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

Ladies and gentleman, the program is about to begin. Reminder that you can submit questions at any time via the ask questions tab on the webcast page. At this time, it is my pleasure to turn the program over to your host, Alec Stranahan.

Okay. Hello, everyone. Welcome to the end of day 2 of the 2022 Bank of America Healthcare Conference, and thanks for joining the session with next cure. My name is Alex Stranahan. I'm Vice President and Senior Biotic analysts covering NextCure here at BofA. And I'm pleased to be joined by Michael Richman. President and Chief Executive Officer of NextCure. Michael, thanks for joining.

Thank you, Alec. Great to be here, and thanks for including us in this year's conference.

Great. Great. So I believe I believe Michael is going to run through some prepared remarks to start, but then we'll jump into Q&A after that. So Michael, over to you.

Great. Thanks, Alec. Yes, I thought it would be helpful just to include some opening remarks on NextCure and kind of where we've been, but more importantly, where we're going. We've been at this for about 6.5 years. We're located in Beltsville, Maryland, and we're focused on next-generation immuno medicines, in particular, looking in the oncology space. Happy to say that we now have 3 clinical candidates, novel first-in-class proprietary programs that will all have readouts in 2023. And our fully integrated organization that includes GMP manufacturing, extensive network of biomarker tools and the ability to develop test to select patients are now being utilized in each of those 3 clinical trials, which will have readouts next year 2023. So we're really excited about telling you about our first program, NC410. This completed Phase I. We reported those updates at SITC and we'll be -- we've already started enrolling in the Phase Ib/II. Our second program in the pipeline is NC762, it is a anti-B784 program. Also at SITC complete provided an update on the Phase I clinical trial and have already started enrolling in the expansion phase, and we'll also provide an update towards the end of next year on that program. And then finally, our third clinical program that we recently announced, NC525, but we filed the IND in October. We're fortunate to get the 30-day clearance from the FDA, and we'll start enrolling patients beginning of next year. So looking forward to telling you a little bit more about each of those 3 programs. Independent of our fully integrated organization and 3 clinical candidates. We also have a very strong balance sheet of $169 million as of the end of last quarter, which provides us a runway into mid-2025 and more than ample resources to advance each of our 3 programs. So I'm happy to take your questions today, Alec.

Great. Thanks, Michael. So now we'll jump into the fireside portion. I've got a few here, but for those on the line, if you do have a question, feel free to send them over through the Veritas platform, and I'll read them off anonymously as we go along. So Michael, maybe I want to get to the active pipeline because, obviously, that's where the action is going to be. But maybe just to start up front, you recently made the tough choice of discontinuing development of NC318, which you acquired, I guess, through Yale. That must have been a difficult decision. So if you could just walk us through your thought process here given the data and your priorities looking forward.

Yes, great. Thanks for bringing that up. Even though we've been at this for 6.5 years, it feels like we have a very long history and NC318, which was our lead program, certainly was a big part of the company for the last -- since its conception. Very difficult decision to make. Obviously, I want to thank the investigators and the patients for participating in the study. With that said, recently, we came to the conclusion that the inability to reproduce some of the earlier clinical observations that we have in the Phase I ENI trial regarding some of the clinical responses we have seen in lung cancer and a fair number of stable disease as we came to the conclusion that we could not reproduce some of the earlier findings in a monotherapy setting. We actually did a lot of modifications along the way with respect to narrowing down the tumor types, increasing the dose increasing the frequency, administering patient selection. But even after dosing over 100 patients, we had to make that difficult decision. With that said, we still believe the target, and we're still supporting our colleagues at Yale University who are conducting a combination study of NC318 with pembro, where Merck is kindly providing the drug to support that study. We stay very engaged collaboratively with the Yale team, the focus right now has been strictly on lung cancer patients, mainly in PD-1 refractory subjects where we continue now looking at NC318 in combination with pembro, and an amendment is currently being made to increase that to 800 mgs.

