Corvus Pharmaceuticals, Inc. Q4 FY2023 Earnings Call

Good afternoon everyone. Thank you for standing by and welcome to the Corvus Pharmaceuticals' Fourth Quarter and Full Year 2023 Business Update and Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. It is now my pleasure to turn the call over to Zack Kubow of Real Chemistry. Please go ahead, sir.

Thank you, operator, and good afternoon everyone. Thank you for joining us for the Corvus Pharmaceuticals' fourth quarter and full year 2023 business update and financial results conference call. On the call to discuss the results and business updates are Richard Miller, Chief Executive Officer; Leiv Lea, Chief Financial Officer; Jeff Arcara, Chief Business Officer; and Ben Jones, Senior Vice President of Regulatory and Pharmaceutical Sciences. The executive team will open the call with some prepared remarks, followed by a question-and-answer period. I would like to 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 and are 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' annual report on Form 10-K, 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. Leiv?

Thank you, Zack. I will begin with a quick overview of our fourth quarter and full year 2023 financials and then turn the call over to Richard for a business update. Research and development expenses in the fourth quarter of 2023 totaled $4 million compared to $4.1 million for the same period in 2022. R&D expenses for the full year 2023 totaled $16.5 million compared to $24.5 million for the full year 2022. The net loss for the fourth quarter of 2023 was $6.7 million, including a $1.4 million non-cash loss related to Angel Pharmaceuticals, our partner in China. This compares to a net loss of $9.8 million for the same period in 2022, which included a $4.6 million non-cash loss related to Angel Pharmaceuticals. The net loss for the full year 2023 was $27 million, including a $5.3 million non-cash loss related to Angel compared to a net loss of $41.3 million, including a $10 million non-cash loss related to Angel for the full year 2022. Total stock compensation expense for the fourth quarter and full year 2023 was $0.6 million and $2.1 million, respectively compared to $0.6 million and $2.7 million for the same periods in 2022. As of December 31st, 2023, Corvus had cash, cash equivalents, and marketable securities totaling $27.1 million as compared to $42.3 million at December 31st, 2022. I will now turn the call over to Richard, who will discuss our clinical progress and elaborate on our strategy and plans.

