BioAtla, Inc. (BCAB) Earnings Call Transcript & Summary

Hello, and welcome to the BioAtla Second Quarter 2022 Earnings Call. [Operator Instructions] Please note, today's event is being recorded. I'd now like to turn the conference over to your host today, Bruce Mackle. Mr. Mackle, please go ahead.

Thank you, operator, and good afternoon, everyone. With me today on the phone from BioAtla are Dr. Jay Short, Chairman, CEO and Co-Founder; Scott Smith, President; Philippe Martin, Chief of Clinical Development and Operations; Sheri Lydick, Senior Vice President, Commercial Strategy; and Richard Waldron, Chief Financial Officer. Earlier this afternoon, BioAtla released financial results and a business update for the quarter ended June 30, 2022. A copy of the press release is available on the company's website. Before we begin, I'd like to remind everyone that statements made during this conference call will include forward-looking statements, including, but not limited to, statements regarding BioAtla's business plans and prospects; financial and operating performance and expectations; operating costs and expenses; product pipeline; clinical trial and regulatory timing and associated resource requirements; its programs and potential partnerships; and the advancements of its CAB technology and product candidates. These statements are subject to various risks, assumptions and uncertainties that can cause actual results to differ materially and are described in the filings made with the SEC, including the most recent quarterly report on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, August 9, 2022, and BioAtla disclaims any obligation to update such statements to reflect future information, events or circumstances, except as required by law. With that, I'd like to turn the call over to Jay Short. Jay?

Thank you, Bruce. Thanks to everyone for joining us for our second quarter 2022 BioAtla earnings call. The broad applicability of BioAtla's CAB technology has allowed us to continue advancing the development of our innovative clinical and preclinical programs. The second quarter was marked by strong execution with promising results across 5 potentially registration-enabling ongoing Phase II trials for our 2 latest-stage CAB-ADC product candidates: mecbotamab vedotin, or BA3011; and ozuriftamab vedotin, or BA3021, across multiple solid tumor types for these first-in-class therapeutic candidates. But before I go any further, I'd like to remind everyone that additional details related to what we are going to present are available on our website as part of our updated company presentation that may be helpful to you. We have several additional upcoming catalysts this year for both our lead assets, including important results to be covered in today's discussion. We previously shared interim data on our BA3011 Phase II sarcoma study and we now look forward to enrolling multiple sarcoma subtypes into part 2 of that study. Further on today's call, we will discuss new results for additional sarcoma subtypes, an important initial interim data for the non-small cell lung cancer study for BA3011. Our Phase II BA3021 studies also continue to advance, and we anticipate an interim update for non-small cell lung cancer in the fourth quarter. We also expect that our successful validation of the liquid biopsy will accelerate the melanoma study for an enrollment update later this year. In addition, we are actively screening in our head and neck study with the first patient anticipated to be dosed shortly. Our Phase I/II basket trial for our CAB-CTLA-4 antibody, BA3071, is currently ongoing with the first patient dose completed. We also remain on track for our pre-IND meeting and IND filing for our dual CAB bispecific antibody, EpCAM CD3 or BA3182 this year. We are pleased with our cumulative results that continue to support both the efficacy and safety from a more differentiated proprietary CAB platform thus far in 2022, and I believe we are well positioned to continue with strong execution. Most importantly, we are excited to share the updates of our ongoing clinical programs with you to date, in particular, observations from our Phase II non-small cell lung cancer study with our lead asset BA3011. With that, I would now like to turn the call over to Philippe for additional details. Philippe?