Great. Maybe we could talk a little bit more about the Yale study in terms of patient selection, I know you guys have your S-15 assay that you were implementing. Is this also part of the Yale study as well in terms of enrolling patients?

Yes. So currently, Yale is looking at PD-1 refractory patients in lung cancer. They are taking biopsies, but they'll be looking at S15 expression retrospectively. With that said, there's also a number of key biomarkers that they'll be looking at in that setting with respect to looking at tissue samples and blood samples to get further understanding of how the drug is behaving mechanistically. What impact, if any, the anti-PD-1 drug is also having the utility of NC318.

Okay. Great. Well, definitely looking forward to the update from the investigators at a later point. But maybe we can shift over to the active pipeline. Maybe first, NC410. We saw data at SITC recently, like you mentioned. But maybe just at a high level, could you maybe talk a little bit about the novelty of LAIR1 as a target? I know in your preclinical work, you showed that the utility of LAIR1 and pretty broad expression both could lead to responses in monotherapy but also could lend itself to combinations as well. So maybe you could talk about that target and what gets you excited about it?

Yes. Well, first of all, I am very excited about LAIR1. We've been working on it for 5 years. It's a fascinating pathway and Mother Nature has really challenged us to really understand how best to understand the pathway, but more importantly, how we navigate drug development. And I'll tell you a little bit about the biology and then walk you through kind of 2 unique novel candidates we're developing intervening through the LAIR1 mechanism. So first LAIR1, co-inhibitory molecule like PD-1 is expressed on T cells and other myeloid cells and quite interestingly, it binds 1 or 2 binding partners, C1q, which is part of the complement pathway. But I think more interesting collagen which is part of the extracellular matrix, we call the ECM, not your equity capital markets. But what we've learned over the years is that collagen is a key resistant factor and why a lot of anticancer therapies are unable to kill the tumor and restore immune function. And what LAIR1 does is that when it binds collagen there's a negative signaling through the T cells and turns if off. But quite interestingly, only in humans and higher primates, there was a gene duplication somewhere along the evolutionary chain, we call it LAIR2. So LAIR2 differs in LAIR1. It's 70% homologous but it's soluble and quite interestingly, it binds collagen with greater affinity. So basically, it's a natural decoy outcompete the negative signaling to LAIR1 to restore immune function. So we're not that smart. We just follow what Mother Nature has already taught us. And what we realized early on that in looking at LAIR2, knowing that it was good for the system, we thought, well, why don't we just add more LAIR2. So we created a biomimic we call NC410. It's basically -- it's a combination of 2 forms of LAIR2 and it outcompetes the binding of LAIR1. So NC410 is a pretty extensive preclinical technology package, but we've been through the Phase I that we reported at SITC that you mentioned, Alec. We dosed 40 patients. We looked at about 7 different dose cohorts, 10 different tumor types. And the outcome of that Phase I study gave us confidence that we were able to see very good safety Group PK. We've looked at an extensive assessment of biomarkers and that demonstrated some mechanistic activities in biting the C1q, remodeling collagen and also looking at some other biomarkers related to T cell activation. So based on that data, and certainly laid the groundwork for moving forward and advancing that program forward. So in summary, NC410 is a LAIR2 biomimic. It remodels collagen within the tumor and through their remodeling, you actually change the architecture of the tumor. So imagine punch holes in the tumor itself, which now enables the T cells to infiltrate and kill the tumor and to restore immune function. And this is one of the reasons we're so excited about NC410 because it's a completely different way of looking at antitumor responses. We know that high-density collagen creates this resistant barrier. In fact, many of the tumor types that are very collagens, so resistant to PD-1 and PD-1 therapy. So we think NC410 creates a unique opportunity to look at various combinations moving forward, where we can look at the tumor side and then also looking at the infiltration and impact of various immune cells within the tumor microenvironment.

Great. So it sounds like there's some clear biologic rationale for this being a backbone for combos.