Thank you, Leiv, and good afternoon everyone. Thank you for joining us today for our business update call. Corvus has become a pioneer in the research and development of ITK inhibition as a new therapeutic modality to benefit patients with a diverse range of diseases. We have demonstrated that selective inhibition of this target leads to significant biologic effects that could lead to new treatments for cancer and immune diseases. In 2024, we are focused on two key value drivers to further confirm and advance this opportunity; first, begin patient enrollment in a registrational Phase 3 trial of soquelitinib for patients with relapsed PTCL, or peripheral T cell lymphomas, an indication with no fully FDA-approved therapies and significant unmet need. And second, begin patient enrollment in a placebo-controlled Phase 1 trial of soquelitinib for patients with moderate to severe atopic dermatitis, which is expected to generate the first clinical data for ITK inhibition for an immune disease before the end of the year. We believe Corvus is positioned to build value in the near-term with significant upcoming clinical milestones for soquelitinib in oncology and immune diseases, further strengthening our ongoing business development, which is concentrated on partnering opportunities for ITK inhibition. Recently, published data demonstrated the potential role of ITK in a broad range of indications, and we have expanded our capabilities and approach to business development with the appointment of Jeff Arcara as Chief Business Officer. Jeff will be presenting his views and strategy in a moment. I will now provide further details on our two priorities for the year and our other programs, starting with soquelitinib for PTCL. We plan to begin patient enrollment in our soquelitinib registrational Phase 3 clinical trial in relapsed PTCL in the third quarter of 2024. The data from our Phase 1 trial continues to evolve with longer follow-up of treated patients. In the most recent data cutoff from January 2024, we found that a patient with previously reported partial response of approximately 80% target lesion reduction after nine weeks of therapy subsequently converted to a complete response at 18 weeks due to continued tumor response. This patient, who remains on therapy, had relapsed extranodal NK/T-cell lymphoma involving the nasopharynx and represents the fourth complete response out of 21 Phase 3 eligible patients in the trial. The objective response rate, or ORR, for the Phase 3 eligible patients in the Phase 1 trial remains at seven out of 21 patients with four complete responses and three partial responses or 33%. Although not studied head-to-head, the ORR, complete response rate, disease control rate, progression-free survival, and overall survival for this group compares favorably to the results seen with belinostat or pralatrexate, which are the standard chemotherapies for PTCL that we will be comparing against in a Phase 3 trial. These agents received accelerated approval in the United States, but no definitive trial has been conducted for either. The median progression-free survival for our patients and the primary endpoint for our Phase 3 trial remains at 6.2 months, which is substantially better than reported for the standard agents. Regarding our interactions with the FDA, we reached alignment on the final study protocol and in February, they granted soquelitinib orphan drug designation for the treatment of T cell lymphomas. This is an important milestone that reinforces the unmet need for new therapies for these patients given existing drugs provide limited efficacy and are associated with significant toxicity. In fact, current NCCN guidelines for relapsed/refractory PTCL recommend that patients enter an experimental clinical trial as the preferred treatment for second-line therapy. We are already working with or are in advanced discussions with a number of leading centers in the United States and Canada. We anticipate about 40 centers will participate in the trial, the vast majority of which will be in the U.S. Our second priority is soquelitinib for atopic dermatitis, the first immune disease indication we are exploring. Our plans to move into a clinical trial are supported by our preclinical work, including using soquelitinib to successfully treat spontaneous canine atopic dermatitis. We are on track to initiate a Phase 1 trial in April. We plan to enroll 64 patients with moderate-to-severe atopic dermatitis that has progressed on at least one prior therapy. The study will be randomized, placebo-controlled, and blinded to patients and the treating physician. There will be four sequentially enrolled cohorts of 16 patients, with patients in each cohort being randomized 3:1 to different dosing regimens of soquelitinib or placebo administered for 28 days. The primary endpoint is safety and tolerability, and efficacy will be measured using investigator global assessment and the clinically validated measurement of improvement in the Eczema Area and Severity Index, also known as EASI. It should be noted that while the atopic dermatitis trial is double-blind, the doctor and the patient are blinded, but the company is not blinded. We plan to evaluate the data in an ongoing manner as successive cohorts of patients complete enrollment. Based on the anticipated enrollment and follow-up timelines, we believe data from the initial cohorts will be available before the end of 2024 with study completion in early 2025. We are planning to conduct a solid tumor trial in relapsed renal cell cancer, but are prioritizing initiation of the PTCL and atopic dermatitis trials. Our plans to move into a clinical trial are supported by our preclinical work and independent academic confirmation led by a team from Erasmus University in Rotterdam. The clinical and preclinical results we have seen with soquelitinib have motivated us to search for additional analogs of ITK inhibitors. In February, we presented data at the Keystone Symposia on Systemic Autoimmune and Autoinflammatory Diseases that included the first description of our next-generation ITK inhibitors, which are designed to deliver precise T cell modulation that is optimized for specific immunology indications. Given the broad potential of ITK inhibition in inflammatory and immune-mediated diseases, we seek to partner with biotech or pharma companies that have established development and commercialization capabilities that match the various opportunities. In order to accelerate our business development activities, in February, we appointed Jeff Arcara as Chief Business Officer. He joins Corvus with more than 30 years of commercial experience in the biopharmaceutical industry, including broad functional experience across commercial development, corporate development, product licensing and partnering, and corporate strategy. I will now pass the call to Jeff to comment briefly on our business development initiatives.