Thank you, Jay, and good afternoon, everyone. I would like to provide initial interim observations on Part 1 of our Phase II study in non-small cell lung cancer and an update on Part 1 of our Phase II study in sarcoma. First, I will go over our preliminary data in non-small cell lung cancer and start with a brief introduction of the study design. Our ongoing potentially registration-enabling Phase II trial of BA3011 is designed to evaluate the efficacy and safety of BA3011 monotherapy and in combination with nivolumab in AXL-expressing patients with refractory non-small cell lung cancer that have failed either ALK, EGFR or PD-1 inhibitors. We did not restrict the number of prior lines of therapy or restrict any particular type of non-small cell lung cancer and have enabled patients with either non-squamous or squamous cell carcinoma. Therefore, the interim data will be presented accordingly. There are 2 parts to the non-small cell lung cancer Phase II portion of the trial. In Part 1, interim analysis will be conducted after 20 and up to 40 patient as the potential to be followed for at least 3 months. Our predefined goal criteria for the interim analysis is to achieve an overall response rate of approximately 20%. As of the data cutoff of July 15, 2022, we had enrolled 15 patients with 9 efficacy evaluable patients. Four patients are currently on treatment, but did not have yet the opportunity to be followed for 3 months, and 2 additional patients were not deemed efficacy-evaluable. Importantly, all patients are PD-1 failure patients and have failed on average 2.5 prior lines of systemic therapies for metastatic disease. Of the 9 evaluable patients, 7 were announced squamous adenocarcinoma patients and 2 were squamous cell carcinoma patients. So far, we observed a total of 1 complete response and 2 partial response for a combined objective response rate of 33%. All response were observed in non-squamous group, representing an ORR of 43%, or 3 out of 7 patients. 4 out of 7 of these non-squamous patients were administered BA3011 monotherapy, while 3 received BA3011 in combination with nivolumab. The 2 PRs were observed in the non-squamous monotherapy group, representing an ORR of 50% for this group, and the CR was observed in the non-squamous combination group, representing an ORR of 33% for this group. Of the 2 evaluable patients in the squamous cohort, we have not yet observed a response with either BA3011 monotherapy or BA3011 in combination with nivolumab. All patients enrolled were AXL-positive with a TmPS of 1% or more. The rate of AXL positivity in the non-small cell lung cancer population continues to be high. We estimate it to be approximately 35% for the non-squamous population and approximately 30% for the squamous population based on over 200 non-small cell lung cancer patients tested so far for AXL expression. As of the latest safety data cutoff, the safety and tolerability profile from the Phase II non-small cell lung cancer study continues to be differentiated from other MMAE ADCs. No new signals have been identified from Phase I. No treatment-related deaths and very few grade 3, 4 AEs were reported. To put this data into perspective, and notwithstanding the preliminary nature and small sample size of our data set, the efficacy observed in this study and, in particular, the efficacy observed for the BA3011 monotherapy non-squamous and BA3011 monotherapy non-squamous and squamous combined is so far highly competitive in this PD-1 refractory population and supportive of moving forward to the registrational part of this study. We are continuing to enroll patients in Part 1 to help us better define which population and which treatment cohort or cohorts, we will be advancing to the registrational part of the study. With now close to 20 patients enrolled in the Part 1 of the study, we anticipate we'll be able to present interim results of approximately 20 patients in the fourth quarter of this year. I will now present the sarcoma data. During our last quarterly call, we presented interim data from our ongoing Part 1 of the potentially registration-enabling Phase II trial of BA3011 which was designed to evaluate the efficacy and safety of BA3011 in adults and adolescent patients with refractory soft tissue and bone sarcoma. We enrolled patients across 7 different sarcoma subtypes to receive BA3011 monotherapy and across all sarcoma subtypes to receive BA3011 in combination with nivolumab, split equally between CD20 positive and CD20 negative tumor expression. The purpose of Part 1 was to identify sarcoma subtypes that do not respond to BA3011 treatment and eliminate the subtypes from moving forward into Part 2 of the study; predefined go/no-go criteria for the interim analysis; determine which subtype may advance to Part 2 of the study. This threshold for a go decision is either at least 1 partial response or complete response for subtype or progression-free survival, or PFS, rate of at least 40% at 3 months. Patients were selected based on AXL expression using the TmPS of greater than or equal to 50% in each sarcoma subtype. The subtypes in soft tissue sarcoma included leiomyosarcoma, synovial sarcoma, liposarcoma, or the soft tissue sarcoma such as UPS. In bone sarcoma, the subtypes included osteosarcoma, Ewing sarcoma and other bone sarcoma which includes chordoma and chondrosarcoma. The interim result presented previously in UPS and osteosarcoma satisfied our predefined go criteria into Part 2 of the Phase II BA3011 study. UPS and osteosarcoma are advancing as separate cohorts to registration studies. Additional detail for these registration studies will become available following FDA written response. Today, we are sharing data from additional cohorts based on an efficacy data cutoff of July 25, 2022. In liposarcoma, we've enrolled 6 patients and observed the PFS rate of 60%, which exceeded our predefined go criteria to Part 2 of Phase II. These patients have progressed on 2 or more prior lines of systemic therapies. For context, recent studies have shown that for the earlier first and second-line metastatic liposarcoma patients, the PFS rate for placebo at 3 months is around 30% and approximately 50% for eribulin and trabectedin. In synovial sarcoma, we've enrolled 5 patients. These patients have progressed on 3 or more lines of systemic therapies. The PFS rate at 3 months was 50%, which also exceeded our predefined go criteria to Part 2 of Phase II. For context, the PFS rate for pazopanib at 3 months is 49% for the earlier first and second-line metastatic synovial patients. With regards to safety profile across sarcoma subtypes, BA3011 continues to be generally safe and well tolerated with a Phase II safety profile consistent with the profile observed in Phase I. We are currently evaluating the clinical and commercial opportunities for these subtypes and we'll decide on the path forward in the near future. We are continuing to enroll patients in the Ewing sarcoma cohort and the bone other sub-cohort, mostly made of chordoma and chondrosarcoma. Thank you for your attention. Sheri will now highlight the significant unmet need and commercial opportunity in non-small cell lung cancer. Sheri?

