Q3 2019 Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
Martin Force, Vice President Investor Relations and corporate Communications you may begin.
Thank you Jamie.
Good afternoon, everyone and thank you for joining US a press release with the company's third quarter financial results was issued earlier today and can be found in our company website.
Joining me today, or bill Rango, or chairman and interim Chief Executive Officer, Dr., Heflin, Cohen's Chief Medical Officer, and David Smith, Our Chief Financial Officer.
Today's conference call will include forward looking statements under the private Securities Litigation Reform Act of 1999.
Regarding our research and development program financial outlook.
Actual results may differ from those indicated by these forward looking statements due to numerous factors, including those discussed in the risk factor section of our SEC filings.
Our expectations and assumptions could change, while we may elect to update these.
In the future.
We disclaim any obligation to do so even if our views changed on I'll turn the call over to Bill.
Thank you Martin good afternoon, and thanks for joining us today to review, our third quarter achievements and preview upcoming milestones.
Since becoming interim CEO I've had the chance to interact with a number of our analysts and investors and I look forward to interacting with you during the call today.
This has been a year of many clinical milestones for our wholly controlled programs and we look forward to multiple data read outs in 2020.
These redoubts will allow us to make disciplined data driven decisions to prioritize future pipeline investments.
We were expecting data readouts from several programs next year.
We remain on track for a plan futility analysis from the fight trial in mid 2020.
The combination arm of Pembroke and P.A., one five though isn't rolling ahead of schedule and we anticipate early efficacy data in the first half 2020.
We're reporting initial safety data from the phase one clinical trial.
The 2155 in a poster presentation at city this coming Saturday.
Unexpected have additional MPT 155 data in late 2020.
For our partnered programs the randomized phase two trial, that's the Bureau, and Opdivo in second line pancreatic cancer has completed enrollment.
And we expect to BMS do have actionable data next year.
And finally, BMS 986 to five eight they fully human monoclonal antibody targeting 10, three continues to advance in a phase one two clinical trial is now being studied by BMS in combination with Opdivo.
Since becoming the interim CEO .
My first priority was to conduct a review of five crimes operations.
With the goal of ensuring our long term sustainability and value creation as a company.
My first action in CEO was implemented restructuring plan that meaningfully extends our cash runway and enables us to prudently advance and prioritize our clinical programs, while evaluating long term strategies to grow the pipeline.
As part of the process I have engaged with the team and I've been impressed by the caliber of the people in our organization as well as the professionalism.
And agility that the team has shown as we all work to become a more nimbler organization.
Our team is passionate about the mission and the restructuring is well underway as planned.
Another priority of mine has been to start to search process to recruit the new CEO .
We've engaged to search firm formed a search committee composed of board members and expect to search process to take approximately four to six months.
I will continue to serve as the interim CEO until a new CEO was appointed.
And I look forward to working with the five prime team, while the search progresses.
Im confident in our team our pipeline and our ability to advance clinical programs through and beyond 2020 data events, which represent important inflection points for our company.
I will now turn the call over to Helen Who'll provide an update on our clinical programs Helen thanks.
Thank you Bill.
Let's begin with BMS and the fight trial.
We paused prescreening and have enrolled more than 140 patients with newly diagnosed advanced age gastric cancer, representing approximately 25% of the projected total enrollment for the trial.
The prevalence of FGF are to be over expression. This patient population is approximately 30% based on our global Prescreening data and we remain on track for plan futility analysis in mid 2020.
I'd like to remind you that the fight trial is a double blind placebo controlled trial, which means in order to maintain integrity. The trial for the investigators and the study team we have an independent data monitoring committee.
The only public announcement that we expect to make is whether the trial has passed or not passed futility.
Moving on to FP, 150, which is our monoclonal antibody targeting tumors that over express b seven each for.
At ESMO last month, we presented preliminary efficacy results from the phase one be monotherapy expansion portion of the trial.
