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

Good afternoon. Welcome to the JPMorgan Healthcare Conference. My name is Raji Gunasekera. I'm with the health care investment banking team at JPM. And today, I'm pleased to introduce the ALX Oncology team, and their CEO, Jason Lettmann.

Great. Thanks for having me, Raji, and thanks to JPMorgan for having us dangerously close to happy hour here, so I appreciate you guys tuning in. Forward-looking statements, and here we go. So we are ALX Oncology, we're in the CD47 space. We believe we're the leader in the space, and we'll go through some of the history, but very excited about the last year coming off a great 2023 and looking forward to an outstanding year here in 2024. So a few highlights. Last year, we were -- we shared the results from ASPEN-06, which is the first randomized study in the solid tumor space to show activity, and in this case, in gastric cancer. And what we showed is relative to standard of care, a 30% delta versus control, so [ 52% ] versus 22% on control. And again, first time that randomized study in CD47 has readout positively. This was encouraging, but for us, just further confirmation and building off of what we've seen in the past, where we've had multiple studies that I've highlighted, both a differentiated safety and efficacy profile. We are going to talk about 2 mechanisms of action today, one in combination with anticancer antibodies and two in combination with checkpoint inhibitors and we have encouraging data across both mechanisms. As I mentioned, if you look out to this year, we have several data readouts coming, first of which is full data on ASPEN-06, which will happen next quarter, Q2. In the back half of the year, we're going to share data from 2 randomized studies in head and neck cancer, also first-in-class. It will be the first randomized data to readout in CD47 in combination with a checkpoint. Beyond that, we are encouraged by where we can go from here. We have ongoing studies of breast, bladder, ovarian, as well as heme. We do not believe this is a heme versus solid story. We think with the right mechanism and the right combination, we'll continue to show activity. And last, but certainly not least in this environment, we have a strong balance sheet and are well funded through early 2026. So as a reminder, CD47 is the ultimate marker of self. It's how healthy cells evade destruction by the immune system. And so therefore, it's been a pretty challenging area to target. CD47 is the don't-eat-me signal. And I'm sure many of you have read about it. And what we're developing is evorpacept, which has an inactive Fc domain, is the only CD47 blocker in development that has an inactive Fc. So on the next slide on the left, you can see how evorpacept works. Evorpacept achieves near complete CD47 blockade without targeting blood cells. And then this is a very important differentiator. As you'd imagine, when you're trying to target something like CD47, it's very important to target just cancer. So when you combine evorpacept with an anticancer antibody, which in essence provides the eat me signal or the positive signaling, we get what you see on the right, which is a very targeted destruction of cancer. This is markedly different than how conventional CD47 agents have attacked the problem. In trying to develop a drug with single-agent activity, they've combined both the positive signal, as well as blocking the don't eat me signal. And what you see is by indiscriminately blocking CD47, you're both going to target healthy cells, and in this case, red blood cells, which has been an interesting fact that's affected many of our competitors in the space. And that's what this slide highlights. Again, on the top is evorpacept with an inactive Fc domain. And throughout our clinical studies with combinations, whether it's KEYTRUDA, Herceptin, Rituxan, we've seen a very consistent efficacy signal and the only randomized data to date that has readout positively. This is very different than what others have seen, whether that's Trillium 47, I-Mab that have been limited by heme-related tox, and ultimately, with magrolimab led to the failure in MDS and AML last year. The good news here is that we saw a very predictive signal from the early days. And what you see on the left here is evorpacept and demonstrated superior phagocytosis versus both magrolimab and Trillium. And what this is then translated to in the clinic in over 400 patients is a differentiated profile. And I think lately, particularly following the randomized data, we've had a lot of questions as to why, right? There's certainly an [ aptitude ] and a willingness to try to think about this as a class effect, but evorpacept is fundamentally different. On the left here, we see how we're different, higher affinity CD47 binding, which results in more potent activity. We have an inactive Fc domain, which causes less sink effect, both in terms of sink to healthy cells, but also in terms of directing macrophages to the right place. And we have a lower molecular weight, which we think is particularly important in solid tumors. And last, we have an antibody like PK, which allows us to dose right aside -- right alongside the backbone regimen. And this is what's translated in robust clinical activity, best-in-class safety, strong solid tumor activity and broad combo potential. So with that, we're really pursuing testing two mechanisms, as I mentioned, on the top in combination with anticancer antibodies and importantly, ADCs, which I'm sure everyone's heard of at this point, and then with checkpoint inhibitors. So we're going to talk about the combination with Herceptin and Ram/Pac in gastric, talk about as well as what we're doing in bladder with PADCEV. And then on the breast front, we are running a study with our partner, Jazz, to look at Zani, as well as [ Enhertu ]. We believe we can both be used in combination within HER2 as well as in many of the spaces that they're currently playing. And then on the bottom is what we're doing on the checkpoint front, again, different mechanism, but also very relevant. And we are running the -- what will be the first studies to readout in combination with a checkpoint inhibitor, and that's ASPEN-03and 04. So we'll start with gastric. The ASPEN-06 study is looking at evorpacept plus Herceptin. And as a reminder, this is how ALX148 or evorpacept works. We block the don't eat me signal. And then we use Herceptin to provide the positive signaling, which increases ADCP in combination with Tras or Herceptin. This is the registration strategy we're pursuing. On the left, the first study done was our Phase I study, again, saw very strong response rate there, which led to ASPEN-06, which we're going to talk about, and then ultimately into our randomized study, which will be our Phase III. The Phase II design or -- can I go back here we go. The Phase II design looks at evorpacept plus Tras or Herceptin and then Ram/Pac or the chemo backbone versus Tras plus Ram/Pac. And that is a little different than the registration study, which we will be comparing versus Ram/Pac because Ram/Pac alone is the global standard of care in the second line. This highlights what the current benchmarks are. So on the top is the RAINBOW study, which was Ram/Pac versus Pac. Again, I think the highlight here is 28% versus 16% overall response rate with pretty modest survival gains. And then there is the DESTINY-Gastric-01 study, which has been HER2 study, which looked at in HER2 versus physicians' choice chemo, again, 41% versus 11% overall response rate. So both large, randomized studies, but demonstrate relatively modest response rates and survival benefits that certainly need improvement. So as we mentioned, the design of ASPEN-06 was to really isolate the contribution of evorpacept. So the only difference between the 2 arms here was the addition of evorpacept. And importantly, we did not limit what prior treatments were used in the first line. So whether that's Enhertu or checkpoint, we truly ran a second line and third line study to test the power of evorpacept. This was an interim prespecified analysis of 54 patients, and the goal was to see a 10% delta versus response versus control, excuse me. The study was well balanced. Again, this was a global study. We had over 40 sites participating across 19 countries, and the arms were balanced in terms of age, stage of disease, et cetera. Turning to safety. I think this has been very encouraging and perhaps underappreciated. We've seen a really consistent tolerability of evorpacept across a number of studies. And what you can see here is with the Evo arm on the left versus control, a very balanced safety profile, which is consistent with the backbone therapy. And we do not see evorpacept adding any additional tox on top of backbone. So in terms of the punch line, what we demonstrated was a 52% versus 22% overall response rate. Again, we were shooting for 10% delta, which from a clinical perspective, is the minimal difference that we needed to see. So we're very pleased to see nearly triple that, again, first randomized study to readout in solid tumors in the space. Also encouraged to see 1 CR, which are few and far between in gastric. And although early, I think encouraging durability, as well as we were not reached on the treatment arm, but yet had 7.4 months on the control. So again, this compares well with both DESTINY studies, as well as the RAINBOW study. So in terms of the waterfall, again, I think what we see here is substantial consistent tumor shrinkage on the left versus control on the right. And I think what was most exciting for us as a company is if you were to overlay the ASPEN-06 data with the ASPEN-1 data on the right, a very consistent effect. So what we saw in Phase II was remarkably similar to what we saw in Phase -- in our Phase Ib study. Again, as context, the RAINBOW study with Ram/Pac is the global standard of care. We showed a pretty substantial benefit over that and are encouraged by that as we think about next steps. So in some robust clinical activity, we had ORR of 52% in a patient that's in desperately -- desperate need of other options. And we think we compare well versus the standard of care out there. Again, well tolerated. We are not seeing the heme related tox that others in the space have seen and it's been consistent across what we saw