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

Great. Good afternoon, everybody. Thank you for joining us. I'm Terence Flynn, the biopharma analyst at Goldman Sachs. Very pleased to be hosting CytomX this afternoon as part of our virtual conference. Joining us from the company is Sean McCarthy, who's President, CEO and Chairman. Sean, thank you very much for joining us. Really appreciate your time today.

Great. Thanks, Terence. Absolute pleasure to be here.

Maybe just to start, I thought you could set the stage and give a little bit of an overview of the company and the strategy for those on the webcast that maybe aren't as familiar with what you guys have been working on over the last several years.

Yes, absolutely happy to do that, to kick things off. And just before I jump in, just a reminder that I will be making certain forward-looking statements over the course of the next 30 minutes or so. And I refer you to our safe harbor statement on our Investor Relations page on our website. So we are a clinical stage oncology-focused company. We are advancing a novel pipeline of oncology therapeutics based on what we consider to be a really quite different approach in the therapeutic antibody space, a platform that we call the Probody platform. Probodies are fully recombinant prodrug antibodies designed to be selectively active within tumor tissue relative to normal tissue. And I'll say more about the platform in just a moment, but we've made a ton of progress at the company over the last couple of years. And we currently have 4 assets in or moving towards Phase II clinical studies. These are the potentially first-in-class drug candidates, CX-2009 and CX-2029, and these target proteins called CD166 and CD71, respectively. Both of which are novel tumor antigens previously considered as undruggable targets. We're also advancing clinical programs called CX-072 and BMS-986249. And these, respectively, are Probodies directed against the checkpoint targets, PD-L1 and CTLA-4. At ASCO a couple of weeks ago, we presented data on all 4 of our lead clinical programs. And taken together, we believe these updates show broad progress across the pipeline and comprise a growing body of evidence that the Probody platform can unlock potential in undruggable targets and also enhance clinical profiles of immune checkpoint inhibition. The encouraging Phase I data that we've presented so far is pointing the way to what we consider to be clear Phase II studies that are designed to show us more of what these novel drug candidates can do and what their long-term potential is. As part of our business strategy also, as we've advanced our platform and our pipeline, we have also prosecuted a pretty broad-based business development strategy. And we form strong partnerships that underscore the potential of our technology, we believe. These partnerships are with BMS, AbbVie, Amgen and most recently, Astellas. We've had a really good year so far with the partnerships. We've achieved a number of important milestones. BMS advanced the 986249 anti-CTLA-4 program into a randomized Phase II study, and they paid us a $10 million milestone payment for that. We received a $40 million milestone payment from AbbVie for the advancement of the CD71 program, CX-2009, into the Phase II expansion stage. We have advanced our first program within our bispecific collaboration with Amgen into IND-enabling studies. That's a very interesting Probody construct targeting EGFR and CD3. And we signed a new deal, which we announced in March, with Astellas for discovery and development of Probody bispecifics, for which we received an $80 million upfront payment. So in actual fact, this year so far, we've generated an additional $130 million in capital from our alliance partners. And these partnerships, as I mentioned, have been and will continue to form an important part of our business strategy and financing strategy on a go-forward basis.

Great. Well, I think that's a great overview. As you think about the -- maybe following up on the partnership angle, are there more partnerships to do there? Is that something you're actively exploring? Or do you feel like you're in a pretty good place right now with kind of the bandwidth on the partnership side?

Great question. And one of the tremendous attributes of our technology platform is its breadth. And the masking technology that I'll describe in a bit more detail in a moment, the masking Probody technology, because it can be applied to really any antibody format, whether it's a therapeutic antibody or a drug conjugate or a bispecific or maybe even other formats, immune agonists, maybe even masking cytokines. We're doing some work in the lab on that front as well. We've got kind of multiple platforms within the platform. And what that means is that there are many, many targets available to us, many more than we could ever hope to work on as a company ourselves. And that has given us and continues to provide opportunities for partnerships in the future. So we continue to be open to additional partnering. We always have said that we do the right deals at the right time. And to some extent, our decision to execute on partnerships depends a little bit on our equity cost of capital and whether or not to take non-dilutive capital from partners or not. But we do have additional bandwidth, I would say, to do additional deals in the future, but we've also got a number of really strong partnerships already in place that have been very important to us.

