Q1 2018 Earnings Call
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like to turn the conference over to your host Ben <unk>.
Mr. <unk> you may begin.
Thank you operator, good afternoon, everyone and thank you for joining US today. This call is also being webcast live on our website.
<unk> got a novo dot com and a replay will be available as indicated in our press release.
As a reminder, we will be making forward looking statements. During this call that relate to our business, which include our plans to develop our aspire immunotherapy platform in combination with our proprietary selected delivery devices as well as our capital resources, all of which involve certain assumptions risks and uncertainties and could cause.
Actual results to differ materially from these statements. These.
These statements are based on the beliefs and expectations of management as of today.
Our actual results may differ materially from our expectations investors should read carefully the risks and uncertainties described in today's press release as well as the risk factors included in our filings with the SEC.
We assume no obligation to revise or update forward looking statements, whether as a result of new information future events or otherwise.
Joining us on the call from <unk> are Dr. Joseph Kim President and CEO , and Peter Keyes, Chief Financial Officer, I would now like to turn the call over to <unk>, President and CEO , Dr. Joseph <unk>.
Thank you Ben and thank you for everyone for joining us.
And our first quarter of 2018 earnings conference call.
<unk> remains focused on becoming the leader for treating all major HPV caused diseases from pre cancers to cancers.
And nobody is evaluating vgs 3100.
In a phase III trial, treating cervical pre cancer as well as a phase II trial for HPV caused bolivar pre cancer.
And HPV caused head and neck cancer is being targeted in a phase II trial conducted by medimmune with <unk> zero $45, seven which stems from our out licensing deal that we announced back in 2015.
There are plans to add phase III study for treating anal dysplasia, two our HPV treatment platform in 2018 continued to highlight and complement both the versatility and capability.
The aspire technology platform as it relates to treating HPV caused diseases.
We began this year by amending our collaboration agreement with Apollo Bio, which we later closed in March providing Apollo bio with exclusive rights to develop manufacture and commercialize <unk> 3100 to treat pre cancers caused by HPV within <unk>.
China.
<unk> received an upfront payment of $23 million.
Minus Chinese government taxes and.
We remain entitled to receive potential future milestone payments of up to $20 million.
As well as to receive double digit tiered royalty payments on sales.
The agreement with Apollo Bio is a significant advancement for our company as <unk> continues to identify opportunities that expand and strengthen our efforts to develop VEGF 3100 globally.
And just as importantly as HPV.
<unk> remains the most common sexually transmitted infection in the oral and the <unk>.
Main cause of cervical cancer, which kills more than 270 <unk>.
Women every year worldwide.
This is very important.
The agreement also will also help broaden awareness globally on all HPV related diseases.
So looking ahead in terms of next steps with Apollo bio <unk> will rely on the Apollo <unk> expertise and working with the Chinese regulatory agencies, while we will remain focused on patient and equipment within the U S and ex China for our trials while providing.
Global data to help accelerate Apollo <unk> work with the goal that Apollo biochem potentially complement international of equipment for the ongoing reveal phase III studies.
Our overall, China commercialization efforts.
Speaking of reveal trials.
As of today, we have roughly 60 sites open and recruiting patients for reveal one evenly split within the U S and internationally.
And the enrollment rate remains on track.
As a refresher the reveal one study is a two to one randomized double blinded placebo controlled phase III trial designed to evaluate <unk> 3100 for the treatment of high grade cervical dysplasia caused by HPV 16, or 18 subtypes, where the primary endpoints.
A regression of high grade cervical lesions.
Dan clearance of HPV, 16, or 18 virus in the cervix.
Similar to our phase II study design, we will when we will have a study follow up through week 88 <unk>.
Reveal two which we expect the enrollment to initiate in late <unk> or early 2019, we will have the same criteria and design as we reveal one with the only exception being a study follow up through week 40, instead of week 88.
As we discussed.
