Agenus (NASDAQ:AGEN) Q1 2021 Earnings Call

0:00 Good morning, ladies and gentlemen. Thank you for standing by and welcome to AGENAS first quarter 2021 conference call and webcast. At this time, all participants are in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, please press star then one. Please note that this event is being recorded and may be used in future AGENAS promotional material. I would now like to turn the conference over to John Medina, Director of Investor Relations. John, please go ahead. Thank you, Rebecca, and thank you all for joining us today. Today's call is being webcast and will be available on our website for replay. I'd like to remind you that this call will include forward-looking statements, including statements regarding our clinical development, regulatory and commercial plans and timelines, as well as timelines for data release and partnership opportunities.

0:55 These statements are subject to risk and Uncertainties, and we refer you to our SEC filings for more details on these risks. As a reminder, this call is being recorded for audio broadcast. Joining me today are Dr. Garo Armen, Chairman and Chief Executive Officer, Dr. Jennifer Buell, President and Chief Operating Officer, Dr. Steven O'Day, our Chief Medical Officer, and Christine Klaskin, Vice President of Finance. Now I'll turn the call over to Garo to highlight our progress during 2021 so far. Good morning everybody and thank you John. Thank you all for your participation and interest in agenus. In the past seven and a half weeks since our last call, we have continued to make progress on our key programs and milestones.

1:42 These include additional clinical trial data, advancing our INKT programs in COVID and cancer, earning two presentation slots at ASCO, Filing our first BLA, defining our strategy for 1181, and being on track for cash accretive corporate transactions for this year with a start in the current quarter. Firstly, we announced that we submitted our Bostilumab BLA to the FDA for the treatment of recurrent or metastatic cervical cancer. under the accelerated approval pathway.

2:30 Second, regarding our next generation CTLA-4 inhibitor, Agen 1181. At the ACR annual meeting in April, we disclosed new clinical responses for this antibody. There has been steady and impressive results continuing the trend we had previously disclosed. Additional data and clinical responses will be presented at upcoming conferences. Third, regarding our INKT program, we had indicated in our last call in March, we extended our INKT clinical development program into cancer. While we continue to advance INKT cells in patients with acute respiratory distress syndrome, Secondary to COVID-19, we have recently announced the initiation and dosing of our first patient with cancer and will soon initiate our cell therapy combinations with checkpoint antibodies in solid tumor cancers.

3:43 Turning to TIGIT. We have advanced our efforts to expect to file an IND for our lead anti-tiget program, AGEN 1777 by specific, during this current quarter. Next, regarding corporate transactions, we continue to expect cash accretive corporate transactions this year, starting in the current quarter. While there has been tremendous upheaval around the world over the last 12 months, a genesis core mission is unchanged. And we are on track with the delivery of our objectives. Speed and quality of our innovations is and will continue to be the core to our strategy.

4:38 We will continue to marshal the best people and the resources that are paramount to achieve success for us. I would like to now turn the call to our President and Chief Operating Officer, Dr. Jennifer Buell. Dr. Buell. Thank you, Garo. As Garo described, we made great progress during the opening months of 2021, advancing each major program efficiently towards our major objective. He also mentioned that speed of innovation remains our imperative. The industry standard for timelines and drug development from ideation to the clinic is four years. But in that same time, we've actually delivered 15 new discoveries.

5:29 This is in part attributable to our technology integration. This is realized in our vision platform, short for virtual systems for immuno-oncology. What is vision's purpose? The purpose of vision is to generate superior IO assets in less time by quickly defining why and how immunotherapies work to control tumors. Vision enables quicker validation of drug targets. It empowers faster optimized molecule design, faster drug candidate selection. It defines biomarker signatures that predict which patients will respond to therapy and Vision offers ways to customize those treatments to expand patient benefit.

6:18 What is Vision? Vision is a virtual drug discovery system. It mimics or recapitulates a patient's tumor microenvironment and their immune system. It uses artificial intelligence and predictive algorithms to explore a much broader range of drug biology interactions. than any human capability. Vision generates data and provides feedback in real time to enable better drug discovery decision making. More importantly, Vision has helped give rise to our pipeline of differentiated molecules. This includes valstilamab, our PD-1 inhibitor, which we believe is showing differentiated activity pre-clinically and clinically.

