Corvus Pharmaceuticals, Inc. (CRVS) Earnings Call Transcript & Summary

Greetings. Welcome to the Corvus Pharmaceuticals conference call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Zack Kubow of Real Chemistry. Thank you. You may begin.

Thank you, operator, and good afternoon, everyone. Thank you for joining us for the Corvus Pharmaceuticals conference call to discuss an update on mupadolimab and other topics. Joining me on the call from the company are Dr. Richard Miller, Chief Executive Officer; Leiv Lea, Chief Financial Officer; and Dr. Mehrdad Mobasher, Chief Medical Officer. The executive team will open the call with some prepared remarks followed by a question-and-answer period. I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements. Forward-looking statements are based on estimates and assumptions as of today and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by those statements including the risks and uncertainties described in Corvus' most recent quarterly report on Form 10-Q and other filings the company makes with the SEC from time to time. The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law. With that, I'd like to turn the call over to Richard Miller. Richard?

Thank you, Zack, and good afternoon, everyone. Thank you for joining us today to discuss an update on mupadolimab, our B-cell activating monoclonal antibody targeting CD73 that was formally designated CPI-006. And we will cover 2 key updates for mupadolimab on today's call. First, today, we announced that we are discontinuing our Phase III study of mupadolimab for COVID-19 and due to the effectiveness of vaccines in reducing serious infections and hospitalizations. We estimate this will reduce our planned operating expenses in 2021 and by approximately $11 million, a significant cost savings that extends our cash runway as we prioritize resources and intensify our focus on our oncology programs. Second, we will provide an overview of our ongoing clinical development of mupadolimab for cancer and the emerging opportunity for use in the treatment of viral associated cancers with an initial emphasis on HPV-positive human papillomavirus oropharyngeal cancer. After this, we will provide an update on our ITK inhibitor CPI-818, our collaboration with Angel Pharmaceuticals and our adenosine A2A receptor inhibitor, ciforadenant. Leiv will then provide an update on our balance sheet and projected cash runway. Following the prepared remarks, we will open up the call for a Q&A session. Starting with mupadolimab for COVID-19, there are a number of factors related to the trajectory of the COVID-19 pandemic that have recently come into focus. Many of the various types of COVID-19 vaccines, be it mRNA, protein subunit, viral vectors have now been confirmed from real-world data to be highly efficacious especially in terms of preventing serious disease and hospitalization. Their dramatic efficacy has exceeded the expectations of most experts. In terms of durability, available information and the biology of SARS-CoV-2 virus suggests that immunization will provide prolonged protection, including to recently described variants. The spike protein is a powerful immunogen and appears to be the Achilles heel of the virus. Although there remains a high degree of uncertainty over the future course of the pandemic, to date, the news on vaccines has been very encouraging. Vaccine distribution in many developed countries appears to be progressing at a rapid pace, leading to dramatic downward trends in the incidence of serious disease and hospitalizations. And with multiple sources of vaccines, increasing manufacturing capacity and mobilization of governments, widespread penetration of vaccines even to underdeveloped countries is likely to occur over the next couple of years. Accordingly, we have decided to prioritize our resources on mupadolimab in oncology. This decision is also driven by new data in oncology and increasing support for CD73 as an important target in oncology. Although the number of patients enrolled in our COVID trial will be too small to draw definitive conclusions, we'll be analyzing various clinical and laboratory data from those enrolled in the randomized double-blind trial to date, and we will report on this information in the near future. Thus far, we can report the following. No safety issues were observed in the study patients, in line with our experience from our Phase I COVID-19 study and our ongoing Phase I/IB studies in oncology. We continue to be encouraged by the follow-up results from our Phase I COVID-19 study. And over the long term, we believe there is a strong rationale for exploring mupadolimab as an immunotherapy for a variety of infectious diseases. Mupadolimab is a potent B-cell activator and a unique anti-CD73 antibody. Data from earlier studies demonstrated that a single low dose of mupadolimab stimulates a prompt, high titer polyclonal IgG and IgM antibody response to viral antigens. This response is antigen specific. Most of our efforts to date with mupadolimab has been investigating its use in the treatment of cancer. We have reported data with our antibody previously at SITC and ASCO and published on the immunobiology of this antibody in mdRxiv. Mupadolimab is a unique antibody that binds to a critical epitope involved in B-cell signaling. We were the first group to describe the B-cell activating properties of CD73, and