Q3 2024 Iovance Biotherapeutics Inc Earnings Call
Okay.
Smaghi: Thank you for standby mining Smaghi and I'll be your operator today.
Speaker Change: I'd like to welcome everyone to the I've been third quarter 'twenty 'twenty four result financial results call.
Sara: Now, let me turn the call over to Sara.
Sara: Thank you operator, good afternoon, and thank you for joining our conference call and webcast to discuss our third quarter and year to date 2024 financial results as well as recent corporate and development program update.
Speaker Change: Doctor friend, though our interim Chief Executive Officer, and President, who will provide an introduction and summarized the latest progress with our U S. Commercial launch of Amtrust me, including revenue and revenue guidance patient demand and market access and update on our global regulatory submission at a high level summary of our key pipeline.
Speaker Change: Dr. Bryan Johnson, our executive Vice President Medical Affairs, well highlight adoption and demand authorized treatment center or <unk>.
Speaker Change: As our community outreach initiatives to drive additional growth for the U S commercial launch of Ams Caribbean and advanced melanoma.
Speaker Change: Doctor in garbled Whiskey, our Chief operating officer, who will cover our commercial manufacturing experience and the status of our ongoing capacity expansion.
Speaker Change: John Mark Benjamin our Chief Financial Officer will review, our financial results, including revenue and revenue guidance gross margin and the spin.
Speaker Change: Our balance sheet.
Speaker Change: And Dr. Robert Kraft Finkelstein, our Chief Medical Officer will review key pipeline highlight including recent updates related to our clinical program in front line non small cell lung cancer.
Speaker Change: Dr Raj Perry, our EVP of regulatory Affairs, and Anne <unk> Senior Vice President commercial are also on the call and available for the Q&A session.
Speaker Change: Earlier. This afternoon, we issued a press release that can be found on our corporate website.
Speaker Change: Dot com.
Speaker Change: Before we start I would like to remind everyone that statements made during this conference call will include forward looking statements regarding <unk> goals business focus business plans in transaction revenue and revenue guidance commercial activities clinical trials and results regulatory approvals and interaction.
Speaker Change: Landon strategies research and preclinical activities potential future applications of our technology, and you're factoring capability regulatory feedback and guidance payer interactions licenses in collaboration cash position on expense guidance and future updates.
Speaker Change: We're looking statements are subject to numerous risks and uncertainties many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings.
Speaker Change: Our results may differ materially from those projected during today's call. We undertake no obligation to publicly update any forward looking statements.
Speaker Change: With that introduction I will hand, the call to fret.
Speaker Change: Yeah.
Speaker Change: Thank you Sarah I am pleased to host this afternoon's conference call to discuss our financial results for the third quarter and year to date of 2024 as well as our recent corporate highlights.
Speaker Change: <unk> is nearing the end of a successful year following our first FDA approval and a strong start to the U S commercial launch of <unk> for patients with advanced melanoma.
Speaker Change: We're rapidly advancing our robust pipeline of current and future generation til cell therapies across all stages of development to expand our commercial opportunities.
Speaker Change: I would like to begin by highlighting the exceptional continued demand for integrity.
Speaker Change: Our third portal third quarter total product revenue was $58 6 million.
Speaker Change: Surpassing the top end of our third quarter total product revenue guidance of $53 million to $55 million.
Total product revenue in the third quarter included $41 million for antenna.
Speaker Change: And $65 million for Proleukin.
Speaker Change: As a reminder, impacting revenue is recognized upon infusion to the patient.
Speaker Change: <unk> revenue is recognized upon delivery to distributors or hospitals typically a few months prior to integra infusion.
Speaker Change: Year to date total product revenue was $94 million through September 30, including $54 9 million, SRAM, Pagni and $35 $5 million for Luke.
Speaker Change: Third quarter and year to date revenue reflects robust initial uptake and increasing strong demand and adoption of impact.
Speaker Change: As well as sales of Proleukin use with integrity.
Speaker Change: Since the first infusion in April through today 146 patients have been infused with <unk>.
Speaker Change: Keeping us on track towards towards our 2024 guidance of representing about $75 million two.
Speaker Change: <unk> 2024 break revenue from <unk> alone with more to come.
Speaker Change: Fusions over time also reflects the increasing rate of adoption with 25 in the second quarter.
<unk> 82 in the third quarter and 39 in the fourth quarter to date.
Speaker Change: Our team's successful execution is well beyond that medical need in advanced melanoma.
Speaker Change: <unk> broad patient access and a motivated and expanding network of authorized treatment centers are atc's.
Speaker Change: To drive strong adoption and uptake of <unk>.
Speaker Change: With 56 current Atc's, we remain focused on our goal of Onboarding approximately 70 totaling six by year end.
Speaker Change: Our community referral initiatives are also driving additional demand as our atc's continue to scale up to treat more patients.
Speaker Change: In addition to robust demand favorable medical coverage policies of reimbursement are facilitating broad access to <unk>.
Speaker Change: Approximately 75% of Integra patients are covered by private payers.
Speaker Change: The 250 million lives for more than 95% of U S. Covered lives currently have access to reimbursement through positive medical coverage policies for pharmacy benefit plans.
Speaker Change: And positive payer coverage has been consistent with the label clinical trials and national comprehensive cancer network or <unk> guidelines.
Speaker Change: As Eagle will further summarize where manufacturing is delivering <unk> to patients at an increasing pace we.