7:06 This also includes agent 2373. That's our CD137 antibody. Both antibodies will be featured in an upcoming virtual ASCO Annual Meeting in early June. And of course, this also includes HN1181, our anti-CTLA-4 antibody we believe is showing the potential to have best-in-class activity in the clinic. And with that said, I'll turn the call over to Dr. Steven O'Day, our Chief Medical Officer to provide his insight on 1181, including the differentiated activity we disclosed at this year's AACR annual meeting. Steven? Thank you, Jen. As Jen and Garo discussed, we've made additional progress with AGEN 1181. The evolving clinical data strongly supports the preclinical flock bindings and continues to show the strength of the engineering behind this antibody.

8:09 We anticipate additional HN1181 clinical data disclosure at upcoming clinical conferences. As the data matures, we continue to see responses in cold tumors, traditionally a very difficult set of tumors to treat with IO therapy. These cold tumors are typically low in tumor mutational burden, They are microsatellite stable and they have low or negative PD-L1 expression. This is in contrast to warm or hot tumors that typically have higher tumor mutational burdens. They can be high microsatellite tumors and they have higher levels of PD-L1 expression.

8:56 These warm or hot tumors are typically related cancers to environmental exposures like tobacco, alcohol, or viral pre tumors. In addition, we have noted responses in patients with the low affinity CD16 allele, which data suggests would be expected to have an inferior response to first generation CTLA-4 antibodies. The clinical trial to date has been dominated by traditional cold IO tumors due to referral patterns to phase one IO trials. Recently we have treated our first patient with melanoma, a hot IO tumor with single agent 1181 with a rapid objective response.

9:46 This patient was PD1 refractory and importantly had CD16 low affinity allele. Regarding adverse events, no immune mediated hypophysitis, pneumonitis, or hepatitis have been reported to date which is encouraging and favorable compared to patients treated with urovoid-based IO regimens. As of our latest disclosure at AACR's annual meeting in April, we've observed a total of seven objective responses, including two responses in endometrial cancer, two responses in colorectal cancer, two responses in ovarian cancer, and one response in melanoma.

10:33 We believe we have tremendous flexibility with the clinical development of Agent 1181 and the potential regulatory path. Studies are continuing as monotherapy with 1181 and in combination with our PD-1 inhibitor, Balstilamab. We plan to develop Agent 1181 in indications that represent large market opportunities. This strategy is exemplified in our ongoing phase two expansion cohort of MS stable colorectal patient in our current trial, which is actively accruing patients. Our initial registration plan targets indications for rapid launch by seeking approval through the accelerated approval pathway.

11:21 as monotherapy 1181, or on top of our PD-1, Valstilamab, or any approved PD-1, including patients with unmet need. I'd like to now turn the call over to Christine Klaskin to discuss our financials. Thank you, Steven. We ended our first quarter 2021 with a cash balance of $119 million. as compared to $100 million at December 31st, 2020. Cash used in operations for the three months ended March 31st, 2021 was $43 million compared to $35 million for the quarter ended March 31st, 2020. Net loss for the quarter ended March 31st, 2021 was $54 million or 27 cents per share which includes non-cash expenses of $12 million compared to a net loss for the same period in 2020 of $45 million, or 31 cents per share, which includes non-cash expenses of $3 million.

12:29 We recognized revenue of $12 million and $15 million for the quarters ended March 31st, 2021 and 2020, respectively, which includes revenue related to non-cash royalties earned and revenue recognized under our collaboration agreements. I now turn the call back to Garo. Thank you very much, Christine. And thank you all again for your interest in Genus and for joining us this morning. The progress that Genus is making so far this year is positioning us for a strong 2021. Looking into the current quarter and beyond, we expect to achieve value-driving events, with our clinical and preclinical cut pipeline.

