CytomX Therapeutics, Inc. Q2 FY2022 Earnings Call

Good afternoon, everyone. Thank you for standing by. Welcome to the CytomX Therapeutics Second Quarter 2022 Financial Results Call. Please be advised that today's call is being recorded. I would now like to hand the call over to your host for today, Chau Cheng, CytomX's Vice President, Investor Relations and Corporate Communications. Please, go ahead.

Thank you, Yola. Good afternoon and thank you for joining us. Before we begin, I'd like to remind everyone that during this 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. We undertake no obligation to update any forward-looking statements whether as a result of new information, future developments or otherwise. Earlier this afternoon we issued a press release that includes a summary of our second quarter 2022 financial results and highlights recent developments at the company. We encourage everyone to read today's press release and the associated materials, which have been filed with the SEC. Additionally, the press release and a recording of this call can be found under the Investors and News section of our website. With us on the call today are Dr. Sean McCarthy, CytomX's Chief Executive Officer and Chairman; and Carlos Campoy, Chief Financial Officer. With that, let me turn the call over to Sean.

Thank you, Chau, and good afternoon, everyone. Thanks for joining us for an update on recent progress at CytomX. The foundation of our work at CytomX is to destroy cancer differently. With our innovative Probody therapeutic platform, we have blazed a new trail in oncology R&D, and it is now generally accepted that the conditional activation of biologics offers tremendous opportunity for the development of new cancer therapeutics. At CytomX, we firmly believe that our multimodality Probody platform has the potential to deliver differentiated medicines for the treatment of people with cancer. To ensure CytomX remains well-positioned for the future, as announced last month, we have made a series of recent changes within the organization to prioritize our R&D investments and capitalize on our extensive clinical experience to date with our platform technology. Our restructured pipeline holds much promise for people with cancer and continues to span preclinical stage to Phase 2. CX-2029 is in the later stages of Phase 2 expansions and enrollment into the solid tumor cohorts has been completed. Our collaborative work with Bristol Myers Squibb continues, including the randomized Phase 2 study of BMS-986249, and we're also well underway with Phase 1 dose escalation for CX-904, our EGFR CD3 T-cell engaging bispecific. Regarding our early-stage pipeline, our recent decision to deprioritize praluzatamab ravtansine now enables us to focus our resources and capital towards two exciting new wholly-owned programs: CX-801 and CX-2051. I'd like to spend a few moments focusing on these new opportunities. CX-801 is our conditionally activated interferon alpha-2b, the lead program within our broad efforts in the cytokine field. Interferon alpha-2b is an approved immunotherapeutic that has demonstrated clinical activity in multiple cancer types, and we believe it provides an orthogonal and potentially superior approach to cytokines like IL-2, IL-12, and IL-15 in activating antitumor immune responses. At the cellular level, interferon alpha potently stimulates antigen-presenting cells to activate cytotoxic T-cells. Furthermore, interferon alpha combines effectively with checkpoint inhibition and offers tremendous potential to unlock checkpoint refractory and/or resistant cancers. Despite its potential, however, the systemic toxicity of interferon alpha has limited its use to date. We're therefore excited to have created CX-801, a conditionally activated master version of interferon alpha-2b, designed to harness the powerful activity of this potent immune modulator by increasing its therapeutic window. The broad therapeutic window of CX-801 was highlighted in our poster presentation at AACR earlier this year, and we aim to rapidly advance this potentially best-in-class program towards clinical evaluation, with IND filing targeted for the second half of 2023. Switching now to CX-2051, a conditionally activated antibody drug conjugate targeting EpCAM with potential applicability across EpCAM-expressing epithelial cancers. EpCAM has been regarded as a high-potential oncology target for decades and has been clinically validated by others. For example, the locally administered anti-EpCAM antibody toxin fusion protein opituzumab monotox has demonstrated robust clinical activity in non-muscle invasive bladder cancer. However, efforts to generate systemic anti-EpCAM therapeutics have to date not been successful due to toxicities to epithelial tissues. This is because EpCAM, or epithelial cell adhesion molecule, as the name suggests, is present on the majority of normal epithelial cells, and conventional anti-EpCAM biologics administered systemically have significant dose-limiting toxicities. We're applying the learnings from our clinical studies with praluzatamab ravtansine and CX-2029 in the design of CX-2051, and we'll have more to say about the molecular configuration of this drug candidate in the future. We plan to file an IND for this novel ADC in the second half of 2023. A key theme that connects our two newest programs, CX-801 and CX-2051, is that both targets have a level of validation that we believe increases the probability of future clinical success, and we are excited to be moving these programs forward. Now returning to our later-stage pipeline where we continue to work intensively with our partners to advance multiple novel programs in the clinic. This past quarter, we introduced into the clinic CX-904, the third therapeutic modality from our versatile Probody platform. CX-904, which is partnered with Amgen, is our conditionally activated T-cell engaging bispecific antibody designed to target the CD3 receptor on T-cells and the epidermal growth factor receptor on cancer cells. This target combination is intended to activate antitumor T-cell responses in EGFR-positive cancers. In Q2, we treated the first patient with CX-904, and Phase 1 dose escalation is ongoing with the goal of assessing safety and selecting a go-forward dose for subsequent expansions. Moving on to BMS-986249, our CTLA-4-targeting Probody candidate licensed to Bristol Myers Squibb. CTLA-4-targeted therapy is a foundational immuno-oncology strategy, and treatment with ipilimumab as a monotherapy or in combination with nivo has resulted in clinically meaningful antitumor activity in a variety of malignancies. The durability of responses to anti-CTLA-4 therapy continues to highlight the importance and uniqueness of this target. However, CTLA-4 blockade has a narrow therapeutic window, and we believe that the broader potential of CTLA-4 therapy could be realized through the application of our Probody platform. BMS continues to evaluate 249 in a randomized Phase 2 study in combination with nivo versus ipi plus nivo in patients with newly diagnosed advanced melanoma. BMS previously reported Phase 1 safety data for 249 at ASCO 2020, showing the CTLA-4 targeting Probody was well tolerated at elevated doses both as monotherapy and also in combination with nivo. At ESMO 2022, BMS plans to present updated Phase 1 results for 249 in a poster presentation. In early 2021, BMS extended the evaluation of 249 plus nivo to advanced hepatocellular carcinoma, castration-resistant prostate cancer, and triple-negative breast cancer. And BMS also continues to study BMS-986288, the non-fucosylated CTLA-4 targeting Probody in a Phase 1 dose escalation study both as monotherapy and also in combination with nivo in patients with advanced solid tumors. Now continuing on to CX-2029, our CD71 or transferrin receptor directed ADC, which is partnered with AbbVie. Enrollment into the overall CX-2029 Phase 2 expansion study has now met its objectives in all three solid cancer indications, including the esophageal/gastro-esophageal junction cancer cohort. The diffuse large B-cell lymphoma cohort has been deprioritized due to strategic and competitive reasons and did not enroll any patients. A data update for the squamous lung cohort is expected in the fourth quarter of 2022, and data from the esophageal and gastroesophageal junction cancer cohort continues to mature. With that, let me hand over to Carlos, who will provide you with a financial overview for the quarter.

