Nuvation Bio Inc. (NUVB) Earnings Call Transcript & Summary

Good morning, everyone. My name is Farzin Haque. I'm one of the biotech analysts at Jefferies. It's my pleasure to introduce David Hung, CEO; and Philippe Sauvage, CFO of Nuvation Bio. Thank you for joining us today. This is a fireside chat format. For those who may be new to the story, David, maybe you can start off with a 1-minute intro to Nuvation.

Sure. So we are a commercial stage company. Our 2 most advanced assets are IBTROZI, an inhibitor of ROS1 -- for ROS1-positive non-small cell lung cancer. We started our commercial launch 3 quarters ago. I think it is pretty clear now that IBTROZI is the leader in the ROS1 space with the highest response rate and longest duration of response yet seen in ROS1 lung cancer, 90% response rate, now 50-month median duration of response. If you look at our first-line growth in our last 3 quarters, we've increased 35% of first-line patients from Q3 to Q4 and then again, from Q4 to Q1, we believe that's a very auspicious beginning to our launch. So we feel very confident of the trajectory for IBTROZI, I think that's going to be a very substantial commercial opportunity with the revenue stacking that we would anticipate from a 50-month duration of response. Safusidenib is our mutant-IDH1 inhibitor for gliomas. We also believe that safusidenib will become a best-in-class agent with a response rate that we published in low-risk, low-grade glioma of 44% and a progression rate at 1 year of only 4% and progression rate at 2 years of only 12%, which we think compares extremely favorably with all other molecules that have been tried in the space. We are in the middle of 2 studies, the SIGMA study, which covers 3 of the 4 pieces of the glioma pie, all high risk as well as high risk, low grade. That's a PFS trial that I'll read out in '29. But more importantly, we also initiated a grade 3 oligodendroglioma study in the low-risk, high-grade subset of glioma. This is a notable study because the endpoint is response rate. We will have that study fully accrued and read it out next year in 2027. We believe that because it's a response rate trial, looking at precedents for other glioma drugs, Chimerix was approved on 50 patients response rate with a response rate of 21% OJEMDA was approved on a 77% -- a 77-patient trial for pediatric glioma. We think that's a very exciting program. And then we're looking at designing another study, a third study to look at post-vorasidenib failures, which we think will be also a very large unmet need. There are no drugs approved in any of these spaces that we're targeting with our 3 trials, and we should be kicking that off relatively soon.

Exciting progress. So considering the IBTROZI's profile and the ROS1 market, what is considered niche by many, how do you see the long-term opportunity unfolding that some investors may not be appreciating, especially the early days of the launch has been encouraging, like 50% mix in the first-line setting in the last quarterly update?

Yes. I think what many people fail to appreciate is that it's a very different market for many oncology markets. You start with a drug, which is like 50% higher price than ALK because of the rarity of the disease to your point, but it's still half of the epidemiology, so it's still very significant. But more importantly, you're talking about 90% response rate, 50 months median DOR, which is really exceptional in oncology. So the dynamic of the buildup of the market and the size of the market is very different because you're almost talking about a chronic disease or chronic drug. So patients will stay on drug for a very, very long time, which is very unusual in oncology setting. So the dynamic of the launch of our growth is really that. It's like patients will come on drug and because of the tolerability profile, the extremely high response rate and the very high duration of response, they will stay on drug for a very long time and the market will build like that. So I think what many people fail to appreciate is that, that you're moving into a space where the dynamic of your launch, the dynamic of your sales is almost what you will see with a chronic disease and a drug which is given for chronic disease. And that's very different from a typical oncology buildup of sales. And so I think that's what people are missing in general.

Makes sense. So how is the compounding effect of the 15-month median PFS in the frontline setting currently tracking versus your internal revenue stacking models for 2026 and beyond?

Yes, that's exactly the point, Farzin, is that what we are seeing right now is exactly what we are expecting in terms of buildup of the first-line patients. Like David was saying, growth of these first-line patients, 35% a quarter. So we started at 60, 80, 110, and we know there is lots of space to keep growing this first-line patient pool. And as we grow, they will stay on drug for a long time, and all of this will appear in terms of this is a drug that will be given for a very, very long time. So we have seen so far in the launch exactly what we are expecting to see from a clinical trial, and that's very reassuring for the long-term dynamic for our sales.

