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

Good afternoon, everyone. Thank you for standing by. Welcome to the CytomX Therapeutics Strategic Update Call. Please [indiscernible] recorded. I would now like to hand the call over to your host for today, Chau Cheng, CytomX's first Vice President, Investor Relations and Corporate Communications. Please go ahead.

Thank you, Andrew. Good afternoon, everyone, and thank you for joining us. Before we begin, I'd like to remind everyone that during this call, we will be making forward-looking statements. Because forward-looking statements are related to the future, they are subject to inherent uncertainties and risks, including the uncertainty surrounding the COVID-19 pandemic 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. Earlier this afternoon, we issued a press release announcing a strategic realignment of the company. With us on the call to discuss today's update is Dr. Sean McCarthy, CytomX's Chief Executive Officer and Chairman. Carlos Campoy, Chief Financial Officer, will also be available to answer Q&A following our prepared remarks. With that, let me turn the call over to Sean.

Thank you, Chau, and good afternoon, everyone. At CytomX, we are dedicated to destroying cancer differently. Ever since CytomX was founded, we have been focused on bringing more effective cancer therapies to the patients who need the most. CytomX Probody therapeutics are designed to be conditionally activated within the tumor microenvironment, offering the potential for the improvement of therapeutic index for multiple antibody and biologic formats. We are applying our technology to some of the biggest challenges in oncology biologics R&D today, including opening new targets for antibody drug conjugates and solid tumor opportunities for T cell bispecifics as well as widening the therapeutic window for immune modulators such as cytokines and checkpoint inhibitors. Last week, we announced results from our Phase II study in breast cancer of our wholly owned CD166 targeting ADC, praluzatamab ravtansine. As we discussed at the time, praluzatamab did not emerge from our Phase II studies as Phase III ready, and we have, therefore, decided to substantially reducing total investments in this program, and we'll be seeking a partner for its further advancement. Since we will not be initiating Phase III studies in the near term, today, we have announced that we will be substantially reducing the size of our organization, including significant cuts in our later-stage development teams and across our G&A functions. In total, we will be reducing our workforce by approximately 40%. The changes we are making are expected to extend our cash runway into 2025, allowing for the progression of our earlier-stage pipeline and the continued advancement of our ongoing partnered clinical programs towards key milestones. We will be maintaining strong capabilities in research and translational sciences as we continue to advance our pipeline, which I will review in a few moments. Although difficult choices have had to be made, we strongly believe these are the right steps to take at this moment in time in the biotech equity capital markets and to position CytomX optimally for the future. I would like to express my deep appreciation to the CytomX team members who will be transitioning out of the organization. You have contributed so much to the company's vision and mission, and you will be sorely missed. Let me now turn to our go-forward R&D priorities for the restructured company. I would like to start with a brief discussion of where we are with our core platform technology. I believe it's now generally accepted that conditional activation of biologics is a strategic area of oncology R&D that offers tremendous opportunity for the development of new cancer therapeutics. And frankly, we've seen an explosion of interest in this field in recent years following the trailblaze by CytomX. I want to underscore that the substantial investments CytomX has made in the clinical exploration of our Probody technology platform have allowed us to achieve many technical milestones with conditional activation for the first time by any organization. It's important to recognize these firsts, which include showing that Probody therapeutics can be stable in the circulation of cancer patients and activated in tumor tissue from on-treatment biopsies. Translational clinical imaging studies demonstrating accumulation of Probody therapeutics in primary and metastatic tumors. Demonstrated clinical anticancer activity of similar magnitude to that of a comparable unmasked antibody. Going further into the clinic than anyone before with the undruggable targets CD166 and CD71, showing the potential benefit of our marketing strategies and the continued development and optimization of the broadest repertoire of protease-cleavable linkers based upon our deep knowledge of the tumor microenvironment. We have continued and will continue to learn and apply platform insights and improvements to our programs, and we intend to maintain our leadership of the field. Now turning to our product candidates. I want to briefly mention 3 emerging programs we are advancing with the restructured organization. Starting with CX-904, our conditionally activated T cell engaging Bispecific designed to target EGFR on cancer cells and the CD3 receptor on T cells within the tumor microenvironment. CX-904 is designed to minimize extratumoral activation of T cells and potentially widen the therapeutic window for targeting EGFR-expressing solid tumors with this modality. We announced the initiation of Phase I dose escalation in May for this program, and this program is part of our partnership with Amgen, where we are responsible at CytomX for clinical development through initial proof of concept and where we retain significant U.S. commercial rights. The second emerging program I want to highlight today is CX-801. As we have previously reported, we are further broadening our Probody platform's potential by applying our conditional activation technology to certain cytokines. CX-801 is our conditionally activated Interferon Alfa-2b. Interferon alpha is a potent cytokine with demonstrated clinical activity in multiple cancer types. It is widely regarded as having potential to expand clinical benefit in traditionally immuno-oncology sensitive as well as IO insensitive or cold tumors and particularly in combination. Despite this potential, however, the systemic toxicity of Interferon Alfa has limited its clinical use. We are, therefore, thrilled to have created a novel masked version of Interferon Alfa-2b designed to harness the powerful activity of this potent immune modulator. The broad therapeutic window of CX-801 was highlighted in our poster presentation at AACR earlier this year, and we aim to rapidly advance this program towards clinical evaluation with IND filing targeted for the second half of 2023. The third program I want to briefly mention is CX-2051, a conditionally activated drug conjugate targeting EpCAM, with potential applicability across EpCAM-expressing epithelial cancers. EpCAM is a high potential tumor target, which has already been validated and to which we are applying the learnings from our extensive clinical studies with praluzatamab ravtansine and CX-2029. We plan to file an IND for CX-2051 in the second half of 2023. For CX-2043, our previously described preclinical EpCAM-directed ADC, this program is being deprioritized. In addition to these early-stage programs, we continue to have important clinical studies ongoing with our partners. CX-2029 partnered with AbbVie is a conditionally activated ADC that targets CD71, the transferrin receptor. We previously reported encouraging initial data on CX-2029 activity in a Phase II expansion study in patients with squamous non-small cell lung cancer, all of whom have received prior treatment with checkpoint inhibitors, and we remain on track to provide a data update in the second half of 2022. Our partner Bristol-Myers Squibb continues to develop BMS-986249 and BMS-986288. The Probody versions of the anti-CTLA-4 antibodies, ipilimumab, and the non-fucosylated ipilimumab, respectively. BMS-986249 is in Phase II in combination with nivo in a randomized study versus ipilimumab plus nivo in patients with untreated advanced melanoma. This novel combination is also being evaluated in advanced hepatocellular carcinoma, castration-resistant prostate cancer and triple-negative breast cancer. BMS-986288 continues in Phase I dose escalation both as monotherapy and also in combination with nivo in patients with advanced solid tumors. In summary, the CytomX pipeline going forward remains strong, and with the restructuring announced today, we believe we are very well positioned. We also continue with broad research activities within our highly valued alliances with AbbVie, Amgen, Astellas and Bristol-Myers Squibb, and we look forward to continued progress with our partners. We also see broad scope for potential new alliances moving forward, and we will continue to emphasize new business development as an integral part of our strategy. As part of the restructuring announced today, 3 executives, Amy Peterson, Alison Hannah and Carlos Campoy will be transitioning from CytomX. I want to thank Amy, Alison and Carlos for their many contributions to CytomX, and we wish them the very, very best for the future. In closing, CytomX remains committed to true innovation, and we recognize that our approach is and always has been a big idea. It's a different idea and being different takes courage and persistence. We are proud of the progress we have made, and I want to, again, sincerely thank all members of the CytomX team who will be leaving us. You have made a difference to many people with cancer, and I express my sincere gratitude and best wishes to you all. Now with that, let's open the call up for Q&A. So back to the operator.