We have indicated previously our goal is to have both studies to read out in 2020 one.
While we do not comment on specific patient accrual numbers during this process.
Confidently state that our trial is on track and we have a world class team dedicated to execute the study as efficiently and effectively as possible.
In addition to our phase III study for training cervical dysplasia, and our phase III study for training involve our dysplasia. We recently opened a phase II study for treating HPV caused anal pre cancers in both men and women to provide you with some context.
Dysplasia, if left untreated may progress to cancer and is estimated that there will be over 8500, new annual cancer cases diagnosed this year in 2018 and approximately 11 100 persons will die of this cancer in the U S.
Our immunotherapy aims to address an unmet medical need for anal dysplasia, but providing a non surgical immunotherapy and thus avoiding the unwanted effects of surgery.
The other potential benefit is that the response to <unk> 3100 systematic systemic.
And may clear the underlying HPV infection, which is the root cause of the disease.
Accordingly, there is the potential to reduce the risk of recurrence of anal dysplasia.
<unk> on track to begin enrollment for the phase II study in pain.
<unk> second quarter this year.
Turning now to our immuno oncology programs.
I'll begin with an update on our collaborations with Astrazeneca medimmune.
In December maybe zero 457 in combination with <unk> to fund the mab to revise I'll call. It from here events to the phase II efficacy phase of the trial, triggering a milestone payment to <unk>.
Medimmune is evaluating many 0457 in combination with Dover, It's approved PD lone checkpoint inhibitor in patients.
Recurrent metastatic HPV associated head and neck cancers in a clinical trial with an estimated total enrollment of 50 patients and there will be a poster presentation at this year's ASKO on this study as well as the poster.
Phase one monotherapy study of <unk> 0457 in the cervical cancer setting.
In addition, we.
We are very pleased to report that medimmune is expanding the testing of Med D 0457.
Combination therapy to other cancers associated with HPV infection in a separate phase III clinical study Medimmune has recently posted on the clinic trials that dove.
This plan to test this combination therapy in a separate open label Phase II study in patients with multiple recurrent metastatic HPV associated cancers, including cervical anal penile and vulvar and vaginal cancers.
This trial, which is being sponsored by and conducted at MD Anderson Cancer Center is designed to test the efficacy and safety of this combination therapy and cancer related to HBV, which CVC space roughly 40000, new cases of cancer are found in these parts of the body and little over.
Our 31000 of these cancers are caused by HPV infection.
While we will not be providing any updates from many on the enrollment and potential milestones associated with this trial at the <unk> at this time.
We do anticipate the trial to begin in the second quarter and we will provide an update after the study has officially begun enrollment.
Moving now to our bladder cancer program, which is being running combination of Roche Genentech's PD lone inhibitor.
Lithium mab.
Call. It <unk> from here, we have also posted the phase II study design on current trials Dot Gov in April .
And we plan to open roughly 25 sites in the U S and Spain.
Primary endpoints of this phase II study will be all.
<unk>.
T cell immune responses and safety.
We're on schedule to begin enrollment in the second quarter and we should have interim phase two readouts by 2019.
For our other combination checkpoint inhibitor trial.
With iron ore 50, 401, we also posted the phase II trial design for our GBM study that involves INR 50, 401 in combination with Regeneron PD, one checkpoint inhibitor set a preliminary <unk> or semi just to provide some.
Context in terms of when we can expect data readout from this study the patient setting our newly diagnosed GBM patients, meaning these patients have little to no residual tumor and <unk>, providing the alternative to standard of care, which is chemo or radiation we expect.
To fully enroll approximately 50 patients by June of 19, our preferred this because this is an open label study and we control the data readout and we believe that we could see and provide an interim readouts before being fully enrolled.
We anticipate this trial to begin enrollment in the second quarter as well and we also plan to open a total of 25 sites.
Before I move to the infectious disease business.
I also wanted to provide just a brief update on our prostate cancer program.
