Immunocore Holdings plc (IMCR) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to Morgan Stanley Global Healthcare Conference. I'm Sean Laaman, U.S. Head of SMID Cap Biotech Equity Research here at the firm. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have Immunocore, and we're joined by their CFO and Head of Corporate Development, Travis Coy. Welcome, and thank you for your time today, Travis.

Maybe just to commence proceedings, we've got a couple of macro questions here we've been asking all our companies. But the first one is with China's rise in biotech innovation, how are you thinking about Immunocore's competitive position here? And will this influence your R&D and business development strategy?

Yes. First of all, Sean, thank you for having us. We appreciate it. China, it's interesting. They've made great strides, right, in biotech. I think in particular areas, what's been noticeable, especially has been in immunology and cell therapy and accelerating innovation in those aspects. And so from an Immunocore perspective, our competitive advantage has been and where the company has been developed around has been a TCR platform. So we need to make sure we're not complacent, right? As we look at making sure we're staying on the cutting edge of science, we want to make sure we're not complacent with -- and making improvements to that platform. And as we look across the globe, the development of technology is not always inside our 4 walls, right? And so China is certainly an important part of that. We view China as both a competitive aspect as well as an aspect of opportunity. So I think it's both.

Wonderful. And how are you currently leveraging AI or thinking about AI's future disruption potential?

Yes. We think about AI in 2 ways. One is an incorporation of artificial intelligence into making business operations more efficient. But the other is how do we improve R&D. I think incorporating AI into business operations and making those more efficient is table stakes to be competitive within any company. But from an R&D perspective, again, back to our TCR platform on which the company is founded upon, areas where we're using AI are in TCR, both target identification and in protein/peptide interactions. It's particularly good in large data sets and helping us process those large data sets. That's one area that helps us accelerate drug discovery. I think other areas we use it with an R&D perspective are responses to regulatory filings as well as kind of back to the data theme as well as doing clinical data analysis. So those are some of the ways we can leverage AI to improve both probabilities, if you will, as well as speed. And I think that's -- over the long term, AI could have a very profound impact on our industry, and that's some of the ways we're leveraging it at Immunocore.

And last question before we dig into the details of Immunocore. But what has been most impactful on the regulatory front? Would it be FDA, MFN, tariffs, anything to comment there?

There's a lot of uncertainty across all those, Sean. But I think we've been very significant -- sorry, we've been very fortunate at Immunocore that we haven't seen a significant impact in the near term on all 3 of those yet. But as you think across the 3 of those aspects, I think if I was going to put one in the forefront, I'd probably say the FDA interactions. It is -- those regulatory interactions are so important to our investments and how we make investments and how we develop assets given the amount of capital allocation, as you know, that we put into clinical trials and clinical studies. So having clear and concise and consistent guidance from a regulatory agency is really important for us, whether it be Immunocore or whether it be the broader industry. Whereas I see MFN and tariffs as very -- while important, very economic-focused policies that over the longer term, you can -- you have ways to mitigate around, whereas making sure, again, that regulatory guidance and making sure your investments are placed in the right way that give you certainty to approval and also speed to approval is important.

Wonderful. I've got a few overview type questions here. And the first one is, can you provide an overview of the company's approach towards developing T cell receptor therapies for oncology and autoimmune diseases?

Yes. Yes, I've referenced our TCR platform a few times. So what we're doing on the oncology side is using T cell receptors to engage T cells to help kill tumors. And we do that through -- what is unique about our platform is it allows us to produce soluble off-the-shelf therapies. And I think that's a big advantage for us compared to some of the others working out there. On the autoimmune side, it's actually taking that same thesis or axis and reversing it. So there, we're down-regulating the immune system. And one of the unique things we can do with the platform and are working to demonstrate with a couple of assets is for those approaches to be very tissue specific. And that allows us to prevent or avoid, if you will, the systemic immunosuppression that you typically -- that you see with immunology assets today. So we're really excited. Obviously, we were able to produce the first TCR therapy that was ever approved in KIMMTRAK. So we've demonstrated success, if you will, in oncology. We still need to demonstrate success in autoimmune, but we're very optimistic about that potential.

And I wanted to touch on the ImmTAX platform. What differentiates your platform from competitor bispecifics?

Yes. I'd tie it back to the off-the-shelf high affinity -- that gives us access to about greater -- around 90% of the human proteome. That's a big difference compared to if you think about traditional bispecifics that typically rely upon membrane-bound or extracellular targets to be effective. And so it gives us a much broader opportunity set with which to work from as we think about target identification.

