CytomX Therapeutics Inc

NASDAQ:CTMX

Earnings Call Transcript 2024-Q3

[Operator]

Good afternoon, everyone. Thank you for standing by. Welcome to CytomX Therapeutics Third Quarter 2024 Financial Results Call. Please be advised that today's call is being recorded.

I would now like to hand the call over to your host for today, Chris Ogden, CytomX' 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 third 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' Chief Executive Officer and Chairman. Sean will provide an update on our pipeline and company progress before I walk through the financials for the third quarter. We will then conclude with a Q&A session.

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

[Sean McCarthy, executive]

Thanks, Chris, and good afternoon, everyone. As always, we are very pleased to be here today to provide an update on CytomX' progress as we advance towards our vision of transforming lives with safer, more effective therapies.

Since our inception and the creation of the Probody therapeutic platform, we have been leaders in the field of masked, conditionally activated biologics, and our team has been working tirelessly to address areas of oncology with high unmet need. Leveraging our multi-modality Probody platform, we have more than 15 active discovery and development programs across our internal and partnered research pipeline with 3 of these programs currently in Phase I clinical development. CX-904, a Probody T-cell engager targeted to EGFR and CD3; CX-2051, an EpCAM-directed Probody antibody drug conjugate; and also CX-801, our Probody interferon alpha-2b.

Each of these programs really stands on the shoulders of our broad platform and clinical experience to date with masked therapeutics, and we continue to push boundaries in our quest to make the biggest difference we can for cancer patients. The CytomX pipeline is poised to deliver multiple clinical readouts in 2025 that will inform next steps for later phase clinical development and create significant value for shareholders.

Now moving to our pipeline updates for the quarter. I'll start with our work in the T-cell engager space. The field of T-cell engagers in solid tumors has seen meaningful advances over the past 1 to 2 years, but there remains a scarcity of really good tumor targets for conventional unmasked T-cell engagers because of target expression in normal tissues.

At CytomX, we're applying our Probody therapeutic platform to masked T-cell engagers directed against highly expressed solid tumor targets in order to maximize their activity in tumors and minimize systemic toxicities in normal tissues. We're working on multiple T-cell engager programs, including CX-904, our masked Probody T-cell engager targeting EGFR and CD3, which is partnered with Amgen in a global co-development alliance.

EGFR is a well-validated target in multiple cancer types. Nobody has yet been able to develop a T-cell engager against this target, so we are breaking new ground with this program. CX-904 is designed with a single EGFR binding arm and a single CD3 binding arm and both are masked in a protease-dependent manner, allowing for tumor activation.

In May this year, we shared a first look at safety and efficacy for this clinical program, announcing positive Phase Ia dose escalation data from 35 patients that showed an emerging favorable safety profile and encouraging early signs of single-agent anticancer activity at doses up to 10 milligrams. Since our May data disclosure, dose escalation has continued, and we've been focusing enrollment on patients with pancreatic ductal adenocarcinoma, non-small cell lung cancer and head and neck squamous cell carcinoma.

We're pleased to report that the 15-milligram step dosing cohort has cleared. A maximum tolerated dose has not been reached for step dosing and escalation continues. Since dose escalation is continuing, we don't expect any decision in 2024 regarding initiation of Phase Ib. We continue to engage with our partner, Amgen, regarding plans for CX-904, and we look forward to providing additional updates on the program next year, including potential Phase Ib initiation.

I'd like to turn now to CX-2051, our wholly owned first-in-class antibody drug conjugate targeting epithelial cell adhesion molecule or EpCAM. Developing therapies targeting EpCAM has been a goal of cancer research and development since its first identification as a highly expressed colorectal cancer antigen more than 40 years ago.

EpCAM is a highly attractive drug target due to its high expression in many solid tumor types, including colorectal cancer, non-small cell lung cancer, ovarian cancer, triple-negative breast cancer and gastric cancers. EpCAM has been implicated in many aspects of cancer biology, including signal transduction, cell proliferation and epithelial mesenchymal transition, and it's particularly highly expressed in colorectal cancer. In fact, we estimate that more than 90% of CRC patients have high-level EpCAM expression.