Thank you, Richard, and good afternoon everyone. I am very excited to join the Corvus team to advance the development of a very promising pipeline. In cancer, Corvus is focusing in areas of high unmet need with a novel target and with significant commercial potential. The opportunity to join Corvus at this time was very appealing with a number of potential milestones and key inflection points for the company over the next six to 12 months, including the start of our Phase 3 trial of soquelitinib for relapsed PTCL, which is addressing an indication with significant unmet need and provides the opportunity to bring an important new treatment option to patients and create value for Corvus. From the commercial perspective, if approved, it will be the only fully FDA-approved treatment for relapsed PTCL. To give a sense for the magnitude of the opportunity, consider these factors. PTCL has a very high unmet need with a very low survival rate of under 20% in five years, so there is a desperate need for new and effective therapies. It is estimated that there are 70,000 cases of PTCL globally with current pricing for treatments in the U.S. ranging from $200,000 up to $600,000 per year. Soquelitinib represents a near-term commercial opportunity with our planned Phase 3 trial protocol intended to enroll 150 patients. The market for drugs to treat hematologic malignancies is large, at approximately $55 billion and is projected to grow to $90 billion by 2028. For purposes of benchmarking, global sales of Adcetris, an anti-CD30 drug conjugate, were $1.6 billion in 2023, with estimated sales of approximately $558 million in patients with non-Hodgkin's lymphomas, primarily in patients with anaplastic T cell lymphoma, a subset of PTCL accounting for about 15% to 20% of cases. Together, these factors make the PTCL opportunity substantial for a novel effective treatment as is seen with other disease-modifying therapies in the hematology space. More broadly, we view PTCL as an entry point with numerous potential ways to expand the opportunity to help more patients with solid tumors and immune diseases. Given all this, we believe soquelitinib and our next-generation ITK inhibitors can be an attractive opportunity for partners, given the unique mechanism of action, human safety data with soquelitinib from our Phase 1 lymphoma trial, the large and diverse market opportunities in oncology and immunology, and our strong intellectual property position with issued composition of matter patents for soquelitinib extending out to November 2037, not including likely extensions. With that, our preferred partnering strategy is to find partners with development and commercialization expertise in immune disease, as well as to seek regional partnerships in oncology. We have seen increasing momentum in partnering interest since the announcement of our Phase 3 registration trial in the third quarter of 2023 and recent publications on the activity of soquelitinib in preclinical models of cancer and immune diseases. I will now turn the call back to Richard.

Thank you, Jeff. Turning to our partner-led programs, the Kidney Cancer Research Consortium is currently enrolling patients in a Phase 2 portion of the Phase 1b/2 clinical trial evaluating ciforadenant or adenosine A2A receptor inhibitor as a potential first-line therapy for metastatic renal cell cancer in combination with ipilimumab and nivolumab. The clinical trial is expected to enroll up to 60 patients, and there are currently about 25 patients enrolled. Based on current timelines, we anticipate initial interim data in the first half of 2024. Encouragingly, as we enroll more patients, we continue to see that the deep response rate exceeds our 32% benchmark based on 14 evaluable patients that have received at least one follow-up assessment, up from eight evaluable patients at our Q3 call. Recall, deep response rate is complete response plus partial responses that exceed 50% tumor volume reduction. This endpoint has been shown by others to predict prolonged progression-free survival and is 32% with ipilimumab and nivolumab. For our anti-CD73 antibody mupadolimab, our partner, Angel Pharmaceuticals, is continuing to enroll patients in a Phase 1/1b clinical trial in China with mupadolimab alone and together with pembrolizumab in patients with non-small cell lung cancer and head and neck squamous cell cancers. Summarizing the outlook for 2024, our current cash allows us to achieve near-term milestones, including starting our registrational Phase 3 clinical trial of soquelitinib in PTCL, generating interim data from early cohorts of the soquelitinib Phase 1 atopic dermatitis clinical trial, and reporting interim data with ciforadenant in renal cell cancer in the first half of 2024. Our intent is to leverage these near-term milestones and achievements as we seek additional funding and partnerships for our ITK inhibitors in immunology and oncology, as well as our other novel programs, including the A2A receptor antagonist, ciforadenant. We look forward to providing updates on our programs in the coming quarters. I will now turn the call over to the operator for a question-and-answer period.

Thank you. We'll now begin our question-and-answer session. Our first question comes from Graig Suvannavejh with Mizuho Securities. Please go ahead with your question.

Hi, this is Gerry on for Graig. Thanks for taking our questions. Maybe two from us. To start off, on the Phase 3 soquelitinib trial initiation, can you kind of speak to what's kind of gating the start of that trial? And have there been any adjustments to the protocol since? I do have a follow-up.