As a b August 9th data cut off date, there were 31 patients across ovarian endometrial and breast cohorts, who are valuable for response.
One patient aneel bearing cohort at a confirmed response and an additional 11 patients had stable disease and remain on therapy.
Supporting B seven each for the potential targets, we observed an increase in the infiltration of T cells, and NK cells and the tumors. The patience it either responded well it's stable disease.
On the poster we also presented safety data from the first for patients in a phase one a combination arm as FP 150, with Pembrolizumab, which suggested that pay 150 could be combined at a full dose of 20 milligrams per kilogram every three weeks with standard full does pembrolizumab.
Based on our preclinical data and the hypothesized mechanism of action of FP 150, we continue to believe that the most promising opportunity for FP, one fiftys and the combination.
The FDA 150, plus Pembro expansion is enrolling ahead of schedule and we anticipate early efficacy data and the first half of 2020 .
Turning to S.P.T. 155, our novel CD FC fusion protein dose escalation is proceeding according to plan and we will present, the first available safety and pharmacokinetic data from the initial dose escalation cohorts at city this coming Saturday November 9th.
Clinical data showing this drug can be administered without exhibiting cytokine release syndrome would be encouraging because other antibodies activating T cell through CD 28.
I have reported Super agonism, and severe cytokine release syndrome.
BT 155 on the other hand, as a CD 80 FC fusion protein that requires co stimulation for T cell activation, and therefore should not trigger Super agonism.
For our partner programs BMS is completed enrollment in the randomized phase two trial Kabira enough Tivo in second line pancreatic cancer. Accordingly, we expect BMS have actionable data early next year, but please recall BMS is the trial sponsor and we'll determine when it's appropriate to disclose data next steps for this program.
And finally, BMS 96 to five eight a fully human antibody targeting Tim three and immune checkpoint receptor continues to advance in the phase one two clinical trial is now being studied by BMS in combination with Opdivo.
Before ending I'd like to highlight the latest example of the productivity from five Prime immuno oncology research collaboration with BMS. The Journal Nature recently published New research, providing insights into the mechanism of action of Vista. The first identified checkpoint that utilizes utilizes ph to function selectively in tumors.
The work leading to this discovery was the result of a large collaborative effort led by Dms and five prime.
I'll now turn the call over to David Thank you Alan.
To begin with some comments on the restructuring before turning to third quarter financial results. Our decision to restructure is expected to extend our cash runway as we execute on our clinical programs and is aligned with the goal of focusing on our most promising programs based upon data readouts that we expect in 2020.
We expect the restructuring to result in $20 million of annualized savings from reduced head count and facilities expenses.
The company will incur approximately 4 million a pre tax charges for severance costs related to the restructuring primarily due primarily during the fourth quarter of 2019.
As part of the restructuring and Rightsizing the organization or cash runway will be meaningfully extended further into the future. The length of the cash runway will be determined by the prioritization future pipeline investments that will be informed by the data that we have outlined for 2020.
As both Bill and Helen of mentioned, we will soon have the data needed to make a go no go decision for Lpa 150, mono and combination therapy.
Also in FEMA passes the upcoming futility analysis.
We may not resumed enrollment in the fight trial without a partner given the significant cost of running this global phase III trial.
The key takeaway here is that we have the resources that will take us not just through but beyond go no go decisions for the fight trial Lpa 150, an f. peachy 155.
We could potentially realize additional savings by not taking forward, one or more clinical programs, where we could potentially incur additional cost by deciding to advance the program to the next milestone.
We will know this at the next data readout for each of these three wholly owned and controlled programs in 2020.
Now turning to the financial results for the quarter cash cash equivalents and marketable securities totaled 186 million September Thirtyth 29 team compared to 214.1 million on June Thirtyth 29 team. We continue to expect full year 2019, net cash used in operating activities to be in the range of one.
Third and 17 million 222 million with cost savings from the restructuring beginning in 2020.
