Iovance Biotherapeutics Inc

NASDAQ:IOVA

Earnings Call Transcript 2019-Q2

[Operator]

Good afternoon, and welcome to the Iovance Biotherapeutics Second Quarter 2019 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 the call is being recorded at the company's request.

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

[Timothy Morris, CFO]

Thank you, Operator. Good afternoon, everyone and thank you for joining us. With me on the call is Maria Fardis, our President and Chief Executive Officer; and Dr. Friedrich Finckenstein, our Chief Medical Officer. This afternoon, we issued a press release that you can find on our website at iovance.com, which includes financial results for the second quarter of 2019 as well as the company update.

Before we start, I'd 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 or 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, I will pass the call over to Maria.

[Maria Fardis, President and CEO]

Thank you, Tim, and good afternoon, everyone.

Iovance continues to make excellent progress in development of TIL therapy. We are excited to potentially become the first company bringing TIL therapy products to market for patients with solid tumors. I’d like to briefly highlight a few recent achievements.

First in June we reported encouraging results from our ongoing studies of TIL therapy at the American Society of Clinical Oncology or ASCO Annual Meeting. The results that were reported in both metastatic melanoma and advanced cervical cancer showed objective response rates that is represent improvements relative to available treatment options and late stage take late stage patient populations. The results also show the potential long-term benefit of TIL therapy as we have not yet observed a limit on the median duration of response in either the melanoma or cervical cancer study.

Second, we are working to expand our manufacturing capabilities to prepare to meet TIL therapy broadly accessible to patients. In May, we entered into a long term lease agreement to build a commercial scale production facility in Philadelphia and in June we began construction.

Third, our cervical cancer program is moving forward and an accelerated pace. We are extremely pleased to have received a Breakthrough Therapy designation from FDA for LN-145 and we now plan to submit a biologics license application or BLA for TIL therapy, LN-145 in late 2020.

Now I will discuss these development program in detail and provide an update on our corporate activities as we prepare to potentially commercialize while we further continue to evaluate the broad potential of cell therapy in clinic.

Our pivotal study of TIL therapy with lifileucel and the treatment of metastatic melanomaC-144-01 is progressing well. The results we presented at ASCO shows that lifileucel demonstrated an Objective Response Rate or ORR of 38% in 66 patients. Response rate for current treatment in the patient population are typically between 4% and 10%, which means that lifileucel has a strong potential to become an important new treatment option for these patients.

As the data continues to make sure we know that the responses appear durable following a one-time treatment. At 8.8-months median follow-up, Median Duration of Response or DOR had not been reached.

We continue to expect a BLA submission for lifileucel by end of 2020. We are very pleased with the progress of our study of TIL therapy LN-145 in patients that have advanced cervical cancerC-145-04. At ASCO we reported early results in 27 patients demonstrating an ORR of 44%. These results are highly encouraging, available care for this patient population includes chemotherapy response rate seeing the chemotherapy in second line metastatic cervical cancer is approximately 5% to 13%.

Responses to LN-145 maybe durable as the median DOR had not been reached at 7.4 months of median follow-up. In May, Iovance received Breakthrough Therapy designation for LN-145 from the FDA. In June of 2019, we met with FDA, the agency noted that the ongoing C-145-04 study maybe sufficient to support registration of LN-145

These developments allow us to plan for a regulatory submission using our ongoing study which is now pivotal registration enabling program. We have recently amended the protocol to increase the number of patients to 75. We plan to include in the BLA patients who have progressed following an issue of systemic therapy for recurrent or metastatic disease.

In addition to the impressive results we have observed with TIL therapy in patients with late stage disease, we also believe that there may be a clear potential for TIL therapy in the treatment of patients at earlier stages of treatment.

Our evaluation of patients at early stages of disease currently involved the population of patients who have not experienced checkpoint inhibitor therapy. In our study, IOV-COM-202, we are enrolling patients that are naïve to treatment with PD-1 inhibitors. This is a basket study evaluating TIL therapy LN-145 in combination with pembrolizumab in several indications including PD-1 naïve patients with melanoma or head and neck cancers.

