Immunocore Holdings plc Q2 FY2024 Earnings Call

Welcome to the Immunocore Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to Clayton Robertson, Head of Investor Relations. Thank you. You may begin.

Good morning, and good afternoon. Thank you for joining us on our Q2 and first half 2024 earnings call today. During today's call, we will make some forward-looking statements, which are qualified by our safe harbor provision under the Private Securities Litigation Reform Act of 1995. Please note that actual results can vary materially from those indicated by these forward-looking statements, including those discussed in our filings with the SEC. On today's call, I'm joined by Bahija Jallal, CEO of Immunocore; and Brian Di Donato, CFO and Head of Strategy, who will share a strategy update. Ralph Torbay, Head of Commercial, will review our first half KIMMTRAK sales and additional growth opportunities for KIMMTRAK. David Berman, Immunocore's Head of R&D, will provide some pipeline updates, including near-term readouts in oncology and infectious diseases. Brian will also provide highlights on our financial results reported this morning. Bahija?

Thank you, Clay. As you may be able to hear, I'm losing my voice, and I have pharyngitis. So to be able to answer your questions at the end, I will ask Brian to pinch-hit for me. Brian, please?

Thank you, Bahija. We hope you feel better. We are pleased to share with you an update on Immunocore through the first half of 2024. We've achieved excellent commercial results while advancing our T cell engager platform in three therapeutic areas. We appreciate your continued support in advancing our mission of delivering innovative and life-changing medicines to patients. Earlier this year, we outlined our three strategic pillars and our areas of focus for the next 18 to 24 months. Today, we will provide updates on the first two of these pillars. First, we continue to maximize KIMMTRAK performance, reporting continued sequential revenue growth for the quarter and significant year-over-year growth for the first half of 2024. This growth was driven by strong U.S. performance. We expanded our customer base and increased market penetration and reported a longer duration of therapy. We also continue to increase our global footprint with additional country launches, allowing us to bring KIMMTRAK to more patients around the world. To achieve our longer-term growth objectives for KIMMTRAK, we are simultaneously pursuing label expansion in both late-line cutaneous melanoma with the ongoing TEBE-AM trial and also an adjuvant uveal melanoma with the soon-to-start ATOM trial. If successful, these two expansions may allow up to 6,000 patients to benefit from the survival benefit of KIMMTRAK. Moving to the second strategic pillar, our aim is to progress our nine clinical programs, all first-in-class, leading bispecific TCR therapies, while progressing our innovative research engine to identify additional novel targets and therapeutics. At ASCO, we presented Phase I data of brenetafusp, our prime targeted therapy in previously treated cutaneous melanoma patients, which drove the decision to start the Phase III registrational trial in first-line cutaneous melanoma patients. Next month at ESMO, we will present late-line ovarian cancer data. And in Q4, we are planning to present late-line data in lung cancer at a medical conference. We're also excited about the potential of our platform to treat infectious diseases. As you recall, our objective is to deliver a functional cure for people living with HIV, and we expect to present the MAD data from our HIV trial early next year. I'll now ask the team to share additional details. First, Ralph will discuss KIMMTRAK's commercial performance. Ralph?

