ALX Oncology Holdings Inc. (ALXO) Earnings Call Transcript & Summary

Good day, and thanks for joining us to have a conversation with Jaume Pons, CEO; and Sophia Randolph, CMO of ALX Oncology. ALX Oncology is developing novel antibodies targeting the CD47-SIRPalpha axis. This -- their lead asset, ALX148, is being tested in the clinic as a therapy for treating solid tumors, a first for anti-CD47 therapies. To discuss the clinical development to date, the expected progress in 2021 and beyond, I welcome Jaume and Sophia to this fireside chat. Jaume and Sophia, glad to see you both and accepting our invitation to talk to our audience today.

Thank you.

Thank you.

To start off, Jaume, could you highlight for us the importance of the CD47-SIRPalpha axis as a pathway to developing immunotherapies against cancer? This is especially for the folks who are not aware of what this axis is all about.

Yes, sure. CD47-SIRPalpha is 2 myeloid cells in the innate immune system where PD-1/PD-L1 [ as to T cells ] and the adaptive immune system. So this pathway is the main brake for macrophages and dendritic cells, which are essential for a strong and durable anti-tumor responses. In my opinion, CD47 blockers have the potential to be a new cornerstone of anticancer therapy.

Great. Over the years, CD47 -- anti-CD47 therapies have certainly garnered interest in the market, especially after the acquisition of Forty Seven, Inc. by Gilead for nearly $5 billion. How does ALX148, your lead molecule, differentiate itself against magrolimab, which is a Forty Seven, Inc. or Gilead's drug now? And also there are other molecules, which are being developed by Trillium and other competitors. So how do you differentiate ALX148 against the rest of them?

Yes. So to answer that, first, I want to mention that CD47 is not only expressed on cancer cells, so the target is not only these present cancer cells but it's also expressed in more normal cells. So all these molecules that you mentioned are targeting CD47 with antibodies with an active Fc domain to directly kill CD47-positive cells. So therefore, they also can target normal cells for destruction. And that has shown in the clinic or limitations because toxicity. Despite of these molecules, we're designing to have single agent activity. It is very interesting to me that all these molecules have not been developed as single agent but in combination, where the active Fc is probably only contributing to those limitations. ALX148, when we designed it, we -- it's the only CD47 blocker with an inactive Fc that is designed to be used in combination. We have shown a best-in-class safety profile in the clinic that has allowed us -- allow us to higher dosing and in the clinic that has translated to better efficacy as well, both in solid tumors and hematological malignancies. At this moment, ALX148 is the only CD47 blocker with positive solid tumor data.

That's good. So Jaume, certainly, your team has shown both preclinical and clinical data just as you alluded to, which allows ALX148 to establish itself as a drug with a major immune -- I mean as a major immune therapy against solid humors. Could you highlight some of this data that investors can look into?

Yes, I would love to and actually I could spend a long time thinking about that because we are so excited actually. So in the solid tumor side, at this moment, we have positive proof of principal data in second-line HER2-positive gastric cancer for patients that will have progress anti-HER2 treatment. So patients that were treated with Herceptin and failed and progressed with Herceptin. Then we took these patients, and we did them with Herceptin plus ALX148. And then we have a very interesting positive signal and then we were again on top of the standard of care that is Herceptin plus chemotherapy combined with ALX148. And we also had responses much higher than the background therapy. Also we have positive data in second-line head and neck squamous cell carcinoma in combination with pembrolizumab. And also in first-line head and neck squamous cell carcinoma in combination with pembrolizumab plus chemotherapy. In both cases, having responses way above what is expected for the background therapy. In my opinion, despite these studies are very small, the fact that we have positive data in 4 independent combination trials, the solid tumors is to me a very clear signal of activity in the solid tumor setting.

Very good. As you said, there are 4 different solid tumors in which ALX148 has shown activity, right, like the head and neck, breast and gastric cancer. But of these, what sort of end points do you need to see at the end of these studies, the ongoing studies, so that you can make -- if you need to make a choice, which one to go forward with? What sort of endpoints do you need to see in these studies?

Sophia?

