CG Oncology, Inc. (CGON) Earnings Call Transcript & Summary

All right. Good morning, everyone. Tyler Van Buren here, senior biotech analyst at TD Cowen. Thank you very much for joining TD Cowen's 45th Annual Health Care Conference. For our next session, very excited to have a hybrid presentation and Q&A discussion with CG Oncology. And it's my pleasure to introduce Arthur Kuan, the Chairman and CEO of CG Oncology. Arthur, it's a privilege to have you here. Thank you very much for joining me. I'll pass it over to you to kick off the presentation.

Thank you, Tyler. Good morning, everyone. So I just want to start off with our mission, and I believe this is actually what sets us apart from the very beginning. We're laser-focused on one mission, and that is to develop bladder-sparing therapeutics for patients suffering from bladder cancer. Having that focus and intensity on this one mission really help us build a very strong organization with a great culture. So from there, we've selected the largest market opportunity in bladder cancer, which I'll go over to in the next slide. But basically, 70% of all NMIBC is covered by our clinical development plans. The unique MoA of cretostimogene, being an oncolytic immunotherapy, is also what we believe that leads to the superior efficacy and durability and safety that we're seeing in the clinical trials. Last but not least, we have a very strong balance sheet. We just did a follow-on raise last year, and the cash is expected to last us into the first half of 2028. So starting off with cretostimogene's MoA. Really, this is one of the ideal settings for an oncolytic immunotherapy, right? Bladder cancer is one of the most immunogenic tumors, mostly caused by cigarette smoking and others, but it's highly immunogenic. And we know that BCG as a frontline therapy works in this space really well. We're just offering something more selective in terms of tumor killing, which then in turn generate an even more potent and selective antitumor immune response. So those factors combined really leads to a great safety profile as well because creto has a thousandfold killing differential when it comes to a normal versus cancer cell. So here on this slide, I just want to walk us through the market opportunity a little bit more in detail. We think most of the opportunity here exists in the U.S. market, probably around 80%. And of that, as you can see here from an incidence standpoint, there are 83,000 patients per year coming to the market. There is a huge prevalence population. Bladder cancer patients tend to live for a long time. The issue here is they continue to recur. And up to a certain point, radical cystectomy may have to be an option. And that is the very one procedure in surgery that patients want to avoid. So if you go down the funnel, 75% of all bladder cancer is non-muscle invasive. And of that, the highest unmet need are between intermediate-risk and high-risk NMIBC. The low-risk patients are well taken care of at this moment. So our program is solely focused on intermediate risk and high risk. So I'll start with high risk. At the very bottom here, we've already done 2 trials that have completed, and one is actively reporting out data. That's in BOND-003. We have 2 cohorts there, Cohort C, which is the CIS cohort. That's the initial on-label indication. Cohort P is actively enrolling, and it's going really well, and we expect to report data later this year. CORE-001 is a combo trial that we did with Merck in combo with KEYTRUDA. That's already wrapped up last year. And really, what that does is that it provides optionality for creto being the backbone of therapy that we want it to be, and we have the option to add on additional therapies beyond that. So moving to exposed and BCG naive. So there are about 25,000 patients who are BCG naive, high risk coming to the market every year. And even in the BCG shortage environment, most of them will get some BCG. So that quickly flows into the BCG-exposed market. And really, the way we think about BCG exposed is we think of it in terms of the addressable patient population, right? It's got to be well north of 10,000 patients a year because you've got patients who fall outside of the BCG-unresponsive definition, which is somewhat of an arbitrary one defined for regulatory purpose. But patients who recur after 12 months of having getting adequate BCG would fall into the exposed bucket. And patients who never had a maintenance therapy will also be in the exposed bucket. So that is a very sizable population. And in practice, many physicians view exposed and unresponsive in a very similar lens, right? So that's an area that we're very excited about. And hence, we're doubling down, and we're opening up 2 cohorts in that setting. In BCG naive, this is driven by popular demand from physicians who oftentimes don't have access to BCG. And for the first time in our company's history, we're very privileged and honored to have this chance to provide physicians with the opportunity to administer creto to patients in the high-risk BCG-naive setting. And there will be data that will come out later this year. So definitely stay tuned for that. Moving on the left-hand side, in intermediate risk, there are about 18,000 new patients coming to the market each year. And when you think about the market just from the recurrence rate of these patients, right, these patients could recur 30% to 40% or higher at any given point in time from a 1-year to 2-year basis. So there's a sizable addressable market that's out there