Q4 2019 Earnings Call

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Good day, everyone and welcome to the AARGM Bio Sciences fourth quarter and full year 2019 financial results. Today's call is being recorded at this time I would now like to turn the call over 2 million love to hear Chief financial Officer of idea.

Thank you operator, welcome and thank you to those of you joining us today to discuss <unk> fourth quarter and full year 2019 financial results.

With me this afternoon to discuss the financial results and to provide in general corporate update our Fred Schwarzenegger, Chief Executive Officer, Bruce Kite, Chief Scientific Officer, and Dan Chen Chief Medical Officer.

Before we begin please note that we will be making forward looking statements on this call, including statements about our Jim's plans expectations and for cash and about future events.

Actual results may differ materially as a result, the various risks and uncertainties, including those discussed in the Companys. Most recent annual report on form 10-K.

As well as its other filings with the FCC.

Any forward looking statements represent high G.M. spews as of today March 26, 2020, only and the company disclaims any obligation to update these statements except as required by law.

Following this call a replay will be available on the company's website, www dot hygiene and bio dot com.

With that I'll now turn the call over to Fred.

Thank you Ms. bar.

Good afternoon, everyone and thank you for joining us on this call to discuss our fourth quarter and full year 2019 financial results.

Obviously, the cobot 19 pandemic is at the forefront of everyone's thoughts and concerns at this time [laughter], we're very pleased and relieved to advise you that today, none of our Jim employees have reported that they have been infected.

However to reduce the risk that any such invecture infection would spread among the idea I'm team. We have adopted a general work from home policy pending further clarity.

Well, none of us can accurately assess the medium and long term impacts of the cobot 19 pandemic as of now we're hopeful that the impact on our current time lines will be modest.

Of course, if the current level of restrictions and limitations were to be expanded or continued for silver mines. We expect that we might start to see a greater impact on our timeline.

Fortunately as Mr. Bill will discuss we're in a strong position from a cash reserves perspective.

We have adequate cash to last us into 2022, and if the financial situation appears [laughter] concern. A later this year, we can take steps to extend that cash runway.

Notwithstanding the overhang of covert 19, we remain excited about the potential of our pipeline and we're eager to see the clinical results of the dose escalation portion of the phase one clinical trial Vijay I'm 23, 23, our cdtwenty by Cdthree T cell engaging antibody towards the end.

Under this year.

We continue to hope that idea I'm 23, 23 will prove to be a best in class antibody for the treatment of resistant in refractory non Hodgkin's lymphoma.

Dan will shortly provide an update as to the current status of that clinical trial.

We're also excited by the prospects for our Gen. Eight four for four or G.M.D.R. five agonist antibody, which we me believe may have application in the treatment of a broad range of cancer types.

As Bruce will discuss shortly we currently remain on track to file an I.M.D. for our Gen. Eight four for for this year and our preclinical gold toxicity profile and therapeutic index appear to be very encouraging.

Finally, as Bruce will describe we're excited about the prospects for RG M. 70, 354, our targeted aisle 15 immune cell stimulating that antibody, we expect to file an out of an I.M.D. for this product candidate.

Our next year.

So while these exciting product pipeline events are now coming that relatively rapid pace for IGPM.

They this progress has been made possible by a decade of dedicated creative and inventive effort focused on the engineering and enhancement and manufacturing to by Jim antibodies.

As a reminder, hi, Jim antibodies are one of the five classes of natural antibodies and you all have lots of our Jim antibodies in your body.

But I GM antibodies are the only antibody class with 10 binding units as compared with only two binding units for RG antibodies.

Nonetheless, all of the currently market, an antibody drugs or RG GE based we believed that the 10 binding units inherent in our Jim antibodies enable them to buying more strongly to sell surface targets relative to our Gigi antibodies also our Jim team has developed a unique.

By specific antibody format, which we believe may have certain safety and efficacy advantages in the treatment of cancer when compared to I Gigi antibodies.

At this point, it's my pleasure to turn the call over to Dan who will describe hygiene I'm 23, 23, and the current state of art clinical trial.

Thank you Fred.

So we're very happy to be in the clinic with our first high affinity high affinity engineered IDN T cell Engager and that of course is I'm 23, 23, Hi, Jim 23, 23 is a cdtwenty by Cdthree by specific hygiene M. antibody design for the treatment of patients with sea.

