CytomX Therapeutics, Inc. (CTMX) Q3 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the CytomX Therapeutics Third Quarter 2020 Financial Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your host for today, Ms. Stephanie Ascher with Investor Relations. Ma'am, please go ahead.

Good afternoon, and thank you for joining us on today's call. With me today are CytomX's President, Chief Executive Officer and Chairman, Dr. Sean McCarthy; Chief Development Officer, Amy Peterson; and Chief Financial Officer, Carlos Campoy. Earlier today, CytomX issued a press release that includes a summary of our recent progress and third quarter 2020 financial results. We encourage everyone to read today's press release as well as associated materials, which have been filed with the SEC. In addition, the press release and a recording of this call can be found under the Investors and News section of our website at cytomx.com. During today's call, we will be making forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties and risks, including the uncertainty surrounding the COVID-19 pandemic, that are difficult to predict and many of which are outside of our control. Important risks and uncertainties are set forth in our most recent public filings with the SEC at sec.gov, including our Form 10-Q filed today. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise. I would like to turn the call now over to Sean.

Thank you, Stephanie, and good afternoon, everyone. Thanks for joining us today. I'd like to open today's call with a brief update on our pipeline progress this past quarter. Then I'll hand the call over to Amy to provide context on clinical data we presented to date and where we're heading with our most advanced programs. Finally, Carlos will round out the call with our financial results for the quarter. I'd like to start with a few words about our overarching strategy at CytomX. We are defining a new class of conditionally activated antibody therapeutics with broad potential for bringing new approaches to the treatment of cancer. We aim to leverage our differentiated platform to discover, develop and commercialize a portfolio of new cancer therapies to make a difference in the treatment of many tumor types. Throughout 2020 and despite the ongoing pandemic, we have continued to make steady progress towards advancing our pipeline and building our company. We have five product candidates in clinical development. And together with our partners, we now have eight active Phase II evaluations in seven different tumor types, providing multiple opportunities for potential advancement towards registrational studies as we build our pipeline and company for the long term. Our pioneering work on conditional antibody activation is aimed at changing the way we think about monoclonal antibody treatments for cancer by developing what we call Probodies, a novel class of therapeutic antibodies. The advantage of our Probody approach is that these unique antibody therapies are designed to bind to targets in tumor tissue and minimize binding in normal tissue. Why is this important? Well, traditionally, therapeutic antibody targets have been chosen based on their selective presence in disease tissue. This selected expression is usually critical because conventional antibodies will bind to their targets wherever they are present, even on normal tissues. Unwanted normal tissue expression of targets can lead to undesired toxicities, particularly with potent antibody formats, like antibody-drug conjugates and T-Cell-engaging bispecifics. This has substantially limited the available universe of tumor targets for these increasingly important modalities. CytomX Probody therapeutics are designed to reduce target binding in healthy tissue by masking the target recognition site of the antibody until it reaches tumor tissue, where the mask is removed in the tumor microenvironment, allowing the antibody to bind to its target and elicit its anticancer effect. In normal tissue, the mask is intended to remain intact and prevent binding to the target. This unique and elegant approach has shown potential to create a therapeutic window where previously there was none, thereby opening up the therapeutic landscape to new abundantly expressed tumor antigens, for example, CD-166, CD71 and EpCAM. Fundamentally, we believe our Probody technology has the potential to unlock many previously undruggable targets, leading to new first-in-class cancer treatments. At CytomX, we have built a robust scientific foundation for our Probody platform and a fully integrated research and development engine. We believe we have established clinical proof-of-concept for our platform against multiple cancer targets. We have demonstrated single agent anticancer activity in each of the three programs for which efficacy data has been presented publicly, and each of our clinical programs have shown encouraging tolerability profiles. Our translational data from tumor biopsies support mechanistic performance of the platform. We have established robust and proprietary manufacturing processes for Probodies that apply to multiple formats, including drug conjugates and T-Cell engaging bispecific Probodies, and we are well-positioned to build a late-stage development company around our emerging platform-driven pipeline that I will now briefly review. Starting with CX-2009, our wholly owned Probody drug conjugate, or PDC targeting CD-166, a cell surface protein that is highly expressed in many cancer types. We've seen a lot of excitement about the antibody drug conjugate field this year with developments such as the approval of Trevali for the treatment of breast cancer, which, of course, drove the acquisition of Immunomedics by Gilead. Antibody drug conjugates have now been repeatedly validated and the search is on for new targets for the next generation of ADCs. Although highly expressed in many tumors, CD-166 is not a great ADC target due to its expression on many healthy cells. But it's exactly the kind of target that we have the potential to address with our platform. CX-2009 has been designed to unlock CD-166 targeting using the cytotoxic warhead DM4. Our previously reported Phase I clinical evaluation of CX-2009 in solid tumors