Q4 2019 Earnings Call
Good morning, ladies and gentlemen, and the won't come to Joe's true beauty fourth quarter and full year 2019 earnings conference call I.
At this time all participants are in a listen I'll email. We do later, we'll conduct a question and answer session and instructions will follow with tech side.
As a reminder, this conference is being recorded at the company's request.
I will now turn to calibrate your host homeowner Joshi. They chose therapeutics. Please go ahead.
Thank you operator, good morning, and welcome to the John's Therapeutics fourth quarter and full year 2019 financial results conference call before.
This morning, we issued a press release, which outlines the topics that we plan to discuss today.
The releases are available in the Busters immediate section of our website at Www Dot Jones T X dot com.
Speaking on today's call will be our CEO, and President Dr., which Murray, who will discuss our pipeline progress and key milestones for 2020, followed by our CMO Dr. bent tree, who will provide an update on our clinical activities and lastly, our CFO Kim Dropkin will review our full year 2019 financial result, and 2020.
Pardon me, we'll then open the call for your question.
Before we begin I would like to remind everyone that today's discussion will include statements about our future expectations plans and prospects that constitute forward looking statement for the purposes of the safe Harbor provision under the private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by the forward looking statements as a result of various important factors, including the risk factors discussed in our as E filing.
In addition, any forward looking statements represent our views only as of today February 27, 2020, and should not be relied upon as representing our views as of any subsequent date.
While we may elect to update these forward looking statements at some point in the future. We specifically disclaim any obligation to do so even if our abuse change with that I will now turn the call over to rich.
Thanks, Camel and good morning, everyone.
As we reflect on 29 team I'd like to note the meaningful advancements jobs is made further progress our growing io pipeline toward several key milestones that we set forth in early 2019.
The progress stems from our translational science platform driving new Io therapies to the clinic.
As well as analyzing patient samples from our clinical trials to inform new science driven development us.
The latter is best illustrated by our lead Phase two program book, Bertilimumab, <unk>, which represents what we believe will be necessary to make a meaningful impact for patients who were not benefiting from today's Io therapies.
<unk>, we made significant progress over the course of 20 Nike.
First the introduction of our to vote for development paths.
Based on the results of extensive reverse translational analysis, we identify important biomarker differences between responding and non responding patients, enabling the emerge and select trial.
No the exciting data for my contact at HCR, where we showed improved responses progression free survival and overall survival directly linked to the treatment emergent Lycos high Cdfour T cells.
These cells or a beaupre associated pharmacodynamic biomarker not seen with PD one inhibitors.
Next the identification of a predictive biomarker tests of Oprah to be used for patient selection and the upcoming select trial.
Which we believe will allow us to select patients more likely to generate micro size city for T cells, and the presence of Barbara and potentially experience clinical benefit.
And the work, we've done with dosing schedule, which which maybe an important feature of how to optimize activity of stimulus story, rather than inhibitory based immunotherapies.
As we look to 2020, the significant unmet need faced by many cancer patients continues to be at the forefront of everything we do.
Best will take you through more details on both emerge and select in a moment.
But before turning the call over to her I'd like to take this opportunity to reflect on the unmet need and wife Oprah could have a major impact starting a non small cell lung cancer.
The last decades been very exciting with game changing treatment advances in oncology made by approve checkpoint inhibitors.
As PD, one inhibitors expand further and further into frontline therapy.
Growing number of patients who are progressed on these therapies need new treatment options.
For example, we estimate approximately 90% of non driver mutation frontline non small cell lung cancer patients in the U.S. receive a PD, one or PD L. One inhibitor as part of their initial therapy.
And the majority of those patients either relapse or do not respond, creating a new growing area of unmet need.
Standard of care for this patient population is docetaxel, which has a low response rate and the challenging toxicities associated with chemotherapy.
Part of the boat provision is to provide better treatment options for patients in this setting.
And that market opportunity a substantial with more than 40000 patients in the U.S. each year and Jeff This particular setting.
