Q3 2021 TRACON Pharmaceuticals Inc Earnings Call
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Good day, ladies and gentlemen, and welcome to Tracon Pharmaceuticals third quarter 2021 earnings conference call. At this time all callers are in a listen only mode. After the Speakers' prepared remarks, we will conduct a question and answer session and instructions will be given at that time during today's call, we will be making certain forward looking statements.
Including statements regarding expected timing of clinical trials and results regulatory activities future expenses and cash runway in our development plans and strategy. These statements are subject to various suites that are described in our filings made with the securities and exchange Commission, including our it.
Our report on Form 10-K for the year ended December 31st 2020, and subsequent quarterly reports on Form 10-Q, you are cautioned not to place undue reliance on these forward looking statements.
We disclaim any obligation to update such statements now I would like to turn the call over to Doctor Charles Dor, President and CEO of Tracon Pharmaceuticals, Dr. Tortola.
Good afternoon, and thank you for joining <unk> third quarter 2021 financial results and business update call.
I will begin with an update on our pipeline and then review our recent activities following that Scott Brown, Our Chief Financial Officer will review our financial results for the three and nine months ended September 32021. Finally, we will conclude by taking your questions.
I'd like to begin with details on our recent in licensed a Y H 001, a potential best in class CTO <unk> four antibody from <unk> Biopharma.
We have discussed for some time, our objective of adding another immuno oncology asset to our portfolio that complements and roll them out.
In October we accomplished this goal through a collaboration with the science driven company you care Biopharma headquartered in Beijing.
Significant advantage of this license has the potential for <unk> to market two separate in licensed immunotherapy assets as the treatment combination for sarcoma patients.
Therapeutic strategy is complementary to our ongoing and before my registration strategy in sarcoma.
And the start trial.
Notably we received a broad license for wide 001 to develop and commercialize in North America in sarcoma and in other indications, including microsatellite stable colorectal cancer renal cell carcinoma, and K Ras positive lung cancer.
And we can substitute any one of those indications for bladder cancer endometrial cancer or melanoma at our election.
In these non sarcoma indications white joser, one could be combined with existing standard of care agents, including marketed PD one antibodies.
Tracon are responsible for the cost of the clinical trials in these indications while you cure is response for the manufacturing and supplying whites here's your one for clinical trials.
We will use your royalties ranging from the mid twenty's to the mid double digits on net sales.
Except for the period through the first full calendar year commercialization during which the rates are reduced.
Based on preclinical data why is 001 as a utility for antibody with best in class potential.
And these preclinical experiments the antibody was more potent enacted the nephew luma mab at blocking <unk> four inhibition of <unk> 80, and <unk> 86 activity.
And at inducing T cell proliferation.
The FC portion of the antibody has been designed for superior antibody dependent cell mediated cytotoxicity compared to if he luma map.
Which may more effectively deplete regulatory T cells.
1001 also demonstrated superior anti tumor activity as a single agent and when combined with the PD, one antibody compared to your aluminum mab and <unk> mouse tumor models.
<unk> is currently dosing <unk> zero, one and two phase one trials one is a single agent and one in combination with a PD one antibody Tory Palo map.
For future presented data at <unk> and Cisco this year.
Notably as of the data cutoff of August night, the combination of wide 001, and Torrey Palomar had been well tolerated in 18 patients with advanced cancer dose with wide zeros are one up to two milligrams per kilogram every three weeks.
Dose escalation continues at this time to determine the recommended phase II dose of <unk> zero one.
To date, there have been no unexpected toxicities and the most common related adverse event has been grade one rash.
A single patient had a grade three related toxicity that of colitis that permitted with treatment.
Two patients demonstrated objective tumor responses, including one patient with bladder cancer, who had failed prior treatment with a PD one antibody.
Our initial development plan for wide Joser one is to study the drug in combination with <unk> in sarcoma early next year.
That trial is expected to also study a triplet that includes Dr. Route doxorubicin chemotherapy, which is the frontline standard of care treatment for soft tissue sarcoma.
While development in sarcoma is straightforward due to the lack of any approved Immunotherapies. We also see a path forward in other indications where there is clear evidence of activity with dual checkpoint inhibition.
For example.
The combination of Opdivo and your voice is approved for the first line treatment of intermediate and high risk patients with advanced renal cell carcinoma. However.
However, our discussions with key opinion leaders indicate that most patients receive frontline treatment with a PD, one antibody and veg F inhibitor, rather than with your boy.
Therefore, we believe the unmet need in advanced renal cell carcinoma patients is in the PD one refractory setting.
