CytomX Therapeutics Inc

NASDAQ:CTMX

Earnings Call Transcript 2023-Q3

[Operator]

Good day, and thank you for standing by. Welcome to the CytomX Therapeutics Third Quarter 2023 Financial Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Ogden, Senior Vice President, Finance and Accounting. 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 third quarter 2023 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' Chief Executive Officer and Chairman. Sean will provide introductory comments on CytomX' progress and key milestones before we cover our pipeline progress and financials for the third quarter.With that, I'll now turn the call over to Sean.

[Sean McCarthy, executive]

Thanks, Chris, and good afternoon, everyone. Thanks for joining us for an update on CytomX continued progress in 2023. At CytomX, we are highly focused on the discovery and development of novel cancer medicines, utilizing our Probody therapeutic platform to localize potent biologic modalities into disease tissue via conditional activation, increasing therapeutic index and offering new options for patients. Given the continued challenging external environment for biotech, I'd like to start with an overview of the strong fundamentals of CytomX today with 3 areas of particular focus, outlining why we believe we are very well positioned as we move towards 2024 and beyond.Firstly, our pipeline. CytomX is active across our pipeline in key areas of current oncology R&D. Two of the biggest highlights recently at ESMO 2023 were new breakthroughs in the use of Antibody Drug Conjugates and T-Cell Engagers. ADCs and T-Cell Engagers are poised to be therapeutic platforms with potential to transform the treatment of solid tumors. I'm very pleased to say that for many years, CytomX has been building significant expertise across these important modalities, and we currently have differentiated lead programs in both areas. Our pipeline has never been more relevant or had more potential. 2023 has been a year of intense, focus and exceptional execution for CytomX that has set the stage for key value-creating milestones in 2024 and 2025.Starting with CX-904, our Probody T-Cell Engagers targeting EGFR and CD3. Coming out of ESMO last month, there's clear momentum and increasing clinical evidence that T cell bispecifics can have a meaningful clinical impact in solid tumors. However, a central challenge in this highly potent modality is that the majority of solid tumor targets are also expressed in normal cells, limiting therapeutic window. CX-904 is designed to address this challenge for EGFR, which is one of the most highly validated and broadly expressed solid tumor targets. CX-904 has continued to advance through Phase 1, and we're in the process of starting to backfill certain cohorts as we continue dose escalation. We remain on track for initial data in the first half of 2024.Our first-in-class EpCAM-targeting Probody ADC, CX-2051, is on track for IND filing by the end of this year and Phase I initiation in 2024. CX-2051 is an excellent example of CytomX' differentiated ability to pursue novel ADC targets. We are particularly excited about EpCAM given its high expression level across multiple tumors, including colorectal cancer and its prior clinical validation as a target for cancer therapy. We presented the full preclinical profile of CX-2051 at World ADC in October, and the presentation can be found on our website. We plan to execute on Phase Ia dose escalation through 2024 and data permitting to initiate Phase Ib expansion cohorts in 2025.We have also continued to advance our first Probody Cytokine CX-801 towards the clinic. CX-801 is a mask version of interferon alpha-2b for which we see enormous potential as a novel centerpiece of cancer immunotherapy in the future. Last weekend, we presented updated preclinical data at SITC. This presentation is also available on the CytomX website. IND filing for this program is also anticipated by the end of the year.Continuing in the field of cancer immunotherapy, our partner, BMS, is advancing the marked nonfucosylated CTLA-4 program, BMS-986288 in Phase II, which includes proof-of-concept studies in microsatellite stable colorectal cancer and in non-small cell lung cancer. BMS anticipates data will be available from this program in 2024. Taken together, our pipeline is deep, strong, relevant and poised to drive value inflection in the near term.The second area I'd like to highlight today is our partnerships. CytomX created the field of protease-based conditional activation more than a decade ago, and our substantial and consistent investments in our platform technology have allowed us to attract many high-quality partners. We currently have alliances with Moderna, Regeneron, Astellas, Amgen and BMS that each bring value to CytomX in the form of technical validation, increasing the reach of our platform and providing nondilutive financing.Together with our partners, CytomX today has more than 15 active R&D programs. In addition to upfront cash infusions from these partnerships and potential future product royalties, each partner program has the potential for near and long-term cash milestone payments. CytomX has a strong track record of earning milestones under our alliances, including most recently, a $5 million payment from Astellas for our first clinical candidate nominated in the collaboration.Thirdly, I would like to highlight our strong financial position. Chris will review shortly how we are continuing to manage the financial resources of the company in the context of the challenging external environment. Before handing over to Chris and continuing on the theme of fiscal discipline, I would like to provide a brief update on CX-2029, our Probody ADC targeting CD71. We've been encouraged by the antitumor activity we've observed with CX-2029 to date. However, based on current priorities, we will not be directing significant additional investment in this program in the near term.Now let me turn the call over to Chris, who will walk you through our financials.