We continue to believe that novel approaches that are independent of the PD. One inhibitor CD eight focus biology will be required to derive meaningful benefit in the growing population of patients who progressed on PD one inhibitors.
Fundamental immunology research over the decades emphasize the importance of CD for T cells and their central role in orchestrating a more complete overall immune response.
Speaks to the potential opportunity for <unk>.
Our corporate strategy is highly differentiated from the majority of other studies in this patient population most of which employs retreatment of patients who have already progressed on a PD one inhibitor with a PD one inhibitor again, along with another agent.
And the PD one inhibitor naive population the use of a predictive biomarker may support improved outcomes in a chemo free immunotherapy combo regimen.
That was we recently presented our upcoming select trial uses the test of Oprah biomarker to select patients for treatment with Volpara plus our PD one inhibitor Gtx 40 14.
We believe test rhopressa positive patients at baseline have a higher likelihood of generating heico's high Cdfour T cells and the presence of Oprah and that's a potentially greater chance of clinical benefit.
The order clinical programs, we continue to make progress advancing our earlier stage pipeline using our translational science platform.
We continue to believe that our strategy of discovering and developing I O therapies aimed at immune cell types beyond the traditional CDH cell is an area of opportunity to bring more benefit to patients.
Notably we advanced our next development candidate to come from our platform Gtx 18, 11, which is currently and I, Andy enabling activities and is on track for first half 2021, Hi, Andy filings.
Gtx 18, 11 is a monoclonal antibody engineered to deplete tumor resident T regulatory cells, while sparing other types of T cells.
We plan to present additional scientific data supporting the development of Gtx 18, 11 at the upcoming HCR meeting in April.
On the corporate development front, we demonstrated external validation with the out licensing of our macrophage candidate Gtx 80 64 to Celgene.
That was part of a broader renegotiation with Celgene and we now have the full unencumbered global rights to Barbara Gtx 40, 14, Gtx 18, 11, and our entire discovery pipeline.
On the heels of a strong 2019, a pipeline execution in corporate development. We are poised for an important here of new clinical data and key milestones in 2020.
To reiterate we plan to report preliminary efficacy and related biomarker data for Barbara from the emerge trial and the second half of 2020.
Initiate the select trial using test volpara in mid 2020.
Present data on Gtx 18, 11 at the 2020, you see our meeting.
Continue windy, enabling activities for Gtx 18, 11, with an expected I Andy filing in the first half of 2021.
And continue to work on advancing multiple new targets from our discovery pipeline.
With that I'll now turn the call over to Beth to further discuss our clinical pipeline and science in more detail.
Thanks, Rich and good morning, everyone.
As rich mentioned 2020 is an important your new clinical data and key milestones for just building on our key clinical learning in 2019.
Beginning with our vote for program, we continue to make significant progress and have introduced two different development pads based on a reverse translational analyses.
First approach is our induction strategy in the emerged trial and the second is our patient selection strategy in the select trial using our predictive biomarker to spoke FRE.
Both emerge and select trials are based on three major learnings from iconic.
First we identified treatment emergent I Cotai city for T effector cells in the peripheral blood of patients treated with Oprah alone or in combination with nivolumab that are associated with clinical benefit, including response rate progression free survival and overall survival.
We've shown that emergence of these cells does not occur with PD, one inhibitor therapy, and therefore, we believe that their vote for specific cells.
We have also demonstrated that I close I see before T cells expand and persist throughout durable responses some over two years.
Second we identified and are in a signature and baseline tumor biopsies, which we called Tis Oprah which is optimized for prediction of emergence of by Cosac Cdfour T cells and predicted clinical benefit in Iconix and third we identified what we believe is a more optimal dosing regimen for both brands.
All of her built for trials are built upon the fundamental science of our founders coupled with the reverse translational analyses from our iconic trial.
Another key learning has been that Oprah activity requires the presence of primed I close I see before T cells.
All of this work has culminated in our to vote for development path.
