IO Biotech, Inc. (IOBT) Earnings Call Transcript & Summary

All right. Good morning, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Ulz, one of the biotech analysts here, and it's my pleasure to introduce the team from IO Biotech, starting with Mai-Britt Zocca, to my immediate left, CEO. In the middle, we have Amy Sullivan, CFO, and to my far left, we have Qasim Ahmad, CMO. Before we get started, I just need to read a quick disclosure. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that Mai-Britt, maybe I'll pass it over to you just to make some introductory comments for people that maybe are less familiar with your story.

Yes. Thank you, Mike. As always, it's very nice to be here in New York attending the conference. And we are here on the back of just a very recent readout with our lead program, where we are testing Cylembio, our immune-modulatory cancer vaccine targeting IDO and PD-L1 in first-line advanced melanoma. And what we saw was really exciting. So we have seen a median PFS readout of 19.4 months versus 11 months in the control arm, and that is pembro where we are testing it against. It came out with a slight miss on the p-value. So that was not a full home run we did. But when we look at the data, we really see just encouraging data across all subgroups and also all stratification markers. So we are taking now the totality of these data towards the regulatory agency, discussing with them. So what is exciting beyond the data is really the benefit risk profile that we are seeing where we are not adding any safety concerns in the experimental arm. So what we have is really effect that resembles like a combination or a dual agent, but with a monotherapy safety. And we do see this as a clear benefit for the patients in need of better and more safe treatments. And we are ready to submit BLA at the end of this year as we would be with the p-value hitting. So we are still ready for that. And also, we are ready with the commercial scale CMC and supply chain. So excited about where we are and very much looking forward to the dialogues with FDA.

Yes. Great. Thanks for that introduction. And I do want to dig into the data a bit but maybe before we get there, if you could just talk a little bit about the mechanism of action of Cylembio and just maybe how it's differentiated from some other cancer vaccines.

Yes. So we believe that the reason why we are seeing such a clear effect, and it has not been seen before in randomized Phase III trials testing therapeutic cancer vaccines where many of them has failed in late-stage clinical trials. Our approach is quite different. We are targeting not only the cancer cells, but also the immune suppressive cells in the tumor microenvironment. And we are doing that using our T-win technology platform, where we are identifying antigens that are expressed not only on the cancer cells, but also on the immune suppressive cells. And that allow us to generate T cells that really targets both cell populations. And what we have seen in all the models and now also in the clinical settings is that, that really drives a clear benefit in terms of clinical effect.

And maybe you can talk about some of the advantages just compared to some personalized vaccine approaches.

Yes. So what we have also thought through when we started developing these compounds with Cylembio being our frontrunner is that it should be convenient for the patients. So our treatment is off the shelf. It's ready when patients comes in and need the treatment. So that's a clear benefit compared to the personalized vaccines, if we should use those as an example where you need to have a biopsy, and that takes time. And that time is precious for patients that have a cancer growing in them. So we do see it as a benefit that we have an off-the-shelf strategy.

All right. Maybe now we can start digging into the data a little bit more, which I think is probably where most of the interest is. Phase III study, advanced melanoma. Maybe talk a little bit about the design and maybe a little bit more on the key takeaways from the study in your view?

Yes. Thank you. So this is a Phase III randomized study. It was an open-label study, but the company is blinded to the trial analysis as well as the outcome until we readout, 1:1 randomization, as Mai-Britt mentioned earlier on, IO-102, IO-103, which is Cylembio plus pembrolizumab versus pembrolizumab. We recruited 407 patients. This is a pure first-line study. So patients were not treated with any prior first-line treatments or naive to any first-line treatment. We finished recruitment in the trial back in December of 2023. So when we read out now, it's almost close to 18-plus months. So the median follow-up in most patients was more than 23 months.

And just in terms of the primary endpoint on the...

The primary endpoint in the study was PFS by blinded independent central review. And obviously, OS and ORR and other are secondary endpoints.

Can you maybe put into context sort of that PFS benefit in terms of what's available in melanoma?