[Operator Instructions] And our first question comes from the line of Mara Goldstein with Mizuho.

So the first question I have is just on the BMS compounds. Have you confirmed with BMS or have you spoken to the company recently?

I'm sorry, Mara, thanks for the question, but I'm not sure I quite understand it. Have we confirmed what?

Have you confirmed those trials are -- I mean, I know they're listed as ongoing. I'm just curious from a status perspective, just because it's been so long since we've heard anything.

Yes, absolutely. And I think we've said pretty consistently that they continue to enroll patients across the BMS-986249 and the BMS-986288 studies, and we continue to work with BMS on potential timing for communications. But yes, those are absolutely active and enrolling.

Okay. So then if I could just ask, can you maybe just review for us just what are the differences in CX-2051 that prompted you to choose that as a candidate to go forward? And then just on the 40% staff reduction, does that include not filling current open positions? Or is that consistent with employees on payroll today?

So let me take the first question, and Carlos will take the second question. So what I would say about CX-2051, we're not in a position to disclose the detailed structure or molecular architecture of that program just yet. But what I will say is that given how much we've learned from the clinic on CX-2009 on praluzatamab and also on CX-2029, it is a program that is absolutely incorporating learnings from those studies, and we'll have more to say about that in the future. Now of course, I would say that a general theme of the work that we're doing on the earlier stage programs benefiting from the clinical experience we've gained over the years is to continue to engineer these next-generation probodies to further broaden their therapeutic window, and you'll see that as a continued focus of the company moving forward based on the huge amount of learning that we've had from the clinic so far.

And in terms of the headcount, Mara, it is a 40% reduction from the number of employees on board currently.

And our next question comes from the line of Kaveri Pohlman with BTIG.

