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

Hi, everyone. Welcome. It's a great to have everyone back in person. My name is [indiscernible]. I'm an associate here in the healthcare investment banking team. It's my absolute pleasure to introduce Jaume Pons, CEO and President of ALX Oncology.

Thank you. So after the customary disclaimers, let's move to CD47 as a target and Evorpacept our clinical candidate as a CD47 blocker. So here on the left, you have the expression of CD47 in cancer cells in red and normal cells in black. As you can see, CD47 is very highly overexpressed in tumors, but also is like highly expressed in normal tissues. Therefore, if you want to use CD47 as a tumor target and kill all CD47 positive cells, you will be producing a lot of toxicity. Quite interesting to us about CD47 is its function as a myeloid checkpoint. So it functions very similarly to PD-1, PD-L1, but instead of these cells, we are here talking about macrophages and dendritic cells in the innate immune system. Here on the left and the right, you have -- see a macrophage expresses SIRPalpha, that's the receptor for CD47, and that's an inhibitory receptor. Cancer cells display positive signals that we call eat me signals. And these eat me signals will allow macrophages to eat cancer cells. To protect itself, cancer cells will upregulate CD47 sending don't eat me signal inhibiting microphages. One of the most known positive signals is activated binding of an antibody to the cancer cell and the interaction of the Fc of this antibody with Fc gamma receptors on the macrophage site. Therefore, molecules like Herceptin should be able to kill cancer cells by macrophages, but it's not happening because macrophage is upregulate CD47. What's important here that -- like in the case of PD-1, blocking CD47 SIRPalpha is not sufficient to activate macrophages. The positive signal, the interaction between the Fc and Fc gamma receptors, for example, is absolutely required for a macrophage to get activated and kill cancer cells. This is important because other agents, our competition has decided to meet molecules that block CD47 and at the same time, containing active Fc that interact with Fc gamma receptors on the macrophage site. What is happening there, as I showed you before, CD47 is expressed everywhere. So all these molecules have shown in the clinic, hematological toxicity, anemia, thrombocytopenia, neutropenia. These toxicities caused limited dosing of these molecules, and therefore, they cannot dose high enough to completely block the mechanism. And in the combination setting, they cannot get the maximum activity of the combination drug. And because these molecules have been tuned down to have a weak Fc because they have very active Fc [indiscernible], so they cannot be developed. These molecules do not have single-agent activity, they have to be developed in combination and they just carry over the toxicity that they built in, in the design of the molecule. So what we decided to do is designing a molecule that only block CD47. It does not provide the required positive signal. Therefore, despite [indiscernible] normal cells, it does not kill normal cells. And then in the combination setting, we can dose very high. And when the other molecule provides the required positive signal, kill cancer cells. So basically, we had gained a specificity by removing the factor function. Let me come to evorpacept, our clinical candidate. We usually will paint it like an antibody, but it's not an antibody. What it is, the extracellular domain of the receptor for CD47, SIRPalpha that has been highly modified to have very high affinity. It's a picomolar binder of CD47. And we use that to a compelling activated Fc in terms of Fc gamma receptor binding, Yet it still contains the same binding for [ FcRM ]. So it has the same decay as a regular antibody. We have a half-life of 30 days in the clinic. This molecule also has half the molecular weight of an antibody. And therefore, we have twice the number of binding sites per gram of protein. So our 10 mg/kg is equivalent to 20 mg/kg of an antibody. This smaller molecular weight has allowed better tumor penetration, manufacturing [ compelling ] antibody standard. In this table, I compare ALX molecule evorpacept with the main competition, Gilead and Pfizer molecule and [ I-MAB ]. And you can see that evorpacept has the highest affinity of all the molecules that now show in the clinic, also the only one that does not have any effect or function. All the other ones are mostly IgG4 and IgG1. That has resulted that evorpacept is the only of these molecules that does not have hematological signal in the clinic, and it's the only one that have shown proof of principle inside tumors. For example, magrolimab from Gilead did fail a couple of studies in solid tumors. In the heme area, we have shown activity as well as magrolimab has done. Here showing the development plan of evorpacept, and we look at this development plan in terms of mechanisms. In one part, we have a combination with checkpoint modulators. And in this bucket, we are doing now 2 Phase II randomized studies. One in combination with Keytruda and another one with Keytruda chemotherapy, both in first-line head & neck. We have first line designation for these 2 indications, and we are working with Merck in the study. In the bucket of anticancer antibodies, we have a randomized Phase II in combination with Herceptin, Cyramza, paclitaxel and in fast-track designation and collaboration with Lilly. Also in the same bucket, we have multiple Phase Is, for example, with Padcev, [indiscernible] for urothelial cancer. Zanidatamab, designed-base molecule, but now is just therapeutic molecule, bispecific molecule for breast, high HER2 breast and low HER2 breast. Also, within HER2, HER2 ADC from the [indiscernible] [ AstraZeneca ], also in breast. And