Okay. I might start with some KIMMTRAK questions, but isolated to metastatic uveal melanoma to begin with. But going forward, I believe the KIMMTRAK growth is expected to be more moderate as the launch has matured. But you can provide more detail here on how to expect the trajectory or what you expect for the trajectory from this point forward?

Yes, happy to. So just to make sure everybody is oriented, KIMMTRAK is our product that's approved for in frontline metastatic uveal melanoma. We've been on the market about 4 years now. And so we're very -- as you're alluding to, we're very pleased with the growth that we've seen today. We generated about $192 million in the first half of this year, and that was about a 32% -- that was a 32% growth rate over the same period last year. Given that we are on the fourth year of market and that we have established ourselves as standard of care across uveal melanoma, we do expect that growth rate to moderate a bit. Pretty typical as the product gets into its mature life cycle, at least in the current indication, as you alluded to. So we've seen about -- we see about 4% to 7% quarterly sequential growth rate the last several quarters. We expect that to moderate from there kind of going forward to give you a little bit of quantitative aspect of how we think about it.

Sure, sure. Wonderful. And I think you're at about -- I think you said in Q2, maybe 68% penetration in the U.S. And what would you estimate peak potential penetration could be?

Yes, you're right. We're approaching 70% penetration in the U.S., and that's largely being driven and coming from the community setting and our efforts there to increase that penetration. If you use -- I think a good -- if you think about peak of where we could go, I think if you use Europe actually as a good proxy for that, where we have a much more -- in a country-by-country basis, we have a much more centralized commercial ecosystem in Europe, right? So I have to add that caveat. But in many of those countries, we're 80-ish or plus percent penetrated. And so we -- that's why we're optimistic that we can continue to push towards that in the U.S. We believe we still have room to grow driven by that penetration in the United States.

Sure. And how do you think about planned launches in the Middle East, North Africa, Turkey as a contributor?

Yes. So look, other -- so I talked about U.S. growth. We shift to OUS growth. It's important that we continue to expand the global access of KIMMTRAK. So we were approved in about 39 countries and launched in about -- in 28 countries. And so part of that expansion is looking at opportunities where we may not be the best company as ourselves to do it, but do it with a distribution partner. And that's actually what we did in MENA and Turkey recently. We recently announced a distribution agreement with Er-Kim to help continue to make sure we can reach every patient. And that's where most of our OUS growth is coming from is those additional launches.

Sure. And I believe you're now observing 13 months duration of therapy. And can you remind us how it compares to what you observed in the clinic and what's driving the increase?

Yes. So this is -- our duration of therapy has been quite a remarkable story for us. In the clinic, the reason I say that is in the clinic, we saw about 10 to 11 months of duration of therapy. In the real-world commercial setting, we're now seeing around 13 to 14 months. And it's incredibly uncommon to see that happen, to see that duration of therapy be higher than what you saw in a randomized controlled clinical setting. And I think that speaks to the product profile of KIMMTRAK. We've now demonstrated a 3-year overall survival rate of 22 months. The safety -- and so from an efficacy perspective, incredibly attractive on the heels of the clinical data that was an overall survival ratio of 0.51. From a safety perspective, what we see is one of the most common adverse events is CRS, cytokine release syndrome because of the CD3 on part of the bispecific, so it's anticipated. But what we see after the first few doses of KIMMTRAK, that CRS drops to mid-single-digit rates. And so it becomes very manageable and predictable for physicians. And I think part of that dynamic that we see is it's allowed us to get to the penetration that I talked about in the community. It's also hard for that duration of therapy to go beyond what we've seen in the clinical setting.

Wonderful. Still on KIMMTRAK, but moving over to advanced cutaneous melanoma. So I guess starting first with the Phase III study in second-line advanced cutaneous melanoma, could we briefly talk about how advanced melanoma compares to uveal melanoma, both in terms of clinical aspects, but also in terms of the size of the commercial opportunity?

Okay. So we have 2 -- just to ground everybody, we have 2 life cycle management plays for KIMMTRAK, so 2 Phase IIIs that a life cycle management plays. One is advanced cutaneous melanoma, Sean, you're alluding to. And part of the rationale for why we are pursuing that indication is the similarity between uveal melanoma and cutaneous melanoma. If you think about uveal melanoma before KIMMTRAK, it was an incredibly immune insensitive tumor, very difficult-to-treat tumor where checkpoint inhibitors have not worked. We demonstrated superiority versus pembro as a monotherapy with KIMMTRAK. So there's a lot of -- if you relate that to cutaneous -- advanced cutaneous melanoma, where patients have advanced mostly off beyond checkpoint inhibitors, right, they've sort of by definition, have become immune insensitive. And so there's a lot of similarities in that regard. There's also a lot of similarities with GP100. That's a target for KIMMTRAK. And so we have very high expression rates across both uveal melanoma and cutaneous melanoma. So a lot of good reasons to believe and why we feel we have a high probability and chance of being successful in advanced cutaneous melanoma.