for the intermediate-risk space. And currently, there is no FDA-approved agents for IR from a medical intervention perspective. Even BCG, which is normally indicated for this from a guideline standpoint, that currently is in shortage. So this is a serious unmet need that we're currently addressing with our Phase III randomized controlled trial, PIVOT-006. So with that, I'll dive a little bit deeper into -- this is our pivotal trial design, BOND-003. And again, we follow the FDA guidance that's published now. And I would point out one of the key design difference, which is we have a mandatory bladder mapping at 12 months, meaning that 5 to 6 sites in the bladder, we have to then biopsy to reconfirm the CR rate. So this is a very rigorous standard that others may or may not have done. From a study design perspective, there are 2 cohorts, Cohort C and Cohort P, P for papillary or Ta/T1. These are patients without CIS. So the strategy there is to conduct a trial that enrolls up to 75 patients or so, and we'll be publishing that data, and we're going to go for an NCCN Compendia listing strategy, which has already been proven by 2 other players in this space. And Cohort C is the one that will be our initial label that we file for later half of this year. From a patient demographics and baseline perspective, this is really what you typically would see in a BCG-unresponsive population. I will point out that in terms of number of BCG installations, you can see that the median number of doses of BCG is 12, and the range is pretty broad. It could be up to 66 doses in this study. And I will also point out that up to about 40% of patients on BOND-003 have had prior intravesical therapies, including chemotherapy. So this is a really heavily pretreated population. Some of our competitors may have excluded prior chemo patients. So this really reflects as close to a real-world setting as possible. And here are the results that we presented last year at the Society for Urologic Oncology meeting. As you can see on the left-hand side, 75% complete response rate out of 110 patients. This is one of the largest and most mature data set that we've seen in this space. And on the right-hand side, when you look at the landmark analysis, whether by KM or actual landmark, nearly half of the patients have a complete response. And what does that translate to? What is the risk that patients are taking? So if you look at our progression-free survival rate, MIBC, we're sitting at 97.3%. Basically, there isn't a whole lot of risk of disease progression when you're on creto. And when you look at cystectomy-free survival, 90% are radical cystectomy-free at 12 months. And we're definitely very proud of those results. And we think that in the commercial setting, that number will ultimately be presented -- it is a secondary endpoint, to patients as a reference when they think about which therapy they want to choose. So here's a DOR estimate of creto in responders with at least 14.5 months of follow-up as of the September 30 cutoff. And as you can see, the line is really flattening here, right? So at 12 months, there's a 63% probability of maintaining a CR. And then at 2 years, it's still sitting about 50%. So very encouraged by these results. Later this year, there will be additional updates and follow-up on this curve. So definitely stay tuned for that. Here's another way of looking at the data in a swimmer plot. And again, in 82 responders, you can see that really they're really all moving towards the right. And in the green dots here, you can see these are patients who have completed therapies. And even after they've completed treatment, response rates continue to be very durable. And I would say that this is a unique feature of -- that's tied to our MoA. Other therapies that may depend on potentially chemotherapeutic MoAs will probably not have this type of kind of completion of treatment and having a durable response afterwards, right? We really attribute this long tail to the unique MoA that we have that's generating an antitumor immune response. Last but not least, from a safety vantage point, again, this is one of the cleanest safety profile that we've seen and that many physicians have seen. No Grade 3 or higher treatment-related adverse events. And the compliance rate here is also very high, right? So these are all the ideal profile that someone who's in their 70s will want to see in a bladder-sparing therapeutic. So as we kind of rank this against other approved agents, really, this is one of the rare instances where an agent can beat KEYTRUDA, although not apples-to-apples, in median DOR, right? And certainly, this is, I think, again, speaks to the route of administration, the unique MoA, right? And even against another approved intravesical agent, we're already greater than 2.5 months, at times higher than their median DOR. And so again, this was based on the September 30 cut, and we do expect to continue to share more updates there later this year. It's a busy slide, but I'll just point out that if you just think about efficacy, safety, durability and tolerability, creto is really well positioned in the BCG-unresponsive setting. And I think I talked about the combination trial that we did with KEYTRUDA. That also provides another data point that suggests, hey, creto can be the backbone and there could be additional therapies that gets added on it. Whereas others, they have shown that combination may not be a suitable strategy. So with that as the foundation, we're aggressively investing into indication