jim. We look forward to advancing CPI-818 and our other products under your leadership. We believe we are positioned to initiate clinical trials in autoimmune and/or allergic diseases over the next six to 12 months. Moving on to Ciforadenant, our adenosine 2A receptor antagonist; we are progressing with our Phase 2 trial with the Kidney Cancer Clinical Trials Consortium in frontline renal cell cancer focused on the triplet combination of cifo plus ipilimumab and nivolumab. This trial is based on our publication in 2018 showing synergy of ciforadenant with anti-CTLA-4 antibody in preclinical tumor models. The trial, which will enroll up to 60 patients, is anticipated to be initiated in the third quarter of this year. The primary endpoints will be deep responses. Deep responses are CRs and PRs with greater than 50% reduction in tumor volume, reflecting our goal to raise the plateau on progression-free survival and survival by adding ciforadenant. The Kidney Cancer Consortium is led by MD Anderson and includes several leading centers such as Vanderbilt, Beth Israel, Boston, Cleveland Clinic, UT Southwestern, and others. As a reminder, this is an open-label single-arm trial, so we anticipate that we will get a good feel for efficacy early in the trial. For mupadolimab, our B cell activating anti-CD73, while we are pausing initiation of our Phase 2 trial, we believe it is differentiated in the CD73 landscape as it binds to a unique epitope on the CD73 protein, which on B cells results in their activation and differentiation into antibody producing plasma cells and into memory B cells. This property is not dependent on adenosine. I emphasize this point because we think that the immunomodulatory properties provide a unique mechanism of action in immunotherapy. Our partner Angel Pharmaceuticals will continue developing mupadolimab in China with a planned Phase 1 trial exploring monotherapy and combination with pembrolizumab in patients with advanced lung and head and neck cancer. The IND for this trial was recently accepted by the CDE in China. In closing, we believe Corvus is well positioned with several potential catalysts for our programs in the next 12 months combined with an extended cash runway that now runs into 2024. Key upcoming milestones include: expanding enrollment of peripheral T cell lymphoma patients with additional Phase 1 data before the end of the year with CPI-818. As a reminder, this study will include Angel Pharmaceuticals, who will be responsible for the portion of the study in China. Second, CPI-818 development in autoimmune and allergy is ongoing with a goal of initiating clinical trials early next year, early 2023. Third, starting the ciforadenant and the Phase 2 trial for frontline renal cell cancer in partnership with the Kidney Cancer Consortium in the third quarter, with the potential for a read-on clinical activity relatively early in enrollment, since it is an open-label study. We look forward to providing updates on these key initiatives in the coming quarters. I will now turn the call over to the operator, for questions and answers.

Thank you. We will now begin the question-and-answer session. Our first question comes from Li Watsek with Cantor Fitzgerald. Please go ahead.

Hi, everyone. This is Rosemary on for Li. Thanks for taking my questions. I just have a couple. So first for 818, I'm just wondering if you have any ideas about the pathway to approval and the approximate timeline for that?

Okay. Do you want to give me your second question as well?

Sure. So second question, regarding Mupadoliumab. Would you be able to discuss potential BD opportunities, given that the future trials in lung cancer are going to be quite expensive?

First, let me address the pathway to approval for 818 in lymphoma. We are currently studying 818 in patients who have experienced multiple recurrences, and our objective in the ongoing trial is to confirm the responses we have observed. The next step would be a Phase 2 trial focused again on advanced recurrent patients. It's important to note that when treatment fails initially, the median survival drops to less than six months. Therefore, we believe there is potential for approval as a monotherapy through a single-arm study. Additionally, due to the safety profile we've observed with 818, we also aim to explore its use in frontline therapy, likely in combination with standard chemotherapy regimens like CHOP or CHP, which would require a randomized trial. In such a trial, progression-free survival would need to be an endpoint. Essentially, we envision a single-arm trial with monotherapy for advanced disease, alongside a randomized trial for early treatment of peripheral T-cell lymphoma. As you may know, treatment options for this disease are limited; there are some approved agents, but their efficacy is not very strong. We believe that 818 represents a novel mechanism of action that may prove to be more effective than some other agents currently in early development. Furthermore, when treating T-cell lymphoma patients, we are also examining their normal T cells, B cells, and overall immune function. This approach provides us with various insights from these T-cell lymphoma trials, which we think will be relevant for autoimmune trials. Regarding Mupadoliumab, the lung cancer sector has become quite crowded, and many are anticipating further data on TIGIT combinations with anti-PD-1 treatments. We, too, are monitoring developments in this area. We have a trial protocol prepared, which involves chemotherapy and pembrolizumab with or without Mupadoliumab. We understand the trial we need to conduct and are simply waiting for more clarity in the market. Given that this is a blinded randomized Phase 2 trial, we decided to pause its progress partly because we won't be able to analyze the data for another 12 to 18 months. In contrast, investing in our other programs allows us to gather data rapidly, thereby increasing our value in a challenging environment. Mupadoliumab is a unique anti-CD73 treatment, and we are eager to reintroduce it into the clinic as market conditions improve.

