Genocea Biosciences, Inc. (NASDAQ:GNCA)
Q2 2016 Earnings Conference Call
August 04, 2016, 09:00 ET
Maren Killackey - IR, Stern
Chip Clark - President & CEO
Jonathan Poole - CFO
Seth Hetherington - CMO
Jeff Hung - UBS
Ted Tenthoff - Piper Jaffray
Welcome to the Genocea Second Quarter 2016 Financial Results Conference Call. [Operator Instructions]. At this time, I would like to turn the call over to Maren Killackey of Stern Investor Relations. Please proceed.
Thank you, Operator. Good morning. This is Maren Killackey with Stern Investor Relations and welcome to Genocea’s second quarter 2016 financial and operating results conference call. This morning we issued a press release, which outlines the topics that we plan to discuss today. This release is available at www.genocea.com under the Investor Relations tab.
Today on our call, Chip Clark, President and CEO will review the company’s recent business and clinical highlights and then Jonathan Poole CFO will review the financial results. Seth Hetherington, CMO will be with us today for the Q&A.
Before we begin, I would like to remind everyone that statements made during this conference call relating to Genocea’s expected future performance, future business prospects, or future events or plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are intended to be subject to the Safe Harbor protection provided by the Reform Act. Actual outcomes and results could differ materially from those forecast due to the impact of many factors beyond the control of Genocea.
Genocea expressly disclaims any duty to provide updates to its forward-looking statements whether as a result of new information, future events or otherwise. Participants are directed to the risk factors set forth in Genocea’s 2015 Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission.
With that, let me pass the call over to Chip.
Thanks, Maren and good morning everyone. I'm pleased to report we continue to execute on plan with GEN-003 our first in class treatment for genital herpes and our research efforts in immunooncology and cancer vaccines. We're very encouraged by the GEN-003 clinical profile and compelling potential benefits for patients suffering with genital herpes infections. In the U.S. approximately 11 million patients have been diagnosed with genital herpes infections. We believe these patients need new treatment options to reduce their clinical disease and risk of transmitting the infection to others. Recently 12 month efficacy data from our Phase 2 dose optimization study was highlighted at this year's American Society for Microbiology Annual General Meeting, ASM Microbe 2016.
We previously reported some of these data in March. At 12 months after dosing GEN-003 demonstrated sustained and statistically significant reductions in viral activity and in clinical end point at levels similar to a full year of taking daily anti-viral therapy. GEN-003 was safe and well tolerated with no serious adverse events related to the vaccine. I will remind you that this is the second trial in which GEN-003 has demonstrated statistically significant and clinically meaningful results against relevant virologic logic and clinical endpoints. We are currently conducting a Phase 2b study for GEN-003 testing the two most promising doses from the last study versus placebo. The dosing phase is complete in this 2b study having enrolled approximately 135 U.S. subjects with a history of recurrent genital herpes.
Subjects have been randomized to one of three dose groups, placebo, 60 micrograms per protein and 50 micrograms of adjuvant or 60 micrograms per protein and 75 micrograms of adjuvant and are being monitored for 12 months using the same virologic and clinical endpoints from previous trials. We are using GEN-003 material manufactured with Phase 3 processes that increased scale in this study so the results will be important in confirming the efficacy and safety profile of GEN-003 in advance of our FDA end of Phase 2 meeting which we expect to occur in Q1 next year.
Later this quarter in September we expect to report safety and virologic efficacy data from this study. Around the end of the year we expect to report six month clinical efficacy data from the study. That readout represents the first opportunity to measure GEN-003 and placebo against potential Phase 3 clinical endpoints. Finally we also expect to commence a Phase 2b anti-viral combination study next quarter to explore the potential additive effect of GEN-003 with chronic suppressive oral anti-viral therapy. We expect clinical efficacy data from this trial in the second half of 2017.
If GEN-003 is additive to the effective chronic suppressive oral anti-viral therapy we believe this would further strengthen GEN-003 value proposition to patients and physicians. Given its strong product profile we view GEN-003 as a potential cornerstone treatment for genital herpes with a greater than $1 billion revenue opportunity in the U.S. alone. GEN-003 offers durable efficacy via novel mechanism of action. With GEN-003 potentially a first line therapy oral anti-virals could be used as a rescue medicine if outbreaks occur.
GEN-003 also offers greatly improved convenience of overall anti-virals which may drive significantly better real world efficacy than oral anti-virals which rely on high and sustained levels of treatment compliance for optimal benefit.
Now let me turn briefly to our immunooncology effort where we are applying our ATLAS platform to cancer vaccine target discover in development. We remain focused on advancing our collaboration's with Memorial Sloan Kettering Cancer Center and Dana-Farber Cancer Institute and we look forward to announcing additional data from these partnerships as well as providing further updates on our internal cancer vaccine development strategy later this year.
We are also very happy to have made senior appointments to Genocea in the last quarter. We welcomed, Dr. John Bishop to the company in May. John is our Senior Vice President of Pharmaceutical Sciences and has extensive experience building teams to support pharmaceutical sciences and manufacturing activities for all stages of product development and commercialization. We also welcomed Ron Cooper current President and CEO of Albireo to our Board of Directors in June. Prior to Albireo Ron spent 2.5 decades at BMS working internationally and in the U.S. on sales, marketing and general management most recently he served as President of Europe.
