CytomX Therapeutics, Inc. (CTMX) Q3 2022 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the CytomX Therapeutics Third Quarter 2022 Financial Results Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference call over to your today's speaker Chris Ogden, Senior Vice President of Finance and Accounting. The floor is yours.

Thank you. Good afternoon, and thank you for joining us. Before we begin, I'd like to remind everyone that during this call, we will be making forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties and risks 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. We undertake no obligation to update any forward-looking statements whether as a result of new information, future developments or otherwise. Earlier this afternoon we issued a press release that includes a summary of our third quarter 2022 financial results and highlights recent developments at the company. We encourage everyone to read today's press release and the associated materials, which have been filed with the SEC. Additionally, the press release and a recording of this call can be found under the Investors and News section of our website. With me on the call today is Dr. Sean McCarthy, CytomX's Chief Executive Officer and Chairman. Sean will provide a business and pipeline update before I walk through the financials for the third quarter. With that, let me turn the call over to Sean.

Thank you, Chris, and good afternoon, everyone. Thanks for joining us for an update on recent progress at CytomX. Our mission at CytomX is to destroy cancer differently, and we're focused on leveraging our Probody platform to deliver differentiated medicines for people with cancer. CytomX's clinical achievements and learnings to date continue to highlight the broad applicability and scientific depth of our platform. Probody therapeutics are designed to achieve conditional activation of biologic therapies in tumor tissue, and we now have clinical experience with this important approach in more than 500 patients, many of whom have significantly benefited. Importantly, we have shown the potential of the platform to improve the therapeutic window across multiple biologic modalities including checkpoint inhibitors, antibody drug conjugates, T cell bispecifics and cytokines. These achievements are the result of our deep scientific expertise in biologic masking and in mapping the protease tumor microenvironment. Our continuous learning in the field of conditional activation is central to our conviction that our platform and pipeline has the potential to deliver breakthrough medicines for cancer patients. Conditional activation of biologics is an area of cancer R&D that is increasingly recognized in the industry as an important new frontier. Localization of cancer therapy via conditional activation offers immense promise and CytomX is at the forefront of this field. Innovation takes time and persistence and along the company building journey. To make the biggest difference, we must from time to time, take bold, decisive action and prioritize the opportunities most likely to deliver meaningful impact to patients. Last quarter, we made the difficult decision to restructure the company in order to focus our internal resources on our wholly-owned next-generation pipeline and on our partner programs. As a result, CytomX remains strong, it's funded into 2025 and is well positioned for the future. Our current pipeline spans from preclinical Phase 2 across multiple modalities and is addressing many important areas of unmet needed oncology. I'd now like to briefly review our lead programs. I'd like to start with our wholly-owned next-generation pipeline candidates, CX-2051 and CX-801. Now for these programs, we have selected previously validated targets EpCAM and interferon alpha-2B, respectively, that have historically been limited in their potential due to systemic toxicities. In the molecular design of CX-2051 and CX-801, we have incorporated our platform expertise and clinical learnings to optimize predictive therapeutic index in order to potentially broaden the clinical utility of these promising targets through conditional activation. Focusing now on CX-2051. EpCAM has been regarded as a high potential oncology target for decades and has been clinically validated by others. However, efforts to generate systemic anti-EpCAM therapeutics have to date not been successful due to toxicities in epithelial tissues. At the World ADC Conference during Q3, we were pleased to unveil CX-2051 as our newest conditionally activated ADC. 2051 is tailored to optimize the therapeutic index for EpCAM-expressing epithelial cancers by matching the target with payload mechanism of action and with tumor sensitivity. We selected cathodes in a topoisomerase 1 inhibitor as the payload for this program based on the well-characterized profile of this class and the strong clinical activity observed with TOPO-1-inhibiting ADCs, including, for example, the recent groundbreaking breast cancer data for N HER2. At World ADC, our data presented for 2051 demonstrated a wide predictive therapeutic index and strong preclinical activity and tolerability in multiple preclinical models, including in colorectal cancer. The expression profile of EpCAM and the tumor sensitivity profile of the camptothecin payload provide an exciting clinical path forward for this program, and we anticipate filing an IND for this novel ADC in the second half of 2023. Turning now to CX-801, our conditionally-activated interferon alpha-2b, the lead program within our broad efforts in the cytokine field. At SITC later this week, we will share preclinical data for CX-801, highlighting its potential to improve therapeutic window versus unmasked interferon. Interferon alpha-2b is an approved