has shown evidence of single-agent anticancer activity in HER2 nonamplified breast cancer in addition to ovarian cancer, head and neck cancer and also lung cancer. Our current clinical focus for CX-2009 is on breast cancer. CD-166 is highly expressed in more than 80% of hormone receptor-positive HER2 non-amplified breast cancers and in approximately 50% of patients with triple negative breast cancers. During Q4, we will be initiating a Phase II study of CX-2009 in hormone receptor-positive HER2 nonamplified breast cancer and triple negative breast cancer to further define the clinical activity of this unique agent. Amy will walk you through the design goals and timing of this study in a few moments. Turning now to CX-2029, a Probody drug conjugate targeting CD71 that we are developing in collaboration with our partner, AbbVie. CD71 is also known as the transferrin receptor is involved in iron metabolism and is overexpressed in a variety of cancers. Its biologic function involves very rapid internalization from the cell surface. And this property would, in theory, make CD71 an attractive target for an ADC. However, CD71 is also expressed in healthy tissues, especially dividing tissues where iron transport is necessary to cell division. And even low doses of an ADC to CD71 are lethal in animal studies. CD71 has therefore been a high potential but elusive target with a nonviable therapeutic index. We have explored the ability of our platform to open a therapeutic window for a CD71-targeted Probody drug conjugate, potentially creating a novel first-in-class anticancer approach. Our first clinical evaluation of CX-2029 presented at ASCO 2020 realized our objective of achieving therapeutic levels of a CD71 targeting drug conjugate in cancer patients and demonstrated encouraging single agent anticancer activity. This morning, we were pleased to announce the treatment of the first patient in the Phase II expansion stage of our evaluation of this unique agent. Amy will recap our Phase I findings for CX-2029 and some additional details on the expansions in a few moments. I would like to move now to our anti-CTLA-4 program, where we have made important progress in collaboration with Bristol Myers Squibb, working to develop potentially safer and more effective versions of ipilimumab. Having established a key role in the treatment of melanoma, anti-CTLA-4 regimens are expected to become increasingly important therapies across multiple solid tumor indications. And while the blockade of CTLA-4 has been shown to augment T-Cell activation, proliferation and anticancer activity, this often results in high levels of systemic immune-related toxicities that can lead to the reduction in therapeutic dosing or treatment discontinuation. Our ongoing work with BMS is aimed at decreasing the systemic side effects of anti-CTLA-4 therapy while maintaining anticancer activity. BMS-986249 is a Probody version of ipilimumab that we have developed together in our alliance and which has shown an attractive tolerability profile as both monotherapy and in combination with nivolumab in Phase I studies in patients with advanced cancers, and these data were presented by BMS at ASCO earlier this year. BMS is now conducting a randomized controlled study, evaluating the tolerability and activity of BMS-986249 in combination with nivo compared to nivo plus ipi in patients with previously untreated metastatic melanoma. This study holds the potential to demonstrate the ability of our Probody masking technology to improve tolerability, increase duration of treatment and enhance patient outcomes with this important immunotherapy. BMS-986288 is also being advanced in this partnership, and this is a Probody of a nonfucosylated version of ipilimumab. This program is designed to broaden the therapeutic window for a more potent version of ipi. BMS is continuing to enroll patients in Phase I dose escalation of BMS-986288 in patients with select advanced solid tumors. We look forward to seeing additional progress from BMS on these important anti-CTLA-4 Probody programs in 2021 and beyond. In terms of our Preclinical Pipeline, we continue during Q3 to advance CX-904, our T-Cell-engaging bispecific Probody targeting EGFR and CD3 and partnered with Amgen towards IND-enabling studies with a filing expected in 2021. In addition to our work with Amgen, we also continue bispecific Probody drug discovery activities as part of our strategic collaboration with Astellas, our second pharma partner in this exciting area. The overarching goal of our work on bispecific T-Cell engagers is to use masking and conditional activation to broaden the therapeutic window for solid tumor treatment with this emerging class of antibody therapeutics. Finally, I would like to highlight our ongoing preclinical work on another undruggable ADC target, EpCAM, and our EpCAM-targeting Probody drug conjugate, CX-2043. EpCAM or Epithelial Cell Adhesion Molecule, also known as TROP-1, is expressed in multiple cancers. However, it has proven to be very challenging to drug since, as the name suggests, the target is present on the majority of normal epithelial tissues. Previous attempts to drug EpCAM with systemic therapies have resulted not surprisingly in significant dose-limiting toxicities. It's encouraging, however, that at least one locally delivered therapy of recombinant toxin fusion has demonstrated clinical activity in bladder cancer, suggesting that targeting EpCAM could have even broader potential if we use our conditional activation approach to enable systemic administration. We're advancing CX-2043 utilizing our Probody technology and ImmunoGen's drug conjugate technology and specifically, the next-generation maytansine warhead DM-21, which is more potent than earlier generations of this payload chemistry. At the recent EORTC triple meeting, we presented updated preclinical data showing potent anticancer activity for CX-2043 and significantly improved preclinical tolerability of the Probody relative to the underlying ADC. We're now advancing this PDC candidate towards IND-enabling studies and a potential IND filing in 2021, continuing the theme of using our platform to drug the undruggable. Now, I'd like to hand the call over to Amy.