Thank you, Brian, and hello, everyone. We've had a strong first half in 2024, delivering $146 million in net sales, which represents a 34% increase compared to the same period last year. I'm proud of our cross-functional team's achievements and commitment as we expanded our reach to more patients. We've now launched KIMMTRAK in 19 countries, including nine new launches since the beginning of the year. In the context of a challenging reimbursement environment in Europe, we have made good progress with access, signing two additional reimbursement agreements in Poland and Sweden, which are expected to launch in the fourth quarter. In Q2, we also announced the acceleration of our Phase III trial, the TEBE-AM study in advanced cutaneous melanoma. This is an important part of our growth strategy beyond mUM and we are very pleased with this progress. I will now take you through the figures and financial performance in more detail. We delivered $75.3 million in net revenues with KIMMTRAK in the second quarter, which is an increase of 7% compared to the first quarter. Net revenue growth was driven primarily by the U.S., where we saw an 11% growth compared to the first quarter. This growth comes from our continued focus on the community and increasing the duration of therapy. We estimate we now have around 65% market share in the U.S. and believe there continues to be opportunity for further growth. In terms of penetration since launch, over 500 unique sites in the U.S. have treated patients with KIMMTRAK, most in the community. To continue expanding our reach, we're constantly innovating and recently rolled out our AI-enabled patient-finding tool. This has allowed us to find more patients in lower-density community centers while keeping our field force footprint unchanged. Our goal is to continue growing the U.S. through further market penetration and appropriately supporting duration of therapy, currently trending to 11-plus months. This is exceptional and speaks to a different mechanism of action with the benefit of KIMMTRAK extending beyond the typical RECIST response. Many patients with the best response of stable disease do well and remain on KIMMTRAK years later, contributing to the growing duration of therapy we observe. Shifting gears to Europe, demand flattened in Q2 and revenues declined net of a $6.7 million increase in rebate reserves. The access environment remains very challenging across Europe, and we expect incremental demand growth in the second half of the year to come from the launches in Poland and Sweden. I'm pleased with our team's effort to reach more patients globally with mUM driving near-term growth. KIMMTRAK has the potential to benefit patients beyond mUM and drive midterm growth through label expansion with the TEBE-AM study. Following a consultation with the FDA, we converted and accelerated our TEBE-AM study into a Phase III registrational trial in second-line plus advanced cutaneous melanoma. This is exciting and helps us in two ways: first, to robustly test the PD-1 combination and KIMMTRAK monotherapy arms. And second, by rolling the 120 patients already enrolled into the Phase II, we accelerate the time to final analysis of the Phase III by up to 12 months. We now expect to complete the enrollment in the first half of 2026 and potentially see data in the second half, noting, of course, the event-driven nature of the endpoint. Today, we're only at the beginning of the KIMMTRAK journey. In mUM, we're growing KIMMTRAK double-digit year-over-year as we increase our penetration in the U.S., support the duration of therapy around the world and launch new markets. Our two ongoing Phase III registrational clinical trials position us for continued growth in the mid- to long-term. With the TEBE-AM trial, we see the potential to extend the benefit of KIMMTRAK to up to 4,000 additional patients with second-line plus metastatic cutaneous melanoma. With the ATOM trial, we see this benefit expanded into the adjuvant uveal melanoma setting, where all the evidence with KIMMTRAK points to our platform being potentially transformative. If successful, we could help up to 6,000 patients across all three indications live longer and better lives. I'm very excited about our future and to tell you more, I'll hand over to David.

