Marker Therapeutics, Inc. (MRKR) Q3 2019 Earnings Report, Transcript and Summary

Greetings, and welcome to the Marker Therapeutics’ Third Quarter 2019 Operating and Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Tony Kim, Chief Financial Officer. Thank you. You may begin.

Thank you and welcome everyone to our third quarter 2019 earnings call. The press release reporting our financial results is available in the News section of our corporate website at markertherapeutics.com. Joining me for the call today are Peter Hoang, our President and Chief Executive Officer; Dr. Juan Vera, Chief Development Officer; and Dr. Mythili Koneru, Senior Vice President of Clinical Development. As a reminder, we will be making forward-looking statements during today’s call. These statements are subject to risks and uncertainties that may cause actual results to materially differ from those forecasted. A description of these risks can be found in our most recent Form 10-Q on file with the SEC. I would now like to turn the call over to Peter Hoang.

Thank you, Tony. Good afternoon, everyone and thanks for joining us. We continue to make good progress advancing our MultiTAA T-cell therapies across various hematologic and solid tumor cancers in the quarter. In ongoing partner-sponsored clinical studies with MultiTAA T-cell at Baylor College of Medicine, patients are experiencing durable responses some over five years with virtually no meaningful treatment related toxicities. And while it’s early days, we’re encouraged by the promising results delivered by the novel T-cell immunotherapy, particularly in such challenging disease areas. In anticipation and support of future Marker-sponsored clinical trials, we continue to build-out our infrastructure and expand our team. We anticipate the next 12 months to 18 months to be an exciting and productive time for our company. As you may recall, based on the breadth of data collected across the Baylor-sponsored studies, we’ve selected acute myeloid leukemia or AML as our lead indication for our first company-sponsored clinical trial. We’ve recently filed a new investigational new drug application or IND with the USFDA as part of a planned Marker Phase 2 study in post-allogeneic hematopoietic stem cell transplant patients with AML in both the adjuvant and active disease settings. Upon reviewing our submission, the FDA requested additional information regarding certain quality and technical specifications for two reagents supplied by third-party vendors that are used in our manufacturing process. These reagents are ancillary products used in manufacturing and are not present in the final product. However, because the data are needed to clear the IND, the trial has been placed on hold until our complete response to the technical questions is being satisfactory to the FDA. Because the agency’s questions were directed to third-party products rather than our own process or product we worked with the regulatory and quality groups at the respective manufacturers to address the FDA’s request. After receiving the required information from them, we submitted our complete response for the agency in late October, and regulators have 30 days to respond. We will communicate and update and our plans to move forward once these questions have been addressed. Given the various resolution scenarios, we are confident that we can initiate the trial in 2020 and hope to provide more precise timelines later this year. We recognize the need for new improved therapies in AML and advancing our novel T-cell candidate, which we believe can have a significant impact on the treatment of this patient population, remains our top priority. In fact, AML is the most common acute leukemia in adults and progresses rapidly with our treatment. The prognosis for these patients is poor with a five-year survival rate of 28%, and a high risk of relapse necessitating the need for improved treatments. Current options are mostly limited to chemotherapy, sometimes in combination with a bone marrow transplant. Both treatments carry a risk of bleeding, life-threatening infections, and permanent infertility. Bone marrow transplants also carry risk of graft versus host disease, also known as GVHD. We believe that our MultiTAA therapy may have several advantages over standard approaches as well as other T-cell therapies in development. In contrast to mono-specific T-cells, MultiTAA T-cells recognize up to five antigens and allow for epitope spreading leading to a more potent durable anti-tumor response, and unlike transplants that require hospital stays, MultiTAA is administered in an outpatient setting. MultiTAA based cell therapy is our central focus, but we are also advancing several legacy vaccine-based programs. To date, clinical results in our breast cancer trials have showed continuing progress including based on a preliminary analysis of 34 patients enrolled in the triple-negative breast cancer trial to date, 31 have showed meaningful immune responses to vaccine treatment of 80 patients treated at 11 clinical sites, 14 have shown disease progression as of September 30, 2019, following treatment with TPIV 200. We have however, made the decision to discontinue the development of cancer vaccine in patients with platinum-sensitive advanced ovarian cancer based on an unblinded review of interim results from our Phase 2 study conducted by an independent Data and Safety Monitoring Board or DSMB. Although the DSMB did not express any safety concerns with respect to TPIV200, we have elected to suspend the trial as it did not meet our threshold for probability of success based upon our pre-specified criteria. Pending full review of the data, we anticipate closing the trial in the first quarter of 2020. Unlike the ovarian cancer trial, there is no formal interim analysis in the breast cancer trial. The last patient will complete the trial in Q2 2021; at which time, we will communicate the results and make a decision on next steps for that product. With that, I will turn the call over to Tony to review financials. After that, we look forward to taking your questions.