In April, we announced that a new arm of the basket study will be added to allow for treatment of PDL-1 naïve patients with non-small cell lung cancer indication with a combination of LN-145 and pembrolizumab. This cohort is now active.

Beyond solid tumors we also see potential for our TIL technology platform in the treatment of hematologic cancers. As part of the collaboration, the Ohio State University on comprehensive cancer center, we are working to develop a cell therapy product for hematologic indications called peripheral blood lymphocyte or PBL therapy.

At the Congress of the European Hematology Association or EHA in June, our advanced research study described the manufacturing and preclinical results for the PDL therapy also called IOV-2001 as a treatment approach in chronic lymphocytic leukemia. PDL are different than CAR-T and that they are targeting multiple antigens associated with the patient disease.

CAR-T therapy targets one tumor cells of its antigen with CD19. We have no demonstrated the ability to grow PDL cells for therapeutics use from 50 milliliters of blood in only nine days. Our plan is to begin clinical development for CLO in the population of patients in the disease that has progressed following our treatment. We expect to file an investigation on new drug application on an IND before end of the year 2019.

We also continue to pursue opportunities to refine TIL therapy methods with the goal of developing further generations of commercial TIL therapy products that may have improved efficacy. One of these approaches to refinement is to investigate methods of selection of TIL therapy. Iovance believes that this approach to TIL therapy may offer improved potency paired with a good safety profile.

Two projects are therefore being pursued in this direction an internal program as well a collaboration with CHUM. In July 2019, we entered into a collaboration with the University of Montreal Health Centre or CHUM which has agreed to conduct clinical study with PD-1 positive selected tumor-infiltrating lymphocyte or PD-1 positive TIL. In addition this agreement with CHUM represents our expansion into Canada. We look forward to initiation of this collaboration.

We also continue to build our corporate infrastructure as we prepare for regulatory submissions and potential commercialization. We have expanded our management team by adding Dr. Friedrich Graf Finckenstein, our Chief Medical Officer and expanded our Board of Directors. We have increased our manufacturing capacity with our current CMO and have now dosed over 200 patients at Iovance.

We are pleased to have entered into a long-term lease agreement for our own manufacturing facility to support broad access to TIL therapy. This facility located in Philadelphia will be used for commercial and clinical production of autologous TIL product. We have also expanded our intellectual property portfolio with seven recently granted or allowed U.S. patents for composition and methods of treatment related to the use of TIL technology.

In the next few months, we look forward to presenting at several conferences including the [indiscernible] Global Conference in New York, the Wells Fargo Security Healthcare Conference in Boston, the Alliance for Regenerative Medicine Cell & Gene Meeting in Mesa in California and Cantor Global Healthcare Conference in New York. Finally our financial position is strong, we believe that we have sufficient operating capital to complete our pivotal studies and file for regulatory approval for product in both advance melanoma and advanced cervical cancer in late 2020.

Now I would like to ask Tim to share and overview of our financial results. Tim?

[Timothy Morris, CFO]

Thank you, Maria.

Our quarterly news release contains details of our financial results. Rather than read through all these details my comments will address a few highlights. Net loss for the second quarter 2019 was $47.6 million or $0.38 per share compared to a net loss of $30.7 million or $0.34 per share for the second quarter last year. The increase in net loss for the quarter as compared to last year was due to higher spending as we continue enrollment in the pivotal study prepare for the BLA filings and eventually commercialization.

Specific higher expenses are due to increased headcount in both R&D and G&A. At quarter end we had approximately 120 employees as compared to approximately 75 at June 30, 2018, increased spending on market research for both melanoma and cervical, additions to the IP estate and patent portfolio in the U.S. and worldwide, an increase in manufacturing capacity in the U.S. and Europe.

Research and development expenses were $39.3 million for second quarter 2019 an increase of $14.7 million as compared to $24.6 million for the second quarter 2018. General and administrative expenses were 10.9 million for the second quarter an increase of $4.1 million compared to the $6.8 million we had for the second quarter 2018.