Thank you, Philippe, and good afternoon, everyone. Lung cancer is the second most common cancer and the leading cause of cancer-related mortality worldwide, with 80% to 85% classified as non-small cell lung cancer. Upon further breakdown, non-squamous subtype accounts for approximately 75%, while squamous cell accounts for the remaining 25% of non-small cell lung cancer cases. There are over 540,000 people in the U.S. living with lung cancer and approximately 200,000 newly diagnosed patients per year, majority of which are diagnosed with advanced or metastatic disease. The introduction of targeted therapies and checkpoint inhibitors in the past decade has improved the treatment landscape for patients with advanced or metastatic non-small cell lung cancer. Chemotherapy plus immune checkpoint inhibitors have become standard of care in the front-line setting in patients with metastatic disease. Despite advances in first-line care, the majority of patients eventually progress and experience worsening outcomes after each line of subsequent therapy. There are limited options for these patients who progress on immune checkpoint inhibitors, and available treatments in the second-line setting and beyond have suboptimal overall objective response rates of 10% to 20%. While the data Philippe just shared are early observations, the signal is encouraging, particularly when we think about this multi-refractory non-small cell lung cancer population, and we believe that BA3011 has the potential to fill a significant unmet medical need for these patients. Turning to the commercial opportunity. Non-small cell lung cancer is one of the largest oncology therapy market, valued at approximately $20 billion in 2020 in major markets and projected to grow 9% annually, reaching $48 billion by 2030. We estimate that there are approximately 40,000 to 50,000 AXL positive non-small cell lung cancer patients per year in the U.S. and over a 100,000 per year worldwide. We estimate that this represents a significant global commercial opportunity of approximately $2.5 billion to $3 billion. With respect to sarcoma, we remain energized about the continued opportunity for BA3011 in soft tissue and primary bone sarcomas, even when considering only UPS and osteosarcoma, given the significant unmet medical need and lack of approved treatments for these patients. Combined, there are approximately 5,000 to 7,000 AXL-positive addressable UPS and osteosarcoma patients per year in the U.S., and over 12,000 globally, which we estimate to be a worldwide commercial opportunity of up to $1 billion. Taken together, our preliminary observations in non-small cell lung cancer and our Phase II sarcoma study data, our lead CAB-ADC asset, BA3011, has the potential to be a best-in-class therapeutic treatment for patients who have failed frontline regimens with an estimated total global commercial opportunity of approximately $4 billion. We are excited for the upcoming near-term catalysts this year in our BA3011 program and for the potential of this asset to fill significant unmet needs for refractory patients across a variety of cancers. Now I would like to turn the call over to Scott Smith, President of BioAtla, to provide an overview and updates to other ongoing clinical programs. Scott?

