Agenus Inc. (AGEN) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Agenus business update. [Operator Instructions] I would now like to hand the conference over to your speaker today, Divya Vasudevan, Senior Director of Oncology Strategy and Investor Relations. Please go ahead.

Thank you very much, Catherine, and thank you all for joining us today. Today's call is being webcast and will be available on our website for replay. Before we begin, we would like to remind you that this call will include forward-looking statements including statements regarding our clinical development, regulatory and commercial plans and time lines as well as time lines for data release and partnership opportunities. These statements are subject to risks and uncertainties, and we refer you to our SEC filings for more details on these risks. As a reminder, this call is also being recorded for audio broadcast. Joining me this morning are Dr. Garo Armen, Chairman and Chief Executive Officer; and Dr. Jennifer Buell, President and Chief Operating Officer. Now I'll turn the call over to Garo. Garo?

Thank you very much, Divya. Today, we announced a strategic decision to withdraw our Biologics License Application, or BLA, for balstilimab for the treatment of patients with second-line recurrent or metastatic cervical cancer. This decision to withdraw the BLA does not change the development plans for balstilimab combinations. Following the full approval of balstilimab announced 4 months ahead of BLA's goal date, or I should say following the full approval of pembrolizumab announced 4 months ahead of the FDA's BLA goal date, the agency no longer considered it appropriate to review the BLA for accelerated approval and recommended us to withdraw the application. The BLA submission for balstilimab received Fast Track and Priority Review Designation from the FDA back in June with a target action date of December 16, 2021 for the decision on the BLA. As part of the BLA review process, we successfully completed 3 FDA inspections. At the conclusion of these inspections, there were no cited issues, concerns or Form 483s in technical terms. And all of this, of course, is a testament to our commitment, readiness and quality of our organization. We made this decision despite the fact that balstilimab having met its trial endpoints in the largest single arm trial to date in this population, involving 140 patients. Balstilimab showed responses in both PD-L1 positive and PD-L1 negative patients, which were 20% and 8%, respectively, compared to pembrolizumab responses of 14% and 0% in a trial of 77 patients, which resulted in its accelerated approval for only PD-L1 positive patients back in 2018. Now, of course, in single-arm trials, it's hard to compare results from one trial versus another. However, we are very heartened by the fact that our response rates were quite robust in a trial which represented almost double the number of patients in the pembrolizumab trial. Balstilimab has also shown superior killing of PD-L1 negative tumors compared to other anti-PD-1 therapies, including pembrolizumab, suggesting a broader mechanism consistent with balstilimab's clinical activity in both PD-L1 positive and negative cervical cancer. From the start, we anticipated the commercial market for balstilimab monotherapy in second-line cervical cancer will be small, and it has become smaller today because the market has gotten considerably crowded after the recent approval of pembrolizumab in the first-line setting. And that, of course, also affects the potential size of the market. However, given the importance of PD-1 blockade in cancer intervention, we had always prioritized balstilimab as a necessary component in our pursuit of highly effective combinations within our portfolio and potentially with partners including combinations with our next-generation CTLA-4, AGEN1181. And, of course, these facts continue to be the driver for our balstilimab advancement. Our PD-1 strategy is driven by the urgent unmet need for effective and affordable cancer therapies. Hence, the independence from third-party PD-1s has been key to our strategy and continues to be. At this year's SITC conference, we will present new data on AGEN1181 as monotherapy and in combination with balstilimab. We will also announce further details on our plans to accelerate the development of AGEN1181 plus balstilimab in multiple tumor types. Our objective is to pursue trials designed to enable full approval while pursuing accelerated approval pathways for rapid commercialization and access to patients when appropriate. In addition to withdrawing our BLA for balstilimab in second-line cervical cancer, we will also discontinue our confirmatory trial BRAVA. This is expected to reduce R&D expenses by over $100 million spread over at least a couple of years. However, given the clinical benefit demonstrated by balstilimab, we are planning to launch expanded access programs to give patients and doctors access to balstilimab in several countries including the U.S., of course, pending a regulatory process in each country. So in summary, let me point out several things. One is that balstilimab BLA withdrawal was not related to product performance or company performance in being able to bring this to the finish line. As I indicated, our product performance was very, very satisfactory. It met the standards that were predefined for the accelerated approval process. And also, very importantly, we were able to pass 3 very important inspections by the agency, including clinical inspection, quality inspection and CMC inspection with no 483 citings, which is something that we are very proud of as a company. Secondly, as I said earlier, balstilimab continues to be a very important cornerstone of our combination of strategies, particularly with 1181, and we expect to disclose some data that we believe will show the efficacy of both 1181 and balstilimab in SITC in early November. And thirdly, we have plenty of cash resources that we will end up the year with. My estimation is that we will end up the year with approximately $0.25 million in cash. and that will allow us to certainly bridge any process into a major corporate development transaction as well as allow us to take our programs forward. Did I say -- my COO who is sitting right next to me here, she pointed out that I said $0.25 million. I meant $0.25 billion. Thank you very much. So with that, I end the formal comments, and I'm happy to take any questions, of course.

