Q2 2019 Earnings Call

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, this conference is being recorded at the company's request.

I will now turn the call over to your host small Joshi with Jones Therapeutics. Please go ahead.

Thank you operator, good morning, and thank you for joining the Jones Therapeutics second quarter 2019 financial results Conference call. This morning, we issued a press release, which outlines the topics that we plan to discuss today the release of available in the Investor and media section of our website at Www Dot Joan.

<unk> Dot com.

Speaking on today's call will be our CEO , and President Dr., which Murray, who will provide an update on our recent pipeline progress a corporate update and review key milestones for 2019, followed by our CMO Dr. Babytree, who will provide an update on our clinical and preclinical development activity Lastly, our CFO Kim Dropkin will review our second quarter financial results. We will then open the call for your questions.

Before we begin I would like to remind everyone that today's discussion will include statements about our future expectations plans and prospects that constitute forward looking statements for the purposes of the safe Harbor provisions under the private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including the risk factors discussed in our SEC filings.

In addition, any forward looking statements represent our views only as of today August seven 2019, and should not be relied upon as representing our views as of any subsequent date, while we may elect to update these forward looking statements at some point in the future. We specifically disclaim any obligation to do so even if our views change with that I will now turn the call over to rich.

Thanks, Tom Good morning, everyone.

2019 is shaping up to be a very productive and successful year for Josh.

As we head into the second half of the year, we made significant progress against our corporate goals.

As a reminder, our goals for 2019 include.

Moving three immuno therapies into the clinic.

Presenting bertilimumab or Volpara, PFS and OS data.

Initiating new phase two studies with Barbara.

Establishing safety and recommended phase two dose for Gtx 40 14.

Following the R&D initiating phase one for Gtx 80 64.

And advancing our next development candidate into R&D, enabling studies.

Well <unk>, we presented exciting PFS and OS data from iconic at this year's HCR conference and initiated the phase two Imerge study.

Our Gtx 80, 64, while we were tracking to meet the 2019 program goal. We made the strategic decision to exclusively license the program to Celgene, which we view as a successful outcome.

Turning to Gtx 40, 14, our PD one inhibitor I'm pleased to announce today that we've completed enrollment in the phase one trial and determine the recommended phase two dose.

We plan to present data from the J T X 40, 14 phase one study in the second half of this year.

Additionally, we remain on track to advance our next discovery program into R&D, enabling studies.

Oh abroad, and wholly owned discovery pipeline includes multiple programs targeting T regulatory cells macrophages have stromal cells.

Although we've made tremendous progress in executing against our goals, we still have a lot to do to address the growing unmet needs of cancer patients.

Before turning the call over to best to go into more detail on our program I'd like to touch on our corporate strategy.

Since joining jobs over five years ago together with the management team I've been focused on building a company that has the ability and resources to develop novel I O targets and bring these therapies to the right patients.

Given the ever changing landscape and complexity of I O drug development.

We focused on creating a company that can support both discovery and development.

On the heels of the renegotiation of the Celgene agreement I believe we're in a stronger position than ever to move our wholly owned pipeline forward.

I'll now take a moment to summarize our recent celgene renegotiation.

In July 2019, Celgene exclusively licensed the worldwide rights to Gtx PT 64.

Our highly selective potential first in class antibody that targets the L.R. b two receptor on macrophages.

I'm very proud of our team as this speaks to the work that we've done to leverage our our translational or <unk> translational science platform.

To efficiently take Gtx 80, 64 from target discovery to clinical candidate.

At the same time, we also entered into a mutual agreement to terminate our broader strategic collaboration with Celgene, which was signed in 2016.

We now have the full worldwide rights to Barbara Gtx, 40, 14, and our entire discovery pipeline.

Resulting in a robust pipeline that includes the targets previously within the Celgene collaboration pool.

Plus our tumor stromal cell programs, which have always been wholly owned by jobs.

The productive three year relationship with Celgene was very beneficial.

Helping us to build out our broad platform and we are very pleased with this outcome.

Also during the time, our team made great progress and advanced three programs into development.

