CytomX Therapeutics, Inc. Q1 FY2020 Earnings Call

Good day, ladies and gentlemen, and welcome to the CytomX Therapeutics First Quarter 2020 Financial Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Christopher Keenan, Vice President of Investor Relations. Chris, you may begin.

Good afternoon and thank you for joining us. Earlier today, we issued a press release that includes a summary of our recent progress and our first quarter 2020 financial results. This press release and a recording of this call can be found under the Investors and News section of our website at cytomx.com. With me today are CytomX's President, Chief Executive Officer and Chairman, Dr. Sean McCarthy; and CytomX's newly appointed Chief Financial Officer, Carlos Campoy. During today's call, we will be making forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict and many of which are outside of our control. Important risks and uncertainties are set forth in our most recent public filings with the SEC at sec.gov, including our Form 10-Q filed today. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future developments, or otherwise. I would now turn the call over to Sean.

Great. Thanks Chris and good afternoon everybody. Thanks for your patience since we were getting the call up and running. I gather there is quite a lot of call volume at the moment. Anyhow, once again, good afternoon and thanks for joining us. It's a pleasure to be here to provide an update on our progress during the first quarter of 2020. I'll begin today's call with a brief overview of our business operations against the backdrop of COVID-19 and then we'll review first quarter highlights across the pipeline. I'll then turn the call over to Carlos, our new CFO, you just heard of from Chris, and Carlos will review our first quarter financial results, then I'll wrap-up and then open the call up for questions. Let me start by saying that all of us at CytomX hope that you and your families are well and keeping safe during the ongoing pandemic. The situation is impacting all of us in different ways and it looks like it will continue to do so for some time. We are committed to ensuring the continued well-being of those involved with the conduct of our business. This includes the patients, the staff, physicians engaged in our clinical trials, the vendors and partners who support these trials and, of course, our dedicated employees who continue to impress with a drive and focus during these challenging times. Despite the operational challenges presented by COVID-19, our team remains highly focused and very mindful that as the American Cancer Society has recently reminded us all, cancer is not waiting and so neither are we. At CytomX, we see a major opportunity to more effectively target therapeutic antibodies into diseased tissue, generating new classes of anti-cancer therapies. We believe our unique Probody therapeutic platform represents a fundamental advance in the field of antibody engineering and we are highly focused on using our platform to discover and develop a broad clinical pipeline of novel drug candidates to make a meaningful difference in the treatment of cancer. Our unique science offers the potential for new and highly effective anti-cancer therapies, including first-in-class molecules against novel undruggable targets, potentially best-in-class molecules against validated targets, and new combination therapies. Probodies are fully recombinant antibody prodrugs comprised of a therapeutic antibody and the mask designs to block the binding of the antibody to its target until the mask is removed. Mask removal is achieved specifically and selectively within cancer tissue by certain disease-associated proteins called proteases that we know are present and active in most cancers. Proteases are in effect molecular scissors, which in the context of tumor progression, function to cut the path for invading and metastasizing cancer cells. Our Probody strategy is to leverage tumor proteases to localize antibody activity into cancer tissue, thereby decreasing target engagement in normal tissues and broadening or even creating a therapeutic window. We have pioneered this new approach that we believe has the potential to improve and optimize a range of antibody formats, including cancer immunotherapies, antibody-drug conjugates, and T-cell engaging bispecific antibodies. Despite the emergence of COVID-19, we had a very productive and important first quarter toward the ongoing advancement of our strategy of developing innovative cancer therapies in areas of significant unmet medical need and with a particular emphasis on undruggable targets. I'd like to start today's update with CX-2009, our wholly-owned Probody drug conjugate, that targets the previously undruggable target CD-166. CD-166 is a tumor antigen that has been expressed at high levels on most solid tumors, but is also present on most normal tissues, ruling it out as a target for a conventional antibody-drug conjugate. Our previously presented data from the Phase 1 dose escalation in various solid cancers has shown CX-2009 to be well-tolerated and clinically active as a monotherapy at doses of four mg per kg and above. This dose is the threshold at which drug conjugates comprising the DM4 payload, the warhead on CX-2009, have been shown by others to be active in the clinic. Clinical activity was observed in breast, head and neck, and ovarian cancers with CX-2009, and we will be presenting updated data from the Phase 1 dose escalation for this agent at ASCO in a couple of weeks. In the fourth quarter of 2019, we announced the initiation of a Phase 2 expansion study of CX-2009 monotherapy in patients with hormone receptor positive HER2-negative breast cancer at the dose of seven mg per kg administered every three weeks, with the objective of enrolling up to 40 patients. Enrollment was initiated and patients were treated during Q1, but regrettably, the COVID-19 situation led us to temporarily pause new patient enrollment and new site activation in this study. Our team continues to closely monitor emerging health authority guidance at IRB/Ethics Committee recommendations, but our goal is to resume the CX-2009 clinical program as soon as possible. Now staying with the theme of undruggable targets, I'd now like to turn to CX-2029, a CD71 targeting Probody drug conjugate that we're developing in partnership with AbbVie and for which in Q1, we announced the achievement of a major collaboration milestone. Long considered a high potential but undruggable antibody-drug conjugate target, CD71 is known as a professional internalizer given its role of moving iron from the extracellular space into intercellular compartments, and it does this in all dividing cells. In fact, many consider CD71 to be the gold standard internalizer to assess the in-vitro activity of antibody-drug conjugates. But the presence of CD71 on normal cells has been an impediment to its use as a drug target. CX-2029 is a Probody against CD71 conjugated to the cytotoxic payload MMAE. We recently announced the achievement of pre-specified dose escalation success criteria for the CX-2029 Phase 1 dose escalation study, resulting in a $40 million milestone payment from AbbVie to CytomX. Data from this Phase 1 