13:19 And this includes an extensive list of important items, starting with, this year, we expect to further detail our BLA strategy for the combination of Bostilumab and Zoliferilumab. Two, having filed our first BLA, continuing to work with the FDA for our first product approval. Preparing for commercial launch for second-line cervical cancer. Four, continuing with our Phase II development for Agent 1181 plus Bostelumab with a strategy to transition these studies to registrational trials. Five, additional data presentations for our own pipeline of agents and partner programs.

14:12 Advancing our AGEN 1777 TIGIT program into and through the clinic. Seven, completing enrollment of the Phase I INKT study in intubated COVID patients. Eight, expending and generating clinical data from our recently initiated INKT cancer trials. Nine, progressing with our commercial manufacturing facility for antibodies. progressing with our sustainable supply of QS21. And 11, progressing and delivering on our cash accretive corporate transactions. Thank you again for your attention. Now we will open the call to questions.

15:02 Rebecca. Thank you. We will now begin the question and answer session. If you have a question, please press star then 1 on your touchtone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star, then 1. And our first question is from Mai Yang from B. Reilly Securities. Your line is open. Good morning, team. Thanks for taking our questions and congrats on the progress. If I may ask quickly on the 1181 to Jen or Dr. O'Day, in terms of patients that you're continuing to treat, could you provide more color on, you know, you said melanoma, but what sort of patients do you anticipate having update this year? And specifically to Garo's comment on, you know, what could allow you to transition to a registration trial?

16:06 And then... Just a follow-up to that, you know, there was a ODAC committee meeting on checkpoint inhibitors very extensively over three days. So I was just curious broadly as, you know, you are one of the pioneers developing different approaches of checkpoint, like what did you think were the implications for your portfolio? So maybe, Mayank, what I will do, what we have publicly disclosed based on the data from AGEN 1181, We have seen responses, as Dr. O'Day mentioned, in tumors that are otherwise unresponsive to immune therapies, those being microsatellite-stable endometrial, microsatellite-stable colorectal, ovarian, and now also in tumors considered hot or warm, those being melanoma. Now, that has been the extent of what we've publicly disclosed.

16:58 and so the data have been driving our decision on areas to pursue in which we're eligible for fast to market opportunities like accelerated approval as well as very large market opportunities such as Dr. O'Day mentioned and that being colorectal cancer, MSS colorectal cancer. So I'll just ask Dr. O'Day if he has any other feedback. Yeah, I mean thank you for the question. What's exciting to us is that we have a designed next generation CTLA-4 that's showing activity in the clinic, as I've said, particularly in tumor types that traditionally don't. We're obviously expanding colorectal as we publicly disclosed, and that's going well. We will continue to expand other areas where we're seeing signals, and the science will follow us here.

17:51 As we expand these cohorts, Depending on the strength of the signal, our goal is fast to market and we're not shying away from large markets because cold tumors are traditionally large markets and we will pursue the science. and Mayank related to the ODAC meeting you know this was as you've seen predominantly focused on different product opportunities and I think consistent with what our expectations were from the meeting we don't we don't perceive any negative impact to our portfolio of course products that show tremendous efficacy will continue to be fast-tracked and made available to patients and so those are the products that we're pursuing obviously and So I think that the outcome was not impactful to us in any negative way.

18:43 Thank you. And maybe just a couple more. Any incremental color on the CD137 data coming up at ASCO, sort of how many patients, combination versus monotherapy, heart versus cold tumor, any color on that? Maybe also if you have any update on the sustainable supply of QS21 and sort of where you are with the synthetic manufacturing process. Thank you. Well, thanks for the question. Obviously, we have embargoed data from ASCO, so obviously I can't give any details around it, except to say that as you would expect, all Phase I IO trials are with, you know, the tumor types that come into these trials are typically cold tumors, and we're very pleased with How this trial is progressing in monotherapy and we anticipate we have not seen any major toxicity signals and we're looking forward to do combinational approaches very soon. So more to come from ASCO where the detail of the trial to date will be summarized.

