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

All right. Good morning, good afternoon, everyone. Thanks for joining us here at the Goldman Sachs Healthcare Conference. Thrilled to be joined today by Arthur Kuan from CG Oncology.

And maybe I'll just kick it off with kind of a high-level question. If you could provide an overview of the company, and let's focus on some of the key value drivers over the next 12 to 24 months?

Sure. So Arthur Kuan from CG Oncology. We are in this really exciting and growing market called non-muscle invasive bladder cancer, which is about 75% of all bladder cancer from an instance perspective. And within that, we have a product that addresses both the intermediate risk and high-risk population. And that's about 70% of the 75%. And in numbers terms, we're talking about 50,000 patients instance in the U.S. alone, right? So it's exciting. We're filing our BLA in the second half of this year. It will be the company's first BLA in the BCG unresponsive high-risk NMIBC population. That's about 15,000 patients a year. There are three products approved in that category, but they've not made any meaningful penetration yet, and we can go into that. So this is an exciting space where these providers who are urologists have not previously experienced kind of a boom in the buy-and-build set up, but this is their chance to do so. So we're here to really revolutionize and really evolve this whole space and this market will continue to evolve and grow over the next several years. So we're very excited about that.

Awesome. Lots to talk about. Maybe we'll start with some of the data updates that you've had recently. You had a big updated AUA. And maybe you can talk us through some of the key outcomes that you shared at that particular conference? And I think 24-month update was one of the marquee kind of features of the data. So we'll focus on that as well.

Sure. So just to remind everyone, our modality is an oncolytic immunotherapy and it's very important to keep that in mind because ultimately, we believe our MoA is one of the key drivers of the clinical data and outcomes I'm about to share. So in a 110-patient trial called BOND-003, and a specific cohort called Cohort C, we enrolled patients with carcinoma in situ disease that cannot be resected. So the FDA allows us to use complete response as an endpoint, as well as duration of response as a secondary endpoint to assess these patients. And in those patients, we saw a 75.5% complete response at any time that we reported AUA this year. And importantly, these responses are highly durable. So at 1 year, the KM estimated duration of response is 65% and at 2 years, it's 58%, right? So meaning, if you have a response at any time, your probability of lasting greater than 2 years is north of 50%. And that's really exciting. When we think about the landmark analysis, right? So regardless of kind of when the CR occurred, but let's say, you started therapy on day-1, at 12 months, over 46% of patients are in a CR. And at 2 years, the data is still reading out fully. But so far, we have 9 more patients who are pending. But excluding those, we're already at 31% to 34% CR rate at 2 years. And KOLs would tell you, if you hit a 30% CR at 2 years, that's game changing. None of the competitors out there that are approved are even close to kind of that 30% plus mark. So with 9 more CRs pending assessment, and kind of given the long-tailing immunotherapy that we're all accustomed to, we certainly think that, that number could further increase, right?

You kind of alluded to this, and maybe you can contextualize for us how those response rates stack up versus other agents currently on the market or in development in non-muscle invasive bladder cancer?

Sure. Yes. So I'll start with KEYTRUDA's response at 2 years. So KEYTRUDA was the first approved agent in this space in 2020. And at 2 years, they have a 9% complete response rate, with a 13% Grade 3, 4 side effect profile. So it's not surprising that their penetration rate in the space is probably in the low single digits. And so next to that, we have nadofaragene, which is a gene therapy product, secreting interferon-alpha. They do about 19% at 2 years. And then there's a combination product, IL-15 plus BCG, that's probably in the 24% range, right? So anything north of 30%, I think, psychologically is a big step up, right? So if we can even kind of be on the high end of that kind of 30s range, it would be unheard of. And then if you couple that number, which this number is also going to go inside the label, it's cystectomy-free survival rate. And there are a couple of ways of doing it, but I think what one of our competitors, J&J who hasn't read out the 2-year data yet, they're reporting CFS rate of about 90% at 1 year in responders. So in contrast, we have 90% CFS rate in responders out to 2 years already. So meaning, if you have a CR, right, there's a 90% chance that you're going to be cystectomy-free out to 2 years, right? And that's also another meaningful endpoint for folks to see.