[Chris Ogden, executive]

Thank you, Sean. I'm pleased to be able to share an update on our third quarter 2023 financial results with everyone today. As of September 30, 2023, we had $194 million in cash, cash equivalents and investments, which includes $30 million received in July as a result of a successful and strategic private placement financing with BVF Partners. Overall, cash burn in the third quarter was $16.8 million comparing to $33.9 million in the equivalent period of 2022. The reduction in cash burn versus the same period in 2022 reflects our continued focus on disciplined capital allocation and cash management as well as increased R&D reimbursement under our collaborations.I'd also note that our cash balance of $194 million for the third quarter of this year is flat to the third quarter of 2022, which also highlights the company's ability to balance cost prioritization, business development, milestones and equity financing to maintain a strong financial position in a very challenging biotech environment. This balanced capital formation and allocation strategy has remained consistent over time and aligns well with our focus to build near and long-term stakeholder value. In terms of cash runway, we expect our current cash resources to fund operations into the second half of 2025. This guidance does not assume any additional milestones from partnerships or any additional progress in new business development.Now moving to revenue and operating expenses for the quarter. For the third quarter of 2023, revenue was $26.4 million compared to $11.1 million for the corresponding period in 2022. Operating expense for Q3 2023 was $23.3 million. R&D expenses decreased $14 million from the corresponding period of 2022 to $16.4 million during the 3 months ended September 30, 2023. General and administrative expenses decreased by $3.7 million during the 3 months ended September 30, 2023, to $6.8 million compared to $10.5 million for the corresponding period in 2022. So you can see from these operating expense numbers, how we have continued to thoughtfully manage the company.Now I'll turn the call back to Sean for closing remarks.

[Sean McCarthy, executive]

Thanks, Chris, and thanks to everyone for your time this afternoon and for your interest in CytomX. Looking ahead to 2024 and 2025, CytomX is very well positioned. This is an exciting time for us, and we remain highly focused on delivering in our pipeline. Our current pipeline encompasses highly relevant and diversified modalities, including T-cell Engagers, ADCs and Cytokines that each have their own unique contribution to make to the treatment of cancer. Let me briefly recap our key priorities and milestones for the remainder of 2023 and through 2024.CX-904 continues in Phase I dose escalation. Initial Phase Ia data is anticipated in the first half of 2024, with the potential for a decision to initiate Phase Ib next year. 2051, CX-2051 IND filing is on track for this year. We anticipate Phase I dose escalation in solid tumors with known EpCAM expression to commence in 2024 with metastatic colorectal cancer as a priority indication. Similarly, CX-801 remains on track for IND filing by the end of 2023 with clinical initiation in 2024. Also in 2024, we expect BMS to make continued clinical progress with the NF CTLA-4 Probody, including proof-of-concept studies in MSS CRC and non-small cell lung cancer with data anticipated to be available in 2024.We also anticipate considerable progress across all of our collaborations as we continue drug discovery activities with Moderna, Regeneron, Astellas, Amgen and BMS. I'll close by thanking our exceptional team members who remain highly focused on making the biggest difference in the treatment of cancer. This is an exciting moment for CytomX and we anticipate multiple inflection points over the next 12 to 18 months as we continue our work in such important and relevant areas of oncology R&D.With that, operator, let's go ahead and open up the call for Q&A.

[Operator]

[Operator Instructions] Our first question come from the line of Roger Song from Jefferies.

[Jiale Song, analyst]

So maybe let's focus on the now for as the near-term pipeline. So maybe, Sean, you can let us know what is the expectation for the upcoming data in first half next year, particularly maybe any thoughts around the number of patient tumor types you will be able to share with us? And the second part is what will be the key consideration to move into the expansion cohort? My understanding is that decision will be made later part of 2014 with more follow-up, maybe a little bit another data update? Yes. That's the key question I have right now.