First the induction path in which I close I see before T cells are induced by another agent prior to administration of Oprah.
The study for the induction path is the emerged trial, which is a phase two open label Multicenter trial using it for Linden lab or it'd be to induce I could tell you see before T cells prior to footprint administration.
The trial is underway in PD, one experienced patients with non small cell lung cancer.
As rich mentioned this is an area of high unmet need as PD, one inhibitors have moved into frontline settings.
As we have detailed previously we're implementing a new combination dosing strategy for the emerge and select trial, which we believe is more appropriate for an agonist.
Given our understanding of the kinetics of induction and expansion of by Cosac CD for T cells by it'd be and FFO prep, respectively. We believed that the unique combination dosing and sequencing strategy that we are using and emerge optimize is both I close I see before T cells and Costimulatory.
Biology.
We believe Jones has a compelling and differentiated approach to immuno oncology combination therapy.
We expect to report data from the emerged trial, including preliminary efficacy and biomarker relationships to clinical outcomes for up to 40, non small cell lung cancer patients in the second half of 2020.
The study investigating the predictive biomarker path is the select trial.
Based on the evaluation of baseline tumor samples from patients and iconic we identified the gene signature and threshold just spoke breath, which predicts gopro associated I close I see before T cell emergence as well as improved response rate overall survival and six and nine month progression free survival in Tis.
<unk> positive patients.
The select trial is designed to determine if patients with his spoke for positive tumors, we'll have a higher likelihood of generating I close I see before T cells in the presence of Oprah, resulting in potentially greater clinical benefit.
This is an 18 gene signature that was originally developed as a predictive biomarker for PD. One inhibitors. However, this also includes genes associated with integral elements of see before T cell biology that may contribute to a more comprehensive immune response.
In the upcoming phase to select trial patients will be selected using to spoke for select is a randomized excuse trial in non small cell lung cancer comparing vote Brugh, plus Gtx 40, 14, our PD one inhibitor to Jay T X 40 14 alone.
We expect to enroll approximately 75 immunotherapy naive second line non small cell lung cancer patients, who will be selected using the tis Oprah biomarker.
We estimate that approximately 20% of second line non small cell lung cancer patients will be above the two spoke for threshold and potentially eligible for the trial.
We expect to initiate the selection trial in mid 2020 and report interim clinical data in 2021.
Turning to Gtx 40, 14, we presented phase one safety and preliminary efficacy data at the 20 1950 meeting in November of note anti tumor activity was observed with an overall response rate of 16.7%, including one complete response and two partial responses all confirm.
Armed resist responses and within acceptable safety profile in a difficult to treat population with no therapeutic options.
Using our own PD, one inhibitor in combination with Oprah provides flexibility and cost savings.
I'm proud of the accomplishments of our team in 2019 and look forward to continued progress in 2020 on clinical trial execution and read outs and clinical and biomarker data now I would like to turn the call over to Kim for a discussion of our yearend financial results Kim Thanks, Beth good morning, everyone.
As reported in this mornings press release, we ended 2019 with cash cash equivalents and investments totaling 170.4 million compared to 195.9 million for 2018.
The decrease was primarily due to operating costs incurred during the year offset by the 50 million dollar license fee received in July 2019 pursuant to our Gtx 80, 64 license agreement with Celgene.
Turning to the piano our license and collaboration revenue was 147.9 million for full year 2019, compared to 65.2 million for 2018.
The year over year increase includes 50 million of cash received under the Gtx 80, 64 license agreement with Celgene and 97.9 million of noncash revenue Rec recognition related to the Celgene upfront payment of 225 million that we received in 2016.
During 2019, we incurred 67.1 million in research and development expenses compared to 70.1 million for 2018.
The decrease in R&D expenses for the full year 2019 was due to 6 million of decrease manufacturing and I Indy enabling costs.
And point 9 million a decrease lap consumable costs.
The decrease was partially offset by 3.1 million of increased employee compensation costs.
General and administrative expenses were 27.9 million for 2019 compared to 26.4 million for 2018.