One of the areas where I think you guys have gotten pushback on the profile of cretostimogene versus some of these other agents is on the like re-induction of the drug. Maybe you can explain what re-induction means and kind of give us some context for why you think it's been not as big of a deal?

Sure. Yes. So re-induction is not something that we came up with. So if you go back to the standard of care for this disease, it is BCG. And BCG is given in this kind of a weekly times 6 fashion. So once a week for 6 weeks, and then you assess whether there's a response not responded. You typically give another course of 6 weekly induction. So that's what we mean by re-induction. And in that re-induction, you can see north of 50%, 60%, 70% response rates in the first-line setting, right? So it's something that the urologists are very accustomed to, and the patients are also very accustomed to, given the mechanism of action. So I would say, re-induction only works if your MoA supports it. In contrast, chemotherapy, you do not reinduce a patient who has a progress on chemo, right? It's just not part of the modality as well as a standard practice. So in our case, we adopt a similar approach given our oncolytic immunotherapy MoA. We have seen in Phase II studies where there is a delayed immune response, right? And for some reason, these patients, if you give them another course, 50% of the time they [Technical Difficulty]. And those CRs are actually highly durable. So in the Phase III trial, 28 patients were reinduced and 14 of them converted to a CR. And those CRs are still highly durable and some are even out to 2 years now.

Okay. So for the patients, you mentioned there was a 28, and then 50% of them are kind of getting into a response. For those patients that do need a re-induction, how does their overall first year of treatment compare to the overall first year of treatment for a patient who doesn't need to be re-induced?

Yes. So if you don't need re-induction, your year-1 number of doses is about 15 doses. And if you do need re-induction, then it's 18 doses. So 3 extra. And then year-2 and beyond, we do 6 doses per year.

And it doesn't matter at that point?

Yes.

Okay. In terms of the regulatory filing, how are the re-induced patients incorporated into the overall responder analysis?

Sure. So there is -- the FDA is very clear about this to us as well as to other sponsors. If a patient gets re-induced, meaning their first CR didn't occur at 3 months, but occurred at 6 months, because they were reinduced at 3 months, and we check them up every 3 months. Meaning, the first CR would have occurred at 6 months, the FDA wants us to follow them for at least 12 months. So month-18 from the start of therapy, right? So that's the only way that those patients could be included into the label. So we're doing exactly that, and we're even trying to push boundaries a little bit more to see if there's room to incorporate not just 12 months from the first year, but maybe something beyond that.

Okay. So of those 28 patients, do you have data that you've shared, or can you share on what the, like, landmark looks like at 18 months? Or the duration of response? Whatever makes the most sense.

Yes, I think, hopefully, in kind of future conferences, we can go through those.

Okay. So I think you mentioned this in your initial kind of notes on the company, but you're preparing for a filing in the second half of the year. Talk to us about what are the gating factors that stand between you filing before then?

Sure. So number one, I'll start with the efficacy part. The minimum duration of response that we're looking for is at least 12 months. Certainly, we're trying to push the boundaries to see in this competitive market, how do we get more duration of response data into the label. So potentially 24 months, 18 months, something beyond 12 months. So there's that one aspect. The other aspect is we have announced that we're trying to simplify the administration process from a previous 5 steps to currently a 2-step process. So to be clear, cretostimogene is a administered via a soft catheter by medical assistant, a urologist or MD does not have to be involved in that process. It's done the same way that BCG has given, so no change to the practice workflow. Now what we're trying to do is to optimize the turnaround time for the centers. And we used to do kind of 5 steps where you do a saline wash, DDM wash, and then you do a DDM dwell, and DDM is a transduction agent that allows the virus to [Technical Difficulty] tissue. Followed by the DDM dwell, you give creto and dwell after 45 minutes to an hour. So what we've done now is to eliminate the washing steps because we're avoiding the patient's bladder anyway. And even if you avoid the patient's bladder, you're still going to have a urine that comes into the bladder continuously, right? So we're just going to go straight to the DDM dwell, drain it followed by the creto dwell. The time savings there could be about 20 minutes or so. So I would say, this is one where we believe it's -- it will be nice to have in the label, but we definitely want to push for it because saving 20 minutes of a very high-volume center would actually be pretty meaningful, right? And so we're collecting that data for CORE-008 trial right now.