[Sean McCarthy, executive]

Roger, thanks for the question. So to take a little step back on 904, let's just recap our major objectives with the program. So as I mentioned, as we're coming towards the end of 2023, we are now beginning to backfill certain cohorts in the dose escalation. The dose escalation is essentially being conducted in an EGFR all-comer setting. So we're enrolling patients who are expected to have EGFR expression. We're not actively selecting for EGFR expression, but their tumor types that are expected to be EGFR positive. And this is Phase Ia, right? And as we saw at ESMO just a couple of weeks ago, Phase Ia early dose escalation and dose exploration for T cell engages needs to be done thoughtfully, needs to be done methodically with the principal objective of evaluating safety and dosing schedules for these potent agents. And so that's what we're doing.And our goal, as I said, next year will be to analyze the Phase Ia data with our partner Amgen and in collaboration with Amgen, make a decision on the go-forward plan for Phase Ib. But of course, go forward to Phase Ib would involve expansions into select EGFR positive tumor types to really gain additional experience with the drug candidate. So we're on track with the goals. We're on track with our guidance of initial data from Phase Ia in the first half of next year. And not ready at this stage to talk about number of patients or specific tumor types. That would be a little premature but we are on track and making good progress.

[Jiale Song, analyst]

Maybe just a quick clarification. When we see the initial data is that the data set you will make the expansion cohort decision or you will wait for later to make that decision?

[Sean McCarthy, executive]

Yes. So it's a great question. It's a little hard to say at this point. As we're in the throes of this study, again, pointing back to the very important updates that we saw from several companies at ESMO in this modality, the early Phase Ia exploration of doses and schedules. It can take some time to get that to a place that you're ready to move into Phase Ib. And of course, increasingly, we're expecting. We're seeing that Phase Ib involves more than 1 dose, more than 1 dose in schedule per project optimist. I think the Amgen data for tarlatamab, I think, illustrated that very, very clearly and very nicely. So I think the short answer is we'll see. We'll continue to collect data to make the best decision we can as we look to transition from Phase II to Phase Ib next year.

[Operator]

And our next question come from the line of Jade Montgomery from H.C. Wainright.

[Jade Montgomery, analyst]

This is Jade Montgomery from H.C. Wainwright for Mitchell Kapoor. So when it comes to CX-801, is there any particular tumor type there that this particular interest like with CX-2051, you mentioned there was the primary interest in the one type of tumor? Is the one for CX-801?

[Sean McCarthy, executive]

Yes. So what -- maybe let's start with what we know about interferon, so CX-801 being a conditionally active interferon. So we know that interferon has shown clinical activity in several tumor types in melanoma, in renal, in certain sarcomas, lymphomas. And the goal here with 801 actually as quite nicely demonstrated in our post that the goal with 801 is to drive intratumoral immunity -- antitumor immunity. So we're looking to -- and as we showed in the poster, the preclinical data that we have shows that we are -- 801 is very capable of inducing an immunogenic phenotype intratumorally.And so -- and those tumor types where interferon is active are, generally speaking, tumors that are immune competent. So those will be obvious places for us to consider going in early clinical development. The other thing to say here is that the strategy -- another thing about the strategy of 801 and has also emphasized in our SITC poster is that mechanistically, we would absolutely expect based on preclinical studies, interferon alpha, localized interferent alpha-2b to partner very well with checkpoint inhibition. And in fact, we showed some potent combination data in our poster last weekend.And so in the clinical program, we would also be looking to, I would say, fairly quickly move into the combination setting, which makes obvious sense to really drive leverage the full immunobiology of interferon in checkpoint inhibitor combinations.Let me just make one other comment on EpCAM since you made the reference to EpCAM as well in terms of tumor types. So the strategy there is to bias our Phase I enrollment into CRC. But of course, EpCAM expressed. One of the things we love about this target is that EpCAM expressed in many, many solid tumors at high levels. In fact, we believe that there are across the 5 major expressing cancer types for EpCAM. They're up upwards of almost 300,000 potential treatable patients who are EpCAM positive across those tumor types. So we'll be focusing in CRC, but also enrolling additional tumor types as well, potentially looking for additional signals in the Phase I setting. So I hope that will helps.