Yes. So that's a good question. So we've taken quite a bit of care in our mid-development program in our Phase II program, and many of our protocols at this point are randomized and we'll be initiating over the course of the first half to midyear. So specifically, when we look at, for example, head and neck, and this is a trial that is also currently 2 randomized Phase II trials that are currently on ct.gov. So when we look at our compound, ALX, in combination with pembrolizumab in the first randomized Phase II study, we are looking for an improvement over the benchmark set by KEYNOTE-048 where pembrolizumab alone, showing an overall response rate of roughly 20%. So we would be looking to improve upon that to a goal overall response rate of about 33%. And then in the second randomized Phase II study, where ALX plus pembrolizumab on the backbone of 5-FU cisplatin again, working off of the benchmark from KEYNOTE-048 in that first-line checkpoint-naive population. The backbone of pembrolizumab 5-FU is about 36% ORR. So we'd be looking to improve upon that to a goal ORR of about 54%. When it comes to the gastric cancer population, and Jaume summarized some of the top line data there, they are the regulatory comparator in the second line in patients who have failed prior trastuzumab is actually ramucirumab-paclitaxel. So ultimately, we're designing a Phase II study and the final design isn't completely nailed down. But it will be a randomized study. The test arm will be ALX plus trastuzumab on top of that regulatory comparator, ramucirumab-paclitaxel versus ultimately ramucirumab-paclitaxel itself. From the RAINBOW study, ram-pac objective response rate is about 30%, and so we would want to see a goal of around 50%. But the randomization arms are what we're working on there in conjunction with FDA. And then lastly, as you mentioned, the collaboration that we have with Zymeworks looking at HER2-positive advanced breast cancer, this is a Phase I/II study. Both of these drugs are exploratory in this population. And so the benchmarks that are in the field include, for example, T-DM1 in HER2-positive advanced breast cancer with ORR rates of about 43%. So we would want to be ideally seeing something with ALX in combination with zanidatamab somewhere above 50%. So we'll see what comes out of that study. But ultimately, that's what we would be looking for.

No, pretty good, pretty good. But within these, in head and neck, you're doing both a doublet and a triplet with chemotherapy. So what's the rationale there? Because most -- well, the CD47 therapies that we have been looking at mostly just do doublets, and then they don't go to the triplet. So -- but here, you're trying to do something unique here.

Yes. So here, what it has to do is when you look at the existing labeling for pembrolizumab, pembrolizumab has indicated in 2 different ways in the first-line head and neck population. So in patients who have -- are PD-L1 positive, pembrolizumab is indicated as monotherapy in the first-line checkpoint-naive population. But then it also has a second indication, which also captures patients who are PD-L1 negative. And in that population, patients have derived clinical benefit looking at pembrolizumab in combination with 5-FU cisplat. So we wanted to be able to offer what we see as this enhanced activity with pembrolizumab in both of these populations. So building upon the existing labeling for pembrolizumab, we're looking both at PD-L1 positive as well as PD-L1 negative patients and then with the appropriate backbone.

Okay, perfect. So Jaume, I know it's not only ALX148. That's not the story of ALX Oncology. Obviously, you've been working on other things. Certainly, this morning, it was pretty -- an interesting announcement that you, along with Tallac put out regarding your collaboration, for developing what we call TRAACs, SIRPalpha TRAACs. So for people who haven't heard or who did not tune in this morning, could you give us a brief introduction to what TRAACs are and how you plan to be part of that collaboration and get that to the clinic?

Yes. As you know, as I just told you, ALX148 was designed to be used in combination on top of the standard of care. It's basically ALX148 is releasing the brakes from the innate immune system. It's actually releasing the brakes for mass -- dendritic cells and myeloid cells. What we wanted to do is to create a molecule that directly activates dendritic cells and jump start the immune system. And to do that, we want to deliver a very potent agonist molecule that is a CpG so dendritic cells express toll-like receptors. Those are activated by CpGs, and there is a lot of clinical proof-of-concept with CpGs in melanoma in [indiscernible]. But we wanted to deliver that systemically. I wanted to deliver that specifically to the [indiscernible] to dendritic cells. So to do that, we made a collaboration with this company called Tallac, where they provide a very unique CpG and a conjugation technology. And we provide antibody to bring these CpGs to dendritic cells and macrophages amyloid cells. So basically, what we're doing is getting a molecule that is a very strong activator and press accelerator in the cells [indiscernible] on dendritic cells. And initially that we're going to be targeting indications where the patients last failed standard of care. We can actually go after the standard of care. So in a way, it's extremely complementary to the ALX148. It's a little bit confusing because the antibody that we use to target this is an anti-SIRPalpha. [ Probably this happened ], the SIRPalpha has the right expression profile to this job. But it does not have the characteristics to be a -- specifically a CD47 blocker. The goal of the molecule is to deliver the CpG to dendritic cells.

So do you think with this new entity, the SIRP TRAAC, you could be actually expanding into additional indications, additional solid tumor indications? That's been the key for CD47 therapies that they have not been able to attack the solid tumors. So do you think this is going to empower your system in terms of reaching out or being able to utilize against additional solid tumor indications?