20 positive cancer, including non Hodgkin's lymphoma.

CD 20 is a protein commonly expressed on the surface of non hodgkin lymphoma cells as well as chronic lymphocytic leukemia cells and even.

Multiple myeloma cells, albeit at low levels.

CD three is a protein expression on the surface a T cells in our preclinical studies I am 23, 23 strongly bound to CD 20 positive cancer cells and demonstrated two distinct mechanisms to potently eliminate those cancer cells.

These are T cell dependent cytotoxicity and complement dependent cytotoxicity.

This cell, killing was even possible for cancer cells expressing very low levels of CD 20.

We also observed that the potent elimination of cancer cells by T cells with RG I'm 23, 23 occurred with very low levels of cytokine release relative to comparable IGBT cdtwenty by Cdthree antibiotics.

In non human Primate studies with a cdtwenty by Cdthree IGPM, we again observed very low levels of detectable cytokine release, and importantly, no observable safety findings. Despite elimination of all detectable CD 20 expressing cells in circulation.

And in tissue compartments.

So last October we announced the initiation of our first in human Phase one clinical trial of Biogen 23, 23 in relapse and refractory B cell lymphoma patients.

This trial is a multicenter open label trial intended to assess the safety pharmacokinetics and preliminary efficacy of intravenous RG I'm 23, 23 in patients with relapsed refractory b cell non Hodgkin's lymphoma.

Hi, Jim 23, 23 is being administered at a planned fixed dose as part of a dose escalation protocol.

Our initial six clinical trial sites are now open and they include city of Hope Sarah Cannon, MD Anderson, Fred Hutch, Honor health and Dana Farber.

We also hope and hope to open additional U S and X U.S. sensors later this year in preparation for our phase one expansion.

[noise], we've been able to readily dose escalate AARGM 23, 23 per our clinical trial protocol and we are currently recruiting to our 30 milligram dose, which happens to be the fourth dose cohort in the phase one.

Escalation has gone well to date and with no obvious signs.

Cytokine release syndrome.

This is consistent with what Weve observed with our Cdtwenty by Cdthree IDN in our non human Primate studies.

We look forward to gaining further characterization of the clinical performance of Biogen 23, 23 during dose escalation as the data from the Phase one study is collected analyzed and verified.

While we do not yet have experience.

While we have not yet experienced a significant slowdown in our phase one enrollment due to co bid 19.

We do recognize that this is possible.

That said our goal is to begin dosing at the 100 milligram dose by the summer and complete dose escalation by the end of the year.

We continue to target presentation of initial safety and efficacy data from this clinical trial at a future meeting such as the Ash 2020 cents.

At this point I will turn the call over to Bruce who will discuss I do you have made for four for NRG and 70 354.

Thank you Dan.

Hi, Jim 80, 444 isn't I G.M. antibody targeting death receptor number five.

This is which which is expressed on a broad range of solid tumors as well as on leukemias and lymphomas.

Windier five receptors are bound on the surface of itself.

They act to send a commit suicide or a pump tonic signal to the cell.

This intra cellular episodic signaling requires efficient cross linking of at least three D.R. five receptors on any given so on any given sell at that location.

No I T M with its 10 binding sites isn't especially appropriate format for an antibody to induce productive cross linking the or five receptors on cancer cells.

In preclinical studies RDR five ITM antibodies demonstrated significantly enhanced hey, pub tonic signaling compared to an high Gigi antibody with the same binding domains.

That resulted in greater than a thousand fold increase potency and killing cancer cells.

And this has been seen with multiple cancer types.

In addition to the encouraging signs of preclinical efficacy our current preclinical data for IGPM 8444 indicates that we have a very strong safety profile and an excellent therapeutic index of safety versus efficacy.

So we we are currently expecting to file an eye and D with the U.S.F.D.A. for I GM hate for for for this year.

Initially for the treatment of patients with solid tumors.

No I would also like to introduce hi, Jim 735 for our targeted immune stimulated stimulating I I, all 15 antibody, which we hope will have broad oncology applications.

This product candidate demonstrates another use of our novel Jay chain based by specific technology.