Furthermore, we know that if EpCAM can be engaged successfully and safely, it can lead to tumor responses in patients as best demonstrated by the anti-EpCAM tox infusion, oportuzumab monatox that elicited a 40% complete response rate in non-muscle invasive bladder cancer. Because of its systemic toxicity, though, this drug needed to be administered locally. Similarly, the previously approved trispecific antibody, [ cetuximab ], was shown to be effective in the treatment of malignant ascites, but again, had to be locally administered.

Interest in EpCAM continues to be high across the industry, but why has it taken the field so long to develop a successful systemic anti-EpCAM cancer therapeutic. The answer lies in normal tissue expression. EpCAM expression is, in fact, relatively low on most normal tissues compared to its expression on cancer cells, but it does have particularly high expression in the normal gastrointestinal tract. This became problematic with first-generation anti-EpCAM antibodies that induced acute pancreatitis. Second-generation approaches, such as the EpCAM CD3 T-cell engager, solitomab, had even more severe toxicity, including grade 3 and higher upper GI inflammatory diarrhea and acute elevation of liver enzymes at subtherapeutic doses.

So how can we unlock the potential of EpCAM with a systemic therapy? Well, let me list the key properties of CX-2051 that we believe make it a very attractive clinical candidate. CX-2051 is a masked, high-affinity anti-EpCAM antibody incorporating a protease-cleavable linker that we have validated clinically in other contexts. The cytotoxic payload, [ CAP59 ], is a topoisomerase-1 inhibitor well matched to cancer types where EpCAM is highly expressed, including CRC.

The [ CAP59 ] payload has comparable preclinical antitumor efficacy to Daiichi's deruxtecan, both as a free payload and in the context of the EpCAM binding ADC. The payload antibody linker in CX-2051 has been optimized for bystander effect, which is believed to be an important contributor to ADC anticancer activity. Furthermore, we've shown in preclinical models that CX-2051 is equivalent in activity to the unmasked ADC, but it's much better tolerated in terms of GI tox.

CX-2051 also has shown antitumor activity in irinotecan-resistant colorectal cancer models, a particularly important finding since we anticipate this drug will be used in the post-irinotecan setting. CytomX advanced CX-2051 into the clinic in the second quarter of this year in metastatic CRC. Given the very high EpCAM expression and substantial medical need in CRC, we are focusing dose escalation in this cancer type to initially assess safety, explore initial signs of anticancer activity and determine optimal dose levels for further evaluation.

EpCAM expression levels in the Phase I study are being assessed retrospectively and are anticipated to be high in the majority of patients. And while now we're focusing CRC to gain initial experience with 2051, we see a broad opportunity to expand into several additional EpCAM-positive tumor types once we have a preliminary assessment of safety and antitumor activity from this initial study.

I'm very pleased to report excellent early progress in the Phase I study of CX-2051. We are already enrolling the fifth dose escalation cohort just 6 months into the trial, and we have observed a favorable safety profile for CX-2051 to date, suggesting that masking is functioning as designed. It's still relatively early days, but we see this as a very promising start, and we remain on track to provide an initial Phase Ia update in the first half of 2025 to hopefully set the stage for broad-based development of this drug.

With respect to the long-term opportunity for CX-2051, we estimate that there are approximately 300,000 EpCAM-positive addressable patients in the United States alone. So this program represents a potentially transformational value-creating opportunity.

Moving now to our third clinical program, CX-801, our masked interferon alpha 2b Probody cytokine. Interferon alpha is a well-validated molecule that we view as overlooked in the field of oncology. Interferon has established single-agent anticancer activity in multiple tumor types, and it has also demonstrated potential as a combination therapy with checkpoint inhibitors. The powerful ability of interferon alpha to both directly kill tumor cells and drive antigen presentation make it an ideal mechanism for combination with checkpoint inhibition potentially across a wide range of indications.

CX-801 incorporates a dual masking strategy with a peptide mask blocking the interferon domains and a steric Fc mask, which are designed to clamp down the activity of systemic interferon and significantly increase the therapeutic window. Our preclinical data for CX-801 demonstrates synergy with PD-1 inhibition, both in terms of antitumor activity and activation of the tumor inflammatory microenvironment.

Moreover, we've also shown in animal models that systemic activity of our masked interferon is significantly reduced and overall tolerability is markedly improved compared to the unmasked cytokine. We're excited to have recently initiated the Phase I clinical study for CX-801, having dosed our first patient during the third quarter.

