NextCure, Inc. (NXTC) Earnings Call Transcript & Summary

Okay. Hello, everyone, and welcome to Day 3 of the 2021 Bank of America Healthcare Conference. Thank you for joining this session with NextCure. My name is Alec Stranahan, and I'm the analyst covering NextCure here at BofA. I'm pleased to be joined with -- today, I'm joined by Michael Richman, President and CEO of NextCure. And I believe Michael has some few slides to start, and then we can jump into Q&A at this time. So with that, Michael, over to you.

Great. Well, thank you very much, Alec, and thank you very much for the opportunity to speak at the BofA Securities Conference. It's a pleasure to give you a quick update on NextCure. So hopefully, everyone has the slides in front of them. The first slide really addresses the key vision for the organization, and this involves developing next-generation immuno medicines. On Slide 2 is our forward-looking statements. On Slide 3, these are NextCure's highlights. We call these the 3 Ps, our pipeline, our platform and people. I'll walk you through quickly our pipeline. We're very proud of it over the last 5 years. We've introduced 3 INDs, taking 2 products into the clinic, NC318, which is currently in Phase II; NC410, currently in Phase I; and our recently announced IND filing of NC762. In addition to the pipeline, we have a discovery platform we call FIND-IO. This stands for functionally investigated NextCure discovery in immuno-oncology. And this enables us to discover and validate novel targets that we hope will impact those patients in need and addressing unmet medical need. But then finally, our people. We have a fully integrated GMP manufacturing [indiscernible] to produce clinical materials to support our pipeline. We've recently announced earlier this year, the hiring of Dr. Han Myint, as our CMO. And then finally, as many of you may recall, the company was discovered -- was founded about 5 years ago where -- by Dr. Lieping Chen, who discovered PD-L1 and remains fairly active with the company as both a founder, a consultant and Head of our Scientific Advisory Board. Slide 4 is a high-level overview of our product development pipeline. NC318 is a humanized monoclonal antibody against Siglec-15. We're currently in Phase II in monotherapy. We've also recently announced a combination with PD-1 with our founding institution, Yale University. Thirdly, we've -- we're pursuing a Phase I clinical trial. This is a dose escalation safety tolerability study with NC410 or LAIR2 decoy program. And then finally, NC762, which we'll be initiating clinical trials shortly. In addition to that, we have multiple programs working their way through the pipeline, and we'll -- you'll be hearing much more about those in the coming years. Just to point out, NextCure owns full worldwide rights to each of its programs. So Slide 5, let's briefly talk about NC318. This is a humanized monoclonal antibody targeting Siglec-15. Siglec-15 was in fact discovered by Lieping Chen at Yale University. It's got a unique expression profile unlike many other IO targets since it's expressed, both on the tumors kind of infiltrating into macrophages. This unique expression profile creates an immunosuppressive environment, and we've developed NC318 to counteract the suppression and to activate the immune cells to kill the tumor. I will briefly talk about an update on the program with respect to our newly developed CLIA-validated immunohistochemistry test that we'll be using for selecting patients. We recently announced our collaboration with our founding institution, with Yale University, to return to lung with respect to looking at both monotherapy and combination with an anti-PD-1. And we'll be applying a lot of the lessons we learned with respect to patient selection, looking at combinations and also addressing an extensive biomarker analysis with our future programs. So just to kind of recap for those that have been following the company, you may recall, NC318's history in Phase I, where we had -- we conducted a dose escalation study, 49 patients, 15 different tumor types. We looked at all comers at the time. At that time, about 25% of those patients were non-small-cell lung cancer, we had 1 CR, we had 1 PR and 3 stable disease. Happy to say that the CR and PR subjects remain on therapy. Our Phase II, which is ongoing, the recommended Phase II dose at 400 mgs every 2 weeks, we're conducting biopsies. And we've announced in the past that we have 2 PRs, 1 in head and neck, 1 in triple-negative breast, both in which we've advanced the Stage 2 of the Simon 2-stage study. Moving forward, we'll be selecting for S15-positive patients. As mentioned earlier, we're also conducting study with Roy Herbst and Scott Gettinger of Yale. These are leading lung cancer oncologists, and we're very fortunate to have the opportunity with them coupled with the supply of pembro by Merck. This is a 3-arm study, a mono study looking at S15-positive patients in a PD-1 refractory setting. And then quite interestingly, looking at the combo with pembro, both in PD-1 refractory and PD-1-naive patients. I think one of the more important updates and something many of you know we've been working on for a long time is a clear validated immunohistochemistry test. So this