Okay. So talk to me about the data generation that's required to enable that? What is -- has the agency specified what they're looking to see? And when can you complete this study?

Yes. So in our pre-BLA meeting, we're very clear. We asked the agency, hey, how do we get this 2-step process in there besides BOND-003 Cohort C, which used the 5-step. All other trials have gone to the 2-step process. And they said, hey, show us 50-patient data from CORE-008, which looked at both the 2-step and 5-step. And they're not asking for a kind of randomized controlled study. They just want to look at, in general, like from a confidence interval perspective, safety efficacy is it within the same ballpark.

Okay. So are they looking at both safety and efficacy? And is there a set time point they're looking at it for?

Basically, CR any time. Yes. So we believe we should have that data by the end of this year.

Okay. And so then once you have the data in hand, you're going to be able to submit the filing. Is there anything else on the manufacturing side that needs to be done?

Yes. So one of the things that we're trying to enhance is the experience at the site level, right? So our product is stored at minus 60, which has a tremendous shelf life of up to 5 years. But we recognize that maybe there are some sites that may have access to a freezer. So for those sites and for all these sites, we ship just in time, right? So the just-in-time delivery is something we need to validate, which is ongoing, meaning we ship a minus 60 in the current and the product can remain stable inside that current for up to 5 days. So it gives them some wiggle room there. And beyond that, we've also executed a study that allows us to take the product from minus 60, move it into a fridge, which every single center would have at 2 to 8 Celsius for up to 1 month. So we already have that data. Now it's just about -- we talked to the FDA about how do we get this into the label? They said it's just a matter of executing kind of more lots to show them that, hey, there's a statistical variance and sampling that makes sense. So that's ongoing. And we believe that part to us, it's a low-risk execution, and we just want to make sure we get that done correctly.

Okay. So with all of these things, activities that are ongoing, I guess, what is your level of confidence you'll be able to submit the filing by year-end?

So we think the guidance on initiation will remain on track. We've not requested for rolling yet. But if we do, obviously, we definitely want to leverage everything that's available to us, to optimize the filing efficiency.

Okay. And would you anticipate a priority or standard review?

So we do have BTD. So in the past, agents that have BTD in our space, specifically have received priority review. But obviously, it's something we need to ask.

Okay. Maybe as we think about the commercial opportunity, let's start high level. Can you describe the addressable market as you see it?