In this case the immune stimulating out 15 is attached to the J chain of an anti PD L. One specific ITM antibody, which serves to display the immune stimulating Io 15 on the surface of PDL, one positive cells such as cancer cells.

And our preclinical studies this target it off 15 create strong proliferation of CDH type T cells also called killer T cells, and natural killer cells or NK cells.

Both of these cells play important roles in the treatment of cancer.

We're currently expecting to follow 90 on this molecule 70 354 with the U.S.S.P.A. in 2021.

Now finally would we continue to make excellent progress with our manufacturing efforts. We've now completed a force GMP manufacturing run.

Hi, Jim 23, 23 with yields improving on each run.

In addition, weve manufactured enough ITM 23, 23 to meet our currently contemplated clinical trial needs for at least the next 12 months.

We also continue to make progress with yield and process improvements on our pipeline programs as part of the overall evolution and growth of our ITM antibody expression in manufacturing capabilities.

To that end, we're in the process of preparing to build out GMP manufacturing facility and I cite here in mountain view, California.

We expect to build out to begin once restrictions related to coded 19 are lifted.

Now I'll turn the call over to Mr. to review the financial results from this quarter and for the full year 2019.

Thank you Bruce.

In addition to the brief financial overview I will provide on the call today, you can read additional detail on our fourth quarter and year end financial result in our press release issued prior to this call and in our 10-K, which was filed with the SEC.

2019 was a very strong fundraising year Fry GM, we raised gross proceeds of $201 million in our initial public offering in September and gross proceeds of $102 million an hour series C. Private placement in June and July.

As a result, we are fortunate to be in a strong financial position with cash and investments totaling $236.6 million as of December 31 2019.

In the fourth quarter, our research and development expenses were $12.8 million for the full year 2019, R&D expenses were $35.3 million.

General and administrative expenses for the fourth quarter of 2019 were $3.2 million and $9.2 million for the full year 2019.

Our net loss for the fourth quarter of 2019 was $14.8 million or a loss of 49 cents per share.

For the full year 2019, our net loss was $43.1 million or a loss of $4, an 80 cents per share.

Turning now to the financial guidance for 2020, we will continue to invest in our R&D programs by the end of this year. Our goal is to generate initial data from our ongoing trial of I GM 23, 23 and to file in R&D for IGPM 844 for.

Also as Bruce noted, we will look to start the buildout of our mountain view GMP manufacturing facility.

As a result, we expect our full year 2020, non-GAAP operating expenses to be between 75 million and $85 million. This excludes estimated noncash stock based compensation expense approximately $8 million based on the recent trading range of our stock.

Including noncash stock based compensation expense, our 2020 GAAP operating expenses are expected to be between 83 million 93.

Yes.

We also expect to end 2020, with a balance of over $140 million in cash and investments providing hygiene with an expected cash runway into 2022.

With that I'll now turn the call back over to Fred.

Thank you Ms. huh.

I'd like to take a moment just briefly to thank the GM team for their excellent work I believe that they have established I, Jim as the global leaders in the research and development of engineered IGPM antibodies.

First in human application of our engineered I, Jim antibody technology, Hi, Jim 23, 23 is now smoothly dose escalating in our phase one clinical trial, our D.R. five antibody I GM 8444 is expected to follow into the clinic this year and our targeted I'll 15 immune.

Stimulating <unk> antibody.

Hi, Jim 70, 354 is expected to move into the clinic next year.

We believe that we're well positioned to begin to realize the potential of by Jim antibodies and possibly change the course of therapeutic antibody development.

We greatly appreciate your interest in I, Jim and we look forward to keeping you all informed as to our progress towards this mission.

With that operator, I'd like to open the call for questions.

It's asking question, you'll need to press star 100 telephone.

Good question Preston Keith Please standby compiled the gionee roster.

Our first question comes from Stephen Willey with Stifel. You May proceed with your question.

Yeah. Good afternoon, guys. Thanks for taking the questions and congratulations progress.

It was.

Maybe just a point of clarification so.

Are you going to commit to return to year end dose escalation.

Presentation.

Regardless of just whether or not some of the.

Oh, so the timing gets potentially delayed here in terms of your ability to ramp up additional cohorts.