Makes sense. And then recently at ASCO, you had HR, the quality of life data and the cognitive function data as well from the TRUST-II. So how does it influence prescriber behavior and differentiation in the frontline ROS1 setting?

Yes. I think our recent patient-reported outcomes were very important because not only does IBTROZI have the longest duration of response and highest response rate of any of the drugs of the TKIs in the ROS1 space, but we are now showing 88% of patients improved -- were improved or stable across multiple important outcomes. And importantly, if you look at cognition, which has been a significant issue for many of the ROS1 drugs, IBTROZI is now the only ROS1 drug to improve cognition in patients. And I think that it's just yet another differentiator between not only the incredible efficacy of the drug, but also the tolerability of the drug. And I think the fact that if you look at the patient reported outcomes, the fact that many patients reported improvements in symptoms like cough or shortness of breath, even before their first scan showed benefit, this is an example of the kind of quick, very rapid benefit that patients are seeing with IBTROZI and another differentiator of us from other TKIs in the same space.

Cool. And then you had the -- last month or a couple of months ago, you had the inclusion in the NCCN CNS guidelines. So how is the dialogue with prescribers evolved regarding the use of IBTROZI to prevent brain mets?

Yes. Again, if you look at IBTROZI's intracranial response rate, even in the second-line setting, our response rate is 66%, which again is the highest of the ROS1 TKIs. And given the fact that ROS1 goes to the brain 85% of the time, it's really important to have good CNS coverage. And I think that the new NCCN guidelines for CNS drugs including IBTROZI is another important step and again, increasing the use of IBTROZI in patients who could benefit. And I think that given our CNS profile, I do believe that we have, by far, the most robust CNS coverage of any drug today in ROS1, and that will further differentiate us in the launch.

And then the NCCN also the contraindicates immunotherapy and chemotherapy for first-line agents -- first-line patients. So how does that streamline your commercial messaging to the community oncologists that see the majority of these patients?

Yes. So prior to 2025 and, in fact, until the end of 2024, oncologists could take 2 approaches to treating ROS1 patients. NCCN guidelines actually had 2 recommendations for the treatment of ROS1 lung cancer. One would be including IO chemo in that algorithm. The second would be using a ROS1 agent. In 2025, that changed with the guidelines now contraindicating IO and requiring the use of a ROS1 agent. It always takes a little while to change physician practice, but we do think that, that was a very important change in the NCCN guidelines because now you do need to give a ROS1 agent and you cannot give IO for ROS1 disease. And looking at the other ROS1 agents available, as I mentioned earlier, there are really no agents that come close to the response rate of 90% and the durability of 50 months that we see with IBTROZI. So we feel very confident that the NCCN guideline changes will, again, lead to further sales of IBTROZI and dominance in the ROS1 market.

Makes sense. And then in the community settings, there's a much lower rate of testing generally, like constraining the addressable market. Like is there anything that you can do or initiatives you can take to essentially support to increase the testing?

Well, I think that testing in general has been increasing with the advent of precision oncology drugs ever since the development of EGFR and then ALK and then ROS and then RET drugs. I think that's all increasing. There was a really important new development at ASCO. The LIBRETTO study with selpercatinib now showed an extremely robust effect in the adjuvant setting, a hazard ratio of 0.17, which is just outstanding. And because of that, that's going to mandate earlier testing because now that study shows you that physicians who intervene even earlier in the disease course can actually have a profound effect on their patients. So the fact that now with -- the patients with lung cancer, if they have RET, they really want to be testing that as early as possible because the LIBRETTO study suggests that they'll have substantially more benefit treating it earlier. I think that's a rising tide that will float all boats. I think that's going to really increase testing earlier in lung cancer in general. That's just the beginning. We have an adjuvant study going on in ROS1, and we are now confident with the selpercatinib results that we should see the same thing as well. We're the only company running an adjuvant study for our ROS1 agent. So we think that testing will increase in the selpercatinib trial. It's just another example of why early intervention and more testing is so important for patients.

Great. And then on the competition side, like are there specific clinical or commercial levers that you can pull to maintain the IBTROZI's market share once the Nuvalent's zidesamtinib enters the space?

I think we just need to see what the Nuvalent label is. We'll see a second-line label in September probably. And I think that we feel very, very confident that 90% response rate is going to be very, very hard to beat. 50-month DOR, virtually impossible without another 4 years of follow-up. So I think we are the market leader. We think that there are no metrics close to ours for any agent so far, and we feel confident that we'll be market leader.

