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

Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. 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. For this session, we have Michael Richman, CEO of NextCure. Welcome, Michael.

Thank you, Jeff.

For those who may not be familiar with NextCure, can you provide an introduction?

Sure. I'd be happy to. And first, I'd like to thank you, Jeff, and Morgan Stanley for the invitation for NextCure to present today. Hopefully, you have a copy of our slides that people can -- that are attached and people can walk through. First and foremost, NextCure was started about 5.5 years ago with a focus on developing next-generation immunomedicines. Our next slide is just our forward-looking statements. I'd like to kind of walk you through what we call the three Ps at NextCure, our pipeline, our product and our people. Our pipeline, I'll walk you through briefly, today, is focused on our first leading product, NC318. This is a humanized monoclonal antibody targeting Siglec-15, currently in Phase II trials. Next, we have our NC410 trial. This is currently in Phase I and focuses on the LAIR pathway to restore immune function. And then finally, most recently, we announced the initiation of our NC762 trial, which focuses on B7-H4. With respect to our platform, our product strategy actually has been somewhat of a triangulation, including patient selection, looking at extensive biomarkers, potential for combination products and independent of our product strategy, we also have what we call our FIND-IO discovery platform, which really sets the stage for building the pipeline and building value in the company in the future. And finally, the third P has to do with people and the experience they bring. We're a fully integrated organization. In fact, we control the clinical trial supply through our own GMP manufacturing. We have an experienced leadership team that supports these 3 clinical programs as well as the platform. And the company was founded by Lieping Chen at Yale University, who discovered PD-L1 many years ago, and that's been instrumental in the IO field. The next slide focuses on our product development pipeline. Again, quickly, I just mentioned NC318 targeting Siglec-15. We'll be providing a data update towards the end of this year. We're developing this in monotherapy. Quite aligned with that strategy, we're also working with Scott Gettinger and Roy Herbst at Yale University that are conducting a combination study of NC318 with pembro. Our NC410 study, we'll also be providing an update later this year on the Phase I clinical trial and then NC762 is just starting with respect to the Phase I study. I should note that we have worldwide rights to all of these programs. Slide 5, let me get into NC318. As I mentioned, this is a humanized monoclonal antibody targeting Siglec-15. S15 is uniquely expressed both on tumors and myeloid cells, in particular, M2 macrophages. And S15 and NC318 promotes T cell function through activation and interferon production that ultimately sets the stage for T cells to kill the tumor. Some of the highlights we'll walk through briefly is this triangulation strategy that we've developed with respect to testing and selecting patients, with respect to biomarker evaluations and with respect to combination therapies moving forward. The next slide talks about the Phase I study that we've reported on in the past. This involved 49 patients, 15 different tumor types. We saw a CR and PR in lung cancer. Both of those subjects remain on therapy today. The Phase II study that's ongoing now has been shifting in the direction of now selecting for S15 patients using a CLIA-validated test. We recently announced the resumption in enrollment of non-small cell lung cancer patients into that therapy. And we've increased the dose from the 400 mg dose every 2 weeks to now looking at 800 mg weekly, to enhance drug exposure. And in the Phase II that we reported on in the past, and we'll provide an update on, were 2 confirmed PRs, 1 in head and neck and 1 in triple-negative breast cancer. As I mentioned, we're also conducting a study in collaboration with our colleagues at Yale University, looking at a 3-arm approach with respect to looking at S15-positive patients in monotherapy. And we're also looking at 2 arms in combination therapy with pembro, one with respect to PD-1 refractory patients and the other with respect to PD-1 naive. As I mentioned earlier, we've taken this triangulation approach with respect to selecting patients, developing a significant repertoire of biomarkers and then thirdly, looking at combination approaches. This is just an example of the 3 tumor types that we're looking at with respect to Siglec-15 and where we're now