Okay. Understood. Maybe just moving on to one of your lead assets, 2029, which you had some new data for at ASCO. So maybe you could just give us a little bit of background about why the target is so attractive here and then recap the data that we saw at ASCO?

Yes, absolutely, happy to. Let me start with the technology platform itself. And just a brief recap of what a Probody is and how this platform is designed. So a Probody, as I've already mentioned, is a fully recombinant antibody prodrug. And the basic construction or design of a Probody is we take an antibody and we add a mask to the antibody in fully recombinant form. And the mask blocks the ability of the antibody to bind its target until the mask is removed. The mask is removed by intratumoral proteases. Technically, the way that's achieved is by incorporating a cleavable substrate, a protease substrate adjacent to the mask in the Probody. And we've known for a very long time in the field of cancer biology that protease dysregulation is a hallmark of cancer tissue. So we have carefully designed the platform such that the masks can be removed in the tumor by tumor-associated proteases. And we've demonstrated, I think, quite clearly in translational studies on treatment tumor biopsies that masks are removed in cancer tissue allowing antibody to bind to target. So the basic idea, the concept here is to localize the therapeutic activity of the antibody into tumor tissue and minimizing binding in normal tissues, thereby, either improving the therapeutic window for an antibody, where there's room for improvement, for example, with immunotherapies, or creating a therapeutic window for targets -- undruggable targets, where there's no therapeutic window unless we use our technology. And CX-2029 is a great example of a program designed to open a therapeutic window for a high potential target that without our technology has not been shown previously to have a therapeutic window. So CX-2029 is what we call a Probody drug conjugate that targets a protein called CD71. CD71 is the transferrin receptor. It's a protein that plays an essential role in the delivery of iron into metabolizing and dividing cells. As you would expect from the name, transferrin receptor binds to the protein transferrin in the iron complex form, internalizes the complex into cells, the iron is delivered and used for cellular metabolism. CD71 has been thought of, for a very long time, as a great way to deliver payloads to cancer cells because it's present not only on all dividing cells, it's present on -- at high levels on most tumor types as well. And it circulates off the cell surface very, very quickly. So many attempts have been made over the years to try to target CD71, for example, with recombinant bacterial tox infusions, a few of them have been moved to the clinic, but with no success. And the reason for the lack of success is that this target is present on all normal tissues, iron is present for all normal dividing cells, and so there is effectively a therapeutic window of 0 for this target. We've always liked it as a target, though, because that we could potentially address with our technology because we reasoned that by masking an antibody to CD71 and then conjugating it to a cytotoxic payload, in this case, MMAE, that we could open a therapeutic window for this high-potential target that is undruggable through conventional means. So CX-2029 is an antibody against CD71 that has a mask on it and a cleavable substrate conjugated to the MMAE payload. It's important to note that the -- while the antibody is masked in this construct, as is typical for a Probody, the payload is not masked. So we do expect to see, in the clinic, at certain doses, payload toxicities. What we're trying to minimize is toxicities to normal tissues, which in the unmasked form result in this target having a therapeutic index of 0. We have thoroughly explored the preclinical potential of CX-2029 in preclinical models and our preclinical studies have shown -- first of all, we confirmed