Steve This is Fred I I would say that our current expectation is that we will update the market by the end of the year as to where we stand and on what Weve. What we've learned so far in this clinical trial I suppose we're in very uncertain times and that could change but that very.

As much as our intention.

Okay, and then maybe a question for other Danna Bruce.

Sounds like you're in the 30 Mig fixed dose cohort now can you maybe just talk about what that dose from Moeller equivalency perspective, the non human primates buys you in terms of in terms of B cell depletion.

Sure why don't I turn that that question over to Bruce since it's a preclinical question.

Right. So at at that point, Steve at the 30 make for Keurig equivalent and a in a monkey model. We had seen depletion of proliferate per [laughter] peripheral b cells in the normal peripheral b cells circulating in the monkey.

On the order of a 50% or more of those peripheral b cells had been depleted at that site and of course that functions in a sense as a biomarker the circulating b cells and the next question or the next.

Clinical question will be how how well that occurs on tumors of course.

Okay and then.

Just lastly, you talked about some of the other programs and the timing associated with those with respect to R&D filings. I know you guys have also talked about wanting to go after other tumor antigens on the bi specific front I think CD 123 Cdthirty eight.

Can you, maybe just talk a little bit about what's the cadence of.

Of those nexgen programs is and I guess.

How you know what is happening to 23 23 dictates the pace at which those things progressed through.

Various I'd, enabling studies thanks.

Sure well this spread I'll turn that question over to Bruce in a second but I guess I would say that at this point nothing that we've seen in 23 23 would indicate that we wouldn't want to push forward with 123 or three and 38 as quickly as possible. So we are.

Pushing those preclinical programs as fast as we can subject to current limitations of course, so Bruce you want to talk about this yes, Fred. Thank you I agree that we are moving as fast as as we can on both of those programs.

And they are they slated for an eye in d. in likely the year after the immune stimulating program or possibly that same here.

But right now the data looks very good in vitro and Nvvault and we're encouraged with the platform. So we're moving full steam ahead on both of those programs.

Bruce you might mention that.

They were seeing the same site type of cytokine release data on.

Preclinically on 123, and 38 that we saw on 20.

Absolutely Fred.

Yeah, as we're well aware we've described in great detail with the CD 20 program 23, 23, we get very strong efficacy without cytokine release in our preclinical studies, both in vitro and Nvvault.

And the both with CD 120, Threep program as well as the anti Cdthirty eight program. We see the same responses, we've seen strong a profound a a potent anti tumor cell killing.

Without the attendant cytokine release, so we're seeing really a confirmation of this safety advantage of the platform.

Great. Thanks for taking questions.

Your next question comes from Iron Man with Jefferies teammates.

And your question.

Hi, guys. Thanks for taking my questions and hope you guys just staying safe.

So maybe I just wanted to start with the two three to three program can you talk about your expectations on data later this year I know clearly, it's a fluid situation but.

If everything goes according to plan and you're not going and if you don't observe any dose limiting toxicity do you think we could see the thousand milligram dose being presented at ash or is it more likely the 100 and the 300 milligram doses that were going to see at ash. Thanks.

Thanks, Barry and for that question I'll take it at a topline and just say, we still hope that we're going to be through a thousand milligrams or by the time of ash, but at this point I'll I'll turn it over to Dan and he can go into more detail.

Yeah. Thanks, Karen for that question. So we are targeting being complete having jokes.

I am 23, 23 at the thousand milligram.

Dose level by the time of Ash 2020, now of course, a lot can happen between now and then.

In terms of our continued enrollment onto the study at the pace that we would like we would like it to go but we continue what we continue to see is we believed right now our ability is there to get through the thousand milligram cohort.

Whether we're able to do that and NASA head of Ash 2020 will ultimately determine whether data any data presented at a meeting like Ash 2020 includes the thousand milligram cohort you can imagine safety from thousand milligrams generally could come in very.

Quickly.

Whereas efficacy choirs follow up see imagine that we would have depending on when that cohort gets enrolled will determine what potentially as there for.

That that potential presentation.

Okay, and then maybe a question for Bruce you.

In your prepared remarks mentioned about the manufacturing yields for 23 23 in terms of the fourth manufacturing Ron can you just talk a little bit about the yield relative to the earlier ones onto three to three and.

