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

Hi, everyone. Welcome. My name is Luka Kachukhashvili. I'm an associate here on the health care IB team. Logistically, we'll go through the presentation, and then I'll open it up for Q&A. My pleasure to introduce Jason Lettmann, ALX Oncology's CEO.

Great. Thanks, Luka. Thanks to JPM for having us. I have the ALX team with me here with Alan Sandler, who is our Chief Medical Officer; Ali Dillon, who's our Chief Business Officer; and then Jaume Pons, who's our Founder, CSO and President. So thrilled to be here. It's been a great meeting for us, and thanks to you all for your interest in our company. We're going to make some forward-looking statements here today. As part of our -- let me go back one. So one of the things we've been working on is how we tell the story. We picked starlings because we are nature lovers. And one of the things we're trying to do at ALX is harness the power of the immune system and specifically in macrophage biology. And starlings, as you know, move in packs. And one of the things we've been working on is using evorpacept to drive macrophages to the right place. And we're very excited about what we've accomplished on that. We are developing evorpacept, as I mentioned. It's a novel first-in-class, we believe, best-in-class approach to cancer treatment. We are operating in the CD47 space. And importantly, and what we're going to touch on today, is the validation that we have. We've been executing the program now for almost a decade, and we are the first and only CD47 to have validated randomized data in Phase II in gastric cancer, which we'll talk about. The safety and tolerability has been consistent. We've now dosed over 700 patients and have shown an ability to treat cancer in a way that is safe, particularly when compared to the conventional approaches that came before us. We have applicability across solid and heme, which we'll talk to. We're able to dose very high. And again, this is a unique approach to activating the immune system. We're running several trials, as we'll get in today, across head and neck, gastric, breast, bladder, et cetera. And we are in a great spot. We have a ton of catalysts coming this year. We're coming off significant readouts last year and are looking forward to the next year and the next 6 months in particular. So as we'll get into, we're developing a novel IO approach. Again, have dosed over 700 patients to date. We are the only CD47 to show ORR as well as overall efficacy relative to the class. And it dates back to the mechanism from the early days when Jaume and the scientific team founded the company off of a Nature article in 2014, this dead Fc approach to approaching the target is truly, truly differentiated. And the good news is, is that early work has now translated into the clinic, where we have multiple positive readouts to support the thesis. We are testing the drug across 3 major classes. We have 3 major shots on goal here: first with anticancer antibodies, second with checkpoint inhibitors and then, last but not least, with ADCs. We've had the benefit of several great partners: Merck, Lilly, Sanofi to help support us. And we have a strong balance sheet to be able to play these milestones through over the next year. We'll talk a little bit about the data to date. We're coming off good data at San Antonio in December, in combination with zani, which really validates this approach to breast cancer. And we have an oral presentation coming up a week from tomorrow at ASCO GI, where we're going to share updated data in our gastric study, ASPEN-06. So as I mentioned, here's where we are in terms of the pipeline. Again, we've been really testing this molecule across a wide range of indications. So ASPEN-06, on the top there, is what we're pursuing within gastric cancer, and we'll talk about that. Within head and neck, we're pursuing ASPEN-03 and ASPEN-04, which are frontline head and neck studies in combination with KEYTRUDA or in combination with KEYTRUDA plus chemo. Across those 2 studies, we have over 300 patients enrolled, and we are going to be reporting data from that in the first half of the year as well. We're also exploring ADC combinations. So one with PADCEV, the second with ENHERTU. We believe that evorpacept should be able to be combined with both. And then we also have, as I mentioned, a collaboration with Sanofi to look at the combination with SARCLISA. So mechanistically, and we've just redid our graphics here to try to simplify the mechanism. The first approach is to unmask cancer. So CD47 is one of the primary modes in which cancer evades the immune system. So the first thing we do is unmask cancer. The second thing we do, in combining with an anticancer antibody, is to unleash and drive the immune system against it. So as you can see here in the graphic, we're able to do so both with a macrophage. So when we combine with an anticancer body, we drive ADCP. And we're also -- we do it with dendritic cell signaling. So that's how the drug works. Importantly, we've built this to do this in a safe way. So we are the -- we have the highest CD47 blockade among the class. We have a dead Fc, which is very important, and we have a low molecular weight to drive increased solid tumor penetration. We also have antibody-like PK, which enables us to do so. This is how we compare with others. And again, I think it's really important to look about at what's been done in the class. So we have successfully differentiated the molecule from the beginning via the dead Fc. So we have clinically validated now in an inactive way -- sorry, I'm losing my breath here. I may have you take over for a minute, Alan, on this section. You want to just talk about differentiation? Sure, thanks.