expansion. So we started this trial last year, PIVOT-006. This is in the intermediate-risk NMIBC setting. What's unique about this trial is we're including all of the IR patients. So some of the competitors have excluded high-grade Ta tumors that are less than 3 centimeters. So they have to label their indication LGIR. So we're going for the entire IR label. So that is one key point that I'll point out. And we do believe that TURBT is the mainstay for this disease, and we think an adjuvant protocol is appropriate to address this unmet need when there's a shortage of BCG. So we're very excited about this program. It's enrolling really well, and it remains on track. As we previously guided, it's going to be enrolled the first half of 2026. And here, moving on to our CORE-008. So this is a trial that has 3 cohorts, but I'll talk about the design for 2 here. Again, the strategy here is to look at both BCG-naive patients who are high risk and also BCG-exposed patients who are also high risk. In the naive cohort, we started this last year. There will be 2 arms that we're enrolling right now. And the CIS arm will have 50 patients or so. The Ta/T1 arm will have about 75 patients. Later this year, we're going to first present the CIS cohort. And so definitely stay tuned for that. I think the thinking here is in terms of BCG shortage, if you have a therapy in the second-line setting that is already doing 75% CR rates, what could it do in the first-line setting, right? There's going to be a lot of considerations here. We will wait to see the data, and then we'll make the decision upon that. From a BCG-exposed perspective, it's a 150-patient trial, and we do think that there's NCCN guideline potential here, especially when you present and publish those results alongside an approved indication in unresponsive, that just adds to the total body of evidence that support cretostimogene in the commercial setting. So as a summary here, this is all the work that we're currently working on. As you can see, 2 Phase IIIs and a number of Phase II trials are ongoing. And some of the catalysts are shown here, but this is another slide that can perhaps capture that. Second half of this year, I think the focus is on the BLA submission, along with a couple of data readouts. Cohort P, which is about 60% of the NMIBC BCG-unresponsive setting, that's going to read out later this year. And then for the first time, we're going to read out the Cohort A BCG-naive high-risk data as well. So last, I want to shift gears into how we view the kind of the commercial opportunity for creto. And I think we can get into this more in the Q&A as well. But there are a few key insights that I can share with the group here. One is really there's a serious unmet need here because these tumors continue to recur in patients, right? So the number of cystoscopies that you have to do and TURBTs you have to do really starts to build up into the 10s and 20s. And ultimately, you'll have to face a choice of do I want to get a radical cystectomy or am I fit for radical cystectomy. And almost all patients will say they don't want to have their bladders removed. So there's a strong drive from the patient side of things. And you've heard about the BCG shortage, and that's been going on for the past 10 years. It's extremely hard to make BCG, and it sells for $100 a dose. It's -- there's no economic incentive for any players to come in and make a generic version of it. It's also extremely challenging to bring a foreign BCG strain into the country to basically be an approved foreign BCG strain. So those are some of the macro challenges in the space that we're seeing. And thus, creto being a kind of a next-generation oncolytic immunotherapy initially positioned after BCG, we think that's a great starting point and beachhead for us. And we're going to continue to make the right investments, and we have already done the right clinical trials to help us provide more coverage for the IR and HR patients. And the second point here is because of the BCG shortage, you're seeing this concentration of patients compounded over 10 years, right, because if your site doesn't have BCG, you're likely going to refer your patient to a site who has BCG and so on and so forth. So this concentration has really continued to evolve. It's gotten even more concentrated. So for a small company like ours, I think this focus and small account setup, right, with key accounts covering more than 70% of all the BCG volume, we really -- based on that insight, gives us the confidence that we can launch in this space, right? And we've already been investing in prelaunch activities, engaging with customers, calling on customers through our trials and also just our expanded access protocol as well because we have BTD for cretostimogene. So those are the things that we're already doing even before the launch. And last but not least, I think from a BCG shortage standpoint, we don't foresee that coming back anytime soon. However, BCG is still the mainstay for bladder cancer, especially for high-risk patients. And the way creto is positioned is that for the provider, they don't really need to change their workflow. It's the same way that they typically give BCG, which is via a medical assistant or a nurse. So if this remains the workflow, no retraining is required. And that really lowers the barrier for adoption for many of these practices. So that is one key advantage that we have. So I'll stop there. That's our last slide. And Tyler, I'm happy to open up for Q&A with you.