Our initial goal for this program is to markedly improve on the clinical profile for unmasked interferon and PD-1 inhibition in melanoma and CX-801 Phase I dose escalation will primarily focus in this tumor type, initially as monotherapy before moving into combination dose escalation with KEYTRUDA, which we have access to through a collaboration and supply agreement with Merck. Initial Phase Ia data for CX-801 is anticipated in the second half of 2025. So with that, let me hand things back over to Chris to provide an update on our financials.

[Chris Ogden, executive]

Thank you, Sean. Echoing Sean's sentiments, we're in an exciting stage with our pipeline. And as we move into next year, we plan to deliver important clinical updates that have the potential to deliver significant value creation for CytomX and will also further inform our highest priorities for capital allocation across the pipeline. With that context, we continue to remain disciplined in capital allocation with a focus on delivering against our clinical milestones in 2025.

Now with that, I'm pleased to be able to share our third quarter 2024 financial results with everyone today. As of September 30, 2024, we ended the quarter with $118 million in cash, cash equivalents and investments compared to $137 million in cash at the end of the second quarter. We expect that our cash balance will continue to fund CytomX operations to the end of 2025. As always, our cash guidance does not assume any additional milestones from existing collaborations or any new business development, and we are active in this area.

Turning to revenue and operating expenses for the third quarter. Revenue was $33.4 million compared to $26.4 million in the third quarter of 2023. The higher revenue in the third quarter was driven primarily by research under our collaborations with Bristol-Myers Squibb and Moderna.

Operating expenses for the third quarter were $29.3 million, an increase of $6.1 million compared to the third quarter of 2023. R&D expenses were $21.4 million for the third quarter of 2024, which was an increase of $4.9 million compared to the corresponding quarter in 2023. This was primarily driven by increased clinical and manufacturing spend for CX-2051 as well as higher clinical spend for CX-904. G&A expenses increased by $1.1 million during the 3 months ended September 30, 2024, to $8 million compared to $6.8 million for the corresponding period in 2023.

Operationally, we continue to make significant progress with Amgen, Astellas, BMS, Moderna and Regeneron with the majority of our partnered research currently focused on masked T-cell engagers. Year-to-date, we have received $10 million in preclinical milestones through our collaboration with Astellas and continue to receive R&D funding across a number of our partnerships. Additionally, we have the potential to earn additional milestones through our collaborations over the next year.

Closing out our financial updates, we continue to be disciplined in capital allocation with financial resources to support key pipeline milestones, which we expect could drive meaningful value for shareholders and inform later-stage development for the pipeline. With that, I'll turn the call back to Sean for closing remarks.

[Sean McCarthy, executive]

Thanks, Chris, and thank you, everyone, for joining us today. We're excited about the work we're doing at CytomX to advance our multi-modality clinical pipeline towards value inflection in the near term, and we continue to push boundaries with our science. The Probody platform and antibody masking in general is of high strategic interest in the industry, and we continue to be at the forefront of this field.

Looking ahead to 2025, we're well positioned to deliver multiple clinical data readouts across the pipeline, and we remain focused on advancing CX-904, CX-2051 and CX-801 to clinical proof of concept and to rapidly advancing programs into later phase development where we can deliver meaningful and differentiated outcomes for patients. Furthermore, I'd underscore that CytomX is and always has been built to deliver value over the near and long term, and we maintain our long-term perspective. We have deep expertise in the field of masked therapeutics across multiple modalities strong large pharma and biotech partnerships, which position CytomX to drive sustainable innovation over time.

To close out, as always, I want to thank sincerely the patients who join our studies, their families, our clinical investigators and our team for continuing to drive our mission forward. And with that, operator, let's go ahead and open up the call for Q&A.

[Operator]

[Operator Instructions] And your first question comes from the line of Joseph Catanzaro with Piper Sandler.

[Joseph Catanzaro, analyst]

So maybe first one on the CX-904 update and timing around the Phase Ib decision. And it sounds like that's contingent on finishing the dose escalation and optimization. I guess as we think about that, is there a like prespecified target dose that you're looking to achieve? Is it hit the MTD? I guess talk us through how you're going about making the decision that you've identified the right dose and the right schedule there.