do we have another bucket in hematological malignancies in combination with azacitidine or azacitidine plus Venetoclax or rituximab. In addition, we also have extensive IST trials. For example, in ovarian with Keytruda, colorectal with Keytruda plus Erbitux and NHL rituximab, lenalidomide. So altogether, this class of molecules represent almost half of the sales of cancer agents in the U.S., just showing the potential of use of this molecule when our randomized studies readout. Focusing first on safety is one of the slides that I find more boring is because there's actually not much to talk about. So in the -- you can see that the most frequent side effect is fatigue, low grade; some rush, low grade; and everything else is low incidents and mostly low grade. If you compare that with the other CD47 molecules, you will see a very strong difference. In terms of efficacy, I want to talk first about gastric trials. In this case, we are combining with Herceptin, accepting by HER2 on the cancer cell and then the Fc setting interact with Fc gamma receptors providing the required positive signal. Then because cancer cells upregulates CD47, this positive signal is actually not working, that will block CD47, and we enable a new mechanism of Herceptin that is usually not in use. The first study that we did was in second line and later casted patients that had progressed after 1 or more HER2 treatments, and also half of them had been massively progressed after PD-1 treatment. So it's a very advanced, very difficult patient population. In this study, we pick it because it was not expected that Herceptin had any activity in this setting. There's a publication from [indiscernible], that the prospective way show that Herceptin did not add anything on top of paclitaxel. When we combine evorpacept and Herceptin, we saw a 21% response rate that is very similar to a chemotherapy treatment in this setting. So it actually shows a very nice activity in a very difficult patient population. However, Herceptin is not approved in the second line setting because not shown to work. Therefore, we have to go into a study that is standard of care. So we pick this active doublet, Herceptin plus evorpacept, and we went on top the standard of care Cyramza, paclitaxel. In this setting, we saw a 72% response rate and OS at 17 month. That data is very compelling. It will compare it with what is our benchmark in this indication. So our regulatory benchmark, but this would be Cyramza, paclitaxel is 28% response rate and less than 10 month OS. We have a big gap but is a standard of care and our results. The other relevant data point is [indiscernible] that has been recently been approved in second line or third line gastric cancer where we see a response rate in the 41%, also with shorter OS. And there is 1 study, single institution, single arm in Korea, where we have our trastuzumab, ram, [ paclitaxel ] our control arm with a 52-percentage project. So in either case, we have a big gap between our results and the potential results that we can use as a benchmark. But of course, to prove the efficacy of this treatment, we have to go to randomized studies. And that is where we are now. The first study is a Phase II randomized with the control arm of Herceptin, Cyramza, paclitaxel versus our arm of evorpacept, Herceptin, Cyramza, paclitaxel. The goal here is to define the contribution of evorpacept on top of the triplet. If this study is positive, we're going to go Phase III against the regulatory benchmark, which is Cyramza, paclitaxel. Therefore, if the Phase II is positive, the Phase III is very likely to be positive. I want you to note the dosing, the study 30 mg/kg every other week, you will see that all our studies are a multiple of 15 mg/kg weekly. So if we combine with our agent that is dosed weekly, we use 50 mg/kg weekly with Herceptin in this case, every other week. We're using 30 mg/kg every other week. And in other studies will be 45 every 3 or 60 every 4. So that shows that our safety profile is allowing us to dose higher and expand the dosing interval to be able to combine well with the combination agent. That is actually not possible with the other CD47 blockers because they have to start with a priming dose of 1 mg/kg, then they have to go higher to 30 mg/kg. They have to go lower, et cetera. And I want to remind you that this 30 mg/kg, for example, is equivalent to 60 mg/kg of antibody. So actually dosing much higher than the molecular competition. The other mechanism that we are testing in combination with checkpoint moderators. Here, the interaction, you can see CD47 SIRPalpha is the same evorpacept also blocks the same that way but the cell of interest is another myeloid cells, dendritic cells. Dendritic cells are constantly [indiscernible] by cancer cells by the interaction of CD47 with SIRPalpha. We will block this interaction, dendritic cells get activated and are able to pick antigens from the cancer cells, cross-priming T cells. And then T cells that are trained to [ receive ] these antigens and cancer cells get [ analyzed ] by the combination with the T cell checkpoint PD-1, and this T-cells will be able to kill cancer cells. To look at our data in this setting, as we have to understand how PD-1 works in the next setting. Here, you have the 2 studies that got approval of Keytruda in head & neck, KEYNOTE-048 for the first line and KEYNOTE-40 for the second line. In the first line at the top, you see that I can note that Keytruda, pembrolizumab plus 5FU/platinum, [indiscernible] cetuximab, 5FU/platinum. You can see that the response rate is basically the same leaving the both arms. So Keytruda was not approved based on response rate. If you look at the PFS, actually we're in the wrong direction. The control arm is actually better than the Keytruda arm. Keytruda was approved by OS, overall survival. And you can see