Speaker Change: We can meet current demand, while increasing capacity and headcount each month to match ongoing growth.
Speaker Change: As the launch continues the treatment journey is also speeding up for patients.
Speaker Change: Financial clearance currently averages approximately three weeks, representing a significant reduction from four to six weeks and initial watch.
Speaker Change: Cesar saving additional time by scheduling in parallel with financial clearance as we're initiating the pre conditioning regimen and conduct in conjunction with where several days prior to product arrival.
Speaker Change: We are consistently delivering on our turnaround time of 34 days for manufacturing of release testing.
Speaker Change: And expect this turnaround times decrease as the launch continues.
Speaker Change: Looking ahead, we are reaffirming our full year 2024, total product revenue guidance of $160 million to $165 million.
Speaker Change: We also reiterate our full year 2025 guidance of $450 million to $475 million and total product revenue.
Speaker Change: We expect a significant increase in year over year growth as atc's broaden utilization.
Speaker Change: New atc's as well as community referral networks contribute to additional demands.
Speaker Change: We anticipate significant additional revenue growth in 2026 and beyond in.
Speaker Change: In the currently approved advanced melanoma indication alone.
Speaker Change: And proleukin represent more than $1 billion peak opportunity in the U S market.
Speaker Change: Globally <unk> represents a multibillion dollar opportunity to address more than 20 previously treated advanced melanoma patients annually in the U S and in our initial ex U S markets.
Speaker Change: Gross margin was shot Mark will highlight in a few minutes is also expected to increase to greater than 70% over the next several years and our third quarter gross margin is more than halfway towards that target.
Speaker Change: With a fully integrated infrastructure and the growing interest in <unk> outside of the U S. <unk> is well positioned to continue scaling globally.
<unk> teams are being built and regulatory dossiers are under review submitted our planned across multiple international markets with the potential for our first ex but ex U S approval in the first half of 2025.
Speaker Change: The European Medicines agency validated and accepted accepted our marketing authorization application or MAA for a review for all your EU member states with potential approval in the second half of 2025 the.
Speaker Change: The medicines and healthcare products regulatory agency in the United Kingdom.
Speaker Change: Is reviewing a separate MAA submission for potential approval in the first half of 2025.
Speaker Change: Our new drug submission is also underway for near term submission in Canada and will include a prioritize review process for potential approval in mid 2025.
Speaker Change: Additional regulatory dossiers remain on track for submission in Australia, and Switzerland in 2025.
Speaker Change: We will target additional markets with highly concentrated population of advanced melanoma patients in the future.
Speaker Change: I have answers points remained the global leader in innovating developing and delivering current and future generations of Intel cell therapies for patients with cancer.
First approval launch a large scale manufacturing with fuel cell therapy, together with our intellectual property position and deep pipeline provide us with distinct competitive advantages.
Speaker Change: Future growth drivers include global label expansions in the frontline advanced melanoma and other tumor types of next Gen or next generation programs that we'll discuss in more detail today.
Speaker Change: I'll hand over now to Brian Our executive Vice President of Medical Affairs, who will summarize our ACC network in U S field activities Brian.
Brian: Thank you Fred.
Brian: We're excited about the potential for <unk> to improve the lives of thousands of patients with advanced melanoma.
Brian: <unk> continue to share positive feedback and stories about their patients who have benefited from <unk> since approval.
Speaker Change: My objective today are to highlight one demand and adoption and utilization across our expanding ATC network and to our field support for <unk> as well as targeted community oncologists.
Speaker Change: First our ADC network is scaling and expanding as planned and we expect robust demand.
Speaker Change: Demand growth to continue in <unk> early inclusion in the NCC guidelines combined with strong clinical data has supported broad and successful market access today of taxi as available at 56% United States Adcs and our goal is to reach approximately 70 total <unk> by the end of 2024.
Speaker Change: With more to come in 2025.
Speaker Change: Our field medical team is composed of highly experienced medical science, liaisons and former health care providers, including oncologists and surgeons. They understand the unique needs of each ATC and proactively provide support training and peer to peer conversations around patient selection and surgical resection to maximize <unk>.
Speaker Change: Accessible outcomes with the <unk> treatment regimen.
Speaker Change: As we expand our ATC network to bring treatment closer to patients more than 90% of treated patients are located within 200 miles of an ATC today, nearly all melanoma patients will be within a two hour drive to the closest center by year end.
Speaker Change: Community referrals are also driving patient volume and demand growth across our networks of Atc's.
Speaker Change: <unk> field teams are currently targeting top community practices and large community focused professional organizations.
Speaker Change: The primary objective is to drive early referrals by identifying patients with advanced melanoma, who are currently receiving frontline treatment and may be eligible for <unk> upon disease progression.
In summary, we are extremely pleased with the early launch performance as our Atc's successfully adopt and broaden utilization of the taxi I will now pass the call to Igor Bolinsky, our chief operating officer to highlight our manufacturing progress.
Speaker Change: Thank you Brian.
Igor Bolinsky: Today, I'd like to highlight our commercial and clinical manufacturing capabilities, the progress of our commercial launch and the status of our ongoing capacity and facilities expansion.
Igor Bolinsky: Manufacturing capacity continues its steady ramp up multiple months to support the growing commercial demand.
Igor Bolinsky: We continued to actively higher manufacturing and quality control stuff as well as supporting functions and have significantly increased our capacity at higher than so therapy center or ICC since launch in February.