Yes. So in the U.S., and I'll mainly focus on incidence. So the incidence in the U.S. is there are 85,000 new patients with bladder cancer diagnosed each year, right? And 75% of those are non-muscle invasive and then 70% of those are, what we believe, we can address, in the intermediate risk and high-risk population. So our initial on-label claim for the first product would be in the BCG unresponsive category. And there are about 15,000 eligible patients each year that we can address. And there's certainly a lot of kind of patients in between the BCG naive and BCG unresponsive category called BCG exposed. That's a growing number of patients, and that's a number probably well north of 30,000, 40,000, 50,000 patients that are in the BCG-exposed category. So we have a couple of trials addressing that. And we have a trial addressing BCG-naive high risk that we'll be reading out later this year, CORE-008 Cohort A. And then lastly, on the left-hand side, an intermediate risk, we're going really the most upstream kind of patients. These are either de novo or recurrent intermediate-risk patients who have typically not seen BCG before. So when we talk about BCG naive, I like to think about are we talking about high risk or intermediate risk? So in the intermediate risk bucket, that's 18,000 new patients coming to the market each year. And these patients live for a very long time. Their progression rate is really low. The issue that we're solving for is actually recurrence. They continue to recur every 3 months, and it's become a real burden for these patients. The guidelines recommend kind of one dose perioperative chemo and then you kind of observe for recurrence. And if BCG were to be available, you can give BCG. So we have this unique window where there are no BCG currently available in the U.S. to give to the IR patients. So that's why we're able to run our PIVOT-006 trial, which is a randomized Phase III controlled trial against TURBT, right? So it's an adjuvant trial, where one arm gets TURBT, plus creto; the other arm just gets to TURBT. And we're looking for RFS as an end point. So that trial, we just guided this past quarter that we're 6 to 9 months ahead of our enrollment schedule. So that's really encouraging. We've never seen enrollment rates this fast in any trials in this space. And it's actually one of the market segments that we believe we have a unique advantage in, and I'll explain why. Number one, I mentioned there's this BCG shortage enabling us to enroll in this space. Number two, because of the shortage, all the pharmas with the PD-1 can't really enter the space, because the PD-1 agents need to be an add-on to another agent, such as BCG. So it's really kind of a blue ocean segment for us. Now the two other players that are in the space. One is obviously UroGen, which they have to lead the lesion behind and allow their chemo gel to ablate the lesion, right? So there's going to be some segment of the market that may prefer that. But we think the majority would prefer resecting the tumor that they can see and giving drug afterwards. And the other part is -- J&J has an erdafitinib product in a pretzel called TAR-210. They have to do two cuts. First cut is FGFR3 positivity, either by tissue or urine and another cut, they have to exclude high-grade TA lesions, which again, those are patients that we include, and we think it's about 30% of the market that are in the high-grade TA category. So FGFR3 is probably, per J&J, 70% of the pie. But when you do those two cuts, their target population then shrinks by 50% relative to ours, right? So if we were to get our label, this is going to be the broadest label, no testing required and the safety profile we anticipate to translate over from the unresponsive setting. So that's really our view of like getting to the most upstream of all these patients. And then at the back end, we have the unresponsive label. And so we'll slowly come in between to capture the high-risk naive and high-risk exposed patients.

Let's go back to the unresponsive group because it's going to be the first you get approved in. And so in that population, you mentioned a 15,000-patient incidents. Talk to us about the carcinoma in situ versus papillary pieces of the population. What's the breakdown? And then what's the path to market for each of those groups?

Sure. So the initial on-label claim will be in the carcinoma in situ group. And those patients take up about 40% of the unresponsive market. The remaining 60% are TAT1 or papillary lesions that do not have CIS present. That's [Technical Difficulty] the market. So for CIS, we're going to go for the full approval on label. For TAT1, the FDA has said that to get on the label, you need to run an RCT, which currently is not feasible, because there is no control arm in that setting that will be appropriate. The strategy there is to go from an NCCN Compendia listing. And what you need to do is show in 50 patients with a 12-month follow-up of RFS, a number that's probably north of 40% at 12 months. We believe that's the path to gain on NCCN for Level 2b evidence. The CIS population will get like Level 2A. But once you're on there, based on our market feedback, the sites are getting reimbursed by payers.

Okay. So talk to us a little bit about the competitive landscape and BCG-unresponsive. So there's a couple of drugs that are already approved. You guys, J&J is expecting to get approval later this year, I think. So talk to us how you expect the market kind of to segment with the available therapies? And also, how are you thinking about sequencing?