immunotherapeutic that has demonstrated clinical activity in multiple cancer types and we believe provides a potentially superior approach to activating antitumor immune responses to IL-2, IL-12 and IL-15. Interferon alpha stimulates antigen-presenting cells to activate cytotoxic T cells and combines effectively with checkpoint inhibition, offering tremendous potential to unlock checkpoint refractory and/or resistant cancers. However, the powerful anticancer activity of interferon alpha has thus been difficult to harness due to its systemic toxicity. For CX-801, the data to be presented at SITC show a wide therapeutic index with an enhanced tolerability profile versus unmasked interferon without limiting its potent antitumor effects. Importantly, these data also highlights CX-801's preferential activity in the tumor microenvironment as well as the potential for synergistic effects when combined with checkpoint inhibition. We believe CX-801 has the potential to become a unique centerpiece of combination therapy for a wide range of tumor types, and we aim to rapidly advance this potentially best-in-class program towards clinical evaluation with an IND filing targeted for the second half of 2023. Moving on now to our clinical stage pipeline. We continue to work intensively with our partners to advance multiple Probody therapeutic programs. Our work with Bristol-Myers Squibb is making important progress, including with BMS-986249, the Probody version of ipilimumab. At ESMO in September, BMS presented promising updated Phase 1 data from an ongoing Phase 1/2 study in patients with advanced cancers. We are particularly encouraged by the safety profile and clinical activity reported from the Phase 1 study to date. Both as monotherapy and in combination with nivolumab, 249 appears to be tolerated at higher doses than standard ipilimumab clinical dosing. Clinical activity was demonstrated in multiple tumor types, including melanoma, and a particularly encouraging case study of a response in microsatellite stable colorectal cancer. CTLA-4 continues to be an important target and a foundational immuno-oncology strategy, but CTLA-4 blockade has a narrow therapeutic window. The ESMO 2022 update provides continued evidence for the Probody platform, enabling higher and potentially more efficacious doses of anti-CTLA-4 therapy. BMS continues to evaluate 249 in a randomized Phase 2 study in combination with nivo versus ipi plus nivo in patients with advanced melanoma. The combination is also being studied in advanced hepatocellular carcinoma, castration-resistant prostate cancer and in triple-negative breast cancer. During Q3, BMS also highlighted our collaborative work on CTLA-4 in the SITC webinar series in a presentation titled Building on the Legacy of Ipilimumab. This presentation focused on the company's portfolio of next-generation anti-CTLA-4 antibodies to which the Probody strategy is a core focus. BMS also continues to study the nonfucosylated CTLA-4 targeting Probody BMS-986288 in Phase 1 both as monotherapy and also in combination with nivo in patients with advanced solid tumors. This strategy is aimed at enhancing the clinical benefit of ipilimumab through superior APC-mediated T-cell priming. BMS will be presenting a poster at SITC this week, focused on the non-mass version of 288, BMS-986218, and this poster will include preclinical data for 288, the Probody, which continues to advance in the clinic. We continue to be excited to be playing such an important role in BMS next-generation CTLA-4 efforts, and we look forward to future clinical updates on these programs over time. Moving on to CX-2029, our CD71 or transferrin receptor directed ADC, partnered with AbbVie. CD71 has long been recognized as an attractive target for cancer therapy because of its efficiency as an internalizing transporter and because it's highly expressed in many solid and hematologic tumors. However, this target has previously been undruggable due to its expression on many normal tissues. CX-2029 is a conditionally-activated Probody ADC targeted to CD71 that has demonstrated favorable tolerability and encouraging antitumor activity in Phase 1 and subsequently has advanced into a multi-cohort Phase 2 expansion study. Enrollment into the CX-2029 expansion phase is now complete in all three solid tumor types. A data update for the squamous lung cohort is expected in the fourth quarter of 2022. Additionally, data from the esophageal gastroesophageal junction cancer cohort continue to mature. We anticipate dialogue with our partner, AbbVie, as to the next steps for this program. Thus far on the call, we have discussed the application of our versatile technology to three biologic modalities, ADCs, cytokines and checkpoint inhibitors. I would now like to move to our fourth modality, T-cell engaging bispecific antibodies. Localization of the powerful activity of T cell engagers is a key goal in cancer R&D, and we believe our platform is very well suited to address this challenge. In September in Cancer Research, we published preclinical data demonstrating that a conditionally active bispecific EGFR-CD3 Probody could expand the safety window while maintaining anticancer activity of this potent target combination. This work has led to the clinical candidate, CX-904, and we are now well underway with Phase 1 dose escalation for this program with the goal of assessing safety and selecting a go-forward dose for subsequent expansions in EGFR positive tumor types. CX-904 is partnered with Amgen in a global co-development collaboration, and we believe this T cell engager has broad potential across many cancers, and we look forward to providing future updates. Let me now turn the call over to Chris to provide you with a financial overview for the quarter.