The increase in DNA expenses is primarily the result of increased employee compensation costs.
Net income for 2019 was 56.8 billion or basic net income per share of $1.72 and diluted net income per share of $1.66 as compared to a net loss of 27.4 million in 2018, or a basic and diluted net loss per share of 84.
Yes. This increase was driven by the 147.9 million of license and collaboration revenue recognized under our agreements with Celgene.
We reiterate the 2020 financial guidance, we provided in January.
We continue to expect gross cash burn on operating expenses and capital expenditures for the full year twentytwenty to be approximately 80 million to 95 million.
We are no longer providing license and collaboration revenue guidance as potential future payments under our Gtx 80, 64 license agreement with Celgene, our royalty and milestone based.
Given the strength of our balance sheet, we expect our existing cash cash equivalents and investments to be sufficient to enable the funding of our operating expenses and capital expenditure requirements through the end of 2021.
Additionally, we continue to have the flexibility to drive our innovative immunotherapy pipeline, while efficiently executing against our strategic plans and goals.
With that I'll hand, the call the rich for final thought.
Thanks, Kim before we open the call for questions I'd like to bring the conversation back to the patients that were trying to help.
The success of the initial checkpoints has created benefit for patients, where none was thought possible less than a decade ago, but.
But with that new challenges and therefore opportunities have arisen to treat patients who progressed on PD, one inhibitors and the broader topic of moving I O therapies closer to a precision medicine concept.
I believe our new trials reflect the scientific advancements that we'll we'll need to be made from data glean from the lab in the clinic. So that we can continue to envision a future with longer and broader durable benefit for patients that do not have those options today.
As we look forward to updating you in the in the future and with that we'd now like to open the call for your questions operator.
Ladies and gentlemen.
Hi.
Sorry.
<unk>.
Hello.
First question is been answered.
So from the Q. Please.
Your first question comes from the line of foreign Speakerphone Helen.
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Hi, good morning, congratulations on all the progress.
Before thank you.
So of course it number one on me merge trial are you selecting outpatients, then don't show I suppose high CD cells from GP induction and maybe kind of little more broadly what is the dosing in the merge trial and doesn't make sense to add and you p. booster in the middle of treatment.
Sure. So I'll start with the second question. So the dosing is if he is given every six weeks for up to four doses alternating with full breadth. So you get it be on day, one and three weeks later patients get Oprah and then three weeks later, they get another dose of it'd be that both brugh. So we do.
That alternating sequence for Ford up to four doses of it be after which they receive beaufor alone.
So in terms of the I close I see before so thats a really interesting question. So.
We are tracking those cells very closely so we're watching what they do after it be and then before both bra and then after it be again right now we're not doing any kind of selection, but we are following that very carefully and it's certainly you know is something to think about in the future. We also.
Although we're not using any selection in this study we have we are testing a number of potential predictive biomarkers in baseline tumor samples that we'll be able to go back and looked at so right. Now this strategy is to induce the I close I see before cells with Oprah.
With it be sorry, and then to treat with Oprah, which as we expect to cause proliferation sustained activation of those cells overtime.
Which in our iconic study was associated with long term clinical benefit.
Gotcha.
My last question on this so for a biomarker tests.
If the so I trust successful and it looks like a very useful biomarker what would you have to do to make the test a approval by the FDA.
Sure. So it's a it's already a validated test so its run on the Nanostring platform and there's just there's a series of steps you go through to create a companion diagnostic and you know we've already mapped out what that path would look like we would work with a vendor.
That would actually be the one to develop the companion diagnostic in in in partnership with Us on her clinical trial.
So I wouldn't be limiting in terms of the regulatory strategy.
No no no not at all.
Great. Thank you very much for taking my questions.
Okay.
Your next question comes from the line.
From Wells Fargo.
Okay.
Hi, guys. Thanks for all the detailed for taking my questions I'm a couple so just on the emerge study is there any early insights you have on the Tolerability of the modified dosing protocol that you're pursuing and any early indication of success at an induction about heico's high CD for itself with it.