study will be the subject of an oral presentation at ASCO 2020. The CytomX and AbbVie teams are now actively finalizing plans for the initiation of Phase 2 expansions as soon as possible. CytomX has the responsibility for advancing this program through initial proof-of-concept, whereupon successful, the program will transition to AbbVie for registrational studies and ultimate commercialization. CytomX retains significant U.S. commercial rights to this asset and is also eligible to receive double-digit ex-U.S. royalties, should the product reach the market. I'd now like to move to another unique R&D strategy that we're pursuing at CytomX, which is to use our Probody technology to generate first-in-class agents against undruggable targets in the context of T-cell engaging bispecific antibodies, which I will refer to going forward as TCBs. TCBs are highly potent therapeutics, which directs the activity of cytotoxic T-cells to tumors. This approach has the potential to take immunologically cold tumors and make them hot, opening many new avenues for cancer treatment. While clinical advances have been made with this approach in hematologic malignancies, notably with Amgen CD19/CD3 bispecific, Blincyto, its application in solid tumors has been challenging. The reason for this is that the high potency of TCBs could target normal tissues with low antigen expression resulting in significant toxicities. For several years, we've been working at CytomX to research and optimize Probody or masked versions of TCBs, with an initial focus on the EGFR-CD3 target pair. Data published by others has shown that EGFR, while a well-validated oncology target, is undruggable in the context of a CD3 bispecific or conventional CD3 bispecific. Our published preclinical findings have shown that Probody TCBs against EGFR could induce tumor regressions and create a therapeutic window for this cancer target. These important findings serve as the foundation for our ongoing collaboration with Amgen, which I'll speak about in just a few moments. Building on our successful research on Probody TCBs, during Q1, we announced a major strategic collaboration in this area with Astellas. Under this new agreement, CytomX and Astellas will collaborate on four initial programs focused on the discovery, research, development, and commercialization of Probody TCBs targeting undisclosed tumor antigens for the treatment of cancer. CytomX will lead early drug discovery activities, with Astellas leading preclinical and clinical development and commercialization activities. Under the terms of the agreement, CytomX received an $80 million upfront payment and is eligible to receive future preclinical, clinical, and commercial milestones of over $1.6 billion, together with tiered royalties on product sales that range from high single-digits into the mid-teens. For certain targets, CytomX may co-fund a predetermined portion of product development costs and become eligible to receive a pre-specified portion of profits in the United States. CytomX may also later elect to co-commercialize products directed toward such targets in the U.S. Research work and the collaboration is underway, and we are thrilled to have Astellas as our newest partner. Returning now to our Amgen partnership, I'm also delighted to report that we have recently advanced a lead Probody TCB candidate against EGFR that we call CX-904 into IND-enabling studies. This is the first Pro-TCB from our platform to reach this important landmark. CytomX is responsible for IND filing, which is targeted for late 2021 and for early clinical development. We're very pleased with this excellent scientific progress within our Amgen alliance and with the growing excitement around the potential of the Probody TCB space, as also evidenced by our new partnership with Astellas. Moving now to our potential best-in-class programs, CX-072, our wholly-owned anti-PDL1 Probody and BMS-986249, the anti-CTLA-4 Probody partnered with Bristol Myers Squibb. CX-072 was the first Probody we advanced into the clinic, and it has provided us with crucial insights and the first clinical proof-of-concept for our platform. We'll be presenting long-term follow-up data from the CX-072 Phase 1/2 study as an oral presentation at ASCO. In Q1, as part of our portfolio reprioritization, we announced the termination of the Phase 2 program combining CX-072 with ipilimumab, the anti-CTLA-4 antibody, in patients with relapsed or refractory melanoma. This decision followed a reevaluation of the evolving clinical competitive and commercial landscape in immuno-oncology taken together with the impact of the COVID-19 pandemic. We continue to evaluate opportunities for the further advancement of the CX-072 program and we plan to initiate combination studies with our second wholly-owned program CX-2009 later this year. During Q1, we also announced an important pipeline milestone in our foundational oncology collaboration with BMS. The leading edge of this alliance is the anti-CTLA-4, BMS-986249. CTLA-4, the target of ipilimumab, is the prototypical checkpoint target, and blocking this mechanism has proven highly effective in the treatment of patients with melanoma and other cancer types, both as monotherapy and in combination with PD pathway inhibitors. While a very important advance, CTLA-4 blockade can cause severe immune-related toxicities, creating a clear opportunity for a Probody version of this agent to improve tolerability, increase duration of treatment, and potentially improve activity. BMS and CytomX have previously presented preclinical proof-of-concept for CTLA-4 Probodies at several major research conferences, and Phase 1 clinical data for this Probody will be presented at ASCO. Based on these Phase 1 findings, BMS recently initiated a randomized Phase 2 expansion study comparing the tolerability and activity of BMS-986249 plus nivolumab to ipilimumab plus nivolumab in frontline metastatic melanoma. The advancement of the CTLA-4 Probody into this study triggered a milestone payment of $10 million from BMS to CytomX. This is an important study that, if positive, has the potential to place the ipilimumab Probody on a registrational path. Moreover, this work is a terrific example of what we set out to do with our platform when it was first conceived of, and we're excited about its potential for cancer patients. Additional recent progress within our BMS alliance includes the initiation of the dose escalation phase of another clinical study, a Phase 1/2 study, for a second anti-CTLA-4 Probody. We call this BMS-986288, and this is based on a modified version of ipilimumab. This second clinical Probody program demonstrates BMS ongoing commitment to our technology platform as a way to potentially unlock additional value in the CTLA-4 mechanism and across other targets. Before handing over to Carlos, I want to also note that we continued to strengthen our executive leadership at CytomX, and with the appointments in Q1 of Carlos as CFO and also Dr. Alison Hannah as Chief Medical Officer. Carlos and Alison each bring over 30 years of leadership experience from across their respective domains. So, we are absolutely delighted to welcome them to the team. I would now like to turn the call over briefly to Carlos.

