Immune Design Corp (IMDZ) CEO Carlos Paya on Q3 2018 Results - Earnings Call Transcript

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About: Immune Design (IMDZ)
by: SA Transcripts

Immune Design Corp (NASDAQ:IMDZ) Q3 2018 Earnings Conference Call November 6, 2018 4:30 PM ET

Executives

Sylvia Wheeler - IR Officer

Carlos Paya - CEO, President & Director

Stephen Brady - EVP, Strategy & Finance

Sergey Yurasov - Chief Medical Officer & SVP, Clinical Development

Analysts

Beau Miller - RBC Capital Markets

John Barrett - Leerink Partners

Joseph Pantginis - H.C. Wainwright & Co.

Operator

Good afternoon, and thank you all for joining Immune Design's Third Quarter 2018 Conference Call. [Operator Instructions]. I would now like to turn the call over to Sylvia Wheeler of the Investor Relations Group at Immune Design. Please go ahead.

Sylvia Wheeler

Good afternoon, and welcome to our third quarter conference call. Joining me on the call today are Dr. Carlos Paya, President and Chief Executive Officer; Mr. Stephen Brady, Executive Vice President, Strategy and Finance; and Dr. Sergey Yurasov, Senior Vice President and Chief Medical Officer.

Before we start, I would like to remind you that today's call will include forward-looking statements that are subject to risks and uncertainties. Our actual results may differ materially from those described. We encourage you to review our risk factors in our most recent quarterly report on Form 10-Q, which can be found on our website at immunedesign.com. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so even if our views change.

With that, I'll turn the call over to Carlos. Carlos?

Carlos Paya

Thank you, Sylvia. And before I begin my comments, I would like to thank you all again for joining our call. As you know, we recently provided a thorough program and company pipeline update just a few weeks ago. With that said, I would like to take a few moments to provide a deeper understanding of G100, our intratumoral TLR4 agonist as we believe the asset is underappreciated.

There are 4 key drivers for the program that we would like for you to take away from our call today. Number one, G100, already known to be active as a single agent at 5 and 10 micrograms, is now being shown to be active in a new cohort of patients treated with 20 micrograms that included relapse/refractory follicular lymphoma patients. Number two, the TLR4 baseline expression in the tumor continues to show promise as a predictive biomarker in the new G100 20-microgram cohort shows further increases of the overall response rate in the TLR4 high population. Number three, long-term follow-up of follicular lymphoma patients treated with G100 at 10 micrograms and combined with pembrolizumab shows that clinical responses observed to date are durable. And four, based on the above, we are further pursuing the clinical development of G100 at 20 micrograms with pembrolizumab for potential accelerated approval in front-line follicular lymphoma patients while also exploring G100's potential in earlier lines of therapy in follicular lymphoma as well as in other non-follicular lymphoma tumors.

The SITC data announced today as well as a preview of the data at the upcoming ASH Annual Meeting supports our more aggressive development of G100 with a higher probability of success. We have already established clinical activity with G100 at a 5-microgram dose in a variety of studies in which we also identified prognostic biomarkers of response, such as increased CD8 TILs, the ratio of CD8 to CD4 TILs and a reduction in CD20 lymphoma-associated B cells post G100 treatment. We have now determined that G100 at a 20-microgram dose further increases these biomarkers, comparing favorably to that of the 10-microgram dose. In addition, those biomarkers translated well with clinical outcomes, showing faster and deeper scope of clinical responses at a 20-microgram dose.

Importantly, clinical responses were again observed in relapse/refractory patients. Also, the baseline TLR4 tumor expression continued to predict a higher rate of ORR in the 20-microgram TLR4 high patients versus that observed at 10 micrograms, 29% compared to 60%, respectively -- the opposite, sorry, 60% to 29%. Importantly, the increased activity did not come at a cost in safety as the 20-microgram dose was also well tolerated. Armed with this data, we are confident in taking the 20-microgram dose forward in our planned future clinical trials.

We would like to also remind and point out that the 20-microgram data was generated without the use of checkpoint inhibitor, proving again its clinical activity. And this is a very important differentiated aspect of G100 in the intratumoral space particularly with regards to recent data presented and to be presented on other intratumoral agents being investigated.

At the upcoming ASH meeting, we will be presenting on the long-term follow-up of patients from our randomized Phase II clinical trial with G100 at 10 micrograms with or without pembrolizumab. The now available ASH abstract has the following 4 key takeaways: Number one, response rates continue to be higher in the combination arm, including in heavily pretreated follicular lymphoma patients. Number two, clinical responses continue to be sustained, durable and longer in the combination arm. Number three, long-term exposure to G100 and pembrolizumab was well tolerated with no increase in adverse events from that previously reported. And four, the baseline TLR4 tumor expression continues to predict improved clinical outcomes. All together, these data further support our plans to proceed with G100 at 20 micrograms plus pembrolizumab in follicular lymphoma patients that have received 3 previous lines of therapy in our registration-directed trials that will be initiated soon and that we discussed in detail in our last conference call.