Igor Bolinsky: Too many section facilities approved by the FDA for commercial manufacturing of <unk>. One is our internal manufacturing facility either in cell therapy Center located in the Navy yard in Philadelphia. It is one of the largest cell therapy manufacturing facilities in the world.
Igor Bolinsky: In addition to our contract manufacturers facility provides us with further capacity and scheduling flexibility to serve targeted patients.
We're pleased with our commercial and manufacturing experience to date, which remains consistent with prior clinical experience.
Igor Bolinsky: Our medical affairs team is doing tremendous job.
Igor Bolinsky: <unk> best practices among agencies, such as optimal tumor selection than simple procurement for manufacturing, which contribute to improving manufacturing success rates.
Igor Bolinsky: <unk> turnaround time has been consistent at 30 to 34 days.
Igor Bolinsky: <unk> received in cells at the manufacturing facility to upside we've been ready for return shipment to the EDC.
Speaker Change: As Fred mentioned, we are working on optimizing our processes to further shorten the turnaround time.
Speaker Change: As we scale up we also expect to improve the cost of goods over time through economies of scale and operational efficiencies as well as by leveraging our competitive advantage and unique position as the leader in the two cell therapy space.
Speaker Change: Our manufacturing network is currently running at high capacity utilization, while ensuring slot availability for our adcs.
Speaker Change: In anticipation of potential regulatory approvals of <unk> outside the U S. We are establishing logistics and distribution to support a successful commercial launch in new markets, such as the EU UK and Canada.
Speaker Change: The ICC already serves patients in our clinical trials in Europe, Australia, and other geographies and we intend to manufacture global commercial products from Paul at Philadelphia sites as well.
Speaker Change: In anticipation of the longer term growth global commercial demand in melanoma and other indications we are expanding our manufacturing network.
Speaker Change: <unk> is built today has the capacity to provide products for more than 2000 patients annually.
Speaker Change: Building out the existing shelf space with ICC.
Is expected to bring the capacity to over 5000 patients annually upon completion, which we expect within a couple of years.
Speaker Change: So the expansion of our manufacturing campus in Philadelphia, along with process optimization and automation is expected to bring the capacity to over 10000 patients annually.
Speaker Change: The IBM manufacturing supply chain and quality team is committed to operational excellence and providing them tied to the patients in the spirit of doing everything right. First time every time I would like to thank them for their continued dedication 20, $473 65, and serving our patients who need this paradigm changing and potentially lifesaving.
Speaker Change: Eric.
Speaker Change: Importantly, our expertise into a cell therapy as well as manufacturing capabilities are protected by a robust intellectual property portfolio.
Speaker Change: <unk> currently owns more than 230 granted or allowed the U S and international patents and patent rights for employers.
Speaker Change: And other two related technologies that are expected to provide exclusivity through at least 2042.
Speaker Change: I am available to answer additional questions during the Q&A and I will now hand, the call to Mark our Chief Financial Officer.
Speaker Change: Okay.
Mark: Thank you Joe.
Speaker Change: Today, I will review, our current cash position as well as our results for the third quarter and nine months ended September 32024.
Speaker Change: We will also highlight our financial outlook, including revenue and expense guidance as well as our gross margin.
Speaker Change: As of September 32024.
Speaker Change: <unk> cash position was approximately 403 $8 million.
Speaker Change: Including a portion of the 200 million.
Speaker Change: Net proceeds from the market the equity financing facility during the second and early third quarters of 2024.
Speaker Change: We expect the current cash position and anticipated product revenue to be sufficient to fund current and planned operations into 2026.
Speaker Change: I will now transition to our financial results.
Speaker Change: Net loss for the third quarter of 2024 was $83 5 million.
Speaker Change: <unk> 28 per share.
Speaker Change: Compared to a net loss of $113 million or 40 <unk> per share for the third quarter ended September 32020.
Speaker Change: Net loss for the first nine months of 2024 was $293 6 million.
Speaker Change: $1 <unk> per share compared to a net loss of $327 7 million.
Speaker Change: Our $1 44 per share for the nine months period.
Speaker Change: September 32020.
Transitioning to revenue with trip previously summarized.
Speaker Change: Total product revenue includes dark green fusion in the U S and global sales of Proleukin primarily use.
Speaker Change: <unk> regimen.
Speaker Change: And other commercial and clinical systems.
Speaker Change: As previously discussed product revenue is recognized upon delivery to distributors and hospitals and generally purchased several months in advance of anticipated infusions.
Speaker Change: And then tied to the revenue recognition.
Speaker Change: Total product revenue was $58 6 million for the third quarter of 2020 for <unk>.
Speaker Change: Including $42 1 million for integrity, and $16 5 million for production.
Speaker Change: Total product revenue for the first nine months of 2024 was $90 4 million.
Speaker Change: And consisted of $54 9 million foreign taxes, and $35 5 million for Peru.
Speaker Change: Revenue for the first nine months of 2020.
Speaker Change: 0.50 point 7 million, respectively for global sales of Proleukin.
Speaker Change: Revenue increases in both periods of 2020 for further prior year periods.
Speaker Change: Primarily attributable to the U S commercial launch of <unk> and the related strong demand for <unk> for use with <unk>.
Beginning in the second quarter of 2024.
Speaker Change: I will now highlight our cost of sales, which includes cost of inventory overhead and related cash and noncash expenses that are directly associated with cellcom and <unk> as well as manufacturing cost of AMT taxes.