Thank you, Ralph. I'm really pleased to update you on the strong progress we have made on our pipeline. I'm proud of our R&D team. We have hit all our development milestones in progressing nine clinical programs, including three Phase III trials, starting three new Phase Is and expanding to three therapeutic areas. Today, I'm going to focus on the two clinical stage programs with data readouts over the next 18 months, brenetafusp and HIV. Let's recall our strategy in cutaneous melanoma and the data supporting the Phase III trial. The most common therapies used globally are anti-PD1, either as monotherapy or in checkpoint combination and BRAF therapy for BRAF mutation-positive patients. Once patients progress on these available therapies, the only options are clinical trials and TILs for select patients. Our strategy is to demonstrate in the Phase I trial in third-line patients that brenetafusp is active and well tolerated, and that this activity would support a PFS endpoint in a Phase III trial in first line. Here's a summary of the key data from the Phase I trial we presented at ASCO. First, brenetafusp has monotherapy activity, something not commonly seen for other biologics in heavily pretreated melanoma. Second, the disease control rate, which is a surrogate of progression-free survival, is higher for brenetafusp monotherapy than the combination of nivolumab + relatlimab in a similar setting. Third, we see higher activity in PRAME-positive versus PRAME-negative. This provides biological plausibility as the PRAME-negative subset behaves as an internal negative control. And finally, the systemic T cell fitness data indicates we expect an even higher disease control rate and longer PFS in first-line. These data supported our decision to move to Phase III in first-line. In our Phase III first-line trial, we will combine two biologics, brenetafusp and nivolumab, each with monotherapy activity and with complementary mechanisms of action. Based on the Phase I cross-trial comparison I just shared with you, we fully expect that brenetafusp + nivolumab in the first-line setting will be superior to both nivolumab alone and nivolumab + relatlimab. We are pleased to announce that the Phase III PRISM-MEL-301 study has started, and we are focused on activating more sites globally. With the PRISM-MEL-301 in first-line I just shared and with the TEBE-AM in second line that Ralph shared, we are really proud to be one of the few companies to have multiple Phase III investments in cutaneous melanoma, both backed by strong data. I will now turn to brenetafusp in ovarian cancer. Women with ovarian carcinoma are cycled through platinum regimens shown in the blue until they become resistant or refractory shown in the green. At which point, they receive non-platinum chemotherapies or for the folate alpha receptor positive tumors, antibody-drug conjugate. Unlike melanoma, ovarian cancer has historically not been sensitive to immunotherapy. In heavily pretreated, platinum-resistant, which is the population in our Phase I trial, the outlook is poor with non-platinum chemotherapies having response rates less than 10% and disease control rates between 40% to 50%. In our Phase I trial, we aim to demonstrate in the platinum-resistant setting that brenetafusp is clinically active and can be combined with non-platinum chemo. This will be the subject of our ESMO poster next month. We have learned for our platform that clinical benefit manifests as disease control and that activity is even higher in earlier lines, and that combinability with standards of care may enable at least additive activity. In addition, unlike melanoma, ovarian cancer is more complex with two distinct disease segments that are treated very differently, which requires us to study more combinations. Therefore, our next step in ovarian is twofold. First, in the heavily pretreated, platinum-resistant disease, we will expand our patient dataset of combinations with non-platinum chemotherapy. And second, in the earlier-line platinum-sensitive disease setting, we will test the combination with bevacizumab and with platinum chemotherapy. Let's now turn to lung cancer. Late-line lung cancer is a heterogeneous disease with patients generally having rapid progression. With lung, we are still in the signal detection phase. Later this year, we plan to share monotherapy data in heavily pretreated lung cancer selected for PRAME expression and combinations with late-line chemotherapies enrolled without regard to selection for PRAME expression. The next steps are additional combinations with osimertinib in the EGFR mutant patients and with docetaxel. This will then be followed by first-line platinum combinations. PRAME is a promising target across multiple tumors. And brenetafusp is a first-in-class PRAME ImmTAC. When you pioneer a novel platform, you have to be ready to look, to learn and to adjust. In fact, frankly, this is the exciting part of drug development. We did this for brenetafusp and melanoma, and will follow the same thoughtful approach for brenetafusp in ovarian cancer. I will now close by updating on HIV. HIV is currently managed by antiretroviral therapy. But when ART is stopped, the virus rebounds on average within two weeks. By week eight, after treatment interruption, 98% of people will have a viral load of at least 200 copies per mL. This is the threshold commonly used to denote the risk for viral transmission. The next frontier in HIV treatment is functional care, where the goal is to reduce or eliminate the viral reservoir, which would then delay or prevent viral rebound. To date, no therapy has convincingly demonstrated either of these endpoints. This is the goal of our 113V program, called STRIVE. The MAD portion of the STRIVE study is ongoing. We are treating with 113V plus ART for 12 weeks and then stopping both therapies. The objectives of this study are twofold: first, determine whether we can reduce the viral RNA reservoir during the treatment phase. And second, whether we can delay viral rebound or alter the kinetics of viral rebound after treatment interruption. As of June, we have enrolled 15 people living with HIV across three cohorts, the highest at 300 micrograms. The 300-microgram dose is biologically active. The next step is to enroll more people living with HIV to better characterize the activity and to explore higher doses. This will move the data release into the first quarter of '25. I'm very proud of our R&D team. We pioneered the world's first TCR therapeutic. We saw the value of KIMMTRAK early in Phase I, and we followed that vision to bring a fantastic new medicine to metastatic uveal melanoma patients. We saw that value for KIMMTRAK in cutaneous melanoma and the potential in adjuvant uveal, and these programs are underway. We see that value in brenetafusp, and we are excited to follow through on that vision as well. Brian, I'm going to hand back to you now.

Thank you, David. Earlier today, we released our financial results for the second quarter ended June 30, 2024. Please refer to the press release and our latest SEC filing on Form 10-Q for our full financial results. I'll now share some of the key highlights. In Q2, global KIMMTRAK unit sales and net sales have both continued to grow sequentially, even with the challenging reimbursement environment in Europe. Net revenue grew to $75.3 million in Q2 from $70.3 million in Q1, a 7% increase, driven primarily by the 11% growth in the United States. The U.S. has consistently contributed over 70% of global net sales. In Q2, we increased rebate reserves by $6.7 million in Europe as we continue to make best estimate revenue recognition assumptions and associated accruals. For the remainder of 2024, we anticipate global unit sales will continue to grow on a sequential basis as we continue to expect solid demand in the U.S. market and new country contributions from non-U.S. markets. While both SG&A and R&D expenses declined sequentially this quarter, they have increased 31% in the first half over the same period in 2023. We expect R&D expenses to marginally increase in the second half compared to the first half as clinical development for late-stage PRAME and KIMMTRAK Phase III programs continue to accelerate. In aggregate, our net loss for the first half of $36.1 million or $0.72 a share was roughly unchanged from 2023, given our increase in sales revenue. As you can see on this slide, our net cash and marketable securities position increased to $860 million as of June 30th, or $770 million, net of the planned $50 million loan repayment and an expected $40 million in European sales rebate payments, both expected in the second half of '24. I'd like to congratulate the teams on continued KIMMTRAK sales growth as we reach progressively more patients globally. This cash flow enables us to accelerate the broader portfolio while delivering transformative outcomes to patients. For the remainder of 2024, we will be presenting the brenetafusp Phase I late-line ovarian data at ESMO and then in Q4, the initial Phase I lung data at a medical conference. Looking over the next four years, we expect numerous data readouts, including additional data from brenetafusp, our HIV Phase I study, data from our three Phase III trials with KIMMTRAK and brenetafusp, and data from several new trial starts across our three therapeutic areas. With a strong balance sheet, a robust and diversified portfolio, our talented and dedicated teams and a clear and compelling vision for the future, we are confident we can continue to deliver significantly for patients and shareholders. Thank you. We will now take questions.

