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

Well, welcome, everyone, and thank you for joining us at another great session at the 2021 Jefferies Global Healthcare Conference. Really happy to have here with us on this fireside chat the President and CEO of ALX Oncology, Jaume Pons; and also with us, the Chief Medical Officer, Sophia Randolph. Thank you for joining us today. We were briefly just chatting, of course, about so many things going on. I know Sophia is quite busy with so many trials getting up and running. But I would just love to just start off first with a bit of a high-level question that I think is on the minds of many investors, maybe to Jaume, is trying to sort of parse out the CD47 landscape because there has been a lot of different companies sort of popping up. And I would just love to sort of briefly hear about why you think ALX is differentiated from some of those others that we're hearing about. That would be a good -- great place to start off.

Yes. So thank you, Michael. I can talk about that for a long time. So we'll try to be brief. CD47, I think, is a good target, not that it's -- because it's HER2-expressing cancer cells, so not because it's a tumor-associated antigen, I think it's a good target because it's a checkpoint modulator in the innate immune system. It is a checkpoint modulator for dendritic cells and macrophages. And I think the company is split a little bit in the way that they approach this duality. So many companies are choosing to make molecules to have an active Fc and therefore directly can bind and directly kill cancer cells. So they are using the CD47 as a tumor-associated antigen. That would be great if CD47 were only expressed in cancer cells, but that's not the case. CD47 is also expressed in most normal cells, so it's expressed in red blood cells, platelets, neutrophils, [ separately ], any single normal cell in the body, [ so a maker of cells ]. So I think this approach has brought to -- many compromises in terms of which effector functions they use, which affinity they pick, with the result that, at the end, they don't have a single-agent activity or not a strong single-agent activity, and they have to develop [ their assets in combination ].

Do you feel -- I was just going to say, do you feel that they're -- I don't want to use the term hand-waving, but other companies who claim that just have a different epitope and claim to still be able to have an active Fc that they think that's good but have somehow gotten around anemia. And some of those companies have partnered, et cetera, and that's what they're saying. And they have some data, but it's hard to interpret. Is that -- do you think that ultimately will still not be as good?

Yes. So I would say that even in those cases, those molecules do bind normal cells. And they have shown in their own data all these molecules do bind normal cells. Maybe they bind less red blood cells, but they still bind platelets, for example, or T cells or other normal cells. And also, in those cases, they are taking compromises either in the Fc function, so in IgG4, which is less potent than IgG1, so it's not able to produce full activity, or picking a low-affinity molecule that actually is less able to block the pathway. So still, like those cases, they are [ really taking ] compromises in the site of single-agent activity. And again, they have to be developed in combination. We designed a molecule to be used and developed in combination, to completely focus in CD47 as a checkpoint modulator. And we believe that in that setting, in the combination setting at the checkpoint, we have a superior molecule.

Right. The other issue with the combination approach, which is required, is potential additive toxicity, so teasing out the therapeutic window. Do you think that ultimately will become an issue because a lot of these companies are still against single agents, just to get safety before they can go into commerce? What do you think about that?

I think it's an essential difference. Our molecule has already shown in the clinic that it can be combined with multi-agent cytotoxic therapies that nobody else has shown, combined with checkpoints, combined with cancer antibodies and not only use -- and not only shows safety, also we have shown efficacy, in the solid tumor setting and where we are completely unique as well. So I think the CD47 is a checkpoint modulator. We have the best molecule. And they do a parallel to that with PD-1 and PD-L1 molecules. Of all of them, of all the PD-1, PD-L1 molecules, there's only one with an effector function. That's avelumab. But all the other ones choose to treat PD-1, PD-L1 as a checkpoint, not a tumor-associated antigen. Avelumab chose to try to do both, and avelumab is not the best of the PD-L1 molecules.

That's interesting. So that's another example of where they would have wanted to dial it out as an inhibitor, right?

Yes. My guess is that they wanted to have both, wanted to have the checkpoint and the effector function against cancer cells, with the result that if it didn't work as well, they're just having a pure checkpoint modulator like pembrolizumab.

Right. So that philosophy and that specific strategy has played out now in data. So let's talk about the gastric data, gastric cancer data, and the head and neck data, maybe we can take each one of them separately, and talk about why you were excited about that data, small numbers of patients, but why you were excited and where that takes you for the next update. I don't know if that's a good place for you or for Sophia to talk about.

Yes. That's better for Sophia.

Sure, sure. No problem. Yes, so the data that we have in head and neck and gastric, and I'll start with the gastric, is really exciting for us. And all of these data coming from our first in-human study has propelled us into our mid-development program. So in terms of gastric cancer first, so most recently, we presented at SITC this past year. There, we presented some initial data in 14 patients of our drug, plus trastuzumab, on top of the standard of care, ramucirumab, plus paclitaxel, in patients with second-line HER2-positive gastric cancer. And there, we saw an objective response rate of 64.3% in those 14 patients. And at that time, we had a median follow-up of about 5.3 months. So this was extremely exciting for us. The benchmark there, RAINBOW study, is about 28% in the overall response rate. And then even the more recent Phase III within HER2 in patients who have failed 1 prior tras, objective response rates there were about 41%. So the data of our 64.3% was exciting and early. So now coming up at ESMO GI this July 3, we'll be presenting an update on that now fully enrolled cohort of approximately -- roughly around 20 patients. And so we're excited to see now response rates across that full cohort as well as the longer median follow-up, such as...