thus far have shown the most potent effect on stimulating B-cells into antibody producing cells, both in vitro and in vivo in clinical trials. Anti-CD73 antibodies are now attracting significant attention. For example, at the virtual AACR and ASCO meetings this year, AstraZeneca and I-MAB reported data indicating that their anti-CD73 antibodies also have effects on B-cell function, confirming our earlier discoveries. These companies also reported preliminary evidence of antitumor activity, and they, along with others, are aggressively advancing anti-CD73 cancer programs. We view this as further validation of mupadolimab's potential in oncology, and we are confident that we are well positioned, given the significant amount of preclinical and clinical data we have generated to date. Our work in both cancer and viral diseases, such as COVID-19, have provided important insights and data into how to best utilize the biologic properties of our antibody in the clinic. Across the treatment of cancer and COVID-19, one of the common factors in patients where mupadolimab has shown activity is the presence of viral antigens such as SARS-CoV-2 virus or in the case of patients with HPV-positive head and neck cancer, the presence of human papillomavirus or HPV antigens. Our studies have uncovered a novel mechanism of action. Mupadolimab activates B-cells, which are then driven into antibody producing plasma cells by the presence of viral antigens within the tumor. Recent work by 2 other academic groups have shown that B-cells present within the tumors of head and neck cancers produce HPV specific antibodies. As published in Nature in 2020, other groups have all known that B-cell infiltration in other tumors are strong predictors of response to immunotherapies, even more predictive than T cell infiltration. In our ongoing Phase I/IB cancer study, we have observed evidence of antitumor activity with mupadolimab in oral pharyngeal cancers associated with HPV infection. Based on these findings, during the second quarter, we began enrolling an expansion cohort of up to 15 patients with advanced HPV-positive head and neck cancer that have failed treatment with anti PD-1 antibodies in chemotherapy. In this cohort, mupadolimab will be given in combination with pembrolizumab. Our goal is to present data from this expansion cohort at a medical meeting later this year. Our objective in this study is to show at least a 20% response rate, which would provide solid rationale to advance into Phase II and III studies. For context, 20% response rate would be considered a good result in this patient population. HPV-positive head and neck cancers are increasing in incidence in the U.S. and are now more common than head and neck cancers associated with tobacco use. In fact, some people have called this an epidemic. From 1990 to 2008, there was a 225% increase in HPV-positive head and neck cancers. HPV is believed to be the positive factor in about 70% to 75% of all head and neck cancer cases. HPV is also associated with cervical, anal, vulvar, penile and other cancers. I might add that HPV-positive cancers was the subject of this year's Karnovsky lecture at ASCO. More broadly, many other cancers are believed to be associated with or caused by viruses, including hepatomas, lymphomas, brain tumors and several types of skin cancer as well as other cancers. We believe that mupadolimab's mechanism and unique properties could position it as a new treatment option for viral associated cancers. Now let's briefly discuss our ITK inhibitor CPI-818, an oral covalent inhibitor of ITK targeting T-cell-mediated diseases, including lymphomas and autoimmune diseases. We have previously described objective tumor responses in 2 of 7 patients treated with peripheral T-cell lymphomas, or PTCL, in our Phase I study. PTCL is more common in China than in the United States, representing about 26% of non-Hodgkin's lymphomas. This puts it on a par with some of the more common B-cell lymphomas in the U.S. Based on this, we are partnering with Angel pharmaceuticals in China to initiate a global Phase II study of CPI-818 in T-cell lymphoma. Angel has filed its IND with the CDE and we'll be executing the study, including responsibility for all expenses in their territory. In addition, Angel was making excellent progress in building its team and establishing its new headquarters. Recently, Angel has opened its U.S. operation and will be moving into a new R&D facility in Shaojing, China, next week. We continue to be optimistic about Angel's prospects and our corresponding ownership position, which is currently a 46% equity ownership stake. Turning to Ciforadenant, our small molecule inhibitor of the adenosine A2A receptor, Ciforadenant is one of the most advanced agents in this class, having been tested both as a monotherapy and in combination with anti-PD-1s. We are working in collaboration with the Kidney Cancer Consortium to launch a Phase II study of ciforadenant in a triplet combination with pembrolizumab and TKI in frontline renal cell cancer. As previously reported, we have identified an adenosine gene signature biomarker, which is present in around 50% of renal cell cancer patients. This biomarker identifies patients that do poorly with anti-PD-1 agents and are more likely to respond to an adenosine blockade. With that, I will turn the call over to Leiv for an update on our financial outlook.

