CytomX Therapeutics, Inc. (CTMX) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to CytomX Therapeutics conference call. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's conference call, Mr. Christopher Keenan, Vice President of Investor Relations. Chris, you may begin.

Thank you, Jerome. Good afternoon, and thank you for joining us. Earlier today, we issued a press release announcing CytomX' achievement of a $40 million milestone as part of the company's AbbVie CD71 partnership and providing a clinical-stage pipeline update given the impact of the COVID-19 pandemic. This press release and a recording of this call can be found under the Investors and News section of our website at cytomx.com. With me today are CytomX' President, Chief Executive Officer and Chairman, Dr. Sean McCarthy; CytomX' Chief Development Officer, Dr. Amy Peterson; and CytomX' newly appointed Chief Financial Officer, Carlos Campoy. During today's call, we will be making forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict and many of which are outside of our control. Important risks and uncertainties are set forth in our most recent public filings with the SEC at sec.gov. We undertake no obligation to update any forward-looking statements whether as a result of new information, future developments or otherwise. I would now like to turn the call over to Sean.

Great. Thank you very much, Chris, and hello, everyone. Thank you for taking the time to join us today. I'll be keeping my remarks brief, but let me start off by saying that all of us at CytomX hope that you and your families are keeping safe and well at this very challenging time. My colleagues and I at CytomX continue to do well, and the safety and well-being of our employees, our clinical trial participants and clinical site physicians and staff is, of course, of paramount importance to us. Thus far in 2020, CytomX has made excellent progress. This includes the initiation of a randomized Phase II clinical study by our partner, Bristol-Myers Squibb, evaluating the Anti-CTLA-4 Probody, BMS-986249, in frontline melanoma announced in February, and the establishment of a major new strategic alliance with Astellas announced last week in the exciting area of T-cell engaging bispecifics. Earlier today, we issued a press release announcing another significant achievement, a major clinical and financial milestone within our AbbVie alliance relating to CX-2029, our program targeting the previously undruggable target, CD71. These achievements underscore the increasing validation of our Probody platform and illustrate how our partnering strategy continues to contribute meaningfully to the advancement of our pipeline. From a position of strength, but against the pressures the COVID-19 pandemic is placing on the health care system and on clinical trial enrollment across the biopharma sector, we also announced today that we are taking steps to reprioritize our clinical portfolio and optimize resource allocation with the goal of maximizing long-term value creation and ensuring we emerge from the COVID-19 situation even stronger. These steps will afford an increased emphasis on our work on previously undruggable targets, such as CD166 and CD71, and the continued advancement of additional potential first-in-class programs towards future IND filings. I'd like to spend a few moments discussing the AbbVie milestone and then turn to the steps we are taking within our clinical pipeline. In April 2016, AbbVie and CytomX entered into a co-development and licensing agreement, under which the 2 companies set out to discover and develop a Probody drug conjugate against CD71, also known as the transferrin receptor. CD71 is a cell surface protein essential for iron uptake into dividing cells, and it's highly expressed on a number of solid and hematologic cancers. This target has very attractive molecular properties for efficient delivery of cytotoxic payloads to tumor cells. We believe that CD71 has high potential as an anticancer target, but it's widely considered undruggable due to its presence on most dividing healthy cells. CX-2029 is a Probody or masked antibody conjugated to the cytotoxic payload, MMAE, which has been designed to potentially create a therapeutic window for this novel target. A summary of our preclinical work on this program was recently presented at the World ADC Conference in London and is posted on our website. The $40 million milestone payment announced today follows CytomX' achievement of prespecified criteria for the dose escalation phase of the ongoing Phase I/II PROCLAIM-CX-2029 study. CytomX and AbbVie are finalizing next steps for the advancement of CX-2029 into Phase II expansion cohorts in select tumor types. CytomX will run these expansion cohorts in continued close collaboration with our AbbVie colleagues. And I want to congratulate the teams on bringing this exciting program to this important milestone. We expect to present preliminary data from the Phase I dose escalation of CX-2029 during 2020. Turning now to our clinical pipeline more broadly. In assessing the evolving COVID-19 pandemic and the results and challenges for clinical trial execution within our studies and also across the industry, CytomX has made the decision to temporarily pause new patient enrollment and new site activation in the PROCLAIM-CX-2009-001 study, which includes the Phase II expansion study evaluating monotherapy CX-2009, an anti-CD166 Probody drug conjugate, in patients with hormone receptive-positive HER2-negative breast cancer. We will continue to closely monitor global health authority guidance and IRB/Ethics Committee recommendations, and we intend to resume the CX-2009 clinical program as soon as practical. We also announced today our strategic decision to terminate the PROCLAIM-CX-072-002 study evaluating CX-072 in combination with ipilimumab in relapsed and refractory melanoma. This difficult decision comes following a reevaluation of the evolving clinical, competitive and commercial landscape in immuno-oncology, alongside the emerging impact of the COVID-19 pandemic. With this reprioritization, certain resources can be redirected towards CytomX' potential first-in-class assets against undruggable targets, including CD166 and CD71, to the clinical combination of CX-2009 with CX-072 and to the generation of additional clinical candidates for advancement to IND filing and future clinical trials. In closing, we are very pleased to have reached this very significant milestone in our AbbVie alliance, and we believe the steps we are taking across our clinical pipeline are prudent at this challenging moment in time. We continue to execute at a high level and remain highly focused on CytomX' mission and vision of delivering innovative therapies to cancer patients, both ourselves and with our partners. My colleagues and I also want to emphasize that we are all in this pandemic together, that we will get through it and that we will come out stronger. Thank you very much for your time. Chris, I'll hand it back to you.