Data presented at Astro indicate that PD, one refractory patients can be re sensitize to immunotherapy and we expect to test Rideshare zero one in this line of treatment.
This strategy of second line dual checkpoint inhibition may be relevant for many tumor types, where PD. One directed treatment is given in combination with chemotherapy or VEGF inhibitor, but without your void in the first line setting.
Transitioning now to end before med, which remains our most important development program.
As a reminder, and before them Abbott as a potential best in class PD Lone checkpoint inhibitor given by rapid subcutaneous injection that confers a safety advantage by eliminating the risk of infusion reactions and may confer additional clinical benefit given it obviates treatment in an infusion center.
We continued to make good progress enrolling patients in the <unk> pivotal trial, we have now initiated 26 clinical sites and enrolled more than 50 patients into the trial. We continue to expect the availability of interim and <unk> efficacy data by the end of this year and a topline data release.
This initial DMC mandated interim efficacy analysis occurs following the second <unk> scan and the 36th enrolled patient.
That occurs 12 weeks after enrollment.
To allow for determination of the preliminary objective response rate.
We know from prior studies with checkpoint inhibitors in sarcoma that responses may take 20 or more weeks to develop including in the case of patients treated with the dual checkpoint inhibitors opdivo in your voice.
Our goal therefore is to overcome the futility bar that requires at least one objective response by blinded Central review in each cohort and to report at least a 10% objective response rate by blinded Central review across the two cohorts.
That the response rate is preliminary and will be based on a maximum of only two scans for many of the 36 patients analyzed.
As a reminder, the <unk> trial includes two cohorts of 80 patients. Each one cohort received single agent and performer and a second cohort received <unk> in combination with <unk>.
The primary endpoint in both cohorts is objective response rate by resist as confirmed by blinded independent Central review with duration of response being a key secondary endpoint.
And each cohort the demonstration of nine of 80 objective responses by blinded Central review or.
<unk> 11, 25% objective response rate.
Defines the level of response that satisfies the primary objective of this study.
Wishes to statistically exceed the 4% response rate of <unk>, the only approved treatment for refractory EPS in MFS.
Based on ongoing safety assessments, we also expect <unk> to have a superior safety profile compared to <unk>, a drug with a black box warning for severe and fatal capello toxicity.
We continue.
Can you to expect that at the interim efficacy data later this year is positive it would be the basis for submitting a request to the FDA for fast track designation or breakthrough therapy designation.
As Eva designation prevents a rolling BLA submission that would facilitate an earlier review of the BLA.
Looking forward, we anticipate the second interim efficacy efficacy assessment as well as the final response assessment in 2022.
And assuming positive data, we expect to submit a BLA for accelerated approval that if approved could allow for product launch in the U S. By the end of 2023.
As I have noted previously peak sales of <unk> reform in sarcoma could reach $1 billion across multiple sarcoma indications.
This sarcoma driven sales potential could be further enhanced by marketing why it's 001 as part of the treatment combination.
It is important to understand that the extent of the sales potential in sarcoma with NV full map at parity pricing is not just the forecasted initial $200 million and estimated potential revenues and EPS in MFS.
Combined sales could potentially exceed $1 billion vendor format, and <unk> zero, one broadly penetrate sarcoma in the frontline adjuvant and neo adjuvant settings.
In parallel our corporate partners III medicines, and Alpha <unk> oncology submitted end of a full map data from the completed pivotal trial in MSI high cancer in China as part of an NDA that was accepted for priority review by the MPA in January.
We believe as a format could be approved in China before year end.
In addition to <unk> zero, one our newly acquired asset we continue to expect Trc 102 to continue to advance through NCI sponsorship in lung cancer in combination with chemotherapy and radiation therapy.
We believe a randomized trial with chemo radiation with or without Trc 102, followed by <unk> maintenance is warranted in these patients and expect this constitute advanced for NCI funding consideration this year.
This would continue our close collaboration with the insight on the development of Trc wanted to whereby the NCI has funded five trials of this drug candidate.
The inside also continues to study the combination of tiers, who went on to with Temodar chemotherapy and reported data at the ACR NCI <unk> virtual International conference on molecular targets and cancer Therapeutics in October.
While we have reported on the activity of the combination of Temodar in tiers 202 in MGMT methylated patients with brain cancer and colorectal cancer.
The new NCI data reported encouraging data of the combination in lung cancer the disease not associated with MGMT methylation, notably tiers, we wanted to and Temodar was well tolerated in squamous histology lung cancer patients, who were heavily pretreated and refractory to immunotherapy.