While continuing to build a broad pipeline of potential next generation I O therapies.

Let me step back a moment and highlight why we believe the use of our translational science platform is critical to the advancement of novel immuno therapies.

In discovery, we interrogate the tumor micro environment to understand and identify Io targets.

Our discovery methods are sustainable.

And we plan to continually to apply this approach to our target selection process.

The exclusive license of Gtx 80, 64 to Celgene is an important example of this technology at work and a validation of our approach.

Beyond discovery, our platform enables reverse translational two to interrogate the characteristics of responding patients in our clinical studies.

This has led to the key scientific findings underpinning the next stages of clinical development of our lead program Barbara.

With our experienced team validated platform and strong balance sheet.

We continue to advance both our ongoing clinical and discovery programs and remain focused on understanding the underlying mechanistic science of our immuno therapies and the characteristics of responding patients.

With many exciting developments on the horizon, we believe jounce is well position for significant value generation going forward.

Thanks, Rich I want to take a moment to touch on some of the recent highlights of our pipeline.

We're particularly pleased with the progress we have made with Oprah.

Most notably as rich mentioned in mid June we announced the initiation of our phase two Imerge study of Oprah in combination with ipilimumab or it'd be in PD, one experienced patients with non small cell lung cancer bladder cancer.

These patient populations represent a rapidly growing area of unmet need as PD, one inhibitors move into earlier lines of therapy with few options and no established standard of care for patients who progress after a PD one or PDL one inhibitor.

Although PD one inhibitors has made great strides. Unfortunately, there are still more patients who do not respond to therapy than those who do.

As the primary activity of PD, one inhibitors impacts CD eight cells, we believe that focusing on the critical role that CD four cells may help address this unmet need.

The phase two emerge clinical trial, a vote and if he built upon the original science from our founders as well as the reverse translational subset analysis from patients who benefited in our iconic trial compared to those who did not.

The Imerge study also includes new dosing schedules and a novel combination sequence based on our understanding of the kinetics between it'd be the emergence of I could tie city for T cells and Oprah.

We are pleased to have begun enrollment in this study.

As a reminder, assays to emerge clinical trial is an open label multi center study to evaluate the efficacy of Oprah in combination with <unk>.

In the initial stage, we expect to enroll approximately 40 patients with non small cell lung cancer and approximately 40 patients with bladder cancer.

The primary study endpoint is overall response rate and secondary endpoints include safety duration of response progression free survival and overall survival.

Additional important assessments will include close monitoring of I close high CV for T cell emergence and a range of other biomarkers, including exploratory assessment of potential predictive biomarkers.

We expect to report preliminary efficacy and biomarker relationships to clinical outcomes for up to 80 patients in 2020.

Beyond the emerged trial. We are also in the planning stages of additional phase two studies of Oprah.

As a reminder, in April we presented exciting new data from the phase one two iconic trial with Oprah at the A.C. our annual meeting.

Further establishing the importance of the <unk> associated I Cotai T.D. for T cell biomarker in defining patients with the greatest clinical benefit.

Specifically, we observed improved progression free survival and overall survival in patients with the emergence of I. Cotai C D. Four T cells versus those without them.

As we previously reported the emergence of this population of cells with students Oprah and not to PD one inhibitors.

Based on these reverse translational findings strategies to optimize emergence and expansion of these cells have become a cornerstone of the boat for development program.

As rich announced we're pleased to have completed enrollment in the phase one clinical trial of Gtx 40, 14, our PD, one inhibitor and to determine the recommended phase two dose we plan to report data from this study in the second half of this year.

Beyond these clinical programs. We also continue to advance and build out our discovery pipeline of novel I O targets, including T regulatory cells macrophages and stromal cells.

True to our goal of developing the right immunotherapies for the right patients we plan to incorporate potential predictive biomarkers at an early stage in all of our discovery programs, we expect to announce a new development candidate and move it into I, Andy enabling studies later this year.

We are pleased with the progress we have made to date across our entire pipeline. We continue to focus on the underlying mechanistic science of our immuno therapies as we work towards bringing meaningful and long lasting benefits to cancer patients.