And also the yield compared to high Gigi This fourth Ron and I think you mentioned that you have sufficient doses for the next 12 months are your assumptions based on you know those level at the thousand milligrams.

Or is it based on lower dose levels and I guess, what duration of dosing are you assuming in your assumption of of 12 months. Thanks.

Thank you Baron.

So let me let me go back to your first question and we've done for runs and Weve steadily improved and I don't see that we're going to stop doing that our yields get better and better roughly we've doubled the yield since our first run and that puts us in very good range of.

Other by specific IBG fees.

Those those types of programs don't typically have the yields of a standard IBG. So we'll be very much in the range.

And as we indicated will be improving all along.

No. The second half that question on the clinical supply in inventory and we did take a high level look at this where we intended to be.

Able to treat at a thousand milligrams and at least for.

10 to 12 doses.

I would like Dan you could comment on the duration, but I think we will be able to to handle.

Dosing in this.

Escalation and and even in the expansion trials with the currently available inventory.

Yes, and thanks, Bruce I.

I think that as we think about dose and schedule and duration of therapy for our gem 23, 23, I think we have to realize they're still not we don't know what that ultimate dose and schedule and duration of therapy will be and in fact, we built this program to enable the clinical data coming in from the trial.

To help us make those determinations, so not just dose, but so the actual scheduled let me take forward as wells, how long we treat with as a base case. The protocol was written to assume that.

That we would initially target dosing of up to.

About six months, but we also belts and provisions to both.

Back off on the frequency of that dosing and potentially also further adjust the duration of therapy. So a lot we'll have to depend on that data itself, but I think that I very much support what Bruce said, which is I think we have a clinical supply right now that is.

Well positioned to get us through this phase one.

Great. Thanks for taking my questions.

Thank you. Our next question comes from Ted Tenthoff with Piper, saying that you May proceed with your question.

Great. Thank you very much I'm thankful to hear that everybody is doing well and it's good to hear all of your voice is on the call today Hum.

Good I'm going to go kind of because some of the earlier states golf and I'm really excited about the 754 in terms of 15.

Great and then maybe characterize that a little bit curves are certainly seen some other approaches here. So how does have a GM format really work.

HM.

Simulators.

Maybe I'll ask Bruce to start and then we can go to Dan if there's no further follow up.

Right.

Thank you Dan sorry, Ted [laughter]. Thank you for the question Huh.

And and we're very excited about the I'll 15 immune stimulating I GM.

And of course, its first and foremost it's targeting a immune cells. We have a as a specific targeting of I'll 15 to PDL, one positive cells and we've demonstrated as on all of our programs, we're able to target a lower expressing cells.

With the idea I'm compared to the corresponding IBG, so that gets us to even though expressing PDL one positive tumor cells.

The next important thing is of course were displaying aisle 15 to incoming NK cells and C.D.A.T. cells.

And we get a not only the high ability of binding to PDL, one that we get a strong durable context dependent presentation of the I'll 15. So this is in a different type of by specific.

Immune cell engaging mechanism, where we have a durable stable platform to display aisle 15 on the surface of the of the tumor cell and what we've seen in our preclinical studies. So this is a a robust enhancer of local I'll 50.

In activity.

Oh interesting really cool approach.

And Dan do you want to offer some additional thoughts about the application of that.

Sure.

So as you can imagine we're very enthusiastic about our I O 15 by PDL one program.

I think we think that aisle 15 does offer some really interesting characteristics in terms of being in any in larger later.

Obviously in the clinic aisle 15 of the cytokine tends to be much safer and dosing Dan for example, the very closely related aisle to.

As a therapeutic.

Hi, All 15 also tends to really push a more of a memory phenotype in the T cells that respond to it and so we think these two characteristics together make it a really excellent.

Therapeutic for us to have in our pipeline for development and finally, I'm I'm a strong believer.

As Bruce had mentioned that the stability of the Isogen platform, both for binding to a target cells. So that it's not coming on and off.

And also the ability to present in context, so recall that aisle 15 in the human immune response is often presented to a t. So.

It's presented by generally things like myeloid cells like dendritic cells and so you can imagine when that I'll 15 signals presenting for that T cells, not only the T cell seeing the aisle 15, but they're seeing other molecules.