Thank you, Sean. I will first start with our CX-2009 program, which we are moving to patients with HER2 nonamplified breast cancer, including those with hormone receptor positive or terminative subtypes. Despite important recent progress with new treatments, including sacituzumab govitecan, there remains a substantial unmet need in breast cancer for safe and effective treatments. We believe that CX-2009, a conditionally-activated ADC, has the potential to address a large population of patients with breast cancer. CX-2009 is a Probody drug conjugate that targets CD-166 and deploys the DM4 payload. CD-166 is highly expressed in over 80% of hormone receptor-positive breast cancer and in 50% of triple negative breast cancer. We presented data at ASCO 2020 as well as other venues, demonstrating compelling activity in these two subtypes of breast cancer, namely, we reported two confirmed PRs in patients with hormone receptor-positive disease, and three unconfirmed, but deep responses in patients with triple negative disease, including a patient who previously had progressed on pembrolizumab and on sacituzumab govitecan. Of the 33 patients with either of these two subtypes of breast cancer, nearly half or 48% had stable disease or better as their best response to CX-2009. We will be providing a further update on our Phase I work on CX-2009, including preliminary translational biopsy data at the San Antonio breast cancer conference later this year. To put our Phase I dose escalation in context, sacituzumab govitecan reported two confirmed PRs in 25 patients with a variety of tumors in their Phase I dose escalation study, one with triple negative breast cancer and one with colorectal cancer. It was not until the expansion phases were enrolled that a more compelling signal in triple negative breast cancer was observed. We are encouraged by what we have seen with CX-2009. As you know, we put enrollment on hold during the shutdown stemming from the COVID-19 pandemic. We have been able to leverage this pause to further hone our investigation of CX-2009 in breast cancer subtypes by initiating a focused Phase II study consisting of three parallel enrolling arms. Arm A will enroll patients who have received 0 to two prior cytotoxic chemotherapy regimens for advanced hormone receptor-positive HER2 nonamplified breast cancer. Arms B and C will enroll patients who have received one to three prior lines of therapy for advanced triple negative breast cancer that expresses CD-166 by immunohistochemistry. Arm C will additionally require that the tumor from patients is positive for PD-L1. CX-2009 will be administered at a dose of seven mg per kg every three weeks as monotherapy in arms A and B, and in combination with CX-072, now with the generic name pacmilimab, our Probody to PD-L1 in Arm C. We anticipate enrollment to commence this year and are hoping, the pandemic notwithstanding, to have an initial look at data from both arms A and B in Q4 2021 and from Arm A in 2020 - arm C, sorry, in 2022. I'll now move to our program evaluating CX-2029, our Probody drug conjugate against CD71 deploying the microtubule inhibitor MMAE as its payload. We presented the first ever clinical data from an ADC to this target at ASCO 2020. In this presentation, we reported three confirmed responses, two in squamous non-small cell lung cancer and one in head and neck squamous histology. Updated data were included in our press release issued this afternoon. Yes, I am regarding the signals observed with CX-2029 in this Phase I dose escalation study remains high. And as we announced this morning, we have treated the first patient in the Phase II expansion stage of our ongoing evaluation of the potential of this novel - the first patient in the Phase II expansion stage of our ongoing evaluation of the potential of this novel first-in-class agent. The expansion stage will evaluate approximately 25 patients each with squamous non-small cell lung, head and neck squamous cell, esophageal or GEJ junctional cancer or diffuse large B-cell lymphoma. We anticipate initial data from the expansion cohorts late in 2021. I'd like to focus on two of these cancer types that were assessed in the Phase I dose escalation, namely squamous lung and head and neck squamous cell carcinomas. 12 patients with either of these subtypes of cancer were enrolled. And I'd like to now provide a more complete picture of activity and tolerability of CX-2029 in these patients, reflecting an updated data cutoff of August 14, 2020. Of the four patients enrolled with squamous lung, we observed a best response of stable disease or better in three of them, including two confirmed partial responses with durations of 2.5 months and 5.6 months in patients dosed at five and three milligrams per kilogram, respectively. The patient with stable disease enrolled into the three milligram per kilogram cohort and remained on treatment with stable disease for 26 weeks or approximately six months. The one patient who experienced disease progression as their first on-treatment assessment was enrolled at the one milligram per kilogram dose level, a level that was not predicted to be consistent with biologic activity. There were eight patients with head and neck squamous cell carcinoma enrolled into this Phase I dose escalation study, all of whom enrolled either into the two or three milligram per kilogram dose cohorts. Of these eight patients, we observed a best response of stable disease or better in seven of them, including one confirmed partial response that remains ongoing at 38 weeks on treatment and now with target lesion reductions of greater than 80%. One of the patients with stable disease also remains on treatment at 33 weeks. The others have come off for disease progression. In addition to the clear signs of clinical activity, I'd like to also highlight that none of these 12 patients stopped treatment for a toxicity-related issue. Those off treatment came off for disease progression. The most commonly occurring Grade three or higher adverse event was anemia, occurring in 49% of 45 patients treated across all dose levels. No new safety signals were observed at the updated data cutoff. With regards to the anemia, we have been working with experts in the field to actively investigate the potential etiologies, including payload toxicity and direct effects on reticulocytes. In the expansion cohorts, we will implement additional monitoring as well as investigate the effects of various interventions, including blood transfusions, growth factor support, dose delays and or reductions to better mitigate the side effect and to ensure that our patients can continue to receive biologically active doses for as long as their disease responds. In summary, we are on track to have key data from both the CX-2009 and CX-2029 programs next year that will directly inform registrational strategies. More broadly, our clinical pipeline has continued to take shape as we and our partners have advanced to Phase II proof of development studies with four Probodies evaluating seven indications. These ongoing studies provide many opportunities for advancement to late-stage development, and we aim to conduct additional signal seeking in the future in other indications where activity has also been observed, all with the goal of growing our pipeline and company for the long term. With that, I would like to turn the call over to Carlos to review our financials.