Great. Thank you very much for that presentation, Arthur. You guys have a lot going on. I'll do my best to get through it here with the Q&A, also joined here by Ambaw. So you mentioned the -- you showed the data that was presented for BOND-003 at SUO. Clearly, very impressive data. On the panel yesterday -- the bladder cancer panel, you guys were at the star of the show. And we asked at 24 months what the CR rate needs to be. And the clear consensus with the physicians and the expert panelists was 30%. Given the 25 patients that are at 24 months, setting kind of lower bound of probabilities in the Kaplan-Meier estimate above 40%, I'm feeling pretty good about you guys meeting that bar, and we'll see if you exceed it. So with these data updates that you'll have in the first and the second half, a 30-month follow-up and then 36, how should we -- are you able to say anything more about those and whether we're going to get a mature 18-month CR rate or 24-month at either of those data points?

Sure. So if you look at our swimmer plot, you can appreciate the maturity of the data set. So there are still 21 patients who are in CR as of that data cut who have not reached the 24-month mark yet. So obviously, we hope that they can continue to mature, and we'll present the most mature data set at these updates.

Okay. Great. And with this data, assuming it continues to trend and flatten out over time, the probability of approval is quite high. What are you guys doing in terms of preparing the BLA? And is there a possibility of maybe a rolling submission even though you guys are guiding to the second half?

Sure. I mean I can probably speak to that. I would say, really, our goal has been to put together the most robust regulatory package for submission that will give us a very robust package insert that we are going to be able to commercialize upon that. So our entire focus has been building upon that regulatory package for submission to the agency, along with, obviously, the additional data and readouts that we're going to have in 2025 and beyond. In terms of rolling submission, both our BTD and Fast Track Designation does allow us to make a request at the agency, and we're going to be having dialogue with the agency around our submission strategies in order to do that. Our goal, again, the most complete robust package submission, the fastest way possible we can. So we will make ourselves -- avail ourselves to really that strategy from an approach perspective.

And if I'll add just in terms of what goes in the label, CR any time, duration of that CR lasting greater than 12 months. Median duration of response goes in the label as well. However, for a recent approved product, ANKTIVA, that didn't make it in because the FDA noted that they've censored too many patients. So we do think having the best median DOR that we know of in the label is going to be a key differentiation in the marketplace.

Got it. And since that's still maturing, you're going to need the additional follow-up this year to be able to submit that. Okay. Just to follow up on your comments regarding the BCG high-risk or BCG-unresponsive high-risk market. You talked about the unmet need there with the BCG shortage kind of rate for new agents. On the panel, the KOL essentially said, if you guys are approved and potentially TAR-200 as well in the setting, you guys are going to treat like 90%, 95% of patients, which is a pretty high penetration rate. But in terms of the absolute magnitude and size of the market, how do you think about that? How large could this market be?