Our first question comes from Michael Yee with Jefferies.

Congrats on great progress. We have two questions. On KIMMTRAK, I know you made a few comments about the challenges about reimbursement in Europe. Can you just help us understand in the second quarter there that the reserve was for? Was that a specific country? And what does that mean for the go-forward third and fourth quarters? Do we go back to adjusting for that? And was that a one-time reserve? So help us understand the second quarter and then third and fourth quarter adjustments. And then on the pipeline, I thought you made a very, very interesting comment about HIV. Can you just expand on that a little bit? You're saying you're enrolling more patients at a higher dose and it's biologically active. Have you been looking at the prior doses? Is the study all blinded? What are you seeing there? And what gives you that confidence to enroll more patients.

Thank you, Michael. Brian or Ralph for the first question, and David for the HIV, please.

Sounds good. Thank you. Thank you, Michael, for the question. So look, we've had successes with reimbursement as proven by the nine launches that we've had so far in the first half of the year. We increased the estimated reserve by $6.7 million, sorry. This should be a one-time thing based on the latest assumptions that we have on the negotiations. Now in terms of looking forward, I would caution you against just adding the $6.7 million because the erosion is both backward-looking and forward-looking and it's mainly on our negotiations with France and Germany.

Michael, so with the HIV program, we're in the dose escalation phase of the multiple ascending dose. And as mentioned, we've gotten up to 300 micrograms, and we'll continue to dose higher. There's a couple of important factors we're looking at. This is the first time we've taken our platform into a setting with such a low peptide target density and where we have such a low, in fact, cell target density. And so it was an important question for us to ask, can we actually see anything? And then, of course, there's never been a functional cure. There's never been a therapy that can reduce the reservoir or delay the rebound. So these are all really important factors. And we do see evidence of biological activity during the MAD portion, but it's still early, and there are only a few patients per cohort. And so we think it's prudent to get some more patients in that cohort and also to continue to go higher. We will discuss more of what biological activity means as we approach the full data release, which will be in the first quarter of next year.

Our next questions come from the line of Jessica Fye with JPMorgan.

This is Nick on for Jess. First, on the brenetafusp ovarian update we should expect at ESMO, can you just help us set the stage for how many patients with the data we should expect kind of the split between mono and combo? That I believe you stated should be more combo? And maybe add some more detail around what we see as promising data that supports continued evaluation here in this setting based on some of those benchmarks you provided.

Yes. Yes, happy to. So in terms of size, it's going to be roughly the same number as the cutaneous melanoma data set at ASCO. It will be mostly monotherapy. But in contrast to the ASCO melanoma, we will have more combinations because there are more chemotherapy options here. So we'll be mostly mono with combination as well. In terms of the questions that we're going to be asking, so number one is, and these are the standard questions I've been asking throughout my drug development career in the space. Is there monotherapy activity? Can you combine with the intended registrational partner if you plan to do a combination? And can you have confidence that the drug activity can meet whatever registrational endpoint? So those are the types of questions we're asking in order to progress. In terms of the metrics or the benchmarks I think you were asking, yes, so there aren't a lot of good benchmarks in this heavily pretreated, platinum-resistant setting. There are a few published chemotherapy trials. And so the chemotherapy benchmarks there, the response rates are in the single digits and the disease control rate is about 40% to 50%.

Great. And then in addition to bringing the platinum-resistant ovarian cancer patients, you noted some evaluation in the platinum-sensitive setting as well. So can you provide a little bit more detail on the progress there and when we kind of expect an update from that data set?

Mohammed, do you want to take that?

Sure. Happy to do that. So as David mentioned, obviously, ovarian is more heterogeneous and complex than melanoma. So we've been exploring mostly in the platinum-resistant setting, but now the study does allow us to move to earlier lines and combine with therapies that are used in the platinum-sensitive setting and those include bevacizumab and also will include platinum doublet.

Our next question comes from the line of Tyler Van Buren with TD Cowen.

I have a couple of follow-ups on the ovarian update at ESMO. So I understand that the bar for beating non-platinum chemo and platinum-resistant patients is low. But for the brenetafusp combo, specifically isn't ELAHERE or mirvetuximab data the bar? And then the second question is if you can combine with non-platinum chemo with good safety, do you believe that the likelihood of combining with platinum chemo in the front-line with platinum-sensitive patients is high?

