Iovance Biotherapeutics, Inc. (IOVA) Earnings Call Transcript & Summary

Welcome to the Iovance Biotherapeutics Special Update Conference Call. My name is Michelle, and I will be your operator for today's call. At this time, all participants are in listen only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Sara Pellegrino, Senior Vice President, Investor Relations and Corporate Communications at Iovance. Sara, please begin.

Thank you, operator. Good morning, and thank you for joining our conference call to discuss recent corporate, clinical and regulatory updates. These updates were highlighted in a press release we issued earlier this morning, which can also be found on our corporate website at iovance.com. On today's call, Dr. Fred Vogt, our Interim President and Chief Executive Officer, will provide a brief introduction and summary about our acquisition of Proleukin, a recombinant human interleukin-2 product as well as our Phase III Confirmatory Study in Frontline Advanced Melanoma. Dr. Finckenstein, our Chief Medical Officer, will review the details for our frontline melanoma trial prior to highlighting new positive clinical data and our regulatory strategy in frontline advanced non-small cell lung cancer, or NSCLC. Dr. Jean-Marc Bellemin, our Chief Financial Officer, will also comment on our cash position and anticipated cash runway. Following the prepared remarks, we will hold a question-and-answer session. Several additional members of our executive leadership team are available to participate. Dr. Igor Bilinsky, our Chief Operating Officer; Dr. Raj Puri, our Executive Vice President, Regulatory Strategy and Translational Medicine; and Jim Ziegler, our Executive Vice President, Commercial. Before we start, I would like to remind everyone that statements made during this conference call will include forward-looking statements regarding Iovance's goals, business focus, business plans, pre-commercial activities, clinical trials and results, regulatory interactions, plans and strategies, research and preclinical activities, potential future applications of our technologies, manufacturing capabilities, regulatory feedback and guidance, payer interactions, licenses and collaborations, cash position and expense guidance and future updates. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected during today's call. We undertake no obligation to publicly update any forward-looking statements. With that introduction, I will turn the call over to Fred.

Thank you, Sara, and good morning, everyone. We are pleased to hold this call to review a series of corporate, clinical and regulatory updates that strengthen our mission to be the global leader in innovating, developing and delivering cell therapies for people with cancer. Today's call will highlight several key updates. First, we have entered into a definitive agreement to acquire worldwide rights to Proleukin, a human interleukin-2 or IL-2 product, for which we have a strong strategic fit and rationale. Next, we have alignment with the FDA on the Phase III TILVANCE-301 confirmatory trial in frontline advanced melanoma. As a result, we can provide additional detail on the study design, which we think is very favorable. As mentioned in the press release, we remain on track to complete our BLA submission and post-anti-PD-1 advanced melanoma this quarter, and we expect TILVANCE-301 to be well underway at the time of potential approval. We also reported new positive clinical data as well as our regulatory strategy in frontline advanced non-small cell lung cancer, or NSCLC, and we look forward to discussing with FDA along with potential registration trial designed to take advantage of these results. Finally, the strength of our balance and sheet including proceeds from our ATM facility, we are well positioned to fund our operating plan into 2024. I'll begin today's discussion with the Proleukin transaction. As we prepare for our first potential approval and commercial launch, as we advance our pipeline in earlier treatment settings in larger clinical trials, we decided to enter into a strategic transaction with Clinigen to acquire worldwide rights to Proleukin and IL-2 product used to promote T-cell activity following TIL infusion. Benefits of this transaction are expected to include immediate and future revenue, security of the IL-2 supply chain and logistics surrounding TIL therapy administration, and lower cost of goods and clinical trial expenses for Proleukin used with TIL therapies. Terms of the agreement include an upfront payment of GBP 166.7 million, a GBP 41.7 million milestone payment upon first approval of lifileucel in advanced melanoma, and double-digit global sales royalties from Iovance to Clinigen. As Jean-Marc will highlight in further detail, this transaction will be financed with efficient cash, is expected to close in the first quarter of 2023, subject to required regulatory approvals and clearances and other customary closing conditions. Moving to our recent clinical and regulatory updates. I would also like to highlight our Phase III TILVANCE-301 confirmatory trial in frontline advanced melanoma. During the fourth quarter of 2022, we reached agreement with the FDA regarding the TILVANCE-301 trial design to support accelerated and full approvals of lifileucel in frontline advanced melanoma as well as a full approval of lifileucel in post-anti-PD-1 advanced melanoma. I will now ask Friedrich to further highlight details of the TILVANCE-301 trial design in our clinical and regulatory updates. Friedrich?