Okay. Very helpful. Thank you.

Our next question comes from Mara Goldstein with Mizuho. Please go ahead.

Hi, this is Mara. I have a question about 818 in autoimmune disease. I noticed you previously presented the preclinical data in GVHD. I'm curious if that is the indication that aligns best with the immunologic properties of 818, or are there other autoimmune diseases that you believe might be a better fit? Additionally, could you discuss the potential differences in the dosing of 818 for TCL compared to autoimmune diseases? Thank you.

All right, Dr. Rosenbaum, maybe I’ll let you take the first part of that question.

Sure. Well, in addition to the data on acute GVHD, we have reported data on the MRL/lpr mouse, which has similarities to lupus. We've reported data on a T cell-mediated colitis model and data on a mouse psoriasis model. So those are diseases of interest. As well as some of the diseases that Dr. Miller mentioned, atopic dermatitis, pulmonary fibrosis, and asthma. And I think we're sorting through those data to decide what's going to be the initial clinical target.

If I may add to that, in response to your question, graft-versus-host disease is not our primary focus because we believe that the conditions Dr. Rosenbaum outlined, such as atopic dermatitis, asthma, inflammatory bowel disease, and fibrotic diseases, offer significant opportunities. We have an oral agent with a novel mechanism of action that has demonstrated relative safety at higher doses than what we would typically use for autoimmune diseases. Regarding your second question on dosing, it's likely to be lower for autoimmune diseases. We aim to target any autoimmune or allergic condition associated with Th2 cells, which are numerous. The 200-milligram dose we currently use for peripheral T-cell lymphoma is likely in the range we would employ for autoimmune diseases, although we might consider going slightly lower.

Got it. Thank you.

Our next question comes from Sean Lee with H.C. Wainwright. Please go ahead.

Good afternoon, everyone. Thanks for taking my question. I have two questions in particular. First for the 818 with the upcoming update at ASH. Could you provide us a little overview of what kind of data we can expect in terms of patient numbers, endpoint biomarkers? And is it only going to be just from the 200-milligram cohort, or are we going to get an update from the other cohorts as well?

We will provide an update on all the dose cohorts. We are considering some doses above 200 to enhance our pharmacokinetics and gain a clearer understanding. At ASH, we anticipate presenting data on approximately 40 to 50 patients, including efficacy data, safety data, and any immunologic data we have from blood work and biopsy results. The abstract has already been submitted to ASH and is pending acceptance. It will feature work from both Angel in China and the Corvus aspect of the study.

Great. Thanks for that. And for the mupa, are we going to get any more updates from the pembrolizumab combo study, or is all that paused at the moment?

We still have some patients on follow-up from our Phase I study, and Angel will soon be starting their Phase I study in lung cancer and head and neck, targeting the same tumors we were focused on. Thank you for highlighting that. We're pausing our efforts at Corvus, but the study will continue with Angel in China, and we will still gather information from that. The main reason for our pause was to concentrate our resources on the other two programs that we believe can offer clinical data more quickly and enhance our value. I don't have a timeline for new updates on mupa, but we are still enrolling and following patients alongside Angel. To clarify, we are not enrolling new patients at Corvus; we are monitoring patients already in our study. Angel will begin enrolling patients soon.

Got it. Got it. Thanks.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Richard Miller for any closing remarks. Please go ahead.

Thank you, operator. Thank you everyone for joining our conference call today. It's been a pleasure to update everyone on what's going on at Corvus and we look forward to giving further updates on our quarterly conference calls. Thank you and goodbye.

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