Arvinas, Inc. (ARVN) Earnings Call Transcript & Summary

Good afternoon. Thanks for joining us for the next session at the Bank of America Healthcare Conference. I am Tazeen Ahmad. I'm one of the senior Smid biotech analyst at the bank. It's my pleasure to have our next presenting company with me here on stage, Arvinas. And sitting next to me are Ian Taylor, who is Chief Scientific Officer; well as Randy Teel, who is Chief Business Officer as well as Interim CFO and Treasurer. Gentlemen, thanks for making the trip out west.

Thank you.

Thanks for the invitation.

So maybe we'll start with Randy about the overview of the company, if you could give us a 2-minute summary of the platform and what makes Arvinas differentiated? And then I'll ask you a question about a recent transaction.

Sure, and thanks again for hosting us. Yes. So Arvinas was founded about 11 years ago at this point. We make PROTAC protein degraders. I expect that most folks in the audience are well aware of that by now. We've moved to a point where have our first pivotal data coming out in the latter half of this year. So our lead program is vepdegestrant partnered with Pfizer, and our monotherapy second-line plus study has top line data plan for half of the year. That's probably the biggest thing coming this year, hard to compete with that. Also for that program, we'll also share some combination data with some other CDK4/6 inhibitors. We recently, last December, shared data with vepdegestrant along with palbociclib, Pfizer's CDK4/6, but also have an ongoing study with abema and ribo as well. And so we'll share some of that data by the end of the year. That will tee us up for our first ever submission for approval and hopefully get that in short order and turn us into a commercial company, which obviously would be a major milestone for us. At the same time, we are bringing along a number of other programs, at least 20 in the pipeline, with the recent deal that we'll talk about in a minute for ARV-766. The next 2 programs actually are just now starting in the clinic. So ARV-102 is a LRRK2 degrader in neuroscience. As far as we know, that's the first PROTAC degrader intended for neuroscience neurodegenerative disorders to enter the clinic, and that has just started dosing earlier this year. We'll certainly talk about that during this half hour. And then we also have a program called ARV-393, which is a BCL6 degrader relevant for both hematology but also some potential solid tumor activity as well. Behind that, like I said, a number of other programs, both in neuroscience and in oncology. Those are the 2 major focus areas that we have. And we are well capitalized at this point, capital into 2027. I'll get that question out of at the start. We usually wait till the end, but that's one we always get asked. But a lot to talk about. So I'll let you move on to the next one.

Yes. So as promised, I wanted to ask you about the deal that you signed with Novartis for ARV-766 in prostate cancer. Can you talk about how long those talks were in play and why it made sense to have Novartis take over this program here and what it means for Arvinas in the future?

Yes. Absolutely. And business development for us has been a pretty constant activity, I mean, for the past 10 years. So we started out with target deals with Merck back in the day, Pfizer, Genentech, Bayer, along the way in the -- through 2018 or so, and then did the Pfizer deal for vepdegestrant in 2021, which was a co-co deal. I didn't mention that a moment ago for vepdegestrant. It's a co-co, 50-50 global cost and profit share. The Novartis deal for 766 is quite different. It's an out license. That was just announced about a month ago. It's still an HSR review, so still has to close. But that's an out license. And the rationale there was as we have gotten more and more data for vepdegestrant and continue to expand the development program, which we last talked about in December, we realized it would make sense -- we had always known it would make sense to look for a partner. For ARV-766, which is an AR degrader, the market there is primarily in prostate cancer. And there are late line opportunities in CRPC but the biggest opportunity was clearly always going to be in the cash rate sensitive space. Those are large, long trials, thousands of patients. And we felt like as we look ahead towards what I just talked about in terms of completing the trials with vepdegestrant, increasing them multiple Phase IIIs ongoing, planning to build out the infrastructure to launch in the U.S. While it's a 50-50 cost/share with Pfizer, we book sales in the U.S. and Pfizer book sales outside the U.S. So we thought that for 766, it made much more sense to do an out-license structure where we'll let Novartis who has a lot of capability in prostate cancer, a growing portfolio in prostate cancer, Pluvicto and some other therapies, makes sense to let them invest, take it to the earlier stages. And obviously, that patients can benefit from that. We can benefit from that while we are focused on bringing vepdegestrant to market as well as bringing along the next generation of PROTAC degraders from our pipeline. So that was really the rationale there. Excited about that, lots to come from it. We actually still have some data coming up for 766 at ASCO in just a couple of weeks. So you can look for that there. But thereafter, it will be certainly Novartis' program pending closure to pursue.