Great. And the studies evaluating KIMMTRAK monotherapy or in combo with pembro, how does Immunocore think about KIMMTRAK's addressable patient population as a monotherapy versus a combination therapy with a PD-1?

Sorry, Sean, can you ask that one more time? Sorry...

The study evaluating KIMMTRAK monotherapy in combination with pembro, how does the company think about KIMMTRAK's addressable patient population as a monotherapy versus as a combination therapy with a PD-1?

Yes. So as Sean alluded to, so the way the design of TEBE-AM, which is the advanced cutaneous melanoma Phase III is set up is we have a monotherapy arm in KIMMTRAK. We have a combination arm with KIMMTRAK in combination with the PD-1 and then a control arm. And so what we're also encouraged by is when we look at the Phase I data, what we generated with KIMMTRAK, we obviously saw a strong monotherapy activity in a patient population. But we also believe there may be some synergy between KIMMTRAK and pembro as well. And we've been able to demonstrate that we can safely combine those 2 agents. And so we've set up a well-controlled with an overall survival endpoint, right? It's an important part given the context of the current FDA environment. So that would give you some insight why we designed the study that way. And so we're -- given that the similarities that I talked about between uveal and cutaneous previously, we think we could see benefit in both. We were able to demonstrate superiority to pembro in uveal melanoma. And because of those similarities, we think we also have a strong chance in doing so as part of TEBE-AM. But we set up a study so we can evaluate both. One question I actually didn't answer that, but I realize you asked is one of the reasons we're also excited about cutaneous melanoma is because of the patient population that it opens up. So it's an additional -- so uveal melanoma has about 1,000 patients eligible for today in HLA-2-positive patients, cutaneous melanoma adds an additional 2,000 to 4,000 patients. So it has the potential to provide a very significant inflection point in KIMMTRAK's commercial growth.

Wonderful. And you mentioned 2 Phase III trials and sort of the second Phase III trial in ocular melanoma. So how is the Phase III adjuvant trial in ocular melanoma or the ATOM trial enrolling? And have you shared when we might see the next data update on that?

Yes. We initiated the ATOM trial, which is for adjuvant uveal melanoma late last year. And it's worth noting that's being done in conjunction with EORTC. And so we're off to a good start. We have several sites in Europe that are up and running and enrolling. We also recently received the IND acceptance in the U.S. So we anticipate we'll having U.S. sites come on board imminently this fall. So off to a good start. We haven't provided yet guidance on precise timing for an adjuvant study just because it probably is about a 3-year enrollment with another couple of years for data readout given it's an adjuvant trial. But as we get to more of a steady-state enrollment curve, we'll provide more specific guidance as to when we think we could have data there.

Sure. And it's been a really good story with KIMMTRAK in uveal melanoma and that we're kind of coming to that maturity piece with these further Phase III trials coming on and hopefully, it extends growth. Could you map out the catalyst path for the programs?

Yes, for KIMMTRAK...

For KIMMTRAK and the further indications in the Phase III study?

Yes. So for TEBE-AM, we should complete enrollment in the first half of next year. And I mentioned it's overall survival. So it is event-driven, so I have to add that caveat. But we hope to have data in the second half of next year, realizing there could be some variability given that event-driven nature of the overall survival primary endpoint. And I alluded to the time lines on ATOM. We'll hopefully probably 3 years of enrollment and another couple of years before we have data there, but we'll give more concrete guidance as we get further along in the enrollment for ATOM.

Wonderful. Moving on to the PRAME portfolio. So Phase III PRISM study in first-line cutaneous melanoma in combination with nivo. Could we talk about the rationale for pursuing cutaneous melanoma and the commercial opportunity?

Yes. Yes. So this is our third Phase III study that we have ongoing as an organization right now. And just to orient people, brenetafusp is a PRAME-targeted agent. So the reason we chose to go into frontline, this is in a frontline cutaneous melanoma study. The reason we chose to do that is based on the evidence that we saw in Phase I. So when we generated monotherapy activity with brenetafusp, we saw in a patient population, encouraging disease control rates that were actually greater than checkpoint inhibitors. It was also greater than nivo plus rela even in a combination play. So because of those improved disease control rates, we decided to move into earlier lines of therapy in combination with nivolumab. It's really the basis for why we made that decision.