Enrollment in the pivotal melanoma and cervical study has increased as compared to last year and over the first quarter this year. We have increased manufacturing capacity to support this enrollment. We also added headcount and begun pre-commercial activity in anticipation of BLA filings for these programs in late 2020. We anticipate that the level spending for the second quarter 2019 will continue at this level on a quarterly basis until enrollment in the pivotal studies is completed.

Net loss for the six months ended June 30, 2019 was $84.5 million or $0.68 per share compared to a net loss of $57.2 million or $0.65 per share for the period ended June 30, 2018. The increase in net loss for the first half of 2019 as compared to the first half of 2018 is due to the reasons discussed above for employees, market research, new IP an additional manufacturing capacity.

Research and development expenses were $70.2 million for the first half of 2019 and increase of $25.7 million compared to $44.5 million for the same period ended in 2018. General and administrative expenses were $19.9 million for the first half of 2019 and increase of 6.1 million compared to $13.8 million for the same period in 2018.

At June 30, 2019 the company held $410 million in cash, cash equivalents, short-term investments and restricted cash as compared to $440 million that we had at March 31, 2019. During the second quarter the company used $34 million for operating activities. The company anticipates that the year-end balance of cash, cash equivalents, short-term investments and restricted cash may be between $310 million and $320 million.

I will now turn the call back over to the operator for your questions

[Operator]

[Operator Instructions] For your first question we have Mark Breidenbach from Oppenheimer. Your line is now open.

[Mark Breidenbach, Oppenheimer]

Congrats on this very rapid progress and thanks for taking the questions. Just first one about timing relative timing of melanoma versus cervical. Do you sound like they are both going to be ready for BLA filings towards the end of 2020? If you had to guess which one would come first could you do that at this point or they'd be either too early to tell?

[Maria Fardis, President and CEO]

Hi, Mark thank you for the question, I don’t know if I can necessarily say quite yet. I do want to highlight that we are also continuing to work with FDA to assure our cervical sample size is in line with their expectations. We think we are fairly close with the numbers. We want to make sure that we continue that dialogue.

I can tell which is why we put sort of that late 2020 and frankly so within a month or two of each other there is a very good chance that we might want to combine them or that agency asks us to combine them. Somewhere around that late 2020 I think both of them could possibly be filed.

[Mark Breidenbach, Oppenheimer]

And also another timing question with respect to the new manufacturing facility. Obviously construction was started relatively recently can you just remind us when you expect it to be fully operational and have you given us any indication on capacity for this facility in terms of number of batches or doses per year it can accommodate?

[Maria Fardis, President and CEO]

Yes, we have expected it to be operational in about two years and our expectation is thousands of patients can be supported through this facility. It is a butterfly design in a sense that half of the facility is expected to the operational supporting our initial year or two of commercialization. And then subsequent to that the rest of the facility can also get opened up. So it's capable of increasing capacity as necessary.

[Mark Breidenbach, Oppenheimer]

And so in the meantime, if you have approved products before that’s operational but they will be supported by your agreements with third-party manufacturers?

[Maria Fardis, President and CEO]

That’s exactly right, so initial manufacturing plan could be done through our existing CMOs while the facility get ready.

[Mark Breidenbach, Oppenheimer]

And just one last one from me if that's okay, any plans to conduct internally blinded independent reviews of responses either from Cohort 2 and the melanoma trial or the initial cervical data that you presented at ASCO?

[Maria Fardis, President and CEO]

I can answer the second part maybe more easily, anything going forward now that the agency has agreed the study is pivotal likely will not be done in a public setting. So the cervical data will be read by BIRC but probably will initially be disclosed to FDA before further publication. Cohort 2 BIRC is something that we are working on just to make sure that we have a very clear process with our BIRC. We have not made a commitment of timing of disclosing that data given that Cohort 2 is just supportive from a FDA perspective, but yes we are working in that front as well.

[Mark Breidenbach, Oppenheimer]

Okay, fantastic thanks again for taking the questions and congrats on all the progress,

[Maria Fardis, President and CEO]

Thank you, Mark.