Yes. So let me see where we're at here. So again, demonstrated, again, tolerability and clinical activity. And we're looking at the concept of the inactive Fc domain. The purpose for that is to avoid collateral damage and toxicities, and requiring then a partner antibody to have the active Fc domain to sort of drive the therapeutic effect for the immune system, avoiding then the collateral damage and toxicity. This will, therefore, allow for a broader therapeutic window and higher CD47 affinity, again, because of the fact that you can concentrate solely on that CD47 without worrying about its effects collaterally outside of the tumor with what the other generation of active Fc domain. All right. So the -- again, this mechanism, as I've mentioned, enhances that therapeutic activity: 3 potentially different modalities across both hematologic and solid tumors, 2 potential first-in-class mechanisms of action. Again, you have the Don't Eat Me signal, and then the Don't Activate for T cells. The opportunities can be combined, therefore, you have the dead Fc, you need another partner to direct it for its therapeutic effect. Those are 3 different choices that are done here. You have anticancer antibodies, which would have an active -- that active Fc component. And this can be done. We've got the Phase II study in gastric and GEJ cancer. And we also have in multiple myeloma with SARCLISA, non-Hodgkin's lymphoma and a recent breast cancer study that was presented at San Antonio with zanidamab. In addition, you can combine with antibody drug conjugates. We have a urothelial carcinoma study with PADCEV, a Ib study. And also, we are in the midst of a study with I-SPY and IST looking at a combination with ENHERTU. In addition, another aspect is to combine with checkpoint inhibitors, and we have several studies looking at this with KEYTRUDA in head and neck cancer, both with and without chemotherapy; an ovarian cancer study with KEYTRUDA with chemotherapy; and then we also have a neoadjuvant study with human papillomavirus in oropharynx cancer, again, with KEYTRUDA in this particular setting. So the breadth of the clinical data supporting evorpacept's potential to deliver is, again, shown here with the various study types. Strong activity, that's been observed across 6 different clinical trials to date. There are now 10 ongoing studies across 9 tumor types. This includes some ISTs as well. And evorpacept is the only CD47 blocker that's been able to demonstrate activity across both hematologic and solid tumor cancers. And importantly, and I think this is something that we will be seeing coming up later this year, but evorpacept is the only CD47 that's demonstrated positive data in large randomized Phase II study. We've talked about the gastric cancer data. Head and neck cancer will be coming -- will be forthcoming.