And maybe related to that is there are predicted the rate of us if the adoption how reliable as it is actually if I suppose high city for salt.
And then I've got a follow up.
Sure so.
All I can really tell you right now is a enrollment is on track to support the interim analysis that we're planning to do later this year and that's when we'll report data. So we don't typically provide any information on you know data from the ongoing trial.
The and as I said enrollment is going well and we're on track to have data a in the second half of the year and then your other question.
Just regarding <unk>.
Uh huh.
Sure sure.
Sure so.
It's a little it's a little hard to interpret sometimes we've heard people say that you know all the cells get induced yeah coast gets induced on all the cells, but then it drops off very quickly so its a little bit hard to discern from the literature exactly what the expected rate of.
Hi costs induction from just it be would be but of course, our trial will answer that because we are measuring that in a prospective manner. Most of the studies in which that's been done it's been more of a retrospective finding so I think ours will be the first study to my knowledge, that's prospectively looking at how the kinetics of.
Hi coasts induction after it be and then with Oprah at it on.
Yeah, what did I hear what is published Gen and they tend to be Oh.
A fairly decent number of small studies, but with kind of a common theme to that and that tends to be done in PD, one naive patients and of course, we're looking in PD, one experience, but from that kind of collection of small studies you know that the numbers were always north of 50%. Some will go away and you know.
Almost all the patients, but really what we think is extremely important is the maintenance and sustainability of these cells and that's what we say that's what we think our trial will be able to a two uniquely answer.
And then just one final question just on the select study and what you learned from iconic whether other arnie signatures that you evaluate it or was this the one that you know prospectively thought.
Would make sense and really the only when you evaluate it just wondering if there were other rd sensors that had a decent predictive value.
Sure. So we actually we had to a long list of genes that we looked at and a number of pre determined signatures that we assessed and this one came out as the one that looks the most predictive for clinical benefit, but then what we thought was really really important was.
To see if it also tracked with the I could say city for T cells, and so first it looks like it predicted clinical benefit but since many of these patients were also treated with a PD. One inhibitor. We then took this biomarker and applied it to see its predictive value for ico sized city for T cell emergence.
And then it clearly predicted for that and then we selected the threshold based on the ability to predict I suppose I see before T cells, and then when we apply that to because a clinical data. It was clearly also predictive for clinical benefit.
Yes, we looked at a number of different jeans isolated jeans and gene signatures prospectively and this was the one that appeared to be the best.
Great. Thanks for taking my questions.
You're welcome.
Your next question comes from the line of Michaels from Baird. Your line is.
Hey, guys. Thanks for taking the question just another one on emerge in terms of the interim update are expected to second half. The after this year can you just give us the sense of what types of biomarker data you plan to provide.
Sure I'm definitely the I could say see before T cells target engagement since we're doing a new dose and schedule.
Other than what we've done before so those are the two primary ones. We also as I said, we plan to do some risks so looking at some baseline biomarkers and some other aspects of biology.
Got it and.
Maybe just in terms of the patient numbers, you've mentioned potentially up to 40 patients can you maybe give us a sense of.
You know sort of average follow up.
At that point in time, just trying to get yes.
Meaningful.
Yes, yeah, absolutely. So yes, so weve time to the interim analysis to be done. After every subject has had at least to post treatment or on treatments C.T. scan. So we'll have at least 18 weeks of data on all of those patients before we report any data.
Okay, great. Thank you.
Welcome.
Your next question comes from the line.
Yes.
Oh H.C. Wainwright your line is open.
Hi, guys Aaron on for Debjit, So I have some questions about.
How are you plan on tackling the enrollment challenges for the select trial Thanksgiving.
Slide 19 disruptions and how do you expect.
Enrollment to go.
In this like study given.
That many of the non small cell lung cancer patients are likely to have previously been treated with an anti PD one.
Sure. So we're doing this study ex U.S. because they're actually are.
