Earnings Call Transcript - CRVS Q4 2024

Operator, Operator

Good afternoon, everyone. Thank you for standing by. And welcome to the Corvus Pharmaceuticals Fourth Quarter and Full Year 2024 business update and financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct your question and answer session, and instructions will follow at that time. It is now my pleasure to turn the call over to Mr. Zack Kubow of PR Chemistry. Thank you. Please go ahead, sir.

Zack Kubow, Investor Relations

Thank you, operator, and good afternoon, everyone. Thanks for joining us for the Corvus Pharmaceuticals fourth quarter and full year 2024 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's annual report on Form 10-K for the year ended December 31, 2024, that was filed today 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?

Leiv Lea, Chief Financial Officer

Thank you, Zack. I will begin with a quick overview of our fourth quarter and full year 2024 financials and then turn the call over to Richard for a business update. Research and development expenses in the fourth quarter of 2024 were $5.2 million compared to $3.2 million for the same period in 2023. The $2 million increase was primarily due to an increase in socalitinib clinical trial expenses. R&D expenses for the full year 2024 totaled $19.4 million compared to $16.5 million for the full year 2023. For the full year 2024, the increase of approximately $2.9 million was primarily due to higher clinical trial costs associated with the development of socalitinib. The net loss for the fourth quarter of 2024 was $12.1 million, including a non-cash loss of $2.2 million related to Angel Pharmaceuticals, our partner in China. In addition, we recorded a non-cash loss of $2.3 million from the change in fair value of Corvus' warrant liability during the fourth quarter of 2024. This compares to a net loss of $6.7 million for the same period in 2023, which included a $1.4 million non-cash loss related to Angel Pharmaceuticals. The net loss for the full year 2024 was $63.3 million, including a $3.2 million non-cash loss related to Angel and a non-cash loss of $33.4 million from the change in fair value of Corvus's warrant liability during the year. This compares to a net loss of $27.0 million, including a $5.3 million non-cash loss related to Angel for the full year 2023. Total stock compensation expense for the fourth quarter and full year 2024 was $0.8 million and $3 million, respectively, compared to $0.6 million and $2.1 million for the same periods in 2023. As of December 31, 2024, Corvus had cash, cash equivalents, and marketable securities totaling $52 million as compared to $27.1 million at December 31, 2023. In May 2024, associated with our financing, we also sold common stock warrants that have an exercise price of $3.50 and expire on June 30, 2025. Two investors early exercised their warrants during the fourth quarter of 2024, resulting in $18.6 million in cash to the company. If all the remaining warrants are exercised, we'll receive approximately $41 million in additional cash. Based on our current plans, we anticipate our cash provides runway into the first quarter of 2026. I will now turn the call over to Richard, who will discuss our clinical progress and elaborate on our strategy and plans. Thanks, Leiv, and good afternoon, everyone.

