CytomX Therapeutics Inc

NASDAQ:CTMX

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Good evening, everyone. Thank you for standing by, and welcome to the CytomX Therapeutics Second Quarter 2024 Financial Results Call.

Please be advised that today's call is being recorded. I will now hand the call over to your host for today, Chris Ogden, CytomX's Chief Financial Officer. Please go ahead.

[Chris Ogden, executive]

Thank you. Good afternoon, and thank you for joining us. Before we begin, I would 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 second quarter 2024 financial results and highlights recent progress at CytomX. We encourage everyone to read today's press release and the associated materials, which have been filed with the SEC.

Additionally, the press release, a recording of this call and our SEC filings 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 an update on the company's progress and pipeline before I cover the financials for the quarter and we open up the call for Q&A.

With that, I'll now turn the call over to Sean.

[Sean McCarthy, executive]

Thanks, Chris, and good afternoon, everyone. We're delighted today to provide an update on our recent progress, which includes the continued development of CX-904 in Phase I dose escalation and clinical study initiation for our newest wholly-owned programs, CX-2051 and CX-801. CytomX PROBODY therapeutic platform encompasses more than a decade of innovation in antibody masking and conditional activation. And it's designed to enable the clinical development of anticancer modalities directed against targets that would otherwise be undruggable or significantly limited by therapeutic window.

CytomX currently has 15 active programs across our internal and partnered research and development activities, including 3 clinical stage PROBODY therapeutics designed to address large patient populations. Based on our continued strong execution, CytomX is currently very well positioned to build value and make a meaningful difference for cancer patients.

Let me dive right there and then start with CX-904, our masked PROBODY T cell engager targeting EGFR. Last quarter, we announced positive initial Phase Ia clinical data for CX-904, which was an important first step in the clinical development of this program. EGFR is a very attractive target given its broad expression across multiple tumor types and also its high level of clinical and commercial validation with multiple approved small molecule and antibody therapies.

CX-904 constitutes a novel therapeutic strategy that leverages EGFR as an address to direct T-cell mediated killing to tumor cells via CD3 binding. EGFR-CD3 has previously been considered an attractive but undruggable target combination because of the widespread expression of EGFR in normal tissues. In the absence of masking, we would expect an EGFR-CD3 site specific to be severely toxic and undevelopable likely with high rates of severe skin rash and cytokine release syndrome.

By using the CytomX PROBODY platform to mark both EGFR and CD3 binding domains, however, we are opening a therapeutic window for this target combination, and we've been very encouraged by our clinical findings reported to date. In May, we were delighted to release positive initial Phase Ia dose escalation results for CX-904, achieving our early Phase 1 goals.

In this first stage of release of CX-904, based on an April 16, 2024 data cutoff, we reported on 35 heavily pretreated patients with a median of 4 prior lines of therapy. The initial safety profile of CX-904 looks very encouraging, specifically in step dosing cohorts up to a target dose of 10 milligrams. We did not see any cytokine release syndrome. And across all 35 patients treated with non-step and step dosing schedules, we saw only 1 grade 3 rash.

In common with certain other T-cell engagers, we observed some musculoskeletal events that were manageable in part with tocilizumab prophylaxis. These early findings show that marketing is effectively blunting CRS and other toxicities that would be expected for the corresponding unmasked EGFR CD3 T-cell engager.

In the context of this emerging favorable safety profile, we also reported encouraging early signs of single-agent anticancer activity for CX-904. In 26 efficacy of valuable patients treated at doses above 750 micrograms, we observed 8 measurable tumor reductions, including confirmed partial responses in 2 of 6 efficacy-evaluable patients with pancreatic ductal adenocarcinoma. These initial findings are particularly encouraging because pancreatic cancer has not been shown historically to respond to immunotherapy or to EGFR antibodies. However, EGFR is expressed in more than 90% of pancreatic cancer patients. And our data suggests that CD3 mediated T-cell killing via EGFR binding can be effective in this cancer type.

Moreover, there's also increasing evidence from others in the field that pancreatic cancer can be immune competence and map the T-cell response. This is both based on progress with neoantigen vaccines and recent data from ASCO 2024 for a Claudin 18 CD3 T-cell engager. In our view, our early CX-904 results in pancreatic cancer highlight exactly why CX-904 was designed, and they illustrate the power of antibody marking, opening a therapeutic window for an undruggable T-cell engager target and bringing a unique pharmacology to a cancer type of high incidence and significant unmet medical need.