[Jade Montgomery, analyst]

Yes. That was great. And I mean, just more on that on both of those with the Phase I data, do you plan to try and have that by the end of next year or is that more of a 2025 timeline? What factors as well may influence this, do you think?

[Sean McCarthy, executive]

Yes. So the goal right now, where we're super focused as a company is to file the 2 INDs for 2051 and 801 initiate clinical studies in 2024. I think as we said for 2051, our goal is to get as far through Phase Ia in 2024 as we can. We're not ready at this point to give any guidance on data. That could take a little longer.

[Operator]

Our next question will come from the line of Etzer Darout from BMO Capital Markets.

[Lukas Shumway, analyst]

This is Lukas Shumway on for Etzer. You have ongoing collaborations with Astellas and Regeneron. Can you give us an update as to how those are progressing, maybe where we'll see the biggest opportunities for the bispecifics from those and what types of programs you might see from those collaborations?

[Sean McCarthy, executive]

Yes. Thanks for the question. And as we emphasized on the call, we're really thrilled to have such a large number of high-quality partners to work with. It's allowing us to expand the reach of the technology and also it's been an important means of financing for the company and I think will continue to be in the future. Both Astellas and Regeneron are focused in the field of bispecific immunotherapies. Our work with Astellas began a little earlier. That deal is a few years old now and Regeneron is a more recent deal about a year old. We did earn our first milestone in the Astellas relationship this year, which is very significant. That's for one of the T cell engagers that's moving forward into IND-enabling studies.The work with Regeneron is still relatively early, but it's also focused in a number of bispecific strategies. We haven't disclosed any specifics there about the kinds of bispecifics. But of course, they're a very strong player in that field, and we're absolutely delighted to be partnering with them, to be working with them, and we expect really great things to come.

[Operator]

And our next question will come from the line of Anupam Rama from JPMorgan.

[Malcolm Kuno, analyst]

This is actually Malcolm Kona for Anupam. Just one quick one for us. Do you have a sense yet for which types of solid tumors you will be prioritizing for CX-904?

[Chris Ogden, executive]

Malcolm, could you repeat the first part of the question? We didn't hear it clearly.

[Malcolm Kuno, analyst]

Yes. Do you have a sense yet for which solid tumors you will be prioritizing for CX-904?

[Sean McCarthy, executive]

Yes. Well, as I mentioned, in the early stages of the program as we're in right now in Phase Ia, where we're escalating and exploring dosing schedule in the context of, broadly speaking, EGFR positive tumor types. So as I put it, essentially kind of an EGFR-positive all-comer strategy to gain initial experience with this drug candidate. As we move forward into Phase Ib next year, once we analyze the Phase Ia data, once we sit down with our partner, Amgen, there are, of course, a multitude of EGFR positive tumors that we could move into depending upon what we've seen in the early part of the clinical studies. So I think some of them are the obvious ones like lung and head and neck to name but 2, there could be others. And that will be a decision that will be taken in -- we'll take into consideration the commercial drivers of our partner, Amgen. So TBD.

[Operator]

Our next question will come from the line of Peter Lawson from Barclays.

[Unknown Analyst]

This is Courtney on for Peter. I have a quick question on the CTLA program with BMS. What should we expect in the 2024 data update and how many patients?

[Sean McCarthy, executive]

Yes. Thanks for the question. So BMS most recently updated at their R&D Day about a month ago. And the update was that they are -- this is with the nonfucosylated anti-CTLA-4 Probody that we call 288 that they are conducting proof-of-concept trials in non-small cell lung and MSS-CRC. Those studies are ongoing. The data are anticipated in 2024, but no additional details beyond that. So we are keenly anticipating their data, and they, of course, are in the driver seat for data disclosure and timing of any disclosures, which at this point has not been clarified.

[Operator]

I'm not showing any further questions at this time. I'd like to turn the conference back to Dr. Sean McCarthy for closing remarks.

[Sean McCarthy, executive]

Great. Thanks very much, and thanks, everyone, for your time today and for your interest in CytomX. I hope this update on our broad company progress has been helpful. Please feel free to reach out to our Investor Relations team should you have any questions, and have a great rest of the day.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.