Thank you, Amy. I'd like to review the financial highlights for the third quarter ended September 30, 2020. We are in a strong financial position to continue to advance our Probody platform and drive our broad and deep pipeline to key value-driving inflection points over the next one to two years. As you've heard Sean mention, we have a strong record of major alliances, which have allowed us to broaden our pipeline, advancing three programs from concept to clinical stage and working through multiple discovery stage programs while generating significant nondilutive capital. We've already received $130 million from partners this year, and we are eligible for significant milestones around future development and regulatory achievement. Revenue for the third quarter was $17.8 million compared to $10.7 million in the corresponding period in 2019. Research and development expenses were $24 million for the quarter compared to $28 million in the third quarter 2019. General and administrative expenses were $8.6 million for the third quarter 2020 compared to $8.5 million in the same period in 2019. Total operating expenses for the third quarter 2020 were $32.7 million as compared to $36.4 million for the corresponding period in 2019. As of September 30, 2020, cash, cash equivalents and investments totaled $321 million. We anticipate that our balance sheet will allow us to comfortably meet projected operating requirements into the latter part of 2022 without considering additional receipts of partnership milestones or new business development deals. With that, I'll turn the call back to Sean.

Great. Thank you very much, Carlos. Before we open the call up to questions, I'd like to emphasize a few key points from today's update. Firstly, we continue to see the preclinical and clinical weight of evidence building for the Probody approach to conditional antibody activation and with an increasing focus on undruggable targets. Secondly, our clinical pipeline has advanced considerably in 2020, with Phase II studies underway for four programs across seven cancer types. Thirdly, our partnerships are strong and remain an important component of our overall business plan through the advancement of key programs, including the BMS-986249 ipilimumab Probody and the generation of nondilutive capital through alliance upfront and milestone payments. Fourth, we are well-funded through important clinical inflection points we aim to reach in late 2021 and into 2022. We're on track with our goal of building an enduring oncology-focused company based on the unique therapeutic approaches that we're pioneering. We'd like to thank our entire team, our partners and our investors for their continued support, and we look forward to updating you again soon. With that, I'll turn the call back over to the operator, and we can open it up for questions. So, operator?

[Operator Instructions] And our first question comes from Terence Flynn with Goldman Sachs. Sir, please proceed.

Hi, thanks for taking the questions. Maybe two for me. I was just wondering, in terms of CX-2029, I appreciate the data update today. Anything that as you looked at the patients that progressed, any similarities about those patients in terms of what might be driving that progression? It sounds like maybe it's not adherence, but anything in terms of pathways or anything you identified on that front? And then, I guess, as you think about - maybe for Carlos, as you think about the balance sheet, are there additional partnership opportunities as you guys think about it? I know, Sean, you mentioned there's been a lot of interest in ADCs, but as you think about further partnership opportunities, is there anything that you're considering near-term or you feel like you're going to drive to these kind of Phase II proof-of-concepts next year and then that would be the pivot point to make a decision there?

Great. Thanks for the questions, Terence. Let me kick them both off and then be happy to hand over to Amy and Carlos for additional comments as well. With regards to the clinical question, we're still early in characterizing this drug candidate. This is a really big idea. And the - I'll give you one example of something that we need to do more work on, of course, which is the relationship between target level and response. So we're very early in our assessment of that particular biomarker, if you like. I would also just remind you and everyone on the call that is a Phase I study with late-stage patients brought into a dose-escalation setting. So it's still early days there as well. Let me just comment on the partnering and balance sheet, and then again, I'll hand over to Amy and Carlos. You're right, of course, partnering is - has been and will continue to be an important part of our plan moving forward. We do enjoy a robust balance sheet at the moment. We have - within our existing alliances, we do expect over the next couple of years to earn additional milestone payments in those alliances, which are not counted of course in this current cash balance. And we continue to be interested in additional alliances. Your question was, I think, alluding to some extent as to whether we would want to go to actually get the Phase II data before we partner the assets. That may very well be the case. But I would remind you that we've also been quite successful over the years in platform partnerships as well in which we've been able to generate significant upfronts for partnering a handful of targets with partners. So we've got a lot of flexibility, I think, on the partnering front over the course of our cash runway. But let me ask Amy if she has any other comments on the progression question.

Sure. Just briefly. Thanks, Sean. Your entire - you're right, the patient population that we enrolled, unfortunately, progression of disease is the expected outcome. I will note that in all patients, when we did the waterfall plot across all patients treated at biologically relevant doses, we did note that those patients whose tumors don't typically respond to microtubule inhibitors were the ones who progressed is their best assessment. So for example, colorectal mesothelioma. If you're asking about the head and neck or the squamous, I'd say, again, unfortunately, we're in the metastatic setting and all patients, the expectation is ultimately that they will progress. However, we are very encouraged that we have the durability of response that we did of 2.5 months in one, almost six months in another and getting close to that in the third. And so we're encouraged that we can actually get durable responses despite the refractory nature from these patient populations.