Now I would like to turn the call over to Kim for a discussion of our Q2 financial results, Tim Thanks, Beth and good morning, everyone.

As we reported in this mornings press release cash cash equivalents and investments as of June Thirtyth 2019 totaled 152 million compared to 195.9 million as of December 31st 2018.

The decrease was primarily due to operating costs incurred during the period.

Subsequent to the quarter end, we received $50 million in July 2019, pursuant to our new license agreement with Celgene.

Turning to the piano our collaboration revenue was 17.4 million for the second quarter of 2019 compared to 19.4 million for the same period in 2018.

We call that collaboration revenue currently noncash reflects the recognition of the Celgene upfront payment received in July 2016.

In connection with the termination of the broader Celgene Alliance announced in July 2019, we expect that the remaining deferred revenue relating to our original strategic collaboration with Celgene will be fully recognized in the third quarter of 2019.

During the second quarter of 2019, we incurred 18.1 million in research and development expenses compared to 18.5 million for the same period in 2018.

The decrease in expenses was due to lower external R&D costs, partially offset by an increase in employee compensation costs.

General and administrative expenses were 7.3 million for the second quarter of 2019 compared to 6.5 million for the same period in 2018.

The increase in DNA expenses was a result of increased employee compensation costs, including higher stock based compensation expense and cost to support our operations.

Net loss for the second quarter of 2019 was 7 million or a net loss per basic and diluted share of 21 cents.

As compared to a net loss of 4.7 million for the same period in 2018 or a net loss per basic and diluted share of 14 cents.

This increase was driven by lower noncash collaboration revenue.

We reiterate our updated revenue guidance and expect to record 50 million in cash revenue in 2019 related to the exclusive license of Gtx 80, 64, and approximately 98 million in noncash revenue and 2019, representing the remaining recognition of the Celgene upfront payment received in July 2016.

Based on our operating and development plans, we continue to expect gross cash burn on operating expenses and capital expenditures for the full year 2019 to be approximately 80 million to 95 million.

Our strong balance sheet allows us the flexibility to drive our innovative immunotherapy pipeline plus efficiently execute against our strategic plans and goals.

We are focused on executing our next phase two studies of both Brazil and continue to advance the rest of our pipeline.

With that we would now like to open the call for your questions operator.

Thank you.

Ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your Touchtone telephone. If your question has been answered very wish to remove yourself from the queue. Please press the pound key to prevent any background noise. We ask that you. Please place your line on mute once your question has cheated.

Our first question comes from the line of TV channels.

With each.

H.C. Wainwright. Your line is open. Please go ahead.

Hey, good morning, So I've got a couple so since you have the recommended phase two dose for our Gtx 40, 414, do you have a sense of how active a de stocking up versus the other PD ones and if 40 14 will serve as the best combination pop off of Oprah.

Hi, <unk>. This is Beth so we've always stated that our primary goal in developing Gtx 40, 14 is to be able to use it in combination with other drugs in our pipeline.

And we have mentioned that we plan to.

[noise] share the data from the phase one study in the second half of this year.

So.

The next combination of that vote is 40 14, and you don't really have to go to any other anti PD ones, that's what I should read into it.

No. We haven't stated what the next combination as we are currently in the planning stages of additional phase two studies and we'll share more information up as time progresses.

Great and then one last one so in terms of the month study what does the internal hurdle.

After the you know the first bullet 80 patients to the full 226 patient recruitment that's up on clinical trials right now and could you just remind us on the rationale for choosing non small cell lung Utopia last the first two indications. Thank you so much.

Sure. So on so we have a an interim analysis built into the protocol and the initial a number of patients that we've announced are to get to that point and you know we haven't shared the details of that at this time regarding the choice of the tumor type.

So we put a lot of thought into this I previously what we wanted was areas where there was a significant unmet need in the PD one experience space, but where we had reason to believe that if the invoke Brett would make a difference and so for non small cell lung cancer. If you recall in the iconic study we actually had.