Yes. I'll address the first question, and then Mohammed can discuss the platinum. Tyler, it's great to see a new treatment option for these patients with mirvetuximab, which is a targeted chemotherapy. We know that chemotherapies are effective. The main difference for us is that the strategy with mirvetuximab in the platinum-resistant setting is aimed at replacing chemotherapy. In contrast, our strategy is to enhance chemotherapy rather than replace it. Therefore, our approach will focus on adding to chemotherapy. Eventually, there may also be a possibility of adding to mirvetuximab. Would you like to comment on platinum sensitivity?

Sure. Happy to do that. So I would say, Tyler, this is early days. This is the first time we're actually combining our platform with chemotherapy, and we're learning. But so far, the expectations are that we should be able to combine, and the plan is to then move from the non-platinum-based chemotherapies to the platinum-based chemotherapies over the coming months and into next year.

Our next question comes from the line of Eric Schmidt with Cantor Fitzgerald.

Maybe back to KIMMTRAK for a moment. It sounds like you've crossed the $300 million annualized run rate for the first time. You've grown now for several quarters at 30% or more year-on-year. You've spoken to more patients out there than you thought previously and longer duration, of course, than you had assumed. So I guess the question is what's the ceiling for this drug in the current uveal melanoma indication? Do you think it's a $500 million, $600 million, $700 million drug? Where is this going to end?

Ralph, do you want to take that and maybe, Brian, you can comment also at the end.

Thank you, Eric, for the question. So look, we're very proud of the growth that we've had. A lot of it has been driven, as we've stated, by the U.S. growth where we're 65% penetrated. It's important to keep in mind two aspects. One is the reimbursement landscape in Europe is such and the challenges are such that we expect really minor to very incremental growth coming from Europe moving forward. So a lot of the growth will be driven by the U.S., a lot of the incremental growth will be driven by the U.S. That's for mUM. But really I think where we get very excited is when we think about the label expansions that are possible with the TEBE-AM study, which expects data in 2026 as I mentioned. And from the ATOM study a little bit further down the line, that also would bring us into the adjuvant setting, would bring the platform to the adjuvant setting. So I think there is still significant growth for KIMMTRAK, up to 6,000 patients potentially benefiting from it.

The only thing I'd add, Eric, is that we're really pleased that given the survival benefit of KIMMTRAK that the duration of therapy continues to extend. The mean duration of therapy is now over 11 months, approaching 12 months, maybe plus. And as patients stay on longer and the tail is pronounced as we see in the three-year survival follow-up, it's still unclear how long the duration of therapy can extend. So that's one of the upside potentials in KIMMTRAK. And as Ralph said, 73% of net sales are coming from the United States. We'd expect that to continue going forward.

Our next question comes from the line of Michael Schmidt with Guggenheim.

I have another one for David just on the PRAME program again. Could you just provide us with your updated views on the opportunity in the lung cancer indication? Are there any particular patient subsets and focus for the development for that or are you enriching certain patients into this cohort? Any particular genotypes perhaps that might benefit most from PRAME in lung cancer and what should expectations be for the scope of that data readout later this year?

So with lung, of course it's a lot more heterogeneous disease on multiple levels than ovarian and melanoma and so we have been very interested in looking at those key subsets in order to first see the initial signal before we start expanding. So one example of the key subset, of course, are actionable gene mutation-positive patients because those are, in a sense, checkpoints, and so that would make an interesting place for us to look, but there are other potential subsets as well. We have initially for the monotherapy, as I talked about in the presentation. We focused on enrolling PRAME positive because about half of the adenocarcinoma patients are PRAME negative, half are positive. And for the initial signal, of course you want to make sure that the patients are PRAME positive. And so we have been doing this double screening, looking for the right patients and so the monotherapy data later this year will be smaller probably than what we're seeing for ovarian and for melanoma. But it's a little too soon to guide to the numbers of that. The combinations, of course, is where we're also interested because that's where we believe our platform is going to work best in terms of combinations. So it will be a monotherapy and it will be mostly a chemotherapy combination initially. As I talked about, Michael, going into next year we expect to move into earlier lines with a docetaxel combination and with the osimertinib combination. Mohammed, anything you want to add?

No. I guess we also will have platinum-based chemotherapy options that will come a little bit later after osimertinib and docetaxel.

Our next question comes from the line of Jack Allen with Baird.

Congratulations on the progress. I wanted to ask a little bit about the earlier stage pipeline. I know the PIWIL program recently cleared CTA and is expected to enter the clinic in the second half of this year and you also submitted the CTA for the Half-Life Extended PRAME and have plans to submit the CTA for the PRAME-A24 program. I guess my question here is when can we start to see the pipeline kind of build out and see clinical data from some of these earlier assets?

