Iovance Biotherapeutics Inc

NASDAQ:IOVA

Earnings Call Transcript 2018-Q2

[Operator]

Good afternoon and welcome to the Iovance Biotherapeutics Second Quarter 2018 Financial Results Conference Call. All participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at the Company's request.

Now, I would like to turn the conference over to Mr. Tim Morris, Chief Financial Officer at Iovance. Sir, please go ahead.

[Tim Morris, Chief Financial Officer]

Thank you, operator. Good afternoon, everyone and thank you for joining us today. With me on the call is Dr. Maria Fardis, our President and Chief Executive Officer. This afternoon, we issued a press release that you could find on our website at iovance.com, which includes the financial results for the quarter ended June 30, 2018 and recent achievements.

Before I turn the call over to Maria, I would like to remind everyone that statements made during this conference call will include forward-looking statements regarding Iovance's goals, business focus, business plans, clinical trial plans and results, potential future applications of our technology, manufacturing capabilities, regulatory feedback and guidance, licensing and collaboration agreements, future updates, and cash guidance.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time-to-time in our SEC filings. Our results may differ materially from those projected during today's call. We undertake no obligation to publicly update any forward-looking statements.

With that, let me pass the call on to Maria.

[Maria Fardis, President and Chief Executive Officer]

Thank you, Tim and good afternoon everyone. During the second quarter, we continued our efforts toward our mission to develop TIL therapy as a treatment option for cancer patients in a global setting. As part of our TIL development program, we are executing to have clinical trials and expanding application of the technology into new indications and earlier lines of therapy.

To that effect, since the last quarter call, we have initiated manufacturing of LN-144 and 145 at Lonza, Netherlands in support of the melanoma and cervical clinical trials in Europe, dosed the first melanoma patient with LN-144 also known as lifileucel. In Europe, making an important milestone for our global development plan, increase the total number of our participating clinical sites world-wide across our four company-sponsored studies to over 70 sites initiated our regulatory interaction with FDA and with a scheduled meeting in third quarter 2018 to define the registration path for lifileucel.

Activated sites in five countries across two studies for melanoma and cervical to conduct clinical trials in Europe. And this includes the countries of Netherlands, France, Hungary, Spain and the United Kingdom. For additional updates on the ongoing clinical trials, let me start with our lead program, lifileucel for melanoma.

We have dosed patients in Europe and continue enrollment in the global Phase 2 metastatic melanoma study, C-144-01. Currently 34 global sites are active, 18 of which are in the U.S. and 16 are now active in Europe. Patient dosing is continuing for C-145-03, our Phase 2 trial of LN-145 for the treatment of patients with recurrent and/or metastatic squamous cell carcinoma of the head and neck.

For C-145-04, our Phase 2 trial of LN-145 for the treatment of patients with recurrent, metastatic or persistent cervical carcinoma, we have actively screening at sites in U.S. and EU ongoing. We anticipate dosing our first European patient in the near-term.

We also are conducting a fourth Iovance-sponsored study in non-small cell lung cancer patients as part of our collaboration with MedImmune, the R&D arm of AstraZeneca, allowing treatment of patients with TIL plus durvalumab. Given recent changes in the treatment landscape for lung cancer, we intended to modify the study design although we still plan on seeking to enroll PD-1 or PD-L1 naïve patients.

With respect to expanding our TIL technology, clinical development into new indications as part of collaboration program with MD Anderson Cancer Center, we have now activated the first of two Phase 2 clinical studies. In the activated study, 2017-0672, we will be investigating LN-145 manufactured using our Gen 2 manufacturing process in treating patients with soft tissue sarcoma, osteosarcoma and platinum-resistant ovarian cancer.

For the second study, MD Anderson will begin enrolling patients in the second half of 2018 and we’ll use TIL manufactured by that institution. This different manufacturing method will allows for investigation of the impact of utilization of the 4-1BB agonist antibody or urelumab on the TIL product.

I would like to continue to discuss our core IP portfolio. We have a number of patent applications in process and I’d like to outline the IP portfolio around Gen 2. As many of you know, all ongoing trials are utilizing our Gen 2 manufacturing method, that last 22 days and yields a cryopreserved product.

Iovance owns the associated patent rights for the Gen 2 process is granted, our patent application should provide protection through 2038. Our license patent rights from the NCI and our own patent rights in combination were expensive and advanced development program and commercialization plan, lead to our confidence that we are the leader in the field of TIL therapy.