So the -- as Alan mentioned, the key thing is we're testing this across 3 combinations. Here, we're going to walk through the mechanism within gastric cancer and combining with Herceptin. I think the key point here to look at in the cartoon is that when we combine with Herceptin, of course, we need HER2-directed therapy. We need a HER2 target in order to drive ADCP. So here is the demographics of the study. Again, it was a global randomized study. We enrolled patients across 10 countries and a robust study to look and isolate the power of evorpacept in this combination. Importantly, HER2 expression is highly variable in gastric cancer, in particular. It's a heterogeneous tumor type. So the ability to detect HER2 expression is challenging from the beginning. And we know, over time, that HER2 expression is lost. And we'll get into why this is important. But again, our mechanism requires HER2 expression in order to work. This is how the study was designed. Again, 127 patients randomized. Importantly, we had 48 patients of the 127 with fresh biopsy. Those patients are indicative of patients with strong HER2 expression, and that was an important part of our primary analysis to look at that patient group. We are looking at improvements in ORR, both versus historical control as well as our control arm. This is the safety. Again, I think as we've highlighted, we have a very differentiated safety profile. And here, what you can see when comparing the results across the 2 arms, the ETRP arm and the TRP arm, we have not seen any significant safety signal, which, again, is differentiated in the class. This is what we reported in July in terms of top line results. Again, very pleased to see an over 40% ORR rate on the treatment arm versus 26.6% on control. And I think one of the elements we were most excited about is to see the durability. So here, we had a median DOR of 15.7 months versus 7.6 months on control, which, again, is far and above both what we saw in the control arm as well as historically what we've seen with both in HER2 and ram/pac. As I mentioned, we need HER2 expression in order for our drug to work and work best. And so when we looked at the fresh population, this is where we saw the strongest signal of almost a 55% ORR versus a 23% on control. And as we mentioned, both of these data sets compare favorably with historical benchmarks. From a tumor shrinkage perspective, again, we've seen consistent shrinkage across the data set, which really tells you something about the depth of the response. So in sum, this was the first randomized study in the space to show positive data. Again, this opens the door for us to combine with multiple cancer antibodies and sets the stage for where we go from here as it relates to combining with anticancer antibodies. And as we mentioned, we have data coming a week from tomorrow at ASCO GI, which we'll give more detail as to how this study has matured. So we've talked about the -- where we go and where -- what this opens up to. And one of the studies that we also reported on recently is in breast cancer with zanidatamab. So zanidatamab is an Fc-active bispecific. And the reason to run this study was again to show can we do the same thing with another Fc-active antibody in a large indication like breast cancer. We reported this data at San Antonio in December, as I mentioned. I think the important thing to note from a baseline perspective is that we've treated patients here that have seen a lot of HER2-directed therapy. So on average, these patients have seen 5 to 6 prior lines of HER2 therapy. And importantly, in Cohort 1, all of the patients had been exposed and progressed on in HER2. Here, what we demonstrated was in Cohort 1, we saw a very strong signal. And the strongest signal, again, was in the patients that were confirmed HER2-positive by central lab. And in those patients, we saw a response of 5 out of 9 or over 55%, which, again, in a patient population that has seen a lot of HER2-directed therapy, certainly over and above what would be expected. Waterfall plots, again, are really encouraging as we saw significant lesion reduction across both cohorts. In Cohort 2 here is a HER2-low cohort. So again, a very consistent signal. Same with swimmer lanes. The swimmers here, I think, are impressive in that we had 8 patients that were on treatment for more than 6 months and 4 beyond a year, which, again, is encouraging and I think indicative of an IO agent. So lining up the 2, and I think what we're excited about here is the story within gastric. HER2-positive gastric is very similar to what we've seen with HER2-positive breast. So again, a strong activity and the strongest activity when we have a biomarker at work. And we've had a very well-tolerated agent, and again, in patients that have progressed on prior HER2-directed therapy, which really builds our conviction as to what we're doing and that we're doing something over and beyond what you'd expect with a HER2-directed therapy alone. So the last part of this, we'll talk about where we're going beyond just anticancer antibodies. So we are also looking at combinations with checkpoint inhibitors. Again, CD47 also signals via dendritic cell signaling to prime T cells. And so in this way, we're able to take a different approach to the same mechanism, which is what this highlights. Again, mechanistically, by blocking the CD47 signal via the dendritic cell, we're able to better cross-prime T cells, in a way, release another break. So when combined with pembro, it's, in essence, releasing 2 breaks. So to test this, we're doing 2 large randomized studies in frontline head and neck. Across these 2 studies, we have over 300 patients that we have enrolled, and we're going to be reporting on this data also first half. So excited about this. Again, this will be one of the largest data sets to report in frontline head and neck in a while and potentially could form the basis for an accelerated approval. This highlights how we got here. We first ran a Phase Ib study to deliver the proof of concept. And here, what we showed is a 40% OR rate in patients with evo plus KEYTRUDA. Again, the benchmark in the KEYNOTE studies was 20%. So we saw an encouraging ORR gain. And I think most encouraging was what we saw on the OS side, where we had a 12-month OS of north of 80% and a median OS have not reached in the frontline and then over 2 years in the second-line setting. Again, I think this was a strong proof of concept for us and provide the basis for the 2 large Phase II studies that we're running. Again, these are the benchmarks. I think if you look at KEYNOTE-048, importantly, pembro showed between a 19% and then a 30% -- 36% ORR with chemo. And what really drove the approval here was not ORR or PFS, which was essentially on par with control, but what they ultimately showed in terms of OS. And I think, for us, mechanistically, when you're again combining another IO agent, we would expect results to be similar and improve on what KEYNOTE-048 demonstrated. So the next couple of slides just touch on the third leg of the stool. As I mentioned before, we have 3 large shots on goal with antibodies, checkpoints and ADCs. We're running 2 ADC studies, one with PADCEV and the other with ENHERTU. And mechanistically, it's similar but different. An ADC, of course, is an antibody with a payload. By combining with an ADC, we think we can bring a different mechanism to the table through driving macrophage activation against cancer, and that's why we initiated these 2 studies. There's a strong preclinical foundation for this. We've looked at combining evo with ENHERTU and CDX models and have shown that the effect is additive and over and above what you'd expect with ENHERTU alone. And we've shown that this effect, we believe, is largely driven through ADCP. And again, when we've looked at PADCEV or ENHERTU, we're able to drive additional ADCP. So those are the 2 studies we're running. One is ASPEN-07 with PADCEV. We shared data at ASCO last year, which was the first data to combine evorpacept with an ADC -- or CD47 broadly with an ADC and excited about updating that. And then we also are in the midst of running a study with I-SPY with ENHERTU. And I think that will provide another proof-of-concept data point for us on the ADC story. So before I wrap up, we're excited about the team. I've introduced the folks here. We've been building and adding to the team. Alan Sandler, our CMO, just joined us recently, formerly at Mirati and Zai. And then Ali Dillon joined us about 6 months ago, formerly at Calithera and have continued to strengthen and add to the team as we go into the year. So it's a big vision. Again, 3 big shots on goal for us here, testing 9 different combinations. We think this drug across either of the 3 could represent a major franchise from a commercial perspective. And the combinations we've been running are in very important and large markets with drugs that obviously you all know with Herceptin and Rituxan, ENHERTU and KEYTRUDA. So the foundation here is strong, and I think the commercial opportunity is significant. So as we mentioned, we have data coming on the gastric front next week. So please tune into that. That will be an oral presentation on Thursday. We have ASPEN-03 and 04 reading out first half of the year, and then we're going to be sharing additional data on the ADC front with both the data from ASPEN-07 with PADCEV coming as well as with ENHERTU. So -- and then last but not least, I wanted to mention we're having an R&D Day in February, which is really going to lay out the path to registration here. We've been in a very data-rich mode the last year. And the goal for us at this event will be to tie that together and show the Street where we're headed from a development perspective and are working on -- have been working on that the last few months. Last but certainly not least, in this environment, we're well capitalized. We have about $160 million on the balance sheet as of last quarter, which gets us through Q1 of 2026. So with that, I will open it up to questions, but thank you all.