Many countries in which there's very limited access to the PD. One inhibitors that are approved in this country. So there are places where patients are anxious to enroll in a clinical trial to be able to get access to a PD. One inhibitor. So we're really happy that we're providing them with that opportunity regarding the challenge.
As of enrollment.
Probably the biggest challenges posed by having a requirement for a selective biomarker.
However, if you think about some selective biomarkers like elk, or ret, where you're talking about 3% to 7% of population, we estimate that the tis vote Pro will select about 20% of the second line non small cell lung cancer patient and in our conversations with it.
Investigators.
20% is they're very comfortable with screening one in five of their patients is likely to be positive for the trial. So we have a number of different strategies in place.
In two to tackle. This you know we have enough sites and you know have Oh, a strategy to screen for patients in a way to enable us to enroll those 75 patients and have data preliminary data in 2021.
Okay, and any and maybe could it could could I jump in there sorry to interrupt there just to be clearly the study is an io naive patients not PD, one experienced patients ex us right.
Right.
And just real quick.
Well, we expect to see any yet to spoke.
Evaluations of patients coming out of the emerged study.
Yes, we are looking at to spoke for in baseline samples in the a emerged study as well as well as other predictive biomarkers, but that's obviously the one that where the most interested in right now.
HM Okay. Thank you.
You're welcome.
Hi, Good if you have a question at this time suppressed.
On your child.
Your next question comes from the line of it has from Raymond James Your line is same thing.
Good morning. This is the Neil on for Steve Thanks for taking my questions.
So.
Some checkpoint inhibitors are approved in a deal one expressing patients after showing greater benefits in those subpopulations, there's the those that do not express PD one.
Now that you have a biomarker opt to select for Michael Hi, what are your thoughts on targeting patients that are both PDL one and also helped biomarker for life was high.
Sure. So if you recall that kiss was originally developed as a predictive biomarker for PD. One inhibitors. So we do actually expect the data with Gtx 40, 14 in the select study to be potentially better than in unselected.
PD one naive second line sick second line non small cell lung cancer patient group, we will be looking at PDL, one scores at baseline as well in that study and so that should give us a good sense of how much overlap. There is the tis vote for a threshold that we've selected should.
Allow us to demonstrate or at least the trials designed to demonstrate the superiority of Oprah plus 40, 14 versus 40 14 alone, but you're you're asking a very important question. If that if the study is positive and we want to take this combination forward. It is very important for us to understand.
How it would compare to a PDL one selection criteria and so we will generate that data from this study, which will be very important to inform the deleverage element path forward. As we've said we believe this study would positions Oprah as really the combination partner of choice with the PD one inhibitor.
And is selected patient population, because we know that Oprah to date has not added any toxicity to the PD one inhibitors alone and therefore, it would be a very nice Io combination chemo free combination for patients in many different tumor types and rich you want it yeah, yeah, maybe just.
Adding a comment to that so the way to look at the biomarker tests both for a selection as you we expect the.
Enrichment for PD. One response has been says we need to look at that in link that to be on one stand in terms of the magnitude of that but we expect that within on top of that we've kind of built in this threshold for the icons high speed for ourselves attention. So we're kind of tuning.
On top of that just score for the combo and hence the randomized trial that will be doing which would be looking at just the PD. One and then the PD one plus Barbara So we think the nature of how the biomarker has been.
You don't be will be utilized you know fits perfectly with the concept of doing randomized trial.
Okay.
Thank you.
One follow up question.
You mentioned at approximately 20% of a second line non small cell lung cancer patients are estimated to be above the biomarker cut off and just to confirm does that number only play just second line patients or to the on non small cell like population as a whole.
So that's the data that that we actually have from Nanostring and it's specific to the second line PD, one naive non small cell lung cancer patients. So we're working with them to you know to understand the frequency and in other areas, but since that's the subject the patient population we're doing this.
Studying that was our first priority to understand the prevalence in that population.
Okay.
Sure.
You're welcome.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program you may now disconnect and has a good thing.
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