We also continue pursuing next-generation TIL products both through process development as well as research. The goal of our research work until is to increase the potency of the TIL product. We have been working on modifying the properties of our TIL cells through the addition of different co-stimulatory factors, such as OX40 or 4-1BB agonist as well as utilization of various cytokines in our growth media.

We also continue our research efforts with RXi and selective on investigation of utility of genetically-modified TIL. In terms of new indication, in June, we signed a preclinical collaboration agreement with the Roswell Park Comprehensive Cancer Center. Under this preclinical collaboration, we will explore the potential of TIL therapy in bladder and other oncolytic indication. On the regulatory front in early May 2018, the company was granted orphan-drug designation from the FDA for autologous tumor infiltrating lymphocytes for the treatment of cervical cancer with a tumor size of greater than two centimeters in diameter.

If approved, the orphan-drug designation provides us with seven years of market exclusivity in the U.S. We are on track with the planned FDA interaction to define the registration path for lifileucel in the third quarter of this year. The meeting is scheduled, and we are preparing for this interaction. We will provide further update about this meeting in fourth quarter of 2018.

Looking ahead of the remainder of 2018, we are planning on presenting data from Cohort 2 in the Phase 2 melanoma trial and one other tumor type at an upcoming medical meeting in the remaining part of 2018. Dosing the first patient in our collaboration with MD Anderson, expanding our relationship with academic institutions and corporations in order to broaden our understanding of TIL and new indication, and expanding utilization of TIL in earlier lines of therapy in combination with standard-of-care.

I would now like to turn the call over to Tim for a discussion of our financials. Tim?

[Tim Morris, Chief Financial Officer]

Thank you, Maria. Net loss for the second quarter ended June 30, 2018 was $30.7 million, or $0.34 per share, compared to a net loss of $23.4 million, or $0.37 per share for the second quarter 2017. Research and development expenses were $24.6 million for the second quarter 2018, an increase of $6 million, compared to $18.6 million for the second quarter 2017. The increase in research and development expenses was primarily attributed to an increase in headcount and consulting expenses and an increase in clinical trial costs due to higher patient enrollment and a higher number of clinical sites.

General and administrative expenses were $6.8 million for the second quarter 2018, an increase of $1.9 million compared to $4.9 million for the second quarter 2017. The increase was primarily attributable to an increase in payroll and related expenses. Net loss for the six months ended June 30, 2018 was $57.2 million or $0.65 per share, compared to a net loss of $44.1 million or $0.71 per share for the same period in 2017.

Research and development expenses were $44.5 million for the six months ended June 30, 2018, an increase of $10.3 million compared to $34.2 million for the same period in 2017. The increase in research and development expenses was primarily attributable to a $5.7 million increase in headcount and clinical trial costs.

General and administrative expenses were $13.8 million for the six months ended June 30, 2018, an increase of $3.6 million compared to $10.2 million for the same period in 2017. The increase was primarily attributed to a $2.7 million increase in headcount and a $0.5 million increase in legal expenses driven by increased intellectual property cost.

At June 30, 2018, the company held $276.1 million in cash, cash equivalents, and short-term investments, this compares to $297.1 million at March 31, 2018. During the second quarter, the company used $24 million for operating activities. The company anticipates that the year-end balance of cash, cash equivalents and short-term investments may be between $190 million and $210 million.

Now I’ll turn the call back over to the operator for your questions.

[Operator]

Thank you. [Operator Instructions] Our first question is from Boris Peaker with Cowen. Your line is open.

[Boris Peaker, Cowen]

Great. So I’ll start with maybe the pivotal study in melanoma. I'm just curious, I know you're supposed to meet with the FDA soon. But what are your internal assumption for the target enrollment? And for that target with 34 sites enrolling, how long do you anticipate that would take?

[Maria Fardis, President and Chief Executive Officer]

Thank you, Boris for the question. The sample size would be a subject of discussion with the FDA. So we would not provide a specific guidance today, but we certainly have a proposal that we have put before the agency to see if we can get agreement from them. I agree that this – that was the purpose of having a number of sites active to be able to accelerate enrollment and hit those numbers fairly quickly.

[Boris Peaker, Cowen]

Got you. So what we learn this timeline in 4Q with post-feedback from the FDA?

[Maria Fardis, President and Chief Executive Officer]

That’s our intent if we have clear guidance, yes.