Thank you very much, Jason and team. I guess I can kick off Q&A. I was just wondering your thoughts on just investor sentiment on the CD space. I know there's been some negative sentiment there. And just what do you think investors are missing there?

Yes, sure. I mean CD47 certainly has had its share of failures. I think as many of you know, I think where we have a lot of conviction is, a, there's no question that this pathway is incredibly important. It is a primary mode of evasion for the immune system. And I think interestingly here, we are the only company taking the approach with the dead Fc. Starting with Forty Seven and then Trillium and others, with those 2 large acquisitions, much of the field followed there with an active Fc, and our dead Fc approach is very different. It's fundamentally a different mechanism. So I think what we're seeing now is that translate -- and to have 5 positive clinical trials with anticancer antibodies is really validating, and I think when we've got this combination right and we've had the success in the clinic. So for us, I think the clinical data really speaks volumes as to how we're different.

Super helpful. Thank you.

Very good presentation. Parag Mehta, Aveta Biomics. You mentioned in one of the slides you are doing new adjuvant therapy with KEYTRUDA in HPV-positive head and neck cancer, but I didn't see any data on that one. So what's the inclusion criteria for those patients? Because the HPV-positive head and neck cancer patients generally tend to do fairly all right. So just wondering what's the rationale behind it, and any data on that? Are you in Phase II on that one or?

Yes, it's a great question. So within ASPEN-03 and 04, we're enrolling both, HPV-positive and negative, which is a key differentiator for our drug. We think we should be able to work in both, despite the prognosis across the 2 being different. So it is, of course, as you guess, a stratification factor in the study, but we're looking forward to looking at the data when we have it here first half of the year across both of those populations.

Right. But you mentioned here on the HPV-positive population. So this is a population that gets radiation as a definite treatment after neoadjuvant, or they get other surgical candidates included as well on HPV-positive?

Yes. Well, there are -- I'm trying to think if there are surgical candidates included. Alan, I don't know if you know the answer to that, but we have -- go ahead.

Just wondering if you're referring to the...

Yes.

Yes, right. That was the IST, which we don't have a lot of information on yet. But of course, it's not a study run by us right now. So just to clarify that, that was an IST that's going. It's not an ALX-run study.

Right.