The majority of patients derive clinical benefit including stable disease noted beyond 24 weeks and for 12 patients.
The authors concluded that Temodar in combination with Trc wanted to was a reasonable option for patients with limited second line options.
Our fourth clinical stage asset is the <unk> 73 antibody T. J fourth year nine that is being evaluated in an ongoing phase one dose escalation study as a single agent and in combination with the checkpoint inhibitor to centric.
As we've noted in the past in March 2020, I Mab issued a press release announcing a strategic partnership with kg bio <unk>.
Whereby <unk> received with the press release described as a right of first negotiation for exclusive rights to commercialize T. J fourth years in multiple Asian African and middle Eastern countries for up to $340 million in potential payments to imap.
We believe that based on the kg bio transaction Tracon is entitled to receive a payment under the TJ for 309 agreement. Although <unk> has disputed that this payment is due.
The dispute is being heard before in international Chamber of Commerce Arbitration Tribunal seeded in New York City and.
And we will be arbitrated under New York law with the hearing set for February 2022.
Pending resolution of the disputes on TJ fourth year, nine and the Bispecific antibody agreement, we continue to perform our obligations under the terms of both agreements.
From a business development perspective, we continue to leverage our CFO independent product development platform and U S commercialization expertise to at first or best in class drug candidates and pursue additional external clinical stage assets that would complement our now expanded pipeline.
Second generation immuno oncology targets continue to be of particular interest with the <unk> deal. We have now closed five deals using our platform that can enable rapid and high quality development of novel drug candidates.
We believe our platform is earn additional credibility as a compelling solution for companies, who wish to access the U S pharmaceutical market and retain a meaningful share of their products profitability.
Our capabilities have been recently profiled and unnecessary expense and Andy out to the $1 billion drug problem published by Forbes books that is available from Amazon and other retailers.
In July we raised approximately $13 4 million in net proceeds in an underwritten common stock offering with the capital raise we estimate our cash runway extends into 2023.
This provides us with a cash run rate for more than a year past interim <unk> efficacy data, which is expected by the end of this year and beyond the final <unk> data expected in 2022.
We expect that our enhanced balance sheet will increase the impact of important milestones and also provide capital to advance clinical trials of <unk> 001, as well as other new potential drug candidates, we may add to our pipeline.
At this time, Scott will provide an update on our financials.
Thank you Charles and good afternoon, everyone Tracon.
<unk> research and development expenses were $2 7 million and $8 1 million for the three and nine months ended September 32021, respectively, compared to $1 8 million and $6 million for the comparable periods of 2020.
Increase was related to enrollment in the pivotal <unk> trial in 2021.
General and administrative expenses were $4 2 million and $12 9 million for the three and nine months ended September 32021, respectively, compared to $2 1 million and $6 million for the comparable periods of 2020.
The increase was related to legal expenses for the now state Delaware case, an ongoing arbitration with imap.
Our net loss was $7 million and $21 million for the three and nine months ended September 32021, respectively, compared to 4 million and $12 5 million for the comparable periods of 2020.
Turning to the balance sheet at September 32021, our cash cash equivalents and investments totaled $29 9 million compared to $25 6 million and $36 1 million at June 32021, and December 31, 2020, respectively with.
With the net proceeds of $13 4 million raised in July we expect our current capital resources to be sufficient to fund our planned operations into 2023.
With that I will turn the call back over to Charles.
Thank you Scott to recap, we continue to execute our clinical development plan around our lead product candidate and before Mab and have made substantial progress advancing the pivotal <unk> trial we.
We expect to complete the first interim efficacy assessment and summarize the aggregate preliminary response rate prior to year end.
We also continue to leverage our unique product development platform and added the clinical stage and potential best in class utility for antibody wide 0012, our pipeline, including rights to develop and commercialize within before <unk> sarcoma as well as in multiple other cancer types in North America.
Our recent capital raise as expected fund the company into 2023, which is more than a year falling expected initial interim endosarc efficacy data and Paas expected final end Bossart data.
Which could demonstrate the potential for <unk> to rapidly transform the standard of care for refractory sarcoma patients.
We also continue to expect to leverage our unique product development platform and profit share deal structure to further enhance our pipeline to address unmet needs throughout through our ability to execute clinical trials at low cost.
And therefore avoid the unnecessary expense of zero conduct of clinical trials, we look forward to providing further updates in the coming months and remain confident that we have the right strategy in place to deliver on our development and business plans for the benefit of patients and shareholders.
For your time and attention and we are now available to answer your questions.
Thank you and ladies and gentlemen to ask a question simply press star one on your telephone.