Mohammed?

Thanks for the question, Jack. So you're absolutely right. We're quite excited about the progress we're making with the early stage pipeline. So for PIWIL following submission, we're now in the stage of activating sites and then hopefully we'll be able to meet our target of enrolling the first patient before the end of the year. With HLE, we've made the submission so we're waiting for health authority feedback. And with A24, we remain on track for making the health authority submissions by the end of the year. In terms of data, I mean these are first-in-human trials, right? So we need to get the trials open and start accruing. So it's too early to guide to when we would expect data from these trials.

If I could just add one other point, Jack, is Mohammed's team has really baked in important learnings that we've made from our entire platform from KIMMTRAK and from Brenetafusp. So the PIWIL study is now designed in colorectal cancer with all the best knowledge we have about where this platform is going to work. Likewise with the PRAME Half Life Extension, which is essentially the same molecule as Brenetafusp but with an FC Half-Life Extended. All of the wall of data we're building in terms of combinations and translational insights are directly applicable to the PRAME Half Life Extension. So we see acceleration in our Phase I trials based on these learnings.

Our next question comes from the line of Justin Zelin with BTIG.

Congrats on the progress. I think I'll ask a question about the autoimmune disease programs. It looks like you're kicking off CMC manufacturing care for your candidates. Any thoughts on the timeline for entering the clinic on these programs?

We're hoping by next year. So the CMC is going well and we take it from there. But yes, we're excited about that program as well.

Our next question comes from the line of Jonathan Chang with Leerink Securities.

First question, how do you see the uveal melanoma competitive landscape potentially evolving in the future? What gives you confidence in the ability to continue and potentially expand the successful commercial story in the event of potential new entrants? And second question, I guess just out of curiosity for the lower tech people like myself. Can you provide more color on the AI-enabled patient finder and how is this facilitating the commercial story?

Thank you so much for the great questions. So I'll start with David and maybe then Ralph, you can comment more.

Jonathan, in terms of the landscape, I think there are two ways to look at it. First in the metastatic setting. In the HLE-A02 positive, of course we now have the three-year survival benefit. It's a global standard of care and so we're continuing to build on that. We know that in the HLE-A02 negative, there are studies going on and by the way, it's great to see options. But that registrational study is in the HLE-A02 negative setting. In terms of the adjuvant, we have the ATOM trial, which is a well-designed standard relapse-free survival endpoint. It's a standard endpoint used globally for full approval. So this is a trial that we believe will give us a full approval label with high confidence in the adjuvant setting. We are aware that there's competition in the neoadjuvant setting and I think it's too early for us to comment in terms of that. Ralph, do you want to talk about the AI?

So we're very excited about this tool actually because when you recall, we were discussing initially our approach to addressing the market particularly in the U.S. We talked about the fact that there's a higher density at academic accounts and then after that, it tails off with very low density in the community. One of the challenges is how do you address that low density, those patients that pop up once a year or once every other year. And really now that AI has gotten to the place where some of the predictive models have become very good, we're leveraging that ability to predict based on historical data where the patients and when the patients might pop in in some of the different practices. And that's enabled us to find patients and send bets on a just-in-time basis, which allowed us to basically keep our rep footprint the same.

Our next question comes from the line of Peter Lawson with Barclays.

This is Alex on for Peter. Just had two on the ovarian update. So assuming data is supportive, would you pursue a monotherapy or a chemo combination approval in the platinum-resistant setting or would the goal be to maybe try to go sort of directly into earlier lines of therapy in combination with chemo?

David?

So Alex, I guess it's important to understand and remind about what insights we've made. First of all, our platform works really well with disease control, it works very well in increased activity in earlier lines, and we think it works best in combinations. In ovarian cancer, which is different from cutaneous, there are these two major disease segments and of course multiple different combinations. So, we have to generate the data before we decide on what the next step is. So, the immediate next steps are more chemotherapy combinations in the platinum-resistant setting. And then as we talked about, more platinum combinations and bevacizumab combinations in the platinum-sensitive. This is the data set that we think will enable us to make the best decision on what the next study is.

Okay. And do we actually see any bev combination patients in the 3Q update?

No, there won't be any bevacizumab combinations in this update.

Our next question comes from the line of Ahu Demir with Ladenburg Thalmann.

We have two questions. The first one is regarding the lung cancer program. When will you present or disclose data from it?

Ahu, if you could repeat your first question, please?

I was asking how many patients' disclosure that you would have from the lung cancer and what percentage would have monotherapy versus combination? And I have another question after that.

I would say it's too early to say, but I'll give it to Mohammed to tell you.