We're looking forward to sharing updated data.
For INR 50, 154 trading Biochemically relapsed prostate cancer at this year's ESCO as the poster session.
Looking ahead in 2018, we do anticipate further presentations analyses presented at other cancer conferences later this year and we're targeting a publication before year end.
So more to come as it pertains to the advancement of INR $51 50 for prostate.
Which we plan to do with a partnership but.
But I think youll find expanded publication at ESCO.
Real interest.
Speaking of presentations and publications, we expect to publish our positive phase one data from our Ebola HIV and merge studies in 2018.
All of these in all of these studies, we have consistently demonstrated over 90% immune response rates across.
These trials, while maintaining a favorable safety profile.
Moreover, our clinical presentation on our <unk> HIV vaccine phase one study has been selected as a primary presentation at the annual HIV vaccine trials Network Conference next week, so more to come.
Continuing the theme of our infectious disease focused business, we're thrilled with our recently announced partnership with the coalition for epidemic preparedness innovations, where SEBI as we focused on developing vaccine candidates.
Against Lassa fever.
And middle East respiratory syndrome or Mers.
<unk> will fund up to $56 million.
Over five years to support the advancements of these infectious disease targets through the end of Phase II studies.
As stated in our release back in April .
Share goal of Inova, and <unk> for Lassa, and merchandise seems to be available as soon as possible for emergency use.
As as CEO , Richard Hatchett of Cepheid Elegantly stated epidemics stolen respect borders they destroy lives and devastated economy.
<unk> partnership demonstrates the confidence of both the organization and our aspire DNA vaccine platform to rapidly produce countermeasures against emerging viral threats.
And then protecting large population from potential pandemic.
As we have conveyed previously a key demonstration of such capabilities was that we were the first organization in the world to develop manufacture and report positive human data from a zika vaccine in less than seven months when traditional vaccine can normally takes several years.
To reach this point.
You should expect to hear more on new data, new funding presentations and publications from Innovia advancement of infectious disease vaccines. This year.
More specifically on Zika.
Wait the completion of study in hematologic visits by early third quarter, and we are targeting a study completion and data report on our 160 person, Puerto Rico Zika vaccine study in the fourth quarter.
With that I'd like to turn the call over to our CFO , Peter Keith who will discuss our first quarter financials theater.
Thanks, Joseph and good afternoon, everyone.
Total revenue for the first quarter was $1 5 million for the three months ended March 31, 2018, compared to $10 4 million for the same period in 2017.
The decrease in comparable revenue for the first quarter compared to a year ago was primarily due to the revenue recognized from the termination payment received from Roche during the first quarter 2017 of.
A $4 million.
The decrease was also due to a decrease in grant funding recognized from our DARPA Ebola grant of $4 7 million.
This was partially offset by an increase in grant funding recognized from our Zika virus virus sub grant of $1 2 million.
As a result of the adoption of the accounting standards update number 201 for Dash zero nine revenue from contracts with customers beginning in January 2018, all contributions received from current ground agreements have been recorded as a contra expense.
As opposed to revenue on the consolidated statement of operations.
For the three months ended March 31, 2018, $2 2 million was recorded as a contra research and development expense.
Which would have been classified as revenue in the prior year.
Had this change in presentation not occurred.
Total revenue would have been $3 7 million for the three months ended March 31 2018.
Compared to $10 4 million for the same period in 2017. Additionally.
Additionally, operating expenses would have been $336 5 million compared to $32 3 million for the period.
For the prior year period.
Net loss attributed to common.
Stockholders for the quarter ended March 31, 2018 was $32 4 million or <unk> 36 cents per share on a basic.
Sure basis.
Compared to $23 1 million or <unk> 31 per share for the quarter ended March 31 2017.
Research and development expenses for the three months ended March 31, 2018 were $24 6 million.
Compared to $24 5 million for the same period in 2017.
The increase in R&D expense was primarily related to our <unk> 3100 clinical trials.