Richard Miller, Chief Executive Officer

Thank you for joining us today for our business update call. As we look into 2025, we remain optimistic on the potential for socalitinib to provide a powerful new approach for the treatment of a broad range of immune diseases and cancer. Socalitinib is well positioned as a first-in-class oral therapy that selectively inhibits ITK to modulate and control parallel signaling pathways in the immune system. Our confidence is backed by a strong and growing body of evidence both from our clinical efforts and preclinical research conducted by us and others. First, we have reported a 39% objective response rate from our Phase 1 trial of socalitinib in patients with relapsed T-cell lymphoma. This included a 26% complete response rate, which is more than double the rate seen with standard chemotherapies. Based on this data, we are enrolling a registrational Phase 3 trial of socalitinib in patients with relapsed peripheral T-cell lymphoma, and we have gained a significant amount of experience that we are applying to our other socalitinib programs. Second, we observed a favorable safety and efficacy profile from interim data from our Phase 1 trial of socalitinib in patients with moderate to severe atopic dermatitis. This includes significant responses in the socalitinib treatment groups compared to placebo for the clinically significant endpoints of Investigator Global Assessment (IGA) zero or one and Eczema Area and Severity Index (EASI) 75. Third, preclinical data supports the potential of ITK inhibition in a broad range of indications, including solid tumors, immune conditions such as autoimmune lymphoproliferative syndrome (ALPS), systemic sclerosis, pulmonary fibrosis, and graft-versus-host disease, and inflammatory conditions such as asthma, psoriasis, and inflammatory bowel disease. The data also highlights its mechanism of action, skewing differentiation to TH1 cells, reducing TH2 and TH17 cells and their downstream cytokines, and promoting a switch to T regulatory cells that suppress inflammation. Given the broad applicability of its mechanism of action, we view the potential of ITK inhibition as analogous to BTK inhibition, a category that members of the Corvus team, including myself, helped to develop. BTK inhibitors were first approved for B-cell malignancies and then expanded into autoimmune conditions. Today, I will recap our previously reported data in atopic dermatitis and next steps for the trial, share some detail on the recently initiated NIH trial in ALPS, and highlight the upcoming milestones for socalitinib. In January, we reported interim data from the Phase 1 trial with socalitinib in patients with moderate to severe atopic dermatitis. The trial includes four cohorts that are enrolling sixteen subjects each at a three-to-one ratio of active to placebo: twelve active, four placebo. The trial is double-blind, meaning the patient and the doctor do not know what they're taking, and the active medicine and placebo are indistinguishable tablets. The company and the data review committee are not blinded. The treatment period is twenty-eight days, and then we follow patients off therapy for another thirty days. The twenty-eight-day treatment period is relatively short compared to later-stage atopic dermatitis studies with other agents, which typically treat up to sixteen weeks or longer. The primary endpoint is safety and tolerability; secondary endpoints are based on IGA and EASI scores along with patient-reported measures of itch and biomarkers. The first two cohorts received socalitinib doses of one hundred milligrams twice a day and two hundred milligrams once per day. The same total dose of drug was used in the first two cohorts. Based on our lymphoma studies, we know that one hundred milligrams will provide fifty percent of occupancy of the target, and two hundred milligrams will provide about eighty to a hundred percent occupancy. In January, we reported data from sixteen patients in cohort one and ten patients in cohort two for which twenty-eight days of treatment had been completed. In total, from the combined cohort one and two, this included nineteen patients treated with socalitinib and seven patients treated with placebo. In the socalitinib group, twenty-six percent achieved IGA zero or one, and thirty-seven percent achieved EASI 75. Recall, these have been accepted as measures of clinical benefit and have been used as the basis for regulatory approval for several approved treatments for atopic dermatitis. In the placebo group, no patients achieved IGA zero or one or EASI 75. No significant safety issues were observed, and no clinically significant laboratory abnormalities were seen. Cohort three of the trial, which administers a dose of two hundred milligrams twice a day, that is twice the total daily dose we used in the earlier cohorts, is nearing completion of enrollment, and some patients have already reached the twenty-eight-day follow-up period. The efficacy results so far in the trial, including full cohort one and two, and the initial experience in cohort three, have been positive and consistent with what we have reported to date. No patients in the active treatment groups received concomitant topical steroids or required rescue medications. One patient in the placebo group did receive concomitant topical corticosteroids. In cohorts one and two, two placebo patients experienced flares in their disease during the twenty-eight-day treatment period, whereas no disease flares were seen in the patients receiving active drug during the twenty-eight-day treatment period as