Thank you, Sean. I'm pleased to be able to share an update on our third quarter financials with you today. CytomX remains in a strong financial position with $194 million in cash, cash equivalents and investments as of September 30, 2022. And as Sean mentioned earlier, the strategic restructuring announced in July extends our projected cash runway into 2025 as we continue to look to the long term. Additionally, our approach in advancing both our wholly-owned pipeline and collaboration programs significantly broadens the scale of value-creating opportunities for the company and provides flexibility to diligently manage our capital needs. Given the breadth of our platform, we view the balance in leveraging both internal and external R&D as a key advantage and core to our pipeline and capital management strategy. Now turning to the third quarter 2022 results. For the third quarter, revenue was $16.9 million compared to $17.6 million for the corresponding period in 2021. R&D expenses increased by $1.2 million to $30.4 million during the three months ended September 30, 2022 compared to Q3 2021. The increase was primarily due to restructuring expenses. G&A expenses were $10.5 million during the third quarter of 2022, a decrease of $0.6 million over Q3 2021. The decrease was mainly due to the workforce reduction and a decrease in outside consulting expenses. With that, I'll turn the call back to Sean for closing remarks.

Thanks, Chris. In summary, the continued scientific progress at CytomX with our platform and pipeline holds substantial promise for patients. The translational cycle of bench to bedside to bench continues to teach us where the highest impact applications of our technology lie for the benefit of people with cancer, and we remain steadfast in our commitment. We're looking firmly ahead to 2023, a year in which we expect to see the continued realization of our vision for conditional activation as we reach key inflection points with our most mature partners, advance our first T cell engager and file two new INDs. In the near term, we expect to provide a data update from the lung cancer cohort from the Phase 2 study of CX-2029 and to complete our restructuring efforts. Our unmatched experience in designing and developing conditionally activated biologics derived from our relentless efforts to destroy cancer differently. We also continue to make clinical and preclinical progress with our valued corporate partnerships, and we will continue to pursue new business development as an integral part of our corporate development strategy. Despite challenging current market conditions, we remain firmly focused on building CytomX for the long term as a leading innovator. Thanks to everyone involved in our efforts to make the biggest difference we can. Operator, let's now open up the call for Q&A.

Thank you. [Operator Instructions] Our first question comes from Peter Lawson of Barclays. The floor is yours.

Thanks for taking me first. Just on thanks Sean, CX-2029 kind of how much data should we expect later this year? And then I've got a couple of follow ups? Thank you.

Yes. Hi Peter, thanks for the question. So I think as we've previously guided and just to recap, the design of the expansion cohorts involved enrollment of 25 patients in each cohort. And as we've discussed previously, also the three tumor types, the three solid tumor types that we're investigating are head and neck that we've reported on previously, squamous non-small cell lung and also esophageal cancer, gastroesophageal junction cancers. And so, the goal is the 25 patients in each of those cohorts as we've reported, we've completed enrollment in each. We are on track to report an update for the fully enrolled cohort along by the end of the year, and the data for esophageal gastroesophageal junction continues to mature.

How are the discussions going with AbbVie? Are they kind of encouraged by the data so far? Just curious on how they're viewing the product?

Just to recap the next steps with AbbVie, the way this deal is structured, CytomX is running -- has run the expansion phase. We ran the Phase 1. We've run the expansions. And the next stage in this alliance, which is a global co-development relationship, is that the expansion data will be assessed. And then the asset is scheduled to go back to AbbVie per contract to run the next phase, whether that be a formal Phase 2 or move into registrational studies. We'll be having conversations with them in the coming months about the updated expansion phase data and potential next steps for the program. That's really what we can say at this point.

