Summit Therapeutics Inc. Q3 FY2023 Earnings Call

Good morning, and welcome to the Summit Therapeutics Third Quarter 2023 Earnings and Update Call. All participants will be in listen-only mode until the question-and-answer segment. We do not anticipate any technical issues today; however, if we lose the webcast connection and cannot provide updates, please wait up to 10 minutes for resolution. For updates, refer to the Company's website. Please be aware that today's call is being recorded. Now, I would like to introduce Dave Gancarz, Chief Business and Strategy Officer. You may proceed.

Thank you for joining us. Our press release was issued earlier this morning and is available on the homepage of our website. Our Form 10-Q was also filed earlier this morning and is available on our website. Today's call is being simultaneously webcast and an archived replay will be available later today on our website, www.smmttx.com. Joining me on the call today is Bob Duggan, our Chairman of the Board and Chief Executive Officer; Dr. Maky Zanganeh, our Chief Executive Officer and President; Ankur Dhingra, our Chief Financial Officer; Dr. Allen Yang, our Chief Medical Officer. And in addition, we are joined by a new Chief Operating Officer, Manmeet Soni. Manmeet joins us from Reata Pharmaceuticals, where he was the President, Chief Operating Officer and Chief Financial Officer. Reata was recently purchased by Biogen for approximately $7.5 billion. Manmeet was previously the CFO at Alnylam Pharmaceuticals and ARIAD Pharmaceuticals. Before that, he was the CFO of Pharmacyclics. Manmeet will continue to serve on our Board, and he also serves on the Board of Pulse Biosciences. Manmeet will be responsible for all commercial activities, finance, clinical operations, manufacturing, legal, information technology, and human resources. In conjunction with Manmeet joining us, he invested $5 million in the Company in a private placement at market rates. We are excited to have Manmeet join Team Summit, and I'd like to welcome Manmeet to the team.

Thanks, Dave, and I'm very excited to be here and be part of Team Summit. I worked with the team here at Summit for the last four years as a Board member, and I'm very thrilled to join as a member of the very accomplished and committed management team. I strongly believe that our pipeline candidate, ivonescimab with two Phase III clinical trials currently enrolling in the United States, Canada, Europe and China, has the potential to bring a paradigm shift in the standard of care for patients with solid tumors, starting with non-small cell lung cancer. I'm fully committed to our mission of developing new innovative and patient-friendly medicines for unmet medical needs, and I'm excited to contribute to making this positive meaningful difference.

Thanks, Manmeet. Before we get started with the rest of the call, I would like to note that some statements made by our management team and some responses to questions that we make today may be considered forward-looking statements based on our current expectations. Summit cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Please refer to our SEC filings for information about these risks and uncertainties. Summit undertakes no obligation to update these forward-looking statements, except as required by law. Following comments from Bob, Maky, and Ankur, we will take questions. With that, I will turn the call over to Bob.

Thank you, Dave. Good morning, everyone, and thank you for joining us today. I'd like to share some insights into what Team Summit has achieved. Afterwards, Mike will provide additional details, and then Ankur will update us on our financial standing and outlook. I’m very proud of Team Summit's efforts and accomplishments since we partnered with Akeso. As we announced this morning, we’ve started enrolling patients in our second Phase III clinical trial, HARMONi-3, for those with squamous cell carcinoma of the lung. This is our second Phase III trial for non-small cell lung cancer with the goal of registration. This milestone has been reached due to our strong belief in ivonescimab. In just nine months since in-licensing ivonescimab, we have made significant progress aimed at helping patients who require ongoing innovation to enhance their quality and longevity of life, aligning with our mission at Summit. Our dedication to our mission, and our collaborative efforts, have previously led Maky and me, along with our team, to success in various fields including networking technology, robotic surgery, and with ibrutinib at Pharmacyclics. We remain committed to positively impacting patients in the area of solid tumors. I'm also very proud of our growing organization at Team Summit. A key highlight is Manmeet Soni's decision to join us full-time as our Chief Operating Officer. Manmeet is an accomplished executive with a strong track record, as Dave mentioned. He has been a board member and trusted adviser since 2019. His joining us and belief in our mission and pipeline, along with his personal investment, reinforces our commitment to making a significant positive impact for patients in need of our work. Additionally, recognizing our organizational achievements, we have promoted several team members: Fong Clow is our new Chief Biometrics Officer, Dave Gancarz is our Chief Business and Strategy Officer, Urte Gayko is our Chief Regulatory, Quality, and Safety Officer, and Allen Yang is now our Chief Medical Officer. This team is dedicated to advancing Summit alongside all our leaders and team members. Now, I’d like to pass it on to Maky for more context on our achievements and next steps. Maky?