Thank you, Fred. We are pleased to have reached agreement to be moving ahead with the FDA regarding the Phase III TILVANCE-301 trial of lifileucel in combination with pembrolizumab in frontline advanced melanoma. TILVANCE-301 will randomize 670 patients to investigate lifileucel in combination with pembrolizumab in the experimental arm in comparison with pembrolizumab monotherapy in the control arm. Notably, the FDA agreed to dual primary endpoints of objective response rate or ORR to support accelerated approval and progression free survival or PFS in TILVANCE-301 to support full approval of lifileucel in frontline advanced melanoma. TILVANCE-301 will also serve as a confirmatory trial to support full approval of lifileucel in post-anti-PD-1 advanced melanoma. We are confident in achieving our target enrollment and potentially enabling regulatory submissions in multiple geographies by including an appropriate number of global sites such as many large U.S. and European cancer centers as well as sites in numerous countries beyond the U.S. and Europe, where we expect strong enrollment. This trial is now starting up and is expected to be well underway at the time of potential BLA approval for lifileucel in post-anti-PD-1 advanced melanoma. We expect to provide further details on trial design later in 2023. We are confident in this design based on the latest data from Cohort 1A in the IOV-COM-202 trial of lifileucel in combination with pembrolizumab in frontline advanced melanoma, which remained consistent with previously reported robust ORR by RECIST 1.1 and durability of response. We look forward to sharing additional data from Cohort 1A and moving forward with our frontline melanoma strategy this year. Today, we also share top line initial data in patients with non-small cell lung cancer who are not used to anti-PD-1 therapy from Cohort 3A of the IOV-COM-202 trial. We observed a confirmed ORR by RECIST 1.1 of 47% or 8 of 17 patients in Cohort 3A patients treated with the combination of TIL therapy and pembrolizumab. Responses were observed regardless of PD-L1 status and safety was consistent with other studies of Iovance TIL therapies in combination with pembrolizumab. Cohort 3A comprises three distinct clinical subsets of anti-PD-1 naïve metastatic non-small cell lung cancer patients in the advanced setting: treatment-naïve, post chemotherapy and EGFR-mutant after prior treatment with tyrosine kinase inhibitors or TKIs. The observed differences in ORR among patient subsets are informing the design of a subsequent potential registration study. For example, response rates were highest in treatment-naïve patients for whom we observed an 80% ORR in 4 out of 5 patients. And in post-chemotherapy patients, total we observed is 43% ORR in 3 out of 7 patients. In EGFR-mutant patients after prior treatment with TKI, ORR was 20% or 1 out of 5 patients. 2 patients in Cohort 3A achieved complete response and remain on study, which consists of 1 post-chemotherapy patients and 1 EGFR-mutant post-TKI patients. Study enrollment in Cohort 3A remains ongoing, and we plan to present details and updated results at the Medical Meeting this year. Based on initial Cohort 3A positive results, particularly within the treatment-naïve and post-chemotherapy subset, we plan to meet with FDA in 2023 to discuss data and the potential registration path for lifileucel in frontline advanced non-small cell lung cancer patients. The proposed designs supporting this path will take advantage of the findings of Cohort 3A and explore TIL therapy combined with pembrolizumab administered after standard limited duration chemotherapy. Our goal is to offer frontline advanced non-small cell lung cancer patients improved responses and PFS compared with single agent maintenance pembrolizumab. In summary, we are excited about the opportunities for cell therapy as an earlier treatment in frontline advanced melanoma and non-small cell lung cancer. I am available to answer questions about our clinical updates during the Q&A session. And now I will pass the call to Jean-Marc. Jean-Marc?