[Boris Peaker, Cowen]

Great. And just my last question, what data do we anticipate to see at ESMO, or SITC or any other meeting maybe later this year?

[Maria Fardis, President and Chief Executive Officer]

It would be the typical overall response rate, duration of response sort of the waterfall that shows the depth of response and how long the patients might have been on, would be the typical data that any study at this stage could present. Biomarkers would be something that would be of interest as well, we might be able to seek some of those as well.

[Boris Peaker, Cowen]

But any specific meeting that you could comment right now, where you'll be presenting data?

[Maria Fardis, President and Chief Executive Officer]

So we haven't commented on this specific venue, it would be in the remaining part of 2018 is still our target.

[Boris Peaker, Cowen]

Got you. Great, thank you for taking my questions.

[Maria Fardis, President and Chief Executive Officer]

Thank you.

[Operator]

Thank you. Our next question is from Mark Breidenbach with Oppenheimer. Your line is open.

[Mark Breidenbach, Oppenheimer]

Hi, Maria. Thanks for taking the questions. I was wondering if you could expand a little bit more on the changes to the lung cancer trial protocol? I think I heard you say that you're still going to be targeting PD-1 naïve patients. If so, can you just expand a little bit on what changes are being made?

[Maria Fardis, President and Chief Executive Officer]

Sure. Hi Mark. The study itself was initially a randomized study with TIL alone and one cohort and TIL plus durvalumab another cohort. Given the landscape shift, as of ASCO with checkpoint plus chemotherapy showing fairly strong response in early-line patients. What we are trying to do is we're trying to potentially remove the TIL alone cohort to encourage enrollment.

[Mark Breidenbach, Oppenheimer]

Got it, got it, that sounds good. And with regard to LN-144, I was just wondering in your discussions with the FDA and from the perspective of a safety database. Do you think the FDA would view the Gen 1 and Gen 2 products as conceptually similar enough to group together into a BLA filing for LN-144 or do you think they view these as two entirely separate products?

[Maria Fardis, President and Chief Executive Officer]

That’s a good question. And typically subject to a pre-BLA meeting with agency. I do want to highlight that because we have other studies ongoing. And again this is very early in the dialogue. But typically FDA would like to have visibility to other studies as well and if you pull all of these studies together, that's a respectable number of patients as compared to other cell therapies. So I don't have a concern in terms of safety set. I think you will have sufficient numbers to provide to the agency.

[Mark Breidenbach, Oppenheimer]

Okay. And just one final one from me, I know there are two trials at MD Anderson and basically, they're in the same indications. One is using MD Anderson's TIL, one is using your TIL. What's the rationale behind conducting two separate trials as opposed to just having an extra arm in one trial?

[Maria Fardis, President and Chief Executive Officer]

Correct. So there are two different particular products, and we wanted to be able to report them slightly separately. As a matter of fact, it's time to a BLA. The study that might have the LN-145 might need to be summarized and provided to the agencies. So there are some benefits in having them separated. It's more operational than anything else.

[Mark Breidenbach, Oppenheimer]

Okay, all right. That’s it from me. Thanks for taking the question.

[Maria Fardis, President and Chief Executive Officer]

Sure. Thank you, Mark.

[Operator]

Thank you. Our next question is from Gbola Amusa with Chardan. Your line is open.

[Gbola Amusa, Chardan]

Hi, thanks for taking my call. I’ve two sets of questions. And the first set is kind of related to the last question. I just wanted to understand a little bit more about the TIL manufacturing process from MD Anderson Cancer Center? And how that compares to your process in terms of the time or any other relevant metrics? And can you confirm that from a regulators' perspective that is considered a different product?

[Maria Fardis, President and Chief Executive Officer]

We're not planning on making to claim that our process is the same as MD Anderson. Their process is more similar to our Gen 1. And in fact, the closest analogue to their process is the NCI method. There is an in-process cryopreservation. And they also, at times, have used what is called a tumor banking model, and they recently put a publication out on their process. So I won't go into too much detail, but there is a difference between their process and our Gen 2 process, Gbola.

[Gbola Amusa, Chardan]

Okay, great. And then, intrigued by the preclinical program in bladder cancer and then obviously, there are other cancers, but are there any updates on the likely specific target subpopulations there that make the more sense to treat with TILs?

