NovaBridge Biosciences (NBP) Earnings Call Transcript & Summary

Good day, and welcome to the I-Mab Company Update Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jielun Zhu, Chief Financial Officer. Please go ahead.

Okay. Thank you, operator. Hi, everyone. Good night or good morning, depending on where you are. Earlier today, we have made 2 important announcements regarding a strategic partnership we signed with AbbVie and also a private placement transaction we signed with the consortium of investors led by Hillhouse. We would like to host this conference call to explain more details to you about these 2 transactions. Now joining me today on the call is Dr. Jingwu Zang, Founder, Honorary Chairman and Director of I-Mab. I would like to turn the call over to Dr. Zang right now, and I will take over after he speaks. Dr. Zang?

Thank you, Jielun, and thanks to everyone for joining us today. I'm very pleased to welcome all of you to our update call following these 2 significant corporate announcements today. First of all, I would like to set the stage by giving you a quick corporate update. This is really an exciting time for I-Mab. Among all the progress the company has achieved within such a short period, 2 major developments should be highlighted. Firstly, we have made remarkable progress on all programs in our pipeline development and have achieved a series of key clinical milestones, as we previously promised. With more and more clinical milestones achieved, the innovative nature and the commercial potential of our pipeline have become validated and more visible. This point is exemplified by lemzoparlimab or TJC4, our differentiated CD47 antibody. The differentiation of lemzoparlimab is not only confirmed by our recent clinical study, but also validated by the global partnership with AbbVie and the pipeline -- the PIPE financing concurrently announced today. On this call, Jielun and I will provide you with some key information regarding lemzoparlimab program and a detailed structure of the partnership deal. We'll be happy to address your questions at the end of this call. Secondly, it has never been so obvious until recently that I-Mab is now well on our way to transitioning from a clinical-stage biotech company to become a leading fully integrated global biopharma company. We have begun to execute our plans to build a GMP manufacturing capability in Hangzhou, China to support all the clinical developments of our pipeline around the world as well as future commercial supply for our product launches in China. Furthermore, our recent appointments of the Chief Commercial Officer, Ivan Yifei Zhu, marks our commitment to building commercial capability and are preparing for upcoming product launches. Looking ahead, we are very excited and confident in our science and our increasing capabilities to deliver value through innovation to patients as well as our shareholders. Now let me switch the gear to give you an update on lemzoparlimab, known as TJC4. Lemzoparlimab is designed to minimize inherent bonding to normal red blood cells while preserving its strong anti-tumor activity. This unique property of lemzoparlimab is attributable to its proprietary glycoepitope that is exposed on tumor cells but is embedded on red blood cells. This unique property enables lemzoparlimab to be differentiated and potentially advantageous in drug safety, favorable PK profile or lack of the side effects and skipping need for a priming dosing strategy as compared to other CD47 antibodies that's strongly bound to red blood cells. Our clinical development plan for lemzoparlimab is twofold. For clinical development in the U.S., we aim to first validate the clinical differentiation of lemzoparlimab in a single-agent dose escalation study, where cancer patients were given different doses of a lemzoparlimab from 1 milligram per kilo to 30 milligrams per kilo and are evaluated for drug safety, tolerability and PK/PD profile. The study was recently completed, and the top line results have confirmed that lemzoparlimab is well tolerated as a single agent across all dose levels. In all evaluable cancer patients, no dose-limiting toxicities or severe hematologic adverse events were observed, which represents a clear advantage. In addition, lemzoparlimab exhibited a favorable PK profile and does not require a priming dosing strategy. The clinical data obtained so far are consistent with the unique property of lemzoparlimab in sparing red blood cells. Detailed clinical data will be presented at scientific conferences later this year. Now our clinical study of lemzoparlimab in the U.S. has expanded to the combination part with PD-1 for solid tumor and CD20 for lymphoma to evaluate safety and early efficacy signal. Regarding clinical development in China, we are focused on AML/MDS towards a potential product registration and aim to complete the current accelerated dose-escalation study before starting a pivotal clinical trial in patients with AML/MDS. Now going forward, we will work closely with our global partner AbbVie to facilitate clinical development of lemzoparlimab for product registration, both globally and in China. Now I would like to ask our CFO, Jielun Zhu, to provide you with more details on both the AbbVie partnership and the PIPE transaction. Jielun?