Thank you, Sean. I'm very pleased to be here. I'd like to review the financial highlights for the first quarter ending March 31st, 2020. Revenue for the quarter was $50 million compared to $29 million in the corresponding period in 2019. The increase is primarily due to the partial revenue recognition of the $40 million milestone earned from AbbVie associated with the CX-2029 project and $10 million related to the milestone earned from BMS associated with the initiation of the Phase 2 randomized cohort expansion of BMS-986249. Research and development expenses were $43 million for the quarter compared to $36 million in the corresponding period in 2019. The increase was largely attributed to license and sub-license fees associated with milestones and upfront payments earned in the first quarter of 2020. General and administrative expenses were flat compared to the corresponding period in 2019. We ended the quarter with cash, cash equivalents, and investments totaling $247.9 million compared to $296.1 million as of December 31st, 2019. Our achievements in existing and new partnerships during Q1 have resulted in $130 million in milestone and upfront payments to CytomX that are not reflected in our end of Q1 cash balance. I would like to underscore the company's continued strong track record of executing strategic business development transactions to broaden our pipeline and access additional non-dilutive operating outflow. We expect our strong balance sheet to allow us to comfortably meet projected operating requirements into the second half of 2022, assuming no new collaborations or financing. With that, I'll turn the call back to Sean.