Yes. So at this moment, as you know, between U.S. and Europe, there is a slight difference, but there are 3 main options available for patients. Ipilimumab, nivolumab, which has been there for quite some time, has been a standard of care. Then Opdualag from BMS also has been emerging, especially in U.S. It's slightly different situation for them in Europe. And then pembrolizumab or single-agent anti-PD-1 are the 3 options in the IO treatment landscape. What you see is that in terms of the PFS, anything between 4.6 months to 11.6 months is what has been reported in previous studies. So as Mai-Britt just mentioned, we see a median PFS of 19.4 months versus 11 months in the combination arm versus pembrolizumab arm. So it's about 8.4 months of benefit that you see between the 2 arms.

Yes. So very meaningful benefit over current options. And I guess you just -- as Mai-Britt mentioned, you just unfortunately missed the stats in that. And just maybe any thoughts on what drove that?

Yes. So when we designed the study, obviously, you keep into consideration your Phase I/II study, what's available as a comparator, what are the benchmarks. And that's what we took into consideration. So when MM-1636, which is the foundation of our early clinical program was a single-arm study, 30 patients showed really promising results. That is what we basically designed the trial on. So we put a hazard ratio of 0.65 and the sample size calculation was based off of that, keeping into consideration the overall average anti-PD-1 single-agent outcome as well. And other than KEYNOTE-006, which depending on which portion of the study you read, the maximum median PFS you would expect is around 11.6 months. But it goes down to 4.6 as well in other studies. So we took an average of that and then obviously did the assumptions. So obviously, now as the study has read out, we can see that the proportional hazards obviously don't stay consistent throughout the study. And that's what could have actually one of the reasons that we had. So larger sample size might have actually shown not only the absolute difference we are seeing, but statistically as well. Even though having said that, when we look at the overall study, we see consistently that not just the PFS with a slight miss on the p-value, but all the subgroups within PFS. The OS trend that we are looking at and the subgroups within OS are all favoring the combination consistently and everything is in the same direction throughout.

Yes. So I wanted to also ask some of these subgroup analyses. Maybe you can give us some of the data points that you're talking about.

Yes. So obviously, most of the subgroups are already prespecified subgroups. So for example, we highlighted the PD-L1 negative, PD-L1 positive. So we see benefit across PD-L1, both in positive and negative, however, more profound in PD-L1 negative. So in terms of numerical difference, there is 22.1 months versus 16 months in PD-L1 positive. And in PD-L1 negative 16.1 versus 3 months, which is quite profound with a p-value of 0.006 and a hazard ratio of 0.54. So we -- this is just one example. Then obviously, we look at other poor prognostic factors like elevated LDH, like BRAF mutation. In each one of them, we see significant benefit in the combination versus pembrolizumab alone. We also did some additional analysis just to sort of see the consistency of the data. So for example, there is one outlier that we have highlighted. The patients with prior adjuvant, neoadjuvant PD-1 therapy. This is the first study actually, which has reported where there are a higher proportion or compared to previous reported studies because adjuvant treatment of IO therapy wasn't really a standard of care previously. We have close to about 10% of patients or less than 10% of patients who had prior PD-1 therapy. We allowed them in the protocol, keeping in view the changing landscape and also making sure that our patient population is close to real world as well. So if you take those small portion of patients, 15 in the combination arm, 21 in the pembrolizumab alone arm, imbalanced between the 2 for other prognostic factors as well. It leaves a good proportion of 371 patients. And there, we see nominal significance in favor of the combination with a significant p-value as well as a hazard ratio. So consistently, whichever portion of the study we've looked at, we see benefit basically favoring the combination. And then as Mai-Britt already mentioned, I think the safety profile on top of all of this is actually adding to the totality of the data. So the risk benefit, irrespective of where you look in the study is there. And I just simply say that it's the efficacy of a doublet with a safety profile of a single agent anti-PD-1.

Makes sense. And I guess you're planning to maybe present the data at the medical meeting at some point. Any additional analyses you plan to do or that we should be looking our for?

For this data, we will present as we currently obviously still are evaluating a lot more that is going to come. So we will be presenting data at an upcoming congress. It's been accepted as a late breaker. So something to look forward to in the later part of this year. We are conducting several additional analysis. The biomarker data is coming in. Quality of life is like we are expecting that to also reflect from the overall risk benefit that we see. And then obviously, OS is not mature at this moment. So sometimes next year, we'll have majority of the OS data, and we'll be presenting that at a later time.

Is it possible that OS data could mature and become stats in the future? Is that a possibility or...