Let me now turn the call over to Jonathan to review our financials for the second quarter, after that we will open up the call for your questions.
Thanks, Chip. In today's press release we reported cash, cash equivalents and investments of $86 million as of June 30 compared to $95.7 as of March 31. R&D expenses for the second quarter decreased by $300,000 to $6.7 million from the same period in 2015 reflecting lower clinical cost due to completion of GEN-004 Phase 2a trial which is on-going in the second quarter of 2015 and the conduct of a smaller Phase 2 trial for GEN-003 in the second quarter of 2016 compared to the same period in 2015. We also spent less on GEN-003 in the prior period perfecting the timing of campaign for future clinical trials. These lower cost were offset by higher personnel and lab cost to advance our preclinical product candidates and to develop the ATLAS platform for immunooncology.
G&A expenses for the second quarter were $4 million compared to $3.2 million for the same period in 2015. The increase is primarily related to GEN-003 market research and higher depreciation costs due to facilitate expansion. Net loss was $11 million for the second quarter of 2016 compared to a net loss of 10.3 million for the same period in 2015.
Now moving on to guidance, on the basis of our current operating plan including plan commencement of a Phase 3 trials of the GEN-003 in the second half of next year we expect to have sufficient cash to fund their operating expenses and capital expenditure requirements into the second half 2017. This is assuming no receipt of proceeds from potential business development transactions, equity financings or debt drawndowns.
With that let me hand the call back over to Chip wrap up.
Thanks Jonathan. In conclusion we remain hugely encouraged by what we’ve seen in the GEN-003 program and are excited by the potential of our research in pre-clinical efforts including those in immunooncology. 2016 will continue to be a rich year for GEN-003 clinical milestones with virologic data coming in September and clinical data efficacy data around the end of the year leading to an end of Phase 2 meeting with the FDA expected in the first quarter of 2017.
We also plan to commence an important Phase 2b anti-viral combination study in the fourth quarter to further strengthen the product profile.
With that we will now open the call to your questions. Operator?
[Operator Instructions]. Your first question comes from Stephen Willey of Stifel. Your question, sir
This is [indiscernible] for Stephen Willey. With respect to the ongoing immunooncology collaborations and the cancer vaccine strategy what kind of data can we expect in 4Q '16. Can we expect any detail surrounding teeth T-Cell antigens that have been T-Cell antigens targets that have been selected from the programs and is there a timeline for an IND filing?
What we would expect to share is data from the collaboration with Memorial Sloan Kettering and Dana-Farber. Memorial Sloan Kettering collaboration focuses on individualized tumor mutations so called tumor neo-antigens while with Dana-Farber it is more generalized or tumor associated antigens and sometime this year most likely at a major medical conference we would expect to be able to share additional data on our efforts there which will inform vaccine development.
Sometime in the fourth quarter we would also expect to update you more broadly on our strategy including answering the specific question you pose around the timeline to IND so please keep your eyes glued for that information.
Excellent. And perhaps maybe can we expect one of the potential candidates to move into the clinic by FY ‘17 still?
That remains the aspiration.
Our next question comes from Mark Graham [ph] of Cowen and Company.
Just looking to the data we're going to get out next month from the bridging study. So I think in the prior trials you have had a shedding reduction of about 40% to 55% depending upon the dose and how precise do you think those numbers are and how close do you think you need to be in terms of matching the same on the dose level the same shedding reduction to know that you know the Phase 3 production process is looking like the Phase 2 production process.
I think what gives us confidence that we have accurate numbers on the impact, biology impact on shedding is the fact that we have repeated these results from the prior study. So we are looking for consistent results. That said you know a few percentage points one way or the other is probably just within the range of variability, how much we might actually see it, we'll find out from the data but there is opportunity that things could even look better than what we have seen in the past or something similar would at least be result to give us more confidence to move forward.
As said it's important to realize that the kinds of manufacturing changes we have made with this material are the type that we don’t feel will materially impact what we have seen. So we expect to see similar kinds of reductions as in our prior two clinical trial.
And then thinking about this the anti-viral combo trial, I know you are still finalizing the exact design but where are your thought the days on the kind of the number of patients who are going to be in there. I mean do you think you'll use just one dose of GEN-003 or even still have two doses going forward at that point. And then finally like what type of difference in 6 or 12 month [indiscernible] rate. Do you think it's actually clinically meaningful?
I will ask Seth to handle this but also of course keep in mind that we have to see the readout from the current study before we finalize everything.
That's exactly right. We will anticipate a single dose selected from our current trial to move into the combination trial. So the trial design will be everybody is receiving on a daily Valtrex suppression and then they will receive a placebo or a dose level of GEN-003 and they will receive three doses as we've done in the past. We anticipate powering the study to see approximately 20 point difference in recurrence free rates at six months, we've not done the powering for 12 months but it would be reasonable expectancy but it would be somewhat similar.
The final size I think depends upon our assumptions and really what we see coming out of the current trial.