Sure. So this market is really interesting because it's partially driven by this compounding BCD shortage issue. So over the years, these sites continue to concentrate. If you're not seeing patients, you're not getting more BCG, you're starting to refer patients out to centers that have BCG and have volume. So kind of just kind of snowballed over time. And so we're really focused on the top accounts, right, in the country, call it, 300 accounts. And we're putting them on our trials. We're calling on them right now ahead of launch. And those are the customers that we're focused on. So of those, you're probably thinking about half of them are academic and half are large urology group practices that are typically owned by private equity. And our focus is really on both, right? So -- and we can say that because we've involved both kind of provider types on our studies. And they do behave a little bit differently. The [indiscernible] are very much kind of P&L driven, very much focused on the bottom line. The academic centers, they may have their preferences. Maybe 1/4 of them, they really prefer chemo, such as Gem/Doce combo. For those patients, our approach is to simply lean into our data set, right? We're the only company that has generated data post chemotherapy. And 40% of our patients on BOND-003 have had prior chemo. And of those, maybe 50% of them have had prior Gem/Doce. And we're showing that response rates are very consistent in these different subgroups. So we're going to lean into that and just, hey, what would you use after Gem/Doce? Is it more chemo or is it immunotherapy, right? So we're going to address those -- that segment, want to build trust with them and let them experience creto. For the others, we've had working relationships with them for a long time. They've been part of our trial, and they've been innovating with us with new trial designs. So we feel very confident with that. And some of the kind of community-related questions, do you have a hood, do you have a freezer, the academic centers will not have those issues at all. So that segment, we feel very comfortable in. And even in the community setting, thanks to COVID, many of these centers actually have freezers on site. And if they don't, we're covering a lot of the high-volume centers by BCG volume, by enrolling them into our trials. And if they don't have freezers, we would have addressed that issue during the trial period, right? And actually, to our surprise, like very few centers that are high volume actually would not have a freezer. So that actually is a good setup for us to keep our sales force very focused on these key accounts.

Okay. So you kind of started to allude to this, but there have always been questions around like the infrastructure that a physician or a group practice would need to implement to be ready to offer creto. So can you talk to that, what does the doctor's office need to do in order to get -- to start prescribing cretostimogene?

Yes. So really, the first question we ask is like, hey, do you give BCG right now, right? And that's sort of the first kind of line of questionnaire. And if they do give BCG, that means they know how to prep a BSL Level 2 product safely by protecting their staff. And they have a specific workflow, right, which does not take up a procedure room with the full kind of camera setup where you need to performance a cystoscopy in. So given that existing workflow, we do not need to change that process at all. So typically, a medical assistant will be assigned to this task and administered creto with a soft catheter. And we then focus really on kind of the throughput and how they're going to get reimbursed and all that kind of step-by-step walk through with them.

You mentioned the ability to shave off 20 minutes, but what is that relative to or in terms of -- if I walk in as a patient, how long am I going to be at the doctor's office? When can I leave?

Yes. So currently, it would be about 1 hour and 30 minutes. I think with this new process, it could be potentially down to an hour. And then in the future, post launch, there are centers that give BCG and the patient goes home and dwells at home. Then that would just be administration and leave, right? So that's sort of the long game that we envision. Obviously, studies would need to be conducted to get to that point. But we currently have the hypothesis that there really is no reason that you need to dwell in the clinic. So once you get creto, you can go home, right? So that's the kind of band state. But for now, it will be 1 hour and 30 minutes, shortening to potentially an hour. In the future, shorter than that.

Okay. In terms of provider economics, I guess, I think you mentioned earlier buy-and-bill and not being kind of new for this market. So how should we think about the provider economics and how that will shape their decision-making?

Yes. So it really comes down to the drug, which is ASP plus 6%. There are administration fees associated with administering creto, which is an intravesical insulation delivery fee. That's, call it, $80 to $100. But really, what they're going to make money off of is going to be from the creto ASP plus 6%, right? And obviously, reimbursement confidence is very important here. And I think with the three approved agents, as well as maybe a fourth, those are all going to continue to drive reimbursement confidence with these providers. It's very important because they've not had to experience kind of a high price tag buy-and-bill model before. So having them being like fully primed and ready by the time we launch is very important.

Okay. Cohort P, which is the papillary population that we talked about earlier, that study is expected later this year. Maybe you can talk about the key endpoints for that group of patients and what the benchmarks are to kind of get to the NCCN Compendia's trend?

Sure. We showed a preliminary kind of the data at AUA this year. So in 24 patients, we have a recurrence-free survival rate of about 90% in 9 months. This is just in 24 patients, so it's little small. The full set, which would be in about, call it, 50 to 55 patients, that's expected to come out probably mid of next year. But later this year, we should have additional data out to 12 months in those earlier patient population. I would say the benchmark is, for the two agents that made it into the NCCN Guidelines, they're about 40% at 12 months in terms of RFS, right? So I would say, being well north of that would be very important. And we got to publish the paper and then it could then be completed.