Thank you, Dr. Zang. Now let me go through the key terms of both the global partnership and the PIPE financing transaction. Let me start with the global partnership with AbbVie. Our global strategic partnership with AbbVie is anchored on lemzoparlimab, our highly differentiated CD40 -- anti-CD47 monoclonal antibody. This is a very broad partnership with one of the most respectable companies in biologics globally and is a shining example of genuine cross-border collaboration in pursuit of life-saving therapies for cancer patients. The partnership has 3 key components. The first one, regarding the lemzoparlimab monotherapy license. I-Mab provides AbbVie with an ex-Greater China global license to develop and commercialize Lemzoparlimab. I-Mab retains all the rights to develop and to commercialize lemzoparlimab in Mainland China, Macau and Hong Kong. Both partners will share manufacturing responsibilities, with AbbVie being the primary manufacturer for global supply. I-Mab will also work closely with AbbVie to share data and jointly execute our respective clinical development plans for the purpose of accelerating product registration globally as well as in China. Now let me go through the key financial terms of this license. There are 3 components to the monotherapy license. The first one is the upfront and near-term payments. AbbVie will pay I-Mab an upfront payment of $180 million. Additionally, in connection with the top line clinical data released today, I-Mab has also earned the first milestone payment of $20 million payable under the agreement, making a total of $200 million. The second component is the milestone payment. I-Mab will also be eligible to receive up to USD 1.7 billion in further success-based development, regulatory and sales-based milestone payments. Out of that $1.7 billion, $840 million are based on clinical development milestones as well as regulatory approval-based milestones. The last component is the royalty payments. Upon commercialization of lemzoparlimab, AbbVie will also pay tiered royalties from low to mid-teen percentages on the global net sales outside of Greater China. Now let me talk to you about the second aspect of the partnership we signed with AbbVie today, which is the additional CD47-related collaboration. Now in addition to the lemzoparlimab single-agent license, the partnership today also allows for potential partnership on future CD47-related therapeutic agents, such as lemzoparlimab-based bispecific antibodies. Each party will have the opportunity, subject to further licenses, to explore each other's related future CD47-based programs in their own respective territories. Now specifically, with regards to the bispecific antibodies, AbbVie has a right of first negotiation to in-license further development and commercialization of 2 additional lemzoparlimab-based specific -- bispecific antibodies discovered and currently at CMC and preclinical development stage by I-Mab. The potential value of such license of the 2 bispecific programs is a minimum USD 1 billion in upfront and milestone payments. That is a minimum of $500 million each. If I-Mab and AbbVie cannot agree on the licensing terms, the relevant programs will not move forward. Now let me wrap up by giving you details on the third aspect of the partnership, which is the combination therapies. The partners will explore combination therapies with I-Mab's lemzoparlimab and AbbVie's Venclexta. Both parties are very excited about the potential therapeutic synergies and benefits of this novel combo treatment. So to recap, this is a very, very important partnership for both I-Mab and AbbVie. In terms of total deal value, we believe that this is the largest out-licensing and global partnership transaction ever executed by a China-based biotech company, a truly landmark deal in so many ways. This partnership is also validation of I-Mab's capability in drug innovation, and it combines the relative strength of both companies to create value synergistically for our patients, shareholders and other key stakeholders involved. We are extremely excited about the prospect of working closely together with our friends at AbbVie going forward. With that, let me now turn to the PIPE financing transaction, which we announced concurrently today. I-Mab has entered into definitive subscription agreements with a consortium of investor -- institutional investors to raise approximately $480 million through a private placement or PIPE. As some of you may know, PIPE is a highly efficient and flexible means to raise equity capital for biotech companies globally and is usually led by -- led and participated by very sophisticated biotech investors, further validating the potential of the investee company. The consortium today is led by Hillhouse Capital Group. Hillhouse is one of the most well-known China-based but globally oriented investors in both biotech as well as many other sectors. They have supported highly successful global biotech players like BeiGene. In addition to Hillhouse, GIC, the Singapore sovereign wealth fund, also commits significant capital to this PIPE. The rest of the consortium also includes other leading Asian and U.S. biotech investment funds, such as Avidity Partners, OrbiMed, Octagon Capital Advisors, Invus, Lake Bleu Capital, Perceptive Advisors, Cormorant Asset Management, Sphera Healthcare and Alyeska Investment Group, L.P. As the lead investor in this PIPE transaction, Hillhouse is entitled to nominate one representative to I-Mab's Board of Directors. The private placement comprises 2 components. The first one is the sale of -- sale to the investors of approximately $418 million worth of the company's ordinary shares. That translates into roughly 20.1 million ordinary shares, which is equivalent to 12.67 million American depository shares or ADS at a purchase price equivalent to $33 per ADS. $33 per ADS represents a 2.9% premium to I-Mab's 30-day VWAP or volume weighted average price. The second component of the PIPE transaction is the warrants to subscribe for an aggregate of 5.3 million ordinary shares equivalent to 2.3 million ADSs at an exercise price equivalent to $45 per ADS, which represents a 40.3% premium to I-Mab's 30-day VWAP. The warrants may further increase the proceeds of this PIPE by approximately USD 104.5 million if the warrants are fully exercised. The warrants will remain exercisable at the election of the investors within 12 months after the closing of this PIPE. In terms of the use of proceeds, we intend to utilize the proceeds from this private placement to fund the ongoing and planned research and clinical programs globally as well as development of our commercialization capabilities in China. Now before we open the call up for Q&A, I would also like to highlight that this PIPE transaction, same as the global partnership with AbbVie, demonstrates strong endorsement of I-Mab's R&D innovation and value-generation capabilities. The investor consortium consists of a highly distinguished group of globally renowned sophisticated biotech investors, some of which, such as Hillhouse and GIC, are our existing shareholders who are significantly increasing their capital commitment to I-Mab at this transformational juncture. In addition, the total deal size ranks among one of the biggest biotech PIPE deals without strategic investment component over the last 5 years and also the biggest PIPE financing ever signed by a China-based biotech company. The capital we raised today will substantially extend our cash runway, strengthen our position to effectively execute our strategic priorities and also advance our globally competitive pipeline to ultimately bring innovative medicines to patients in need. With that, I would now like to turn the call back over to the operator so that we can go ahead and take your questions. Operator?