Patients, who had benefit who where PD one experience non small cell lung cancers, who also had emergence of the I close I see before T cells, So and that was in a combination with nivolumab. So we have reason to believe that you know when a new I O combination in those patients is is something reasonable to explore and then I'm also in non small cell lung cancer, because PD one inhibitors have moved into the frontline setting we're able to go right into the second line setting so much less heavily pretreated patients that we treated in the iconic city hopefully patients who will be less sick be able to stay on study longer since we know that vote for seems to take a little while to work and we need that emergence of those lycos high sea before so.

With respect to Urothelial cancer.

It's probably the major driver is that that is one of the first tumors in which Pam Sharma showed induction of I close I see before cells by it'd be and so we know the biology is active in that tumor type and that adding vote on after induction of those I 'cause high C. D. Four cells by it'd be you know fits our scientific rationale. So we believe there is a good scientific rationale for both and then also from kind of the end market sense, an unmet need there earlier lines of therapy patients, who should be able to stay on long enough to benefit.

Appreciate it thank you so much.

You're welcome.

Thank you and our next question comes from the line of Steve.

He has with Raymond James Your line is open. Please go ahead.

Good morning. Thank you just one question for me what is the current head count at the company and can you just talk about the.

Your core competencies that you have across the.

Drug development platform you highlighted in the prepared remarks, where are you strongest than.

Where might you be looking to build out more capabilities as Jones grows and expands and advances.

The pipeline. Thank you.

Sure. Good morning, Steve. This is Kim so we currently have a 127 full time employees here in Cambridge, and one of the things that we've always been proud of is we've been able to build a company with experience across the entire lifecycle. If you will of our programs from the early discovery into clinical and so we feel as though we have a very strong scientific bench in terms of.

You know what we need from the discovery side using our platform also were able to do all of the reverse translational and the translational analysis work that we do internally. So we feel as though we've created.

A team that can.

Go from start to finish if you will and really take us to where we need to be we don't have any major.

Holes, if you will right now in terms of functions that we'd be looking to expand as we continue to develop and go into more clinical trials, we would add additional clinical head count, but our discovery is pretty much.

At the level, we would like it to be and we feel as though we've built a team with a lot of expertise.

Yeah, maybe I'll pick up on that just a bit as well Steve This is rich.

You know the.

The goal really with the focus on the translational work is to try to make that science interface with clinic as seamless as seamless and Pos as possible and so that's that's really how we're structuring the company.

I do think you know we will be seeing from jobs more kind of light shining on.

New programs emerging we obviously were very happy with the.

With the renegotiation of the Celgene deal, which included the Outlicense of Gtx 80, 64, and just to reemphasize that that went from early target discovery really that biological early concept to a clinical candidate and we think we did that in a very efficient manner.

That same methodology that same way of going after these new mechanisms that we think could eventually benefit patients is what will be employing on continue on macrophages T regulatory cells stromal cells. So we're happy with the kind of the horizon of skill sets and how we will progress discovery and then of course as you know we're very.

Very much.

You know supporters of the idea of the reverse translational work at that best that told US about so going forward is really it's more of kind of an integration forward integration rather than filling filling any particular gap and this is that maybe I can just finish by adding.

Recently, Weve really brought in some very senior and experienced people in the clinical organization as well and so we feel like we have a very very strong bench there as well.

Thank you and our next question comes from the line of Jim Birchenough with Wells Fargo. Your line is open. Please go ahead.

Hi, guys. Thanks for the call and all the detail on a couple of questions I guess first.

Can you maybe speak to the expected rate of Heico's, hi, cdfour cells induced by if eliminate Matt what's your assumption in terms of.

These two tumor types and.

There's some data to suggest a certain rate of my course high T cells here.

Sure. That's a great question. Joe This is Ben so in the data that Pam has published its ranged from anywhere from 6% to up to 40% and generally they see an increasing after one to two doses of basi.

So that's kind of the range that we would expect at this point and that's Oh, sorry, that's per patient thats not the number of patients with tyco side, but for an individual patient treated with it'd be they have seen up to 40% of the peripheral blood CD four cells being I cotai.

Is there anything in the protocol Bath or have you thought about.

If you're not seeing that sort of heico's induction on T cells.