is a highly specific, sensitive monoclonal antibody that helps us detect S15 expression in patients, both on the tumor and within the stroma. So we'll be taking tumor biopsies from patients. We'll be validating those with our CLIA-validated tests and enriching for selection for S15-positive patients moving forward, and we'll be reporting an update on this trial by the end of this year. Let me transition into NC410, our second program. So this works through a decoy mechanism involving LAIR1 and LAIR2. LAIR1 is a co-inhibitory molecule expressed on dendritic cells and T cells that creates this negative signaling in immunosuppressive condition. And what we've tapped into is what Mother Nature does naturally, she created a second gene called LAIR2, which is much more specific to the ligands than LAIR1. It ships down an inhibitory response that enables one to restore immune function. Quite interestingly, the mechanism of action works through the extracellular matrix. So we believe this interaction is having an impact on changing the architecture of the ECM moving forward, which will hopefully restore immune function and treat patients. At SITC last year, we had 2 posters with respect to the mechanism of action in NC410, and also looking at combination therapies in 3 independent preclinical experimental works with respect to looking at PD-1 and PD-L1 combinations. And we'll have an upcoming poster at ASCO with respect to kind of an in-trial in progress. Mechanistically, LAIR1 and LAIR2 both bind 1 of 2 ligands, both collagen on the tumor as well as C1q, which is part of the complement pathway. LAIR2 competes with LAIR1 to restore immune function. And what we've done is we've just basically taken what we've learned from Mother Nature. We've created a bio mimic of LAIR2 to which enables us to outcompete LAIR1 binding to activate T cells and dendritic cells to kill the tumor. As mentioned earlier, we're currently in the Phase I portion of a Phase I/II human study. This is a dose escalation and safety and tolerability study. We're looking at multiple advanced and metastatic solid tumors. Most of these tumors are fairly collagenous-based since LAIR1 and LAIR2 bind collagen within the extracellular matrix. So we're looking at lung, ovarian and pancreatic as well as other tumor types. And we'll be providing an update on the Phase I trial by year-end. Transitioning into our third program, again, within 5 years is NC762, is a humanized monoclonal antibody against B7-H4. We screened and evaluated many antibodies to develop this particular candidate that has a unique mechanism of action in directly killing tumors that is independent of T cells. NK cells have been shown to enhance this tumor activity, and we've been looking -- and our plan is to look at a number of gynecological cancers as well as lung cancer moving forward, where we know B7-H4 is heavily expressed. So the IND is filed, unique mechanism of action. We -- many lessons learned from NC318, so we will have an assay as we will with NC410 to select those patients that express the target that we believe will have -- be most responsive to treatment, then we'll be evaluating extensively biomarkers. I'd like to just touch base on our manufacturing. It's not something we often talk about, but a critical and competitive advantage, especially during the time of COVID, where it's difficult to get biologics manufacturing capacity. We had 1,000 liters of capacity during COVID over the last year. We doubled that capacity by adding another bioreactor. This provides an efficiency that enables us to produce clinical material much more quickly than outsourcing that others might do. Also provides us a lot of flexibility in scheduling, efficiency from an operation and capital use perspective and then also managing the quality of the clinical material that we produce. All 3 of our trials will be using clinical material produced here at NextCure. And then finally, we have our platform. Again, this is FIND-IO, functional integrated NextCure discovery. This is a platform that we industrialized, automated and robotized from what's leading and originally developed and how we discovered PD-L1. And we're applying these screens and these validation tools to develop this whole next generation. And you'll be hearing about a lot of these targets working that way to the pipeline. Independent of oncology, there are opportunities to diversify into other areas such as autoimmunity and inflammation and also neuro as it relates to the targets that we've been discovered. Anticipated near-term milestones on Slide 15. As mentioned earlier, we'll provide an update by year-end for on both the NC318 Phase II trial as well as the NC410 Phase I study. Q2 of next year, we'll be focusing on the outcome of our collaborative work with Yale looking at the mono and combo studies with NC318. And then second quarter next year, we'll provide an update on the NC762 study. So thank you very much for the opportunity to give a brief update. And just in summary, NextCure has taken a very focused approach over the last 5 years. We have a lot of momentum, particularly in 3 things pretty much in the clinic, leveraging our platform and applying all this to develop next-generation immuno medicines. So thank you, Alec.