that an unmasked antibody drug conjugate against CD71 is lethally toxic in preclinical studies. So no therapeutic window. We have shown that masking allows for therapeutic doses to be reached in preclinical models, in mass efficacy models and in nonhuman primate toxicology models. And we've shown broad anticancer activity against a range of tumor xenografts. So with the preclinical proof-of-concept established, we moved this program into Phase I a couple of years ago, and Phase I was designed to ask the following questions. First of all, can we achieve therapeutically relevant exposures in patients with an anti-CD71 drug conjugate? Can we do that with an acceptable safety profile? And can we actually, in Phase I, show evidence of anti-tumor activity to validate, in actual fact, that CD71 can serve as a therapeutic target? So let me just briefly recap the Phase I data that was presented at ASCO recently. And this is all available in our corporate presentation and on our company website. So the Phase I dose escalation study enrolled 45 patients over 8 dose levels. The demographics of the patient enrollment were consistent with a typical Phase I patient population. Patients had received a median of 3 prior regimens with actually a maximum of as many as 16. About 1/3 of the patients enrolled had a high, low or unknown CD71 target expression. And the median exposure in the study was 9 weeks length of treatment. The starting dose was 0.1 milligrams per kilogram and the maximum administered dose was 5 mg per kg. Dose levels of 2, 3 and 4 mg per kg were expanded to better describe the safety profile. And dose-limiting toxicities were observed at 4 and 5 mg per kg. The clinical pharmacokinetics and clinical pharmacology, as measured in the Phase I study, was consistent with what we've seen with other Probodies in the clinic, namely that the masking was maintained in the periphery. So the masks stayed on the Probody, which is important, of course. And as I said, it's been consistent across all the Probodies that we've put into the clinic so far. Grade 3 and above toxicities were mostly anemia and neutropenia, so mostly hematologic in nature. Patients were, in this regard, typically managed with red blood cell transfusions and/or supportive care with a median of 2 transfusions per patient. And the hematologic tox was anticipated based on our preclinical findings and also prior experience with other MMAE conjugates. So it's well-established that MMAE conjugates, MMAE being the payload on this Probody drug conjugate, MMAE is known to cause hematologic tox, neutropenia and anemia, specifically. We saw no unexpected safety signals despite the broad expression of this target on all normal dividing cells. The payload in the blood, free payload was measured and was shown to also be low and in the same range as other MMAE ADCs. We did see clear evidence of dose-dependent clinical activity in Phase I. We saw 3 confirmed partial responses among 17 efficacy evaluable patients as of the data cutoff. One of these was at 5 mg per kg and 2 were at 3 mg per kg. 2 of the responses were in squamous head and neck cancer and 1 was in squamous non-small cell lung. One of the patients with head and neck cancer showed a quite impressive 78% target lesion reduction at 16 weeks. Interestingly, this was a very large liver met. And this really was a terrific response for this individual. And exciting to see that we can achieve this type of response with the CD71 targeting agent. Based on our Phase I data, we selected 3 mg per kg as our expansion dose. And overall, we do think this is a very solid Phase I study. It was a carefully executed Phase I study that's given us a clear efficacy signal. It has shown us that CD71 can work as an oncology target. And we do believe we have opened up a therapeutic window for CD71 in drug conjugate form. We now need to do more work as we move into the expansion stage to see how wide the therapeutic window is and where this drug candidate has the potential to be of the most utility.