Yes, definitely the backbone as well as the wishbone and a funny bone.

Maybe we could talk about the clinical progress. So I guess on an update on the study design for the combo at SITC. Could you maybe walk us through this presentation and any unique considerations for this study and maybe how you've incorporated any lessons from your prior studies with other assets?

Yes. Really good question. So our preclinical work always entails looking at evaluating a number of different combinations. And what we started early on was significant synergy in tumor killing in a number of different animal models when NC410 was combined with an anti-PD-1 or anti-PD-L1. This particular data set was highly reproducible in 3 independent labs, and we published on it in a number of journals last year. So we, as well as Jeff Schlom's group at NCI, as well as Linde Meyaard's group at the University of Trecht in the Netherlands, each conducted combination studies were NC410 and anti-PD-1 combos were highly synergistic. So it was that data set that really led the groundwork for making a decision to move forward with NC410 combined with pembro. Merck was kind enough also to provide drug to support this study and the reason we're so excited is we've started to look at things a little bit differently, Alec. We realized that people to study tumor biology are sometimes a little different than people that study immunology. Immunology, people are focused on the various immune cells within the tumor microenvironment. But people who study tumor biology actually study the structure of the tumor the collagen, the fiber neck and different proteins that expressed on the tumor and what we call the extracellular matrix. And what we've been doing in NextCure now is really a unique understanding of the mechanistic activities of what goes into a tumor mass, how a metastasize is and how we need to align that understanding with what's happening in the tumor microenvironment makes the NC410 pembro a perfect combination. NC410 breaking up the tumor mass we could actually measure collagen degradation products we call CDBs in patient serum and aligning that with an anti-PD-1, where you can activate the T cells now to come in and to attack it.

Got it. Got it. So the Phase I-a monotherapy dose escalation is now complete. I think you said that the profile is safe, well tolerated, everything you want for a combo partner. Could you maybe talk a little bit more about the decision to move straight to combo from here?

Yes. Well, the main reason was really based on the impressive preclinical findings. As I mentioned, in the highly reproducible synergistic effects we saw in multiple models and 3 independent labs. With that said, also, I think, in all honesty, the microenvironment or micro or I should say not so much micro, the macroeconomic environment really has kind of really forced us to prioritize certain approaches and knowing that the combination therapy will most likely be the best commercial and clinical opportunity moving forward. We decided to move that forward similarly to what we did with NC318. I think in the old days, we looked at monotherapy and then over time, advanced into a combination setting, knowing how expensive it is to run clinical trials these days, the challenges in enrolling patients, we thought that we would take the strategic focus on looking at the combination approaches, and it's really well supported by all the preclinical validation work our scientists have done.

Great. And in terms of next steps, -- do you have any sort of frame for us to think through timing on potential data from the combo study? Is it next 6, 12 months or maybe more 2024 store?

Oh, no, we don't go too far out there. But yes, so we're looking at probably definitely in the next 6 to 12 months. We've already started dosing patients in the combo we're looking at both a PD-1 refractory basket arm of patients. So in particular, we're looking at colorectal, esophageal, endometrial head and neck and ovarian. And those 5 tumor types are fairly collagenous so it fits well with the mechanistic approach we're taking. Also, we have another arm where we're looking at more of a naive setting in looking at both colorectal and ovarian cancer patients. In the colorectal setting, we're actually looking at MSS and MSI low, those individuals, which make up the largest segment of colorectal cancer patients sadly have not responded to an anti-PD-1 therapy. So we, along with others working in the space, hope that NC410 will have the opportunity of kind of changing that paradigm and improving clinical responses for the colorectal cancer as well as the other tumor types and patients we're looking at.

Great. Definitely looking forward to that update. Maybe switching gears now to NC762. This was another 1 we saw some initial data from as -- could you sort of walk us through the presentation, the NK response duration of treatment and how this sort of adds conviction in your mind as the study continues to dose escalate?