Okay. Randy, I mean how much of any of this timing revolves around the macro environment of interest rates and companies that are not revenue generating are always under more scrutiny in this type of environment? And did you think that it could be more challenging to raise capital without having clarity on where interest rates are going in the nearer term?

No, I would have to say less so. We take a pretty long view. And like I said, we feel very -- we feel well capitalized, but we have a lot of plans. But that being said, I think the resource intensity of moving into the cash rate sensitive space and the trials that, that would require in the coming years as we're commercializing that, I think that is a bigger consideration. Not that we don't think about that, but that's a bigger consideration for us. And the deals, they take a while, right? These are conversations that can go back years as we keep potential partners updated on our progress. It definitely isn't overnight. So those have been going on longer than the interest rate conversations.

Okay. Good to know. So maybe let's pivot back to the pipeline. And Ian, maybe you can give us a summary of the data that was presented at this past attendance at one of your breast cancer conference because that was a big pivot point for share price certainly for Arvinas and help us appreciate the importance of the data that was presented there, specific to vep plus palbo?

Sure. So it was our Phase Ib cohort of vepdegestrant plus palbo, very heavily pretreated patient population. So about 90% at prior CDK 4/6, mostly palbo. About 80% of had prior fulvestrant and about 80% had prior chemotherapy, 42%-ish is in the metastatic setting. So basically, fourth line plus very late line and after palbociclib in particular. And what we showed was a response rate of about 42%, clinical benefit rate of 63%. And really interesting, we have PFS of 11.1 months, which was by far, the best data that's been seen post CDK4/6, so having a CDK4/6 inhibitor after CDK4/6 been a number of studies where that the data was very equivocal. But we really believe that having a great data like vepdegestrant in combination with a CDK4/6 inhibitor, palbo in this case, the synergy that we attacked because the 2 pathways are overlapping, they're complementary, there's cross talk, really came to the floor and that's what drove the great efficacy in both ESR1-mutant patients as well as wild type. So that synergy really helped because in the monotherapy setting, you see better activity in the ESR1 mutants because it's really a signature for ER dependence of those tumors, as opposed to wild-type. In late line, there's a lot of non-ER dependent mechanisms. But when you're hitting both pathways, it's really hard with vepdegestrant against ER and palbo. That synergy really accelerated and increase the efficacy. And really much higher than any of our comparator studies like PACE, MAINTAIN, et cetera. So we're really, really pleased, and it sets us up well for a registrational study down the line. As well as I think it portends to our first line study as well with combination, potentially in combination with palbociclib.

Yes. How important was that efficacy in the wild type and trying to establish what the market opportunity could be?

Yes. Basically, could double it, I guess. I mean, Randy, could you probably speak to the actual size. But we're hoping with our monotherapy trial that we'll also have -- it's a dual endpoint. So we have ESR1 mutants as well as the intention to treat, which it's not powered for wild type specifically. Obviously, other therapies have had trouble getting the broad label. We think we have a really great chance for it. But to have that activity in wild type in the combination, really, it acts as a hedge if we don't get that label in the monotherapy. We're in a really great shape to having the combo. We've been In that stage, probably a couple of years behind our monotherapy trial.