well as the follow-up period off treatment. Socalitinib has been very safe to date as well, with no patients requiring interruption of therapy. We now have experience in over one hundred patients with lymphoma and atopic dermatitis, representing more than nine thousand patient days of treatment, including patients with lymphoma on therapy for up to two years. We continue to believe that socalitinib is an active medicine with several advantages: oral route of administration, attractive safety profile, a novel mechanism of action with an opportunity for unique positioning, including the potential to bridge between topical therapies and systemic injectables. We plan to report data covering the first three cohorts at the Society for Investigative Dermatology meeting taking place May 7 to 10 in San Diego. Our abstract has already been accepted for an oral and poster presentation at this meeting. Outside of atopic dermatitis, we continue to enroll patients in our registrational Phase 3 trial of socalitinib in patients with relapsed PTCL. Recently, we presented updated data from our Phase 1 trial at the T-cell Lymphoma Forum with longer follow-up showing that the median progression-free survival is 6.2 months and the eighteen-month progression-free survival is 30%. The median duration of response was 17.2 months. Progression-free survival is the primary endpoint of our Phase 3 trial, which is comparing socalitinib to either belinostat or pralatrexate, the standard of care agents with reported median PFSs of about three months and eighteen-month PFSs of under 20%. We also have recently announced the initiation of enrollment in a Phase 2 trial of socalitinib in patients with ALPS, autoimmune lymphoproliferative syndrome. This study not only addresses a disease with unmet need but will also provide additional information on the activity of selective ITK inhibition in a serious autoimmune disease. ALPS patients are born with a genetic mutation in Fas signaling that results in lymphoproliferation and a myriad of autoimmune problems such as anemia, neutropenia, thrombocytopenia, and others. Some of these patients go on to also develop malignant lymphomas. The ALPS trial is being conducted under a clinical research and development agreement with the National Institutes of Allergy and Infectious Diseases at NIH. It will enroll up to thirty patients aged sixteen years or older with confirmed ALPS based on genetic testing. There will be two dosing cohorts, two hundred milligrams or four hundred milligrams of socalitinib twice per day for a period of up to 360 days. The primary endpoint of the trial is efficacy determined by reductions in spleen and lymph node volumes as measured by CT scans. In addition, improvements in cytopenias will be assessed by complete blood counts. Improvements in cytopenias can improve quality of life and overall health and serve as a biomarker associated with ALPS disease activity, including autoantibody levels that are reactive with red cells, white cells, and/or platelets. Secondary endpoints include safety and tolerability. We are also planning a single-agent socalitinib solid tumor trial in relapsed renal cell cancer or RCC, representing a new approach to immunotherapy of this disease. We plan to initiate this trial during the third quarter of 2025. Outside of socalitinib, we also continue to advance our other clinical stage development programs. We have been one of the leaders in the development of adenosine A2A receptor antagonists for the treatment of cancer with ciforadenant. This includes our Phase 1b/2 clinical trial that is being conducted in collaboration with the Kidney Cancer Research Consortium. The trial was evaluating ciforadenant as a potential first-line therapy for metastatic renal cell cancer in combination with ipilimumab and nivolumab. The study has reached full enrollment of sixty patients at sites including MD Anderson, Vanderbilt, Duke, and the University of Pennsylvania. The patients are being followed, and we anticipate our partners at the Kidney Cancer Research Consortium will present data from the trial sometime later in 2025. Finally, I should mention that we are advancing several second and third-generation ITK selective inhibitors designed to preferentially affect particular ITK signaling pathways. Summarizing the outlook for the remainder of 2025, we remain focused on advancing the broad opportunity for socalitinib, which has several potential upcoming catalysts. This includes, number one, additional data from the Phase 1 trial in atopic dermatitis in May at the Society for Investigative Dermatology meeting; number two, full data from the Phase 1 trial in atopic dermatitis in the third quarter; number three, initiating a Phase 2 clinical trial with socalitinib in solid tumors in the third quarter of 2025 with initial data anticipated in the first half of 2026; number four, initiating a Phase 2 atopic dermatitis trial in late 2025; number five, continuing to activate sites and drive enrollment in the registration trial of socalitinib in PTCL, driving towards interim data in late 2026. And depending on enrollment trends, it's possible we could see initial data from the Phase 2 ALPS study in late 2025 or early 2026. Our current cash gives us runway into the first quarter of 2026, allowing us to execute on these milestones and further demonstrate the value of our programs and, in particular, the significant opportunity for ITK inhibition in immunology and cancer. We look forward to providing updates on our programs. I will now turn the call over to the operator for a question and answer period.