Jerome, please open up the call for questions.

[Operator Instructions] Your first question comes from the line of Varun Kumar with Cantor Fitzgerald.

Sean, maybe the first one on CD71. Any color on what was the prespecified criteria? Was it safety or some kind of activity?

Yes. Varun, good to hear from you. So as we said in the remarks and in the release, the milestone was triggered by achievement of prespecified dose escalation criteria. And those criteria were essentially designed to get to a dose for the expansion cohorts. So that's really all we can say at this point. As I've said previously, the principal goal of the dose escalation was to assess the safety of this very innovative molecule and of course, to get to a dose for the Phase II cohort expansions. We do, as I mentioned, plan to present data from the dose escalation a bit later this year.

And maybe one last one. Have you talked about any preclinical data? Have you done some kind of combination with CD71? And anything you can talk about the planned Phase II, whether it's going to be single agent or it's going to be in combination?

I can't really say anything about that at this point, Varun, but thanks for the question.

Your next question comes from the line of Etzer Darout with Guggenheim Securities.

This is Paul Jeng on for Etzer. Just one for me about the CX-072 study. So you noted the evolving clinical and competitive landscape as part of the decision process. Were there any specific trials that gave you pause around the potential for CX-072 and your boy? Or could you provide any additional color around your thinking?

Yes, Paul, thanks for the question. Let me hand that one over to Amy who may want to make the comment as just one example on CheckMate 067.

Sure. So I would say the updated survival from CheckMate 067 that was just published in the end of last year clearly demonstrating a very significant and clinically meaningful survival advantage for patients if they received the doublet of nivo plus ipilimumab in frontline, with the median not even being reached and exceeding 60 months, so 5 years with the doublet, comparing quite favorably to monotherapy nivolumab at 3 years, basically, 39 months and favorably even more over monotherapy ipi at 19.9 months. I would say the other trial that may have changed our thinking is the commitment by BMS to double down on the ipi Probody. And maybe, Sean, you want to take -- say something about that.

