Immunocore Holdings plc (IMCR) Earnings Call Transcript & Summary

Good afternoon, everyone. I'm Rajan Sharma. I'm one of the healthcare analysts here at Goldman Sachs. I'm pleased that we've got Immunocore to join us for a fireside this afternoon. We've got Bahija Jallal, who's the CEO; and Brian Di Donato, CFO.

So maybe I'll pass it over to you guys. Could you just maybe introduce yourselves, give us a bit of background on yourselves and maybe make some high-level comments on the company and kind of the trajectory that you've been on over the last 12 months or so?

Sure. So thank you for having us. I'm Bahija Jallal. I'm the CEO of Immunocore. I joined almost 4.5 years ago; was President of MedImmune/AstraZeneca for almost 13 years; and before that, was in the Bay Area, Sugen and Chiron. Yes, I joined the company for really the outstanding science, and they believe in the platform. And since then, we have an exciting platform that not only can work in 3 therapeutic areas, but validated now in the clinic and be happy to talk more about that.

Brian Di Donato, Chief Financial Officer and Head of Strategy. I joined Bahija about -- a little over 3 years ago and also because of this elegant science and the opportunity to take a private company to the public markets, given the commercial opportunity we had ahead of us. Prior to this, I was CFO of another public company called Achillion, which is also in the immunology space, that was purchased by Alexion.

Perfect. And then kind of you spoke to Bahija, I guess, on kind of the multiple technologies, et cetera, and the indication that you have. So maybe from a high level, could you just remind us as to where you are, the kind of the key parts of the R&D story here?

Yes, so definitely. So our platform, which is really one of the characteristics and differentiation with the platform is that it has a soluble TCR that's in one hand, it basically binds to the tumor cells. And on the other side is -- and this TCR T-cell receptor, we made it soluble and high affinity and specificity. And on the other side, we have the anti-CD3 that will bind to any CD3-positive T cells. And what it does is redirect any T cells to bring them then closer to the tumor and kill the tumor. And so why is that differentiated? One is because it binds to a peptide presented by HLA complex. It has -- it will have access to almost 90% of the protium, because every intracellular as well as extracellular protein would be degraded and presented. So we have access to more targets. The second differentiation, it is off the shelf. So if we compare, for instance, to cell therapy, it's off the shelf really and easy and repeatable and cheap, actually, a cheaper manufacturing. So that's some of the advantage. And also, we are bringing fresh T cells every week, if you will, to the tumor. So that's really the aspect. The other aspect is that in the vector arm that we have, we can use the CD3 or anti-CD3 or anything that could upregulate the immune system. And so that works for tumors as well as infectious disease, for instance, so to kill the tumor cell or the infected cells. And we actually have programs in both. On the other side, we can put as an effector function, something to down modulate the immune system, and we have a proof principle now in preclinical showing that we can use an agonist -- for PD-1 agonist, for instance, to go very much organ-specific down modulation of the immune system, which then could tackle several of the autoimmune diseases. So those are the aspects that's very modular platform. And of course, the most important aspect of that is that this was the first soluble TCR bispecific to be validated in the clinic that, with our first product, which is against the tebe which is the gp100, now KIMMTRAK is on the market, has been showed an overall survival of -- would has a ratio of 0.56, which is really amazing. So it validated the platform. This is the first TCR bispecific to show overall survival in solid tumors, which is important. That's the first TCR to be approved at all. But also what is really important is the first medicine to be approved in uveal melanoma in 4 decades. So that basically gives us now the confidence to go after the next generation and the next generation. So we have programs with PRAME and PIWIL coming and then also trying that in infectious disease. And so for us, it validated in human, in the clinic, the whole platform, which then opens up really a lot of possibilities.

Okay. And obviously, you touched upon it, but obviously, last year was a very important year with the approval and the launch of KIMMTRAK. So could you maybe just kind of provide your thoughts there? How successful the launch has been relative to your expectations and kind of initial feedback that you've been receiving?

Yes, definitely. I think the -- I'll let Brian talk more about the KIMMTRAK. We decided to commercialize the drug ourselves because we are -- as we continue to learn about the platform, we are now bringing really the learning from the market to even inform even better how we do the clinical trials and how we do research and all that. So that was very important for us. And we have been extremely happy to see that what we have seen in the clinical trials, which are very controlled and everything, are true in the real world and helping a lot more patients across the world, and we're very happy with the results. Brian can talk a little bit about our performance there.