Thank you, Richard, and good afternoon, everyone. We ended the second quarter with cash, cash equivalents and marketable securities totaling approximately $66.5 million. In the first 6 months of the year, we raised approximately $43.8 million through the sale of common stock. With the discontinuation of the mupadolimab Phase III COVID-19 trial, we now expect full year 2021 net cash used in operating activities to be between $35 million to $37 million, a decrease of approximately $11 million compared to the previously expected range of $46 million to $48 million. This implies the year-end December 31, 2021 cash balance of it $51.1 million to $53.1 million, which will allow us to continue advancing mupadolimab into Phase II, assuming positive results from the expansion cohort. With that, we will now open the call for questions. Operator?

[Operator Instructions] Our first question is from Li Watsek of Cantor Fitzgerald.

I have a couple of questions here. So the first talk a little bit about what's driving the decision to discontinue the trial? Is it strictly related to commercial prospects? Or have you seen any data from the ongoing trial?

The ongoing trial is a blinded trial, so we have not seen any data from the trial. We've also not had any reports of safety or any other problems with the conduct of the trial. That's been moving forward as we had planned. Our decision to shift -- to prioritize -- to oncology is driven really by commercial -- mostly commercial factors. The efficacy of vaccines is pretty clear now. The biology of the spike protein, as an immunogen, is pretty clear. It's very powerful. It's one of the best as far as immunogens known to man. Several different platforms are resulting in very, very good efficacy. And as you've been reading, not only is there a dramatic decrease in the number of infected people, but there's a dramatic, almost complete elimination of patients requiring hospitalization. And that, of course, was the initial target for our trial. So when we project out -- just to give you an example, in the last weeks, this week's New England Journal of Medicine, there's the data from the Pfizer vaccine on the adolescents, 12 to 15-year olds, 1,000 subjects get the vaccine, 1,000 get placebo. There were 16 cases of COVID in the placebo and 0 in the vaccinated group. So these are really highly effective vaccinations. Now the future of COVID is uncertain. There are variants. There's other things that can happen. We still don't know about durability. But the durability so far looks pretty good, and we're now out at 9 to 12 months in some of these studies. So -- and of course, companies have been working and have -- already are testing in clinical trials, booster shots, as you've been reading about or hearing about. So we just feel, as we look out now at our resources, and investing money in continuing to do this trial, when at the same time, we're seeing activity in viral cancers and people are reporting and in the information we learned from our viral studies tells us that we have a really good way to induce immune responses to these viruses is really very compelling for us. Moreover, a couple of recent studies done by academic groups, one notable -- one worth mentioning is Dr. Rafi Ahmed of Emory University, showing that there's significant B-cell infiltration in these HPV-positive head and neck tumors. And those B-cells are making -- they're trying to make antibodies to the virus. And other studies have shown that the more antibodies you have to that virus, the better you do. So I think, Li, to sum up the answer to your question, it's not any data we saw that drives this, not at all. It's really the success of vaccination, and it's really the increasing awareness of CD73 in cancer and the really unique, unique attributes of our mupadolimab, which frankly, is very different, and they're more potent than others. And you know I think you were at ASCO. You heard other people talking about B-cell activation. We have those antibodies, and they're not nearly as potent as ours. So -- and as a matter of fact, we began expanding our head and neck cohort even before deciding on this course of action for COVID-19. Now we are going to look at the data. The good thing is that we've got a double-blind, randomized data, placebo-controlled in our COVID study. And probably by end of August, because patients need 28-day follow-up who have been enrolled in our COVID study, we'll be able to look at the clinical data. Now it will be a smaller number of patients. I don't expect to have enough power to see clinical endpoints, but we'll be looking very carefully at the antibody levels and other immune parameters. And I think it's going to be highly interesting to learn about what trends or what information comes out of that, which will increase the value of this program, not only for cancer, but for future infectious disease targets that we might want to go after.