19:50 Maybe a few words on the molecule, the differentiation design. You know, Maya, maybe I'll just say, though, as a reminder for those new to this product, Agen 2373 was designed. It's an anti-CD137 agonist. We know that these molecules and mechanism are really critical for bringing durable, long-term immune responses for patients with cancer. The problem with preceding molecules is that they have been toxic. Predominantly, a lot of liver toxicity has been observed. We designed our molecule to actually be, to not induce any liver toxicity. So essentially the molecule binds only in the presence of the ligand, so effectively we call that conditionally active.

20:42 There's a condition to its activity that we believe will support a safer profile. or a better tolerable profile. So I think more data will come out on the mechanism as well as what we're seeing in the clinic to support that mechanism. It's fair to say the color is green. And QS21? Oh, QS21, as you know, so there's no ambiguity about the fact that QS21 is a highly active, perhaps one of the most, if not the most active, adjuvant. Now what does that mean? That simply means that vaccines that have QS21 as an adjuvant drive both Th1 and Th2 components of the immune response.

21:40 That's a very, very important element. Now the problem, as you know, has been that In the past, because we haven't had the kind of pandemic that we're experiencing right now, the typical requirement for a vaccine has been, such as, for example, shingles vaccine, in the tens of millions of doses per year. It hasn't been in billions of doses per year. And now that we are confronted with this reality, because we don't know if the current pandemic is going to go away If it's going to continue, we don't know if we're going to be confronted with new pandemics that we're not even contemplating right now.

22:26 However, what we know is that the world's state of mind has dramatically changed from one of a state of compliance or complacency, rather, to a state of heightened urgency to be ready for pandemics. That requires that we need to be ready with a very highly effective adjuvant like QS21 to be able to produce enough of it to accommodate very large quantities of vaccine doses. And in order to do that, the only way to do it in our opinion is to try to replicate the raw material from a natural source to a man-made source.

23:20 And here we're talking about making it with plant cell lines, which we have started the process. So right now, as I've said earlier, it's a question of engineering, not a question of can this be scientifically accomplished, because we've done the science part. We've shown it in small-scale quantities that we can make it. And scaling up, of course, is a different kind of an effort, and that's what we're in the process of doing. And I'd say we're probably a third of the way into it right now in that scale-up process. Does that answer your question, Maya? Yes, it does. Thank you for taking my questions.

24:07 And our next question is from Kelly from Jefferies. Your line is open. Hi, good morning. This is Jason Bouvier on for Kelly Shih. Thank you for taking our call. We're wondering if you can discuss a little more how you're thinking about the development of the second-gen CTLA-4 antibody. For example, how do you prioritize? Do you prioritize the combination therapy with PD-1 or the monotherapy such as in the PD-1 refractory settings? So let me make a general statement and then I'm going to let Steven and Jen address it. So our strategy from a big picture perspective is very simple.

24:53 And our strategy is based on data that we have disclosed as well as data that we have in our possession that factors into our planning. Very important point. We make decisions based on science. Now, at one end of the spectrum, as Steven said, we're seeing very, very pronounced activity in tumors that are cold and represent very large markets because no immunotherapy in those tumors has shown real profound activity so far.

25:38 So on one hand, our strategy is to pursue that very, very expeditiously. On the other hand, there are other cancers that are specialty cancers, so to speak, where there may be a path for approval that is very rapid. So we're looking at both of those strategies, and Steven, Why don't you elaborate on this? Yeah, I understand people really want some detail around the development plan. I think what we've said is that there's going to be a lot of flexibility and options here, and we simply need to see the strengths of the signals as we expand some cohorts to know the path that's most rapid to approval. And it may be single-arm studies if the strength of the signal is high enough. It may involve some comparative trials and each of the diseases, whether it's a cold or warm and hot tumor, obviously, as you know, is a very competitive landscape.

26:38 What I can tell you is we're thinking through this very carefully and we're in parallel thinking about where we want to go as the data evolves and we will be ready as soon as we have more data. What we have been able to do is to reach Doses that we're comfortable with, both in single agent and combination, with a favorable toxicity profile. And so we're ready now to expand these cohorts and see where the data takes us. Great. Thank you so much. Once again, if you have a question, please press star, then 1. And our next question is from Matt Phillips from William Blair. Your line is open.