And then they -- Nuvalent recently showed 47% ORR post-taletrectinib. Does the availability of a highly active second-line salvage option actually lower the barrier for oncologists to prescribe IBTROZI in the frontline?

So that's a good -- important point. So Nuvalent did show some activity in the third-line setting. And just to refresh your memories, the FDA actually gave IBTROZI breakthrough designation in both the first and second-line setting and gave Nuvalent breakthrough designation in the third-line setting. And also, IBTROZI was granted priority review in our FDA cycle and Nuvalent was granted standard review. So I think that the FDA has opined on the profiles of the drugs. And we think that we will be a first-line agent. Nuvalent will be launching in pretreated patients, and we think patients need other options when first-line therapies fail, and we feel extremely comfortable with where -- our launches and where it's going.

Given that Nuvalent plans to file for frontline expansion in second half, how much follow-ups -- like how much time advantage do you think you can have to basically entrench IBTROZI use as a standard of care versus when they come in?

So we will have -- even if they do get first-line approval in 2027, we will have launched -- we will have a 2-year head start in first line. But the more important number is our duration of response right now is 50 months. There are very few drugs in the history of oncology that have been able to match that. In fact, lorlatinib is the only agent that has a longer duration of response than we have and CROWN data were received extremely well at ASCO. I think it's going to be very, very hard for anyone to catch up to our 50-month duration of response. And if you look and -- look at what patients seek in a drug, by far, the most important thing to patients is how long will I respond to the drug I'm getting. So we think that until someone has a duration of response better than IBTROZI's 50 months, it's going to be really hard to displace IBTROZI in the ROS1 space.

And then one of the nuanced point that a lot of people don't appreciate is that Nuvalent had excluded concomitant driver mutations. So how is your commercial team planning to communicate this specific nuance to prescribers?

I think we'll see what happens in the label. It's important to note that in the IBTROZI TRUST studies, both TRUST-I and TRUST-II, we did not exclude any concomitant driver mutations, which are common in lung cancer as you know. So our patient population and our data applied to a real-world population. When you start to exclude patients, especially the more difficult-to-treat patients, I think that the question has to be raised, is that really reflective of a real-world population? No. We can say that our efficacy, our 90% response rate, our 50-month duration of response are in all patients, no exclusions, including the most difficult-to-treat patients. And that's why we feel so confident that this drug will be very, very difficult to displace.

And then you talked about the partial TRKb inhibition may prevent CNS mets and tumor migration. Has this mechanistic hypothesis been -- how has this mechanistic hypothesis been received by the medical community? Do physicians find this compelling? Or do they prefer the TRK-sparing narrative?

Well, I think the LORBRENA, the CROWN study at ASCO just showed you that if you look at the 3 now longest-acting drugs in oncology, lorlatinib, taletrectinib or IBTROZI and repotrectinib, all 3 have some measure of TRKb inhibition. Taletrectinib or IBTROZI has the least of the 3 drugs, but still some TRKb inhibition, and we do believe that the role of TRKb in CNS metastasis is extremely important. So we do believe that the recent CROWN data suggests that having some TRKb inhibition as long as the tolerability is acceptable is a very positive thing. If you look at the discontinuation rate in the TRUST studies, of patients with any of the top 6 adverse events, ALT elevations, AST elevations, nausea, vomiting, diarrhea or dizziness, only 1 of 337 patients on IBTROZI discontinued therapy. So that's a really, really low discontinuation rate. So clearly, our amount of TRKb inhibition has not caused any issues with tolerability. And to the contrary, we believe that 15-month duration of response that we're seeing with IBTROZI could very well be in part due to the amount of TRKb inhibition that we have. And if you look at now lorlatinib 7-year PFS and going, that's just an incredible result. And we do know they have a fair amount of TRKb inhibition, but clearly, I think that people always have to keep in mind that the greatest safety risk to patients isn't CNS side effects, it's progression of their disease. Once you get a brain met, you're in a -- you've a big problem. So I think that people need to keep in mind that lorlatinib for all its issues that the people talk about tolerability, the fact that they're on 7 years means it's actually pretty well tolerated. And the fact that they now have a 7-year PFS and going means that they're incredibly effective. So I think we feel that our CNS profile is really attractive having TRKb, we believe is part of the reason that we have such a high intracranial response rate of 66%, which no one else has matched to date and a 50-month DOR, which no one else has matched to date. So we feel, again, very, very confident with the profile of our drug.