Increased the patient numbers or.

Change anything I'm, just wondering if you run into a scenario, where you're just not getting that induction of an eye towards high T cell state.

Sure. So it's something we're going to be monitoring very closely in the study and as I think we've demonstrated we have the ability to react to emerging data and so this is a study where we will be following some of those key indicators very very closely and we will be able to modify things as we go along in response to emerging data.

Yeah, maybe to add to that.

Yeah, sorry, the implication there being we will be looking at this as the study as the study enrolled.

Okay great.

And then maybe just on the ability to dose Debbie and evolve brought together and the tolerability of that combination. It seems from iconic that if you could get patients dose long enough there was a benefit and so.

Maybe what have you learned about the dosing protocol youre.

Bob pursuing here, Yeah, I expect the tolerability of the combination.

You know what kind of confidence do you have that.

Patients will be on volte for long enough to derive a benefit.

Sure. That's a great question, something we talk about a lot.

So first of all we completed the dose escalation in iconic them if the envelope era.

And were able to.

We did not have any dose limiting toxicities.

So we were able to dose the two drugs together.

We were very pleased with that.

And with respect to keeping people on study longer there are a number of different ways that we're addressing that first of all as I mentioned. These are definitely earlier line patients. So these patients are going to be second maybe some third line patients. So they are not nearly as heavily pretreated or beat up as the patients who were an iconic who were mostly fourth line and beyond.

We also have implemented other measures in the protocol that we believe will help keep people on study longer some of those we think we're not really ready to talk about publicly but we think we have a good strategy for that but in addition to tracking the I close I see before so we are also absolutely going to be tracking the rate of how long people are staying on study. So that's something we'll be watching very closely.

And maybe just a final question in the lines of therapy your.

Dosing the combination what would be the expected response rate, Brett, but when the mab alone in lung and bladder cancer.

Yeah, there's not a lot of data on that there's actually no data would be there is some data with tremelimumab and the response rate is about 6%.

Got it thanks for the answers very helpful. Thank you.

You're welcome Jim.

Thank you and again, ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. Our next question comes from the line of Mike <unk> with Baird. Your line is open. Please go ahead.

Good morning, and thanks for taking the question.

I just had a question on the phase two Imerge study and then maybe you can just comment on the early pace of enrollment here in the number of sites that are up and running and then maybe how that's tracking versus your expectations and then secondly, just curious if you've begun enrolling patients in the predictive biomarker cohorts. Thanks.

Hey, Mike So nice try but you know we don't usually share [laughter] share data on the on the pace of enrollment.

I would say I'm just you know we're pleased with how the study is going right now and I'm not really ready to share any additional details and regarding biomarkers as Weve mentioned, we have are including several potential predictive biomarkers in this study in the Imerge study itself.

Great. Thank you.

Thank you and our next question comes from the line of Cory Kasimov with JP Morgan. Your line is open. Please go ahead.

Hi, This is gavin on for Cory Thanks, Ralph data apologize I got on the call late but just just back to the phase two a merged study for for the interim analysis.

Are you going to present data from both the lung and bladder. So all the full Andy or will this be spread out through the year.

Yeah. As we've stated we expect to have to to have data on up to 80 patients across both tumor types next year.

Okay. Thank you and then just in terms of I think.

I think you answered this question.

From Steve, but can you just.

I think I Miss heard but the 6% to 40% that was for the high cost Cds or T cell.

Per page yes.

No yeah, yeah per patient. So if you look at a particular patient and this is what we've been measuring as well you can track the percentage of Ikonos High C. D four cells.

In the peripheral blood CD four cells overtime and so that's what.

Pam has shown that it's been the Max that its increase to at least in the data that the cheese publish has been up to 40% of the peripheral blood CV for cells are I close high after treatment with EFI.

Okay and is there is there are certain cut off where you're defining that high versus low.

Yes, there is.

Yes, there is I don't have you shared that but yes, we do have a cut off that we've identified.

Okay. Thank you very much.

You're welcome.

Thank you and I'm showing no further questions and this does conclude our Q and a portion.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may disconnect everyone have a great day.