My first question is regarding the T cell engager program. Do you say what epitope 904 winds to? And do you plan to test it for EGFR-mutated tumors because there were plenty of data at ASCO, suggesting that these agents work well in those patients, especially in combination with EGFR targeting TKIs.

Yes. Kaveri, thanks for the questions. So we haven't disclosed the -- again, the actual molecular structure of CX-904, which is the EGFR-CD3 bispecific. We have presented previously on earlier generation molecules that we evaluated preclinically, but we have not yet presented or disclosed the specific molecular architecture of CX-904, including the epitope. The question on EGFR mutations is a really interesting one, that's something that we have an active interest in.

Got it. And my second and last question is on CX-801 Can you tell us how IFM Alpha is different from some of the other cytokines in the clinic, like IL-2, IL-15 and IL-12? And based on your preclinical studies, what tumor type makes sense for this [ acid ]?

Yes. Thanks for the question. So we're super excited about the interferon program. As you I'm sure know, it was one of the very first immunotherapies approved more than 3 decades ago. It's been approved in several tumor types over the years, including in melanoma. It's not used very much, of course, because of its real serious systemic toxicities. We believe interferon therapy in [ mast ] form has potential across many, many solid tumors, too many to list right now. It's a mechanism that is fundamental in its ability to activate the immune system within tumor tissue. And in fact, we've shown that in our preclinical studies that we presented at AACR earlier this year. We showed directly that the [ mast ] interferon alpha-2b activates immune infiltrates in associated tumors. We showed that it combines -- it has monotherapy activity, of course, it combines very nicely with anti-PD-1, and we are looking forward to moving this program forward. We do think it has broad potential in -- not only as a monotherapy, but also in multiple potential combination settings. And as I said in my prepared remarks, interferon has -- interferon alpha has potential to further amplify the immune response in IO sensitive tumors, so combinability with approved checkpoint inhibitors, for example, but also and perhaps even more importantly, to activate the immune system in cold tumors, in IO insensitive or refractory tumors. So we see this program as having a lot of potential. We also think with regard to -- there are a few others out there doing somewhat similar things. We do believe based on the engineering that we've done that we have a potentially best-in-class approach here.

Our next question comes from the line of Mitchell Kapoor with H.C. Wainwright.

I was wondering if you could just comment on the desire and ability to bring on additional pipeline candidates? And would that be mostly through partnerships or in-house? Just kind of if you could comment on the expansion of BD from here?

Yes. Thanks for the question, Mitch. I think there are probably a couple of different questions in there. So our overriding focus from the early R&D standpoint, the preclinical right now will be to get these 2 INDs filed for the next-generation product candidates, CX-801 and CX-2043. We do plan to continue with some internal drug discovery of our own, but we also, as you point out, we have with our existing partners, these partnerships that we value very highly, we have a significant number of ongoing discovery programs with them with AbbVie, with Amgen, with BMS and with Astellas across different modalities. And with regards to the question on -- with the connection, if you like, between potential new partnerships and further development of the pipeline, that is something we're absolutely interested in doing. We do note that in a market like this, where equity-based financing is not top priority, that business development has the potential over the next 1 to 2 years to provide additional capital to the company. Quite frankly, as it always has, over our entire history, but of course, more importantly, provide us with additional opportunities to take shots on goal with our technology as we continue to learn and optimize our conditional activation platform with Probody therapeutics.

Got it. And then could you just talk about the upcoming squamous non-small cell lung cancer data, and what derisks the Phase II data as we approach that readout?

Yes. So I'll take you back to the data that we presented end of last year, which was 16 of the 25 targeted enrollment -- patient enrollment in that expansion phase. We had 16 patients that we reported on. We had a response rate, a confirmed response rate of 19%. And as I've also mentioned in my remarks, in patients who had received prior checkpoint inhibition. So we were encouraged by that. We have completed enrollment now into that full cohort. We do expect to have that data in the second half. We'll sit down with our partner, AbbVie, to discuss the data and potential next steps. And what we're looking for in the data update, a couple of things that I would focus on. First of all, how well we have maintained that response rate? We think that's a good response rate. In that patient population, there's a significant unmet need in the post checkpoint inhibitor setting in squamous lung, as you know. So we're looking, first of all, to be in that same ballpark, which is the ballpark that we had guided going into that data last December. We'll also be paying very close attention to the anemia. As you know, anemia has been the principal side effect of that drug candidate. It's the side effect that would be predicted or the toxicity that would be predicted from preclinical studies. It is something that we're watching and monitoring closely, and we'll have to take a look at both of the efficacy signal and the toxicity as we determine next steps for CX-2029 with our partner, AbbVie.

[Operator Instructions] And our next question comes from the line of Roger Song with Jefferies.