Thank you, Sean. As of June 30, 2022, we had $228 million in cash, cash equivalents, and investments. Our recently announced restructuring efforts that Sean mentioned earlier should allow us to extend our cash runway to 2025. This runway forecast does not include any potential upfront or milestone payments from existing or future partnerships. For the second quarter of 2022, revenue was $18 million compared to the $16 million for the corresponding period in 2021. The increase was largely related to the CD71 collaboration with AbbVie. R&D expenses increased $5 million to $31 million during the three months ended June 30, 2022, compared to Q2 2021. The increase was primarily due to higher personnel-related expenses and laboratory contract services in support of our preclinical and clinical pipeline. G&A expenses were $11.7 million during the second quarter of 2022, an increase of $2.4 million over Q2 2021. The increase was mainly in personnel and professional expenses. Let me now turn the call back to Sean.

Thanks, Carlos. In closing, we believe our recent decision to restructure CytomX puts us in the strongest possible position to maintain our technological leadership in the conditional activation of oncology therapeutics and to advance our robust pipeline with substantial potential for patients. We're proud of the significant progress we continue to make building on the consistent achievement of technical milestones, including six INDs filed across three therapeutic modalities, four programs that have advanced to Phase 2 studies and more than 500 cancer patients who have been treated with our product candidates to date. Our corporate partnerships remain strong and we will continue to emphasize new business development as an integral part of our corporate strategy. As we've said before, we care for every patient, we learn from every patient, and we deeply thank everyone involved in our efforts to make the biggest difference we can. We are committed to destroying cancer differently for the benefit of people living with cancer, and we remain firmly focused on building CytomX for the long term. Operator, let's now open the call up for questions.