Speaker Change: Cost of sales for the three months ended September 32024 was $39 8 million.
Speaker Change: Primarily attributed to $8 $3 million in pellet cost associated Resubmission broke off and manufacturing success rates.
Speaker Change: $6 9 million for noncash expenses, including fair market value step up and tangible asset amortization.
Speaker Change: $3 9 million.
LTE vehicle on product sales.
Speaker Change: Notably our third quarter of costs associated with pension drop off in manufacturing success group of decreased overall.
Speaker Change: Purchase quarters, we book of $8 7 million.
Speaker Change: Even though volume and activity greatly increase.
Speaker Change: In the prior year three month period cost of sales was $4 3 million.
Speaker Change: Primarily related to noncash amortization for intangible assets.
Speaker Change: Cost of sales for the nine months ended September 32024 was $78 5 million.
Speaker Change: Primarily related to $17 2 million and certain cost associated with patient drop off in manufacturing success with <unk>.
Speaker Change: $20 3 million and noncash expenses.
Speaker Change: <unk> fair market value step up intangible assets amortization and $8 2 million in royalties payable on product sales.
Speaker Change: The prior zero nine months period cost of sales was $6 4 million.
Speaker Change: Primarily related to noncash amortization for intangible asset.
Speaker Change: The increase in cost of sales in the third quarter and year to date 2024 over the prior year periods were primarily attributable to the U S commercialization of <unk> beginning in the first quarter of 2024 as well as related increase of sales of proleukin, including the initiation of product sales commercial.
Speaker Change: Manufacturing and related cash and noncash expenses tied to <unk>.
Speaker Change: Since the initial launch of <unk> cost of sales is improving as we increase the volume and capacity utilization due to continued strong demand on loan shrimp.
Speaker Change: In addition, as Brian and John mentioned, the ongoing support education and training reserve OTC as well as the <unk>.
Speaker Change: The focus on operational efficiencies in manufacturing and release testing.
Speaker Change: Further optimize our cost of sales and <unk> to a higher gross margin overtime.
Speaker Change: I will briefly comment on third quarter gross margin.
Speaker Change: Our cost of sales in the third quarter includes $6 9 million of noncash expenses, such as fair market value and amortization related to the protein accumulation.
Speaker Change: Brazil thing in the third quarter gross margin of $25 6 million.
Speaker Change: So revenue of $58 6 million.
Speaker Change: The improvements in gross margin over the second quarter reflects our ongoing focus on profitability and positions us more than halfway.
Speaker Change: Towards our target of gross margin above 70% of the couple of years.
Speaker Change: I will now shift to our operating expenses.
Research and development expenses were $68 2 million for the third quarter of 2024.
Speaker Change: Queens of $19 3 million compared to $87 5 million for the same period ended September 30.
Speaker Change: 2020.
Speaker Change: Research and development expense was $210 1 million for the nine months ended September 32024, a decrease of $46 5 million compared to $256 6 million for the same period ended September 32020.
Speaker Change: The decrease in research and development expenses in the third quarter and first nine months of 2024 over the prior year periods were primarily attributable to the transition of <unk> to commercial manufacturing and lower clinical cost and lower cost, resulting from the completion of pre commercial qualification activities.
Speaker Change: In 2020.
Speaker Change: This decrease in research and development were partially offset by increases in headcount and related costs, including stock based compensation.
Speaker Change: Selling general and administrative expenses were.
Speaker Change: $39 6 million for the third quarter of 2024, an increase of $12 6 million compared to $27 million for the same period.
Speaker Change: At September 32020.
Speaker Change: Selling general and administrative expenses were $110 5 million.
Speaker Change: For the first nine months of 2024, an increase of 33.
Speaker Change: $3 5 million.
Speaker Change: Compared to 77 million for the same nine months period ended September 32020.
Speaker Change: The increase in selling general and administrative expenses in the third quarter on the first nine months of 2024 compared to the prior year periods was primarily attributable to increasing the calvin related costs, including stock based compensation to support the overall business and related infrastructure growth as well as legal costs.
Speaker Change: Commercial related costs.
Speaker Change: Looking ahead I would like to briefly summarize our financial outlook.
Speaker Change: As Fred mentioned, we reiterate our guidance for total product revenue within the range of $160 million to $165 million for the full year of 2024.
Speaker Change: And 450 to 475 million.
Speaker Change: For the full year 2025.
Speaker Change: Regarding our operating expenses.
Speaker Change: Reiterate full year of 2020 forecast from guidance in the range of 320 million to $340 million.
Speaker Change: Excluding one time expense.
Speaker Change: We will also keep leveraging opportunities to optimize spending in the coming quarters.
Speaker Change: For additional information. Please see the company's were selected condensed consolidated balance sheets and statements of operation in this afternoons press release.
Speaker Change: And our Form 10-Q to be filed later today.
Speaker Change: I will now the call to Friedrich <unk>, our Chief Medical officer to discuss our clinical pipeline.
Speaker Change: Okay.
Speaker Change: Thank you John Marc this.
Speaker Change: As my colleagues have condensate and <unk> is only the tip of the iceberg for the potential of til cell therapy in solid tumors, which represent more than 90% of all diagnosed cancer in the U S.
Speaker Change: To date I will focus on our clinical programs in lung frontline melanoma, and dmitry of cancer as well as our exciting next generation pipeline.