All right. Great. So most of my questions have been asked. Maybe, Sean, if you can comment on this. Is the -- you mentioned something like a second-generation Probody. Understanding you have for multiple pipeline candidates in the cleaning call [indiscernible]in different stage and also have kind of different data already reported. Just curious, what is your -- the direction in terms of the second-generation probody? What kind of optimization you will implement to those early pipeline like a mask or linker payload or target. So maybe just a high-level comments on those kind of a notion.

Yes. Roger, thanks for the question. So we've been working on this technology for some time, as you know. And as I wanted to emphasize in our comments today, we are the leader in this field, and we have learned an enormous amount from our clinical exploration and investments. And there are -- we've always referred to our platform as a tunable system. And the -- by which we mean the 2 main components of a Probody therapeutic that make an antibody a Probody are, of course, the mask and the protease-cleavable linker. And we continue to gain experiences to how to optimize masking, how to optimize the protease-cleavable linker. But it actually goes broader than that because we also take into account the format of the antibody. Is it an antibody, an ADC? Is it a bispecific or is it a cytokine? We also take into account, as you rightly point out, the payload or the effector moiety. In the context of an ADC, it can be the [indiscernible]. In the context of a bispecific, it's the T cell or immune cell engaging arm. For example, CD3. And where this all integrates at the end of the day is therapeutic window. The difference between the efficacy of the molecules and their tolerability in animal models and ultimately, their efficacy and tolerability in the clinic. And we have made a ton of progress here. With CX-2009, we have shown that CD166 can be successfully targeted. We have activity in -- particularly in hormone receptor-positive breast cancer, we need to do more work to optimize the dose, and we plan to find a partner to optimize that program. So we learned a lot from 2009. We were limited, we believe, in terms of therapeutic window principally by the payload. So that's an area that we're paying a lot of attention to moving forward for our ADC programs, what are the optimal payloads moving forward. CX-2029, similarly, we were able for the first time to take an ADC into the clinic and show that we could achieve therapeutically active levels of CD71 targeted ADC. We did open a therapeutic window for CD71. We do have a high rate of anemia. Could we improve upon that or a similar program by increasing therapeutic window using next-generation masking protease-cleavable linker. So these are the kinds of questions that we're asking. These are the kinds of things that we're integrating, for example, into our next-generation EpCAM program and also integrating into our cytokine programs and our bispecific programs as well.

Our next question comes from the line of Etzer Darout with BMO Capital Markets.

Great. Just the first one for me. Just wanted to get a sense of where you were with IND-enabling studies on the 2 programs, the interferon program and the EpCAM program? Where were you with those in terms of the plans to file IND in 2023 ? And then I have a second question.

Yes. Thanks for the question, Etzer. So yes, so we're right on target with where the programs are today to guide to IND filing second half of next year for the 2 of them. So far so good. Programs have made excellent progress over the last few months. So on track, I guess, is the way I would answer that question.

Great. And then the second question. We talked about sort of the complexities of ADCs and sort of now you're adding a Probody conjugate component. I had questions coming from investors around the linker component, right, to the payload? And what you've kind of learned from that sort of assessment of the CX-2009 data and give it some of the toxicities that maybe there were some earlier than expected or anticipated cleavage of the linker, and whether or not there was any of that? And then what kind of learnings, if you would, from that study in terms of deciding [ is the ] Probody conjugate like the EpCAM ADC that you're moving forward?

Yes, that's a great question. I think the -- really the simplest way to look at the CX-2009 data that we presented last week is that the dose of 7 mg per kg is just too high. And we -- I don't -- we don't believe that, that -- the toxicity that we've seen at 7 mg per kg derives specifically from cleavage of the payload per se. I think we can't conclude that yet. What we can conclude is that and what we've reported is that the dose of 7 mg per kg given every 3 weeks is not tolerated sufficiently to move forward at that dose. We are optimistic that the dose of 6 mg per kg could be based on early findings in Arm B of the study. We have more work to do to see if that is the case and of course, to evaluate the clinical activity of that dose. 6 mg per kg is -- as you will also recall, that is the dose that ImmunoGen has been at in their two Phase III studies with mirvetuximab. So there are multiple moving parts on a Probody drug conjugate to be sure. We have the mask. We have the cleavable protease linker. We have the payload and we have the chemical linker. In this case, it's the SPDB linker. On CX-2009, I'm not in a position to comment on what the payload or the linker will be on CX-2051, but I can say that it will be incorporating these learnings from CX-2009 and also CX-2029, which is a VcMMAE.

[ It is time to ] call back over to Chau Cheng for his closing remarks.

Yes. On behalf of the executive team, I'd like to thank you all very much for joining us this afternoon. We look forward to updating you in the future on our ongoing progress.

This does conclude today's conference call. Thank you for your participation. You may now disconnect, and have a great day.