So those -- so it was, I would say, a quadruple combination. But 2 of those, ramucirumab and chemo, are a standard option for patients with second-line gastric cancer. And you're saying that people had a, was it, 28% response rates in general?

So they actually -- with the quadruplet, we had a 64% response rate. The backbone of ram/pac would be the 28%.

Exactly. Right. So that's really exciting because you're doubling it. Now if you're going to say, "Oh, well, does the Herceptin do anything?" And your answer was, "We'll look at something like in HER2." I think is what you said, and go ahead with that. And that was higher, but that's just -- that's as a single agent, so that wouldn't explain it either.

Yes. I mean even when you look at in HER2, which is an antibody-drug conjugate, so trastuzumab hooked on to a deruxtecan chemotherapy payload, there, you're seeing an objective response rate of about 41%.

With the direct cytotoxic...

Right. But what we did do, because it is a question that we get, which is, well, you have a 4-drug regimen, how do you know what your drug is adding into that mix. And so what we had done, and we also presented at SITC this past year, was this updated data from a cohort looking at ALX plus trastuzumab, so a chemo-free regimen in the same second-line setting. And so there, we saw, out of 19 patients, a 21% response rate. And this is significant because, as we've just discussed earlier, our drug isn't anticipated to have much monotherapy activity by design based off of the design of the molecule. But when we combine it with an antibody like trastuzumab, which is also known and already has been published to have minimal activity in the second-line setting, so these are patients who have already failed prior trastuzumab, that activity via Rb2 signaling, patients just don't respond very well to it beyond chemotherapy.

Yes. So if you were to parse those pieces out, there's certainly no data to suggest that it should be this robust, and so therefore, you feel good that the hypothesis of the mechanism is playing out. Now given that we'll have more patients, I guess, presented and more follow-up, what is good data? What do you come away saying is good? Is that consistently high response rates? Is that a specific -- a PFS that's better than ramucirumab? How do we benchmark that to give us confidence for the next step?

Yes. So the first thing that definitely we would want to look at is objective response rates. And certainly, we've talked about the benchmarks already for that. Durability of response is important. RAINBOW as the backbone was about 4.4 months as well as its median PFS. So anything significantly above that would be exciting for us. And then, of course, ultimately, the gold standard is always overall survival. But in this Phase I cohort, the primary thing that we would be looking at, in addition to safety, would be objective response rate and the durability.

Okay. Now just to be clear, it's 6 more patients, so it's 14 now going to 20. Is that what you said?

Yes, we'll see -- we'll be presenting it midyear, but approximately 20.

Okay. So it's 6 more incremental patients. So it's not like there should be huge swings of the data, right, because it's just...

Right. And it's -- and I do want to -- it's approximate. So approximately that number.

Approximate. Okay.

And yes, but we'll have so a few handful of additional patients to look at response, but then also the longer durability of those who are already on...

And are those all at a higher dose, those new patients presumably, so you should feel good about that?

Right. So all of the patients with the quadruplet therapy, the majority of those patients will be looking at ALX at 15 mgs per kg Q week. And then there's a smaller group at 10 mgs per kg Q week.

Have you decided -- we'll get to head and neck in a second. Have you decided what you want to do? Are we going to hear an update? Or is there an analyst call after that data? Or how will we hear about what you want to do next?

In terms -- go ahead, Jaume...

In the interest of our call, what we're going to do, obviously, in the poster, we're going to describe everything, will be a press release. If we think it's necessary, we'll do an investors call, but we have not decided yet. And I want to mention that...

Okay. Would you want to take it forward though? You want to take it into a Phase IIb, kind of like head and neck?

Yes. We're completely ready to do a Phase IIb. So this will be starting shortly. So maybe, Sophia, can comment on that. Sophia, I think the number of patients is 18, right, for the -- for this...

But yes, the formal number at this point is 18.

Yes.

So you have 18 patients.

Yes.

Okay. So it's a small number more. But again, you will get more patients, it's more about follow-up. And does that inform you -- I mean you've had some of the data since SITC, just about what the next step is. I don't want to spend too much time because it's a smaller market, but does it inform what the next step is? And I guess, talking with the FDA, but you want to move forward.

Yes. Absolutely. And so yes, we will be working on a randomized Phase II study. And so we'll be looking at not only sort of definitively teasing out the contribution of ALX to a tras-containing regimen, but then also ultimately looking at the randomization between that and ramucirumab/paclitaxel.

So we'll wait for that update. Now in the meantime, what was most intriguing to me was that you had some great head and neck data but that, that was discussed with the FDA already. And then you guys have been able to, and I think the words are, say potentially pivotal study. Maybe you could talk about that. I mean to have a potential pivotal study started now is a pretty big thing for a small biotech. So maybe just talk about the head and neck data like you did with gastric, what the response rates were versus what you would expect. And what did the FDA say about this next study that you can do?