Thanks, Peter. Net loss for the quarter ended September 30, 2019, was $5.5 million, compared to a net loss of $4.4 million for the quarter ended September 30, 2018. Research and development costs during the three months ended September 30, 2019, was $3.1 million, compared to $1.9 million during the three months ended September 30, 2018. The increase of $1.2 million was primarily attributable to increases in personnel-related expenses, relating to the build-up of our internal infrastructure. General and administrative expenses were $2.5 million during the three months ended September 30, 2019, as compared to $2.6 million during the three months ended September 30, 2018. The decrease was primarily attributable to $0.6 million of merger-related expenses incurred during the three months ended September 30, 2018, offset by increased expenses in headcount-related legal and other professional expenses. I will now turn the presentation back over to Peter for final remarks.

Thanks, Tony. I’ll open the call for questions. Operator?

Thank you. [Operator Instructions] Our first question comes from Christopher Marai with Nomura/Instinet. Please state your question.

Hello, this is Jackson Harvey on for Christopher Marai. I’m just curious after the FDA resolves the clinical hold with the response to their technical concerns, how quickly will you be able to start dosing patients?

Hi, Jackson. thanks for the question. That’s a great question. We’ve not stood still in the meantime. In fact, I think that preparations for initiation of the trial are fully underway. In fact, we’re progressing ahead of plan in the site enrollment plan. To date, we have visited over 20 sites, who are now waiting for an accepted IND number. Once we have an accepted IND number, we can get the IRB and contracting process started with those sites. And so, I do anticipate that we should be able to start the trial promptly after acceptance of the IND.

Great. Thank you very much.

Our next question comes from Ted Tenthoff with Piper Jaffray. Please state your question.

Great. Thank you very much. Just following up on that, what are some of the outstanding issues with respect to the IND hold and just be a little bit clearer on timing. What are the next steps exactly? I want to make sure I understand that. Thanks, Peter.

Yes, absolutely, Ted. Let am I turn the question over to Mythili Koneru, our Head of Medical Operations.

Hi, Mythili.

Hi, there. Thank you, Peter. To address your – the first part of your question, the FDA requested additional information specifically regarding certain quality and technical specifications for two reagents that were supplied by a third-party vendor that we use in our manufacturing process, but it’s actually not present in the final product and fuse to patients. So, because the FDA requires this data before planning, allowing any of these plans studies to move forward or this IND, the IND which was placed on clinical holds until our complete response to the technical questions that’s satisfactory with the FDA. So, the idea is that as we communicated in the press release, we’ve been working with the regulatory and quality groups at these respective manufacturers to address the FDA’s request, and we’ve submitted a complete response to these issues that was raised by the FDA on October 28, 2019. So, the FDA is going to respond within 30 days after receiving the complete responses and then indicate whether the whole is actually lifted and if not, specifically the reason is why the clinical trial.

That’s really, really helpful, because I think it puts into perspective just how, maybe, hopefully minor that says for the IND. So, all the best in getting there up and going, we’re excited to hear more about the studies?

Thanks, Ted. We really do see at a sort of a – not atypical from what we’re seeing across the industry in biologics right now in cell therapy. So appreciate it.

Thank you.

Our next question comes from Matt Biegler with Oppenheimer & Company. Please state your question.

Hey guys, thanks for taking my questions. Peter, what do you think really could be a worst case scenario here with this IND delay? Do you think the FDA might require you to find a new vendor for those reagents that you mentioned? And if so, I mean, how long would you estimate it would take to do equivalence testing?

Yes, matt. That’s a good question. Let me once again refer to Mythili here. From what I can say, I think that the FDA acceptance at this point is really the gating item for us to start. Like I said, the site enrollment has gone, if anything better than expected. And so I do think that, we should be able to get pretty fast start as soon as we get acceptance. Mai, do you have anything further to add?

Yes, just would like to reiterate that, we have been working very closely with these prospective manufacturers and have submitted the response to the FDA’s questions. We do expect to initiate the phase 2 clinical trial of our MultiTAA program for the treatment of post-transplant AML in 2020. And then we feel confident about that.