[Operator]

Your next question is from Biren Amin from Jefferies. Your line is open.

[Biren Amin, Jefferies]

Thanks for taking my questions. Maria maybe if I could just start on the cervical cancer cohort that you presented at ASCO. How many of the 27 patients that were presented at the meeting will be counted towards the pivotal trial, because I think previously you said that - you may have had a very few patients who may not have advanced disease?

[Maria Fardis, President and CEO]

Almost all would qualify, we have not broken down, as I’ve noted when a study is pivotal we intent to release very little data, really we should provide that data to FDA first. So we have not broken it down by specific line of therapy but almost all of them would qualify with this new patient population definition.

[Biren Amin, Jefferies]

And then just on timelines, I believe you previously commented that the cervical sample size should be in line with FDA just want to ask around that because I think in your press release you tightened enrollment, previously it was 75 to a 100 patients and now its just 75 patients. So I guess what drove this modification?

[Maria Fardis, President and CEO]

We continue the dialogue with FDA and we want to be sure that we have complete alignment. In the meantime, the study itself had 59 in there. So we wanted to be sure that we have enough runway while we continue the discussion with FDA, so that’s why we amended it to 75 while we continued the dialogue.

[Biren Amin, Jefferies]

Okay. And then maybe one more, I noticed that you plan to complete enrollment for the melanoma cohort in Q1 2020 and given you may have overlapping timelines across both indications, should we assume that the cervical cohort with complete enrollment in Q1, 2020?

[Maria Fardis, President and CEO]

It’s a reason or expectation Biren, I think it has to do with our completion of the dialogue with the agency whether they agree with 75 sample size, but that did high level assumption that we are pursuing right now, but again, it depends on our completion of the discussion with FDA.

[Operator]

Your next question is from Madhu Kumar from R.W. Baird. Your line is open.

[Madhu Kumar, R.W. Baird]

So one thing we've been kind of thinking about a lot is how physicians consider the use of IL-2 as part of the TIL administration procedure and when you talk to physicians in your market research, what has been the kind of feedback on the use of IL-2 and to what degree do you think kind of improving the perspective of between oncologist will occur through education versus technologies, so in method they don't rely upon kind of the use of high-dose IL-2 even if it's at a different dosing duration than the standard approved usage?

[Maria Fardis, President and CEO]

Thank you, Madhu. Maybe a couple of points before sort of talking about the hustle experience. The median number of doses for melanoma and cervical one was 5.5 and one was 6. So administration of IL-2 didn't seem to be an issue both for the patients tolerance perspective as well as the hospital infrastructure.

It’s important that we note that we are in hospital setting for just about all of our clinical trials sites or hospitals most of these sites have already been using IL-2 and in fact many more sites have been using IL-2 in the past five years. At the footprint of IL-2 has been at 100 and 150 or so different type as late as about five years ago. So there’s a lot of trained staff at most of the hospitals that have administered IL-2 and they are comfortable with it.

So we have not really run into an issue where we want to activate a site and they had no staff that had been trained on IL-2.We also definitely help with any refreshments in terms of training to administration of IL-2 as well, so that hasn’t really come up as an a showstopper issue for us. It seems that most of the hospitals that we're in have the training staff to support that administration.

[Madhu Kumar, R.W. Baird]

And then my other question is are there any expectations for data in the next six to 12 months that would be reasonable, I mean, obviously you can't speak hard and fast but would there be any more data from anything ongoing clinical programs over the next year or so?

[Maria Fardis, President and CEO]

Yes. We do have other studies beside the two pivotal programs. We certainly code have data on Cohort 2 if there is any new information to be shared or other indications all ongoing. So we have not excluded a possibility of trying to put some data out, particularly when there was more like the 12 months timeframe, but we haven’t committed to anything that’s I guess that helped you look at it.

[Madhu Kumar, R.W. Baird]

Okay, follow up on that last point. When you said, you have more additional Cohort 2 melanoma data if there is new information, what would you define as a new information from that cohort?