[Operator Instructions] Our first question comes from Mayank Mamtani with B. Riley Securities.

And sorry to hear about this unfortunate development. So Garo, are you able to comment -- 2 pieces to my question. Is there a regulatory and commercialization path ex U.S. you're able to talk about? And then accessing an approved checkpoint inhibitor is obviously core to any combinations in immuno-oncology, as you know well. So how does your plan to develop 1181, obviously, but also a pipeline that was relying on this foundational asset? How should we think differently about that as a result of today? And then I have a follow-up.

Sure. So for your first question is easy, Mayank, we are definitely exploring those options because, as you know, there is a tremendous unmet need, not just in cervical cancer, but some of the other cancers that we have touched with our products so far. And our expanded access program is designed actually -- the aim of the expanded access program will be to make patients be able to get our products when appropriate, of course. And if we can submit data to other countries that will allow us to market products. That will, of course, be also a part of our strategy. With regard to your second question, if I understand it correctly, you're asking how would the withdrawal of the BLA for balstilimab affect our development pipeline, our plans, our time lines and so on and so forth. Is that fair?

That's accurate because -- yes, that's right, Garo.

So as you know, right now, our strategy, when we started on our bal journey, we never really expected to have a commercial opportunity with bal as a monotherapy. In fact, we were getting a lot of questions about, does the world need a fifth, sixth, seventh, eighth PD-1 antibody? And the answer is, no, you cannot really compete with being the sixth, seventh, eighth in the marketplace. But we pursued cervical cancer to go through the process of, of course, approval because there was a window available, even though we never thought the commercial opportunity for cervical cancer would justify really a commercial effort per se. We thought this will be a nice dry run for us. But in essence, the potential bal for us is in combinations with the rest of our pipeline. I mean, that has been our strategy when we entered the bal arena with our own discovery of bal 5, 6 years ago, and that doesn't change. And so in terms of the vigor with which we will pursue combinations, that doesn't change. One can say because we're discontinuing the BRAVA trial, which is a confirmatory trial, an expensive trial, now we will have more resources to dedicate to combinations and perhaps more bandwidth of the organization to do that with as well.

Appreciate the color. And then my follow-up question, sort of related, Garo, is you were thinking of sort of building an OB/GYN-focused organization to begin with. But how should we -- are you able to comment on what sort of initial tumor type focus should we expect from you? Is it really going to solely be focused now where 1181 goes, for example, colorectal cancer? And then how should we think about time lines as you sort of reset? Because your commercial organization was leaning towards maybe that OB/GYN focus initially. So how should we think about that commercialization time line? And how you might -- I think you're commenting on $100 million on that -- basically on the R&D spend from that clinical trial. But what about the commercial spend also that was scaling up?