Great. Maybe a couple of follow-ups. I guess first is on -- I think you noted you saw more efficacy in the squamous side. Any preliminary thoughts on why that might be the case?

Yes. It's a really intriguing observation. And it's one of those things when you're doing early clinical development that you're always on the lookout for interesting clinical signals and signals that are -- that just fall out of the data, signals that are sometimes noted by our investigators as something interesting going on. So it's certainly an intriguing finding from Phase I. We don't yet know what it means. It has given us some clear direction into the expansion stage and 2 of the expansion cohorts willing of the 4 that we're going to run include squamous non-small cell lung and squamous head and neck. What might underlie these clinical observations, these early clinical observations, what it could be. It could be target level. It could be sensitivity to the payload. It could also be some element relating to the microenvironment of these particular histologies. And perhaps a preferred ability to activate the prodrug. We don't know yet, but we'll be looking at all of this as we move forward. But most importantly, these interesting clinical observations do point the way clearly to additional experiments in the Phase II setting.

Okay. Great. And then the other question is just about the anemia. Any more color you could share there on the mechanism? And then maybe just how you're managing that? And anything that might change in Phase II on that?

Right. So yes, as I mentioned, so hematologic tox is the principal toxicity that we've seen in Phase I. It was, to a large extent, anticipated by our preclinical work and also by what we know about MMAE. The etiology of the anemia specifically is under active investigation. And Dr. Geoffrey Shapiro who reviewed our oral presentation, discussed our oral presentation at ASCO, Geoff Shapiro from Dana Farber, I think characterized it really quite well by saying that the anemia is -- it looks like it's -- there's a little more anemia than there is typically with MMAE and likely to be multifactorial in nature, potentially reflecting overall -- actually a very important role for CD71 in red blood cell generation. This is one of the reasons that an antibody drug conjugate, CD71, is -- does not have a therapeutic window is because of its predicted toxicities, including severe toxicity to the bone marrow. With the Probody, we've been able to get to therapeutic levels and treat patients and see responses. That's a big step forward. But there may still be an element of CD71 contribution to the anemia. We need to understand that more, more work to do. In terms of how it was managed in Phase I, it was effectively managed by red blood cell transfusions. As we gain more clinical experience and we understand the etiology of the anemia in more detail and how to treat it, for example, with growth factor treatment during therapy, we'll be better able to understand the overall risk-benefit for this very unique drug candidate.

Great. And then I know you're moving into a Phase II expansion cohorts. Any sense of the tumor types you're likely to enrich for? And then when might we get some data from that Phase II study?

So we've announced at ASCO in our ASCO presentations that we will be moving forward into expansions at the 3 mg per kg dose in 4 tumor types, 2 of which I've mentioned previously, which -- for which we've seen clinical activity already. So squamous head and neck and squamous non-small cell lung cancer. We're also moving forward into 2 additional indications where we've seen preclinical activity. We saw preclinical activity in many, many models. The majority of models that we tested with CX-2029 responded. We've selected 2 additional indications for expansion. One of them is esophageal cancer and the other is DLBCL. And those selections have been made or really all 4 selections, of course, have been made in close collaboration with our partner, AbbVie. In terms of potential timing on data, a little hard to say at the moment. Obviously, with everything that's going on out there with COVID-19. We are adding the finishing touches to the study designs for these expansions and beginning outreach to sites. It's probably going to take a little bit of time to get the study up and running. So we're not really ready to guide on timing yet, but we will do so as soon as we can.

Okay. Understood. And maybe the last one before we move on to your next program is just on the economics with AbbVie. Can you just remind us how that works?

Yes. So as I've already mentioned, the Phase I data that we presented underpinned the achievement of a pretty significant milestone, a $40 million milestone payment from AbbVie recently, which is designed to fund the Phase II expansions that we're running at CytomX. We've already earned additional milestones for IND filing and initiation of the clinical study from AbbVie. So we've done a pretty good job of checking the box on specific milestones in this alliance. The way the deal works is that we're developing this asset through the Phase II expansions, effectively, clinical proof of concept, whereupon the program will go back to AbbVie for registrational studies and commercialization. And we are in a co-development relationship with AbbVie from Phase III onwards, which -- for which we will gain 35% of U.S. commercial rights, including an option to opt into a co-promotion here in the U.S. should this product ultimately reach the market and ex U.S. royalties that reach the -- into the 20% range.

Okay. Great. I guess on the second program, 2009, again, there was another update at ASCO here with some more patients, longer follow-up. This Probody drug conjugate target CD166. So I guess to start a similar type question, just what's intriguing about that target? And then what did we learn coming out of ASCO for this program?