that the only early parameter that you can use to predict this over the survival is -- over a survival of 12 months, where Keytruda as 53% is better than the control arm. The same happened in the second line KEYNOTE-040. The [ response ] rate in the absence of chemotherapy is a little bit better for the Keytruda arm, 4% better. PFS at same. Again, Keytruda was approved by OS endpoint and the only parameter that we used early in the study to predict the OS is certainly OS of 12 month. So remember, KEYNOTE-048, 53%; KEYNOTE-040, 37% OS at 12 month. So we have 2 studies in [indiscernible], one in the second line, equivalent to KEYNOTE-040; and one in the first line equivalent to KEYNOTE-048. Similar to what it was seen for the KEYNOTE [ serious ], the response rates didn't change much. In the case of the first line, 38% versus 36% in the KEYNOTE-048. But again, in the last 12 months, when it was 50%, we have 87%. The second line, equivalent to KEYNOTE-040, we do see an improvement in response rate, 40% versus 15%. But again, our OS at 12 month is 80% that compares very well to 30-something percent that KEYNOTE-40 had. Of course, this is a small number of patients. It's 10, 15 patients. Like in the previous case, we have to go to a randomized study to prove the efficacy of our molecule. In this case, we are taking the full label of Keytruda in the first line, head & neck. One study is Keytruda versus the Keytruda evorpacept, the other one is Keytruda chemotherapy versus Keytruda chemotherapy evorpacept. The first case is for the patients who have PD-1 score greater than 1, In our case, for patients that are agnostic so any PD-1 score. Moving to hematological malignancies, which is another mechanism. In this case, combined with azacitidine, what azacitidine does is upregulate calreticulin, which is a non-positive signal that cancer cell display and calreticulin interacts with LRP in the macrophage site, providing the required positive signal then evorpacept block CD47 unleashing activity of macrophages. In this case, we have 2 studies, both in MDS and one on AML. We put them kind of in the same bucket because that's related diseases. And in both cases, we have done so far the dose escalation safety study that will start at 20 mg/kg every other week to 30 mg/kg every other week and 60 mg/kg every 4 weeks. In both cases, the same -- in both cases, we have been able to reach the maximum dose. So [indiscernible] and get maximum-tolerated dose. Our maximal dose is the maximum administered dose. And remember that is equivalent to 120 mg/kg of antibody in terms of binding sites. Focusing [indiscernible] MDS. You see that we saw blast reductions. That was something that we point out in the study is that in both studies, we have refractory patients and newly diagnosed patients. Refractory patients are not expected to [ respond match ]. And the ones that you really want to focus going forward is newly diagnosed. However, in the Phase I, most of our patients are refractory patients. So if you look at the results on the right, you see blast reductions in most patients. We have CRs in the naive -- newly diagnosed patients. And very interestingly, we have Marrow CRs in the refractory patients. Signal study is seen in the case of AML in combination with azacitidine and Venetoclax. In this case, we see a blast reduction in all patients. Again, we only have 3 newly diagnosed patients where we see CRs and as we see interesting activity in the Ven-Naive refractory patients. From here, what we're doing now is what we are running now is dose expansions, dose optimization study where we're comparing 40 mg/kg versus 60 mg/kg of evorpacept in combination with azacitidine and this is for the patients. And after that, we pick 1 dose to start a randomized Phase II. That will be a pivotal study. In the case of AML, we have finished the first part as well. We are waiting to have the results from the dose optimization in MDS to also move into a shorter -- hopefully, shorter and smaller dose optimization before going to a randomized study. Here, the upcoming milestones of 2023. I'm not going to read them all. You can download them from our website. I just want to point out a couple of them. At the second half of the year, we're going to show data from the Gastric study, our randomized Phase II, that will be, for sure, the first solid tumor randomized data for the CD47 pathway. And maybe the first randomized data that we see for any CD47 patient, as yesterday Gilead changed their guidance for when they're going to show data for their Phase III in MDS. And also in the second half of the year, we'll show the dose optimization data for our MDS study. And also in the first half of this year, we're going to start the -- we're going to file IND for our second compound that I don't think I'll have time to talk about it, but you can see information about that in our website. Going to 2024. Very importantly, we're going to have the randomized data for the 2 Phase IIs in head & neck, also randomized, also to be the first time that any combination randomized which the [ modulators ] show later. In terms of financial information, we are in a good situation. As of last September, we had $293 million in cash or cash equivalents. We have access to $100 million loan facility, fifth of those at our own discretion, 40 based on milestones, and we have taken the minimum that is 10. And with that, we expect to have a cash runway through mid-2025, which includes the readout of all the Phase IIs and all the Phase Is, I've been talking about. As a summary, we believe that evorpacept is a very differentiated design of a molecule that has translated in a very differentiated clinical profile. And hopefully, that is -- will prove this statement. And also, we have other compounds that we'll be talking in the future. And with that, thank you for your attention.