Activities under our collaborative collaboration with Medimmune.
And an increase in employee head count to support our R&D and clinical trial activities.
These increases were offset by the $2 2 million Contra.
Research and development expense recorded from the grant agreements as previously discussed.
As well as a decrease in expenses related to the DARPA Ebola ground.
As it nears completion.
General and administrative expenses were $9 7 million for the three months ended March 31, 2018 versus $7 8 million for the same period in 2018, I mean 2017, the increase in G&A expenses was primarily related to the Chinese VAT taxes.
<unk> and advisory fees in connection incurred in connection with the Apollo bile upfront payment we received.
This was offset by a decrease in noncash stock based compensation.
Providing more light on the Apollo upfront payments, although we received the cash during the last week of March we did not recognize the revenue during the first quarter, we expect revenue recognition to occur in subsequent quarters.
Finally, cash and cash equivalents and short term investments were 102.
<unk> 8 million compared to 127 4 million as of December 31, two.
<unk> 2017.
With that I'll turn it back to you Joseph Thanks, Alright, Thanks Peter.
As you can see our financial position is on solid ground.
Before we open the lines for Q&A, it's important to recognize both what we have accomplished during the first quarter and where we are positioning ourselves to deliver and execute over the next 12 to 18 months.
We're extremely pleased with our latest partnerships that have enabled us to form both a global presence and market awareness towards the adaptability of our aspire platform, while providing non dilutive funding that continues to fuel our very prolific R&D programs to bring novel.
<unk> therapies to clinic.
Second our latest accomplishments further validate our robust aspire immunotherapy technology, while combining the DNA immunotherapy with our wholly owned select trial delivery devices on targeting both pre cancers and cancers in phase III and multiple phase II studies.
Long with emerging infectious disease vaccine demonstration.
Demonstration of the value of such platform and pipeline. We believe will continue in the forms of more clinical data.
Partnerships and non dilutive funding in the coming quarters as I mentioned before we have a broad set of catalysts over the next 12 to 18 months that we're very excited about at <unk>.
And I feel we have positioned ourselves appropriately appropriately to be the global leader leader for treating all major HPV related diseases.
And now I'll look forward to taking your questions and discussing our progress in greater depth. Operator. Please open the line for questions.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
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Our first question comes from the line of Greg <unk> from RBC. Please proceed with your question.
Hey, guys. Thanks for taking my question and congrats on the progress.
Thank you Greg.
I just wanted to start more nearer term with respect to ask you. Just you mentioned 50, 150 and others just wanted to get a sense of what we could be looking for.
With regards to some of the titles that have been posted that are certainly relevant to you and <unk>.
Yes, so we have two posters, along with medimmune and <unk> 0457.
One is a phase one study monotherapy that we did in cervical cancer, so there'll be a new dataset.
We're presenting which shows.
<unk> an immune responses in this cancer population second.
Medimmune and <unk> phase III trial early design.
So they are both relevant to <unk> zero for five 7% our third poster at ESCO is a more complete set.
Strong immune data from our prostate cancer 50 115.
With some of the.
The early signals of efficacy from this study so we're very excited about those three poster presentations.
And.
Because of the embargo I don't want to say anymore, but.
We look forward to following up post <unk>.
That helps thank you and then just turning to reveal one and I certainly recognize that.
<unk> indicated not to give sort of a play by play as far as how that is progressing but I just wanted to get your thoughts on the pacing as I recall back in March I think some of the sites were maybe 50 U S and 10.
Ex U S Im seeing.
The split of perhaps 60, I think is what you've recently.
So just indicated globally. So just wanted to get a sense of how that.
How that pacing has progressed in the more recent past and how you see that perhaps are replicating or or certainly amplifying out thereafter to get to your ultimate goal of full capacity.
Yes.
Thank you early in the year.
Last year, we at the beginning of the study restarted.
Really with the U S sites first and then stop.