And the cognition on the patient-reported outcome at ASCO was also very important. You can see that patients report better cognition on our drug, which is pretty impressive in terms of -- when you compare to other drugs in that space.

Yes. And another example of not only no lack of CNS impairment, but actually a CNS benefit in addition to disease control. And now, we're actually seeing improvement in cognition in the brain. So that's, again, another feature of this drug that no one else has been able to match with any other drug.

And then I have one more question on the IBTROZI. So you have the adjuvant study ongoing, the TRUST-IV. So what is the current enrollment status? And how do you think the adjuvant opportunity related to the advanced disease market could shape up?

So our trials are right on track. So we feel very good about the enrollment of TRUST-IV. We think that the adjuvant market is really important. Diseases are always easier to treat the earlier you treat them. So finding the disease early, treating it early, we think it is really important for patients. I think the LIBRETTO study with selpercatinib just showed that in spades, 0.17 hazard ratio, incredible. So we think it's the right direction for the field. And again, it's a substantially larger market opportunity. So we feel that we are very happy that we are in an adjuvant study. We are the only ROS1 agent doing an adjuvant study because to do an adjuvant study, you have to have a drug that's not only effective but also highly tolerable. And I think IBTROZI fits both bills. So that study is accruing, and we think that that's going to be a very important study for us to expand our ultimate commercial opportunity.

Cool. Switching gears to safusidenib. So can you discuss the IDH1-mutant glioma market? You're positioning it in 3 of the 4 subgroups, as you had mentioned, and versus vorasidenib, which is only approved for low-grade, low-risk glioma. So how large is the TAM?

So if you look at what vorasidenib sales have already been in just 1 of the 4 pieces of the pie, they generated $312 million in the fifth quarter. So they're already on a $1.5 billion a year run rate, and we think that's going to be a very big drug. The reason that the market is large is that even though the incidence of glioma is about the same as ROS1, the low-grade glioma patients can live for 20-plus, even grade 3 oligo patients can live for 12 to 14-plus years. And even high-grade patients, including IDH1 GBMs, which are very different from non-IDH1 GBMs. These patients, even high grade can live for 6-plus years. So because of that, you do see revenue stacking in glioma that probably doesn't apply to any -- virtually any other oncology indication. There are really no oncology indications that have 20-plus year PFS in general. So I think that because the survival is so long, that leads to an extremely large prevalence population. That prevalence population for IDH1 gliomas is probably in the tens of thousands of patients and the vorasidenib launch has already demonstrated that. So we think that -- we're going after all 4, not just 3 of the 4, but actually all 4 pieces of the pie. So the SIGMA study alone goes for 3 of the 4 pieces. The oligo -- the grade 3 oligo study goes for 1 of the 4 pieces, but then we're going to be targeting a post-vorasidenib failure study that goes after the rest of it for everything in the vorasidenib market. So we're actually going for all 4 pieces of the pie.

And then can you comment on the enrollment cadence so far like -- and the feedback from the site investigators. There's nothing approved, so you should potentially enroll faster than...

Yes. So we think that trial is enrolling very well. We've said that we're going to finish enrollment in the grade 3 oligo study next year, and we'll have data next year. And that's a response rate study. We think that, again, approval trial would probably be in the range of 50 to 80 patients. So we're looking forward to announcing that data. If you look at the Servier numbers, they've disclosed that they've treated over 5,500 patients so far in their launch with vorasidenib. If you look at the progression rate of 23% at 1 year, given the fact that vorasidenib launch has now been out 16-plus months, you can expect about 1,000 patients on vorasidenib to be either failing or close to failing. So we need to enroll, we think, somewhere between 50 to 80 patients for a trial that we could bring to FDA to discuss the possibility of an accelerated approval if we hit a response rate north of 20%. As I mentioned, Chimerix got approved, a 21% response rate in 50 patients. We think that that's the size and response level that we would need to start a serious discussion with FDA. So we're pretty excited about that. We think the [indiscernible] study will enroll very quickly, as I said, because there's about 1,000 patients already out there that are either failing or close to failing. So we look forward to finishing that study rapidly.