in the Phase I and now seen in the Phase II. So with that, I'm going to turn to the second mechanism, which is really looking at using the same don't eat me -- blocking don't eat me signal, but this time doing so to better activate T cells. So in the head and neck study we're running, we're looking at evorpacept plus KEYTRUDA. And in essence, by blocking the don't eat me signal, we are able to better activate T cells. And through activating the dendritic cells, we're able to cross prime T cells to better cancer -- better target cancers like head and neck. So historically, if you look at the space, head and neck is interesting in that overall response rate has not necessarily been predictive to survival. And the definitive studies in the space, KEYNOTE-48 and KEYNOTE-40 demonstrate this, where they showed roughly equivalent overall response rates, both in first line and second line, and then they demonstrated gains, relatively modest gains, but gains in overall survival, which I think is really important because if you look at our data, we've now tested over 20 patients in a Phase Ib, and what we were able to demonstrate was consistent survival benefit. So if you look at our overall survival rate at 12 months, which is in the green, in both first line and second line, we showed north of 80%, which we believe is a very strong, although early signal in head and neck can helps validate what we think is a second very interesting mechanism. So what are we doing now? We're running 2 large Phase II studies, ASPEN-03 and 04. These are first line head and neck studies and will be definitive studies in this space. Again, first randomized studies to readout in CD47, which we're planning on later this year. And the study design reflects the current KEYTRUDA label. So one is KEYTRUDA alone. So evorpacept plus KEYTRUDA versus KEYTRUDA and ASPEN-04 is evorpacept plus KEYTRUDA plus chemo versus KEYTRUDA and chemo again, directly reflective of the label. It's a co-primary endpoint. So looking at OS at 12 months, as well as response rates, and that's going to also readout later this year. So -- what we're excited about is, again, 2 potential first-in-class mechanisms. We don't have the third mechanism on here, which many of you are aware of, but magrolimab and others were testing a different mechanism other than these 2. We believe that the responses and the activity that we've seen across these mechanisms have been differentiated and consistent. And that's what you see in the middle panel here. Again, the gastric data was the first to readout in solid, but it builds on both data we've seen in heme with our Phase Ib and NHL, as well as our Phase I being gastric, which was also positive. And again, similar for the checkpoint story. We had positive Phase Ib data, which drove our strategy in terms of Phase I. So from here, we're now testing 9 -- we have 9 ongoing studies, so a very robust development plan. On the anticancer antibody front, we are testing with trastuzumab, as I mentioned. But we also believe that this effect with an anticancer antibody should apply to heme. And so, we're running a study in collaboration with Sanofi to test evorpacept in combination with SARCLISA. And we also are soon going to readout data in NHL. On the ADC front, which, again, mechanistically, we think makes sense. We are testing evorpacept in combination with 2 of the most prominent ADCs out there with PADCEV in bladder, as well as in [ HER2 ]. And again, mechanistically, we believe we should be synergistic and additive to an ADC. And then last, as I mentioned, we're going to readout over 300 patients randomized later this year, testing the theory with KEYTRUDA, which we believe will be a seminal moment for the CD47 space. So in terms of milestones, how does it set up for upcoming catalysts, of course, we have a really busy year. But we have gastric data, full gastric data coming Q2. As I mentioned, we're going to report NHL data Q1, Q2, which we're excited about to help broaden the story beyond solid here. And then in the back half of 2024, of course, we have the 2 big readouts with ASPEN-03 and 04. And then, we'll also have additional readouts with ADCs PADCEV and Enhertu. Behind that, we have a really exciting pipeline. We've been working on ADCs for the last, I'd say [ 3 ] years. We've been very quiet about that but are also planning to share more over the next 6 months, as to what we're doing with novel ADCs and are actually planning to have one of the ADCs in the clinic over the next year. So in terms of financials, we've raised over $600 million to date off of the gastric data in the fall. We raised roughly $60 million, which was a strong financing, very over -- very much oversubscribed. But that leaves us well set up going into the year. We also have a $100 million loan facility with Oxford and SVB. We've pulled [ 10 of the 100 ]. And so, we now are in a place, where we can get through all the milestones this year with no financing overhang and have cash into early '26. So that's us, again, very excited about what we have, very excited about what we've shown, which is differentiated in this space and looking forward to a big year. So questions. Thank you.