[Operator Instructions] Today's first question comes from Louise Chen with Cantor.

Congratulations on all the good news today. So I have a few questions here. First one is can AbbVie do deals with other CD47 players. Secondly, can you give more color on the R&D milestones, what the terms are within the sales milestones, how many steps there are? And the last question I have for you is when will you provide more of a full data set on the lemzoparlimab Phase I data? Will we see it as early as the upcoming ESMO conference?

Jielun, could you elaborate on the first 2 questions?

Sure. Louise, thank you for your questions. So to your first question, we would like to say that both parties will have very limited freedom to operate after we sign this partnership agreement. So we -- this is a true partnership, and we intend for this to be a very, very strategic partnership, both on us and also on our partner. And we expect AbbVie to put in all the resources they can marshal to advance this program as quickly as possible. Okay? The second question with regards to the sales-based milestones, so in my monologue earlier, I mentioned that the total success-based milestone payments is $1.7 billion -- USD 1.74 billion. But out of that, $840 million are based on clinical development and regulatory approval milestones, which means, the remainder, which is $900 million, is based on revenue or net sales in our partners' territories. I'm not at liberty to give you all the detailed steps and the thresholds triggering that -- all of that payment. But I can say that these thresholds or steps are negotiated at arm's length and very much in tandem with market practice.