Indeed, pancreatic ductal adenocarcinoma is currently the third leading cause of cancer death in the U.S. and second line treatments have response rates of less than 10% and only 2 to 3 months of progression-free survival, leaving a major need for new therapies.

We are now accelerating enrollment in pancreatic cancer to further explore the signal. And in parallel, we're prioritizing enrollment in head and neck and non-small cell lung cancers where we had not previously enrolled a meaningful number of patients in the initial dose escalation.

We continue to enroll on multiple dose levels to further inform the selection of a recommended Phase Ib dose or potentially doses. Our fiscal goal for the second half of the year is to generate data to enable strategic dialogue with our global development partner, Amgen, regarding potential initiation of CX-904 Phase Ib expansions in select EGFR-expressing tumor types, and we expect to provide a CX-904 program update by the end of 2024.

Turning now to CX-2051, our wholly-owned, first-in-class EpCAM-directed PROBODY ADC. EpCAM or epithelial cell adhesion molecule is a high-potential oncology target with high cell surface expression in many solid tumor types and that has been implicated in many aspects of cancer biology. Anti-EpCAM therapeutic strategies have previously been translated into clinical activity, but to date, clinical success has been limited to the local administration because EpCAM is present in most normal epithelial tissues.

Efforts to generate systemically administered anti-EpCAM therapies have not been successful to date due to toxicities in epithelial tissues, including in the gastrointestinal tract. Our innovative drug candidate, CS-2051 is a masked ADC tailored to optimize a therapeutic window for EpCAM-expressing epithelial cancers by marking the antibody to reduce binding in normal tissues but allowing activation in tumor tissue. We have armed the antibody with a cytoxic payload based on cancer adhesion [ 825 ] H1 inhibitor, which is a class of drug that has shown potent clinical anticancer activity in the ADC context for multiple targets, leading in recent years, to dramatic advances for patients.

CX-2051 has demonstrated a wide predicted therapeutic index in multiple preclinical models, including colorectal cancer. And like EGFR, I discussed previously in the context of CX-904, CX-2051 could also potentially address large patient populations because EpCAM is highly expressed across many indications, including colorectal, lung, gastric, endometrial pancreatic and ovarian cancers.

In April of this year, we treated our first patient in our Phase I dose escalation study of CX-2051, and we're now already enrolling into our third patient cohort. At this stage, enrollment is specifically focused in colorectal cancer, where EpCAM expression is particularly high, and we're really looking forward to seeing what CX-2051 could do for patients. And based on this progress, we remain on track to share initial data for CX-2051 in the first half of 2025.

Now turning to our third clinical program, CX-801, which is our dually masked interferon alpha-2b PROBODY cytokines. We're excited about CX-801 as a foundational immuno-oncology agent with potential for activity across multiple tumor types, including those that are insensitive to current immuno-oncology therapies. Interferon is a compelling and differentiated opportunity for a masked cytokine for 2 key reasons. First, the biology of interferon is unique in that it has been shown to directly kill tumor cells and interferon also increases [ actin ] presentation to activate T-cells, making it an ideal mechanism for combination with checkpoint inhibition.

Secondly, as a previously approved cancer therapy, interferon has a high level of prior clinical validation, including as both a localized therapy and systemically when combined with PD-1.

The use of interferon at its broader development as a systemic therapy has been limited however due to systemic toxicities. Our preclinical data for CX-801 most recently presented at SITC 2023, demonstrates synergy for our masked interferon alpha with PD-1 inhibition, both in terms of antitumor activity and activation of the tumor inflammatory microenvironment. Moreover, we've also shown that systemic activity of our masked interferon is significantly reduced and overall tolerability is markedly improved compared to the unmasked cytokine in animal models.

Our Phase I dose escalation study is now open and our first clinical site has been activated. This study will evaluate safety and signs of clinical activity for CX-801 as a monotherapy and in combination with KEYTRUDA under a collaboration and supply agreement that we recently executed with Merck. We anticipate initial data for CX-801 in the second half of 2025.

On the collaboration front, we continue to have more than 10 ongoing research programs with our partners, which include Amgen, Astellas, BMS, Moderna and Regeneron with the majority of our partnered research currently focused in masked T-cell engagers. To date, in 2024, we've already achieved $10 million in preclinical milestones through our collaboration with Astellas. And across our collaborations, we have the potential to earn additional milestones over the next 12 to 18 months and beyond.