Yes. I can start off, and Ambaw, feel free to chime in. Look, we've guided that we think the addressable number of patients is at least 15,000 patients a year, right? And you look at the 3 approved agents and how they're priced at, a range of a low end of $200,000 to $240,000, that gets you to a very sizable TAM already, right? And that's just on BCG unresponsive. Again, I think in the real world, the exposed line versus unresponsive is often blurred. So hence, showing data and going for an NCCN guideline strategy, we think it's going to then greatly expand that TAM. And then you have this ongoing recurrences that occurs in the prevalence pool of patients, right? So those are areas that we love to continue to do more work on. But if you just look at the number of BCG vials that's being used every year, it's probably around 300,000 to 320,000 vials of BCG, right? And there's still a shortage of probably around 150,000 doses. So call it, all in, 450,000 to 500,000 doses of BCG that's needed. That's a tremendous opportunity for us.

Yes, that's -- I mean, I think one thing I would add is our goal with our clinical development program is to make cretostimogene backbone therapy within this space, both in the intermediate-risk space as well as the BCG-unresponsive or high-risk space. So -- and our clinical development programs are really hitting upon all the areas in between, BCG exposed, BCG naive. So really, the totality of that data addressing that 70% of that opportunity really gives us a lot of road ahead that's very positive.

And it's really advantageous that these patients are so concentrated in these centers, as you mentioned. Some of these KOLs are seeing hundreds of patients and doing a large amount of installations. But in terms of launch preparedness, how are you guys preparing for launch? Do you believe you're ready and capable to launch creto in this initial indication?

Yes. We believe we're ready. We've had our leadership team -- our commercial leadership in place since 2024. They come at it with over 60 years of experience in bladder cancer, specifically. That's very rare to have that depth of knowledge within bladder cancer, including myself, who spent nearly 15 years within this particular space. We've been doing a lot of prelaunch activities already in 2024, including disease state awareness. We have a field medical team already that's interfacing with our future commercial customers. They're already engaging, on a daily basis, with those customers. If you look at our clinical trial development strategy as well, we've deployed our clinical trials within the highest volume future commercial customer base. So we are actually deploying it within that segment. So clinicians are going to have experience on cretostimogene prior to the commercialization on the clinical utility within their practice. And obviously, in 2025, we're continuing that scientific engagement and also amplification, including payer strategy development and alignment as well as relaunch.

Yes. And it's showing up in our survey results. Clearly, the visibility is very high. The -- just I think some people who are new to the story, maybe think of creto as almost like a gene therapy, and it's going to be difficult to manufacture. And obviously, gene therapy has had limited success commercially. So what can you say on the manufacturing front in terms of scalability and COGS? Can you say anything on what COGS might look like?

Sure. So it goes back to the MoA that I'll comment on, and I think this is very important. So creto is a replication-competent adeno vector. And so that by itself gives us a huge manufacturing advantage in terms of yield. Versus many gene therapy products that are defective-replication, the yield is typically low. And what's great about creto's titer in the clinic is we also use a pretty low titer at 1e12 vp per dose. So those 2 factors, combined, drives a very significant and attractive cost. We've guided that it's in the low single digits, right? So it's off the shelf based on a bioreactor process, disposable bioreactor, and we can make a very high amounts of this. So for the initial indication, we feel very confident that we're going to be fully ready at launch. And the storage condition of creto, the fact that we can store creto at minus 60 and above actually gives us a huge edge in terms of storing and building inventory, right? So that's something that we're already doing. And looking kind of down the road beyond our first approval, we're looking at intermediate risk and as well as other usages, we do intend to scale up. And scaling up here by a factor of 10 or whatnot, those are all within kind of what's been done at -- with other modalities, and we think that's pretty low risk considering the high-yield nature of this product, and that's very robust. I think a lot of folks -- I'll just maybe add another point. In terms of manufacturing difficulty, when you look at ADCs, radiopharms, cell therapy, this is probably, on a relative scale, a lot easier than those modalities.