We estimate ending 2019 with approximately 148 to 153 million in cash cash equivalents and marketable securities.
Net loss for the quarter was 36.1 million or a dollar three per basic and diluted share. This was a decrease from last year's third quarter loss of 47.2 million and attributed to lower overall operating expenses collaboration and license revenue was 3 million.
For the quarter. This is a decrease from last year's third quarter revenue of 5.8 million and was expected. This decrease was primarily related to the completion of the research term under the immuno oncology research collaboration in March of 2019 and from progress made towards our performance obligation under the BMS collaboration agree.
Yes.
Research and development expenses were 26.9 million for the third quarter of 2019 compared to 44.7 million in the third quarter of 2018.
This decrease was primarily due to a onetime milestone payment in the third quarter of 2018 that was triggered by the dosing of the first patient in the phase three fight trial.
Lower compensation costs, preclinical and research activities manufacturing and diagnostic expenses contributed to the decrease and were partially offset by increased clinical trial expense for our clinical programs.
DNA expenses totaled 13.2 million compared to 9.8 million in the third quarter of 2018. The increase was primarily due to increased compensation costs offset by a decrease in the use of temporary resources.
In closing we ended Q3 with a strong balance sheet and our strategic restructuring will meaningfully extend our cash runway, which will take us.
Not just through but beyond go no go decisions for the fight trial FDA 150, NFI T 155.
I'll turn the call back over to Jimmy for human error.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please stand by what we compile the culinary roster.
Our first question comes from Jonathan Chang with SVB Leerink. Your line is now open.
Hey, guys. This is David room, Sean for Jonathan.
Congratulations on the progress and.
Thanks for taking my questions I've got a few here and looks like there were a lot of updates.
First on F 150.
You mentioned enrollment was progressing ahead of schedule and that there would be an update in first half of 20, which I don't know that that was in the press release.
Could you just comment on the data expected.
First off 20 in terms of the patient population and how much efficacy could be reserved at that point versus asthma. Thanks.
Sure Hi, this is Alan Koblin so.
So what.
I want to be clear that we will have we expect to get some data and the first half of 2020, we have not said when we would publicly talk about what that data is that any updated data will be longer term follow up on the monotherapy and patients of course, but more importantly combination. So we are.
The what we're rolling right now is patients with ovarian cancers, whose tumors overexpressed B 784, and all of these patients are getting the full dose of SK 150 in full does that pembrolizumab and that we expect early efficacy from those patients in the first half of next year.
Got it would it be safe.
Back to those data to be presented.
In 2020 mid 2020 or.
Yes, I mean, as you know ASCO abstract or do you need that sort of somewhere around February onest. So right now because again. These patients are just a mall we haven't seen any data were not I don't want to commit yet, but we're having those conversations about.
About one of my first data.
Fair enough.
The second one from me another sort of.
Hi, My logistics question regarding capitalism.
Could you give any color on the timing of the data in 2020, it looks like the via my transcript says 2020 broadly, but I thought I heard you say early 2020, yes, I really yeah, no. Thank you I'm glad that to clarify that.
This is a BMS run trial and so BMS control review of the data release of the data and everything I should say I should be aligned with them. So I misspoke. It just to be 2020 is army now, but which would make sense got it got it so.
And then last one sort of another timeline refinement question.
In regard to the fight study it looks like the timing has been adjusted to say mid 2020 versus first half of 20.
Is this just sort of you guys are finding the timeline here or should we take this as.
Yes.
Yes, I think early in the ever me very first said.
Earlier this year 2019, what we said we were going to doing early utility. We said first half as we get closer we're getting a lot of questions of people, saying, Hey January no no. It's going to be right. We think you closer to the later part of that first half. So we thought it was probably better just to say mid at this point now being November so that people aren't expecting us to have a readout.
Sorry, but as you know its event driven and so it's really going to depend on when the events occur and.