So CD166, otherwise known as ALCAM, is the target of this drug candidate called CX-2009. And so CD166 is a transmembrane protein. It functions as a junctional adhesion molecule. Its biological role is not that well understood. But the reason we like it is it's very highly expressed on many different solid tumors. It's a broadly and highly expressed tumor antigen. It is, therefore, another good target, a promising target for engagement with anticancer therapy, particularly in drug conjugate form, again to deliver payload to tumor cells. But because it's present on normal cells, masking technology is necessary, we believe, to be able to open a therapeutic window. So similar to CX-2029, which targets CD71, CX-2009 targets CD166. It's an antibody to CD166 that has a mask on it, a protease-cleavable mask. And in this case, the payload is the maytansine under license from ImmunoGen called DM4. DM4 is a well-characterized microtubule inhibitor. It's active against a variety of cancers and its toxicity profile is well understood. It includes ocular, neuropathic and to some extent, hepatic toxicities. So the update at ASCO, we focused on our emerging strategy for 2009 in breast cancer. We reviewed the clinical activity that we've seen in breast cancer in both hormone receptor positive breast cancer and triple-negative breast cancer. I should say this asset remains wholly owned by CytomX, and we are excited to be moving this asset forward in breast cancer. So hormone receptor positive, HER2-negative breast cancer and also as a monotherapy and also in triple-negative breast cancer as a monotherapy and in combination with our PD-L1 Probody CX-072. We've seen clinical activity, of course, in both of these indications in patients treated at 4 mg per kg or higher. We saw 3 unconfirmed PRs in 8 evaluable patients in triple-negative breast cancer and 2 confirmed PRs in 18 evaluable hormone receptor positive patients. The overall clinical benefit rate at 24 weeks was 35%. So we see this as a drug candidate that has the potential to bring meaningful benefit to breast cancer patients. It should be stressed that in the Phase I work that we've done and reported -- updated on at ASCO, that this was a heavily pretreated patient population in the TNBC patients. They had a median number of prior treatments of 7. For the hormone receptor positives, it was 8. And most of the TNBC patients had received prior platinum therapy. Most hormone receptor positive patients had received a prior CDK4/6 inhibitor. So again, heavily pretreated in Phase I. We'll be looking obviously to enroll less heavily pretreated patients in the Phase II setting. Another thing we'll be doing in Phase II is using mandatory prophylactic measures to minimize the incidence of the principal toxicity that we've seen with this drug candidate, which is ocular tox. Again, ocular tox is predicted. It's well understood with the DM4 payload. Because the payload is not masked, we expect to see ocular tox at the higher doses. Indeed we did in Phase I. We dose escalated in Phase I as high as 10 mg per kg, and we didn't actually see dose-limiting toxicity up to and including 7 mg per kg, at doses of 8 and higher, these doses were not considered tolerable doses for future study, primarily due to ocular toxicities. In Phase I, ocular prophylaxis was not incorporated until the 8 mg per kg and above dose level, and at first was optional. So the overall learning from the Phase I was that ocular prophylaxis above 8 mg per kg is pretty hard to get to work. The 7 mg per kg was selected as our Phase II dose. Remember, we have evidence of clinical activity at 4 mg per kg and above. And importantly, in the Phase I data that we updated at ASCO, if you look at the safety profile, the tolerability of all reported dose levels, 7 mg per kg actually was very well tolerated in terms of ocular toxicity in the absence of ocular prophylaxis. So we're optimistic that the ocular prophylaxis in Phase II will be effective. And of course, what we're looking for it to do is to keep patients on drug for longer to really give us a better sense of what this drug candidate can do for patients over a maintained period of therapy.

Great. And what kind of activity are you kind of aiming for here in the Phase II study as you think about the bar, like what does the competitive landscape look like? What would you like to see to kind of continue to invest and advance the molecule here?

Yes. Well, without getting into too many specifics, I think if you look at that patient population of the hormone receptor positive patients, as you know, these patients, from their initial diagnosis, often have a very long journey ahead of them on multiple rounds of therapy including ultimately on CDK4/6 inhibitors. And single agent responsiveness in this patient population, as patients progress through therapy, is really pretty low. So it can be in the low double digits. So obviously, we're looking to see something meaningful. We'll be looking for a meaningful single agent response rate. Also looking very carefully though at more holistic measures, including the clinical benefit rate, which, as I've already mentioned, was promising in our Phase I work and is meaningful for these patients who have many other secular of their disease, including, for example, bone mets. So that's in the hormone receptor positive. In triple-negative breast cancer, obviously, we're watching sacituzumab very carefully. Looking at that as a drug candidate with a level of activity that is notable. So we feel that we want to be getting something that was in that ballpark to be differentiated from and competitive with that agent, assuming it ultimately gets approved as its use evolves in the triple-negative setting.

Okay. Great. And maybe the last program there was an update at ASCO was CX-072. And I know that this isn't as big a focus on the forward anymore, but what was the key takeaway at a high level for 072 as we come out of ASCO?

