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Good morning. My name is Jeannie, I will be your conference operator today. At this time, I would like to welcome everyone to the Agenus Q3 2023 Earnings Conference Call. [Operator Instructions]

Thank you, operator, and thank you all for joining us today. Today's call is being webcast and will be available on our website for replay. I'd like to remind you that this call will include forward-looking statements, including statements regarding our clinical development, regulatory and commercial plans and time lines as well as time lines for data release and partnership opportunities among other updates. These statements are subject to risks and uncertainties, and we refer you to our SEC filings available on our website for more details on these risks. Joining me today are Dr. Garo Armen, Chairman and Chief Executive Officer; Dr. Steven O'Day, Chief Medical Officer; Dr. Todd Yancey, Chief Strategic Advisor; and Christine Klaskin, Vice President of Finance. Dr. Robin Taylor, Chief Commercial Officer, will be participating in the Q&A session. Now I'd like to turn the call over to Garo to highlight our progress and speak to our outlook for the remainder of the year. Garo?

Thank you,

Thank you, Steven. The landscape for MSS CRC patients who received 1 to 2 prior lines of therapy is challenging. There are limited effective options available, so our focus in our development and regulatory path is to bridge that gap. At present, the available therapies in this setting, including monotherapy with regorafenib, monotherapy with Lonsurf and the newly introduced combination of Avastin and Lonsurf, offer only marginal reported improvements in survival, and response rates are low with survival curves going to 0. Recognizing this, we've developed a differentiated investigational agent with botensilimab that has already demonstrated significant benefit over reported results for these standard of care therapies with survival curve plateaus consistent with substantial long-term benefit. In our studies, patients with a median of 4 prior lines of therapy, 1/4 of whom had received prior immunotherapy experienced a 24% RECIST response rate compared to the standard of care's reported rate of only 3%. Importantly, our median overall survival is currently exceeding 21 months, a significant leap from standard of care at 12.9 months as reported in the ARCAD database. Our regulatory process is well underway, and we, as we have stated, plan to submit our first BLA as characterized in our Fast Track designation in the middle of 2024. This application is robust. It's targeted to include data from approximately 400 patients at 2 different doses, both 1 milligram per kilogram and 2 milligrams per kilogram and will be supported by safety data from several hundred additional patients across multiple indications where we have observed broad activity. And in this process, we're not leaving any stone unturned. We're conducting a comprehensive and full exploration of dosing schedule ranging from the lowest dose of 0.1 milligrams per kilogram to 3 milligrams per kilogram in our Phase I and Phase II studies. Additionally, we're investigating the contribution of components of the 2 experimental agents, BOT and BAL, in a randomized fashion within our now fully enrolled Phase II study. As we move forward, we are and we'll continue to proactively engage with regulatory authorities. While we await complete feedback from the FDA in EMEA, we have taken scientific advice from key European countries and are in the process of scheduling meetings with the CHMP and FDA representatives. These discussions are crucial as they regard our path forward toward approval. Our goal is clear. We aim to submit this package for potential approval by 2024 midyear, and we're optimistic about the opportunity for an accelerated review, which would allow us to bring this innovative solution to patients in need as soon as we can. Now I'd like to turn the call over to Christine to discuss the financials.

Thank you, Todd. We ended our third quarter of 2023 with a consolidated cash, cash equivalent and short-term investment balance of $100.63 million. This compares to $193.4 million at the end of last year. For the 3 and 9 months ended September 30, 2023, we recognized revenue, which includes noncash revenue, of $24.3 million and $72.5 million, respectively. Including noncash expenses of $28.1 million, we incurred a net loss of $64.5 million for the third quarter. For the 9 months of 2023, we incurred a net loss of $208.9 million, which includes noncash expenses of $82 million. I'll now turn the call back to Garo.

Thank you, Christine. I want to express my gratitude for your support during this clinical phase of Agenus. Our striving cancer research highlighted by botensilimab signify a potential new era in cancer care. I also want to express my gratitude to our employees. I am confident in our team dedication and our ability to achieve our milestones. The success of balstilimab remains our top priority, and I assure you that our diligently managed finances will ensure the necessity for resources to be allocated for this very important endeavor. With your continued support, we expect to meet and exceed our goals with the prospect of bringing hope and healing to those affected by cancer. Thank you for your support once again. Together, we are destined for remarkable achievements for the benefit of cancer patients, which will, in turn, create significant value for all of our stakeholders. With that, I will now open the call for questions. Thank you very much.