Yes. We love B7-H4, fascinating target, another co-inhibitory molecule over-expressed on many different tumor types. And NC762 is a humanized monoclonal antibody targeting B7-H4. Our focus has been predominantly in a number of major tumor types such as ovarian, breast and lung B7-H4 overexpressed in many of the gynecological cancers. As you mentioned at SITC, we reported the completion of the Phase I dose escalation, safety and tolerability study. We looked at 5 dose cohorts. 18 patients. And from that, we saw very good safety. We did not hit a maximum tolerated dose. So our high dose of 20 mg, we'll be moving forward with that in the Phase Ib/II expansion study. So that study has also started. A little bit of a different design from the standpoint of in the Phase Ia, we look at Alzheimer's pretty much from a safety perspective. Here, we're looking at a narrower range of tumor types where we're actually requesting biopsies, selecting those individuals that have high levels of B7-H4 expression. So we've developed a CLIA-validated test. Where we can now look at where we also defined some scores that are cut off to enroll those patients that we think will be most responsive. And this all gets back to your question kind of on NC318. What did you learn? We're always questioning ourselves, but I think we're a much stronger organization and the tools that we're applying to select those patients that we think will both be most responsive to these novel immuno medicines that we're pursuing.

Great. That makes sense. Is the assay 1 that's off the shelf, something standardized? Or did you have to also develop this from the ground up yourself?

Yes. It's off the shelf in NextCure lab. But yes, no, it's a test we develop. We develop all the tests internally. Since we have our own development GMP manufacturing labs, we can develop all the critical reagents internally important and that becomes really important if you're trying to maintain consistency from assay to assay. Once we've got the reagents, we actually develop assays in-house to make sure that they have the specificity and sensitivity we need to utilize in a clinical setting. And then we conducted tests internally. We do the analytics internally, and then we try to feed back that information in real time to the clinical team. Happy to announce in August this year, we actually launched our own GLP lab. Most of these clinical samples usually go to a CRO for testing and then we wait patiently for the data to come in we at this point, we've tried to kind of cut out that middle step. So now the clinical samples are sent directly to NextCure. We have a lab already established with GLP criteria. We can now do the testing and then in real time, as I mentioned, share that information with the clinical team so that they can understand what's going on mechanistically with the drug and how some of these PD markers may play into making any adjustments in the trial moving forward.

That's great. That's great. And then on NC525, I believe you've got a trial in progress post your coming up at ASH. Any unique considerations around how the study was designed that you flagged? I know AML has been a difficult disease to get a foothold in terms of drug development.

Yes, definitely in a difficult disease. And we're actually really excited about NC525. This segue into the hemo space. And this is an antibody that targets LAIR1 so it works completely and mechanistically different than our NC2 -- NC410 LAIR2 fusion. So as you mentioned, we're actually at the ASH conference next week. I think it's Monday will be presenting a poster regarding a clinical trial and progress. So the trial has been designed to look at PML patients. We'll also look at some other hemo patients as part of that study, too. The Phase I will be a traditional dose escalation, safety and tolerability study, but we should be able to generate enough data to have some sort of clinical update by year-end next year. What's interesting about this antibody, unlike many of the other drugs that are being developed is it specifically kills the leukemic stem cells in the glass. But more importantly, it preserves the hematopoietic stem progenitor cells. So from a safety perspective, we're hoping and anticipating that this will be a very effective or potentially effective drug treatment for AML patients. The mechanism of action is pretty exquisite from the standpoint of various signaling pathways and how those signaling pathways are impacted with respect to the leukemic stem cells versus perhaps not being impacted in looking at the normal hematopoietic stem cells. So we're really excited about getting to dose our first patient. Our team is going to the ASH conference next week. So looking forward to updating on everyone next year on this program.