Operator, Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you wish to cancel your request, please press star followed by the pound key. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you. And your first question comes from the line of Jeff Jones from Oppenheimer. Please go ahead.

Jeff Jones, Analyst

Good afternoon, guys, and thanks for taking the question. Lots of data updates to come, so really exciting time for you. I guess starting out on the atopic dermatitis front and the update in May, should we expect full data on cohorts one, two, and three as well as additional biomarker data? And then as you think about the efficacy hurdle there, what do you have in mind to move this ahead into the Phase 2a or in terms of competitiveness in the field?

Richard Miller, Chief Executive Officer

So Jeff, at the Society for Investigative Dermatology meeting in May, we intend to report the full dataset on cohort one and the full dataset on cohort two. We've already completed enrollment and follow-up in those two cohorts. Cohort three is almost completed enrollment, and twenty-eight-day follow-up is coming in on patients now. We'll also have additional one-month follow-up beyond that. So we'll have the full data for cohorts one, two, and three. I also expect to have biomarker data for those first three cohorts as well.

Jeff Jones, Analyst

Okay. Great. And then just in terms of the success hurdles and the efficacy bar that you guys are looking at?

Richard Miller, Chief Executive Officer

First of all, we're pleased with the efficacy we saw in cohorts one and two. Remember, that's twenty-eight days of treatment. We saw roughly a thirty percent difference in some measures between placebo, which was zero in cohorts one and two, and our active arms. That's a strong signal. If that difference is sustained or improves with longer treatment, it would be very meaningful. Many people ask about increasing the duration of therapy, and that's something we're considering. From a competitive standpoint, we're oral, we have a different mechanism of action, safety looks very good so far, and convenience is attractive. The study design was intended to determine whether selective inhibition of ITK had a role in immune diseases and whether there is a signal of efficacy, and we believe we've seen that. As we think about Phase 2 and beyond, we'll consider what is required for registration. To our knowledge, we're the only selective ITK inhibitor currently, and we view selectivity as critical in the biology. Overall, we believe we're in a strong position.

Jeff Jones, Analyst

Great. Richard. I'll hop back in queue.

Operator, Operator

Thank you. And your next question comes from the line of Aydin Huseynov from Ladenburg Thalmann. Please go ahead.

Aydin Huseynov, Analyst

Hi. Good afternoon, everyone. Richard, congratulations on the progress this quarter. I have a couple of questions. Regarding the potential cohort four, could you clarify your plans for cohort four, whether you still plan to enroll a 400 milligram cohort? And could you give a general idea why you would consider the 400 milligram dose as compared to the oncology trial where the optimal dose was 200 milligrams?

Richard Miller, Chief Executive Officer

Good question. For context, cohort one was 100 milligrams twice a day, cohort two was the same total dose given as 200 milligrams once a day, and cohort three is 200 milligrams twice a day. Cohort four would be 400 milligrams given once daily. Before deciding whether to proceed with cohort four, we want to review the full dataset from cohort three. Right now, the plan is to do cohort four, but we are also considering other possibilities, such as extending the duration of treatment. Each of the doses—100, 200, 400 milligrams—achieves substantial occupancy of the receptor. Based on previous work, even our starting dose provides meaningful occupancy, so while we plan for cohort four, we'll finalize that decision after reviewing cohort three data.

Aydin Huseynov, Analyst

That makes sense. Regarding prior therapies, many patients previously failed dupilumab in the first two cohorts. Is cohort three also mostly dupilumab-naive or does it include more dupilumab and systemic treatment failures?

Richard Miller, Chief Executive Officer

We deliberately sought sicker patients in cohort three. So we do have more dupilumab and systemic treatment failures in cohort three, and baseline EASI scores appear higher so far. We're not finished with the cohort, but we do expect a higher proportion of treated failures in cohort three. Whether there is a specific effect in dupilumab failures remains to be seen; we don't yet know how that variable plays out.

Aydin Huseynov, Analyst

Understood. And on biomarkers, you mentioned you will talk about them in May. Could you elaborate a little on what kinds of biomarkers you're assessing for atopic dermatitis?

Richard Miller, Chief Executive Officer

Some of the biomarker findings we presented earlier are being confirmed in our ongoing studies, and we've picked up additional interesting signals. We are studying T regulatory suppressor cells and other immune cell populations, and they are proving to be interesting. We continue to see durable effects in patients who receive the drug. It's a small dataset, early, but the biomarker signals are provocative and worth further study.

Aydin Huseynov, Analyst

Okay. Understood. Thanks so much.

Operator, Operator

Thank you. And your next question comes from the line of Graig Suvannavejh from Mizuho Securities. Please go ahead.

Graig Suvannavejh (Sam), Analyst

Hi. This is Sam on for Graig. Thanks for taking our questions. On ALPS, given that it's a less common indication, can you tell us about the addressable patient population for ALPS and whether there might be subsets of patients who would be ideal candidates for socalitinib?