Thank you, Bob, and good morning, everyone. I'm incredibly enthusiastic about ivonescimab, its potential and what Team Summit has already accomplished. As Bob said, we through conviction and purpose along with our belief in ivonescimab to help accomplish our mission to benefit patients facing difficult odds with unmet medical needs, comes the incredible power of execution of Team Summit at speed accomplished by few, if any, in the biotech space. We now have two actively enrolling Phase III clinical trials for ivonescimab. Our first trial is for those patients with non-small cell lung cancer harboring EGFR mutations who have progressed following a third-generation TKI such as TAGRISSO. We began enrolling patients in the second quarter of this year, and we can now state that we intend to complete enrollment in the second half of 2024. As we have committed to along our tenure here at Summit, we work tirelessly to collapse time in order to achieve our aggressive but realistic goals. Our second Phase III clinical trial for ivonescimab is in frontline therapy. Those who have not yet received treatment for patients with squamous cell carcinoma of the lung, we will enroll patients in this trial across North America, Europe and China. The trial is designed to compare ivonescimab and chemotherapy against KEYTRUDA and chemotherapy in order to determine the efficacy and safety of our innovative bispecific antibody in this setting. Our conviction to move forward with all appropriate speed has been in place since we worked through our due diligence for ivonescimab with Akeso. Obviously, our upfront payment of $500 million to Akeso spoke volumes about our conviction and belief in ivonescimab. Disclosed in part at ASCO 2023, the large dataset that Akeso has generated backs up our conviction of how ivonescimab plus chemotherapy performed in Phase II clinical trials supports our decision to quickly pursue a registrational Phase III study. We believe that the study data is very promising when compared with the current standard of care, KEYTRUDA plus chemotherapy and supports our decision to directly move forward into first-line therapy with our second Phase III clinical trial. In collaboration with our partners at Akeso, we published a poster further describing the mechanism of action of ivonescimab at the 38th Annual Meeting of the Society of Immunotherapy of Cancer, SITC 2023, one of the premium conferences of the year. Ivonescimab is not designed to be the same as the sequential administration of an anti-PD-1 and then an anti-VEGF. Ivonescimab is an innovative, potentially first-in-class bispecific antibody that builds on these two established cancer targets. Ivonescimab tetravalent structure enables cooperative binding between PD-1 and VEGF. Our poster at SITC 2023 described that the binding of ivonescimab to PD-1 is actually over 18x stronger in the presence of VEGF in vitro. In addition, its binding affinity to VEGF is over fourfold stronger in the presence of PD-1 in vitro. Importantly, there is potentially higher expression or presence of both PD-1 and VEGF in tumor tissue and the tumor microenvironment, the area around the tumor as compared to normal tissue in the body. The tetravalent structure, the intentional novel design of the molecule and bringing these two targets into a single bispecific antibody with cooperative binding qualities have the potential to direct ivonescimab to the tumor tissue versus healthy tissue. Anti-PD-1 therapy assists the immune system in killing tumor cells by attaching to the port of a T-cell that actually prevents the T-cell from doing a job in the first place. Some cancer tumor cells take advantage of a built-in checkpoint on the T-cell that is intended to prevent the immune system from overreacting. Anti-PD-1 therapy can bind to PD-1 on the T-cell, allowing the T-cell to do its job without a checkpoint or break; hence, it's referred to as a checkpoint inhibitor. Anti-VEGF therapy helps deplete the tumor of nutrition and blood by binding to VEGF. VEGF helps build new blood cells to supply blood to the tumor. Anti-VEGF therapy also allows the immune system to better fight the tumor. We believe ivonescimab goes further than the sequential administration of an anti-PD-1 and anti-VEGF through this cooperative binding mechanisms, we just described. The intent is stronger ability in this design is to improve upon previously established efficacy standards in addition to the side effects and safety profiles associated with these two targets. Ivonescimab was designed such that the novel compound is greater than just the sum of its parts. Our plans to continue to expand our clinical development program remain in place. Non-small cell lung cancer is only the first step. We have confidence in ivonescimab to continue to expand both in additional indications in non-small cell lung cancer and in other solid tumors during its development lifecycle. Our agreement with Akeso was drawn up with this mindset. We believe strongly in the potential of ivonescimab. We have begun accepting requests for investigator-sponsored trials, IST programs, as we continue to broaden our message related to ivonescimab with the key opinion leaders as well as other physician leaders. We appreciate their high level of enthusiasm for what ivonescimab can do in and outside of lung cancer. We have received multiple inquiries related to potential IST programs that we are considering, and we expect to share additional information in 2024. Finally, I would like to say a word about our team. Based on the accomplishments of Team Summit over the last couple of years, we have elevated certain members of our management team. I congratulate Dave, Urte, Fong, and Allen in their well-deserved new roles. I'm also very excited we have been able to attract outstanding physicians to complete our clinical development leadership team. Dr. Jack West and Dr. Laura Chow have each joined us over the past months. They have over 45 years of combined experience as practicing medical oncologists as well as substantial experience in the development of cancer treatment that now represent some of the most significant cancer therapies in present time. Dr. Jack West is a renowned lung cancer expert and Dr. Laura Chow is a trailblazer in the novel immunotherapies and anti-angiogenic treatment primarily focused in lung cancer as well as head and neck cancer. Team Summit is a truly special place, and I would like to thank each member of our amazing team for their dedication to our mission and goals. Now I will ask Ankur to provide additional details on our financial position and outlook. Ankur?