Okay. Thanks for that. That’s helpful. And so the agency didn’t have any concerns with the actual design of the AML trial and you’re still planning on moving forward with that same design looking at both relapse refractory as well as maintenance patients. is that correct?

Yes. the phase 2 portion of that study is unchanged and we will be exploring both an adjuvant setting as well as an active disease setting. That is correct.

Got it. And then maybe, just one last one for me if I may. So, do you think we’ll get any updated data from Baylor by the end of this year, maybe early 2020? And separately, do you know if Baylor has began testing the higher cell dose patients with AML yet?

Yes. We do plan on providing some additional information next year regarding the Baylor studies, which will obviously; include the AML as well as the pancreatic studies. The higher doses in the AML study has begun.

Great. Thanks for taking the question.

Thanks, Matt.

Thank you. [Operator Instructions] Our next question comes from Tony Butler with Roth capital. Please state your question.

Thanks very much, Peter. Two questions on the clinical trial itself. Other than dosing what are the other parameters that you may be looking at, albeit in a phase 1 trial? Clearly, opportunity sets in cells – our four cell therapy design trials generally give you – could give you a great deal of information that you could move forward within registration trials. So, I just want to understand what will you actually – what do you hope to accomplish? And then the second question is more one of I guess enrollment. Do patients generally in a post-transplant setting actually present with fulminant AML? How will that be gauged and when will dosing then begin for those particular patients? And then finally, ClinTrials has recorded AML and MDS in 44 participants. Would that be around the number that you would – that you’re thinking about for this Phase 1? In other words is ClinTrials correct? Thanks very much.

Thank you for your questions. Let me see if I can address them one at a time. Regarding your first question, the phase 2 study is looking at both in adjuvant and active disease population. The adjuvant portion is going to be randomized to either receive the MultiTAA T-cells or standard of care observation, because it is randomized and we also do have a planned interim analysis. We feel that there is an opportunity to move this forward, but the active disease portion of the study is actually a single-arm part of the study. And given the fact that there’s very limited treatments for relapse setting post-transplant we feel that a single-arm study would be sufficient. In terms of the actual enrollment the phase 1 study, what you saw in ClinTrials.gov is accurate. The phase 2 study is obviously larger and we’ll be looking at 40 patients in the active disease arm. and in the adjuvant part of the study, you have to be 60 patients in each part of the arm TAA T-cells versus standard of care observation for a total of 120 patients for that arm.

And I think that Tony, you asked a question about presentation of AML. Our best information is that their three month follow-up, probably around nine and 10 of the patients will be disease-free and will thus feed into our adjuvant arm for patients receiving the cells as a maintenance therapy without active disease. At the three-month mark, about one in 10 of them will be judged to be active disease that has relapsed refractory and will thus feed into that 40 patients a single-arm active disease arm of the trial. Now, once we complete enrollment of the 120 patients in the randomized adjuvant arm, patients who continue to get enrolled will rather than receiving their cells 90 days after their transplant, those cells will be held for them until the moment that they relapse, thus bolstering the enrollment of the active disease arm. But in total, as Mai said, you’re looking at 160 patients in aggregate.

I’m sorry, Peter, just 160 plus the 40 in the – in those that…

It’s 160 in aggregate, so 120 patients randomized one to one, 60 patients with drugs, 60 patients with – at the control arm. In addition, there will be for the 40 patients in the active disease arm of the trial.

Thank you very much. I appreciate it.

Sure.

Our next question comes from Yun Zhong with Janney. Please state your question.

Hi. Thanks. Thanks for taking the question. So, just curious, did the IND package include the clinical study from that conducted at Baylor investigator-sponsored study?

Hey, Yun, thanks for the question. That’s a great question. It did. from my perspective, I think that this is sort of part and parcel of transitioning in academic process into a company-sponsored process that is appropriate for a pivotal trial and for commercialization. So, I don’t think that we’ve been particularly surprised that there’s potentially a higher level of scrutiny on some of the reagents, but the agency has noted the safety profile of the overall therapy. Really what they’re looking for here is to ensure that all of the reagents that are proposed to be used in the process meet the specification that that they are looking for.

Okay. Thank you.

And ladies and gentlemen, there appears to be no further questions at this time. I’ll turn it back to management to conclude. Thank you.

Thank you again, for joining our call today. We appreciate your attention after hours and wish you all a good evening. Please reach out to us if you have any additional questions.

Thank you. This concludes today’s conference. All parties may disconnect. Have a great day.