27:24 Hey, good morning, guys. This is for Matt. Just on the I know you guys are having ongoing conversations with the FDA. I was wondering if you could provide any color on sort of the focus of those conversations and any alignment that needs to occur between you and the agency there. Then I believe you mentioned that you plan on presenting additional responses from the 1181 trial at upcoming conferences. I was just wondering if I heard that correctly. And if so, if you could provide any color on if those are in similar cancers to what you've seen responses before or those in new indications.

28:14 Yeah. I think our previous statements hold there. We are actively expanding these cohorts, and we expect to present updated clinical and safety data at meetings this year. And regarding the additional color on FDA conversations, I think those are confidential, and it would be inappropriate for us to talk about it or speculate. I think the one addition I would say on Falzal is that as you know and we've disclosed previously, the trial has been enrolled, the large trial over 150 patients. We've concluded our follow-up period, the median follow-up period that was necessary, and the data continue to look very strong.

29:06 So this combination we believe is a real potential opportunity for patients with cervical cancer. We look forward to continuing to keep you updated. Okay, great. And maybe one more real quick. On the COVID trial, I think last quarter, you had mentioned that you expected the dose escalation to wrap up here in the first half of the year. And now I think it's sort of shifted to just general finishing in 2021. So I was wondering if you could provide any color on how the enrollment is going in that trial, especially given that, you know, the vaccination efforts that are ongoing in the U.S. So I'll say just a couple of points on this, but we are still on track to complete dose escalation the first half of this year and then, of course, expand to phase two.

29:55 And where we see a real opportunity here in patients who have sequela, right? So it's acute respiratory distress syndrome secondary to COVID. And we have a real opportunity to expand to bring potential benefit to those patients as well as beyond those suffering from ARDS independent of COVID. So we see a number of opportunities for development of these cells in pulmonary disorders that are quite prevalent that will be untouched or be able to proceed independent of the continued high prevalence of COVID. Although I will say, despite the vaccine efforts, we are still seeing that the pandemic is ravaging certain communities, and this still remains a real problem.

30:43 Great, thank you. We have another question from Mayank. Your line is open. Thanks for taking my follow-up. I will ask the COVID question, Jen, and also just the implication of that in cancer. As obviously these cell types, you know, the source has to be also very scalable. Like how are you sort of making choices, you know, what to go towards COVID versus You know, your cancer study and also in terms of the communities that are ravaging your point, Jen, are you considering doing trials in those territories where, you know, the pain is greater?

31:29 So I'll say, Mayank, with respect to scalability, the real differentiation of a gen test, and it's based on our manufacturing prowess, is that we actually have been able to address, this isn't a biology problem, it's an engineering problem, the scalability of IMKT cells and we have publicly presented data where we're seeing exponential scalability with these cells. I'm now producing nearly 10,000 doses for patients at our current capability and then we're prepared to go far beyond that. So for Agentes, manufacturing has been addressed and now scalability is very straightforward for us. It's just a matter of the numbers and we don't need to scale far beyond what we have right now. It'll address our current needs in the clinic in cancer as well as in COVID.

32:21 As far as the expansion of this trial, we'll provide more detail on the agentes' plans for the INKT in COVID and beyond. And by the way, just to address this question, I want to point very clearly, God forbid, should the viral variants and the mutations keep ahead of our ability to develop vaccines that are going to be able to confront the future challenges? Should that happen? And should, for example, I and KTs be a viable therapeutic approach? There are a lot of shoulds here, but if that were to happen, we do not foresee that manufacturing or cost of treatment will be an issue on a large scale, on a large scale.

33:27 Okay, thank you. And maybe a follow-up question. To this is how any update you could provide on what things you might be looking at, you know, going by yourself versus, you know, there could be a lot of support from external stakeholders, public, private, towards some of these activities. So any color you could provide from a timeline standpoint, you know, when we could expect some of the strategic discussions you might be having? All of these prospects are being actively pursued, Maya. Okay, thanks for taking my follow-up. And we have no other questions at this time.

34:18 Great, thank you everyone for joining us. We'll talk to you soon. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.