I think anything that we show from now onwards will be nominal significance, and that's what we hope to see. At this moment, the hazard ratio in OS is 0.79. It is pretty much in line with what, I would say, other doublet therapies previously reported at 1 year. We already see the projection in terms of how the curve is separating and it is widening. So hopefully, as it matures, we obviously will be sharing more of that.

[Technical Difficulty]

Yes. So let me start addressing that. So we are planning to meet with the FDA here at the end of Q3 or here in the fall, and we expect to have an outcome of that meeting later on in the fall, of course. And what we are approaching the agency with is the totality of the evidence. It's precisely what Qasim has just gone through. We do view the risk benefit as in favor of our combination of Cylembio. And we have seen precedents for this in the past where other drugs have missed slightly on the p-value, but still have been having a reviewable package based on the totality of the evidence that was brought forward to the FDA. So this is also our intent.

So there's precedence here. Is it specific to oncology? Or is it more broader than that?

So it's more broadly. And of course, I mean, we would have loved to have found an example that completely resembled our case. And of course, that's not possible because it varies across indications, across disease areas and so on. But if we look into a specific paper that was in the -- in the 2021 or '23, we have identified that over the course of 2018 to 2021, 10% of those drugs that were approved in that period were really approved with a lag or a slight miss on the p-value. And out of those, a couple of them were in the oncology area as well. So it has been seen. And of course, we have studied those cases as well. But there's not like a one-to-one comparison.

No, makes sense. And I guess one potential scenario is the FDA give you approval on the existing data. What are some of the potential other scenarios that could play out here?

Yes...

I think 2 simpler options would be they give us approval and ask for some post-approval commitments or they say, well, this is really very good data, but you need to do another study, another Phase III to basically prove it again. And I think we are -- as Mai-Britt said, we are getting ourselves ready for either of those. I think in both cases, first of all, when we look at the data, data is quite convincing. And though in recent years, we don't find specific examples in melanoma, but then FDA looks -- or agency basically looks at the totality and they look at the risk benefit. And I think the risk benefit in this needs to be kept into consideration of what else is available. And for other therapies, especially those which are more effective, they come with toxicity. And we actually do not really add anything there. So it will be a matter of review with the agency when we present the totality of data and then the risk benefit that comes with it.

And do you have a meeting scheduled currently? And have you said when exactly that is?

We haven't said when it is, but we have said that it's here in Q3. And as Q3 is coming to an end at the end of this month, everybody can kind of make their own assumptions on when the meeting will be. So it's coming up soon. And of course, we are excited to prepare for this. And also hoping to be excited about sharing the outcome of that meeting.

Can you maybe talk about what you plan to share after the meeting?

Maybe...

Yes. So we will likely wait for the meeting minutes. And we'll get those -- we expect to get those in the fourth quarter.

Got you. Okay. Great. Maybe you can characterize just some of your interactions with the FDA, right? There's been some changes there, but you guys have breakthrough therapy designation. So I'm sure you've been working closely with them. So any just -- maybe just share sort of the some of the feedback or how those meetings.

So, yes, I'm happy to address that. So I still recall the first interactions we had with the FDA prior to our breakthrough designation. Already back then, they were very excited about the modality and the ability to show the effect that also Qasim referred to in our Phase I/II trial, where we saw this really a great effect without any safety concern. So that excited FDA back then, and they have been excited to work with us throughout the years, both on the development on the Phase III and also across other themes that we have been discussing with them, both the CMC package and so forth, potency assay and other aspects of what is needed for a filing. What we have seen and what we are really happy to have during these changes that are occurring at the agency is that the team that we have been discussing with is still the same team. So that is satisfying for us that we are going in now with this meeting to discuss with the same team that we have been discussing in the past. No changes there.

That's great. You might be filing by the end of this year. Maybe talk about just sort of launch prep and where you are in that process?

Yes. I actually forgot to mention one thing around the FDA because just last week, they actually agreed on our pediatric study plan. So that was approved after a long period of discussion, it's not an easy study to get approval on, but we got that last week. So we are very excited about that. And regarding the launch plans, I will let Amy to...

So as Mai-Britt mentioned, we are -- we will be on track to submit the BLA by the end of this year. And as you can imagine, our launch prep has already begun. So we have all the planning in place, and we'll be ready to pursue multiple options, either co-commercialization, commercialization on our own or partnership, but we have all the launch planning in place and ready to kind of kick off as soon as we get the green light.