Yes, absolutely. Thanks, Amy. So absolutely, the strong commitment from BMS to advance the CTLA-4 Probody, which we generated within our collaboration into a fairly large randomized 5 ARM Phase II study in the frontline melanoma setting means that even with our decision -- our strategic decision to stop work on our study, that we're, of course, still positioned in this space with the CTLA-4 Probody in combination with Opdivo in the frontline melanoma setting. So that was another factor that we took into account once the BMS plans clarified over the last couple of months.

Your next question comes from the line of Terence Flynn with Goldman Sachs.

I was just wondering if you can give us any more detail on what the go-forward path for 072 might look like, recognizing maybe there's still some moving pieces there. And then the incremental $120 million in cash from Astellas and AbbVie today, any update in terms of how -- your cash runway? How far does that take you? I'm assuming at least into 2022.

Yes, Terence, thanks for the questions. Regarding 072, one next step that we're preparing for is to combine it with 2009, as I mentioned. And of course, the strategy there that is most appealing to us will be to move it into an indication or indications where both agents have shown single-agent activity, and there are indeed indications that fit that criteria. So we'll be continuing to look at other opportunities for CX-072. The termination of this particular study with ipi does not, in any way, mean that the program in totality terminates. We see potential, and we'll continue to be looking for additional opportunities. Regarding the cash infusion from these last 2 events, I would add to that this year the $10 million milestone from BMS. So we've been able to bring in $130 million so far this year from existing and new partnerships. We're not providing additional formal cash guidance at this point. But you're right, the prior guidance has been well into 2021. Obviously, now that puts us in a stronger position and perhaps even stronger given that we've stopped the study here and we have additional resources to allocate elsewhere in the pipeline. So we feel really good about the balance sheet. We'll be providing additional cash guidance in due course.

Your next question comes from the line of Mara Goldstein with Mizuho.

Great. Can you hear me okay?

Yes, yes, Mara.

So just a couple of questions. And the first, as it relates to the AbbVie relationship and CX-2029, can you just remind us of that financial relationship? And if the $40 million milestone is actually earmarked for CytomX to be spending in the Phase II expansion cohort? And then I had a question, just given the sort of ubiquity of the target, can you just talk about what the criteria are that you would look to make decisions as to which indications to study for that? And then -- and I'm not really sure there's a question in what I'm about to say. But to some extent, both CX-2009 and 2029 are Probody drug conjugates. And so we've seen the advancement of these conjugates and not so much for the Probodies, and I'm wondering if there is a particular bias on a go-forward basis towards those constructs.

Great questions. Let me run through them. I tried to write them down. So first of all, the economics of the deal are such that -- let me focus for a moment on the co-development arrangement. So this deal, even though when we entered into this deal in 2016, this was a discovery stage project. We were able to negotiate terms where we are in a co-development relationship with AbbVie, which provides us with access to 35% of U.S. profits upon commercialization of the drug candidate with an option to opt into a co-commercialization relationship. So we have significant retained U.S. commercial rights on this program. With regards to the milestone, the -- and I don't think I mentioned this. Let me give you the split there. It's 35% CytomX, 65% AbbVie. With regards to the milestone, we haven't disclosed very much at all about this, but the milestone is intended to fund the go-forward expansion cohorts, but also have a component of significant free cash flow to CytomX as well. Regarding the target. You're right to say that CD71, one of the things that makes it so attractive is that it's present on many different tumor types, solid tumors and also certain hematologic malignancies. I really can't comment on particular indications for the expansion cohorts. We may well disclose that at some future point, but there's not a lot I can share with you today. And then regarding your last question, which actually is a very strategic and quite perceptive question regarding the PDCs. What I would say there is that if you think about the Probody platform, in a sense, there's a number of platforms within a platform. We have Probodies, which are Probody versions of antibodies, such as the CTLA-4 Probody advancing with BMS. We have Probody drug conjugates, such as 2009 and 2029. We have T-cell engaging trispecific version of Probodies, such as those being pursued in our collaborations with Amgen and also most recently with Astellas. And as we go down that continuum, the nature of these constructs, they get increasingly potent, of course. Drug conjugates, the potency coming from the payloads, the T cell bispecifics, the potency coming from the recruitment of the T cells. And we do see these as increasingly important venues for us to apply our technology because the challenges of finding therapeutic window are greater, and the impact that we think we can have could be correspondingly significant.