Speaker Change: This week, we are attending the society for immunotherapy and cancer conference or <unk> annual meeting.
Speaker Change: Here, we have a number of invited presentations focused panel taxi and our pipeline.
Speaker Change: Breaking poster we are presenting updated preliminary results from cohort three eight and the ILB come to trial, including additional patients and longer term follow up.
Speaker Change: Good.
Speaker Change: Desiccating likely neutral plus <unk> in patients with advanced non small cell lung cancer, who are naive to checkpoint inhibitor.
Speaker Change: Our therapy.
Speaker Change: Review and analysis of class III patients with Egfr Wild type disease, regardless of PD lone status, who represent the majority of patients in the frontline non small cell lung cancer testing.
Speaker Change: The confirmed objective response rate or <unk> was 64, 3% among these patients, including 54, 5% or are in patients who had difficult to treat PD lone negative disease.
Speaker Change: Higher than reported responses in these patients to currently approved therapies.
Speaker Change: Remarkably five of the six responses in Egfr Wild type tumors were ongoing as of the last follow up visit with four ongoing for more than 20 months from til infusion. In addition median duration of response was not reached the median study follow up of 26 five months.
Speaker Change: Yeah.
Speaker Change: The robust response rates and meaningful to our ability for cohort three demonstrate the potential for the life of looser regimen to drive meaningful benefit when added to standard of care frontline non small cell lung cancer treatment.
Speaker Change: The results are available in the late breaking poster as long as in our corporate deck at <unk> Dot com.
Speaker Change: Based on core credit data, we plan to open a new cohort three D and the ILB come to clinical trial.
Speaker Change: <unk> will investigate a regimen that thats likely to refer to the frontline standard of care of chemotherapy in <unk> patients with Egfr wild type non small cell lung cancer.
Speaker Change: Core <unk> results will inform the design of our planned confirmatory trial in frontline non small cell lung cancer.
Speaker Change: We expect that the integration of the likelihood of a regimen into current frontline standard of care with chemo and <unk> will further augment the strong efficacy seen in call. It three eight and has the potential to establish a new frontline regimen in non small cell lung cancer.
To address unmet medical need among patients with non small cell lung cancer and post anti PD, one setting we're investigating likelihood for monotherapy in a single arm Registrational phase III <unk> clinical trial.
Single agent chemotherapy. The current standard of Kansas, setting provides limited rate and duration of responses.
Speaker Change: Investigators are excited about the opportunity to advance the FERC til therapy for patients with non small cell lung cancer and the <unk> two trial.
Speaker Change: Activations in enrollment continue to accelerate we are also confident in our approval strategy based on the positive preliminary data and prior FDA feedback for IOP adjuvant <unk>.
Speaker Change: We expect to report additional data from the Registrational cohorts in 2025.
Speaker Change: And achieved a potential accelerated U S approval for life.
Speaker Change: Small cell lung cancer in 2027.
Speaker Change: Expanding the commercial opportunity for attack into frontline advanced melanoma is also a top priority at <unk>.
Speaker Change: Our global Registrational Phase III trial, <unk> 301 remains on track to support accelerated or full approval for <unk> in combination with <unk> in frontline advanced melanoma as well as regular approval of attack and post anti PD one melanoma.
Speaker Change: We continue to see strong momentum with enrollment and high enthusiasm among clinical site.
Speaker Change: Nearly 50 sites are currently active across 11 countries in North America, Europe and Australia.
Speaker Change: And more than 50 sites.
Speaker Change: The cross 50, new sites across 16 additional countries are lined up to join two then 301.
Speaker Change: As a reminder, till that's clear one is supported by results from ILD come to cohort one eight.
Speaker Change: In patients with advanced melanoma naive to immune checkpoint inhibitors.
Speaker Change: And the most recent cohort data presentation at <unk> will likely lose surplus symbolism demonstrates at an unprecedented rate depth and durability of responses, including a 30% confirmed complete response rate as well as the safety profile that is.
Speaker Change: Friend shaded from combination checkpoint inhibitor therapy.
Speaker Change: In addition, we are exploring a potential best in class frontline alternative for physicians and patients in the U S Court <unk> and <unk> come to trial will investigate are likely to refer in combination with a new bottom up 10 per lateral them up and patients with frontline melanoma.
Speaker Change: Moving along the pipeline we're excited about our first clinical trial in advanced endometrial cancer.
Speaker Change: Recent approvals of immune checkpoint inhibitors in combination with chemotherapy for frontline endometrial cancer has created an unmet need for patients who progress.
Speaker Change: No currently approved therapies after anti PD, one which represents a significant new opportunity for hotel cell therapy.
Speaker Change: Patient enrollment has commenced in our <unk> hundred one phase II trial.
Speaker Change: To investigate lots of neutral after frontline standard of care chemotherapy and anti PD, one therapy in patients with both mismatch repair or MMR deficient and proficient tumors.
Speaker Change: This trial is supported by published preclinical and manufacturing success data as well as positive feedback from gynecological oncology experts.
Speaker Change: As the leader until cell therapy.
Speaker Change: <unk> also at the forefront of next generation approaches to optimize till until treatment regimen.
Speaker Change: We are investigating and next generation PD, one inactivated till cell therapy, <unk> 4001, and the IOP GM, one 201 clinical trial genetic modification using the talent technology to and activate PD one may enhance the efficacy of <unk> 4001 in place of systemic anti <unk>.