Okay. That makes sense and then just on the oncology program, I know you mentioned that mupadolimab has sort of very robust capability to stimulate B-cell activation versus other anti-CD73 agents. Can you just maybe talk a little bit more about how you think that might translate into differentiating clinical outcomes, especially in the context of virus related cancers? And also, can you talk about like the incidence of the HPV-positive head and neck cancer in the U.S.? And how is it currently treated?

Okay. So let's start with the biology you've mentioned. So all we -- we've tested -- first of all, we've tested our antibody versus several other anti-CD73 antibodies. And only 2 other antibodies in addition to ours have any ability to stimulate B-cells and those 2 others in the AstraZeneca and I-MAB. The Astrazeneca one, we've done more work with. And in vitro, I would say, we're at least tenfold more potent, but it's more than a potency issue. It's the expression of the various markers on B-cells, not only are they getting activated with our antibody, but they're also starting to differentiate. They're acquiring differentiation markers indicating that their plasma cells, that they're turning into -- transforming into plasma cells. Now the other company, I-MAB, we don't actually have their antibody, but looking at their data, which was just presented a month ago, or less than a month ago. Looking at their data, we can estimate that the potency, the ability to activate the B cells is much, much less than ours. Nor was there was going to be no other discussion of differentiation markers. Now 1 other thing, neither AstraZeneca nor I-MAB reported migration of B cells out of the blood. One of the things that tipped us off to this very early in our cancer work. Remember, 90% of what we've done is in cancer, very early on, very first patient, we would see a reduction in circulating B cells in the blood within minutes of administration of.mupadolimab. And at subsequent, we went on to learn that this was due to the redistribution, the trafficking of these activated B-cells to lymph nodes. Nobody else has reported that phenomenon, to my knowledge. Okay. Now -- your other questions, I think, was -- so we think we have a very special antibody. We know it reacts with a different epitope than anybody else. And by the way, that's not an accident. We deliberately selected our antibody for those properties. That was by design. We're very, very clever about B-cells at Corvus, and we have that in mind right from the start. Now your questions about HPV head and neck cancer, that is an epidemic. In the U.S. and Europe, in Asia, potentially because by a different virus, EBV. But anyway, oropharangeal cancers in the United States, as I mentioned, have now become much more dominant than tobacco associated head and neck cancers. So for example, it used to be your typical head and neck cancer patient was a smoker and a drinker and a man. And now it's not necessarily a smoker or a drinker. It's still mostly men, but it's a much younger population of patients. The prognosis of metastatic or HPV-positive head and neck cancer is really not any different. And you're talking about 20,000 patients here in the U.S., roughly, again, increasing. Once you have metastasis, your prognosis is bad, you die. Now there's some debate about whether it has a slower natural history, that's not really clear yet as compared to tobacco associated head and neck cancer. Now early lesions appear to be more curable. By early lesions, I mean those that can be removed, stage 1 and 2 disease that can be removed by surgery or radiation. But again, metastatic disease appears to be just as bad. Now what do you treat it with? Metastatic disease is treated with either anti-PD-1 antibodies alone or anti-PD-1 plus chemotherapy. The chemotherapy drugs are cisplatin, Taxotere, things like that. And oftentimes, they're given together. Sometimes as well. Patients fail that. And when they fail, the prognosis of a patient who gets treated for recurrence metastatic HPV-positive head and neck cancer is abysmal. It's on the order of median survival would be less than a year. PFS would be on the order of 6 months or so. So it's a bad disease when you get to that stage. So what we are planning to do in our current expansion cohort is to treat HPV-positive patients who've already failed either one or two lines of prior therapy for metastatic disease. And we'd be looking for a 20% response rate. Response rate, a 20% response rate in this population would be a very good response rate. A 30% response rate would be a home run. So let's see, what else can I tell you about? I can tell you that it is unknown -- well, just a word about HPV. As you know, it's a 99% or 98% of cervical cancer was HPV positive. And of course, that may go away with a vaccination. However, as you listen to the Karnovsky lecture, it will be 40 years before it goes away. Hopefully, we'll have better treatments even than mupadolimab 40 years from now. But for vaccines, whether they impact head and neck cancer is not known. 10% of men in the United States have HPV in their mouth. And so there's millions and millions of people out there who are already infected. So that's my lecture on HPV for the moment, Li.