Yes. So KIMMTRAK is approved for metastatic uveal melanoma if you're HLA-A*02 positive. So as Bahija said, all of our TCRs target initially HLA-02, which, for uveal melanoma, is around 50% of the population. So the market opportunity is around 1,000 patients a year, we estimate, between the U.S. and Europe. So Rajan, last year, we launched in the U.S., France and Germany. In those 3 countries, our net sales were $140 million. We're still experiencing growth, which is great. We're about 50% penetrated, maybe a little bit more in the United States, so more to go in the United States. The outreach is happening with our sales team. Duration of therapy, not only in the U.S. but globally, is around 9 months is what -- as Bahija said, what we saw in the Phase III. And hopefully, we'll continue to extend as patients get treated earlier and earlier in their disease course. France and Germany, about 75% penetrated, pleased with what the team has done there. We still are in the reimbursement phase with France and Germany. So until we have final reimbursement, we take an accounting assumption for France and Germany, and then we'll true those up once we have final agreement. We announced in first quarter earnings about a month ago that we're also looking to launch in Italy by July. So excited about that and looking to expand the European footprint, not only in Italy but probably 5 other European countries later this year.

Okay. And I think it's fair to say that the kind of launch of the product and the quarterly numbers that you're booking kind of surprised the market versus what consensus was it could, because we were modeling it correctly. But how did that compare to your initial internal expectations?

Yes, it was pretty consistent. I think one of the successes with the commercial launch for us was having an early access program. So we gave the drug. Once we saw the Phase III data, we went to great lengths to make this drug available for free to patients, and it's been available to over almost 1,000 patients for free since the date of Phase III data. And then we were able to transition those patients once we do get reimbursement agreement by country to commercial payers -- to commercial paying customers. So it's a win-win.

Okay. And I guess when you think about the trajectory from here, and one of the questions that I always get from investors is, kind of, well, what's the ultimate opportunity here? So you've talked about kind of patient numbers, but then how do you see the growth from here? Is that duration? Is that -- and driving that penetration?

Yes. I think it depends if you ask patient numbers or sales. For sales, the U.S. is probably 60%, 65% of sales right now. As we add European countries, it may become a little bit less, but we still have more to grow in the United States. So we have patient numbers to grow in the United States, which will convert hopefully to sales. And then Europe as well, Canada, Australia, there will be a sequence over the next 18 months or so. In addition, again, as I mentioned, Bahija mentioned the hazard ratio of around 0.5 for the Phase III. In a sub -- in a cohort analysis, if patients had tumors less than 3 centimeters, the hazard ratio is 0.3 [ secs ]. So getting patients treated earlier is better for the patient journey, and we don't know what that duration of therapy will be. As Bahija said, we're going to update the Phase III data later this year, and we'll present that data with more longevity.

Okay. And how do we -- how should we be thinking about the European opportunity given, obviously, KIMMTRAK kind of a rare -- in a rare indication, high priced? And how are you thinking about that?

Yes. So there's 2 components of the European reimbursement process. One is the health authorities, and we're excited that both France and Germany had KIMMTRAK among the highest rated for oncology therapeutics, given its survival benefit with the gold standard. And it's the only approved therapy for metastatic uveal melanoma for HLA-A*02 positive. So that's great. And then you go to the reimbursement process, and that just takes time. So you work through that, again, with the medical benefit that it provides and the survival benefit. We're confident that the payers will see the value for patients of KIMMTRAK. So that's a process over the next 18 months or so.

Okay. And you're obviously investigating the drug in other forms of melanoma, cutaneous melanoma, for example. Do you just kind of provide us the rationale there and bring us up to speed as to where you are?

Yes. So when we think about KIMMTRAK, and so the target is gp100, it's exclusively expressed in melanocyte, in this case, in uveal melanoma and in cutaneous melanoma. We have done a previous trial seeing in cutaneous melanoma, and we know it works there. And 1 year survival was around 76%, which I think when you compare to whatever it's out there, it was 55%. So we believe it will work. And also, it really emphasizes that this technology can work in checkpoint-sensitive and nonsensitive tumors. So that's one of the pluses. So we are actually looking at doing a Phase II/III trial, looking at -- in the previous trial that we've done was also we added to PD-1, and the combination went well. So we are looking at -- we agreed with the FDA on the design of the Phase II/III trial where we look at either KIMMTRAK by itself, KIMMTRAK plus PD-1 and then direct to survival. This is pretty novel design. In the Phase II portion, we will be looking at if we have ctDNA as which we looked at a reduction, and then trend of OS will drop 1 or we will power the trial differently for Phase III. So that will guide us basically to go into Phase III, but that's where we're looking at KIMMTRAK again, which we believe will have also an impact in cutaneous melanoma.