To withdraw that question press the pound on a husky. Please standby, while we compile the Q&A roster.
Our first question is from Nick Abbott with Wells Fargo. Your line is open.
Hi, Thanks for taking my questions.
Well congratulations on the <unk> inhibitor.
First question is on the new trial.
Youre talking about so for the combination in sarcoma is that going to still be in.
Angiosarcoma, Sps and DDL ads.
Nick Thanks for the question and our thoughts are the following so we expect to initiate a trial combining <unk> with <unk> zero, one and with doxorubicin chemotherapy.
And once we determine that that combination is tolerable, we do expect to enroll multiple expanded cohorts, which could be considered the phase II portion of the phase one two trial.
As you mentioned that will include many of the subtypes you specified DDA virtual LIFO sarcoma. As one example, leiomyosarcoma would be another example, angiosarcoma and Aviv assault parts sarcoma would be another example, and then following completion of the end before the end of the Star trial, we also potentially can enroll UBS in MFS.
<unk> goal is to try to address these patients as early as possible, which is ideally in that first line settings and there are certain subtypes of sarcoma like UBS at MFS with dual checkpoint inhibition seems to be sufficient for significant activity, but there are other ones like leiomyosarcoma, where clearly we're going to have to add immunotherapy to a standard of care agent like <unk>.
<unk> therapy, and that's really the goal of this upcoming trial of Triple therapy.
Alright, Thanks, Alex I'll hop back in the queue.
Thank you Nick.
Our next question is from Maury Raycroft with Jefferies. Your question. Please.
Hi, everyone.
That's on the Opex this quarter and thanks for taking my questions.
<unk> trials for the <unk> arc interim I think I heard that youre expecting at least 10% aggregate overall response rate in this update.
Just clarifying this 10% is informed by the alliance style you resolved and if you can comment on.
Just what are your expectations are for the above or below that 10% I guess, what could the potential range be if youre commenting on that.
Hi, Brian Thanks for the question, Yes, I think if we look at precedent data.
Response rates in patients with EPS treated refractory setting with either single or dual checkpoint inhibition to have raised range between eight and 29%, but I would point out those are the final response rates. If you look carefully at those posters more you'll discern that the preliminary response rate over response rate. After just 12 weeks of therapy.
<unk> been significantly lower than that so.
Our goal remains to achieve the final response rates demonstrated in the alliance trial for example, but I'm, making clear also that we won't have final data at this interim analysis will have his data that includes 12 weeks of data on all the patients which is the six week scan and the 12 week scan.
And that it may be possible certain patients haven't had a formal response at that time.
So we feel that if we have a double digit response rate based on this preliminary response assessment that puts us in good shape, because as youll recall the actual primary endpoint of this study is to achieve an 11, two 5% response rate in either cohort in order to achieve the primary endpoint of the study.
Got it yeah that makes sense and but that 10% that's informed by the swimmers plot from alliance, where you can see some responses happen early but most of them happened later on.
It is more I would say if you look carefully at that alliance data.
That the response rate at 12 weeks was was actually lower than that it's interesting.
So again, we're hoping and expecting to see a double digit response rate, but if you actually look carefully those former plots.
In the especially dual checkpoint inhibition cohort each of the four responses. They had $4 2014, each of those actually took more than 12 weeks to develop and so that's why I think it's important to understand that this is a preliminary report that we will make and not the final data.
Okay, Okay and then.
I was wondering for the breakthrough therapy designation filing by year end are you going to break out the data.
When you when you submit that filing and I guess will it be the cut that you reported the interim or could there be some additional data that you included that breakthrough therapy filing.
Yes, our plan this year is to apply for the fast track or breakthrough designation based on the actual data, which we will carefully interrogate.
And as.
As I mentioned, the 36 patients having gone at least 12 weeks as mandated by the protocol as the DMC review, but if we were to submit an application, which again is our expectation. We ended the year either fast track breakthrough we would submit the totality of the data I think that would be the fairest way to inform the FDA about what we're seeing so.
You have enrolled more than 36 patients as I mentioned, we're well over 50 now.
Got it Okay, and maybe last question just with Eni.
<unk> licensing of <unk> one.
You've talked about pursuing.
Potentially pursuing additional indications with them with why Joe one.
I'm just wondering if you can talk about prioritization with one line sarcoma expansions with and VI.
Versus.
Pursuing additional opportunities with <unk>, and maybe talk about how that could impact expenses going forward.
Yes, no I appreciate the question.