Yes. Very good question, Mayank, and let me address it this way. So, as you know, because of what I said earlier, because of the smaller potential market size for cervical cancer, we didn't invest an enormous amount of effort to build the commercial organization specifically for gynecological cancer just yet. But what we're doing is we have a very, very efficient organization that has been put into place, a Chief Commercial Officer along with several professionals that we were contemplating on building around very quickly to higher sales marketing professionals and so on and so forth. So -- but because we decided to do this prudently, now we can divert some of the efforts of this very slim organization to medical education. Medical education is going to be a linchpin of our strategy with expanded access program. This is not designed to generate revenues in any way. It will be strictly medical education and allowing patients access to our products when appropriate, when it's deemed appropriate by physicians, specialists in the field. Now one thing that I should say is that a lot of companies also initiate expanded access programs with an objective of generating revenues. I will say to you and to the rest of the world that our expanded access program will be comprised of an ability to provide patients and doctors drug free of charge. We will incur all expenses associated with it because, typically, with open access programs or expanded access programs, there is a mechanism to get reimbursement for your costs. We're abandoning that. We will not require any reimbursement or expense sharing associated with this program, which is specifically designed to make the program much more patient and doctor friendly so that patients who are suffering from advanced cancers don't get wrapped up in filling a lot of paperwork in order or the company at the same time waste a lot of time and effort filling out papers to justify reimbursement. So that's something that we're committing to. And that's something that I think is the morally right thing to do for patients.

Sorry, Garo, can you comment on path to market for like what sort of initial indications you might be thinking, maybe 1181-focused?

Okay. So I would encourage you all to wait until our SITC presentation when we will disclose our plans, both in expanded gynecological tumors as well as other tumors where we have seen very important signals with 1181 plus balstilimab, and in some cases, 1181 alone. So I'm sorry that I will not give you additional information on that to comply with the SITC rules. But if you wait for a few weeks, I think you will get a fair amount of disclosure.

[Operator Instructions] We have a question from Matt Phipps with William Blair.

When you were going through the process here, appreciate that bal opportunity was limited, but it did seem to be bal/zal had an opportunity given the increased efficacy, but you ran into the problem of trying to get 2 novel drugs approved and then obviously had to submit bal first. So is this an issue you're going to have on the next first indication for 1181? And any other ways you see of kind of trying to get bal approved alone to help with those combinations?

So Matt, are you asking if we will pursue bal approval alone in any of these combinations? The answer is probably not. Is that the question though?

Yes. I mean that's pretty much the question. Just what other -- does like -- I mean it creates a little bit more complexity in designing a trial, I guess, with 2 unapproved agents and depending on the indications, I guess, that you go into.

Matt, I'm going to just jump in here for a moment. Thanks for the question. So our trials -- and certainly, you'll be hearing more about the development plans for 1181, as Garo just mentioned. In order to support approval based on the plans that we've developed, we will demonstrate contribution of components and the necessity to have the combinations where they're needed. So there may be cases where 1181 can support as a monotherapy, may support approval. And there may be indications where the combination with bal will support approval. But our trials will be designed to demonstrate and differentiate which will enable us with novel-novel combinations to get approval. Our trials will also be designed to support full approval. We will be where it's necessary. We will have a bal-only arm to demonstrate this contribution or an 1181-only arm and the combination. So that's how the development will go. And that won't put us in any compromised or an unsettled position with respect to the combination potential. So this decision to withdraw bal won't slow or delay our programs with 1181 because our trials are designed to support approval based on the differentiation of contributions for each component.

Our next question comes from Mike King with H.C. Wainwright.

Garo, did you -- was there any discussion about potential for accelerated approval pathway in the PD-L1 less than 1%? I mean I know that the numbers were small. I guess 39 is what I'm looking at from the ESMO presentation. But was there any contemplation that, that may be a foundation that you could have built off of for bal?