Our next question is from Tony Butler of ROTH Capital.

Richard, just 3 points. Number one is, when you think back to the Q1 update in April, the focal point was, of course, this COVID trial. To enroll 1,000 patients, and it was stated even in the press release that, that could be achieved by the fourth quarter. If you look at clinicaltrials.gov in 0.2 today, which was updated at the end of June, as you know, 91 sites were thought to be enrolled, but only 7 in the U.S. and 5 ex-US were enrolled, it makes total sense that it is -- has become impossible or I assume, impossible to actually enroll 1,000 patients within the time frame that you had originally estimated. And so I actually think it's wise that you cut the program and move forward with oncology because that's the origin of the company. But I guess what I really would like to understand is at what point did it just had -- were you able to just harness the notion that we really couldn't probably get enough patients enrolled that we could determine whether or not this will be effective in COVID. Forget about the commercialization part because there's some interesting science that you've been able to garner out of trading patients period based upon what you've already stated. So at what point were you able to harness that realization?

Well, I'm not sure I could localize it to a specific bright red line. But I would say there are a couple of things that were very influential number one, the data coming out of Israel, showing how effective these things were. And then just talking from our own investigators in the U.S., I mean, all of our sites were reporting a great decrease in hospitalizations. So it was pretty evident. But there was another thing also. Of course, we always had to hope that -- well not a hope, but when we thought, oh, yes, but there's going to be a surge in the winter and there's a surge in South -- in Latin America. And in fact, as you well know, there is a lot of cases in Latin America and in India. But -- and we have -- although not listed as open in our clinicaltrials.gov, we're very close to having sites in Brazil and Argentina and all those countries down there, Chile. But really, one of the things that we began to become concerned about is those hospitals are so overrun that the ability to conduct a trial when you have chaos in the medical centers, when you have shortages of basic things like oxygen, intravenous fluids, antibiotics, it really makes it difficult to do a trial and say that you're going to go up against standard of care. When the standard of care in many of those places is now questionable in terms of its relationship to what it would be in the U.S., for example. So I would say those 2 things. Look, the vaccine efficacy and the durability has surprised everybody. I mean, it's incredibly effective. Now having said that, I still personally believe scientifically that this is a really strange virus. It mutates more than we thought. There's going to be variants perhaps that will escape immunity. There's going to be potential recombination events that will cause tremendous problems. So the story is not over yet, which is why we're really eager to look at the data we're going to have in a month or so because maybe if that data looks compelling, maybe we revisit this. Maybe there's a different kind of trial. Maybe you look at it in earlier patients, who knows? We don't know how this is going to shake out yet. But what we feel strongly about, based on all the science and clinical work that we've done over the last few years is that we have a very unique antibody that it has really dramatic effects on the immune system, and it's our job now to harness those effects to benefit patients.

Our next question is from Mara Goldstein of Mizuho.

This is Gabriel on behalf of Mara Goldstein. Just three quick questions from us here. The first is I noticed that the HPV head and head cancer program is assessing mupadolimab in combination with pembrolizumab and can you speak to why only pembrolizumab and why not SST triplet combination risk as well? The second question is, does the company plan on looking into any kind of a biomarker or identity signature for this program? And the last 1 here is just wondering, what would you say is the main learning points from the COVID program that can be translatable to the oncology program, for example, things like dosing or mechanism of action?