Thank you very much for the presentation. We can now open it up for Q&A. I think they'll bring the mic to you.

It always works with -- in combination with another agent so that it enhances the efficacy of the other agent. Can it be used -- can we use it in several lines, which means if a patient is failed the second line and now he's moving with another agent to the third line, can it be also associated in several lines for the same patient?

I would say, yes. I will say that this mechanism -- we have never seen any situation of down regulation of this mechanism, right? So I think that it just depend on the mechanism of the combination equation. So if you do in 1 line, [indiscernible] Herceptin and the one we use it with the [ cloud in ], let's say, I would expect to be able to...

You didn't see any resistance on the compound by itself?

We don't have enough data in the clinic to prove that yet, but it's not expected.

And when do you anticipate approval in like 2, 3 years? I mean, I know that you have been granted fast track, but when do you anticipate the [ NDA ]?

Yes. So that really depends, obviously, all these are Phase IIs. So it's a conversation with FDA at the end of the -- of the end of the study. The 2 Phase IIs for head & neck are designed to be substrate and seek approval because we are doing in comparison with the standard of care. In the case of gastric because our control arm is not standard of care. It may be less likely. But again, we have orphan designation for that indication. So it's possible that the conversation will bring us there, right? So no, when it will be, so the most optimistic will be 2 years after we finish the study, right, that [ we would ] in cash in 2025, but of course, that is a, completely, guess.