[Maria Fardis, President and Chief Executive Officer]

So our general strategy has been looking at diseases that are starting from a high mutational load end of the spectrum, you might have seen the Schreiber article and you also look at diseases that are highly immunogenic. So bladder fits that description sort of criteria very well. When we start looking at our indication that first activity always is to look at the growth of TIL, the properties of TIL, investigating how they interfere on activity of the TIL that is manufactured. So we look at them very carefully, and this is the first step in that direction. So we are looking at bladder and in order for us to do that, we always set up a preclinical agreement with an institution who may be interested.

[Gbola Amusa, Chardan]

Okay. So it remains to be determined how broad, let's say, bladder cancer, how broad that indication is that you might go for at this point?

[Maria Fardis, President and Chief Executive Officer]

That's a fair statement. Yes, that's a fair statement.

[Gbola Amusa, Chardan]

Okay, great. Thank you.

[Maria Fardis, President and Chief Executive Officer]

Thank you.

[Operator]

Thank you. Our next question is from Biren Amin with Jefferies. Your line is open.

[Biren Amin, Jefferies]

Yes, hi, guys. Thanks for taking my questions. Maria, what data do you hope to have and share with FDA when you go on to the Q3 meeting? And also should we expect that you would wait for the minutes before you disclose details of the meeting?

[Maria Fardis, President and Chief Executive Officer]

Let me answer your second question that, yes, I would like to wait for the minutes before we disclose the outcome to the public. We, of course, cut the data to the degree we could as late as possible and we have provided to the agency. So that's the most mature data we could provide to them.

[Biren Amin, Jefferies]

Got it. And then are you also planning to speak with the European Medicines Agency regarding this program?

[Maria Fardis, President and Chief Executive Officer]

We actually have had a interaction with a local health authority in EU last year, and we certainly intend to expand upon that as well. That's part of our EU strategy as well. This is why we expanded our clinical trials into the European region, yes.

[Biren Amin, Jefferies]

And then, I guess, on cervical, can you just give us a status on that trial? And when we can expect to have that trial move into the second stage of the study?

[Maria Fardis, President and Chief Executive Officer]

Yes, so what we have noticed is that the patient population that were enrolled into the cervical study were highly refractory patients, very, very treatment-exposed. We have since amended the protocol to include patients that have one to three prior therapies and ideally that they are not exposed to prior anti-PD-1. So we are hoping to get more patients that are similar to the NCI patient population. That's our goal.

[Biren Amin, Jefferies]

Got it, thank you.

[Tim Morris, Chief Financial Officer]

Sure.

[Operator]

Thank you. Our next question is from Madhu Kumar with B. Riley FBR. Your line is open.

[Madhu Kumar, B. Riley FBR]

Yes, thanks for taking my questions. So my first one has to do with what line in kind of post check brain melanoma would you likely focus on your initial discussions with the FDA?

[Maria Fardis, President and Chief Executive Officer]

So patients that are post-anti-PD-1, and if they have a BRAF mutation, post-BRAF inhibitor are clear unmet medical need, there is nothing approved for them. We also – I'd like to – I mean, this is obviously a question that would end up – what patient population would end up on label, and it's a subject to discussion at the pre-BLA meeting.

But I also would point out that the patients that we have enrolled are as the median of three prior therapies. So combination of what patient population we enrolled as well as what was our inclusion criteria in the protocol ends up defining the patient population that would be the label. What I just want to highlight one more time that the unmet medical need is post-PD-1 patients, and if BRAF mutant, post-BRAF inhibitor.

[Madhu Kumar, B. Riley FBR]

Okay. Yes, so while there are no proofs there with post-PD-1, there are obviously several Phase 3 trials that are going on in this post-PD-1 setting. So what can we gain from these existing clinical trials either guide your discussion or guide kind of the potential confirmatory trial you would have to run even with some accelerated approval path?

[Maria Fardis, President and Chief Executive Officer]

So with an accelerated approval path and this is just more of a regulatory discussion, they – if there is a need for confirmatory trial, that doesn't have to be in the same indication as your initial label. And I also would like to highlight that the two other cell therapies that have received a U.S. approval for other indications in heme, both have not had a requirement for a full approval to be – to use the Phase 3 to receive that full approval. They received full approval on the Phase 1 on the context of the single-arm Phase 2 trial. So these are subject to negotiations with the agency that SBIR has been particularly open-minded, and I'm very pleased to see the outcome of other companies' negotiations with them.

[Madhu Kumar, B. Riley FBR]

So that's interesting. Do you think that then is there going to be technology differentiation where your cell therapy, kind of how the drugs are evaluated is more of a guider versus the kind of indication space you're operating in?