[Maria Fardis, President and CEO]

I can define a couple of at least two different directions is we have for example, a DOR that is reached if we have specific biomarkers that maybe appearing upon further investigation or thinking about for example, even in the case of cervical, the clonality of distribution of clonality of cervical all of those are interesting exciting things that we still continue looking at.

There is a combination of how much data maybe coming as well as what venues are available that may be interested in hearing about them. I know the investor community is very interested in the details of the data, academic institutions are more interested in putting brand new sort of directions for research out in various conferences.

The conference is a respective to something that may be more different than just ORR deal that we have published before. So there needs to be a venue where we feel is appropriate to disclose the data. But there is definitely ongoing investigation in a Cohort 2 as well as our other indications that we think are exciting and we learn something new about them every day. We could put that information out.

[Madhu Kumar, R.W. Baird]

Cohort 2 below - would the absence of this [indiscernible] Cohort 2 then because we opt the corollary that the DOR has not been recently DOR haven’t reached?

[Maria Fardis, President and CEO]

It could also vis-à-vis might have considered a conference and the conference did not seen just adding a DOR was adequate enough to get into that conference. So I wouldn't read too much into it.

[Operator]

Your next question is from Joe Catanzaro of Piper Jaffray. Your line is open

[Joe Catanzaro, Piper Jaffray]

Maybe I’ll follow-up and just ask the question a little differently and thinking more about near term data disclosure. So I believe today is actually the deadline for [SIPSI] regular abstract submission have you guys submitted anything to SIPSI?

[Maria Fardis, President and CEO]

I usually don't comment on what we have submitted or we intended to submit until titles or abstract itself is released. Sorry, Joe, I prefer that we know what we can talk to if that’s okay. We’ll wait until the titles come out.

[Joe Catanzaro, Piper Jaffray]

Fair enough. Just thought I'd ask. My next question, so I believe you had mentioned maybe later last year the idea of taking an interim look at Cohort 4 melanoma whether the FDA would agree to that. Was that ever built into Cohort 4? And then along those lines as is there a similar opportunity in cervical to take an interim look if you believe your 95% confidence intervals will exceed that lower down hurdle?

[Maria Fardis, President and CEO]

Yes, we just think about it for a moment in time. I think that as cervical is becoming potentially a component of this package we prefer to transfer all of them together not to have multiple cost on the data. So today’s preference for me would be to read both studies, both cohorts of the studies at the same time and try and see if we can provide FDA with the totality of the data. That would be a more preferred path for us.

[Joe Catanzaro, Piper Jaffray]

And then maybe just one more quick one here. I am wondering if you've noticed any pickup involvement into your cervical trial since the ASCO data disclosure?

[Maria Fardis, President and CEO]

In operations of the study typically we see weighs our patients coming and going, so we’ve definitely seen increased enthusiasm. I think one of the points that Tim made in our increase spend is reflective of our increase in R&D. There have generally been a lot more enthusiasm recently in entire TIL program that I can say.

[Joe Catanzaro, Piper Jaffray]

Okay. And maybe I’ll just squeeze in one more here along the same lines just in regards to the head and neck trial. I know you guys had some struggle with enrollment there and I know it's still the early days of the recent KEYTRUDA label extension in the front line setting, so the window is short. I am just wondering if you have any comments around what you're seeing in head and neck right now?

[Maria Fardis, President and CEO]

Yes, we have very good observation. I agree that I believe the landscape of head and neck is changing and hopefully for the better for the patients, ideally the patients would have seen chemo immunotherapy in the front line and hopefully then the patients was coming to study as opposed to third or fourth line when patients are quite late line at that point.

So we are beginning to see that trend, although it is as you noted, it is early in that landscape shift in a meaningful way. But yes, we are beginning to see that pattern.

[Operator]

Your next question is from [indiscernible]. Your line is open.

[Unidentified Analyst]

Congrats again on the progress and thanks for taking my question. So kind of searching on the same theme with the potential BLA filing for melanoma and cervical in place. Could you speak a bit for the kinds of preparation that you’re making for the filing and to what extent there is overlap for the two programs and then I have a follow-up after?