CytomX also retained significant U.S. commercial rights in certain partnerships, including with Astellas for a select number of programs and with Amgen as part of our global development alliance on CX-904. And pioneering continues to be a cornerstone of our business strategy.

Before handing over to Chris to cover financials, let me first congratulate him on his promotion to Chief Financial Officer. We are really excited to have Chris' cross-functional leadership and strategic financial experience in this key role. And my colleagues and I look forward to continuing to partner with Chris as we build value inside CytomX over the near and long term.

With that, let me hand over to Chris to provide an update on our finances.

[Chris Ogden, executive]

Thank you, Sean. It is a privilege to be part of the CytomX team, and I look forward to helping lead the company towards multiple new treatment options for patients over the long term.

Now turning to the second quarter results. I am pleased to be able to share an update on our financials with everyone today. CytomX finished the second quarter of 2024 with $137 million in cash, cash equivalents and investments versus $150 million in cash at the end of the first quarter of 2024. We expect our cash balance will fund the operations of the company to the end of 2025. Also as a reminder, this cash guidance does not assume any additional milestones from existing collaborations or any new business development.

Operationally, we continue to be focused on controlling costs and disciplined capital allocation, investing behind the clinical progression of our lead pipeline programs.

Now moving on to revenue and operating expenses for the quarter. For the second quarter of 2024, revenue was $25.1 million compared to $24.7 million in the second quarter of 2023. Operating expenses for the second quarter were $33.6 million. R&D expenses were $25.2 million in the second quarter of 2024, an increase of $4.5 million versus Q2 2023, driven by investments in our clinical pipeline.

G&A expenses increased by $1 million during the 3 months ended June 30, 2024, to $8.4 million compared to $7.4 million for the corresponding period in 2023. Overall, our prudent financial management of the company and focused capital allocation has resulted in continued balance sheet strength and positions us to deliver meaningful value through our pipeline over the next 12 to 18 months and in the long term.

Now I'll turn the call back to Sean for closing remarks.

[Sean McCarthy, executive]

Thanks, Chris, and thanks, everyone, for joining us today. CytomX has continued to make excellent progress throughout 2024, but we believe the company outlook is very compelling as we drive forward with our multimodality PROBODY therapeutic pipeline.

Our current pipeline reflects broad investments over time and deep learning as the leading innovator in the field of antibody masking and conditional activation. Our progress with CX-904 positions CytomX at the forefront of the exciting field of T-cell engagers for solid tumors, and we like many others see this area as being on the cusp of breakthroughs for patients.

CytomX continues to prosecute a multimodality strategy with each of CX-904, CX-2051 and CX-801 being well positioned for new clinical data sets over the next 18 months.

Moreover, masking strategies, as exemplified by the PROBODY therapeutic platform for growing strategic interest in the biopharma R&D area, and CytomX remains a recognized leader having created this field.

In conclusion here at CytomX, we remain highly committed and focused on creating innovative treatments for people living with cancer, and we believe our PROBODY pipeline has the potential to deliver safer, more effective therapies.

I want to sincerely thank the patients who join our studies, their families and our team for helping to drive our mission forward. And with that, Operator, let's go ahead and open up the call for Q&A.

[Operator]

[Operator Instructions] Our first question will come from the line of Etzer Darout from BMO Capital Markets.

[Etzer Darout, analyst]

Just a quick one on CX-904. Do you know if you've had any more insights into sort of the correlation between efficacy and EGFR expression and what could be driving the activity that you're seeing in pancreatic cancer? And maybe just remind us for CX-904, can you discuss sort of the venue, if you kind of given some thoughts into sort of the venue where you'll be presenting this update by year-end?

[Sean McCarthy, executive]

Yes, hi Etzer, thanks for the questions. So we are continuing to look at EGFR and how it relates to activity for 904. As we've mentioned, pancreatic cancer, like many others, expresses EGFR. More than 90% of pancreatic ductal adenocarcinoma expresses EGFR. So that clearly relates to the activity that we're seeing, we were thinking in that tumor type has 2 specific correlations between target level and response. I think that remains to be determined. And I would also say that, of course, for T-cell engagers, if we look at historical data from other programs from other organizations, these agents are quite different to functional blocking antibodies in that we wouldn't necessarily expect to require too much antigen to drive responses. But I think this is something we're still learning both for 904 and in the field of T-cell engagers more broadly.