[Operator Instructions] Your first question comes from the line of Emily Bodnar with H.C. Wainwright.

First one, just briefly, if you can comment on when we may expect to see initial Phase II data for the MSS CRC study. And then secondly, if you could talk about how you're thinking about strategy in neoadjuvant CRC. Are you kind of looking to evaluate broadly in CRC or just focus on MSS patients and maybe just discuss the regulatory pathway to potentially getting BOT/BAL approved in that setting?

Thank you, Emily. So let me answer the question broadly, and I'll ask if Dr. O'Day has any additional comments. But -- so what I've said publicly is the fact that we have clearly disclosed the data on the first 70 patients, not because the rest of the data isn't satisfactory but the rest of the data needs to be cleaned up, and we need a little bit of work to do. But our look at the data both in the second cohort and in our Phase II studies indicate that we should have a sustainable response rate, perhaps even an improving response rate as we disclose and analyze these data for regulatory and beyond purposes. So that is going to be more of a regulatory decision, when to disclose it, and the ideal circumstance for us will be certainly to publish the data at around the time of a potential BLA submission. To publish the data in peer-reviewed journal, that would be part of our plan. Now with regard to the neoadjuvant plans, we haven't quite crystallized it yet. Of course, the typical response for neoadjuvant studies is the fact that large studies, they take time. But we believe that depending on what patient populations we go after, we may be able to look at a subset of patients that would be the subject of high mobility with standards of care. And as you know, in these patients, even though the treatments are largely curative, they're not 100% curative standard of care, not a 100% curative, but they cure a quite substantial number of patients. But those cures come at a very high cost to the patients and that includes the potential use of colostomy bags, it involves sexual dysfunction and also involves the loss of muscle function in the area of the abdomen. And particularly, if you are a patient in your 30s, 40s, you don't want to be subject to these morbidity. So we're going to take a little bit of time, not too much time, to determine exactly what the patient population and the trial design would be with the aim of a very rapid trial execution and potentially rapid filing and approval. So I think we'll disclose some of these details in the first half of next year.

Your next question comes from the line of Colleen Kusy from Baird.

Congrats on the progress. For the randomized CRC study that's fully enrolled, can you just give us a sense of the regulatory bar there? Does the combination need to be better than the individual drug arms and standard of care and by what margin?

If I may ask Todd to answer that question.

I think there are really 2 questions there. One is what do we expect in terms of performance versus standard of care and the second is really what do we expect to see in terms of incremental contribution in the doublet. So just to remind everybody about the design of the trial, the 5 arms, of which one is standard of care. And of course, patients are randomized across these arms. The other 4 arms all have botensilimab, which as monotherapy, we know to be active from the Phase I dose escalation. And 2 of those arms have botensilimab in combination with balstilimab. And as we've been observing in the data set that we've been presenting for the MSS CRC patients on active liver met since, well, for the last almost 18 months, there is a substantial benefit in the combination. And so as it relates to the first question versus standard of care, standard of care is for patients with 1 to 2 prior lines of therapy is offering a 3% overall response rate and an expected median overall survival of 12.9 months that's coming from the ARCAD database of over 18,000 patients. And currently, we're showing 24% versus 3% for response and over 21 months for median overall survival. So we need to be obviously meaningfully better than currently available standards of care. So looking at 3% versus 24% or 12.9 months versus over 21 months, I think it's clear to everyone that you could drive a truck through that. Now as it relates to the incremental contribution of balstilimab to botensilimab, given our mechanism of action, which is really multifactorial. First of all, we have obviously our optimized engagement with CTLA-4 and a receptor ligand interaction. But the back-end engineering is resulting in suddenly inactivation of both innate and adaptive immune response, has created a hot [indiscernible], and we have -- we expect to see a substantial improvement in the combination, certainly at least a doubling of response when we add balstilimab. And so I think that's what we want to be able to discern. Just for comprehensiveness, we'll also remind everyone that in that same clinical trial, we are looking at 2 active doses, 1 milligram per kilogram and 2 milligram per kilogram. And at the time of regulatory submission, we anticipate having approximately 175 patients in each of those 2 doses. So we'll be able to have a robust perspective on the activity of the doses, 1 and 2, and also on the tolerability of those two.