Richard Miller, Chief Executive Officer

In the United States, ALPS is a genetic disease present from birth. Patients often begin to show symptoms around age two, including anemia, cytopenias, lymphadenopathy, and they may require long-term immunosuppressive therapies such as cyclophosphamide, steroids, or mTOR inhibitors. The disease is not curable, patients have waxing and waning adenopathy and cytopenias, and a subset may develop malignant lymphomas. A hallmark is massive splenomegaly, which carries its own risks. The abnormal cell in ALPS is a double-negative T cell, which expresses ITK. In murine models with the equivalent genetic mutation, treatment with our drug was dramatically effective—cytopenias normalized and splenomegaly and lymphadenopathy resolved. That preclinical result prompted us to pursue the human disease. The NIH has a significant collection of these patients, and most pediatric hospitals have cases as well. There are approximately 2,500 patients with ALPS in the United States currently. There is not a clear subset that would be more or less amenable to this therapy, though different patients may have slightly different mutations. The core biological problem is defective apoptosis of T cells, and ITK inhibition appears to restore apoptosis in preclinical models. This would likely be a long-term treatment, and given the safety profile we've seen, it could be meaningful for patients. From a regulatory standpoint, this is a disease where large randomized trials may not be required, which is relevant to development strategy. We're very excited about this opportunity because it also allows us to study the effects of ITK inhibition on a range of autoimmune manifestations and biomarkers that could have implications for other diseases.

Graig Suvannavejh (Sam), Analyst

Definitely. Very insightful. Thanks so much, Richard.

Operator, Operator

Thank you. And your next question comes from the line of Roger Song from Jefferies. Please go ahead.

Roger Song (Cha Cha Yang), Analyst

Hi. This is Cha Cha Yang on for Roger. Looking toward your Phase 2 plans for atopic dermatitis, can you give color on what subpopulations you hope to target? Specifically, thoughts on prior medication use, baseline EASI scores, or demographic criteria?

Richard Miller, Chief Executive Officer

Given we haven't finished Phase 1, it's a bit early, but for Phase 2 we would target moderate to severe atopic dermatitis patients who failed topical corticosteroids or systemic therapy, similar to our current inclusion criteria. Baseline EASI scores of sixteen or greater are typical for moderate disease. A typical Phase 2 design might include two dose levels plus placebo—probably a three-arm study with around two hundred patients total—but that's an approximate, standard approach. Endpoints would be EASI 75 and IGA zero or one, which are standard regulatory endpoints.

Operator, Operator

Great. Thank you for that. And your next question comes from the line of Li Watsek from Cantor. Please go ahead.

Li Watsek (Daniel Bronder), Analyst

Hi, team. This is Daniel Bronder on for Li. I have a question about how you prioritize opportunities for socalitinib in oncology versus inflammatory disease as you move into later-stage trials.

Richard Miller, Chief Executive Officer

We currently have a registrational Phase 3 trial in PTCL that could produce data in less than two years, so we are advancing on multiple fronts. Our strategy is to pursue potential approvals in lymphoma and in immune disease. We recognize the considerations of developing a drug for both oncology and autoimmune indications, and we are progressing second and third-generation compounds as well. Dosing and duration will likely differ between oncology and immunology. There are precedents—Rituxan is approved for both oncology and multiple autoimmune conditions—so it's feasible to address both areas. Our immediate objective is to push forward across indications and, at the appropriate time, consider collaborations or partnerships to support larger autoimmune development programs.

Daniel Bronder, Analyst

Okay. Cool. Thank you so much for that detailed answer. One more quick question: Is the plan to delay cohort four due to waiting on cohort three results, or has there been any delay in enrollment?

Richard Miller, Chief Executive Officer

There has been no delay in enrollment. We are waiting to see the data from cohort three before deciding whether to proceed with cohort four or to expand another cohort.

Operator, Operator

Thank you. And your next question comes from the line of Jiale Song from H.C. Wainwright. Please go ahead.

Jiale Song, Analyst

Hi. Good afternoon, and thanks for taking my question. Regarding the upcoming solid tumor study, are there specific indications you consider most suitable for socalitinib, or will it be a basket study? Also, will you need to do a dose escalation again, or would you start with the PTCL dose?

Richard Miller, Chief Executive Officer

For solid tumors, I would start with immunotherapy-responsive tumors such as renal cell carcinoma and lung cancer, because those are settings where immunotherapeutic effects are evident. Melanoma could be considered but is less common in our development plans. I don't think we need a traditional dose escalation; we will evaluate different doses. We have a good handle on dosing and pharmacodynamics and know what it takes to saturate ITK, so doses in the 100 to 400 milligram range are in the same ballpark and should be informative.

Jiale Song, Analyst

Great. Thanks for that.

Operator, Operator

There are no further questions at this time. I would now hand the call back to Mr. Richard Miller for any closing remarks.

Richard Miller, Chief Executive Officer

I want to thank everyone for participating in the call, and we look forward to additional updates in the future. Thank you very much.

Operator, Operator

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.