Our next question comes from Alan Carr of Needham & Company.
This is Daniele in for Alan. I was just wondering if you guys could comment on your plans for your nex-GEN-003 HSV agent whether you're planning on focusing on prophylaxis or what the strategy is there?
The efforts we have in next generation herpes vaccines are informed by first the ATLAS platform in our ability therefore to find novel T-Cell top targets as well as our vaccinology expertise and we do have both next generation therapeutic programs and a prophylactic program in preclinical studies and the shortest answer to your question Daniele that we’re going to follow the data. We think we have the opportunity to create either something that could be a natural successor to GEN-003 that would -- therefore we expect would improve upon the benefit that we expect GEN-003 to provide and if we have a prophylactic candidate we think in our mind be a first class in class candidate for that.
Either way we remain on track with our broad guidance to have something ready for the clinic within the next year or two but it's on go experiments that will determine which the two we prioritize.
[Operator Instructions]. We have a question from Jeff Hung of UBS. Your question, sir.
For the Phase 2b will you be conducting just going out comparing to those of GEN-003 versus placebo or will we now when we compare it to 3, 6, 12 months versus [indiscernible] line within each arm that’s done [ph].
Jeff, we’re kind of looking at each other. You broke up in asking the question. Would you please ask the question again?
Sure, sorry. Hopefully it's better. For the Phase 2b will you be conducting statistical analysis comparing the two doses of GEN-003 versus the placebo or will the analysis only compare the 3, 6 and 12 month versus baseline within each arm as was done in the Phase 2?
Okay, so you’re talking about the current trial and the read out of the data that we have coming in September and then clinical data coming out around the end of the year. So what you will see in the data and the -- it's coming up soon it's just the virologic and the safety and obviously the demographics of the patients that are enrolled for comparative purposes to prior trials. We anticipate doing two types of analysis one is going to be change from baseline across the treatment arms but also looking -- as we've done before at the difference across the arms at the time point of post dose [indiscernible]. So as both will change baseline and looking at where they end up at the time of completion of dosing. And just to add to that in the past we have seen that you get consistent answers looking for data either way which is important because it supports the data is in fact robust.
Okay. And then can you talk a little bit more about the timing and the process for deciding on the dosing frequency like what would you look for in the Phase 2b data to decide on six months versus 12 month dosing. Or would this rely more on discussion you have with the FDA in your end of Phase 2 meeting which would be before the 12 month read out?
All right. So let me continue with that, what you’re referring to is maintenance dosing, in another words when do you have to give another dose after subject has received the primary series. That's an imperative [ph] finding. What we know so far from our last clinical trial is that the effect of GEN-003 persists at 12 months and it's a rock solid persistent, there's no indication that the effect is waning. Consequently we may be in a situation where this effect last even longer that’s and imperative [ph] finding. So what we are doing now is rolling patients over from that prior trial into a long term follow up and I don't have the timing -- of my time as to when that readout will come but in any event we will follow the data and as we understand the durability of the effective GEN-003 we will start to do some paratesting on maintenance doses. It's impossible to predict right now because we just don't see the effect waning.
Well will that long term -- I guess how will that impact your Phase 3? Will it impact your Phase 3 design at all given that your Phase 3 study possibly begin before that reads out?
Yes, we will have some information to give us some idea during the Phase 3 program and again it's still up in the air but we may institute a roll-over protocol for patients in the Phase 3 program, yet to be determined. We won't know until we get additional information.
And one last question is more for bookkeeping. I guess on your R&D expenses. Can you provide any color even qualitative on how you see the trend for the remainder of the year? Thanks.
Jeff, it's Jonathan here. Indeed so what we have seen in the last couple of quarters is principally a year-on-year reduction in R&D expense given the fact that we are now conducting smaller GEN-003 clinical trial and the GEN-004 costs which were present in 2015 are aren't there this year. One of big drivers going forward of -- well the two big drivers of cost going forward from our R&D perspective in the second of the year relate to the fact that we intend to commence the anti-viral combination study in the fourth quarter and also we expect to be investing more behind the manufacturing compared to Phase 3 in the second half of the year as well.
So directionally we expect our R&D expenses to increase in the second half versus the first half versus the first half.
Our next question comes from Ted Tenthoff of Piper Jaffray. Your question, sir.
My question had to do just with respect to the IO collaboration and you mentioned update from the fourth quarter, what form would that take? Are you guys anticipating having a call? Would that be a scientific meeting what's sort of the plan there?
I think we typically have had calls either around earnings much like today or around events and so I think we will reserve the right to remain flexible as to how exactly we do it. Nevertheless whenever we do do it it will include all of the elements I’ve described previously. Data sort of the strategy and the path to the clinic.
I think that will be really helpful to understand those programs what you've been doing there. So look forward to that.
We look forward to sharing it Ted.
Thank you. I show no further questions in the queue at this time, sir. You may continue.
Well then we will wrap up the call. Thank you all for your attention and interest and we look forward to keeping you up to date on our progress.
Thank you. Ladies and gentlemen for attending today's conference. This concludes the program. You may all disconnect. Good day.
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