Thank you, Sheri, and good afternoon, everyone. Before I review our key operational updates from the quarter, I want to share my excitement around the preliminary observations from Part 1 of our Phase II non-small cell lung study. Given the significant unmet medical need and commercial opportunity in refractory non-small cell lung, we are very excited to see an early signal in the non-squamous population, albeit with a small number of evaluable patients to date. Preliminary observations in a non-squamous cohort validate the signal observed from our Phase I study. We will wait for the full interim data analysis before making detailed study determinations, but we are thrilled to see a trend in a positive direction thus far with 3011 in this initial cohort. The early observations in Part 1 of our Phase II non-small cell lung study exceed our internal predefined go/no-go criteria. And we will begin preparations for discussions with the FDA for Part 2 of the study. In the interim, we will continue to enroll and dose patients in both subtypes and anticipate a full interim data set of approximately 20 patients through multiple scans in the fourth quarter of this year. Additionally, the non-small cell lung Phase II preliminary observations further strengthened 3011 as a potential best-in-class therapeutic treatment for a variety of cancers given the clinical outcomes from our other studies in sarcoma. As reported last quarter, the interim Phase II analysis at 3 months in AXL-positive sarcomas demonstrated meaningful antitumor activity, and we met our predefined go criteria for 2 very important sarcoma subtypes, UPS and osteosarcoma. As discussed earlier, we are very pleased to note that 2 additional cohorts, liposarcoma and synovial sarcoma, now qualify to move to Part 2 of the study based on our predefined criteria. We are currently evaluating the clinical and commercial opportunities for these subtypes and will decide on the path forward in the near future. With respect to UPS and osteosarcoma, we have submitted a request to the FDA for written feedback regarding the study design to support registration. For UPS, we have proposed a single-arm trial with ORR as the primary endpoint in a sample size of approximately 60 patients. For osteosarcoma, we have proposed a double-blind, randomized, placebo-controlled trial with PFS as the primary endpoint in a sample size of approximately 120 patients. We anticipate written feedback in the coming weeks, and we will begin enrollment shortly thereafter. Now turning to our second lead CAB-ADC product candidate, BA3021, a CAB-ROR2-ADC. As a reminder, there were no other therapies targeting ROR2 in the clinic, so we have the potential to have a first-in-class treatment for solid tumors. In Phase I, we saw impressive responses in ROR2-positive patients refractory to PD-1 therapy, including 2 PRs in non-small cell lung, 1 PR in head and neck cancer and a complete response in a melanoma patient who remains in complete remission off treatment for over 2 years. To date, we have 3 Phase II trials ongoing with 3021, and I'm happy to provide an update as to where we are with each, beginning with non-small cell lung. The non-small cell lung trial in refractory patients is enrolling as planned and currently dosing with an interim update of the preliminary cohort of up to 20 patients followed by at least 3 months of therapy anticipated in the second half of this year. Turning to the melanoma trial, which is being conducted in patients refractory to PD-1 therapy. As previously discussed, we ran into challenges with trial recruitment, which we believe was due to lower working positivity rate than anticipated and challenges obtaining invasive tissue biopsy in these patients. However, after working on a liquid biopsy with our partner, [ Veracyte ], we are happy to report that we now have a validated noninvasive liquid biopsy assay and that we are implementing as part of the study protocol this quarter. As a reminder, we previously mentioned that one melanoma enrolled in the Phase II as of last quarter achieved a complete response. Together with the complete response we observed in 1 patient in the Phase I study, we have 2 out of 2 ROR2-positive PD-1 refractory patients with a complete response, which is quite remarkable. We remain very excited about the potential of 3021 in melanoma patients, particularly with potential acceleration of enrollment following validation and implementation of the liquid biopsy. The third Phase II study that we've initiated with 3021 is in refractory patients with head and neck cancer, and the first patient is anticipated to be dosed very soon. To round out our CAB-ADC programs, we are supporting a multi-center, investigator-initiated Phase II clinical trial of 3011 or 3021 in patients with platinum-resistant ovarian cancer. This trial is ongoing, and to date, 5 patients have been dosed. Now I'd like to talk briefly about updates for our CAB-CTLA-4 antibody, BA3071. The Phase I/II trial that will examine safety and tolerability of 3071 in monotherapy and in combination with nivolumab is ongoing, and the first patient has been dosed. We believe there's a tremendous unmet need and commercial opportunity for a safer and better tolerated CTLA-4. Turning now to our preclinical pipeline. BioAtla has several candidates in IND-enabling phase that includes CAB bispecifics and second-generation ADC antibodies. We remain on track for a pre-IND meeting and IND filing for our CAB EpCAM CAB-CD3 bispecific antibody later this year as well as for potential additional IND filings for preclinical next-generation CAB-ADC candidate and a second CAB bispecific in 2023. With that, I'd like to hand the call over to Rick to review the second quarter 2022 financials.