In terms of the next update. So yes, as we mentioned, we're planning on an update by the end of the year. That could take the form of a strategic update in terms of next steps for the program with actual data that underpins that strategic update, which will, of course, include a dialogue with Amgen; with that data coming at a future date at a venue to be determined. So no additional color on that at this time.

[Operator]

And our next question comes from the line of Malcolm Kuno from JPM.

[Malcolm Kuno, analyst]

So you've talked about the scope of the 904 update at the end of the year. How should we think about the size of maybe the data that would be received? And then given that you saw a signal earlier this year, how are you thinking about prioritizing indications?

[Sean McCarthy, executive]

Yes. Thanks, Malcolm. So again, with regard to our goal for an update by the end of this year, our overriding focus in the second half of 2024 is to generate additional data to facilitate strategic dialogue with our partner, Amgen, regarding potential next steps for the program. And the obvious next step; if the data supports it, of course; is to move from Phase Ia to Phase Ib. So we're currently enrolling, of course, additional patients in pancreatic cancer to continue to more fully explore that promising initial signal. And so I would say that as we reach the end of 2024, I would hope that we'd have a reasonable number of patients enrolled in pancreatic. However, a much better sense of the overall profile of the activity of the drug in that tumor type.

We're also prioritizing enrollment in head and neck and also in non-small cell lung. And in those 2 indications, we really enrolled very few patients when we gave the update in May. And so there, we're looking to enroll additional patients to really look for an initial signal in those 2 tumor types. And that would be our goal by the end of this year as well. So -- and again, just to be clear in terms of our overriding objective, generate data, meet with Amgen, have that strategic dialogue, define Phase Ib strategy; again, should the data support that. And most likely, to give a strategic update on the program by the end of the year with the data that underpins that update, more likely than not being presented at a venue TBD in 2025.

[Operator]

[Operator Instructions] Our next question comes from the line of Mitchell Kapoor from H.C. Wainwright.

[Unknown Analyst]

This is Dan on for Mitch. Congratulations on the promotion, Chris. I apologize if my questions are redundant. I hopped from another call. We were wondering, given the context of the positive responses you've demonstrated in pancreatic cancer, what response rate or duration of response would be considered meaningful in future updates?

[Sean McCarthy, executive]

Yes. So regarding -- thanks for the question. Regarding pancreatic, I think we're all aware of just how the dearth of therapies available for patients who are at it front line. And in the second-line setting, you're seeing activity of principally chemo regimens with single-digit response rates. So these are patients that are in tough shape, very few options. And quite frankly, we think that bar is quite low. Unfortunately, given the current state of treatment of pancreatic cancers. So that's one of the many reasons that we've been really excited about this initial signal in pancreatic that we're in the midst of firming up with additional enrollment as we move into the second half of the year.

[Unknown Analyst]

If I could ask a follow-up. Do you expect to see any tolerability differences with 2051, given the variability in IHC EpCAM expression?

[Sean McCarthy, executive]

I'm sorry, could you repeat the question?

[Unknown Analyst]

Do you expect to see tolerability differences with 2051 given the variability in IHC EpCAM expression; in the difference EpCAM expression between individuals.

[Sean McCarthy, executive]

Well, we're obviously very early in our clinical exploration of 2051. We're very pleased to have, in a very short order, already have navigated into the third cohort in the Phase I dose escalation. And we're on track for initial data in first half of next year. EpCAM, is to us, a highly attractive target, has been for a long time because of just how high its expression is in so many tumor types. And its expression is actually pretty consistent, particularly in colorectal, where we're focusing enrollment in Phase I. In CRC, EpCAM is expressed at IHC3+ in the majority of patients, and that's actually allowing us to not need to select patients for enrollment in the Phase I study. So in terms of the expression in normal tissues, there's a fair amount of EpCAM in normal tissues, particularly in -- also in the GI tract. It can be heterogeneous, but I think we'll have to see how that plays out in the clinic. But so far so good as we're into our third cohort.

[Operator]

I'm not showing any further questions in the queue. I would now like to turn it back over to Dr. Sean McCarthy, Chairman and CEO, for closing remarks.

[Sean McCarthy, executive]

Thanks very much, and thanks, everyone, for tuning in today. We're really excited about the progress we've made so far this year at CytomX, and we're looking forward to a busy second half and to report to you on additional progress as the year goes on. So have a great rest of the day.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.