Great. Thanks Carlos. So to wrap-up, CytomX had a very strong first quarter of 2020, with many key achievements across our preclinical and clinical programs in our existing partnerships and in the formation of a major new strategic alliance. We have a strong balance sheet to advance our pipeline despite market uncertainty, and we're looking forward to ASCO, at which we have multiple presentations that will provide important updates on all of our clinical stage programs. I am very proud of the CytomX team for staying intensely focused in these challenging times, as we drive toward making the biggest difference we can for patients with cancer. So, thanks all for your time today. We wish the very best to you and your families. And Chris, please now open the call up to questions.

Operator, we'll take our first question.

Thank you. Our first question comes from Peter Lawson with Barclays. Your line is now open.

Peter, are you there? Operator, we can move on to the next question.

Okay. Our next question comes from Christopher Marai with Nomura Instinet.

CD166

Christopher, your line is open.

Can you hear me, okay?

Yes, sir. You were muted in the beginning. You came on halfway.

Okay, I'm sorry about that. So, what I mentioned is toxicity around CD166 program versus the CD71. I'm just curious about the payloads being used here and the internalization profiles of the targets. Given that CD71 is very efficient in internalizing, did that impact the type of payload that you chose to use? I noticed that you use two different payloads for these products. Also for the CD71 PDC, I'm curious about what would some expected on-target toxicities might look like versus toxicities due to the payload in general? Thank you.

Thank you for your questions. To begin with the payloads, when we developed the Probody drug conjugate strategy a few years ago, we intentionally chose to work with the most recognized warheads or payloads for our initial two Probody drug conjugates. DM4 was chosen for the CD166 program through a partnership with ImmunoGen, with MMAE being the second most validated payload at the time. We accessed MMAE through our collaboration with AbbVie, who had an alliance with Seattle Genetics. It could have been the opposite; that's just how things unfolded. We believe these two payloads were the most validated options at that time. Regarding DM4's toxicities, we have known for some time that its main issue is ocular toxicity, which was evident in the higher doses during our Phase 1 dose escalation. This toxicity can be managed through ocular prophylaxis, which we are implementing in our ongoing Phase 2 study. In terms of CD71 and MMAE, the main toxicities associated with MMAE differ from DM4 and tend to be more hematologic. We observed these hematologic toxicities in our preclinical studies and are monitoring them in the clinic. Concerning CD71, it's challenging to assess on-target toxicity. For instance, with CD166, this target is present in most healthy tissues, leading to the possibility of various toxicities. However, in our clinical trials, we did not observe any signs of on-target toxicity related to CD166. We will share the Phase 1 dose escalation data for CD71 in a couple of weeks at ASCO.

Great. Looking forward to it. Thank you.

Thank you. Our next question comes from Terence Flynn with Goldman Sachs. Your line is now open.

Great. Thanks for taking the questions. Maybe just following up on 2029. Based on the animal data, is there any reason to think that the activity would be more robust in lymphoma, let's say, relative to the solid tumor setting? And then can you remind us in the Phase 1 trial, if you only enrolled patients that had high levels of CD1 expression? Was that a cut-off, or are you going to look at that prospectively now when we see the data at ASCO? Thank you.

Yes. Hi, Terence. Thanks for the questions. I'll take the second question first. Patients were not pre-selected for high target levels in the study, but that is something we're looking at prospectively, of course. And with regards to lymphoma, the Phase 1 dose escalation has allowed us to enroll solid tumors and lymphoma. We will obviously report that patient population when we present the data. The preclinical work was mostly focused on the solid tumor side of things.

Thank you. Our next question comes from Robert Burns with H.C. Wainwright. Your line is now open.

Hi, guys. Thanks for taking my questions, and congrats on the quarter. Just two questions, if I may. So, the first one is, could you provide some additional color through the indications you're considering exploring in the Phase 2 expansion based on the data you've seen for CX-2029? And my second question is, similar to what you did for CX-2009 with regards to preclinical assessments of combining it with CX-072, have you been warned any preclinical assessments evaluating potential synergy for CX-072 plus CX-2029, and if so, are you planning on evaluating that combination in the clinic? Thank you.