Thanks for the question. In terms of lung cancer, as David mentioned, it is obviously a more heterogeneous setting compared to melanoma and we are still in the initial signal detection mode. But in terms of patients, it will likely be a smaller data set than melanoma and ovarian and we will likely have more combo patients than mono patients for the reason David mentioned that for monotherapy, we have to select for PRAME and with combo, we are not lying regardless of PRAME tests.

Our next question comes from the line of the HIV program. You mentioned the viral load and the rebound rate. What would give you confidence to proceed based on the MAD data? What data would you seek for combinations for that program?

It's a really good question, Ahu, because of course we're pioneering this area here. No one's generated the data thresholds for what's required to proceed. I would say at this stage, any evidence of activity that is definitely related to antiviral would be really intriguing to us, because no one has been able to show that. So we're looking at whether we can reduce the viral reservoir and can we delay or alter the rebound kinetics? Anything I think here would be interesting for us to continue. Of course, at the end of the day, it's going to have to be an antiviral delay and rebound that is going to be the endpoint. But I think any insights we make here are going to be important for us. So immediate next steps are for us to generate more data and to get to higher doses because we only have a few patients per cohort.

Yes. And I would just add one thing. I think you talked about combination. Just to remind you that we do it. The first part is on top of the antiretroviral.

Our next question comes from the line of Avantika Joshi with Mizuho.

This is Avantika on for Greg. I just had a question. Are you still looking at manifesting tumors beyond melanoma, ovarian and non-small cell?

Yes. We certainly are and there's a strong scientific rationale. But at the team, I've asked them to focus, right? We're launching a global Phase III cutaneous melanoma. We are committed to following up on the signals in ovarian and to look for signals in lung, and we've certainly had the sites focused on those as well. We do have ongoing Phase I exploration in other tumors, but we have to focus. And so we are certainly interested and continue to be interested in other tumors like endometrial.

And one more question was for the earlier stage assets for P115C and T119C, are you initially running basket studies or are you focusing on specific tumors?

Go ahead, Mohammed. I must admit that I don't remember the numbers, but please continue.

Are those numbers referring to the Half-life Extended and the A24?

Yes, the Half-life Extended and the A24.

As David mentioned earlier, we are certainly applying all of the learnings from our F-16 PRAME program to those two programs. We know where PRAME is expressed. So yes, those trials are designed expressly so we have multiple options in terms of the types of patients that we can enroll.

Our next question comes from the line of Jeffrey Hung with Morgan Stanley.

This is Selena on for Jeff. Two questions here on PRAME. For the melanoma data, ctDNA responders were defined as a 0.5 log reduction. Do you expect the threshold for meaningful correlation to longer survival to be similar across indications like in ovarian and lung? And the second question was when might we expect an update from the endometrial cohort?

I'm happy to address both of those questions. The ctDNA response criteria are still in the early stages. Companies have previously observed a 0.5 log reduction in lung cancer, establishing it as a molecular response benchmark. In our uveal melanoma data, the 0.5 log reduction appeared to be a significant threshold that correlated with survival. We observed a similar correlation in cutaneous melanoma, and we will present ctDNA data on ovarian cancer at ESMO. Based on our current data, I believe that the 0.5 log reduction is a valid threshold for us. Regarding the timeline for the endometrial cohort, it's a bit too early to provide guidance since we have directed our team's focus toward ovarian, lung, and cutaneous melanoma, and we have also instructed the sites to concentrate on those areas as well.

Our next question comes from the line of Naureen Quibria with Capital One Securities.

Congrats on all the progress. I guess my first question sort of follows up on the last one. In terms of the PRAME results that you'll be presenting at ESMO. So can you remind us how you're tracking response rates under estimates? Should we just focus on the disease control rates or you mentioned there'll be ctDNA? Is there anything else?

It's a good question. We certainly observed this with uveal melanoma, where even patients experiencing a rapid increase in tumor size benefited from long-term survival. We noted similar cases with brenetafusp in cutaneous melanoma, and I believe we will continue to see these trends in ovarian and lung cancers as well. Our method for measuring benefits includes ctDNA, which offers an independent measure from radiographic assessments, along with evaluating treatment beyond progression. This approach is based on investigators' observations when they see a radiographic increase in size but still perceive a patient benefit. Initially, we found that treatment beyond progression served as a reliable indicator. While the treatment duration (TD) benefits are quite pronounced for KIMMTRAK, we believe that for brenetafusp, the disease control rate is a valuable metric for predicting progression-free survival (PFS). In fact, my analysis suggests that brenetafusp may provide greater disease control compared to KIMMTRAK, despite having some benefit in TD. Ultimately, survival remains the most important endpoint, but I maintain that PFS is still a relevant endpoint for brenetafusp. Mohammed, would you like to add anything?