Thank you, Maky. Very pleased with the progress, both in the development of ivonescimab and continued build-out of Team Summit. We believe ivonescimab has excellent potential and continue to build our development plans towards realizing that. I will give you an update on the financial developments and position as well as financial outlook for the upcoming quarter. Regarding the P&L, the majority of our spending is in research and development, focused on the development of ivonescimab. We spent $15.2 million in R&D this quarter. As mentioned, we have engaged in two global Phase III clinical trials for ivonescimab, both of which are enrolling and treating patients. We're also investing in technology transfer for manufacturing of ivonescimab in our territories. We spent $5.4 million in general administration expenses during the quarter focused on providing infrastructure and leadership for our development efforts. We expect this quarterly run rate of spending to continue to increase next quarter as well as in 2024 as we scale both pivotal studies, adding sites and treating patients as well as continue to build our team. Similarly, investment in manufacturing capabilities will continue to increase in the next several quarters. At the same time, we continue to ensure that we remain disciplined in our approach of investment to extend our cash runway as long as possible. With respect to our cash position, we exited the quarter with $200.5 million in cash, investments and receivables. We have a loan of $100 million that matures in September 2024. This loan has provided us significant non-dilutive capital, enabling a strong foundation for development of ivonescimab via initiation of two pivotal clinical trials. Our cash position is sufficient to continue to make significant progress in the development of ivonescimab by funding the operating costs and working capital needs for HARMONi and HARMONi-3 clinical trials going into September 2024. As mentioned before, we continue to hold our cash equivalents in these investments in highly liquid and highly rated money market funds or U.S. treasuries, and all the money has been reputable U.S. and European banks. And with that, I'll hand it back over to Dave.

Thank you, Bob, Maky, and Ankur. We can now transition to see if there are any questions from anyone on the line that we could answer. If you can please open the line for questions.

Your first question is from Brad Canino of Stifel.

This has been a really busy quarter of external Phase III data disclosures and the tumor types for which you're developing ivonescimab. I'm thinking specifically of the data in EGFR mutant lung from amivantamab and then some of the TROP-2 ADC broadly, in the later line setting, but knowing that those will be investigated early in frontline soon. It would be great to hear your view of this evolving competitive landscape and the opportunities that remain for ivonescimab?

Yes. I don't think it really changes too much of our landscape. We're well underway in our Phase III program for these EGFR refractory patients. If you look at the FLAURA2 data, it was really looking at the frontline setting, and I don't think that really changes our landscape per se. And then I think you're talking about the MARIPOSA-2 data as well. What we think about osimertinib is that it is the standard of care for frontline EGFR mutant lung cancer. But for those patients who relapse, we think that this is a great opportunity. And we know that there's good data for ivonescimab in this space. If you look back, there is a failure of PD-1s in this space, if you look at pembro and nivo. However, there is the ORIENT-31 study that looked at a PD-1 and bevacizumab biosimilar and that study was positive. Getting to RYBREVANT, what we've heard from our sort of engagement with experts is that it is somewhat difficult to give. And so we don't believe it will be significant competition. In addition, the EGFR refractory space is our fast-to-market strategy, and then we're also simultaneously conducting a large frontline study in squamous non-small cell lung cancer.