And beyond the IDH1 mutation itself that defines the population, are you looking at any other markers such as co-occurring mutations or metabolic indicators that might identify patients that most likely would benefit from safusidenib?

So first of all, if you just look at our response rate data right now at 44%, I mean that's almost half of all low-grade patients already responding to our drug. But more importantly, if you look at some data that we disclosed earlier -- just a few months ago, almost half of our patients from our Japanese study are still on drug 5 years out. Now the reason that's important is because not every one of those patients was a responder. So certainly, the patients when you have a response, I mean those patients are all on drug. But what the other number tells you is that even if you're not a responder, but you are either not progressing or are progressing at a slower rate, physicians sometimes keep those patients on drug, too. So we think that a very large number of patients will be treated with safusidenib because there's nothing as an alternative. And brain tumors, if they start growing, don't have good outcomes. So if you can shrink them or even make them grow slower or not progress as rapidly, I think that's a really important way to extend life and quality of life in these patients. So we think that, that's the reason -- another reason why this market opportunity will be so large. On top of that, we're going to be announcing new data later this year, where we're going to now present 3-year follow-up on our Daiichi data, and we think that's going to be very, very interesting to everyone.

Cool. And then do you have any plans to seek approval in the low-grade, low-risk market where vorasidenib is approved? You mentioned it previously, but just to double-click on it. Like what will be your approach there? Are there any additional data that you need to generate and then trials you're running?

So right now, vorasidenib is the only IDH1 approved in glioma at all, and it's approved in low grade. Once those patients fail, there is nothing for them. So we think that any patient who fails vorasidenib that responds to safusidenib, is a great alternative for them. And we think that, in fact, if the drug works after vorasidenib, most physicians and patients will also conclude that this drug is a better drug and probably use it earlier in treatment algorithm. So we think that showing activity after vorasidenib failure will be key to securing the low-grade market. And that's why we believe that ultimately, safusidenib will get approved in all 4 pieces of that glioma pie.

So that's the separate extension of the ongoing study?

That's a new study.

That's a new study, but non-registered?

We're designing it right now, but our plans are to look at a post-vorasidenib failure study.

And it will be non-registrational initially until you get that...

I think the FDA never always wants to see the data before they make any decisions. And so when we have data, we'll take it to them. We think that the response rate is north of 20% in at least 50 patients. We think that, as I said, there's precedent for FDA approval. With Chimerix, 21% response rate in 50 patients. So you can never say what FDA is going to do, but we think there's ample precedent to take the approach we're taking.

And just to refresh the memory, like why mechanistically patients should respond to safusidenib post vorasidenib, like mechanistically it is the same or...

No, they're not. They're not the same. So in fact, interestingly, if you looked at the adverse events of these 2 drugs, they're very different. We made the point that vorasidenib's main adverse event is liver function test abnormalities. If you look at 5 of the top 7 adverse events for safusidenib, even though almost all of them are grade 1, very mild, they're immune like. So we have skin hyperpigmentation. We see arthralgia like rheumatoid arthritis. We see some rash. We see some alopecia like alopecia areata. These are immune type effects. And when you look at our responses, the fact that they take sometimes 6 to 12 months to kick in. But when they do kick in last 3 years, we have a GBM that's been in a complete remission for 3.5 years. We have a grade 3 oligo that has been gone for about 2 years. These are IO-like effects. We believe that safusidenib may have immune mechanism on top of its IDH1 inhibition, and we are actually in the process of characterizing that further. But we do not believe the drugs are identical.

Makes sense. In the last minute, I want to talk about the BD and the pipeline. So you have successfully integrated the AnHeart acquisition and then global rights acquired for safusidenib. So what's the current appetite and capacity for potentially in-licensing and M&A activities? And you also have the DDC platform, too.

So we'll make an announcement on the DDC platform later this year, which we're very excited about. In terms of BD, we will always have an appetite for programs that we think could give us a great ROI for our investors. But we're going to be very disciplined. We have $535 million in cash. We have another $30 million coming in from an Eisai payment next year. So we have plenty of cash to get us to profitability. So if we do a BD deal, it's going to have to be really compelling for us to do it. But we are constantly looking at things, and we think that there's a lot of things out there, but we're going to be very careful and disciplined to make sure we bring in something that will be really value increasing for the company.

Thank you for your time. This is an excellent conversation.

Thanks a lot, Farzin.

Thanks.