Okay. And if I could just ask one more question just around CX-072. Is it fair to assume that there won't be any more single-agent studies of that compound in sort of checkpoint-naive population?

So we plan to report out the -- really the final data from the monotherapy expansion cohorts this year. And I wouldn't say there'll be no more work on it, but I would say it's very much on a back burner at the moment.

Your next question comes from the line of Boris Peaker with Cowen.

I'm just curious for moving on with the combo 072 plus 2009 since both of these are novel compounds. Curious, how would you be able to determine which drug is driving efficacy? And how would you select the right patients for this combo study as well?

Great question, Boris. Good to hear from you. Let me hand that one over to Amy for some brief comments.

Sure. It's an excellent question. I think that we know the response rate from checkpoint inhibition, where it works as monotherapy in many indications. We would obviously want to assess the response rate and benefit from monotherapy CX-2009 as an independent evaluation. And then it's really what can CX-072 bring on top of what CX-2009 can do alone. Does that clarify it?

Well, I mean I understand you're referencing to other drugs, but maybe if we think about it from the eyes of the FDA. In the eyes of the FDA, these are still 2 novel compounds, right? So if you bring them data for a combination of 2 novel drugs, I mean would you have to do some kind of permutation studies or some way, shape or form to show the individual contribution to this combination from the regulatory perspective at least?

So we would have the data from 2009. And in certain indications, you can actually think about pathways where you could get accelerated approval ordered on a single-arm study. Just as if you're in an unmet need patient population without having a comparator necessarily evaluable. So those pathways are possible. I think that right now, we are in relatively early phases with this. We have some hints of activity, some of which was demonstrated at AACR last year, in indications that could be of interest to move further into. But we don't yet know the magnitude of that activity and therefore, you need to understand what is the potential for developability of this as monotherapy. And then adding a checkpoint inhibitor onto this is very similar to what's been done with chemotherapy. So if you think about the combinations that work best with a PD -- or PD-L1 inhibitor, it's really -- it's chemotherapy. And CX-2009 as an ADC with a payload is similar to chemotherapy. So there's quite a lot of potential for these 2 to work better together. When it comes to the individual contribution of CX-072 to 2009, that would have to be based upon discussions with the regulators. However, there are situations where they're willing to consider moving more aggressively, and that certainly depends on the risk-benefit profile that you would bring to them.

Your next question comes from the line of Biren Amin with Jefferies.

Sean, can you just talk a little bit about 072 plus 2009? Will we hear about your plans in terms of where you're going to move forward with this year? Or is it going to be potentially a 2021 event? And I guess, on this combination, can you maybe talk about the biological rationale, whether tumors that have overexpression of PD-1 also have CD166 expression?

Yes. Biren, great questions. Regarding timing, we'd certainly hope to have some clarity this year. Obviously, the situation is really very fluid. So we'll have to see how that plays out over time. In terms of the rationale for combining these 2 mechanisms, CD166, as you know, is a -- is broadly distributed across multiple tumor types. It's present in immunogenic tumors. It's present in non-immunogenic tumors. We haven't done direct comparison to look at the 2 targets side by side. But what we have done and we've reported previously is we've shown, as others have, that these mechanisms can combine very effectively the combination of a drug conjugate with an immunotherapy. In some ways, mirrors the combination of chemo with immunotherapy, and we presented a preclinical poster at AACR last year showing the combination activity of CD166 inhibition with PD-1 inhibition, both in Probody form. So we do think there's a strong rationale for -- mechanistic rationale for this type of combination and all the more so if we go -- as we plan to, into indications where we have demonstrated single-agent activity for both of these molecules.