Well, we presented a pretty comprehensive data set at ASCO, 3 different presentations relating to the long-term safety and efficacy in multiple tumor types at the dose of 10 mg per kg, a comprehensive summary of our translational data looking at, among other things, intratumoral activation of the Probody together with an extensive analysis of the clinical pharmacology of this agent. And I would say that taken together, the data really does reinforce the fact that the Probody platform can deliver durable clinical benefit across multiple cancer types with a favorable tolerability profile that, in this particular case, with the PD-L1 Probody has -- with the potential to enable combination therapies moving forward. We reported a new cohort of patients with high tumor mutational burden, so another immunogenic tumor type. This -- in which we observed deep and durable activity. And so I think this data checks the efficacy box for our platform and for the program, for the platform in general. As the data set is maturing, we do see this as an important proof-of-concept for the platform in general. Regarding safety, we reported a very low rate of immune-related adverse events, particularly among patients who are on therapy for 6 months or longer. So we think the overall profile of CX-072 continues to support its use as a potential preferred combination partner, and that's why we aim to combine it with our own agents, initially CX-2009 and potentially other assets in our pipeline. It's not the leading edge of our platform right now but we certainly think it's a very interesting program that we can continue to build value around with our own pipeline.

Great. And maybe just in the last few minutes, you have, obviously, the Bristol partnership for the CTLA-4. You also have the bispecifics that you touched on with Amgen. Anything that you want to call out for either of those programs in terms of kind of things we should be watching for on the forward here? Or anything we didn't talk about in the pipeline?

Sure. Happy to talk just for a minute about the BMS program. So the Phase I safety data for CTLA-4 -- the CTLA-4 ipi Probody was presented at ASCO, and is very consistent with what we've seen across the clinical experience with the Probody platform so far, in that they reported the escalation to really, really quite high doses of the Probody, the ipi Probody 30 mg per kg as a monotherapy, 15 mg per kg in combination with nivo. And of particular note for the monotherapy cohorts, a grade 3 plus treatment-related adverse event rate of 23%. This is across all dose groups. So this is up to and including 30 mg per kg. And just reference that against the single-agent grade 3 plus adverse events for ipi monotherapy, unmasked ipi, is about the same. It's in the 20% to 30% range. So we've clearly shifted the curve here in terms of being able to get to higher doses of the ipi Probody, both as a monotherapy and in combination. No new safety signals were reported, which we think is very encouraging. And the data have formed the basis for BMS selection of doses and schedules for an ongoing 5 arm randomized Phase II study -- a Phase II expansion study in the frontline melanoma setting. So we're excited about the work that BMS is doing. We think they're doing a very important experiment in melanoma, where they're looking head to head comparing the ipi Probody plus nivo to ipi/nivo in frontline melanoma. So doses and schedules have not been disclosed. But as I said, the ability to get to these higher doses in Phase I was an important foundation for the design of the Phase II study. I should say that there's an important update coming up at AACR from BMS on the preclinical science for not only the ipi Probody but also another CTLA-4 Probody that targets -- that masks what's called an NF version of ipilimumab, a nonfucosylated version, which is designed to be a more potent depleter of intratumoral Tregs. That preclinical update will be very comprehensive across both of those programs, and I think will be helpful to those interested to see the power of what our platform technology can do. Just to wrap up on the bispecifics, and thanks for the question there. Real quick, we are very interested and excited about Probody bispecifics, particularly in the CD3 format. We have our collaboration with Amgen already in that space, advancing an EGFR-CD3 bispecific in Probody form. And our deal with Astellas recently, we partnered it in additional 4 targets. And we see this as a very interesting application of masking technology. The goal being to open therapeutic windows for solid tumors, which has been a very difficult thing for the field to do so far, which -- so perhaps we can talk more about that next time.

Great. And maybe just 1 follow-up on the Bristol side. Can you just remind us the -- are your economics the same on each of those CTLA-4 antibodies? Or are there any differences?

So there's a set of milestones that pertain to the program as a whole as they move through to the clinic. Each milestone as is very conventional gets paid for the first program that goes through and is -- the development milestones, they're payable once. There are royalties that reach the double digits, which are payable across any CTLA-4 Probody that makes it to the market.

Okay. Great. Well, I think we're right up against time, Sean, but thank you so much for your time today. Really appreciate it and best of luck over the coming months.

Great. Thanks a lot, Terence. It was a pleasure, and talk to you soon. Thanks.

Great. Take care, everyone. Thank you.