Got you. And then just finally on 904, how much data - when could we see that Phase 1 data and how is enrollment going? And kind of what tumor types do you think you'll end up focusing on?

Yes, we're thrilled to be in the clinic with this program. As I mentioned in my prepared remarks, this is the first T cell engager that CytomX has moved into clinical studies, and we think the EGFR/CD3 target combination has a ton of potential in EGFR-positive tumors, of which there are many, as you know. We are in the early stages of dose escalation. And I think as is generally recognized in the field, the goal of Phase 1 with these very potent modalities is to firstly assess - carefully assess safety in a stepwise fashion to get to a recommended Phase 2 dose - 2 study in further expansion. So we're making good early progress. We're not ready at this point to comment on timing of any data updates.

Okay, thank you. I'll get back in the queue.

Thank you, one moment for our next question. Thank you. Our next question comes from the line of Etzer Darout from BMO Capital Markets. The floor is yours.

Great, thanks for taking the question. Just one on sort of the CX-2029 upcoming data set. You've highlighted sort of efficacy in the third line plus squamous non-small cell lung cancer. And I guess, is similar efficacy that 18% response, longer duration sufficient, I guess, for advancement. I guess what success in your mind in that study, and how should we think about benchmarks for PFS durability for this population? Thank you.

Yes, thanks for the question, Etzer. So I'll refer you to comments we've made previously regarding the lung cohort. We reported about a year ago, the 18.8% response rate in the first 16 patients enrolled into the study at the RP2D. And our guidance has been pretty consistent. If you look at the benchmarks in the third line setting and in this study, we've been in the post checkpoint inhibitor setting. You're looking at responses to chemo that - in some cases, can be in the high single-digits into the double-digits. We have put out 20% in the past as a response rate that would be of interest. I mean, of course, this is all subject to discussion with our partners to how they would see this asset fitting into their overall pipeline and - therapeutic landscape. In terms of duration of response, again, we would see four to six months of response being an accomplishment in this late-line setting. So, we'll see what we get as we analyze this data in the coming months.

Great, thank you.

You're very welcome.

One moment for our next question. Thank you for waiting. Our next question comes from Mara Goldstein of Mizuho Group. The floor is yours.

Thanks very much. Hey I wanted to ask on excuse me CX-904. You're leading early development with that. And so I'm curious as to sort of from a mechanics perspective, what has to happen between having data from that data set? And what Amgen will look at? And is it on achievement of an MTD? Like how should we think about that from a timing perspective? And I'm also curious if there's any visibility on anything from the Astellas relationship advancing at this point?

First, the traction is in a very similar way to the action ship. So again, it's a global co-development relationship and significant U.S. comes back to 904 as we do for 2029. We're running the Phase 1 program. And it's a similar structure that after our Phase 1b expansion phase. The program would be per contract ready to go back to Amgen for global later-stage development and registration with CytomX having, as I said, an opportunity to participate commercially in the United States. So we haven't provided any additional information or guidance regarding what triggers that. That's not disclosed at this point, but that's - those are the mechanics of the deal. And like I said, we're thrilled to be in the clinic with this agent and we're in the Phase 1 setting highly focused on as they typical for T cell engagers characterizing initially the safety profile over several expansion cohorts.

Okay and then on Astellas?

With regard to Astellas, yes, not a lot more to say there, we're doing a lot of work with them on the T cell engager space. As you know, that deal is focused in T cell engagers. It's central to Astellas IO strategy, not a whole lot more I can say about that at this time.

Okay, thank you.

You're welcome.

Thank you. One moment for our next question. Our next question comes from the line of Mitchell Kapoor with H.C. Wainwright. The floor is yours.

Hi, thank you for taking the questions. Firstly, I wanted to ask about the recently reported EpCAM ADC data at Royalty [ph]. How do you think about that program now differently with this data? And what are some key learnings from that preclinical data? And then separately, how does the prior data from other EpCAM targeted therapy derisks the path forward if you could just comment on that as well? Thank you.