Thank you, Friedrich. I would like to provide additional details about our cash balance and runway. As Fred mentioned, we are financing the Proleukin acquisition with our existing cash. As of January 20, 2023, unaudited cash position was approximately $477 million, which includes approximately $227 million in net proceeds from an at-the-market equity financing facility raised during the fourth quarter of 2022 and early 2023. In addition, we agreed to terms for a secured line of credit of up to $100 million from Quogue Capital. These proceeds are expected to fund the acquisition of Proleukin and our operating plan well into 2024, including manufacturing and launch readiness activities, launch execution and pipeline advancement in our plan trials. With that, I will hand the call back to the operator to kick-off the Q&A session. Operator?

[Operator Instructions] The first question comes from Michael Yee with Jefferies.

Thank you for the update. Two questions, about both related. Can you give us maybe some color on what the gating steps are still left for the melanoma filing and what supports the confidence to complete that filing in Q1? And whatever you can say on that, would be helpful. And then secondly, I guess, can you give some color on the confirmatory timeline for the melanoma study? And maybe just, I know there has been discussion in the past with other companies about how that -- how much of that study actually needs to be completed, enrollment or substantially enrolled, et cetera. What have your conversations been with the FDA around that as it relates to the filing and an actual PDUFA date?

Yes. So the BLA remains on track. We intend to file the BLA, complete the rolling BLA submission in Q1. The activities that are going on right now include validation activities that we've discussed publicly previously, which are well underway, not to use the term there for the other part of this question too much, but they're underway right now and in good shape, and we think we're going to be able to complete the BLA submission on time. I can't really give you any more details. Most of it is heavy CMC-related work, but it's going well. On the confirmatory timeline and the real well underway the FDA said that we received very positive feedback from FDA at the meeting where we described the study to them on our timings. There was no discussion of any kind of percentage enrollment or anything like that. They thanked us and we're happy with the timings of the study. We had this many more terms last year, of course, we got a lot of feedback then. So they were comfortable with our timings, and so we think that's going to be supportive of our BLA approval.

Our next question comes from Tyler Van Buren with Cowen.

Great. I appreciate the question and nice to see all the updates. Two questions. The first one is, can you give us a sense on the outlook for Proleukin sales moving forward? And then the second one is related to the non-small cell lung update from Cohort 3A. Can you help us understand what duration of response looked like in the 2 subgroups that you're moving forward and especially as we think about the prior update at SEC 2021.

Yes, sure, Tyler. On the Proleukin sales, we're not providing guidance right now on sales. What we -- at some point in the future as a commercial company, we'll be able to do things like that. What we can say is that it will contribute significantly, we think, to the overall sales for the company once lifileucel is approved, because it is a supporting part of the regimen and by capturing new sales, that is -- we think is going to be a very significant addition to the potential sales, potential of lifileucel in melanoma. On the durability of non-small cell lung, it's still early, but we are seeing durable responses. So we're very encouraged by this, and that's why we want to go talk to the FDA, and we'll provide more details on that at a medical meeting. Frederick can talk a little bit more as we go here, but do you see any updates, it's very encouraging in terms of response rate. And like I said, it is still early, but we're seeing durable responses and we're very positive. Operator, are there any additional questions?

Our next question comes from James Shin with Wells Fargo. Our next question comes from Mark Breidenbach with OPCO.

Can you hear me all right?

Yes.

Okay. Great. Just a couple of quick ones for me. First of all, thanks for this update. Can you maybe briefly comment on the amount of COGS savings associated with the Proleukin's acquisition in terms of a rough percentage, that would be fantastic. And the second question is just are you planning to offer any updated guidance on the regulatory package cervical cancer in 2023? Or is it going to kind of focus on long this year?