Great. Thanks, Michael, for that overview. Very helpful. So now we can transition to Q&A. I have a few here, but for those dialed into the webcast, to log a question, simply submit it through the Veracast platform, and I'll read it off. So Michael, maybe we could just start on NC318. So we obviously saw some early responses from the Phase I, and the Phase II study is ongoing. Can you maybe talk about the S15 patient selection you're planning to implement, I think, starting in 2Q? Is this active already? And I guess, could you just talk a little bit about the assay that you've built?

Sure. It's a great question. So what we've learned in developing these next-generation immuno medicines is that when you're looking at novel targets and first-in-class proprietary molecules, there are 3 things we have to get right: the target, the candidate and the patient. So focusing on the patient, we've realized that there's been some learning lessons along the way, how important patient selection is. So we're -- a plan moving forward at the end of this quarter to continue with the Phase II enrollment is we've developed an immunohistochemistry base test that enables us to take biopsies from patients and look at S15 expression both on the tumor as well as looking at the M2 macrophages within the stroma. So we think this gives us a real competitive advantage to enrich for those patient cohorts that we believe will be most responsive to therapy. This was not an easy undertaking. And as many of you know, has taken a little bit longer than anticipated. It started with the work in collaboration with David Rimm, a leading pathologist at Yale, where we screen many monoclonal antibodies with respect to murine, rabbit and other types of monoclonals. And through that effort, we were able to define a specific one that gave us the specificity and the sensitivity. Once that was done, we then needed to work closely with our CRO to do additional development of the assay and the validation. Long-term process. The nice thing is we've been applying the same process now to NC410 and NC762. So to answer your question, the test is ready to go. We're in the process of submitting an amendment to the FDA. Hopefully, we'll hear back shortly, and we'll start screening patients and look for those S15-positive individuals.

Okay. Great. And maybe you could talk a little bit about the investigator-led study at Yale. It's going to be NC318 in non-small cell lung and who has obviously monotherapy but also in combination with Keytruda, I believe. So could you maybe just talk a little bit about the rationale continuing to pursue non-small cell lung cancer given the Phase I data and sort of your thoughts around patient inflection as I think in terms of patient selection for this stuff in terms of the prior PD-1 exposure?

Yes. Thanks, Alec. Thank you. There was a little bit of a delay. Yes. So with respect to the Phase I study where we saw the PR and CR in 3 stable disease in non-small cell lung cancer, that gave us hope that moving forward, we would be able to treat this population. Unfortunately, where we enrolled lung cancer patients in the Phase II component, we did not see any responses. When we went back and looked at the biopsies, we saw very few patients that were S15-positive. So at that point, that led us to believe that S15 selection was going to be more important. So during middle of last year, we put lung cancer on hold. We are moving forward with head and neck as well as triple-negative breast cancer, where we saw PRs in each of those indications. So through our founding institution, Yale, where they were involved is a site in the Phase I study, they remain very interested in Siglec-15 biology. We got to know Roy Herbst and Scott Gettinger quite well, leading lung cancer specialists, and they were interested in doing a NC318 study in combination with pembro based on some of the preclinical data that we have generated in combination with anti-PD-1. So based on that, coupled with a very clear design that our CMO, Han Myint and his team have been focused on in collaboration with our colleagues at Yale, we have a real great strategy to move forward. It has a monotherapy arm where we will select for S15-positive patients. These will be PD-1 refractory patients. And then there'll be 2 arms with respect to the combination with pembro, where we'll be focused on refractory and naive patients. So we think this is kind of a very important move for the company and not giving up on lung. We still believe that both the preclinical data, all of the immunohistochemistry expressing beta coupled with the Phase I data that we've observed and Siglec-15 is playing a very important role and working through our Phase II and now working with Yale, we'll be able to answer some of these key questions in monotherapy in combination with pembro and then also climb an extensive biomarker analysis. So there's a lot of traditional work in immunophenotyping, looking at cytokines and chemokines. We'll be looking at soluble Siglec-15, which could be playing an important role in the mechanism of action. We'll be applying NanoString technology. So we'll be able to look at both tissue and things within the blood to determine mechanistically is NC318 doing what it needs to do.