Great. Yes, we'll be there as well. So we'll definitely look out for the poster and I just have one question. This is more of a philosophical question, I guess, for you, Michael. It is one that we've received. It doesn't just apply to you guys, but the IO development landscape as a whole. There have been a lot of good targets identified to get many others, but very few have, I guess, played out in the clinic as monotherapy or in combination with CPIs. So I guess my question is, how are you guys leveraging the wealth of targets that have come out of FIND-IO? And how do you tailor the best drug, whether it's a small molecule and antibody an ADC with your new LegoChem partnership to sort of reap the most benefit out of those targets.

Yes, excellent question. So we look at things where we have to get 3 things right. Alec, we got to get the target right we have to develop the right candidate and then we have to go into the right patient population. And all 3 of those things have to align. But first and foremost, as you mentioned, in Target. So we go through an extensive screening process to evaluate and validate our targets. Once we identify a target, we go through what we call the 3 Rs, reproducibility robustness and then relevance as it relates to cancer or perhaps another disease. We did spend a lot of time looking at expression profiling both on the genomic and proteomic level. So even if it's overexpressed on many tumor types, genomically, looking at different databases, we then actually look at tissue samples, tumor microarrays to look at the expression profiling. And then as one would imagine, we do a lot of animal modeling, both in monotherapy in a combination setting. Your broader question is there are a lot of candidates out there. And why are we seeing more effectiveness in the checkpoint space. Well, first of all, immunology is challenging, but I think we're learning a lot. There's a lot of great science being done. I think combination therapies or modified antibodies or even certain small molecule important role moving forward. We're doing a lot of thinking beyond combinations, but also looking at the sequencing of events. It's not like the immune system, everything turns out at the same time. So there's a certain sequencing events that we need to kind of consider. We also go with the science. So in the case of the LegoChem deal we're really excited to work with the LegoChem team, they're outstanding in what they do with respect to developing various payloads and linkers to modify antibodies. Our first of 3 targets will be anti-B7-H4 as a next-generation molecule -- this will be either a next-generation molecule or potentially used in combination with NC762 itself. One could imagine coming in very hard with a molecule that has a chemical payload and then looking at a naked antibody in the context of maintenance therapy. So our scientists are investigating a lot of these different types of approaches to maximize the effectiveness of the targets. Next, by looking at a lot of targets versus a company that may be just looking at one you learn a lot. Each of these targets has its own distinct biology impacts different types of immune cells. T cells, NK cells, like in the case of B7-H4 macrophages in the case of 715 and by understanding the repertoire of immune cells and how they're behaving in the tumor microenvironment gives us great insight into how to drug a specific cancer. So I think the combination of having the platform, the 3 clinical candidates, the multiple tumor types we're focused on and looking at combinations and ADC approaches, I think really differentiates NextCure from the standpoint of being driven by the science, but also aligning the science with distinct meaningful product development approaches. Great.

Great. Maybe in the last 30 seconds or so that we have, maybe we can just wrap everything up in terms of upcoming catalysts look out for? What would you sort of flag as being maybe the most meaningful or ones that you're most excited from the pipeline?

Well, we love all 3 of our kids. So maybe 4, I guess we're really excited about the 3 clinical programs moving forward. The updates that we'll provide next year. We've got a fully integrated infrastructure that can continue to feed and grow the pipeline, continue to build value. We've got a strong balance sheet of $169 million as of the end of last quarter with a long runway into mid-2025, it really kind of sets the stage for now executing on our plan. I think you brought up a really good point earlier with respect to lessons learned from NC318, our biomarker capabilities and our ability to kind of execute and advance our programs. So I'm excited about the upcoming holidays, but I'm also really excited about our platform and our pipeline and our people and really seeing how hopefully, the impact our drugs will have on patients next year.

Great. Great. Well, definitely looking forward to those updates. But I think for now, that's all the time we have. So I wanted to thank you, Michael, for taking the time to participate in the conference and for the great discussion.

Well, thank you. Alec. We greatly appreciate it. We also appreciate the opportunity for BofA to participate in the conference. And thanks again for your ongoing support.

All right. Great. Thank you.

Take care. Bye bye.