To add on the ex U S sites.
And it's a dynamic.
Situation, where at the sites.
Producing more performing.
As we have in our internal metrics.
To close them down so we don't maintain the nonperforming sites. So.
So there's two dynamic force of adding additional <unk>.
U S sites.
In Europe and Asia as.
As well as <unk>.
Optimizing the sites in the U S.
Got it thanks, and then just more Holistically, what do you see as the biggest risk or risks to two.
Delivering this a successful study here both on time and with the successful outcome of killing.
Murray.
So.
You're referring to reveal one and two.
The biggest risk is.
Not recruiting SaaS.
Time.
The design is very much similar to the phase II B study, which we have successfully met all of the efficacy and safety endpoints. So I feel very confident in terms of.
The product is going to perform.
And the studies are designed so our team is really focused on executing opening up the sites right.
Regions right size.
And just cranking out the enrollment so.
And obviously.
And when you add.
Ex U S sites and the potential upside of that in China.
Through our partnership with Apollo those are exciting work so.
I think.
We see those as positive opportunities.
That can perhaps accelerate and add to our efforts that we didn't have before.
Last year or even earlier so.
We're obviously managing all the potential risks while adding.
A lot more upsides.
Paula <unk> relationship is beyond just cash in.
Our ability to access 1 billion people or or a huge market in terms of.
Ah trials accruing patients as well as.
And potential commercialization market going forward.
Got it that's helpful and just one more for me and I'll hop back into the queue just noticed.
As I mentioned in the press release about the engineers therapeutics are wholly owned subsidiary I'm. Just curious if you could drill down a little bit on that about your overall plans how to think about that as an entity and what can instead expected in terms of timing, but also some of the potential product and technical candidates under that under that roof. Thank you.
Yes, Thanks, Greg.
We disclosed that we have set up this subsidiary in previous calls.
And previous filings, where we are doing as well.
Setting aside the neo antigen.
Which are new cancer antigens that each patient generate as his or her cancer proliferates in and Mutates.
Personalized medicine approach so each product is actually for a specific patient so.
We recognized a while back that <unk> <unk>.
Base immunotherapy platform may be the only appropriate or only a few one of few appropriate platform to address that in a commercially and clinically positive way, so and because this business model is.
Disparate from our current model of points.
For instance, iron ore 50, 401 off the shelf antigens three antigens combined that can treat all patients.
We decided to carve out this exciting opportunity as a separate entity.
While keeping the upside economic and ownership upside of.
This new entity so.
We are in the process of raising a separate investor capital dedicated to promoting and advancing <unk> personalized neo antigen cancer vaccines.
And we will disclose to the public as.
More information is available we expect to close.
The series a funding round in 2018 and separately, we will be building out the company to appropriately execute on those strategies. So please stay tuned for more information I don't have any other publicly available information to add but I think this is another exciting way.
<unk> of monetizing for <unk> shareholders, and a Max more way.
And going after these exciting opportunities without expanding <unk> internal resources as much as possible. So I see this is keeping the upside without expanding.
The resources. So I see this is extremely positive.
Bensman, but we'll keep.
More.
Apprise us as we advance these programs further.
Thanks Joseph.
Thank you.
Our next call comes from the line of Alex Schwartz from Stifel. Please proceed with your question.
Hi, Joseph and team congrats on the progress.
Few questions. Thank you.
I see.
The phase III annual dysplasia trials posted in clinical trials Brightcove.
Some of the Kols.
Kind of believe that the highest unmet need maybe here maybe from your perspective.
What are the key elements of the trial design and then in addition, I see the primary endpoint is at 36 weeks.
Do you have a sense of.
Will you able will you be able to look at interim data.
And when might we see initial data from this trial.
So last part of the answer question first yes. There is the open label trial, So we'll be able to track the progress.
Near real time.
We have an early look now.
Analysis, so we expect to have.
Some early efficacy data.