Right. So the data was much better than people had anticipated, of course. But one area that was a topic of discussion was the rate of neutropenia that you saw, 11% of patients had that Grade 4, but you were able to address that by down-trading -- down-titrating palbo. Can you talk about what the feedback specifically to that has been with physicians and how that's going to influence your Phase III trial design?

Yes, sure. So certainly, in the combination with vepdegestrant and palbo, we did see an increase in exposure of palbo, about 50% over its mean exposure. Of course, you have to remember that the range of palbo exposure is plus or minus 30% anyway. So there's quite a bit of variation, we were about 50%. So a little bit higher. That did come with a higher rate of neutropenia because there is a pretty steep exposure of neutropenia relationship. So what was happening was that the investigators were doing what they always do with palbociclib because neutropenia is a big problem, is they dose down. So it went from 125 to 100 and in some cases, to 75. And then whatever in that neutropenia then came down more into the range of where it historically is with palbo and at the lower levels, basically, the neutropenia was basically downn where it should be. Only 3 patients stopped dosing entirely because of neutropenia out of the 46 that we had in the study. So basically, to answer your question, the KOLs, the investigators Erika Hamilton at San Antonio basically said that the neutropenia was easily managed because this is what they do with palbociclib all the time. They just dose down to drop the neutropenia. So it's really not much different than what they're used to. And so I think that will be informative going forward. For our Phase III study, we do have a study lead-in, where we're comparing 100 mgs and 75 mgs in combo with vepdeg. And we'll see what that is the best dose there in terms of PK, neutropenia and just tolerability in general.

So for someone who are trying to understand what the risks are, for example, you're looking at the 75 and 100, but what about the 125 mg? Some have hypothesized that at least some of the efficacy can be attributable to that early exposure to palbo. And do you risk having lower efficacy when you move into Phase III?

Yes. We don't think so. First of all, there's really no exposure efficacy relationship with palbo. That's been shown. You can look it up in the FDA documents, the summary based on approval. And that was looked at. They saw the exposure neutropenia relationship, and we saw it as well, but there's been no efficacy relationship. Also, the dose interruptions due to neutropenia happened very quickly within the first cycle like 30 days. And then dose reductions happened within like 37 days on median. And then the median time to response was about 110 days. And then subsequently, patients that were dose-reduced actually had a longer duration of therapy than patients who stayed at 125. So the time that they were on the higher exposure, again it was very, very transient. They stayed on drug and had response at the lower dose is much longer. So it's really almost impossible to believe that, that transient increase drove the type of efficacy where eventually, again, we talked about 11 months PFS. Obviously, we'll see when the study lead in, we're going to be testing 175 to start with. We won't have a lot of efficacy data with that. It's mostly PK and safety to pick the go-forward dose. But we're very confident that the efficacy was not because of the boost in exposure.

Okay. And then in terms of time lines for Phase III, can you walk us through that for this program?

So the Phase III for the combination first-line, yes. So basically, we're in discussions with Pfizer whether that Phase III will be a combination with palbo or their CDK4 compound which we've started a combination study with that, and we'll have data toward the end of the year. And then we'll be making a data-driven decision with Pfizer on what combination we'll bring forward in that first-line study. It will be not the most straightforward of decisions, quite frankly, because we're not going to have as much data with the CDK 4 combos we have with palbo. But we know what to expect in terms of safety, what we need to see, and we know what kind of range we want to see with efficacy. So -- but it's just going to be an apples to oranges comparison just because of the amount of data that we'll have for both.

Yes. I guess a more cynical investor would say, well, palbo was going off IP for Pfizer and so Pfizer would be motivated to try to really move forward with the CDK 4. But from Arvinas' standpoint mechanistically, can you talk about what advantages the CDK4 could present relative to palbo?