[Sean McCarthy, executive]

Yes. Joe, thanks for the question. As you know, I mean, since we presented our first results on this program earlier this year, we've been very pleased with the safety profile of 904. And as we've continued our work over the course of the year, we've continued to learn about that safety profile and as a result, been able to continue to successfully escalate. And we believe that it's important to continue to maximize dose for this drug and keep going.

We know that -- I think we're still learning in this field. I think generally that we do see dose responses for T-cell engagers. So we think it's in our interest and our partners' interest to really continue dose escalation, and we're really pleased now to be at the next dose level up from 15, which we're actively enrolling. So of course, the flip side of that is it means that it's going to take more time. That's sometimes the way it goes. T-cell engagers, in general, we're all learning, tend to take more time rather than less, but we've got to make sure we do the right experiments.

[Joseph Catanzaro, analyst]

Great. That's helpful. If I could ask maybe one quick follow-up on CX-2051. It's great to see the dose escalation moving along nicely. Wondering if you could say where dose level 5 falls within the number of planned dose levels and whether dose level 5 is within the expected therapeutic window or maybe there's still ways to go there? Just trying to maybe start to think about the first half '25 update.

[Sean McCarthy, executive]

Yes. So again, great question. So as I said, we're very pleased with the early progress with 2051, quickly having moved into Cohort 5. This is obviously quite an experimental therapeutic, EpCAM being the target, a masked ADC with a -- actually a novel payload, [ CAP59 ]. This is the first experience with this payload in the clinic. So we'll learn as we go in terms of how the clinical data matches up to our modeled predicted range for safety and efficacy.

So what I can say is that compared to our modeling, we are -- we believe we're at doses where an unmasked ADC would be very likely to show the kinds of GI toxicities that have been seen with other unmasked EpCAM strategies in the past. So we're pleased with where we are, but it's still relatively early days, and we'll have more to say in the first half of next year.

[Operator]

The next question comes from the line of Liang Cheng with Jefferies.

[Liang Cheng, analyst]

This is Liang Cheng for Roger. So I guess for us, we have a question about 904, so regarding the Phase Ib decision. So just wonder, I believe the pancreatic was further ahead in terms of enrollment. So where are -- remind us where are we for the enrollment of the non-small cell lung and head and neck? And also, when you make the decision for Phase Ib, will you also report the data or you report separately at a medical conference or like company event?

[Sean McCarthy, executive]

Great. Thanks for the questions. So with regard to enrollment, as we mentioned, we have continued over the course of this year to obviously, enroll in pancreatic, where we reported our first single-agent activity earlier this year. And we've continued to -- well, increased, I guess, emphasis on enrollment in head and neck and lung cancer since that May update.

In the May update, we had just a handful of patients in those 2 indications. So enrollment has progressed well over the course of the year. We've been enrolling at the previously cleared doses of 5 and 10 milligrams. Now that we have 15 cleared, we'll enroll at that dose and also continue to escalate to the next dose level. So that's where we are in terms of tumor types.

In terms of data and decision, this is, of course, a program in close collaboration with Amgen. And we are -- we continue to be very, very focused on the Amgen relationship, on building a data package to share with them when the time is right to discuss next steps, which would be ideally the move from Phase Ia to Phase Ib. And the data should be anticipated on the other side of that potential decision sometime later in 2025.

[Operator]

And your next question comes from the line of Etzer Darout with BMO Capital Markets.

[Etzer Darout, analyst]

Just another one on CX-904. As you're thinking about sort of potential Phase Ib just across pancreatic or the other tumor types, would these be monotherapy studies or maybe studies in combination with standard of care, particularly in like head and neck or non-small cell lung cancer, if and how you thought about that would be great.

[Sean McCarthy, executive]

Etzer, thanks. We're very focused on monotherapy at the moment, and that's very consistent with the goals of our partner. Not to say that we're not giving consideration to combination strategies, obviously, on an indication-by-indication basis. But right now, we remain, at least in the Phase Ia setting, of course, principally focused on monotherapy. As to whether there will be any combination component of potential future Phase Ib, that's something that we do plan to talk to our partner about. But as yet, we have no defined plans for.

[Operator]

Your next question comes from the line of Anupam Rama with JPMorgan.