In addition, we will be testing soon the combination of G100 with rituximab in follicular lymphoma patients with earlier lines of therapy. This more comprehensive development approach in follicular lymphoma will help us to potentially reach a larger percentage of the follicular lymphoma patient population, none of whom are being cured today with current agents and many of whom, we believe, would opt for therapies that offer added benefit through the creation of a durable antitumor immunity without neurotoxicity.

We are concomitantly also exploring the evaluation of G100 in other non-indolent lymphomas also known to us to express TLR4 and considering a number of ISDs in solid tumors in combination with anti-PD-1 and/or anti-PD-L1 agents.

Lastly, G100 is also showing great promise in its combination with other immunomodulatory agents. For example, at the upcoming SITC meeting, data from preclinical animal studies indicate that G100 can synergize with anti-OX40 agents and separately with adoptive T cell therapies, further enhancing G100's potential value as a safe and potent intratumoral activator of both innate and adaptive immunity. We believe that both the previously presented and the new data show that G100 has significant potential as a novel immunotherapeutic agent for cancer patients. We see relapsed follicular lymphoma as a beachhead that may provide a path to potential accelerated approval. Simultaneously and aggressively, we plan to explore its potential in many other indications to ultimately position G100 as a paradigm change in the treatment of numerous malignancies.

With that, I will now turn the call over to Steve to review our Q3 financials. Steve?

Stephen Brady

Thank you, Carlos. We ended the quarter of 2018 with $107.5 million in cash, cash equivalents, short-term investments and other receivables compared to $144.2 million as of the end of the year. Net cash used in operations for the 9 months ended September 30, 2018, was $40.3 million.

Revenue for the third quarter of 2018 was $0.5 million and was primarily attributable to $0.2 million in collaboration revenue associated with our Sanofi HSV collaboration, also known as our G103 program, and $0.2 million in product sales to collaboration partners and other third parties. Revenue for the third quarter was $0.5 million and was primarily attributable to the G103 collaboration with Sanofi in the same period last year.

Research and development expenses in the third quarter of 2018 were $11.2 million, relatively consistent to $10.2 million for the same period in 2017. The $1 million increase was primarily attributable to $1.7 million in in-licensing royalties and fees due to third parties. The increase was offset by decreases in contract manufacturing services, personnel expenses, clinical trial expenses and other R&D expenses. General and administrative expenses for the third quarter of 2018 were $3.8 million, relatively consistent to the $3.9 million for the same period last year.

Net loss and net loss per share for the third quarter of 2018 were $14.0 million and $0.29, respectively, compared to $13.4 million and $0.52, respectively, for the third quarter of 2017.

Again, cash at September 30, 2018, was $107.5 million. Based on current plans, this provides us with runway into 2021.

With that, I turn the call back to Carlos.

Carlos Paya

Thank you, Steve. And looking ahead and beyond the 2 upcoming presentations and data presented -- to be presented at both SITC and ASH, our key G100 catalyst over the next 12 months will include initiating the trial in relapsed follicular lymphoma patients in early 2019; initiating a trial in combination with RITUXAN in earlier lines of follicular lymphoma patients in early 2019, too; evaluating data at periodic intervals in the second half of 2019 in both of the open label studies, which include the combination with pembrolizumab and the combination with rituximab; and fourthly, initiating ISDs to evaluate G100 in both B cell malignancies and solid tumors. We look forward to keeping you updated on our progress.

And now I will pass it to Andrew, our operator, so we can address any other questions you may have. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions]. And our first question comes from the line of Brian Abrahams with RBC Capital Markets.

Beau Miller

This is Beau on for Brian. In the SITC abstract from this morning, you showed that the clinical responses are associated with an increase in CD8 TILs and baseline TLR4 expression in the -- what looks like a total combined group. As you think about moving the G100 into the earlier lines in follicular lymphoma, can you talk about any differences or important similarities that you see between the recurrent refractory patients versus those who are not refractory either in the intratumoral immune response or some -- any of the other measurements that you've been making?

Sergey Yurasov

This is Sergey Yurasov. As you know, we did enroll patients with both treatment-naive and relapse/refractory disease. And we have biopsy material available from both of those patient subgroups. We have seen the responses, clinical responses, in both treatment-naive and relapsed patients, and we have seen an increase in CD8 TILs irrespective actually of the line of therapy. The major discovery that we had that patients with relapsed disease who received multiple lines of therapy are still capable to mount a profound immune response to G100 and experience clinical regression of the disease. As we contemplate strategies to move up in lines of treatment, we anticipate, based on this data, that there should be no loss of potency -- of immunological potency for G100 in early patients.