There's been no changes or adjustments to the protocol. We've been in complete agreement with the FDA on the design, statistics, and other parameters of the trial. Nothing's changed in that regard. Our Phase 1 data continues to improve as we have longer follow-up. We're in the process now of finalizing contracts with the various centers, and there's really no gating items other than the usual administrative things.

Got you, that's super helpful. And then a question for you, Jeff. So, you did speak to a range of pricing in PTCL. Can you kind of speak a little more on how Corvus is thinking about where you fall in that range or that range of scaled pricing?

Yes. Thanks. I guess in terms of pricing, obviously we look at analogs and what the current market is charging in terms of these areas. I think you take into account the size of the patient population that you're going after. But more importantly, the pricing is really going to be dictated on the size of the unmet medical need, which we know is very large in PTCL, as well as the product profile that we present, so the safety and efficacy data that we have. So, I think, obviously we're looking at analogs at this point in time. But ultimately, the final price will be set once we get the final data and do some testing with payers on the value proposition.

Got it. Thanks for taking our questions and contrast on the quarter.

Thank you. Our next question comes from Jeff Jones with Oppenheimer. Please state your question.

Hi guys, and thanks for taking the question. I guess two from me. Can you speak to the confirmed versus unconfirmed reported outcomes in the PTCL study with the additional complete response now? And just to clarify, how many of those are confirmed versus unconfirmed? And then one follow-up.

They're all confirmed. They're all confirmed.

Okay. Yes, thank you.

Yes, Jeff, I would like to add that in cases of relapsed disease, clinicians typically don't differentiate between confirmed and unconfirmed responses; that distinction is more relevant in frontline therapy. In relapsed disease, particularly with this condition, patients often have a very short lifespan, and it's challenging to maintain patients for more than a few months in many instances. However, I can confirm that all of our responses have been verified as both partial and complete.

The swimmer plot you're showing, it looks like there are some patients who are still quite early in treatment. And so it almost looks like you're still enrolling patients in that study. So, I guess, are you still enrolling patients in that Phase 1 study? And would you be able to perhaps roll those patients over to the Phase 3?

We are not enrolling new patients in the Phase 1 study. The patients indicated on the swimmers and waterfalls, some of whom are still receiving therapy, will be monitored and will continue their treatment until they progress. However, there will be no new enrollments in the Phase 1 trial. We are now directing our centers, many of which participated in the Phase 1, to focus on the Phase 3 trial.

Our next question comes from Roger Song with Jefferies. Please state your question.

Hi, this is Liang Cheng on for Roger. Thank you for taking our questions. I think two questions from us. I think the first one on soquelitinib, the updated Phase 1 data. So, for the five patients with tumor reductions that did not meet the criteria of partial response, so how long were they on the treatment? And then for the two that continue, how long have they been on the treatment? Then I have a follow-up. Thank you.

For those who did not meet the criteria for partial response, how long have they still been on treatment? If you look at the swimmer, one is five months, one is about six months, another one is seven or eight months, and the others have shown partial responses. What was the second part of your question?

So, for the two that continue on the treatment? Yes, I guess.

They continue on the treatment. Patients continue on treatment until they progress or they have some sort of a safety issue, but that's not happened.

Sure. Okay. So, maybe moving on.

Is that clear?

Yes, yes. I think my second question is about the Phase 1 study in atopic dermatitis. So, the patients are required to fail at least one prior, so any specific requirements on that?

I didn't quite hear the end of your question. Patients are required to have failed one prior topical or systemic therapy, have moderate to severe atopic dermatitis, and have failed their previous therapy. Does that answer your question?

Yes, yes. okay. Thank you. That’s all from us.

Thank you for the question.

Our next question comes from Li Watsek with Cantor Fitzgerald. Please state your question.

Hi there. This is Rosemary on for Li. Thanks so much for taking our questions. Maybe firstly, could you reiterate the benchmarks for the relapsed/refractory PTCL, what you're hoping to see? There was some interference on the call earlier, so I didn't catch that. And then I do have a follow-up question.