Speaker Change: PD, one therapy, which is associated with short and long term systemic adverse events.
Speaker Change: Or aes.
Speaker Change: <unk> hundred one has cleared the phase one safety data and is currently enrolling two phase II cohorts of patients with previously treated.
Speaker Change: Hello, Noma or non small cell lung cancer with high interest by investigators to contribute to this trial the pace of enrollment is increasing and this trend is expected to continue through 2025.
Speaker Change: Building on our successful Proleukin franchise.
Speaker Change: <unk> 3001 is a second generation modified IL two analog designed to enhance culture of violence.
Speaker Change: Proliferation.
Speaker Change: <unk> 3001 favorable Pharmacodynamic and pharmacokinetic characteristics May result, in a better safety profile may support less frequent dosing compared to proleukin.
Speaker Change: An investigation on new drug or IND application was allowed to proceed for a phase <unk> clinical trial of <unk> 3001, <unk> <unk>.
Speaker Change: RFP treatment regimen and clinical enrollment is expected to begin soon.
Speaker Change: Lastly, IND, enabling studies are proceeding for <unk> 5001, genetically engineered inducible and tethered IL 12 kill cell therapy.
Speaker Change: Prior generation IL 12, til product demonstrated an impressive or of 63% in advanced melanoma patients at doses tend to a 100 fold lower than conventional til product.
Speaker Change: However, the product secreted IL 12, which resulted in adverse events.
Speaker Change: <unk> 5001 design include inducible, IL 12 expression restricted to the tumor and tethering of IL 12 to the cell surface, which prevents IL 12 secretion.
Speaker Change: <unk> 5001.
Speaker Change: Allow higher cell doses over the prior generation product and improve efficacy, while ensuring safety potentially allowing for expansion into a wide range of common solid tumor cancer beyond our current pipeline with significant market opportunity.
Speaker Change: Preclinical results supporting <unk> 5001 will be featured in a poster at <unk> on Saturday November nine.
Speaker Change: We plan to submit a pre IND meeting request to FDA. This year to support clinical development of <unk> five one and many common solid tumor cancers with large populations and unmet need in 2025.
Speaker Change: Preclinical results for <unk> 5001 will be featured in a poster at <unk> on Saturday November nine.
Speaker Change: Additional details about our development programs are included in today's press release as well as the corporate slide deck and the data presentations I mentioned are currently available to view on the scientific presentations and publications page on our website.
Speaker Change: Im happy to address questions about these programs and additional trials during the Q&A session.
I would like to acknowledge the significant progress we have made in advancing our clinical and preclinical pipeline for this year and thank our talented multi disciplinary team of research partners.
Speaker Change: I am excited to see what's next as we continue to develop and deliver kill cell therapy to cancer patients and additional therapeutic settings and with additional tumor types.
Speaker Change: I'll now turn the call over to the operator to begin the question and answer session.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: <unk> like to ask a question. Please press star one telephone keypad to raise your hand during the Q you would like to withdraw your question. Please simply press star one again.
Speaker Change: We are called upon to ask your question or I'm listening via loud speakers.
Speaker Change: On your device. Please see a per handset ensure that your phones on mute when asking your question.
Speaker Change: Again, please press one star one to join the queue and we do ask that you. Please limit yourself to one question for todays session.
Speaker Change: Our first question comes from the line of Taylor Van Buren with TV Cowen. Please go ahead.
Speaker Change: Hey, guys. Thanks, very much congratulations on the quarter and the progress. So the 39 patients treated to date or 30% above the 30 infusions reported at the same time point last quarter and so if you just simply apply that to Q3 sales.
Speaker Change: So Q4 and Proleukin sales are stable you should obviously meet your annual guidance. However, there are significant holidays coming up next quarter. So can you talk about the potential impact of the holidays and have you seen any infusion scheduled around those holidays yet.
Speaker Change: Yes, we can we can talk about that a bit we actually projected fusions out over through the entire quarter and we can see them foreign advance and yes of course during the holidays. There is going to be some patients would either put there is trying to get their infusion our caregivers to try to get the infusion.
Speaker Change: Ahead of the holidays or after the holidays for salaries and as well as the physicians wanting to take time off. So there is a bit of a lull during that period, but I think what you calculated there is a fair estimate regardless of any law I think will still perform quite well in the quarter. We comment we've accounted for that when we do our projections.
Speaker Change: Our next question comes from the line of Peter Lawson with Barclays. Please go ahead.
Speaker Change: Got you. Thank you so much.
Speaker Change: I guess, just a question around Iot stocking level kind of how does that change over time.
Speaker Change: Assuming this kind of going to be less stocking.
Speaker Change: Each quarter.
Speaker Change: If you could kind of walk through the dynamics of what you think that Iot number would look like.
Speaker Change: And then the stocking level.
Speaker Change: Okay.
Speaker Change: Thanks, Peter did the level. We're currently stocking up three specialty distributors, which represent the three large distributors in the United States the big three.
Speaker Change: Primarily focused on one in Q2, another one in Q3 and there'll be another one we expect in Q4 I think as I said before the numbers will be steady they could go down and up 10% or so you see we did more last quarter, we did less this quarter I would.
Speaker Change: Surely advising as anyone thinking we can do more we can we can do more prolonged into the fourth quarter and that may be the case, we'll see but after that we will have all the main distributor stocked up and as I've said on the last earnings call. We expect after that growth to that start in 2025 and go up more more traditionally quarter over quarter.