[Maria Fardis, President and Chief Executive Officer]

I'm not sure, if I understand your question, Madhu. Would you mind rewording it a little bit?

[Madhu Kumar, B. Riley FBR]

Sure. So you discussed how the CAR T drugs got approval – got full approval on Phase 2 single-arm study. We know like in post-PD-1 melanoma, other companies studying on Phase 3 trials competing against some kind of existing agents. And so ultimately, the question I have is, does – as you mentioned, Schreiber is kind of more open to this kind of shorter time frame for approval, is that an advantage that's kind of T cell therapy technologies might have over other drugs in the solid tumor setting?

[Maria Fardis, President and Chief Executive Officer]

I certainly can't comment on what SBIR may do in the future. All I was highlighting was that they were particularly receptive of the last two BLAs for two cell therapies, both Yescarta as well as Kymriah. So I'm pleased to see that they have been open to that dialogue. And I think that what exactly would be an accelerated approval path as well as what would be terms for turning that into confirmatory program is all subjects to an end of Phase 2 meeting discussion as well as a pre-BLA discussion. So both remain open, I think we have to be very open-minded that FDA is within their rights to be asking all sort of a pre-submission or post-marketing requirement.

[Madhu Kumar, B. Riley FBR]

One last one, so how do you think the treatment landscape for cervical cancer has changed with the first approvals of the checkpoint drugs in the space?

[Maria Fardis, President and Chief Executive Officer]

Yes, very good. Thank you. So that particular product, Kymriah, just received approval from the agency in cervical and PD-1 high-expressors as well as the patient population that were post-chemotherapy. It was an accelerated approval, and therefore the regulatory door for that patient population remains open.

[Madhu Kumar, B. Riley FBR]

Okay, great. Thank you. I think its Keytruda, not Kymriah.

[Operator]

Thank you. Our next question is from Jim Birchenough with Wells Fargo. Your line is open.

[Nick Abbott, Wells Fargo]

Good afternoon. It's Nick in for Jim this afternoon. So maybe first off Maria, in terms of the head and neck trial, obviously, that met the criteria in the simultaneous stage criteria a while back, so should we expect another end of Phase 2 type meeting in 2019 for that program?

[Maria Fardis, President and Chief Executive Officer]

Hi, Nick. Thank you for the question. We continue enrolling, and we are certainly looking at the data to assure that there is enough superiority in – and at line that we are in. As you might recall, the patient population we had had a median of four prior therapies. So there were even more progress – further progress along than our melanoma patients are. So I cannot comment. It really depends on the data, and we're continuing to monitor that data.

[Nick Abbott, Wells Fargo]

Okay, thank you. And then just going back to the two trials that you're running in the sarcomas and platinum-refractory ovarian, obviously, you have prepared a number of clinical sites to run this trial. MD Anderson traditionally runs their own trials, and obviously, they would be very restricted in terms of enrollment. Is their trial going to roll out across the number of sites as well?

[Maria Fardis, President and Chief Executive Officer]

Both studies are being conducted at MD Anderson alone for now. This is part of a broader collaboration we have with them, which have preclinical agreement, clinical agreement, which includes the two studies as well as certain access to IP rights around their method of manufacturing, should that prove to be better. So currently, the both studies are planned for MD Anderson alone. We also have certain time frame around that. And if they are not able to enroll fast enough, this is the subject we can approach them should that need arise. At the moment, we are just trying to get them activated and started.

[Nick Abbott, Wells Fargo]

Okay, okay. That makes sense. Thank you. And then just in terms of looking forward, I think in your prepared comments you mentioned study TIL in the early lines of treatment as a milestone for the second half of this year, can you expand on that, please?

[Maria Fardis, President and Chief Executive Officer]

Yes, certainly. And this is part of our broader undertaking that we are thinking about how can we move TIL potentially to an earlier line. We have already started within in the lung setting, and we also will be looking at additional indications in earlier line. We have not really provided much information, but the information that I provided during the call is all I can speak to. But we intend to move TIL in to earlier line and potentially in combination with available care.

[Nick Abbott, Wells Fargo]

Okay, great. Thank you very much.

[Maria Fardis, President and Chief Executive Officer]

Sure.

[Operator]

Thank you. And I'm showing no further questions. I would like to thank everyone for joining today's call. Everyone may disconnect. Have a great day.