Okay. That makes sense. And maybe switching over to NC410. Obviously, LAIR1 is another novel target that hasn't really been pursued by many others. So could you maybe just talk about LAIR1? Your rationale for going after this molecule in sort of the preclinical observations that have supported your confidence in the patient study?

Yes. So LAIR1 has been around for a while. It was first discovered in the context of autoimmunity by Linde Meyaard, who's actually one of our collaborators at the University of Utrecht now. Lieping and our Head of Discovery, Dallas Flies, actually worked on LAIR1 many years ago because it's a co-inhibitory molecule, similar to other immune modulators that people are evaluating. The LAIR1 biology is quite exquisite because it's a natural process in which the tumor has hijacked the immune system to prevail. So LAIR1, as we were describing earlier, is expressed on T cells and dendritic cells. And by binding one of its ligands, either collagen on the tumor or C1q, which is part of the complement pathway, you have a negative signaling effect, which creates an immunosuppressive condition in the TME and when that allows the tumor to grow. Somewhere along the way, Mother Nature duplicated the LAIR1 gene to create LAIR2. It's 70% homologous to LAIR1, but it differs in 2 respects: it's soluble, so it's not membrane bound; and it binds for collagen and C1q with higher affinity. So what we've done in creating NC410 is this bio mimic that works as a decoy similar to LAIR2 to basically counteract LAIR1 binding to its ligands, enabling us to activate the T cells and dendritic cells to restore immune function. So the preclinical data that we've generated mechanistically has demonstrated that this works exactly the way Mother Nature probably intended for it to do. We've generated a significant amount of in vivo data to demonstrate the biological activity and the function of NC410. But I think quite interestingly, some of the combo data that we reported on at SITC last year, we presented 2 posters, one on the mechanism of accident of NC410. And two was the collaboration we've had with NCI, where we're looking at bintra, which is a PD-L1 TGF-beta trap in combination with NC410. And we saw exquisite and impressive tumor killing in those experiments. Quite interestingly, when we went back to challenge the mice, they maintained a memory immune response and the tumor has not come back. We actually repeated the findings internally here at NextCure with PD-L1. And then thirdly, also with our collaborator in the Netherlands. So in 3 independent studies seem very important combination study of NC410 with a PD-L1-like molecule. And what we believe is happening is you're changing the extracellular matrix architecture. And by doing that, it may enable PD-L1 to do certain things beyond what it might be able to do on its own and seeing this synergistic effect. So we're learning a lot about the biology of LAIR1. We think NC410 is some real special properties from a functional perspective. And now we're really excited as we work through the Phase I dose escalation study. We're about midway through the cohorts. And as I mentioned, we'll be reporting an update on that trial by year-end.

Okay. Okay. That makes sense. We're definitely looking forward to the data update later this year. I think you said that we may be seeing some data from 410 at ASCO as well. I think I heard you right.

Yes. So the -- yes. So this is basically will just be pretty much a update on trial update on trial in progress. So we'll provide some additional preclinical data as well as kind of a design of the trial. And this is being shared kind of in anticipation of the more focused clinical data at year-end.

Okay. All right. That makes sense. And maybe switching over now to NC762, which is your newest asset. Should we assume that the Phase I will be structured sort of similarly to NC318 and NC410? Obviously, if you're planning to improve selection maybe from the get go on this study as well.