Thank you. Your first question comes from Kaveri Pohlman from BTIG. Please go ahead with your question.

Yeah, good afternoon. Thanks for the update and for taking my question. For CX-904, can you provide any insight into the study that's ongoing? Are you starting with therapeutically relevant doses and how many dose levels you plan to test?

Yes, hi Kaveri. Thank you for your question. We're very pleased with the progress on 904, which is now in the clinic and beginning the early stages of dose escalation. We haven’t shared significant details about the Phase 1 strategy yet, but I can mention that we are starting with a relatively low dose. It's crucial to approach dose escalation thoughtfully with this type of treatment. This approach aligns with the recent exciting update from Regeneron regarding their co-stimulatory strategies, emphasizing the importance of a stepwise and progressive learning process.

Got it. And maybe a follow-up. Based on your preclinical safety studies, what toxicities and/or DLTs you expect to see? And in terms of CRS rate, is there something you can point to that you would clearly say beforehand is good data?

We haven't really guided on what good data is going to look like. Like I said, I think we need to take this program stepwise. I would emphasize that this is a Phase 1 study with a molecule that we expect to be highly potent as a T-cell engager. And so we are laser-focused in Phase 1 on safety. The data that we've presented previously on this general therapeutic concept of EGFR and CD3 is actually with a different preclinical molecule. We haven't disclosed yet the data or the architecture, if you like, of 904. We will do so in the future. But if you look at that previously disclosed data on the therapeutic concept of EGFR and CD3, we're obviously very focused on cytokine induction. You can see in that previously presented data very, very substantial shifts in improvements in safety with the marketing strategies that we have employed. But, of course, in the clinic, we'll be focused on all of these parameters as we move carefully and thoughtfully through this initial dose escalation phase.

Got it. Thank you.

Your next question comes from the line of Etzer Darout from BMO Capital Markets. Your line is now open.

Great. Thank you for the question. So just wanted to get an update from you on benchmarks for the CX-2029 data in squamous non-small cell lung cancer. And I guess what you would characterize as good data on this upcoming update in the fourth quarter? Thank you.

Hi, Etzer, thank you for your question. As we mentioned in our data release at the end of last year, we provided an update on 16 efficacy-evaluable patients out of a goal to enroll 25 in that cohort. We have fully enrolled that cohort, and at that time, the response rate was just under 19%, with three confirmed partial responses. We had previously indicated that a response rate in the 20% range would be clinically significant. We're close to that with our initial results. Some could argue that the benchmark might even be slightly lower, around 15%, because all 16 patients had prior experience with checkpoint inhibitors. This is an emerging patient population with a significant unmet need, where one would expect responses to chemotherapy to be in the low double digits. We would be very pleased to see the full cohort data maintain the response rate within the range we've already shared.

Great. Thank you.

Thank you.

And our next question comes from the line of Mara Goldstein from Mizuho. Your line is open.

This is Supawat for Mara. My first question is on the CX-2029. How do you plan to disclose the data in the fourth quarter? Is it going to be similar to last year by press release, or is it going to be at the conference venue? Have you decided on that?

No comments on that at this point. As you can hear, we're maintaining our guidance of presenting or sharing data by the end of the year. Now that the enrollment into all three of the solid tumor cohorts, specifically head and neck, lung, and esophageal, has been completed, we'll obviously be sitting down with our partner AbbVie later in the year to review data and start to think about next steps, and disclosure strategy will be a part of that discussion as well. So there's no additional comment I can make at this stage.

Got it. And then one more on that. So with regard to the esophageal and GEJ arms, when do you expect they'd be mature enough to be disclosed publicly?

Yes. I can't comment on that yet other than to say that the cohort is fully enrolled and the data continues to mature.

Got it. And then one more on BMS-962249. I was wondering if you can provide maybe additional color on the type of data that you plan to share or due in Bristol plans to share and perhaps a bit more color in terms of the tumor breakdown if you could?