Okay. So the first question was -- what was the first question again? I got it. Sorry. Yes. Why are we putting it -- okay. So in our expansion trial, first of all, these are patients who failed chemo and PD-1 already. Pembrolizumab is approved for first-line metastatic or advanced head and neck cancer. So these patients have already failed that, and they've all -- most of them have already failed chemotherapy as well. Now why are we combining it? Because when you look at the biology, it looks like not only -- it would be good not only to stimulate B-cells, but also to block the checkpoints that are present on T-cells. So we think biologically, the combination makes no sense based upon what we know and based upon what's been published. So -- and don't forget, Gabriel, unlike many others, we've done a lot of work with our agents as single agents. And this is where this pays off. Because you kind of learn a lot when you get a drug alone as opposed to when you just fire away triplets with some chemo and PD-1s and all kinds of stuff. You don't actually know what you're doing. And of course, at some point, the FDA is going to say, "Hey, tell me what your drug does alone?" So we actually have a lot of information on the biology of our antibody alone. And we think biologics -- we don't have proof for this in the clinic, but putting it together with PD-1, it doesn't have to be, but putting it together with a checkpoint inhibitor makes a lot of sense because now we're arming both B-cells and T-cells. And as you know, B-cells and T-cells talk to each other. In fact, stay tuned for more on that. We kind of know-how CD73 is involved in talking to T-cells. That's something we're going to hopefully present later this year at SITC, perhaps. So anyway, that's the reason for the combination. Now in terms of adenosine signature, no, we're not going to use that. I mean, we'll collect that information, but we're not going to use it in HPV head and neck cancer, we don't really know what the clinical value of that signature would be. And don't forget that we're counting on anti-CD73, not so much for the adenosine blockade. We, frankly -- I personally don't think it's very important. I think what's more important is the B-cell activation, okay? It's not an adenosine story. It's a B-cell story. Now really, maybe the adenosine does contribute. That's definitely possible. Animal studies suggest that. But this is a B-cell story. Okay. So no adenosine signature in this. And then the third question was what did we learn from the COVID study? Well, again, we haven't looked at the Phase III data yet. We will be looking at that as I mentioned, in a month or so, we get all the samples, and we get all the follow-up. But what we learned from our Phase I studies, which we continue to follow those patients, is that the durability of the IgG and IgM titers to the virus are really astounding. There are very impressive prolonged responses. And of course, we learned about safety and other things as well. So all of this has become connected. The science has connected and the connection is that mupadolimab simulates B-cells to -- the stimulated B-cells require antigen to be incrementally expanded to be driven, to make antibodies. That requires foreign antigens and the foreign antigens are the virus. Tumors that don't have viruses, the search for tumor antigens is not that easy, but viral associated tumors they have some serious foreign antigens, like HPV is a very foreign antigen. By the way, in an HPV-positive tumor, you can identify all the proteins -- almost all the proteins of the HPV virus, which are called E2, E6, E7, and these are very, very foreign. Okay. So yes, what we learned about all this is about B-cells, antigen drive, and that has led us now to viral associated cancers, which, again, to emphasize is not just HPV, EDV is on the table. CMV is probably behind many kinds of tumors, brain tumors, perhaps renal cell cancer as well. And other tumors like Merkel cell tumor and other things you've heard of. Some people think that 15% of human cancers are virally associated. Hepatomas for one, would be another one, hepatitis B and C. But there are probably a lot of other viruses that cause human cancers that we have not yet identified. So I hope that answers your questions, Gabriel.

Just one question. I was just wondering on the dosing as well if that's translatable.

Well, the dosing in COVID, we used deliberately a single dose and a lower dose, much lower dose. Because with COVID, it's more of an acute intervention. Cancer is a chronic disease and more subtle. And you've got to think about penetration into the site. And whereas for the virus, our strategy was a little bit different. All right. Is that -- okay. I don't think we have any more questions. I want to thank everyone for participating in the call, and we look forward to updating you on our progress in the coming months and at medical meetings later this year. Thank you, everyone.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.