So Mark, just to be clear, on your first question, you want some idea of the potential savings for clinical trial usage of Proleukin?

COGS. So with respect to lifileucel, so how much will the acquisition of Proleukin impact COGS for lifileucel?

So lifileucel is a separate product. And while we -- it could impact COGS in some way, because we can use it during manufacturing as well. It's not -- it's sold separately as a separate transaction to the hospital. So it's not like -- I don't think it's like a direct effect on cause in that manner, although it can affect manufacturing and improve -- certainly would improve in that case. It's sold separately. What this gives us? It gives us control and security of the supply chain as well as revenue from the sales of Proleukin alongside of lifileucel, which we expect will act essentially like a relaunch of the Proleukin product. When lifileucel hits the market, Proleukin sales should increase much, much more than they ever have in the past, and we'll be able to capture some of that revenue because of this transaction. And then on your question regarding regulatory updates on cervical, hopefully, we can provide an update on that at some point this year. We did provide an update last year on that. When we noted that we were -- we had talked to FDA, and we were expanding enrollment in the study and intended the study to be pivotal. Right now, we're enrolling, and I don't have any updates for you today. But hopefully, we can say more about that at some point this year.

Please stand by for our next question. Our next question comes from James Shin with Wells Fargo.

Can you guys hear me?

Yes. Sorry about that, James.

No, sorry, I think it's something on my end. Just had a question. Will this Proleukin deal have any impact on the Iovance's 3001 program? And given Proleukin only had, I think the label is RCC and melanoma on this label, will Iovance need to gain approval in the lifileucel's other indications?

No. So no and no. We think we're going to continue to develop our own IL-2 asset because it's differentiated from this. However, this gives us an approved asset already, which is the -- as part of the treatment regimen today. This is the product we've been using as part of a treatment regimen all along for our studies, the new asset, the IOV-3001 asset will eventually be in that category, too, but it's obviously early in development. So this -- does that answer your question, James, or...

Yes. And then for the new indications, I guess, like what's the plan for that part?

We're developing this as part of the treatment regimen for TIL therapy. The product is approved for melanoma and renal cell carcinoma in the United States and in a certain number of other jurisdictions. But those are minor indications. So really, what we're focused on is having lifileucel approved and the label for lifileucel will have treatment regimen includes this product with it.

We're not looking at...

Yes, it's not like a classic label expansion. Although by acquiring the asset, it does give us some control over the label, so we can do some things on the label down a lot.

Our next question comes from Peter Lawson with Barclays.

Great. Just on the lung data, I guess, initially it's just -- if you could -- if you had any sense how responses looked in the different PD-1 expression levels?

Yes. And as I mentioned in the press release, Peter, we've seen responses in both PD-1 negative -- PD-L1 negative and PD-L1 positive. They're pretty evenly distributed. Friedrich, do you want to comment at all on this?

Yes, I can -- I mean the data wise, Fred, you're absolutely right. We see responses in both groups, and that's important to know, right? Because the combination here is with pembrolizumab, and there's no chemotherapy involved. So I think that is interesting and important that we are seeing the responses -- meaningful responses in PD-L1 negative patients as well. So that's the basis and the starting point for our thoughts around how to now follow that at subsequent studies in the registrational strategy.

Got you. And the first CRs, were those in PD-1 high patients?

Not necessarily.

Got you. And then I wonder if you could just talk through the -- any kind of prior revenues that we're seeing for IL-2 saying 2022 or 2021 just to give us kind of a baseline?

Yes. I think it's been reported in Clinigen's financials. The product was primarily selling to 2 companies actually, although it sells small quantities around the world for the renal cell carcinoma. Jean-Marc, do you want to make a comment -- well, maybe I can just say, Peter, we can't provide guidance on this, but it was in the low double-digit million sales when they last were reporting their financials. Now they were acquired by a private equity firm, and they are -- so some of that stuff is no longer publicly visible, but that's what they were doing back then.