And although the trial started enrolling in September 2018, the majority of these 140 patients enrolled over the summer until course, it's a little early right now for us to be precise about when the events will occur our our statistician said give her give her another couple of months since you'll be able to UBS to tell us and we should help we get the closer as to when that read out will be but but I think your time.
My questions are great I mean, I think you're highlighting something we're trying to make clear which is all of important data read out all read out.
We're anticipating in the first half of next year at least internally and again I think it speaks to to the theme here that we're really trying to make sure that we make database decisions on our portfolio. So.
Got it got it thanks for clarifying.
For the same what comes out of 2020.
So do we.
Yes.
Thank you. Our next question comes from Chris Shibutani with Cowen and company. Your line is now open.
Hi, good even as the CJ is off on for Chris Tonight, just wanted to follow up on a few questions with the fight trial.
You mentioned that if the trial was successful you may not continue without a partner is this outside of the.
I Love partnership and.
At that point of the futility analysis would you be unblinded to the data. So that's something you could talk to in your partnership discussions.
This is bill.
Let me take a shot at it and then Helen joint join in.
They'll be a couple of people unblind, the but there will not be a majority of people unblinded to the data will basically get information that allows us to make a decision of saying go forward or not go forward.
And we'll see how that plays out when we think about a partnership.
And.
Oh, and if you want to add anything yes to that.
I think.
Yes, nothing's changed from our perspective, I mean, I think that in the sense that.
No. We haven't publicly said what the bar is but we haven't independent DMC. They will look at all the data.
We'll be giving us in terms of the bar for futility thumbs up thumbs down as Bill said, there will be a couple of management people, who will no more than that.
But as you know you're the first step is that you've got a pass utility and then then there is always going to be a business decision and as we said some of that decision to move forward with bema.
Maybe related on how the other programs are going where we want to spend our resources and.
Of course, partnering with the mobile go into that as well, it's a phase three trials inexpensive trial and.
And then also just the external landscape in gastric cancer right, so what else what's happening with other.
In terms of.
Where this will sit in but.
I'm not aware of anything right now externally that would that would change.
I realize that sounds a bit vague, but I think again, a whole pointed said it's going to be.
The decision isn't just a go no go from futility, but then there.
This is part of it might right.
Ed.
Yes.
Yes, I think so if there.
Is the futility readout is successful how would you disclose what the criteria were that that made that decision.
No.
No no no.
No no. It's a it's a pass you know a go no go past no path.
Got it okay. Thank you.
Thank you and our next question comes from Steve Seed House with Raymond James Your line is now open.
Yes, Hi, this is more of ought to go on for Steve Steve House.
And our first question is regarding could be era. So you mentioned potential actionable Dod and 2020 and are there any milestone payments coming if Bristol decides to take it into phase three.
Again, assuming phase three is actually need it and if if if not then what type of event.
Trigger milestone payments. Thank you.
So this is David there.
There would be a milestone payment.
With the initiation of the phase three trial Weve not disclosed what the the size of that milestone is though.
Okay. Okay got it and then our next question is just to clarify on SP. A 150. So you mentioned the phase one be.
On a therapy cohort and the combination cohort.
I guess could you talk about the types of response as you would need to see to make your go no go decision.
There are certain threshold you're looking for.
Yes.
Let me see so yes internally, we haven't we have a threshold we haven't made that pop black.
The way that that I think makes the most sense to answered in ovarian cancer although.
As single agents. The checkpoint inhibitors are not improved yeah. There's a couple of them have reported 10, 15% response rate because there is enough a lot of various tumor types. So so you can imagine that for a combination we would want to see something that we think is statistically significantly higher than that for us too.
To be interested in pursuing them.
Okay got it thank you.
And I guess also clarification question on SPT Onefifty five development. So I think you're proposing maximum dose of 770 milligrams is that based on some receptor coverage saturation that you've found in preclinical studies, what does that maximum level based on.
Let me so I think what you're talking about is based on.