requesting tissue biopsies as part of the consent process. We're testing those biopsies for S15 positivity to enrich for those patients that we think will be most responsive to NC318. Let me transition into our second program, NC410. This works through a novel decoy mechanism and through a LAIR-2 fusion. I'll walk you through the biology quickly because I think LAIR-1 really sets the stage for a major direction as science is moving in, in understanding the extracellular matrix with respect to tumors and the tumor microenvironment. So NC410 works through the LAIR pathway and LAIRs involved in enhancing T-cell activation and ultimately, tumor killing. As we saw with NC318 regarding some of the highlights, we're developing an IHC assay that we'll use for patient selection in Phase II. We have an extensive repertoire of biomarkers, which will provide insight into the mechanistic and clinical correlations that we hope to see with NC410. We've seen significant synergies in combination therapies regarding our preclinical work. And we've reported on some of this work earlier this year with respect to our ASCO poster on the trial and in a recent eLife publication. This next slide shows really the important progression and advancement in understanding the impact of collagen and the extracellular matrix. And what we call the ECM, with respect to the extracellular matrix, is we know that it's associated with immune suppression. We also know that the extracellular matrix is predominantly made up of collagen, one of the key ligands that LAIR-1 and LAIR-2 bind to. And it's this increase in collagen that correlates with PD-1 and PD-L1 resistance. And we believe that by overcoming this collagen within the extracellular matrix, we can help alleviate immune suppression to restore immune function. In this next slide, let me walk you through briefly the extracellular matrix and the role of LAIR-1. So LAIR-1 is a co-inhibitory molecule, and it uniquely binds 1 of 2 ligands. One is collagen; and the 2 is looking at C1q. In this next slide, you could see the impact of a second gene in protein called LAIR-2. So like LAIR-1, where they share significant homology and binds collagen in C1q, LAIR-2 differs in 2 respects. One is it has greater affinity for collagen; and two, it's soluble. So LAIR-2 acts as a competing decoy to prevent the negative signaling to LAIR-1 to restore immune function. This next slide shows the molecule that we've created, and what we call NC410. This is a dimeric fusion protein representing LAIR-2. And as mentioned earlier, uniquely binds collagen and C1q to change the architecture of the extracellular matrix and to restore immune function. Slide 14 is just some of the recent data that we've generated both from a monotherapy and a PD-L1 combination therapy where we see significant tumor reduction and synergistic effects in combinations. Slide 15 just kind of outlines, at a high level, the NC410 Phase I study. We're currently midstream through our dose escalation cohorts, where this is a 3x3 design, looking at safety and tolerability. We're looking at a number of collagenous tumor types, including lung, ovarian and pancreatic. And as I mentioned, we'll be providing an update on this trial later this year. Our third program, NC762, worked through a unique mechanism of action in binding B7-H4, overexpressed on many tumor types, including gynecological cancers. We've initiated the Phase I trail, and like our other 2 programs we're developing an immunohistochemistry-based test to select for those patients that we think will be most responsive. Slide 17 just kind of briefly walks you through the trial design. Again, it's a 3x3 dose escalation study looking at multiple tumor types. And our goal is to, we've initiated the Phase I, and we'll be reporting an update on this trial sometime during the middle of next year. Slide 18 just highlights our GMP manufacturing. We doubled our capacity last year, which really sets the stage for supplying clinical material for all 3 of our trails moving forward. Slide 19 just talks about independent of the pipeline, we have a platform that is uniquely established to select for novel first-in-class proprietary immune modulators that are really setting the stage for the sustainability and continued growth of the organization moving forward. Slide 20 is just some of our near-term milestones. I mentioned NC318 and NC410, we'll be providing an update on the Phase II and Phase I study, respectively. And as we enter 2022, we'll continue to update individuals on these various programs. So finally, NextCure is a fully-integrated organization with a very focused approach in leveraging its platform and moving its pipeline moving forward. So thanks, Jeff. I'll pass it back to you.