Carlos Paya

Yes. And I would just add that the trial that is being planned with rituximab will be on patients that are in second line. And therefore, they are not completely naive and were to the point that Sergey just made. In fact, we do see better responses even though they are all small numbers, but as you start accumulating a number of additional separate trials, we continue to see better responses in the treated patients versus naive.

Operator

[Operator Instructions]. And our next question comes from the line of Maury Raycroft with Jefferies.

Unidentified Analyst

This is David [ph] for Maury. So my first question is how many patients do you need to look at for the open label portion that begins in the first quarter of 2019? And then in terms of that and -- how would you -- how would that guide your single-arm registration? And how should we look at that?

Sergey Yurasov

Right. Thank you for your question. So as we mentioned before, our strategy is based on an open label, single arm study that will enroll patients with relapsed disease. And we'll evaluate responses and durability of responses in a periodic fashion. The ultimate size of the study will be informed by the observed response rate that we will register as we perform such periodic reviews. So we'll enroll the first 10 patients and we can assess the response. We can enroll additional 10 patients and there'll be another assessment. So it's a periodic assessment that we will continue doing through the 2019 as we enroll patients on the trial.

Unidentified Analyst

Actually, that's very helpful, okay. So my second question is, so the median observation was only 8 months for the 20-microgram group. Can you just tell how many patients were included in the 9 months of analysis? And that's from the SITC abstract that was posted this morning.

Sergey Yurasov

Can you please clarify your question? Is it how many patients were at 9 months or beyond?

Unidentified Analyst

Yes. So one thing that we realized was the median observation was only 8 months, right, for the 20-microgram group. So then for the 9 months ORR announces, how many patients is actually included in the analysis here?

Sergey Yurasov

Yes. So it's a great question that has to do, I think, with the time when is the earliest that we can assess the response rate. And based on the experience that we had so far with G100, we think that within 6 months of treatment, we can have a conservative, conservative estimate of a response rate. And that's what prompted us to report 20-microgram dose after approximately 8 months. There is an important caveat to it. There were responses that happened after some significant additional period of time, as long as 12 months, into treatment. But we feel pretty confident that, as I said, conservative estimate of the response rate can be made as early as 6 months in treatment.

Unidentified Analyst

Okay, great. And then the last question is regarding your presentation at SITC. How much more fallout should we be expecting at SITC versus the data cutoff?

Carlos Paya

Abstract versus SITC, probably a couple of months, I would say. Again, I don't have absolute numbers in front of me, but it was one data cut that went back into the abstract submission proceeds, which I believe was back in August. And after that, we did an additional cut, which pretty much is a two month delta.

Unidentified Analyst

Okay, great. And then do we expect to -- is it -- do we expect any continued updates before the SITC or even going forward, additional updates?

Sergey Yurasov

As Carlos mentioned earlier, we have two major data updates. One is SITC, which is this coming Friday; and the next one is ASH, which is a month away from now.

Operator

Our next question comes from the line of Jonathan Chang with Leerink Partners.

John Barrett

This is John Barrett on for Jonathan. Could you just speak to the mechanistic rationale for combining G100 and pembrolizumab?

Carlos Paya

Yes, this is Carlos. I will ask it. Every time we inject G100 to any kind of tumor, and we have very nice clinical data in Merkel cell carcinoma, sarcomas and now extensive data on lymphoma, every single time, the reality of the tumor, you upregulate significantly the expression of PD-1 and PD-L1 in that tumor following G100. And that is mainly due because you really attract and bring in a significant large number of T cells. And so it makes all the sense in the world to be able to now allow those T cells that are now high expressers of PD-1 and PD-L1 to now be able to work better and prevent their exhaustion with PD-1, PD-L1. So it's not only substantiated by preclinical models that we have validated that combination but, more importantly, in the clinic. And I think the trial that we are one of the few if not the only company out there doing intratumoral approach, where we do these even though small, limited, randomized trials, where we can clearly show superiority of the combination of the G100 and pembo versus G100 alone at a lower dose like 10 micrograms.

Sergey Yurasov

And if I can -- this is Sergey Yurasov, John. I can just also add -- I think we certainly have our own clinical experience with G100, pembrolizumab, which is very informative and directs us in that way. But I also would like to draw attention to the data that just came out from pembrolizumab program and was published in Science literally 2 weeks ago, where thousands of patients were analyzed after receiving pembrolizumab. And there was a clearly, clearly significant patient population that is not respondent to pembrolizumab for the reasons of lacking inflammatory changes within the tumor and that -- where there was a great match to your question about our mode of action because what we know from our translation medicine that that's exactly what G100 causes, an inflammatory gene signature followed by T cell infiltration. And if I look at that pembrolizumab Science paper, that's what a lot of patients are missing and, as a result, likely not responding to the intervention with PD-1 and PD-L1.