[Anupam Rama, analyst]

Just wondering if we could -- I could get one in on [ CX-2015 ]. I know that you said retrospectively, you looked at EpCAM expression levels and they're high in the Phase I study. Is it fair to assume moving forward that you will be enrolling only high EpCAM expressing patients? Or will you be taking all comers?

[Sean McCarthy, executive]

Yes, that's a really good question. So in CRC, as I mentioned, it's the cancer type where EpCAM was first described a long time ago. And it was first identified as a function of its really, really high expression. And we've done work with our own assay that we've developed here at CytomX to confirm that in our hands, more than 90% of metastatic CRC patients have high-level EpCAM expression. And so I don't think -- and we'll validate that as we continue to look at the retrospective analysis in this ongoing study. But I don't expect that on a go-forward basis in CRC, we would need to select the target for that tumor type.

If you look across other tumor types, one of the great things about EpCAM is it is expressed on so many cancers also at high levels. But in some like lung cancer, it's high in 60%, 70% of patients. That compares to gastric cancer, similar kinds of levels. And in some tumor types like bladder, prostate, pancreatic, it's a little bit lower. And so we've developed, we think, a very good assay, a great IHC assay that will enable us in some of those other tumor types to potentially select for patients if we need to, and we'll sort of cross that bridge when we come to it.

I think another key point here, though, is that if you aggregate across tumor types for EpCAM expression, there are hundreds of thousands of patients to be treated with a drug like this. And we do see 2051 in the long run for that reason, having potential pan-tumor potential a little bit like we've seen with [indiscernible].

[Operator]

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

[Unknown Analyst]

This is [ Dan ] on for Mitch. Kind of on the idea of EpCAM expression when you were talking about the different tumor types, are there any tumor types that you think are particularly vulnerable to the bystander effect? Like are there any biological rationales for that? And are there any specific tumor types with lower HER2 expression that might be less validated for an ADC approach but have higher EpCAM expression and somewhat higher unmet need that might make it a cancer of interest?

[Sean McCarthy, executive]

Well, I'd say the main way we think about that in the context of this drug candidate is really in the design of the payload and the linker itself. So those of you who have followed CytomX for a while may recall that we actually -- we had a prior version of an EpCAM ADC, which we had conjugated to a emtansine payload. But we've always been really interested in this expression in CRC and how to develop a drug that was more tailored to that tumor type just because of the unbelievably high expression of the target. And that's what led to our selection of the [ CAP59 ] payload as a Topo-1 because as a Topo-1 inhibitor, it's indicated for the treatment of tecan sensitive tumors like CRC.

So we've been very deliberate in the design of this drug in terms of selecting payload to match level of target in areas of high unmet need, including CRC, but not limited to CRC, also including lung, both squamous and adeno, ovarian, gastric, as I've mentioned, and many other tumors besides. With regards to bystander effect, the linker, the trialanine linker that is in this ADC is also optimized for bystander effect and bystander effect can be particularly effective in the presence of high levels of target where ADC will bind target and in the extracellular environment release payload.

So we just feel like the overall design of -- we took our time to really get this one optimized. And we feel like the overall design of 2051, the payload, the cleavable trialanine linker, of course, the antibody mask and the protease cleavable linker and the selection of EpCAM as a very high potential previously clinically validated target really gives us the highest probability of technical success with this drug relative to the other ADCs that we put in the clinic in the past.

[Unknown Analyst]

Awesome. And if I could ask just for a little bit more color on the 904 program update that was expected by year-end. Has that been delayed? Or did the lack of maximum tolerated dose complicate that? And if so, when can we expect the next data release for the Phase Ia with 904?

[Sean McCarthy, executive]

Yes. So we consider today's call really this is the update on 904. And we're now -- and as we've said, this is very much a function of continued dose escalation and wanted to make sure that we really fully explore dose intensity for 904 in the clinic. So that means that the next update on this program will be next year. And what we're laser-focused on is our alignment with Amgen as we continue to collect data and work with them as we move into next year on potential next steps.

[Operator]

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

[Sean McCarthy, executive]

Well, thanks, everyone, for tuning in today. We're really excited about progress through 2024 at CytomX, and we look forward to providing additional updates as we move into 2025. So thank you all for your time.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.