I profile briefly we have right now to three indications outside sarcoma profile briefing renal cell carcinoma, which is our old friend from way back in and Pfizer days. When we were developing <unk>, which is one of our near and Dear assets to many of our Hearts here is many of US were part of <unk> team we.
We have a lot of connections that renal cell investigators.
Profile briefly I think there is still a significant unmet need for those patients.
Most of them are not getting a utility for frontline theyre getting PD, one plus of FGF inhibitor.
And then when they progressed on those therapies are actually very few approved therapies are actually that valuable what's approved on label as our single agent VEGF inhibitors. As an example, or a PD one inhibitor by itself, which you'd likely would not use and someone who's already failed PD, one plus <unk> frontline. So we really think thats, an unmet need after discussions with key.
Opinion leaders and Thats, a place for us to potentially develop <unk> 001, with the with the approved therapy, a PD one or <unk> for both.
And in terms of expenses that would be a phase one study with expanded cohort of patients moving into phase III.
And in our budgets remain very low and lower than I think any other company in the industry given our CFO independents. So were generally budgeting about $100000 to run a trial so for us to run a 20 patient phase one trial, which takes about eight quarters.
You can do the math the burn is incremental and almost not material to our to our bottom line. So that continues to be the.
The key I would say special sauce of Tracon that we continue to leverage to develop a pipeline and to deliver data at much lower cost than most companies that our CFO beholden.
Okay. That's helpful. Thanks for taking my questions.
It was a pleasure.
Thank you our next question.
Ed White with H C Wainwright.
Good afternoon, and thanks for taking my questions.
Just on 001.
What else do you have to do to file an IND do you have to run any preclinical studies or are you pretty much set to go to.
Have to gather the information to file for the <unk>.
So there will be an endometrial cancer.
Yeah.
Yeah.
Okay. Thank you.
Thank you Ed.
And thank you as a reminder, if you have a question.
Star one to get in the queue.
Our next question is from Bert Hazlett with <unk>.
Thank you and thank you for taking the question just one line of Maurice question I, just want to make sure.
Understanding this.
As well, so Charles Youre, basically, saying that the successful or for the end of the studies.
80 or 11 five.
Percent response rate for either arm, but we really shouldn't be expecting anything quite that robust now simply because the patients have only have 12 weeks' worth of scans is that saying it the way you made it maybe slightly differently.
Yes, I think that's a good way to said I think we would be happy if we see a double digit response rates for.
Two reasons one is that its already.
At or exceeds the goal of the study, which is 11, 5% response rate and second of all it would be preliminary and has the potential to grow. So I think that's that's how we look at it.
Okay.
And then and then how much detail, we actually going to see out of this look we're going to get this level of data in terms of response rates.
Get Cigna.
Here at the end of it is that it has been a very well tolerated PD, one slash PDL when therapy.
Based on data from our partners for instance, in there and they are pivotal trial MSI high cancer. They had a response rate that was on par with both opdivo and your volume that cancer indication yet they had no cases of colitis or pneumonitis of the grade III severity.
At all so I thought that was a very encouraging side effect profile.
We have to further study whites heroes, you'll want to identify its side effect profile, but if <unk> well tolerated and why it shows you want as well tolerated it could be the combination is better tolerated than opdivo in your voice.
Clearly experiment, we have to do I would say the existing data with whites here and one in the PD, one antibody tore palmar of support.
Very favorable side effect profile that said, it's still in dose escalation. So there's a lot more data that needs to be seen.
But I think we are very encouraged by the combinations potential.
I also think Burt that using it in the refractory setting could be the spot to really use a dual points dual checkpoint inhibitory strategy.
Other companies have really focused.
In many cases in the frontline setting.
I think if you talk to communities physicians and they are talking about frontline setting they want a therapy that.
May may emphasize tolerability, a little bit more in the frontline setting than seeing the refractory setting once you get into refractory setting and you're talking to a patient that has really very poor treatment options. I do think physicians are more likely to say, we'll we'll take a little bit more of a.
Ah less benign side effect profile, because the option otherwise it's just.
Therapy that has very limited activity and Billy your dosing to the patient without very very little hope frankly, a response. So I think to answer your question <unk> whenever could be better tolerated and second of all I think targeted to refractory setting could make it a much more ideal positioning compared to other to a checkpoint inhibitor.
<unk>.
Got it. Thank you very much look forward to the data coming in and the combination David down the wrong. Thanks.
Thank you for it.
Thank you, Sir and am not showing any haggett questions in the queue.
Thank you very much appreciate your questions and we look forward to updating you.
At the end of the year have a great day.
Thank you, ladies and gentlemen for participating in today's call you may now disconnect.
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