Yes, Mitch, thanks for the question. So we're super excited about this program. We have been interested in EpCAM for quite some time, as you know. And the 2051 program that we disclosed at World ADC as a number of key features, which make this, we believe, a very attractive candidate for moving towards the clinic. First of all, let's focus on the target. So as you rightly point out, EpCAM has been studied in the past and actually shown to be an efficacious target. I'll point, for example, to the data from Sesen Bio in their anti-EpCAM toxin fusion protein, which showed very clear clinical activity in non-muscle invasive bladder cancer. Now that drug, because of its systemic toxicity needed to be instilled and delivered locally. So it's a great proof of concept for how target engagement with a toxin infusion can lead to tumor regressions and very significant tumor regressions. But it's also a case study for how an anti-EpCAM toxin infusion cannot be delivered systemically due to its toxicity. Why not? Well, because EpCAM is present on most epithelial normal tissues. So there's also been previously an - I'm sorry, an EpCAM CD3 bispecific that was approved some years ago, which also needs to be delivered through local application because of its high level of systemic toxicity. So the target is validated. We need to create a therapeutic window for it, which is where the masking strategy comes in. With regard to the payload, we spent a lot of time thinking about what's the optimal payload for an EpCAM-targeted ADC, and we've settled on the Topo-1 inhibitor camptothecin with a cleavable linker to optimize bistandard effect. We think this combination of the validated target, the high-level expression on tumor tissue. The increasing validation of Topo-1 inhibitors as having activity across a wide range of tumor types, as exemplified by an HER2, Trodelvy and other experimental agents in the clinic offers enormous potential for this drug candidate. So the - I would say that the learnings overall from the last few years really distilled into the target being previously validated, the payload being camptothecin Topo-1 inhibitor, and we look forward to pushing this into the clinic and to IND in 2023.

Great, thank you. And 1 financial question - I just wonder how we can expect operating expenses to trend after the restructuring includes around your end?

Yes. Mitch, this is Chris. Thanks for the question. We don't give guidance on phasing. But just to reiterate our cash burn way guidance were projected into 2025. And where we expected to be in terms of the restructuring, we plan to be substantially complete by year-end. If you're looking at just the base OpEx this quarter, I would just remind you that restructuring expenses on an accrued basis are in those. There's about $7 million there in the quarter. So if you back out, you see even a nice sequential decline. So making progress, but not guiding quarter-to-quarter at this point.

Perfect, thank you, I really appreciate it.

Sure.

Thank you. One moment for our next question. Our next question comes from Joe Catanzaro from Piper.

Great, thanks for taking the questions here. Maybe just two quick ones from me I think earlier this year at the time of the praluzatamab update, there was indications that you'd look to seek a partnership. I'm wondering if that's still on the agenda, and you still see that as an opportunity. And then with regards to CX-801 and interferon alpha, I'm wondering if you could point to maybe historical data with interferon alpha and whether there have been sort of typical tumor types that have shown to be responsive to interferon alpha? Thanks.

Yes, Joe, thanks for the questions. Regarding 2009, yes, you're right. We have - we've discussed previously, our interest in potentially finding a partner for praluzatamab. Discussions do continue there. We will be having a poster update at San Antonio with the full Phase 2 data. With regards to 801, again, we're super excited about this program. It follows a similar kind of strategy to what I outlined with the EpCAM program just a few moments ago. It's obviously a validated molecule. It's known to have anticancer activity as known to be limited by toxicities, a multitude of systemic toxicities. But due to the mechanism of action of interferon alpha having both anti-direct antitumor effects and also a powerful ability to activate immune cells, we believe this has the potential to be a central component of combination therapies on a go-forward basis, if we can harness its activity by localizing into tumor tissue. Some of the best clinical evidence that has motivated us for this program comes from the combination study that Merck ran actually of interferon in combination with KEYTRUDA in the melanoma setting, where they saw a high ORR of about 60%. They saw a similar incidence, unfortunately, a Grade 3/4 adverse event, but this is a highly effective drug in combination with checkpoint inhibitors. We think potentially other mechanisms also shown activity in other solid tumors, certain hematologic tumors, and we think there are plenty of places to go with 801 in the future so looking forward to getting that IND filed again as one of our two wholly-owned new programs on the future horizon.

Great, thanks so much for taking my question.

My pleasure.

Thank you. At this time, I'd like to conclude the Q&A session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.