And Carlos, anything to add on the financial side?

No, nothing to add. I think you highlighted it well that we are absolutely focused on our Phase II, but we continue to be interested in new alliances, and we are still working with our existing partners in earlier stage candidates as well.

And our next question comes from Mara Goldstein with Mizuho. You may proceed.

On - sorry, 2029 on the breast cancer studies and that redesign trial where you'll have the three arms there. Do those expansion studies have the ability to convert into registrational studies?

Amy, you want to take that one?

Sure. I'd be happy to. Hi Mara, thanks for your question. So we do know that response rate can be a mechanism for accelerated approval in triple negative breast cancer that is very much on our minds, and we are going to be keenly interested in the results that we get from that. Whether or not we observe a registrational enabling - well, the studies that we designed for the hormone receptor-positive HER2 nonamplified subgroup should inform a registrational study. Whether or not it directly could be converted to a registrational study remains to be seen based on the data that we get.

Okay. And if I could also just ask another EpCAM-targeted drug recently went into the clinic. And I'm wondering if maybe you can talk a little bit about that program and what are the differentiating features for your own asset?

Yes. There - I mean, EpCAM has been on people's radar screen for a long time, and multiple approaches have been tried. And certain approaches are being tried right now, including certain antibody approaches, even cell therapy approaches. And so there are a variety of different agents being evaluated. We have the view that it's going to be hard to get - it's going to be challenging to get a workable therapeutic index for EpCAM without some kind of tumor-targeting strategy like ours. And so this is a target, in many ways, that was almost uniquely designed for our approach of masking. And as you saw - maybe you saw, if you haven't, please take a look at the triple meeting update that we just gave, the masking substantially improves the tolerability of the EpCAM drug conjugate. In Sinos, we were able to dose up to nine mg per kg safely, whereas three mg per kg of the unmasked is not tolerated. And yet we retain potent anticancer activity with the mask version of the ADC. So in some ways, quite similar to the progress we've made with CD71, but we do think some kind of localization is going to be important to successfully target EpCAM.

Okay, thank you. I appreciate it.

[Operator Instructions] And our next question comes from Etzer Darout with Guggenheim. You may proceed.

Thanks for taking my questions. I have one about the EGFR CD3 with Amgen. Just kind of wanted to get a broad view on where you see this program playing a role in EGFR cancers. Any indications that seem particularly interesting for this mechanism for targeting EGFR? And also wondering if there's been any kind of preclinical data to suggest potential advantages for addressing or overcoming TKI resistance.

Could you just repeat the last part of the question? It was what resistance?

Yes, for addressing or overcoming TKI resistance type kind of the got it.

Got it. Yes, sure. Yes, let me take that one. I mean, obviously, given that the programs partnered with Amgen, we're not communicating at this stage on potential indications, but we are gearing up to get this program into the clinic. It's an exciting program. And really, given how broadly expressed EGFR is on a range of solid tumors, we see a number of potential opportunities. And mechanistically, of course, the concept of using EGFR to target tumors and recruit and activate T-Cells is so fundamentally different to TKI inhibition that provided that the target is on a tumor cell, and the target is - well, simply put, provided the target is present on the tumor cell, whether or not the target is inactive for any mutational reason or whatever should not be relevant. So we just need the target to be on the cell surface to bind the bispecific and recruit the T-Cells. So there's a lot of potential. I think we're going to be informed by the data. We'll go signal seeking in early clinical development. And that said, there are some specific ideas that we have. We're just not ready to disclose them just yet.

All right. That's helpful.

Thank you.

And this concludes our Q&A portion of today's conference. I would now like to turn the call back over to Sean McCarthy for any closing remarks.

Great. Thank you very much, and thank you all for taking some time to listen to our update today. We're very pleased with the company's progress, particularly during this very challenging year for all of us in the pandemic, but team has continued to do a terrific job, and we are looking forward to 2021, which has the potential to be a very important year for our company as we continue to advance these multiple Phase II expansion cohorts, both ourselves and with our partners. So, thank you very much for your time.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.