Speaker Change: Yeah.
Speaker Change: Great. Thanks, so much.
Speaker Change: Our next question comes from Andrea newer Kirk with Goldman Sachs. Please go ahead.
Speaker Change: Thanks, So much for taking my question Fred I was wondering if you could provide more color on your comment that pre conditioning is happening sometimes in parallel or before <unk> actually arrived at the ATC. Just curious how common this is and does this suggest that you're manufacturing out of spec rates are improving.
Speaker Change: Sufficiently such that Atc's are willing to do this at Ross. Thanks, So much.
Speaker Change: Yes, that's right Andrew.
Speaker Change: <unk> have a lot of experience with both our manufacturing process and our out of specs as well as with their patients are getting more and more comfortable doing. This so yes, I think youre correct that does reflect that kind of that kind of confidence I can't tell you exactly how common it is what I can tell you that it's more comment the larger adcs and a more sophisticated that have more.
Speaker Change: <unk> I think.
Speaker Change: Many quarters in a launch we'll probably see that for a good number of patients I don't know I cant really guess, but as either a majority a significant minority as we go out in time because.
Speaker Change: We noticed that everybody is getting the message that the sooner you get this product into the patient better. So I think there's a lot of that bill confidence, but want to do this more generally.
Speaker Change: Great. Thank you.
Speaker Change: Our next question comes from the line of Jan then Xu with Wells Fargo. Please go ahead.
Speaker Change: Great. Thanks for taking our questions congrats on the quarter.
Speaker Change: Wondering about the 82 infusions in the last quarter.
Speaker Change: How are they how are they distributed across the months.
Speaker Change: And there are clear trajectory of growth and going into the fourth quarter.
Speaker Change: How do you feel about the mouse the mouse prospects and if I may also wondering ex amongst amongst growth is that mainly from.
Speaker Change: Demand growth in the HCC center number increase or.
Speaker Change: Are there any elements of improved manufacturing and logistics that.
Speaker Change: It makes you.
Speaker Change: Comfortable about forecasting growth. Thank you.
Speaker Change: So yes.
Speaker Change: And.
Speaker Change: Across the two infusions in the third quarter, there is month over month growth that basically.
Speaker Change: Alright, and on trying to unseat go up month over month, and we expect that to continue into Q4 versus <unk> 39, and we've already reported.
Speaker Change: With respect to your question about whether that drew by ATC growth, meaning growth in demand of ptc's or adding new ATC is yes, that's a big factor in driving net.
Speaker Change: And the availability of slots above all will drive that to the fact that we're scaling up manufacturing is really what's driving that growth. It links up manufacturing capacity now I can add since you since you add yes, I think we're getting better and better with our out of spec rate I cant say that month over month quarter over quarter, I think thats whats happening.
Speaker Change: That to continue into 2025 and beyond.
Speaker Change: Yes month over month, you see growth and we expect that to continue its largely driven by capacity and I'm sure. There is an element of.
Speaker Change: I'm sure, it's an element of improved satisfactory and stuff like that also adding some wins to those sales.
Speaker Change: Great. Thanks for the color.
Speaker Change: Our next question comes from the line of Ben Burnett with Stifel. Please go ahead.
Speaker Change: Okay.
Speaker Change: Just a question on just the profitability to kind of the gross margin goals, where do you think you mentioned getting to 70% it sounds like you're halfway there.
Speaker Change: How are you realizing that and I guess, what are the where the operational levers that will get you to that 70% goal.
Speaker Change: Yes, maybe I can start and then John Mark can jump in and help you a little bit so as as we scale up a launch, especially using our ICT C facility Cogs goes down very quickly just on the capacity utilization. So that's a big factor in improving gross margin at the end of the day because thats a major.
Speaker Change: Your component costs with major component cost of sales and.
Speaker Change: That will drive margins up from where they are right now which is in the mid forty's too.
Speaker Change: So somewhere up closer to 70%, we've got all sorts of other initiatives, including operational excellence type work that we used to conduct projects to also improve margins. This includes.
Speaker Change: Some things that are quite confidential, obviously, the things that we do to improve our manufacturing process. Thanks, We did scale things up a lot of things have to be filed with the FDA and take some time to go through but they are all in progress right now and then I think we have pretty good management of our expenses.
Speaker Change: We try to bring those down and keep them steady at least as good as we expand our clinical portfolio.
Speaker Change: <unk> may be able to add more on the accounting side of that as well.
Speaker Change: Yes. Thank you Fred and then I think you said it all and then if you think about the margin I mean, we do expect the cost of sales the cost of goods sold in general to improve overtime. We are only in the second quarter of launches. So obviously.
There is a lot of optimization, which is currently happening and as you have seen in turmoil to a significant jump also improve gross margin between Q2, Q3 and Q2, we know that in the future.
Speaker Change: As mentioned by freight with automation.
Speaker Change: Physician also working on some of the cost isn't related to raw material cost of goods sold as profitability for <unk>.
Speaker Change: The beauty of having your own ICT being in charge and control over the costs. So.
Speaker Change: That's why we are confident and expect the gross margin through to go through to 70% for both 70% in the future years.
Speaker Change: Okay. Thank you very much.
Speaker Change: Our next question comes from the line of David Dye with UBS. Please go ahead.
Yeah.
Speaker Change: Sometimes you did to improve dropout rate.