Brad, do you have any follow-up to that?

That's it for me.

Thank you, Brad. Appreciate your question.

There are no further questions at this time. I will now turn the call over to Dave Gancarz for closing remarks.

Thank you, everyone. We've received a few questions from our current shareholders that I would like to address. One question concerns the progress of clinical trials involving Akeso in China and Australia. At this time, Akeso has initiated or completed 23 clinical trials ranging from Phase I to Phase III. They have treated over 950 patients with ivonescimab in these trials, and the placebo or active control arms have included more than 1,000 patients. There is significant experience accumulating with ivonescimab, particularly as Akeso aims to achieve approval in China in 2024 for the EGFR mutation, while also continuing multiple Phase III studies in both China and Australia. The dataset is continually expanding, which reinforces our confidence in our clinical development plan.

Yes, I want to emphasize that this is a very unique molecule. Over the weekend at SITC, there was a press release related to Maky regarding its mechanism of action. Our focus is on PD-1, which, along with PD-L1, represents a well-established target. PD-1 is particularly popular. Ivonescimab is a bispecific molecule, targeting both PD-1 and VEGF. While there are other strategies that also target PD-L1 and VEGF, I believe there is a distinction, as evidenced by data presented at ASCO for both ivonescimab and various PD-L1 VEGF combinations. In addition to targeting two validated targets, ivonescimab features cooperative binding. Specifically, binding to PD-1 increases VEGF binding by fourfold, and VEGF binding boosts PD-1 binding by 18-fold. Theoretically, this results in strong binding in a tumor microenvironment where both antigens are present. Additionally, ivonescimab is a tetravalent molecule with two binding sites for PD-1 and two for VEGF. Since VEGF is secreted as a dimer by tumors, this can result in cross-linking between multiple ivonescimab molecules. This phenomenon has been documented in the literature for bevacizumab, and we believe a similar mechanism is at work for ivonescimab, potentially leading to increased avidity. To visualize this, think of one hand gripping a handlebar tightly, then using two hands for an even firmer grip—this illustrates the concept of avidity. We anticipate that this will create meaningful differences compared to administering these agents separately, and clinical data appears to support this approach. We are moving forward with our plans very aggressively.

Thank you, Allen. And I think you've mainly addressed this. And then another question with respect to how does this differentiate from just a PD-1 agent on its own. So a lot of approved PD-1 agents to exist pembrolizumab, durvalumab. If you can just kind of speak to a little bit of the difference there in terms of how it works.

Yes, so I thought I'd described that pretty well. But if you want more detail. We could talk about the three-hour answers, I'll try to get the 30-second answer here. Maybe focusing on the MOA, where we have both an affinity and avidity sort of phenomenon playing on with ivonescimab, we've been moving very aggressively based on the clinical trial data. If you look at all the PD-1s and less so the PD-L1s out there, they've pretty much done the same thing. They've gone into non-small cell lung cancer, they compare themselves to chemotherapy. We believe that ivonescimab is superior to PD-1 and PD-L1 therapy, okay? To prove that there are four Phase IIIs running two global ones that are being conducted by Summit and then two Chinese specific studies that are being run by Akeso. The partnerships, you've heard about the HARMONi and HARMONi-3 and EGFR progressors and frontline squamous non-small cell lung cancer. These are ones we're conducting globally with our partners, Akeso, in China, but Akeso actually has, as Dave alluded to, a treasure trove of data across multiple different tumor types. And they've advanced into two additional Phase III that are China specific. One is called the 306 study, which is a frontline squamous cell non-small cell lung cancer against tislelizumab with BeiGene PD-1 for their markets. So it's a Chinese-specific squamous cell frontline study, but they're also running a frontline study of monotherapy ivonescimab against pembrolizumab in frontline non-small cell lung cancer. So if you look at the four studies we're conducting, three of them are against PD-1, and two of them are specifically against pembrolizumab or KEYTRUDA. So we are going to sort of differentiate this molecule from PD-1s dramatically by clinical data.

Thank you, Allen. Really appreciate that. And so that concludes the list of questions that we have received today. So I do want to thank everyone very much for attending this morning's earnings call. As I mentioned earlier, an archived version of the webcast will be available on our website, www.smmttx.com. And I'd like to thank you, and wish you all a great day.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.