Okay. And then, Brian, maybe just the incremental opportunity that, brings to you. And then also within that, if you could kind of help us understand pricing and whether the high price in uveal then translates to larger indications?

Yes, our estimates are that in late-line cutaneous, the opportunity is several thousand patients, so maybe 2,000 to 4,000 patients a year versus the 1,000 that we have for metastatic uveal for KIMMTRAK. But it's on pricing, It's too early to tell. We'll have to see the data and see the benefit to patients and see where the competitive landscape is at that time.

Okay. And talking about the competitive landscape and maybe just going back to uveal here. We've seen some data recently from kind of other therapeutics that are in development, and particularly if you think about some that may not necessarily have the HLA cutoff. So how do you think about positioning of KIMMTRAK means there?

Well, so far, KIMMTRAK, we believe, is the standards of care in HLA-A*02 positive. So anything in the HLA-A*02 positive patients have to show better OS. That's the ultimate endpoint. I think on HLA-A*02 negative, there is an unmet need. Obviously, there is nothing for these patients, and we're happy that this is going to be tested in HLA-A*02 negative. So that's basically what -- how we look at it.

Okay. Okay. And then maybe kind of moving on to what's next after KIMMTRAK. And PRAME is an area that we've obviously been interested in, and the industry is becoming more interested in that. Bahija, maybe could you just outline why there's the excitement there from kind of a high level? And then we can kind of think about how you fit.

Yes. So once we validated KIMMTRAK and the platform as a whole, you view the next step we had. We had already accelerated PRAME from the beginning because it had several of the characteristics. And if you think about, what's going to be really different from KIMMTRAK, this is just -- basically the construct is the same, except the peptide and the HLA that you bind to it. But PRAME by itself is really an interesting target because it's highly expressed in expressing multiple tumor types, not only -- this is outside of -- it is in melanoma, but outside of melanoma as well. The other characteristics is whenever PRAME is expressed, it's highly expressed and homogeneously expressed, which is important. So in multiple tumor cells and in a -- at a higher intensity. The third thing is that it is also a negative prognostic marker. So that means the tumors tend to want to keep the expression of PRAME. So for all these things we think is exciting. And then we did the Phase I that we presented last year at ESMO. And in Phase I, usually, especially with our platform, because it's all humanized, so we don't do any animal studies. We start at a very, very low dose at maple dose, what we say the maple dose. And it was -- and in Phase I, usually, you're really looking at more safety and the dose, but we were happily -- we saw data that was really exciting. We saw 50% ORR in cutaneous melanoma, 36% in uveal melanoma. We saw 50% in ovarian. Again, the numbers are Phase I numbers, but the totality of the data was in pretty -- was over 30 patients or so. So that was really the -- what you want to see in a drug. One is we saw the pharmacodynamics going in the right direction, and we see activity. That was at a pretty low level at 20 micrograms or something like that. So that is, for me, being in this field for so many years to see this kind of data in Phase I was absolutely exciting. Subsequently, that was confirmed in a different platform in the cell therapy platform. So that is the -- the PRAME is a really validated target as far as I'm concerned. And so from there, we are now obviously capitalizing on this data to then continue the development of PRAME.

Okay. And then could you maybe just discuss kind of strategy in terms of trial design and enriching for PRAME? I think in your Phase I, you didn't enrich whereas some of the other players in the field have. So I'd be interested to get you the rationale around that.

Yes. So if you think about -- that's one of the differentiator also with our platform. If you look at -- we increased the affinity of the binding to the target with 1 million times. So we are in the picomolar level. So we know that we can kill cells down to 5 to 10 copies per cell. So our platform is very potent. We didn't enrich because we have seen with tebe and with KIMMTRAK that, while the RECIST -- to see a RECIST response, you had to go with really high what we call H score. The overall survival, it didn't matter if you were a low expressor or high expressor. And that comes, in my opinion, to that exclusive potency that we have. So in the case of PRAME, like I said, the expression is pretty high to start with. So in multiple tumors, we didn't do even -- we looked at the expression in the retroactively, not prospectively. And that was, I think, enough. It depends again what you're going to be looking for. For the RECIST, Yes, it matters. But in this case, it's highly expressed anyway. As we continue now tumor by tumor, we'll consider what the expression and so on.