That's great. And just a follow-up on storage. Given the different temperatures and length that creto can stay at those temperatures and then also once you think about room temperature, how do you think it will progress as it's being commercialized when it goes from distributors to practices and actually being utilized? And does the physician or the practice need a hood to handle it?

Sure. Maybe I'll cover those questions for you. So we've already announced that we've got up to 4 weeks at 2 to 8, which is a normal refrigerator, you'll be able to take it out of the box, store it in a normal refrigerator and utilize it, thaw and utilize in a few minutes. We plan to distribute on a just-in-time basis. So for example, if a patient is coming in on Wednesday, they will get delivery of the product Monday or Tuesday. They have an opportunity to leave it in the box, which will be a box that can last for up to 5 days or take it out of the box and store it in their normal refrigerator. From a thaw time perspective, it's important to note that the volume is 2 ml. So 2 ml thaw time, we're talking about 10 to 15 minutes at room temperature and then to administer to a patient. In terms of prep, the other question reference to prep, this is a BSL-2 product similar to chemotherapy, gemcitabine or BCG. It can be done under a hood, or it can be done on a tabletop prep, similar to how they would actually prepare a BCG or chemo. So that's kind of the set up.

Great. We're running out of time here. So I'm going to try to touch at least on a couple of the other indications. So you mentioned, again, the first data coming from CORE-008 in the second half or by the end of the year. So I believe it's Cohort A, right? So what should we expect from this update? What would be a win in your eyes?

I mean, look, BCG is -- works great in that setting. I think we do know that in the second-line setting in unresponsive, we've already hit about 75% CR any time. This is the first time that we're trying in this setting, right? But obviously, these are treatment-naive patients. So in our mind, anything as good as BCG, if not better, would be a good starting point, right? And don't forget, we still have the option to add on additional therapies given the extremely kind of clean-tox profile that we've seen with creto mono.

Great. Now intermediate risk as we think about PIVOT-006 in that ongoing trial. Again, during our panel, you guys had very favorable results for intermediate risk despite the fact that your data has essentially been in high risk so far, and they're clearly translating that to what you would expect in less severe, intermediate-risk patients. But as we think about that opportunity, can you just touch upon how you might position it in intermediate risk and how that would be different versus high risk? Obviously, you're going after -- you're going adjuvant with TURBT, which is a unique opportunity.

Yes. I mean I can start, and Arthur can add in. The opportunity in intermediate-risk NMIBC, these are patients that are coming over and over again, getting resected over and over again. That's part of the treatment algorithm that patients are facing that are undergoing treatment for intermediate-risk NMIBC. What we hope to see from our data is that we're able to actually curve that curve down, so to speak, in terms of the ability to have to go back in and continue to resect those patients. From an intensity perspective, from a dose intensity perspective, likely the volume of dose within that patient population is less just because of the design of the risk factor within that patient category as well. And so our data, which also includes high-grade disease less than 3 centimeters as well, we hope to see that continued effect that we've seen in the high-risk patient population as well in that patient segment.

Yes. It'd be great if patients didn't have to get 66 treatments of BCG, right? But we're over time. So to wrap up the conversation, I just want to ask you what you believe is the most underappreciated aspect of the CG story by investors.

I would say that this is a -- we've spent -- I personally spent 11 years on this, and many of my colleagues have spent more than a decade in the bladder cancer field. I think this is really a time of -- I'd say there's a huge value inflection point coming in this space, and it's decades in the making. What's exciting here is that there is a kind of clear kind of expansion strategy within the bladder organ at a call point that's highly concentrated. That type of setup is rare in all of oncology, and we really hope to be that player to help address the patient needs here.

Wonderful. Arthur, Ambaw, thank you very much for your time.

Thank you.