Yes. Hi, Robert. Thanks. Great questions. Not prepared or ready to comment on Phase 2 indications at this stage for 2029. But, of course, they will be guided by everything that we know to this point. With regards to the combination, as you rightly point out, we have previously reported preclinical data at AACR last year, showing the potential for CD166 Probody drug conjugate to synergize with PD1/PD-L1, and that work underpins our ongoing strategy to move into the combination of 2009 and 072, which is planned for later this year. With regards to 2029, it's too early to say, but as another drug conjugate, it certainly makes conceptual sense that that could be combined with a PD agent of one kind or another, but we don't have anything more to say about that at this time.

Thank you. Our next question comes from Peter Lawson with Barclays. Your line is now open.

Hi, there. This is Mitchell on for Peter. Can you guys hear me now?

Yes.

Okay. Sorry, I had to redial in. I don't know what happened. So, I had a couple of questions for you guys. The first one is for your CD71 data at ASCO. What kind of data might we see, how many patients and how might that change from the abstract to the time of the presentation?

Really not able to comment on that right now. The abstract will be published, I guess, next week, and we may be in a position to provide some additional guidance at that point. But had not much more we can say at this point. I'm sorry to say.

Understood. And then, just wanted to ask about how you guys are thinking about data release in a virtual world, and what that changes in terms of physician engagement and dialog and things like that?

We are going to do the very best we can.

Got it. Thank you.

Thank you. Our next question comes from Boris Peaker with Cowen. Your line is open.

Great. Can you hear me guys?

Yes, we can.

Great. So, my first question on the 2009 study that's currently on hold, just curious in terms of patients that are enrolled in the study, how consistent are these patients going through their follow-ups, and just what are the potential concerns about data quality, if they start missing some of their appointments?

Yes, hi, Boris. I think that's a question that relates to everyone right now, and I don’t have anything specific to share other than acknowledging that it is a risk. Patients who have been part of the study may face difficulties returning to the treatment centers. We are still in the early stages of understanding what that impact will be.

I guess, maybe just a follow-up on that, because we've got some questions from that from the investors. Are these patients going to hospitals for follow-up or these in outpatient setting?

I don't want to comment on that specifically, Boris, at this point, but it's going to be a combination of those.

Got you. And maybe my last question is with 2009 compound, can you set expectations for data presentation at ASCO? Specifically, what should investors be focused on?

Boris that was 2029?

Yes. No, 2009. Yes.

In 2009, reflecting on last year's update from AACR, this marks the first update on the Phase 1 study of CX-2009, which has now completed the dose escalation phase. There will be further follow-up and additional patients involved. The most crucial aspect is the data supporting our progression of 2009 into hormone receptor positive HER2 negative breast cancer at a dosage of seven mg per kg. This data should clarify for investors the rationale behind that decision based on the dataset presented a year ago.

Got you. Okay. Thank you very much for taking my questions.

You're welcome. Take care.

Thank you. Our next question comes from Mara Goldstein with Mizuho. Your line is now open.

Thank you for taking my question. I have two questions. First, I would like clarification on the cash runway. You mentioned that it doesn't include any potential partnerships, but does it consider any milestones from your current programs, including resources that may be used to support these initiatives? Second, could you provide an update on the BMS collaboration? I understand that you have candidates progressing, but my recollection is that BMS has options for additional targets. Are there any time limits or constraints regarding those targets that they may come back to you on?

Yes. Hi, Mara. Regarding the cash run rate, I’ll share my thoughts, and then Carlos may want to add his insights. We tend to take very conservative assumptions about milestones from our existing deals. Although there might be some milestones included in that run rate guidance, we approach it with caution. That said, we do have a solid history of achieving milestones in our agreements, as I'm sure you'll acknowledge. However, for guidance purposes, we remain quite conservative. Carlos, do you have anything to add?

No, nothing to add.

Great. Regarding BMS, yes, Mara, they do have the ability to select additional targets from the expansion we did a few years ago. We haven't shared the timeline for their target selection, but there is a deadline. We're actively discussing additional target selections with them and are very excited to get more programs started.