Absolutely. So as I just told you, ALX148 is the only molecule in the CD47 field that has shown positive data in solid tumor setting. So we do have a very solid tumor activity. But this new molecule will add another tool to do that, which is actually, as I said before, ALX148 releases the brakes, SIRPalpha TRAAC presses the accelerator. And it does it in a safe way to basically activate dendritic cells and could be used after standard of care failures. For example, after PD-1 refractory patients. So it does expand the number of settings where we can go.

Perfect. So in terms of the clinical readouts, what should investors expect for the rest of 2021 and also in early to mid-'22? Basically, over the next 12 to 18 months is what I'm asking.

Sophia?

So it's going to be a busy year for us this year as well. So in 2021, we anticipate having a readout, especially of our gastric and GEJ populations where we're looking at ALX in combination with trastuzumab, ramucirumab and paclitaxel. So that data will mature, and we'll be presenting it over the course of this year in second-line, again, HER2-positive disease. And then in addition, we'll be able to present mature data on ALX plus pembrolizumab and chemotherapy in the first-line, checkpoint-naive head and neck squamous cell expansion cohort that we have in our first-in-human study. So those 2 parts of data, we'll be presenting over the course of this year. By the end of the year, we also anticipate that from our MDS study, the Phase I portion of that study will be complete. And that's looking at ALX plus azacitidine in patients with higher-risk MDS and relapsed/refractory MDS. So with the completion of that Phase I, we anticipate initiating going seamlessly into the randomized Phase II portion of that study, which will only focus on the higher-risk MDS population. But before the end of the year, the Phase I portion in higher-risk MDS as well as the relapsed/refractory should read out. In addition, we will be initiating our AML study this year, looking at ALX plus azacitidine and venetoclax in first-line and relapsed/refractory AML. And definitely, by, I think, in the first half of 2022, the Phase I portion of that study should also read out. So we'll have some good readouts over the course of this year and into the beginning of next year.

So Jaume, so obviously, ALX148 has been developing a lot of data within the solid tumor space. With this TRAAC coming on board, again, it's in the solid tumor space. But as Sophia was saying, you're still working -- doing some work in the liquid tumors, especially in the MDS space. Of course, magrolimab, the competition, is already out there within the MDS space. So is MDS is just a proof-of-concept kind of a thing for you? Or is it something that you really want to see if you can compete? Because, obviously, it's not just a Forty Seven therapy, there are other therapies also which are being tested for MDS even though in the last 20-some years, we have not really seen something unique come through in the MDS space.

Yes, it's an important indication for us and I think we can have a space there. As you can see in the development plan of magrolimab, they attempt to just combine with azacitidine and trying to go head-to-head against [ Vidaza ], against venetoclax azacitidine. In our case, because of our safety profile, we can go on top of [ Vidaza ] providing more benefit to patients. And that's thanks to our safety profile. In addition, we can actually have a much more convenient dosing. We're planning to dose the patients once a month at the same time that they're getting azacitidine, where magrolimab will have to be dosed weekly or every other week. So I think that we do have a space. And actually, we believe that having the ability of a dose [ trial ], the magrolimab can dose, we will be able to provide more efficacy than time will tell if our clinical trials show that we have more efficacy than magrolimab. But we are working on that.

Perfect. So one question on the patent portfolio in terms of how strong is it. Obviously, there are multiple competitors working within the space. And how are you protecting your patent portfolio from others infringing into your IP?

Yes. So we started with a very strong foundation. So we licensed the exclusive rights for high affinity SIRPalpha as our lead candidate basis composition of matter and concept. And also we licensed the complete nonexclusive patterns for CD47 of Stanford, right? So Stanford has one of the bigger -- or the biggest block of IP around CD47 as a target, and we also licensed that from Stanford. So we started with a very strong foundation. And on top of that, we have done a very significant amount of work, very novel, we believe, in terms of our inactive Fcs and combinations, et cetera. So I think we have a very strong, both IP and FTO, and we are one of the early entrants in the field. So we have been able to provide a good patent landscape for ourselves. Obviously, protection from infringement is -- we will be using the same legal tools that anybody can use to protect themself from infringement when there are damages. But I think more importantly, we are completely unique in our approach for CD47 modulation. So if our approach is the best approach, I don't think we do have competition. I think that our molecule is very differentiated and will be very unique.

So Jaume, the last 20 seconds that we have here, could you tell us what's your -- on the financial side, what's your current runway and funding as to get all your programs through development?

Yes. So we're in very good shape in that sense. We ended 2020 with approximately $435 million. And I think with that, we have enough to the end of 2024 or maybe longer. So we have -- and that is with all the clinical plans that we have been discussing to you. So basically, we have enough money to get to proof of -- to randomized data with the money we have in cash.

Very good. Very good. Thank you very much. Thank you, Jaume. Thank you, Sophia, for taking this time and having a fireside chat discussion with us. Thank you.

Thank you.

Thank you, RK.