Great. Great. So in the past you've indicated that Siglec-15 and PD-L1 might have limited overlap. But you've also seen signs that S15 and PD-L1 may be dynamic. So can you talk about your latest thinking on Siglec-15? And how does that play into your decision to select for S15-positive patients through screening biopsies?

Yes, it's a great question. So from the beginning, we always thought looking at S15 expression as a means to select for those patients that we think would be most responsive to NC318 made sense. When we first started the trial, we did, as you pointed out, notice there was this nonoverlapping expression of PD-L1 and Siglec-15. So the thought process was that if we -- based on this inverse relationship, if we selected for PD-L1 low, we would enrich for patients that were S15 high. We continue to believe that [ nonoverlapping ] expression. Unfortunately, what we saw in the Phase II, when we selected patients for PD-L1 low, we looked at archivable historic biopsies. And when we looked at the fresh biopsies later, we noticed that PD-L1 expression, as you mentioned, was dynamic. So it was changing. So many of the individuals that we thought would be in risk for S15 positivity or in fact PD-L1 high, that had changed over time. So that made our thinking evolve from the standpoint of now developing this CLIA-validated immunohistochemistry test, where we now take consent from patients, we retrieve biopsies, and we send those biopsies to our CRO, where using the test, we can now screen for those patients that are S15-positive either in the tumor or looking at immune cells in the stroma. And then based on that positivity, we can then continue to treat those patients, and hopefully, they'll be most responsive.

And for your Phase II, maybe can you talk a little bit about how you think about the different tumor types. So you mentioned how there were 2 responders in lung. Maybe if you can just talk about the different tumor types that you're looking at and the rationale behind those?

Yes. So we've always been driven by the data sets of expression with respect to looking at various tumor types. And this goes back to looking at the TCGA nucleic acid expression where we see S15 expressed on a number of different tumor types, including the 3 that we're pursuing in lung, breast and head and neck. We then complement that data with respect to the immunohistochemistry data where we've looked at tumor microarrays in collaboration with David Rimm at Yale and also on our own working through our CRO. So there, we could look at many different tumor types and look at S15 expression either in the tumor stroma and try to define what those cutoffs might look like, as we advance the program moving forward. So now based on that combined data set, we can now select patients that we think will be most responsive. So now when we couple in the Phase I data, as you point out, where we saw, I think we looked at 13 patients out of 49 patients with non-small cell lung cancer. As for the PR and CR, those patients remain on therapy today, we saw multiple stable disease. That kind of sets the stage for advancing into the Phase II with lung. And then we also originally included ovarian, breast and head and neck also.

And as you talked about in your introduction, you guys have started enrolling lung cancer patients again. Can you discuss what led to that decision?

Yes. So we never really gave up on lung. We did pause last year when we were doing the Simon 2-stage Phase II study and, unfortunately, did not see any clinical responses based on the lung cancer patients that we have treated. So putting a pause on that with respect to taking the time to develop the test. During that period, we entered into a relationship with Yale to conduct the combo study. As I mentioned, it's a 3-arm study, looking at NC318 in monotherapy and then also looking at NC318 in combination with pembro with respect to PD-1 refractory patients and PD-1 naive patients. So that then -- when we started moving forward and we started looking at the statistical data and looking at stable disease and looking at various different patient populations, we concluded that really lung cancer made a lot of sense based on the S15 expression profile data, both from nucleic acid and the immunohistochemistry perspective. That, coupled with the data that we have seen from the Phase I. So we added that back into the cohorts that we were going to investigate further.

And then another recent change that you guys have made that you talked about was increasing the drug exposure. Can you talk about what led to this decision? And then what you hope to see with that change?

Yes, it's a great question. So we've been doing a lot of biomarker and biostatistical analysis with respect to the impact of biomarkers and how they changed based on different dosing, based on different tumor types. And based on this analysis and in particular, we've been looking at soluble versions of different immune modulators. And in this case, we've looked at soluble S15 and the change that has -- that occurs during the dosing process. And we concluded that if we put much greater drug exposure upfront in treating patients that we're much more likely to see some sort of clinical benefit. You may recall that we did look at an 800 mg dose in the Phase I dose escalation study, although, that was every 2 weeks. So we believe the change to 800 mg weekly, hopefully, will give enough drug onboard to bind S15 and to hopefully see some sort of clinical impact.

Great. And for the update that we're expecting in the fourth quarter, what should we look for in that update? And what does -- what doses might we see data for?

Yes. So with respect to the doses, obviously, we're going to update people on the original Phase II, which was 400 mg every 2 weeks. We'll be doing a full analysis of that Phase II data in the context of the Phase I data, with respect to biomarkers and statistical analysis. Moving forward, now where we're screening for patients with a CLIA-validated test and at the 800 mg weekly, to the extent we have patients enrolled in this trial, we'll also provide an update on those patients, too.

Okay. For NC410, what should we look for that -- from that Phase I data later this year?