Okay. If I could ask one other question about CX-2009, the trial has been temporarily paused due to the current environment. Can you tell me how many patients actually started dosing in that trial?

No, I really can't. But as I mentioned, our goal is to enroll 40 patients in that study. Unfortunately, we cannot provide information on how many patients have been enrolled, and we are also unable to comment on the timing of the data, as the situation has become quite uncertain. However, we are making every effort to get that program back on track and to provide clearer guidance in the future.

All right. Thank you. I appreciate it.

Take care.

Thank you. Our next question comes from Etzer Darout with Guggenheim Securities. Your line is open.

Thank you for taking my question. Most have been addressed, but I have a couple of additional inquiries. First, Sean, regarding CX-072, I would like to know what the next steps are for PD-L1 Probody and what insights we might gain from the ASCO presentation regarding its potential as a monotherapy or in combinations beyond just the CTLA-4 combination. Carlos, could you also discuss the pace of R&D spending for the remainder of 2020 based on the Q1 numbers? Thank you.

Yes, hi, Etzer. Regarding 072, the ASCO presentation will complete the Phase 1 and Phase 1/2a work we've conducted on this program so far. You may recall that we advanced to enrolling patients in several small expansion cohorts of about 15 patients across different tumor types, some of which were expected to respond to checkpoint inhibitors, while others were more speculative. The data update for monotherapy will include comprehensive data along with significant follow-up on patients from the monotherapy expansions, as well as an update on the ipi combination Phase 1 dose escalation. Moving forward, the program remains active at the company as we shift focus towards combinations with our pipeline assets like 2009. We are also in ongoing discussions with potential partners and continue to explore other emerging combination opportunities. There's a lot we can potentially pursue in the future, but the immediate next step will be the combination with 2009, with the indication to be revealed later.

Yes, absolutely. So we're not guiding full-year spend, but beyond our cash run rate that we mentioned, but I do want to point out, as I mentioned during the formal remarks, that Q1 included a series of one-time expenses associated with licenses and sub-licenses that are related to the milestones and upfront payments that we earned during the quarter. So, that's the extent of the guidance I can give you.

Great. Thank you. And congrats on the progress.

Thank you.

Thanks a lot. Take care.

Thank you. Our next question comes from Joe Catanzaro with Piper Sandler. Your line is now open.

Hey, guys. Thanks for taking my questions here. Just maybe one quick one from me on 2029. Would you be able to detail the dose escalation scheme used in this study as it compares to the 2009 dose escalation, specifically, where single patient dose escalation cohorts initially used, were you able to start at a higher dose giving any learnings from 2009 things along those lines? Thanks.

Yes. I believe I mentioned before that we started at a relatively low dose due to the challenging nature of the target, CD71. This is a significant concept, and targeting it is quite difficult. From our preclinical studies, we found that engaging CD71 in cynomolgus monkeys can be lethal at low doses. For several reasons, including this finding, we initiated dose escalation at a lower level than in 2009. I can't provide more details right now, but much of this information will be shared at ASCO.

Okay, got it. And maybe just one quick one, I'm not sure if you have any insight into this, but the Phase 2 randomized portion of the Bristol study, would you happen to know if the nivo/ipi dosing they're using is consistent with CheckMate 067 or have they, sort of, switched to the three plus one that they've used in other studies?

I can't provide any specific details at this time. The study includes five arms with various dosing and schedules being evaluated, informed by observations from the Phase 1 dose escalation. That Phase 1 data will be presented by BMS in a post form at ASCO. This is all we can disclose right now regarding the doses and schedules they are utilizing. The overall aim of this program, particularly regarding the masking of ipi, is to ensure sufficient administration of this agent in the clinic to achieve better outcomes for patients. The dosing and schedules moving forward in Phase 2 align with this goal.

Okay, got it. Thanks so much for taking my questions.

You're welcome.

Thank you. Our next question comes from Mohit Bansal with Citigroup. Your line is open.

Great. Thanks for taking my question, and congrats on all the progress you have made this quarter and last quarter as well. So, couple of questions from my side. So, 2009, if I remember correctly from the last data set, the activity was there, but there was a little bit of like, obviously, safety issue was there, but the responses were not durable until the last update. Now that you are moving with the monotherapy arm in the subset of breast cancer, is it fair to assume that you have tackled the durability issue here?