What should we look for in terms of other data updates later this year?

Yes. So we're very excited about CORE-008. That study has three cohorts. A, B and CX. Cohort A enrolled patients who were BCG naive, high-risk NMIBC. And that population has been fully enrolled as of April. So we expect to have data on that later this year. In terms of benchmark, again, AUA, we saw that Pfizer ran a trial with Sasanlimab plus BCG -- versus BCG. And when you look at the BCG control arm, they're probably the most current control arm data in BCG naive using BCG mono. And we saw that they had an 85% CR rate at any time. So 3 and 6 months unique CRs. And at 12 months, they saw about 76% CR at a year, right? So I would say that's probably the benchmark to look at in this population. It is a high bar, right? So I think we've been very consistent in our view on the market that we actually believe BCG exposed is the opportunity because even in a shortage, these 25,000 BCG-naive patients are getting some BCG. So the minute they get some BCG, they turn into exposed. So we think the exposed market is sort of the lower-hanging fruit. And those two cohorts, B and CX, B is monotherapy creto, CX is creto plus gemcitabine. Those are actively being enrolled right now, and we should expect data probably also next year. And the bar for exposed is harder to tell. But again, these patients really have BCG. So when you give them more BCG, response rate shouldn't be as robust as the first-line BCG-naive patients. So the bar is certainly lower. And the two data sets there, both mono and combo with gem would help inform us of kind of where we land.

Okay. As you think about commercial launch preparation, maybe talk to us about what you're doing to prepare for a potential approval as soon as next year?

Absolutely. So our commercial leadership team is already in place, like the senior leaders. And we already have a team of MSLs covering all the key regions in the country by BCG sales volume. They're calling on customers every day, new relationships, existing relationships. And we're really profiling these accounts down to like the very kind of detailed level to figure out who's responsible for the [indiscernible] that patient experience and all of that, right? So there's a lot of prep work and relationship building. On the other hand, if you think about our clinical portfolio, we're addressing really all aspects of IR and HR. And so we've actually geared our kind of trial enrollment towards sites that we believe are going to be key customers for us. And a lot of them are actually private equity-owned [indiscernible] which really helps us open the door because ultimately, they may be doing kind of more of a coordinated purchasing.

Okay. I think you mentioned there's like 300 high-volume sites or maybe the top decile or whatever. I don't know exactly how you define it, but what portion of those are private equity owned and do they...

I think like more than half, I would say, are private equity owned. And again, that number has continued to evolve. I think maybe 10 years ago, it was maybe like 30%, but the roll-up continues to happen amongst the very few players.

Okay. And how many reps would you anticipate needing to kind of service market?

Yes. I mean, we looked at benchmarks and we did our own analysis on kind of accounts, reach and frequency. So based on comps like kind of the 50-60 range is what we'd expect. Yes, so a small footprint.

Okay. Maybe you can talk about the cash position. How -- what is your current runway guidance? And what are the activities embedded within that?

Sure. So as of Q1, we have about $688 million in cash, and we've guided the Street that it's good through first half of 2028, and which would cover all the existing programs I mentioned, including getting to the PIVOT-006, which is one of our most important trials readout as well as our initial launch in BCG-unresponsive.

Okay. And does that include all the commercial preparation and activities that you need to do?

Yes.

Okay. Great. And how do you think about additional sources of capital then?

Obviously, there -- on a small biotech, we can always use more money. But we've been very disciplined in the past 10 years of our company's history. I would say, there's always room to continue to invest in manufacturing capacity, which we have done. I think, we actually invested in one of our drug product providers in the first quarter. So there's that aspect, including like working on next-gen formulation. So what I'm excited about is adeno vector is actually very stable with the right formulation, even at room temperature. So those are work that I see that we can continue to invest in to make that experience even better.

Okay. Great. Is there anything that we haven't talked about today that you think is important to understand?

It's very comprehensive. Yes. Happy to take questions on that.

No one ever wants to ask a question. So it was great to speak with you, Arthur. I really appreciate all the time. Thanks to everyone who joined us here and online. Thank you.

Thank you.