[Maria Fardis, President and CEO]

Thank you, [indiscernible] for your question. It’s a little hard to hear you, but I think I understood that you are asking what kind of preparation the organization is going through in anticipation for filing?

[Unidentified Analyst]

Yes.

[Maria Fardis, President and CEO]

Thank you, there is quite a bit that an organization - that maybe thinking about a filing next year has to go through both from an infrastructure perspective short-term and long-term both procedurally as well as - and from a growth perspective. So you can imagine that from a procedural perspective various documents need to be finalized, need to be put in place. And lot of different hiring needs to be had including the team members in commercial medical affairs being expanded, market access, market research is undertaken.

So a significant amount of activities are undertaken in anticipation of both filing as well as a potential commercialization. And we are certainly on track for initiation of many of those works stream.

[Unidentified Analyst]

Great. And then now that we have a sense that the regulatory plans in the U.S. you’ve mentioned that kind of Europe is on the horizon. Is there any further visibility in terms of next steps towards putting together a path in Europe and what are some of the consideration that might be different there versus the U.S. for the two programs on whether you might kind of advance them together or separately?

[Maria Fardis, President and CEO]

Definitely, so we have been thinking about engaging the EMA in a more centralized procedure, but we want to make sure that we wrap up all of our FDA discussion around cervical sample size agreement around the protocol before we engage EMA. It’s always easier when we have at least a set of agreement in one health authority before we go to the second health authority. It’s very much on our horizon.

And we are very excited about the fact that we have a fairly broad footprint in our clinical program in Europe, but for a centralized procedure we think that’s likely more towards later part of this year and earlier part of 2020.

[Operator]

Your next question is from Boris Peaker from Cowen. Your line is open.

[Boris Peaker, Cowen]

So first question I want ask - is on the cervical indication. I am just curious what specific patient enrollment criteria that the FDA want to see in the pivotal study that ended up excluding some of the patients that we saw at ASCO?

[Maria Fardis, President and CEO]

Our initial enrollment criteria was patients who have received one prior systemic therapy. And while bulk of these patients are in the metastatic setting, not everybody necessarily has seen a systemic therapy in a metastatic setting. So the definition was a little tighter after the discussion with FDA to assure that they have seen that one prior systemic therapy in the metastatic setting that was their clarity.

[Boris Peaker, Cowen]

And what’s a non-systemic therapy it just means just localize surgery without adjuvant treatment is that what that is?

[Maria Fardis, President and CEO]

A localize therapy can be applied in curative setting for example. It could have been a surgery combined with radiotherapy for example or it could be surgery along with a systemic therapy. So the definition here is stay in the metastatic setting and not in the curative setting.

[Boris Peaker, Cowen]

My next question is on the manufacturing facility, once it becomes operational and you’ve outlined time of about two years. Would Lonza will still be involved in any way or is that when you Lonza relationship ends and you kind of break off on your own for manufacturing?

[Maria Fardis, President and CEO]

Thank you for that. So Lonza is our manufacturer in EU. So if I may rephrase your question I presume you’re asking about [WuXi]?

[Boris Peaker, Cowen]

Yes sorry, I forgot that’s for the U.S. that’s right?

[Maria Fardis, President and CEO]

Sure. We intend to continue the relationship with WuXi. WE find it particularly helpful for our tech transfer, process development and our clinical program. So as of now there is no reason that I see for us discontinue that relationship. They will cover our initial commercial landscape and I would like them to stay engaged with Iovance for their commercialization landscape as well. I don't see this program ending just because we are commercial we will always have a development program behind it.

[Operator]

As we have no more questions, we would now like to return to Maria Fardis for closing remarks.

[Maria Fardis, President and CEO]

Thank you, Operator. We are glad to have this opportunity to reflect on our progress. We would like to extend our sincere appreciation for the many individuals who support our work including our shareholders, dedicated and talented employees, patients, clinical investigators in their ongoing studies and researchers at our partners institutions already working with us to refine application of TIL therapy. And thank you for all of you joining us on this call today. Operator?

[Operator]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may now disconnect.