Speaker Change: We got we only call part of that David could you. Please repeat that question.
David Dye: My apologies so just curious about the dropout rate what are some of the activities you did to improve the drop for a dropout rate that you saw.
Speaker Change: This quarter compared to last quarter.
Speaker Change: I don't think we really did anything in particular, we are optimizing the launches. We go we're teaching atc's how to how to get patients through better we're teaching them how to do better quality surgical resections, you heard a lot of that in the script from all of us are.
Speaker Change: Include Brian depart script, but.
Speaker Change: We are I think they're seeing the benefits of the launch it's ongoing and you're only really only two quarters in the launch so.
Speaker Change: I think what you can expect to see this improve quarter over quarter and will eventually get up to what we think will be the manufacturing success rate that we had or at least manufacturing experience that we had during the clinical studies.
Speaker Change: So no there is nothing I can really point to that we did specifically, we're just optimizing across the board.
Speaker Change: Okay.
Speaker Change: Alright, Thank you very much.
Speaker Change: Our next question comes from the line of Michael Yee with Jefferies. Please go ahead.
Speaker Change: Great. Thanks.
Speaker Change: Fred can you remind us about reimbursement I know that.
Speaker Change: <unk> launch, it's been sort of.
Speaker Change: Coverage by patient in a single case deals can you remind how does it work for commercial if you want any more broad based.
Contract, where you can get approval very quickly Dave.
David Dye: Days or weeks rather than months.
Speaker Change: Wondering how that's going and if that could be a significant accelerator.
Speaker Change: Uh huh.
Speaker Change: <unk> business.
Speaker Change: Second question relates to the lung cancer can you just remind us draw ongoing pivotal study in second line is that something that could possibly readout next year, maybe just rightsize my expectations. Thanks.
Speaker Change: Yeah.
Speaker Change: Yeah. So on the point of reimbursement. Unlike we did we noted during the <unk>.
Speaker Change: Third remarks here that we have cut the average reimbursement time from four to six weeks.
Speaker Change: Down for three weeks out of the financial clearance time that includes prior authorization as well as a single case agreements.
Speaker Change: We think the sweet spot going forward Thats really realistically what atc's can do the good news is they can select the manufacturing slide parallel schedule the operating room time.
Speaker Change: And bring the patient patent back in which takes typically about three weeks even at high speeds given given their operating room capacity and stuff like that so it really I don't think its a drag at all we don't anticipate really needing to further optimize that if you take a look at our corporate deck that we posted today youll see a new slide that summarizes this I think it really.
Speaker Change: Helps highlight where we're going and where other areas, we can optimize but that's not really one of them.
Speaker Change: We're already there I think on that one I'll now small cell lung yes.
Speaker Change: Our press release today talked about us having data out next year to $1 five and us getting approval in 2027, and that's what we think.
Speaker Change: It could have a based on the data and based on the study is running right now.
Speaker Change: Perfect.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of.
Speaker Change: As ticker good why Dean with <unk> Securities. Please go ahead.
Speaker Change: Hey, guys asked to continue on that trust here. Thanks for taking my question.
Speaker Change: A lot of Doubleclick.
Speaker Change: On to the improvement of the out of spec rate and now that you've had several centers treating a good number of patients.
Speaker Change: Have you seen that.
Speaker Change: Any trends or factors that influenced the Oss I'm, particularly wondering.
Is it just a factor of.
Speaker Change: Having more experienced or are you now getting new centers coming online that I just.
Speaker Change: Getting better and I have just much better performing.
Speaker Change: Resections and producing a product right out the gate.
Speaker Change: Well, it's both we're trying at the beginning we had centers come on that we're good and some that struggle to do resection and select patients we help them out they got better and now we learn from that as well and are on our teaching the new ATC is as they come on.
Speaker Change: The benefits of all that early learnings so that they don't make the same mistakes we plot out actual run charge for each ATC to see what they did.
Speaker Change: Outlook look patient by patient preach ACC give them a scorecard as to how they are performing.
Speaker Change: And help them with our peer to peer team that Brian's team.
Speaker Change: Steve Bryan and receives a team that can produce team that does that and others that go out and talk to surgeons and they make sure. The patient selection is correct and they worked with them on resection quality and now I think I would just say that we're just gaining momentum and building momentum here, it's been a big Russian stepping up and up and going faster and faster there's nothing really magical.
Speaker Change: It's hard work, but once its done once it's done they can get the experience and I think what we're seeing is that any ATC can really get these skills to do.
Speaker Change: Sorry.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: That concludes today's Q&A session I would now like turn the call over to Fred.
Speaker Change: <unk> interim CEO for closing remarks.
Speaker Change: Thank you again for joining the <unk> biotherapeutics third quarter and year to date 2024 financial results and corporate update conference call.
Speaker Change: To provide an update on our launch of the first commercial <unk> cell therapy, and look forward to providing further anti vilanch updates as well as continued developments on our pipeline in the near future.
Speaker Change: Already been transformative year for <unk>, and we continue to be motivated as we hear frequent feedback from accs.
Speaker Change: In advanced melanoma patients benefiting in finding hope with anti <unk>.
Speaker Change: In the commercial setting.
Speaker Change: As always we are thankful for the patients health care and advocacy communities, our partners and our exceptional <unk> team I would also like to thank our shareholders and covering analysts for their support thank you.
Speaker Change: This does conclude today's call you may now disconnect.
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