Thank you, Scott. As of June 30, 2022, we had $202.3 million in cash and cash equivalents compared to $245 million as of December 31, 2021. We expect cash and cash equivalents will be sufficient to fund planned operations, including all ongoing CAB product development programs into the second half of 2024. As a reminder, we control all CAB product rights in the U.S., Europe and Japan. Our business strategy includes advancing commercial preparations in key global markets while exploring opportunities to extend our cash runway by generating upfront cash through the selective licensing of product rights in certain territories or collaborations with other biopharmaceutical companies that could also provide to us development milestones and royalties upon regulatory approval and commercialization, and create additional value for stockholders. For the second quarter ended June 30, 2022, we reported a net loss of $28.9 million compared to a net loss of $30.4 million in the same quarter of 2021. Research and development expenses increased from $14.9 million in Q2 of 2021 to $20.7 million in Q2 of 2022, primarily driven by expansion of our product development efforts, including clinical development for CAB-CTLA-4 and preclinical development of additional CAB candidates. We expect our R&D expenses to remain variable from quarter-to-quarter and generally increase as we continue to invest in R&D activities to advance our product candidates and clinical programs. General and administrative expenses were $8.3 million for the second quarter of 2022 compared to $15.9 million for the same quarter of 2021. The $7.6 million change was attributable to a decrease in stock-based compensation for the 2022 period. We expect our G&A expenses to moderately increase to support development of our product candidates, advance our intellectual property portfolio, support focused pre-commercialization activities for our product candidate, BA3011, and meet all requirements as a public company. Net cash used in operating activities for the 6 months ended June 30, 2022, was $42.1 million compared to net cash used in operating activities of $28.5 million for the same period in 2021. The increase in net cash used in the operating activities for the first 6 months of 2022 is primarily due to an increase in research and development expense related to our program development efforts as compared to the first 6 months of 2021. And now back to Scott.

Thank you, Rick. We are very pleased with the progress we've made this year. And with the cash runway into the second half of 2024, we are well poised to reach several milestones and key inflection points with our innovative CAB assets. BioAtla will remain acutely focused on prioritizing the programs and indications we view have the highest probability of therapeutic success and market potential to maximize the value for our shareholders, while being prudent with our strong balance sheet to ensure development and execution in support of our robust clinical and preclinical pipeline. We're very excited about the future of our innovative CAB antibodies and the potential impact on patients across multiple tumor types. BioAtla looks forward to creating long-term sustainable value and transformative cancer therapy. And with that, we will turn it back to the operator to take your questions.

[Operator Instructions] And the first question comes from Kelly Shi with Jefferies.

Congrats on the great progress. My first question is, so for the non-small cell lung cancer program, the AXL cutoff has been lowered to 1%. I'm just curious with this new cutoff, what percentage of the non-small cell lung cancer patients are eligible for the enrollment criteria? And also in the industry responders, how does the AXL expression level looks like? Are they fairly like a broader range of AXL level or more like high expressers? And also -- I mean even though it's a very small number, just curious whether you saw a trend, there's a correlation between the AXL level and the depth of the response.

So Kelly, thank you very much for that question. So the AXL positivity rate with AXL greater than 1% is approximately 35% to 40% of non-small cell lung patients in the area that we're studying. The 3 patients, I don't know that we have disclosed the 3 patients that responded and with their AXL positivity rates, but I'll ask Philippe if there's anything that we can report on that at this time or is that part of the bigger data set once we get that.

Yes, I think it's a little early to report any -- to make any comments about any trends. We want to get a little bit more patients before we do that.

Great. And I also have a follow-up. So as you're evaluating both the PD-1 combo and monotherapy in the lung cancer patients, I'm just curious, for the monotherapy, what kind of ORR rate maybe will incentivize you to prioritize the monotherapy first instead of a PD-1 combo, given that they might add additional tox to the patients.

Yes. Thank you, Kelly, for the follow-up. And again, we want to enroll the full cohort. We had dosed close to the 20 patients. And so once we get everybody through 2 scans, we'll have a bigger cohort to make some of those assessments on. We were very pleased with what we saw on this initial group of evaluable patients. We have said from the beginning that we believe in this PD-1 failure population. And again, I think Philippe reported the average number of prior treatments is 2.5 in the group we have been studying so far, so refractory population for sure, difficult-to-treat population. We were thinking that the 20% and above is approvable. We were thinking 25% to 30% is really something that would be very commercially viable. I think that goes for the mono and the combo. And again, we want to take a look at the full data and decide do we want to prioritize one over the other. We did have a complete response in the combination group, a very nice response in that difficult-to-treat patient. And so we don't have enough information to decide one or the other at this point in time, or maybe there -- once we get the fullness of the data, we'll dictate that what patient type -- characteristic is better for mono or for combo. But we're pleased we're seeing responses both in mono and in combo, and we could take both forward potentially into the registration phase.

[Operator Instructions] And the next question comes from Arthur He with H.C. Wainwright.

Congrats on the progress. I just want to follow up on the lung cancer data. Could you give us about the disease control rate for these 9 evaluable patients?

Yes. And I will -- again, I'll ask Philippe to comment on the specifics here.