Okay. Wonderful. And you're evaluating 2 doses. Can you remind us why those 2 doses were selected for the study?

Yes. So we have a dose selection ongoing. The way the Phase III was designed for PRISM, we call PRISM-MEL is after the first 90 patients are enrolled, there's a dose selection that's triggered. So those 2 doses are 40 micrograms and 160 micrograms. And then there's an IDMC that is a panel of melanoma experts that receives that blinded data and then ultimately makes the best -- will make a recommendation on the best dose to continue forward. And the reason we did that is as part of Project Optimus. This is the FDA's initiative to make sure oncology products are seeing more optimized dose selection in Phase III studies. We did that in conjunction with regulatory interaction. So we're -- that's why it was designed and established that way.

Got you. Understood. How is the Phase I/II study in platinum-sensitive ovarian cancer as well as the signal detection in non-small cell lung cohorts progressing?

Yes. We have 3 experiments going on within our PRAME franchise. So as [indiscernible] just alluded to one of them, which we also have, in addition to brenetafusp. We also have a half-life extended version of brenetafusp. And so those 3 experiments that we're looking at are with brenetafusp in ovarian, and we're moving in earlier lines and in combinations in both platinum-resistant ovarian cancer and platinum-sensitive ovarian cancer. And then also with brenetafusp in lung, similar story, although it's more -- I will say, in ovarian, we saw monotherapy activity, but not quite sufficient enough monotherapy activity to be a stand-alone. We thought it to be a stand-alone by itself, which is why we're looking to optimize that activity with combinations in earlier lines. With lung, I think it's a little different story and that it's more of a -- it's still a signal detection that we're looking for in earlier lines and in combinations, but that's the second experiment is in lung. And then finally, with the half-life extended version, where we're exploring in Phase I that we recently initiated at the end of last year, very similar tumor types to what we explored with brenetafusp. So think melanoma, think ovarian, think lung. The reason I mentioned all that is we view that PRAME -- all those PRAME efforts as a franchise, and we'll make decisions as such as we get that data. But we look to -- hopefully look forward to be able to talk about the data and next steps within the next 12 months.

Wonderful. Moving on to autoimmune. So you've got single ascending dose data from Phase I trial for people living with HBV-positive hepatocellular carcinoma expected at the American Association for Study of Liver Disease in November. Can you talk about the treatment landscape here?

Yes. So our infectious disease efforts holistically in both HIV and HBV are focused on trying to provide a functional cure. So we've set a high bar for ourselves. And as you alluded to, we look forward to disclosing the single ascending dose data in HBV later this year. And as you look across the treatment landscape, when we do, and this is similar to both HIV and HBV is the standard of care is NUCs, right? The challenging with NUCs is while they do a pretty good job of controlling the virus, they're a chronic therapy. And so if you take a person off NUCs, that virus rebounds. And so what we're looking to do is hopefully have a therapy that prevents that from occurring holistically and actually enables the immune system to fight the virus is the way our mechanism works.

Got you. And are there any read-throughs from the HIV study that might inform the HBV program?

Yes, very similar objectives actually that I alluded to, which is really virus control, right? I think -- so that's the main similarity and very similar dynamics with NUCs as patients come off, we're trying to avoid that chronic -- having to have a chronic therapy. I think with -- so I think those are the main similarities and obviously trying to achieve very similar things across the 2.

Got you. And what are you looking for in the SAD data to start the MAD portion of the HBV study?

Yes. Actually, one thing I should have just answered your question in advance. So from an HBV perspective, some of the things we're looking at is it's nice that we have a very clear biomarker with HBV. You have a hepatitis B surface antigen, right? So you can look at efficacy by the -- hopefully seeing reduction in levels of that surface antigen. Other things we'll look at are -- because of the way the mechanism works, we would expect to see -- and this is a little counterintuitive, but we expect to see increases in AST and ALT liver enzymes. Now because that is what we'd expect to see mechanistically. What we don't want to have happen is that those increases are such that we begin to see liver toxicity. So we're looking to hope to see whether we've sort of threaded the needle, if you will, between efficacy and safety and as we look towards that functional cure in HBV.

Got you. And I guess on the rest of the early-stage pipeline, there are also CTA/INDs expected for type 1 diabetes and atopic dermatitis. Taking a step back, which programs and the candidates evaluating infectious autoimmune diseases are you most excited about?