Yes. So NC410, this is a traditional 3x3 Phase I safety and tolerability study. We're looking at 8 dose escalation cohorts. We're midstream through those cohorts. So by year-end, when we provide an update, we won't be completely through the trial, we're pretty much close to the end. Independent of looking -- reporting traditional safety and tolerability, obviously, any clinical observations we make we'll put on. And then I think, quite interestingly, will be the biomarker data from the Phase I readouts. So unlike a lot of trials where we traditionally look at immunophenotyping, we look at cytokines, we look at chemokines, NanoString, in the case of LAIR, because of the unique biology, we can actually measure soluble LAIR-1, soluble LAIR-2. We can measure both of the ligands, C1q and also what we call CDPs. These are the collagen degradation products. So as I quickly went through earlier, NC410 is binding collagen and changing the architecture of the extracellular matrix. And by decreasing the density of collagen, which we'll be able to measure in the biomarker context, we think this will open up the ability for combination therapies to work more effectively, where instead of your molecules being blocked by the ECM, this loosening of the matrix itself may create an opportunity to mechanistically and functionally impact treatment.

And how do you think about which tumors to target in the Phase II portion? Or how will you make that decision?

Yes, it's a great question. So like we mentioned in Siglec-15, we look at LAIR-1 expression. And we look at nucleic acid expression as kind of the first get-go to give us kind of a reference frame of those tumor types that are expressing LAIR-1. We then couple that with the immunohistochemistry studies that we're doing with respect to developing the CLIA-validated test that we'll also use in this trial in the Phase II by looking at LAIR-1 expression. So those 2 things will give us some insight into which tumors are expressing LAIR-1. We then now couple it based on the understanding of the mechanism of action that we walked through in collagen. Many of these tumors are fairly collagenous. One can look at pancreatic cancer and other tumor types that have a significant amount of collagen that we believe, if disrupted, may have the opportunity to have some sort of therapeutic benefit through NC410 or potentially combinations moving forward. So we're looking at obviously all-comers in the Phase I. But as we've reported on, we think lung, ovarian and perhaps others may have -- may benefit from NC410 treatment.

Okay. And you talked about your third asset, NC762, earlier. Can you talk about what you saw in the initial in vivo data at AACR?

Yes. So NC762 is a humanized monoclonal antibody binding B7-H4. This is a target that's overexpressed in many different tumor types, in particular, gynecological tumors. So you see it overexpressed in fallopian tubes, ovarian and breast. And what we -- when we were developing an antibody, obviously, we were screening for a lot of different antibodies with unique functionality. We've always felt, in next year, that we have to get 3 things right. The target, which we know is expressed on the tumor, the candidate, which is having the right antibody and the engineered molecule. And then three, going into the right patient population. And that's where these screening tests become important. So with respect to the mechanism of action, and that we know others have worked in the B7-H4 space, it's an antibody that has a unique functionality. It seems to have a direct tumor killing effect. It could be potentially through an ADCC mechanism. However, we believe that based on our preclinical data to date, this works independent of T cells. We also know that NK cells play a very important role in perhaps augmenting this effect. So based on the various immune cells that are being impacted through our in vitro studies, looking at B7-H4, we believe that this unique antibody will have monotherapy effect, and may ultimately develop it through combinations in the future, too.

Okay. Great. Maybe in the last couple of minutes, I know that when you guys went public, FIND-IO was fairly important part of the story. Maybe you can talk about that and any updates on FIND-IO?

Sure. Thanks. Yes. So FIND-IO is really our platform. It's an acronym for Functionally Integrated NextCure Discovery. And what we're doing with FIND-IO is basically, we're walking through the entire human proteome, using significant assays and screening tools to look at any given protein that may have some functional immune response, whether it's stimulatory or inhibitory. We've identified and continue to identify novel targets. A number of them are working through the validation and early stages of the pipeline. And I think in the years to come, you'll hear more about some of these novel targets, and perhaps not only in cancer, but they may even have -- some of these targets may have applicability in the neuroscience area or even in the autoimmune space.

Great. It looks like we'll have to leave it there. Thanks so much for your time, Michael.

Yes. Thank you, Jeff. Great speaking with you.

Great. Thank you.