Carlos Paya

And, John, just -- to also just bring this down to the rapid part in that question is the fact that if you look at other intratumoral approaches, we are seeing single-agent activities. So even though we do upregulate PD-1 and PD-L1 and we've treated G100 in patients with sarcoma, with Merkel, with nothing else, you see real, not only clinical responses, but also strong immune activation. So that's why we are so excited about this potential G100 by itself. It can work. And what we do see is enhanced activity when you combine it with pembro, which, to Sergey's point, you can take now many pembro tight situations that don't respond to pembro -- patients that don't respond to pembro, and then you can see it now potentially responding when you combine with G100. And this applies to any other PD-1, PD-L1.

John Barrett

Great. You mentioned that there are other lymphomas or other target indications you've identified as potential areas of expansion and, specifically, those indications having TLR4 expression. Could you expand on what indications those are?

Carlos Paya

Yes. So we've done a limited survey but it's pretty significant in other, let's call it, lymphoma world. And we see it clearly, as you all know, roughly in 60% to 70% of patients with follicular lymphoma. And we have similar numbers when we look at, for example, other indolent lymphomas, like cutaneous T-cell lymphoma. We see that also in marginal zone lymphoma, small lymphocytic lymphoma and also, surprisingly, in big numbers in the biggest market for lymphoma, which is the diffuse large cell, B-cell lymphoma. So that's kind of all the 4 types of tumors that we have looked at. And consistently, they express TLR4 at a percentage that is comparable to that, that we see with follicular lymphoma.

John Barrett

Great. And just one more quick one from me. You mentioned that you're going to be starting initiating combination with RITUXAN in early 2019, and there was another catalyst after that initiating. Could you remind me what that catalyst was?

Carlos Paya

The catalyst was to look at the data as they evolve over the second part of the year, where we'll have additional number of patients, like Sergey said. And then the fourth category of potential news is we are starting a number of ISDs in solid tumors. And so we also expect -- again, this is not something we can control perfectly, but we also expect news flow from that at the second part of the year, next year.

Operator

And our next question comes from the line of Joe Pantginis with H.C. Wainwright.

Joseph Pantginis

Two questions, if you don't mind. First, it's more of a logistical question and I'm sure somewhat rhetorical. But now since you're going to be doubling your dose of G100 going forward for all your studies, I just wanted to see -- get to comment on the ability to supply the asset.

Carlos Paya

Yes. There is no issue. We have the dose used already, as you see it, 20 micrograms. And the beauty of this asset is the small molecules synthetically done, easy to formulate in our proprietary formulation and so ready to go.

Joseph Pantginis

That's great. And then my second question -- don't mean to put you on the spot but it's on the front of a lot of people's minds right now, is with regard to potential comparing and contrasting versus STING agonist. Right now, there's obviously a lot of trepidation in the STING arena based on the Merck data. And we'll be seeing the first data out of the Novartis and a durable compound this weekend. So I'm just curious if you could provide any sort of comparing and contrasting of your approach versus STING.

Carlos Paya

Yes, I would say we haven't seen all the data, of course, and hopefully, more will be coming up and the like next month. I would say that the TLR agonist appear to be clinically validated. I would say we are the only group within the TLR agonist that has single-agent activity that we have shown ourselves and, hopefully, convince people that in combination with pembro, we have even better activity. And so we are very proud of our TLR4 data so far. And I have mentioned, Joe, in the past, we do have evidence that when you compare the TLR9 from Dynavax, they just published a nice paper using TLR9 at -- in follicular lymphoma, they get around a 15% ORR. And the abstract today that we have now a new cohort with 20 micrograms showing new response rates by itself with around the 30% type response rate with similar patient characteristics.

So that's kind of -- it's clinically validated. Now STING, as you all know, is a valid approach. It's a much more narrow pathway when you want to activate the innate immune system, and I think the preclinical models were very impressive. But so far, to your point, we have not seen single-agent activity, and I've seen the data presented at ESMO. And we'll see what comes up at SITC. I think we are in a better position with TLR4 G100 to show that we are not only inflaming the tumor, but we're getting clinical responses. And so that is important. And we're also, as you all know, seeing a scope of responses. So time will tell, but I do think that this validates that our path that we decided some years back to pursue TLR4 is a valid one, and we just need to make sure that we deliver the kind of registrational data that we're all going to go forward and get quickly to the finish line.

Operator

Thank you. And I'm showing no further questions at this time. So with that, I'd like to turn the call back over to CEO, Carlos Paya, for closing remarks.

Carlos Paya

Thank you, Andrew, and thank you all of you for listening and attending our call. Yes, let's stay tuned as we advance G100 in a number of indications, and we look forward to sharing the data and keeping you updated along next year. So thank you.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a wonderful day.