There are two points to address. First, BMS presented the Phase I safety data at ASCO 2020, and they will provide an updated report on the Phase I study, which is now significantly more advanced, at ESMO in a few weeks. As previously mentioned, the patient population was typical for a Phase 1 study evaluating novel immunotherapy, featuring a variety of tumor types. In addition, the Phase 2 study they are conducting, a randomized Phase 1 study with 249 participants, focuses on frontline metastatic melanoma and is still in the process of enrolling patients. We will share updates on the timing of data as it becomes available.

Got it. Thank you.

Your next question comes from the line of Mitchell Kapoor from H.C. Wainwright. Your line is open.

Hi. Thank you for taking the questions. I just wanted to know if you could remind us of the differentiation of the second EpCAM ADC versus the first generation? And what cancers might be a best fit for this program based on the design and the signature ratio?

Thank you for the question, Mitch. You're referring to our earlier discussion about CX-2043, an anti-EpCAM Probody drug conjugate with the maytansine payload DM21, which showed impressive pre-clinical results. We have since transitioned to CX-2051, which we believe will provide a broader therapeutic window. However, we are not ready to disclose the molecular architecture of CX-2051 yet. We will present more information at the World ADC Conference in San Diego this September, where we will discuss insights gained from the 2009 and 2029 clinical programs.

Thank you. And for the squamous non-small cell lung cancer data, could you kind of walk us through what expectations you might expect to see if you were to look at patients by CD71 status? And to the degree that you could comment on those analyses that we might see at the data set that would be helpful.

Right. So, of course, as with any new target like CD71 we are highly interested in studying and understanding any relationship between target biology and anticancer activity. That work is ongoing. I can't say yet when we'll be ready to share that data. The study analysis is continuing, but that is something that is of course of high interest to us.

Thank you so much, Sean.

You’re welcome.

Your next question comes from the line of Peter Lawson from Barclays. Your line is open.

Hey, good afternoon, guys. Thanks for taking the question. This is Alex on for Peter. Two questions for me. Just on CX-2029 and the update in lung cancer. Wondering if you could speak a little bit about safety and specifically anemia? And if you could talk about what would be acceptable in terms of the rate and grade of anemia to make this program move forward?

Yes. Hi, Alex, thanks for the question. So something that we continue to learn about and continue to evaluate in regards to understanding mechanistically the anemia and also potential mitigation strategies. We've discussed this quite a bit in the past in our previously reported clinical work; the anemia has been managed through various means, including dose reductions, dose delays, and erythrocyte stimulating agents. We did conclude earlier this year that probably the ESA route is unlikely to help as much as we might have liked. We continue to look at dose reductions, dose delays. And once we look at the full data set across all of the solid tumor cohorts, I think we'll be in a better position to comment a little bit later in the year.

Okay. Great. Thank you. And then just a second question on business development. You've previously talked about remaining active in BD discussions. You obviously have a number of partnerships where you partner your technology. I'm just wondering if you could speak to any interest in terms of looking at bringing in new technology externally. Or are you mostly focusing on partnering your technology to larger pharma players? Thank you.

Yes, that's a great question and there are several aspects to consider. First, I want to highlight that the recent restructuring reinforces our strong cash position heading into 2025. This outlook does not take into account any future business development cash inflows or milestones from our existing partnerships. We still plan to strategically leverage our platform for further business development. We believe, based on our progress and discussions, that our technology remains highly relevant. When considering the advancements in the ADC space, the T-cell engager area, and the co-stimulatory developments we learned about from Regeneron, as well as the cytokine domain, we have a platform that we are confident can deliver significant value across these sectors. Therefore, there may be opportunities during our cash runway to pursue additional deals that could provide non-dilutive funding. We will assess those opportunities as they arise, ensuring we make the right decisions at the appropriate times. Regarding technology acquisition, we are closely monitoring the conditional activation area and feel positive about the internal investments we've made. Our platform is leading in the industry, so I cannot provide further details on any potential activities at this time.

Great. Thank you.

You’re welcome.

At this time, I would like to hand the call back over to Chau Cheng for his closing remarks.

So on behalf of the executive team, I'd like to thank you all very much for joining us this afternoon. We look forward to updating you in the future on our ongoing progress.

This does conclude today's conference call. Thank you for participating. You may now disconnect, and have a great day.