Okay. And then maybe just a follow-up on 2029. Can you talk about the use of the IHC assay and whether this was incorporated in the dose escalation study? And if it was, do you plan to continue to use it in the Phase II dose expansion?

Yes. So I think you're referring to the assay development that was laid out in our World ADC presentation, where the team has done some really very nice work on that. Right now, we see it as an option to be used in the future, but we have not yet formalized our strategy in terms of selection or even as to whether patient selection will be necessary. But we do have the ability to do that based on the assay that's been developed by the team.

Your next question comes from the line of Peter Lawson with Barclays.

Just on CD71, just when are the expectations around the next set of data?

I'm sorry, Peter, could you repeat the question?

Just the timing around data for CD71?

Right, yes. So our objective -- our joint objective with AbbVie is to share data this year from the dose escalation portion of the study. That -- the venue for presentation of that data is still to be determined, but we do expect it to be at a major medical conference sometime this year. Obviously, the conferences are somewhat in flux given the COVID-19 situation, but we are still planning to present that data this year.

All right. And then just as we think about cash, are there any further milestones that we should be thinking about for 2020? And then kind of your appetite for adding additional partnerships.

That falls into the category, Peter, of what have you done for me lately. So we're -- no guidance there. Obviously, we've been able to bring in $130 million in the last couple of months and $120 million in the last week. It puts us in a strong position, and we'll be, like many in the industry, regrouping in the context of these decisions that we've announced today. And looking carefully at our cash balance, I can tell you that we feel good about the balance sheet as it stands today in terms of being able to weather the storm ahead of us. And business development, of course, remains a future possibility as well. Wouldn't rule it out, but no guidance at this point.

The last question comes from Mohit Bansal with Citigroup.

Congrats on the progress here. Quick question on CX-2009. So as I understand that you are actually pausing the development here. CX-2029 -- sorry, 2009. I just got confused. I understand you're pausing the development here for now, the enrollment here. Is this fair to assume -- like, where were you when you paused the development in -- or paused the enrollment in terms of enrolling the new patients? And would it be fair to assume that you should have some data this year for -- to share? Or it is in the flux -- still in the flux right now?

Yes. So I think the question is on 2009?

2009. Yes, CD166.

CD166. Yes. So patient enrollment has been underway for some time in the study. So we're pausing the study with active enrollment underway and patients having been treated. We have guided in the past that -- to not expect any data from 2009 this year, that will be a 2021 event. And that, with the current situation, obviously, we hope that 2021 still makes sense, but we're going to have to wait and see. Does that answer the question?

It does. And then in terms of your expenses for this year, given that situation is in flux and then trial enrollment has been stopped, especially for 2009, can you quantify anything for 2020 at this point, how much leeway you could have in terms of expenses or cash burn this year?

Not right now, Mohit. It's kind of too early, but I would just refer you back to the fact that we reported end of year cash of $296 million. And you add in the $130 million that we've been able to bring in from the partnerships, that obviously puts us in a strong position. So we'll be updating cash guidance in the coming months, but there's obviously a number of moving parts, and a lot of this is kind of breaking news in the context of this very fluid COVID-19 situation. But I would just reiterate that we are obviously in a -- certainly in a strong cash position given these recent infusions.

With that last question, I would like to turn the call back to Sean.

Great. Thank you very much. Well, thank you, everybody, for your time. I really appreciate it at short notice. Obviously, we're delighted with this new milestone. We're very pleased. I'm very pleased with the continued execution by the CytomX team with these significant achievements in the context of a very tough overall environment. And we are continuing to make progress in allocating resource thoughtfully and carefully across our pipeline and portfolio. And we wish you all the very best. And as I said, we're all in this together, and let's keep powering on through and get through this thing. So take care, everybody.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.