Thank you very much, Jason and the ALX team. Are there any questions from the audience?

[ We've got ] happy hour early, I think.

That being said, we do have some questions [ for ] our end. As you noted, obviously, you have a lot of exciting milestones and data coming out. So I want to talk about evorpacept specifically for ASPEN-06 in your Phase II trials. So you're expecting final analysis from the Phase II study, which will include about 122 patients to be disclosed in Q2 of this year. How does this interim data give you confidence for the full data set next year? And what is your -- what's your [ bar or ] expectation for full data appreciating that investors might be expecting or are to come down with a few more points? And how should we think about the disclosure of the data as well?

Thanks. Yes. I think what's important to note is that this isn't a Phase Ib going into a Phase II. This is a Phase II prespecified interim readout going to final. So again, this was a global study enrolling over 40 sites, and we've shared, I think, the data to date. So what is the risk from going from what we have now to final with 122, it's hard for me to handicap, that's what you all do. But again, I think we see the enrollment and the sites, et cetera, being all consistent. And I think as we tried to highlight in the slides, the efficacy and safety is both very consistent between the Phase II and Phase Ib. So we're confident, and we've had a lot of enthusiasm and interest in the study, which is help drive us forward, and we're feeling optimistic about the data.

Nice. Thank you. And on that topic, is that something that you would release on your own or maybe hold for a medical conference?

We're still working towards the exact plan there, but again, feel confident around Q2 and the timing and where we are.

And how do the encouraging early results in gastric cancer derisk your other programs?

Yes. I think that's one of the most exciting things for us. If you go back a few years, the reason to choose gastric was because it was a great place to test the theory, if you will, to test what the drug can do in combination with anticancer antibodies. So I'd say we're excited about the future in gastric, but what is as exciting is where else we can go. And that's the beauty of this mechanism is that the combinations with other anticancer antibodies in other spaces make logical sense, and we feel are very, very much derisked. So you could think about HER2-positive breast, you could think about colorectal in combination with EGFR. You just tick through the list of where anticancer antibodies have built franchises and those are places we can play. So that's what we're doing right now.

Thank you. And speaking of [ worlds' ], you can go -- I wanted to touch on your ex-U.S. strategy, so Asia has a disproportionately higher disease incidence and prevalence of gastric cancer than U.S. or Europe. Can you talk about your geographic development strategy for evorpacept in gastric or GEJ cancer as well as your potential commercialization strategy outside of the U.S.?

Sure. Well, we have all 0 employees in our Asia offices. So it's -- I think it is on us to figure out how best we get this drug to the world, if you will. And I think gastric, as you know, is largely an Asia-based disease. And so, we need to think about how we best do that. And I think one of the great parts about having interim data as strong as it is, it allows us to talk to partners now and explore that. And so, we'll see. I think the good news here is that we have not done any deals around evorpacept. It's a completely wholly owned asset. It's unencumbered. And so, we, as a company and a board, have a lot of flexibility as to how we'd go forward. And we're going to explore that. And if a deal makes sense, we'll do one. But I think we also have a lot of options in front of us here.

That's awesome. Yes. 2-year cash runway definitely helps for that as well.

That helps.