That's super helpful. And at the time of BLA submission, would you expect to have any sort of overall survival early data from this study?

I think we would have certainly evident trends for patient benefit. What we've observed pretty consistently in the Phase I database, which is not small, remembering we've got 101 patients in total there for safety and we have 70 patients in the MSS CRC on active liver metastatic patient population for efficacy adjudication, we are obviously seeing that responses for patients and that response can be stable disease or better is translating to not only durable response but very substantial overall survival. So I certainly expect that we'd be able to demonstrate a point estimates for response, durability of response for patients with stable disease or better and that is trending toward a survival benefit. Remember also that the time of submission is not a moment in time that's frozen because we will be required to provide updates on safety and efficacy during agency review and that will allow time for additional maturation of the data set. And again, as has been consistent since we began to show data in June of 2022, the longer the study goes the more mature the observations have been around the durability of response and its translation to survival. So I think we have a very, very robust set of data to present to the agencies for their review.

Got it. That makes sense. And on the cash guidance, can you maybe just provide a little bit more color on what's included in that in terms of the ongoing and planned studies?

If you can repeat the question on the latter part of your question?

Yes. Just on the updated cash guidance?

I got it, I think. So as you know, we finished the quarter with a little over $100 million. My guidance for the fourth quarter burn is approximately $40 million. Now beyond that, as we've said earlier, we will have a milestone payment that is due to us by the end of this year. And we will sell 2 assets that are nonstrategic assets. We expect that to be completed in the first half of this -- next year. And then a third-party royalty transaction. Now of course, the first 2 are entirely in our control, meaning the milestone payment and the asset sales. And the royalty transaction will require external investors for that kind of transaction. We had done that before some years ago; in fact, about 5 years ago. We consummated a transaction for third-party royalties when we had a much skinnier loyalty portfolio at the time. And we did this with XOMA Corporation. So we're talking about a transaction that will be multiples of that transaction for a much larger and much more attractive portfolio that has had some very encouraging comments from our partners. So with those, we expect to bring in approximately $200 million of cash between now and middle of next year. That is through nonstock issuance transactions. Without any stock issuance, we expect to bring in approximately $200 million. And with that, it will take us where we are in the end of next year. Any other questions?

Mayank Mamtani, your line is open.

Helpful recap of ESMO-driven data. So maybe just to clarify on the second-line plus CRC accredited approval, are you able to talk to the specific guidance you may have on the design of the Phase III confirmatory study and maybe timing of initiation to just kind of round out the other updates you provided? And then I have a follow-up.

So I'll just make a [ broad ] comment on the confirmatory studies, and then I'll ask Todd to provide additional color. With regard to confirmatory studies, we have 2 choices. One is to do a confirmatory study in the second or third-line setting. The other one is to do a confirmatory study in the first line. We have not made that decision yet. We've had discussions with the FDA on the latter-line confirmatory study. We have not yet had discussions on the first line because we're awaiting data from an [ ISD ] study, which is ongoing right now with studies [indiscernible] FOLFOX. And we expect that data to be available in the first quarter of next year, and that will inform us better which way to go, whether we go the first line or third line. Todd, would you like to add any additional color on this?

Yes. I just had a couple of points to that. We already -- Mayank, now that we have a clear understanding of how to preemptively manage or to intervene early on GI toxicity, you already have a higher level of comfort with regard to our ability to combine in the front-line with 5FU and oxaliplatin-based regimens, of course, which have associated GI toxicity. So that level of comfort is rising. But at City of Hope, we are conducting a study to determine what the best management paradigm would be for the combination. In addition to that, I think we have greater strength of evidence for incremental benefit in earlier lines of therapy derived from the preliminary data set we're seeing in the neoadjuvant setting. So I think our objective will be to optimize the development program to accelerate access for patients to a broader patient population. And so there's a lot of regulatory precedent for doing a confirmatory trial in either a broader patient population than the accelerated approval indication and/or in an earlier line. And again, at the end of the day, the decision with regard to the design of the confirmatory trial will require alignment with both the U.S. and the European authorities, and we're basically looking at 2 potential options at least that we would present for their review.