Okay. And just if you -- on that kind of tumor by tumor, what do you think are kind of the most promising and most interesting? And I guess kind of beyond melanoma because the pushback that maybe that, that's kind of one of the less difficult tumors to kind of treat from that perspective. So how do you think about kind of potential beyond melanoma?

So we -- just where we started. For me, frankly, in anywhere where PRAME is expressed, I would like to go in and explore it because it's such a powerful platform. We started where the expression is high basically and where we saw signals as we do in any other drug development. So we started in uveal melanoma, cutaneous melanoma, ovarian, endometrial because it's really high expression there, very high, and also lung to explore the lung. So that's where we now did the expansion, what we call the expansions to confirm what we've seen in Phase I to confirm the activity. And then in parallel, we're looking at doing the combination. So we are -- we opened the combination with PD-1 combination with chemotherapy and then with tebe just to have a kind of a safety run-in that when depending on the line and the indication we can move into combination with standards of care.

Okay. Maybe could you just kind of discuss the wider PRAME strategy, because you obviously have multiple shots on goal there. And you kind of made the decision earlier this year where that was the focus over MAGE-A4, for example. So could you just kind of run through the strategy?

Yes. It was really an easy decision, and that's where the prioritization in the plan. We are in a good situation where we can prioritize in our pipeline, which is great, I think. And you prioritize based on data. So when we started the MAGE-A4 as well as we started the PRAME after looking at the data with MAGE-A4 and the expression, there is -- we know there is activities, an active molecule. But the -- wherever PRAME is expressed, MAGE-A4 is expressed as well or a vice versa. Wherever you see expression of MAGE-A4, we see expression of -- so there was a lot of overlap between that and PRAME. And PRAME tends to -- the prevalence tends to be even higher. So I think it made a lot of sense for us having 2 molecules like this to go ahead and focus solely on PRAME, and that's exactly what we did.

Okay. And then could you just remind us kind of next data points for the PRAME assets?

Yes. By half of -- by the first half of next year, I think we said we'll do that. So this year is really about executing the trials. It's several trials going on right now, the Phase II/III that we talked about, the expansions and all that. So we hope to have data by first half of next year.

Okay. And then you also have the kind of the product that's targeting HLA-A24. Could you just talk about rationale there? And what that may mean in terms of incremental patients that you can target?

Yes, absolutely. So that's really exciting as I think we said, it is HLA-A*02 restricted. When we talk about KIMMTRAK, for instance, we know not only where the HLA-A*02 is West -- in the West. But when we look at the disease itself, it's more -- it's mostly a Western disease where HLA-A*02 are. It's very different with -- when we look at other tumor types now for PRAME, and that's why we took the -- we made the decision to go after A24 because, for instance, in Asia, like just in Japan, the expression of A24 is around, I think, 60%, which is pretty high. So if you add -- and they have also some A2. So if you take the 2 together, it's around 70%. So I think they make it worth it to go and make the molecule against actually HLA-A24 that we can expand that into Asia So that one, hopefully, we'll get into IND by first half of next year.

Okay. And then just as we talked about kind of PRAME being increasingly in focused area, and then we have -- we've seen some data in cell therapy. We have your data that -- how do you look at kind of the competitive landscape? Do you think it's beneficial that there's multiple players doing the work here?

Yes. So I'll just say look at HER2, right? I do believe that the good thing -- the very good thing is that it shows always that the PRAME is a very, very attractive target, right? And I think the populations that are amenable for cell therapies are may be more restricted. So I think it makes sense to go after something that's off the shelf and so on. So I think we're definitely -- it's a great target to go after.

Okay. And maybe kind of just switch and focus slightly to the infectious disease as part of the business. I guess we saw some early data from HIV this year. Could you maybe just kind of contextualize that for us?