Yes. So looking at NC762 focused on B7-H4, yes, the trial design is pretty similar to what we've seen. It's pretty much a 3x3 design. It's a dose escalation study, looking at safety and tolerability. Obviously, we'll be looking very closely, clinical samples that we could evaluate from a biomarker perspective. But mainly, we're looking at safety and a recommended Phase II dose that we could then move forward with a Phase II, where you will be using a CLIA-validated test to select those patients that are expressing B7-H4 and that we think will be most responsive to NC762.

And I guess if you look at the sort of expression patterns of B7-H4, are there any sort of tumor types that jump out that might be more amenable to treatment? I guess, sort of along those lines, I mean, B7-H4 is also expressed in some other immune diseases as well. So are there plans to begin apply NC762 to those indications [indiscernible]?

Yes. That's a great question. So B7-H4 is overexpressing a number of different tumor types. People have worked on it for a fairly many, many years. I think our molecule has a unique mechanism of action and approach. It's overexpressed in many gynecological cancers. So you see it really light up when you do the immunohistochemistry studies in breast cancer, in ovarian cancer, fallopian tube cancer. And of course, you see it in other types of cancers such as non-small cell lung cancer. So we think this has a unique opportunity. I think the mechanism of action with respect to direct tumor killing is somewhat differentiated. It enables us to kind of position this in mono therapy. With that said, we will evaluate combinations if that makes sense from a life cycle management. There are others working in the field looking at EDC types of approaches. If need be, we can certainly add a linker and a payload to it. But at this point, we don't think we need this to see the clinical effects. So we're obviously looking forward to starting that trial and getting that into patients to see what clinical impact it will have.

Okay. That makes sense. And maybe just wrapping up. You guys have alluded to plans to file at least 1 IND a year over the next few years. So the early stage pipeline is definitely not standing still. So maybe that will be great if you provide a little bit more color on the sort of cohort you guys have been doing and whether any of these INDs over the next few years to actually be maybe outside on oncology, say in FIND-AI or FIND-MIND or is the plan really just to go full speed ahead in cancer?

Yes. So we've been developing our platform, FIND-IO platform over a number of years. And our goal is still to ultimately file 1 IND per year. We have a richness of assets. Each of these targets are novel, first-in-class and proprietary. Each of these targets has functional activity that impacts the immune system. So it could be stimulatory or inhibitory. And when we look at these targets, many of them are overexpressed on tumors or various immune cells. But we've also learned over the years that some of these targets will have applications in like autoimmunity or neuro. And I know you -- sorry, you did mention autoimmunity in the case of B7-H4. And yes, there is applicability with respect to a fusion protein that could have impact on T cell-mediated autoimmune diseases. So we're very interested in looking at the other side of the immune system, and this screening platform that we've developed enables us to look at these targets in a different way. Very similar to CTLA-4, where the antibody focuses on cancer and the fusion protein Orencia focuses on arthritis. So we're always looking at that both sides of the pathway with respect to a ligand and a receptor in whether we want to develop an agonist and/or antagonist to turn on the immune system or to turn it off in the case of autoimmunity. Neuro is a really interesting area. So we're very interested in looking at the convergence of neuroscience and inflammatory disease. And many of the targets that we pull out of our screens, Alec, when we go back to the literature, you find out that they have roots in neuroscience, or in some cases, even skeletal biology. And we think this is really interesting because before we had modern day immune systems, we have skeletal systems and we had neuro systems. So a lot of these targets that we've identified, we hope we'll have the opportunity to look at this kind of next wave of unmet medical need in looking at CNS disorders, and we hope to have some of these targets play a role in that.

Okay, very interesting. Looking forward to definitely see the pipeline progress and enter with data later this year. So I think we're out of time, so we'll leave it there today. But Mike, I really wanted to thank you for taking the time to participate on the conference and for the great overview of your business. Really appreciate it.

Well, thank you very much, Alec. It's been a real pleasure. And thanks for sharing your great questions and giving us this opportunity.

Of course. All right. Take care. And thanks to everyone on the line for your interest. All right. Take care.

Thanks. Bye-bye.