Yes, hi Mohit. You're correct that at AACR last year, we reported seven unconfirmed partial responses. One challenge we faced in the study was that we opted not to implement ocular prophylaxis from the beginning. This decision was made to fully assess the safety profile of the drug candidate. As a result, many patients in the higher dose groups discontinued treatment, primarily due to disease progression, with some also experiencing ocular toxicity. This partly explains why we couldn't confirm the dose responses. However, we now have additional data on the drug candidate from Phase 1, which we will present at ASCO soon. In Phase 2, we are requiring ocular prophylaxis and have selected a dose of 7 mg per kg, where we are seeing clinical activity and are confident in the effectiveness of ocular safety measures. The Phase 2 study is designed to provide the best chance for patients to remain on the drug for longer periods, allowing us to fully evaluate what this drug candidate can achieve in a less heavily pre-treated patient population.

Got it. Regarding the CD71 program, since AbbVie has opted in, can you provide comments on the criteria for the milestone payment and what data they needed to see in order for them to proceed with the program?

The milestone of $40 million is significant and is meant to support our ongoing work as we progress through the clinical program and begin the expansion cohorts. The criteria that trigger this milestone relate to what we refer to as dose escalation criteria, which were established when we created the agreement a few years ago. Although we have not disclosed these criteria, they were intended to signify the successful completion of Phase 1 dose escalation, guiding us toward Phase 2 expansions in specific tumor types at a designated dose. Meeting those goals was essential and is the reason the milestone payment was made.

Awesome. Thank you very much, Sean. Really appreciate it.

You're welcome.

Thank you. Our next question comes from Biren Amin with Jefferies. Your line is open.

Yes, hi guys. Thanks for taking my questions. Maybe if I could just start on 2029, Sean. On clinicaltrials.gov, if I look at the exclusion criteria for the Phase 1/2 trial, there seems to be some criteria related to iron metabolism disorders and use of iron chelators. So, maybe can you just talk about the CD71 target and how it interferes with anemia or chelators?

Well, CD71 is by definition the transferrin receptor functions to internalize iron complex to transfer and get iron into dividing cells. So, it's a fundamental component of iron metabolism, and so that was something that was done as a precautionary measure in Phase 1, really not knowing what we would see in the clinic. So that's really all we can say about that.

Okay. And then, I guess, in the cynos study, if I look at that data from a few years ago, I think you tested 2029 along with some other Probody mass antibodies. And I think the reason to choose 2029 is that the other compounds saw some weight loss. So, I guess, my question is, how well do you think the lack of weight loss in cynos with 2029 translates into the human study, given I think that cyno model, dosed animals twice at three weeks apart? And so do you think there might be safety issues that may arise in patients receiving several cycles of therapy?

I'm not entirely sure what specific data you are referencing, and perhaps we could discuss that in a separate conversation. However, I can share that the cynomolgus monkey data we've been discussing primarily revolves around two aspects. Firstly, we demonstrated convincingly that in a direct comparison of antibody-drug conjugates and Probody drug conjugates, neutrophil count serves as a surrogate marker for hematologic toxicity. In the unmasked study, the molecule proved to be highly toxic in cynomolgus monkeys, leading to a significant drop in neutrophil counts and resulting in animals surviving for just over a week. In contrast, neutrophil counts remained stable with the Probody. Additionally, as I mentioned earlier, the main toxicity expected from MMAE is hematologic. Consequently, these experiments are crucial in illustrating how masking during preclinical studies may help create a therapeutic advantage for the target. Earlier this year, we provided an update on this data at World ADC in London, which included some non-clinical studies that further detailed the toxin profiles, emphasizing that the primary toxicities in cynomolgus monkeys are indeed hematologic. I'm not clear on what you meant regarding weight loss, so we should possibly examine that further.

Sure, we can definitely discuss that later today. I have one final question about the separate program under EGFR and the IND filing from 2021. Can you explain if you are pursuing any specific indications with that program?

I can't talk about that at this point.

Okay. All right. Thank you.

Take care, Biren.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back to management for any closing remarks.

Great. Thanks very much. Well, just to summarize again, it was a very strong quarter for the company despite the macro-environments, and we look forward to catching up with all of you guys next quarter. Take care.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.