Yes. It's really -- at least for me, the concept is exciting. And I think we are privileged and happy to test that concept. And if you think about the HIV, thank goodness, it's becoming now a very chronic disease. People don't die from their HIV. Having said that, this is why we do what we do is you're not satisfied just with that, that people have to take their medicine every day or all the time all their life. And if they stop, what happens is that you have the viral load that basically, you have a rebound. And that's because there is a reservoir that's very, very small reservoir, the virus hiding and the CD4 cells. And that the actual technologies right now have not been able to attack the reservoir. So with what I said about the technology being so potent, that we can go kill down to 5 to 10 copies per cell, it behooved us really to go and test that. Because if we can be with that potency, go after that reservoir, we can help the people living with HIV not to have to take these. And there's a lot of issues with taking medicine all the time. There's a compliance issue. So when -- and if you don't -- if you skip or something like that and you have -- every time you have an increase of the viral load, you have -- you're more subject to mutated virus and things like that and also drug-drug interactions if you are taking other medicines. So it's not easy to just say, okay, well, they can just take it all their life. So that's really what we're trying to do. So the Phase I that we did, which is the single-ascending dose, first of all, it was just great for us on HBV to go -- HBV and HIV to go outside of oncology. And we -- the trial accrued very quickly, which was -- it's always a good sign in drug development, so this was good. But most importantly, what was really exciting is we saw -- in this single-ascending dose, we saw a target engagement, what we call target engagement, and we saw that through an increased dose-dependent increase of IL-6, which for us means that we engage the target. So that was very, very exciting. And so now we are doing the multiple-ascending dose. That's recruiting right now. So we are actively doing the trial, is open and is growing. And in that one, what's really interesting is that we will have -- the patients are dosed with their antiviral, so the antiviral, and the ImmTAV, our molecule for 12 weeks. So they take the medicine for 12 weeks, then we stop everything. And then we look for the viral rebound. So meaning that with this trial, we will have a proof of concept one way or the other. So that's exciting, and that's ongoing, and we hope we can make a difference for these people living with HIV.

Okay. And I think in the Phase I, there was kind of very low rates of CRS, right? So that...

We don't see CRS actually in these patients, which is great.

Okay. I guess one thing sometimes that we hear on that as a kind of a -- maybe a bit of a pushback is that -- does that mean there's any risk that there's not kind of sufficient engagement of the immune system because you're not seeing the CRS?

Well -- so the -- it's maybe true in oncology. And why you see a CRS in oncology because you have only the target load is a lot more and so on. But here, you really exclusively to the virus and the target is a lot less. You don't have to deal with the whole micro environment and how many -- how much of the drug that you have to bring there. So we are talking about 15 micrograms. But I would have worried if we don't see any increase. It's actually, it's in a very interesting dynamic because of that lack of tumor microenvironment and everything, even how fast the -- you get the peak with the oncology very quickly of cytokines. And that's -- we believe that's what creates the whole CRS, right? So you have that. In the HIV, it's a lot more -- goes a little bit slower, not as fast up but it goes lower. So we believe that's what avoids the CRS. So I think it's a good sign, frankly, that we see that increase in IL-6. I would have worried if we don't see anything.

And then, I guess, Brian, in terms of kind of strategy on the infectious diseases side, is that something that is better done by Immunocore? Or could that be partnered out and then maybe a better or near of that?

I wouldn't say the infectious disease side generally. I think the way we think about partnerships is per molecule or per disease type. So for HIV if we see a signal and see a path forward, yes, we can start having partnership conversations because those could be large trials. And having external experience in HIV would be really helpful in a large trial. So we would look for partnerships there. So I think we take each molecule separately on when the optimal time to partner them is.

Okay. And then conscious of the time, but just in terms of cash, could you just remind us where you are in terms of liquidity?

Our cash has gone up for each of the last 3 quarters now, I believe. And so we're in great shape and can fund all the trials we need to fund for the foreseeable future. So we say publicly that we're funded into 2026, so call it, 3 years cash runway. We have over $400 million of cash right now.

Okay. And could there be a scenario where you may not necessarily need to kind of go back to the markets to raise additional capital?

Are you asking what peak sales are for KIMMTRAK? It's too early to tell. It's too early to tell what peak sales will be for KIMMTRAK, and it's too early to tell how many pivotal trials will need to run for PRAME.

Okay. So I want to ask you what peak sales will be for KIMMTRAK, but when do you think you may have a better idea on what peak sales might be?

Yes. So we have to finish the reimbursement agreement with brands in Germany. So that will be sometime over the next 6 to 9 months, and we'll announce that when that is complete. The duration of therapy, we'll share the Phase III update on the duration of therapy later this year. But maybe by early first half of next year, we should have a better idea of being able to guide for an annual sales number.

Okay. Perfect. And then maybe just in the last kind of 20 seconds or so, could you just kind of remind us of key catalysts as we get into next year? And what you guys are particularly excited about?

Well, it's definitely the data. As we said, by first half of the year, we'll bring data for PRAME and then we'll bring also the data for HIV to the MA -- the multiple ascending dose. We also have the new -- hopefully, the newcomers, the PIWIL. That's the new target that we set the IND by end of this year. So hopefully, starting then to enroll next year. And then we'd have the IND next year for PRAME A24 and PRAME half-life extension. So a lot happening.

All right. Brilliant. Thank you so much.

All right. Thank you.

Thanks, Rajan.