You're asking me to pick my favorite child, Sean, pretty much. From an autoimmune perspective, we look forward to where we have 2 efforts going on there that are currently in preclinical. But one is a type 1 diabetes asset. Another is CD1a asset that likely will start trials in atopic dermatitis. Hopefully, we'll submit the CTA for -- we're on track to submit the CTA for the type 1 diabetes asset by the end of the year. So look forward to being in the clinic in 2026 with the type 1 program. For CD1A, look to filing the CTA and/or IND in 2026. So a little difference in about a year, difference in timing between the 2. I think across the therapeutic areas, what is -- what makes me excited is the modularity of the platform. You heard a lot about our efforts that we've made in oncology, having delivered the first TCR-approved therapy in KIMMTRAK. We're now exploring and generating data in infectious disease. And I'm really excited to begin exploring data in autoimmune. And I really think that tissue-specific down modulation of the immune system could be very unique for us.

Wonderful. Philosophically, do you think building the platform sort of organically is the right way to go? Or do you see sort of in-licensing becoming an increasing part of your business? You've had a commercial success with KIMMTRAK, which is ongoing. But philosophically, how do you think about that?

Yes. We certainly are very proud of what we've developed in the pipeline and what we have today. But I agree with you in that we're getting to the point as an organization where we have the capacity to potentially create additional value through business development efforts. We need to make sure we do that in a disciplined manner. But we are looking for opportunities to potentially bring into the portfolio, particularly from an oncology perspective, where we have an established footprint, both from a development and commercial perspective and have capabilities established there. So I think if you think about the areas we're looking at, it's likely oncology from an inbound perspective. If you think about more of the outbound side of the business development equation, I mentioned the established footprint in oncology. Areas that may make sense for us to partner to maximize value depending on data inflection points could be infectious disease or autoimmune given they're earlier in their development from an Immunocore perspective as a company. So it's sort of how we think about the business development strategy holistically.

Sure, sure. And with that sort of commercial success out there, like how do you think about forward-looking on OpEx and ultimately sort of cash flow and then the ability to sort of fund your pipeline to go where it needs to go?

Yes. So we have a very robust balance sheet as part of what enables this business development strategy, as I just mentioned, with almost $900 million of cash on the balance sheet. So we're -- and we've dipped our toe and profitability in a couple of quarters. That's not our intent. I will say that our intent is to make sure we're making the right data-driven investments in R&D. So we do expect, particularly with the 3 Phase IIIs, we do expect some increases in our -- we do expect increases in -- moderate increases in R&D investments over time. If you think about the SG&A side and the commercial side of the equation, we're being very disciplined in that regard. It's been mostly flat around $40 million, $42 million a quarter for the last several quarters. And so we're going to continue to be disciplined there. With cutaneous melanoma potentially being our next significant indication for KIMMTRAK, we're very fortunate that we have a lot of overlap in that commercial infrastructure. We're already calling upon around 50% of the physicians that treat cutaneous melanoma by the nature of having promoting in uveal melanoma. So if you think about the additional expenses we may need to make in SG&A to commercialize cutaneous melanoma, think about it as more incremental than it is in a stepwise.

Sure. So I guess what I'm getting at is that if you look at where KIMMTRAK has come from and you're getting into sort of a bit more of a mature phase, at least in uveal melanoma, and you're still confident that you've got the balance sheet and the cash flow generation ability to fund the Phase III trials, get those launches out there, hopefully, when they come and also fund the development of the rest of the pipeline?

Yes, that's correct. Occasionally, people ask us what our runway is. We actually don't provide guidance on our runway because we don't need to. We have the capital, particularly with KIMMTRAK's performance and success to be able to fund the pipeline for the foreseeable future.

Yes. Wonderful. Well, I've come to the end of my question slightly early, but there's one final one, and that is what didn't I ask that I should have?

I think you covered the pipeline fairly well, fairly efficiently in a short amount of time. But I think one thing I'd leave behind is we have 3 priorities as an organization. One is maximizing KIMMTRAK in both the current indication and in the subsequent life cycle management plays with the 2 Phase IIIs, making sure we advance and execute on the pipeline, and then making sure -- and I alluded to this a little bit with the China question is making sure we are not complacent with the platform and make sure we continue to innovate for sustainable growth. And we look forward to continuing to deliver on that for both patients' sake and for -- it will create value for shareholders as well.

Wonderful. Well, that's an end to proceedings, but thank you for your time, Travis. It's been brilliant. Thank you.

Thank you