Yes. To your third question, I just want to say we have our plans to present all the scientific data, including clinical data, at the next SITC meeting, this year.

And our next question today comes from Kelly Shi with Jefferies.

Congratulations on a great deal and progress. So my first question is -- you also have $500 million options on 2 bispecifics of CD47. So what is the impact between the 2 deals on bispecifics and monoclonal antibody in terms of like tumor type, indication selection and also the combo selection? My second question is, from the dose escalation phase, do you expect efficacy signal at higher dose cohorts?

Yes. Kelly, your first question, the monoclonal -- CD47 monoclonal antibody TJC4, the clinical development is going to build on the successful Phase II data from 47 on AML/MDS. We are still -- like other companies, we are still exploring the therapeutic role of our TJC4 for the treatment of solid tumor. And it's not clear how effective TJC4 is or other CD47 antibodies are for solid tumor. So these 2 bispecific antibodies are designed for solid tumor, potentially -- through this biology, potentially increase the efficacy for the treatment of solid tumor. And we are very excited about these 2 bispecific antibodies even though they are, at this point, at CMC and preclinical stage. Our partner, AbbVie, is also very interested. And we have been discussing our plans to see how we're going to move forward with these 2 bispecific antibodies. We -- our plan is to file IND sometime next year and start clinical trial next year in the U.S.

And also my second question is do you expect the monotherapy activity for the dose escalation cohort in the higher dose level -- at higher dose levels?

Yes. So at this point, we are in the process of analyzing all the data as we just completed the clinical study. So today, I'm not in the position to talk about this data because we are still in the process of analyzing. But we will announce the data later this year at SITC.

[Operator Instructions] Today's next question comes from Jill Wu with CMBI.

Big congratulations on these 2 very successful milestones this year -- today. And my question is about your future maybe clinical development plan in the U.S. I'm not sure if you have talked about it with AbbVie. Because we know AbbVie has Bcl-2 and BTK. These 2 assets potentially may have synergies with CD47. So could you please share with us what is your potential clinical -- future clinical development plan in the U.S. to explore the synergies with AbbVie's assets?

Yes. Thank you for the question. In the past several months, we have been discussing with our partner AbbVie, okay, talking about the clinical development plan both in U.S. and China, how to design joint clinical development plan in order to evaluate safety and efficacy, including combination therapies for TJC4. I can say, at this point, we are still in the process of finalizing our clinical development plans both globally and in China. Now it's very clear that our first goal is to focus on AML/MDS, as I mentioned earlier, to really quickly build on the successful Phase II data from 47. Now for that indication, for that clinical study, we do have an advantage. The advantage is that we're considering combining TJC4 with AbbVie's, for example, Venclexta or perhaps other agents. So we are in the process of discussing this, and clearly, there could be an advantage to combine with AbbVie's products in their pipeline. So the first goal is to focus on AML/MDS. At the same time, in parallel, we have been discussing our plans -- clinical development plans for solid tumor, where we will focus -- I-Mab will focus on China prevalent cancers and our partner AbbVie will focus on globally -- global prevalent cancers. And we will join forces to design clinical -- to share the clinical design and share the data. And hopefully, this will -- the synergy will facilitate our clinical development plan going forward.

And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any final remarks.

Thank you, everyone, for attending this investor call, which is arranged at a relatively short notice. And thank you for your attention and focus on I-Mab. We think this is the starting point of I-Mab becoming a truly global company. This is the starting point, not the endpoint. We are very appreciative of your attention and support. We will circle back with you in other format in terms of investor conferences and other format and we look forward to stay in touch with you. Thank you very much. Have a nice day. Bye-bye.

And thank you, sir. Today's conference has now concluded. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.