Pralatrexate and belinostat are currently the standard treatments for relapsed peripheral T cell lymphoma, having received accelerated approval about 15 years ago, but the companies did not conduct the confirmatory trials. As a result, there is no fully FDA-approved drug for relapsed PTCL at this time. Both pralatrexate and belinostat are chemotherapy agents, with belinostat acting as an HDAC inhibitor and pralatrexate as a folate antagonist. These drugs come with common chemotherapy side effects, including neutropenia, thrombocytopenia, and anemia. Additionally, pralatrexate is associated with mucositis. The approval for these drugs was based on single-arm Phase 2 studies that included around 100 to 120 patients, showing a response rate of about 25%. The progression-free survival was approximately 1.6 months for belinostat and about three months for pralatrexate. In our research, we observed a 33% response rate, with more than half of those being complete responses, which is significantly higher than the complete response rate of around 10% for pralatrexate and belinostat. Complete responses are crucial in hematology and particularly in lymphoma treatment. Our findings indicate a progression-free survival of 6.2 months, which is much better than the previously mentioned figures of 1.6 and 3.0 months. Our study is designed to enroll 150 patients, with 75 in each arm comparing standard-of-care to soquelitinib. We estimate a power of about 89% to 90% to achieve an improvement from about three and a half months to five and a half months, which is our goal.

Thank you so much. Yes. Thanks for the really thorough answer. And then I just have a quick question on atopic dermatitis. So, for the data that we may get later this year, do you have any anticipation around the nature of that data, like how many patients and how many doses? Or is it just too early to tell? Thanks.

We have a good estimation regarding the dosing of this drug, as we've been evaluating it in lymphoma patients. We understand the pharmacokinetics, target occupancy, safety, and more. We are studying four cohorts of patients in a sequential manner. We will start with the low dose cohort, which is 100 milligrams taken twice a day. In this cohort, we will enroll 16 patients in a 3:1 randomization, with 12 receiving soquelitinib and four receiving a placebo. Next, we will move to the 200 milligrams once a day regimen, as we believe this dosing will be effective and more convenient; this group will also consist of 16 patients and follow the same randomization. The third cohort will involve 200 milligrams twice a day, consistent with our lymphoma regimen, with the same randomization structure. Lastly, we will have a cohort for 400 milligrams once a day. We know that at 200 milligrams, there is complete receptor occupancy, while 100 milligrams provides good but not complete occupancy, likely sufficient to produce some biological effects. Therefore, we might observe some effects even at the lowest dose. As previously mentioned, both the doctor and patient will be blinded, while our company will not be; we can access the data, and a data monitoring board will also review it after each cohort’s enrollment. We may report data at our discretion, although I do not expect weekly updates. Additionally, there will be extensive biomarker data collected throughout the study, including various cytokines and lymphocyte subsets. Our previous studies have indicated which biomarkers like IL-4 and IL-5 will be affected. For each cohort, we will be monitoring safety and changes in biomarkers relative to baseline, specifically expecting shifts in IL-4 and IL-5 among other relevant measures. Efficacy will be assessed by doctors using specified grading criteria, including the EASI score and global investigator assessments. Each cohort will provide valuable insights. Regarding dosing, we have a solid understanding and will begin at 100 milligrams twice a day. I anticipate seeing initial outcomes early in this study, offering insights into both efficacy and biological activity. We're focusing on atopic dermatitis first because it is a Th2-mediated disease related to IL-4, IL-5, and IL-13, and we know our drug effectively blocks Th2 function. Our previous lymphoma and preclinical studies inform this approach. This study signifies the potential of ITK inhibition as a vital therapeutic strategy for various immune diseases. Thank you for the question.

Thank you so much.

Thank you. And there are no further questions at this time. I'll turn the floor back to Richard Miller for closing remarks.

Thank you, operator. Well, I want to thank everyone for participating in the call today. We look forward to giving additional updates each quarter and advancing soquelitinib and other products in the coming months. Thank you very much.

Thank you. This concludes today's call. All parties may disconnect. Have a good day.