In 2019.
As I said, though it's an open label study.
And we do agree we certainly agree wholeheartedly about annual neoplasia of being a huge unmet medical need.
He used to be the president of Merck vaccine 10 o'clock, then who's on Rspb and Jeremy Farrar, who was head of the Wellcome Trust. Those three gentlemen wrote a piece in the New England Journal Medicine is 2016 really as a call to arms for for doing better and.
Global health threats, new epidemics after the experience with Ebola and Zika another.
Other events.
As a society, we should have enough resources to.
To develop pre made vaccines against known unknowns that usually keeps the global health experts up at night.
So.
Their money, where their mouth is meeting the some of the top organizations Gates Foundation will contrast.
As well as several world governments of Norway, Japan, Germany, India, and counting have put together a fund and created an organization called Seppi to this first piece funds. So that had an open call and their RFP or their proposal Davis.
Cited the first three targets of known unknowns threat that can kill millions of people in the future merce lots of fever and nipper.
So.
Coincidentally had preclinical programs already existing with great data as I said against Merson Lhasa in fact, we have human clinical data from Merce vaccine in the US study that I mentioned earlier.
So.
It became a perfect fit.
Between <unk> and <unk> and and I think this is a great organization.
That will fund our programs as well as others that.
And you'll hear much more about efforts by Seppi and these other global funding organizations that.
That can really promote.
Putting the 21st century vaccine technology against these global threat. So.
Really happy and honor to be part of this.
Okay, well, thank you for additional color and congrats on the progress.
Thank you.
Our next question comes from the line of each and from Hte room right and company. Please proceed with your question.
Thank you for <unk>.
Alright.
Oh My first question is now that opponent has finished.
Close the licensing deal.
<unk> provided view.
Caller regarding the development development timeframe, Vjax city, 100%, China and.
Also.
Specifically.
For the potential, including China aimed via global trauma global figure III.
What timeframe can we.
And can we expect some updates on that front.
The updates later.
And what I can tell you is we already had the kickoff meeting last month.
And we have a very extensive.
Collaboration joint development meeting so.
It's a very.
Coordinated effort between the two groups.
And.
Obviously, they're all in and we're very happy to to.
To have them support and really carry the ball in China as far as the.
Their impact China, China has impact on our reveal trials.
I think I mentioned this before in previous calls the.
The reveal one and two trains are going to go.
We're not gonna wait for China to hop on but we're hopeful that as the train progresses.
There will be able to hop on and really accelerate the pace of the train but.
Goal is to have China become one of our.
Sites and country and sites.
For our current phase III study.
But we're not going to wait two two for that so we are working very hard to coordinate so that they can hop on without us.
Slowing down so otherwise.
Obviously, the China development plan can be independent of the reveal studies that we have ongoing so.
We're still at the early stage and we're working very closely with pillow by a team.
In concert to to make this happen.
Okay. Thank you and my second question is.
450.
54 O one to 2612 a trials.
Atlanta cancer and brain cancer, if you reported positive results from these two trials scene.
2019.
And they'll be able to proceed with the following cities to be 12 or is there any possibility event.
June Tech and the Regeneron could take over for you.
Development.
So.
Quick answer is we could have partners.
Work with us.
Remember, but.
Really depends on the data and obviously, assuming the positive efficacy readout scenario.
And I think the.
The possibility is unlimited so because.
Just to remind everyone I know 54, one would only be potentially effective against GBM and bladder. If we can demonstrate that in those two ends of the spectrum of immune response of cancers.
And agenda H W. Q on an PSA may are expressed in multiple other cancer types.
So we would look to develop this against colorectal cancer breast cancer lung cancer to name a few.
Along with bladder and GBM, so we could have potential partnerships with regeneron genentech.
Or merck or BMS for that matter. So so really we have positioned the studies to be able to give us those upsize inflexibilities Wow working with some of the top partners thug Regeneron in Genentech.