Very helpful. And then on the new pancreatic cancer BOT chemo data, could you just clarify what number of patients you are targeting in the randomized control cohort? And if you are seeing any uptick in enrollment similar to what occurred in other colorectal cancer expansion cohort last year? And for the relatively warmer tumors in lung and melanoma, it seems like you have both mono and BOT/BAL combination data. So there is a theme here of mono BOT data and combination BOT/BAL. So how are you sort of thinking across tumor types where you may pursue BOT stand-alone versus maybe combination? If there's a view on that you could share? And I have one more financial question after this.

Got it. And maybe for Garo, this concept of structured financing or even corporate partnerships. I was just curious if there's any sort of segmentation you're thinking by indication or geographies? Are there any sort of constructs and new [ townships ] that are more preferred versus less? If you could provide some color there, that would be helpful.

The kinds of discussions that we're having and some of them are in advanced stages, as I said before, really encompass both a global collaboration across all indications as well as specific indication collaboration, for which infrastructure exists at some companies to be able to segregate products by indication. That's new technology, and we've been proposed the potential option of segregating certain indications that are of greater interest to certain partners. So we're looking at all of these options simultaneously, and I think a good deal for us would be driven by several things. Number one, the appropriateness of the collaborator, their conviction that our product could be a significant player in the immuno-oncology and broader oncology field. So that's number one because we believe that botensilimab plus balstilimab offers performance advantages that we not seen at any immuno-oncology and oncology treatment setting. So for example, when we talk about patients that have either failed all other therapies or do not respond to other therapies, not just immunotherapy but beyond immunotherapy, these are patients that are in dire need of a product that offers them a potentially curative option with toxicity that is transient. I think that there is an enormous need in the field for such a program. I think botensilimab offers that treatment option for patients. Now -- so given this, the partner must have high conviction that this product could be a huge win for patients and a huge win commercially as a result. That's number one. Number two, the partner needs to make the appropriate financial commitments, not just for compensating us in terms of upfront and milestones but also a substantial financial commitment for the development of this product. And development has to be rapid because, as we've said before, we have seen clear clinical activity in so far 9 different cancers. You can't lie about that. It's real. It's been presented at major conferences. And so of course, there are regulatory and other questions about do overall response rates translate to longer-term benefit. We know they do. We need to demonstrate that with numbers, but with CTLA-4 binding antibodies and ours is a multifunctional broad-functioning molecule that binds the CTLA-4 as one of its 5 different activities, not just the center stage activity but one of 5 different activities. So all of that means that this product needs to be rapidly developed across all indications. And if you pay attention to my quadrant slide, you will see that the opportunity for cancer, cancer patients is enormous. So the partnership has to be based on a commitment -- financial commitment for rapid development and, of course, other cultural compatibilities that will allow our A team to work with -- and partner's A team to bring this into a harmonious conclusion.

Your last question comes from the line of Kelly Shi with Jefferies.

This is Claire on for Kelly. So just one question for the plan for CRC. So can you remind us what's your plan for those CRC patients with liver mets at the Phase III confirmatory study specifically in patients without liver mets? Or is there is an option to look at all-comer patients as well?

There are no further questions at this time. Garo Armen, I turn the call back over to you.

Thank you very much, everyone, for your attentiveness to our developments. This is a very exciting time, I believe, for cancer patients, certainly patients that are in desperate need of effective therapies, not just therapies that extend their life by a month or 2 at a very high cost of quality of life but potentially expand life much longer with potential curative outcomes in some patients and with a much, much more acceptable, more dignified quality of life with some gastrointestinal side effects that are typical to overactivation of the immune system, but they are reversible. And I think if you look at our record, our physicians have learned that reversibility is a function of rapid intervention. And as our trials progress from earlier-stage Phase I trials for extended [indiscernible] patients to Phase II trials, we will be seeing a significant improvement in a way our transient toxicities are managed. So it's a very exciting time for patients. And other than the obligations that we need to fulfill in order to bring these products to patients very rapidly, I think the future looks brighter than it has ever looked in our company's history and my career as an observant and an operator in this business. So thank you very much.