Okay, that's helpful. Sticking to the ovarian cancer topic, what is the distribution of PRAME compared to the folate receptor? Is there any overlap? I'm trying to gauge whether you expect to see any patients transitioning into this area. Would there be any such patients included in the combination?

Naureen, I'm glad to address that. For PRAME in ovarian cancer, the prevalence is quite similar to melanoma, ranging from 80% to 90%. In terms of the folate receptor alpha for LFR, the prevalence is between 35% and 40%. While we don't have exact overlap data, there is likely some. You can estimate the overlap for the folate receptor to be about 30% to 40%, while PRAME in ovarian cancer has a prevalence of 80% to 90%.

I'll just add that what we've seen continually, we saw in melanoma BRAF mutant wild type and with EGFR because we've looked at that mutation that's in lung that we see PRAME expression independent of whether there's a mutation or not. And so although, as Mohammad said, we don't have the exact overlap with folate receptor alpha, I suspect 90% of folate receptor alpha positive are going to be positive for PRAME and I suspect 90% of folate receptor alpha negative are going to be. I suspect that, but we just don't have that data right now.

Our next question comes from the line of Rajan Sharma with Goldman Sachs.

So just going back to KIMMTRAK dynamics and I just wanted to get your thoughts on how you see pricing evolving in the long term. So I think it was Slide 10 where you laid out the increased patient opportunity with the additional indications. But just given the extent of that potential volume uplift, do you expect there to be some pressure on price both in the U.S. and in Europe? And I guess related to your comments on Europe, if there is kind of downward pressure on price with these additional indications, do you think that the European launch would be viable for those? And then just to follow up, I'm sorry if I missed it, but in ovarian cancer, do you expect to include folate receptor alpha positive patients in that trial as well? And then just one follow-up on HIV, if I could. Where do you think dose could go? So I think at the minute, you said 300 is the upper level. Related to that, how high do you think you can dose?

Rajan, I think several questions. Maybe we'll start with the HIV and then we go from there to commercial.

So with the HIV, I mean if you remember, we showed at 15 micrograms, we're already seeing target engagement because we saw IL6. With our platform, you don't need to give a lot. With KIMMTRAK, it was in the 68 microgram dose, we see a survival benefit. So we don't know how high we can go. We're going to go as high as needed, but we certainly know that you don't need to go up to milligram doses without a platform. In terms of the folate late receptor alpha, we don't exclude prior folate receptor alpha. In fact, we have had a few patients who had prior ADC enrolling for our trial. Our approach once again is not to replace existing treatments. It's not to go head-to-head, which is why it's to add on to chemotherapy and so it's independent of the data.

And Ralph, can you comment on the reimbursement just to reiterate here. I don't think we have any issues in the U.S., but it's mostly the EU. Go ahead, Ralph, please.

So first of all, our pricing strategy really depends on the benefit that we see from the data, right? So it should bring significant benefit to patients and society. That's how we price our further indication. To your question on the U.S. and to Bahija's point, we have not seen any downward pressure in the U.S. so far. In fact, I expect that if the data is good in cutaneous given that these are settings of high unmet need and with small patient populations that we would not have to erode the price significantly in the U.S. On the other hand, in Europe you have a good question in terms of price erosion and I think it's too soon to tell. We need data for us to decide whether we'll be launching in Europe or not although it is a very tough market access environment. Frankly, one of the toughest I've seen through all my years of working with Europe.

Our next questions come from the line of Ethan Markowski with Needham & Company.

This is Ethan on for Gil. I think most of them have been answered thus far. But just wondering so I know endometrial is not one of the focused indications for PRAME. But wondering if you plan on going into a similar strategy there where moving any combination in earlier lines like you're planning to do in non-small cell lung cancer and ovarian. And then for KIMMTRAK, you talked about the difficult reimbursement in Europe. Will growth there really be mostly driven by just adding additional countries or do you think that those dynamics are likely to change over time?

Thanks, Ethan, for the question. I think, as David mentioned, the focus has been on ovarian melanoma and lung for now. So the endometrial data that we're generating is really in monotherapy with some of the chemotherapies that are used in late lines, and right now we don't have current plans to explore endometrial in other lines until we actually generate data in the late lines to guide.

Sure. So there is, in fact, a very tough environment in Europe as we've been discussing. However, we've had a lot of successes when it comes to reimbursement. So we've had nine launches in the first half of the year and we expect some of that marginal growth will come from further additional launches because we're currently in negotiations with several countries. In addition to that, I mean obviously we're very well penetrated. The team has been doing a great job in Europe. So really, it's the launches driving the next level of growth.

There are no further questions at this time. I'd like to hand the call back into Bahija Jallal for closing comments.

All right. Thank you, operator. So once again I just want to thank you for your patience, first of all, and continued trust and commitment. And we'll now close the call. Thank you.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.