Okay. Yes. So we're looking forward to an update here in a month or so, I guess.

2 months, yes.

All right. Maybe we can switch to sort of your solid tumor programs. You're planning to share some updates from 2 separate studies sort of in the second half of this year. But maybe we can start with the basket study for the head and neck patients and maybe remind us what you've shown previously and kind of what to expect with this update?

Yes. So this basket study had 2 cohorts, the non-small cell lung cancer and squamous cell carcinoma of head and neck, both are PD-L1 high population. So it's in combination -- same combination, IO102-IO103, the IDO and PD-L1 vaccine and combined with pembrolizumab. So last year at ESMO and SITC, we presented the primary endpoint for both the cohorts, which was response rate. In the head and neck cohort, we demonstrated almost doubling of the response rate from what is the current standard, which is pembrolizumab alone. And then also almost close to doubling of the PFS for pembrolizumab alone. Also, significant numerical benefit seen in the lung cancer cohort as well. So when we look at the totality of the data, no safety concern again in that -- in those 2 patient populations as well. Later this year, we will be presenting update. So the study is fully recruited. So there are no more patients to be added there. We basically will have further update on some of these endpoints and some more biomarker data because that's also an area of interest for us in terms of further highlighting the mechanism of action and how in different populations, this could go forward. Just in context of these 2 cohorts, and where the landscape is, I think the head and neck data is quite convincing. Most of the investigators that we are working with and key opinion leaders are quite keen that we move to the next stage. Obviously, as we move forward with the melanoma program, we'll consider what the next steps are there.

Can you maybe talk about what those next steps could be? It sounds like you're leaning towards head and neck.

Yes. Well, there are -- I think there are several opportunities there. There is still -- so depending -- obviously, we do understand the landscape is moving very fast in head and neck, especially with MIRS, BCARA and other studies that have read out. And all those data look very convincing as well, very encouraging. I think the benefit that we have is the safety profile and the durability. And I'm hoping that as I did not mention this because this is -- we haven't disclosed the data on durability of response from the melanoma study from the Phase III. But that's where we also would be able to demonstrate that it's not only safe and effective, there is durability as well. And I think those 2 elements need to be kept into consideration, especially in head and neck and lung, where you have treatment options with doublets and triplets coming in. But every time you hit a toxicity or you hit resistance. And that's where I would see the benefit of this. So we are still discussing the trial designs, possible options, a window of opportunity to go in before the landscape either changes completely or can we add to the landscape? All of those options are there.

Yes. Okay. And you're also planning to share sort of your neoadjuvant, adjuvant study data. It's a Phase II melanoma and head and neck, I believe, sort of the second half of this year as well. Maybe you can just sort of set the stage there, and I don't believe you shared any of that.

No. We just finished recruitment of that study early this year. Patients obviously have the preoperative period. They go through surgery and postsurgical treatment, then they go into adjuvant. So we are expecting that -- and this study is not just about efficacy. It's also -- there's a lot of biomarker and translational science built into this trial as well. So it will be more of a feasibility moving into adjuvant, neoadjuvant for both of these indications. We are expecting that at least we'll internally have some preliminary data available by end of the year, and then we'll be able to share it externally early next year.

Maybe how many patients?

So total 95 patients are in the study. There are 3 cohorts, 2 melanoma cohorts, 1 head and neck. So we started actually this study with only a very small sample size of 15 in melanoma and 15 in head and neck. And there was a lot of enthusiasm and the landscape was also drastically evolving in perioperative setting for melanoma. So we increased the sample size and then added a randomized cohort, cohort 3, which is 60-plus patients. So in total, the melanoma patients are more than 75 and then the rest is head and neck. So we will obviously have a good comparison within the study for almost a 2:1 randomization for melanoma. So that's to be expected Yes.

Maybe just talk about -- you have a lot of different data in different sort of indications now. How does that sort of lead into your thinking just on the profile of this product and...