Yes. I mean I think, right, certainly Pfizer has incentive for the reasons you stated. I think mechanistically, they're both certainly driving the cyclin pathway. From a biologic standpoint, obviously, CDK4/6 has CDK4 component. CDK4 is thought to be maybe the bigger driver of efficacy certainly more of safety because their neutropenia rates with that compounds are much, much lower. So instead of 60% grade 3, 4, it's more like 15%. So any potential increase in exposure there would be much more tolerated. We wouldn't have to presumably see the type of dose reductions that had to be done with palbo. Again, that's standard with palbo. So -- and we'll see. They've shown good efficacy with their compound so far. And so we're pretty -- and we've shown preclinically that, that combination works really well, vepdegestrant CDK4, actually better than the CDK4/6 palbo preclinically in both wild-type estrogen receptor models as well as ESR1 mutants. So I mean that's preclinical data. But all of that kind of adds up to say that if we did go forward with that combination, it would be a very strong combination.

And where do you think the main opportunity would be, first line over time or second line?

Well, I think -- so it's kind of separate. So we think that palbo combination, which we're also in second line, we're also considering including abema and/or ribo as well. So I sort of have a physician's choice. But in the first line, it's either going to be palbo or CDK 4.

No, but I guess some folks, I think, would maybe appreciate some color on how you're breaking out the opportunities in first-line versus second line, understanding that you're still trying to determine what the combos are going to be in the first and second-line therapies? And maybe Randy, you have some thoughts.

Yes, I can do that a bit. And also one more piece on the palbo combo data, that we had to date in December, but we also have a presentation just actually in 2 days as with breast, which will be updated data with another 6 months of follow on from what we saw in December. So look for that as well. So I think that sequence is important, right? So second line mono comes first. There, the question that we get a lot is around ESR1 mutant versus wild type. So we can definitely talk about that. Considered another couple of years and then the second line combo comes along behind that, which is with palbo plus potentially other CDK4/6 inhibitors, like Ian just said. And then the first-line combo coming another 2 or 3 years beyond that, which again is, as Ian just said, palbo or CDK 4. So across those 3, in terms of how we think about it in terms of commercial opportunity, they get from narrower to broader, which is a good thing for a small company like us just starting on our first commercial launch. We would estimate something in the few hundred millions to maybe $0.5 billion for the -- in revenues for the line mono. Depending on the immune versus wild-type question, that could push towards $1 billion for the second-line combo opportunity and obviously much larger than that for the first line in combo, which is dependent on a lot of factors, multiple years like what the competition looks like at that point, what other programs are brought forth in first-line combination as well. But we really think that sets us up through the end of the decade really to have our first 3 launches all from vep, the other -- while the rest of the pipeline begins. So it really is a sequential, stepwise, growth pattern for us.

If the decision is made in frontline to pursue combo with CDK 4, does that change the time line to when first-line combo would reach market?

Yes, I think it could push out a little bit, but I think that would be well taken. That would be fine. And I think it's as we talk about that, the trade-off, We will have a lot more data by the end of the year for vep and palbo than we ever will for CDK4, right? And that's just a fact. We'll have to live with that. If we had to push off a little bit to wait, as we talked about, it's obviously, Pfizer has a strong push for CDK4, we are certainly not against that. They're both great options.

Right. As Arvinas without the involvement of Pfizer, what do you think about palbo versus rivo, in general?

In terms of?

Doctor preference.

Well, I mean I think certainly, it seems clear that ribo is becoming the more preferred agent probably because it has the overall survival. From a mechanistic standpoint, at least again, preclinically, we've done combinations with all 3, they basically look equivalent and mechanistically, that makes sense. And I think also, as ribo moves earlier potentially even to adjuvant, there is a growing, I guess, recognition. There's not a lot of data, but I think it's coming that if you switch CDK4/6 inhibitors as you go from one line to another, you actually can get benefit CDK to CDK. I think that's what the MAINTAIN study showed. Our data is kind of opposite of that because we -- it was basically palbo after palbo. But I think with our strong data with palbo I think why wouldn't a physician use it with such long PFS and especially if it's a switch after rival, then I think even more so.

In terms of just degraders being combined or your degrader being combined with ribo, how do you think that would be received by physicians relative to palbo?