Possibly present on the surface of those cells and that's what we mean by context and so I think the I'm just last one really allows us to use that.

Yeah, I really like that program. One another quick question. If I may just in terms of scale in terms of the ability at the new facilities that you're planning how how large do you think or.

Well, that's it sold would be what will your scale be when that upper and fully running thing.

I'll ask Bruce to Ah that answer that question right right. Thanks, Ted we are looking forward at our as we call it building too.

Our manufacturing site.

We have put in plans to have two trains of production ending and a thousand leaders. So initially we'll build out the first train for 1000 leader by reactor and then coming on later will bring in the second.

By reactor.

At 1000 leaders.

Good uptick I can come up.

Thank you.

Thank you and as a reminder is asking question you need to press star one on until our next question comes from Michael Smith with Guggenheim. You May proceed with your question.

Hey, guys. Thanks for taking my questions and appreciate the comments on the Corona virus outbreak.

Maybe just a couple of follow up on ATM 23 23.

Maybe Dan or Bruce could you could you remind those at what dose level you would expect a clinical activity based on your animal data.

I'll turn that question over to Dan to start Dan you want to take that.

Thank you Michael so recall that for our Jim 23 23.

We used to be Cynomolgus monkey model to really mapped out all of our expectations around this this program and molecule and when by using that data, we set a mabel dose, which has minimally active biologic effect level. That's the first dose that we started to five high.

Andrew Microgram fixed dose and then we went all the way out to the plan dosing thousand a milligrams fixed dose.

So throughout that entire range, we observed biologic effect it just whereas.

Obviously, increasing with dose so when we set that minimal.

That may able dose at 500 micrograms that had a essentially reproducible, 20% decrease observable in this scenario for Cdtwenty expressing base metals.

And so we've observed across those preclinical studies activity throughout the entire does.

Yeah, Okay that is a relatively we believe a relatively simple.

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Biology to then try to translate into humans.

Got it and and you know as he as you can go through dose escalation with 23 23.

One of your thoughts are on the potential for initiating does expansion cohorts below a hypothetical MTV.

Should.

I should do not see toxicity by year end that is limiting.

Yes, so that's in the <unk> in the Phase one protocol for our Gem 23, 23, we actually built and the ability to expand at any of the dose levels clearly dose escalation is mostly set at three plus three but we think it may be important to also further define.

All of the parameters at any of that given dose levels. So we have the ability to do that at any point in time.

Once a given cohort is cleared.

Okay understood and then a clip sound that BRL five program.

You know with the study initiation Klein here the I knew filing can you help us understand.

You know.

What types of patients he will be enrolling in the phase. One study will this be all comers to while these little discord be enriched for patients that might be potentially.

Responsive to two IDR flies.

Dan do you want to talk about our strategy here for D.R. five clinical development.

Absolutely. So you know as you can imagine we're very excited about our I just made for four or program on multivalent, the our five agonist.

It's something that fourth on the clinical side, we've been preparing for for quite some time engaging with investigators and preparing to initiate the phase one study so that initial phase one study.

For April four for would be in all our solid tumors, we think that the biology for D.R. five agonism is very broad it extends from solid tumors into hematologic malignancies, and we don't think it's limited to any one particular subset of.

Okay, I mean cancers. So the phase one dose escalation would essentially be in all commerce solid tumors, we would add on hematologic malignancies after completing dose escalation.

And and we would not initially be selecting because we want to understand those early efficacy and safety signals in a very broad range of patients. Once we've completed dose escalation, we can certainly target expansions in a more discrete indications, but at this point in time based.

Not only on our preclinical data in our understanding biology, but also from the history of other D.R. five agonist in the clinic, we think that these types of molecules have the potential to generate on single agent and combination efficacy.

In in a very very broad range of cancer types.

Okay. My gut is well thanks for the for the information and congrats on the progress.

Thank you.

Thank you and I'm not saying questions at this time.

I'd like to turn the call over to French torture friends for further remarks.

Well. Thank you all for your support and interest in our Jim and thank you for joining us on todays call and we look forward to keeping you updated as to our progress.

Thank you ladies and gentlemen, this concludes todays conference call. Thank you for participating you may now disconnect.

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