Very good question, Mike. And of course, it makes sense and, of course, we tried. But because of what you said, smaller numbers in that subset, the agency didn't accept the argument. And our argument was even though the response rates are lower in PD-L1 positive patients -- I mean in PD-L1 negative patients, the fact is that these patients do not have any viable treatments. And so we were very heartened to see that in PD-L1 negative patients, not only did we have responses, but we also had responses that were of long duration. And some of these responses are still going on and -- but you get into the argument of numbers, of course, and that did not work. Now as you and others have contemplated, the bottom line in all of this for us is we know we have a highly active PD-1. That's number one. We know that our PD-1 based on our proprietary assays, preclinical assays has some differentiated attributes that makes it more important in PD-L1 negative patients, and we have compared several PD-1 molecules to show that differentiation in these proprietary assays. We also know from a very substantial safety database encompassing over 400 patients that our PD-1 could be a very, very effective and very good carrying agent in combinations. And that safety database that we have built is going to be very helpful for us in getting approval in combinations going forward. So -- and we also know, of course, as I said earlier, that our organization can take these products through with stellar performance, okay? We know how to bring a compound from discovery all the way to the finish line of potential BLA approval and then access to patients beyond that. So all of these things are positives and -- but unfortunately, we didn't win this, getting over the finish line in this particular case because of what we consider to be a technicality. And that's all, really.

Yes. I understand. Second question is if -- it sounds to me like you're stepping back from zal. Am I misreading that? Most of your focus on the CTLA-4 side has been on 1181, which I understand, but since zal has a large database of safety and efficacy, I thought it was still logical to use that as the lead CTLA-4 unless strategy has shifted there.

So very good -- another very good question. And of course, this is a subject dear to our heart. We have the luxury of having 2 CTLA-4s. One is the next-generation. Zal is the first generation. But even with the first-generation compound, we have shown and it was presented at ESMO that in combination with bal, our first-generation CTLA-4 has shown 33% responses, objective responses in a trial of 125 patients in PD-L1 positive patients. So of course, that is a big, big delta from any other existing compound in terms of response rates, any other treatment in advanced cervical cancer. Now bear with us in terms of determining what the next fix may be with zal. The issue with that trial is that while it's a very large trial of 125 patients, we have 2 components to treatment, bal and zal. And because it was a single-arm trial, even though we did a separate bal trial that showed 20% response rates in a very similar patient population, the FDA will require to show the contribution of the -- each element. And so that complicates a little bit from an approval perspective, but that doesn't mean that we will not pursue it, but we need to clarify the pathway of that approval with the agency before we make a commitment.

Right. Yes. Because I mean, the way I would think about it is, okay, so pembro is there in the first line, but it's with chemo and potentially with or without bev, and it seems like a lot going on. There is probably room in the marketplace for an all I-O option. So I guess my question is, has -- is it possible to get there in cervical or is it just a lost cause?

Well, bear with us. We're governed by regulation. And sometimes even though we may think regulation is unreasonable at times as was the case with balstilimab monotherapy, in our opinion, still we have to respect it because that's a governing body that determines these decisions. And so bear with us until we get some clarification, and then we'll come back and inform you of the strategy.

And there are no other questions in the queue. I'd like to turn the call back to the company for any closing remarks.

Thank you very much for your attention this morning, and I think we covered a lot. And if you have any separate questions, we're always available. But be rest assured that the company's strategy, its programs, the impact on value creation has not changed. And of course, this is a little disappointment, but not from a commercial or a value-creation perspective. It's a disappointment from accomplishing what we wanted to get to do by crossing the finish line. And we came very close to it. We did everything right in a stellar fashion. We have an active product. We have a product whose safety is very much in line with its class of compounds. And we also believe that with our expanded access program, when it is launched with regulatory approval, and we hope that, that will come, this program will help patients that are in need of products, as Mike King mentioned, even with bal/zal combination, this is something that should be made available to patients under the expanded access program. And we believe that let the doctors and the patients decide what is in the best interest of the patients. And for this reason, we're making the sacrifice of providing product for free, and we will bear the burden of that cost since we're not being burdened by the confirmatory trial costs right now. Thank you very much for your time again.

This concludes today's conference call. Thank you for participating. You may now disconnect.