On the abstract that was submitted to city, yes correct.
Yeah, So I'm I'm going to Ponton say will answer that on Saturday. After we have our our post draft.
Okay got it and I guess, just one one more clarifying question. There are you're planning to do any combinations with SPT 155, like number or something else.
Certainly you've had internal discussions and it would make sense as it does for any Io drop, but you know even if you get single agent activity, which we certainly expect with this agent that the way. The world is right now you'd want to also show even better activity with combination so.
Right now that is not in our protocol, but.
Sitting sitting in parked in a parking lot right now.
Okay got it thank you very much.
Thank you and our next question comes from Salveen Richter with Goldman Sachs. Your line is now open.
Hi, Thanks for taking the questions as Ross offer Salveen.
Just on the fight trial here. So on the last earnings call. You communicated that was it was hearing tend to have a high hazard ratio of less than one.
Is this still the case and if you do indeed past proceed past the futility analysis is it reasonable to assume you have reached hazard ratio of less than one.
So if we now this is again Helen so if yes. Our plan is to still have a hazard ratio less than one.
And if that passes that Ben that would be the announcement that we have passed futility I think some of the questions have been about Okay. Then then what and I think that's where.
You know that decision about assuming we pass utility what we do next is based on a multitude of factors.
Got it and then secondly.
The trial also uses I see two plus or three plus as the criteria for positivity protein over expression.
Can you elaborate on what percent of patients in the trial.
Undergone using this.
As for here.
Yes, so the trial being conducted and a selected patient population, meaning the patient or.
Ted anybody who enrolled has to test positive for two plus three plus so what pace news, one plus or does not have FGF are to be over session does not a mall to only patients who had that are rolling.
Got it thanks for the question.
Thank you and our next question comes from Michael Schmidt with Guggenheim Securities. Your line is now open.
Hi, Thanks for taking my question. This is on filling in for Michael Just one question for me mention though.
Showing that the fight flight outside China alone was adequately powered for allowance at full enrollment I. Just wanted to know you could remind us on maybe provide some color on what the powering assumptions for for this study is currently thanks.
Yes so.
This is how and so I think what what you've heard us talk about previously and what we should talk about now is when you do a futility analysis from a statistical perspective.
Utility analysis, saying, assuming that you know the benefit is active and your trial has been designed the way that had been trial is this particular.
Version of the trial on like in other words, if the trial is powered at 80%.
And you assume there's a particular benefit if he ran this trial 100 times.
80 out of those hundred times that that trial will show what truth is writer our demonstrate that truth. So when you're doing if utility from a statistical perspective, and I'm sure. My statistician is somewhere cringing. It my description of this but.
What we're doing is we're making sure that this particular run of the trial is falling in one of those 80 times that it's on track to show that benefit.
I think would you heard bill and I say is that so that's why you essentially get to go or no go yes sure. This trial is.
Demonstrating that the study will not be feudal essentially or or it will be futile.
What you heard they'll say is that there will be.
A couple have people on management team, who will have more information than just did you pass did you not pass.
And certainly that would be information that.
That will help us make a business decision about where to go with be manufacturer.
Thank you.
Thank you and I'm showing no further questions in the queue I'd like to turn the call back to building go for any closing remarks.
Okay. Thank you as I said at the beginning you call. We made the decision to implement a restructuring plan that meaningfully extends our cash runway and enables us to prudently advance and prioritize our clinical programs, while evaluating long term strategies to grow the pipeline.
In 2020, and we expect our clinical programs to read out data that will allow us to prioritize future pipeline investments.
Taking into consideration cash on hand and business development opportunities.
We are focused on advancing our clinical programs through and beyond near term data events and as we execute on these important inflection points to maximize value first stakeholders.
With that I'd like to thank you all for joining us today.
I'd also like to thank the patience and investigators participating in our clinical trials are five prime employers and our strategic collaborators who all contribute to the continued advancement of our programs. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.