I think it's simply, as Mai-Britt said, we're in a good place to be. I think the totality of data even prior to the Phase III reading out, we were quite convinced that we have a product in our hand, which has activity and is very safe. It's as safe as you can be. And now I think with the Phase III, it has derisked the program in a way. So it's -- you can think of our Phase III as a large Phase II study. Had it been slightly bigger. I think we would be right now jumping though we are still jumping. But this, I think just derisks the program. It shows that we have a new modality, which not only can be applied in melanoma, head and neck and lung, but in many other tumors and even beyond this as well because the way the technology works, it can go into the chronic diseases, infectious diseases as well in future. So the opportunities could be endless here.

Yes. It seems like broad potential just beyond the indications you've looked at so far, is there another -- like the next one that sticks out to you as kind of a -- makes sense to go in that direction or...

Well, we also have a pipeline in addition to this. So we have -- maybe Mai-Britt can speak more to it as well, but we have the arginase, we have TGF-beta. Those are the 2 next assets that are moving from early development into late phase. So late development. So we are very hopeful that within the vaccines and then other possibilities of combining with other modalities are all different options that we have. So depending on where we go, which direction we take, we could even, in future, be exploring this vaccine on its own, which could be a very safer option of treating patients without any toxicity added at all.

Yes. Got it. So I guess maybe you have a lot of opportunities to move forward in different ways, but -- maybe just talk about your cash position currently and sort of how you're thinking about that.

Thanks, Mike. So we ended the second quarter with just over $28 million in cash. Post second quarter, we took down the second tranche of a debt facility that we have in place with the European Investment Bank. So that brought in $14.5 million on July 4. So with that, we have enough capital to take us into the first quarter of 2026. So obviously, we need to raise to support commercialization efforts to support additional development, and we'll look to do so at some point this fall.

Okay. Great. And maybe in the last few minutes, we could jump into a couple of sort of macro questions that are on a lot of people's minds, and we've been asking all our companies these questions. So there's 3. And the first one, I guess, with China's rise in biotech innovation, how are you thinking about your competitive position here? And will this influence your R&D or BD strategy?

So not -- so of course, we are following with interest seeing what is happening with the biotech landscape in China and how rapid they actually are starting developing great drugs. So that's, I think, kudos to those companies that we are seeing that from. We do not see that there is an immediate change neither in our strategy or in the competitive situation. We are still the frontrunner with our technology and also with the data that we have now, the competition is not really just around.

Okay. And then maybe second question, how are you currently leveraging artificial intelligence or thinking about AI's future disruption potential for this industry?

Yes. So similar to the first one, we are excited about artificial intelligence and also to see how it's being used in drug development, both in early stages and also in later phases. We are maybe not so focused on that right now to implement it directly into our programs. But of course, this is something -- I mean, being a part of an innovation machine, this is a part of what we are also thinking about.

Yes. Makes sense. And then maybe last macro question, just what's been most impactful from the regulatory side? Would it be more changes at the FDA? Could it be MFN just given you're launching next -- potentially next year or tariffs?

Yes. I mean we're watching the landscape very closely, Mike. Everything is changing and it changes one day and the next day it shifts back. We are keeping a very close eye on it. We're thinking through our supply chain in CMC. We do manufacture in Europe. We're looking at the impact of potential tariffs. Would it make sense to put in to tech transfer once we're through the registrational process to move some manufacturing to the U.S. So we're just thinking through all ways that we can work around some of these things.

Yes. Makes sense. And we have a few minutes left. So maybe I'll just ask one last question, and we've talked a lot about all this, but just maybe from here going forward, the next couple of months, just sort of walk us through sort of the focus areas and updates, et cetera?

I'm happy to do it. So front and center is the discussions with the agency. So yes, I can say that we are using all our efforts right now on preparing for that. And of course, we expect to get out with an okay to file, and it will be a review issue. And therefore, we are also spending all our other resources in preparing and planning for that. So of course, besides that, the presentations that we have later this year is also a part of what we are planning for and being excited about. so...

Yes. And we haven't really talked about it, but we're also planning to file an MAA. And there's a lot of precedence there, especially when you look at some of the other recent approvals in melanoma, where they do focus in on a subset of the patient population and provide approvals in different ways. So that's something that we also shouldn't look sight of -- lose sight of and that will be something that we do right after the FDA interactions.

Okay. Great. Why don't we end it there? Thanks so much. Mai, Amy and Qasim, I appreciate your time today.

Thanks, Mike.

Thank you.

Thank you.