Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Corvus Pharmaceuticals Second Quarter 2019 Business Update and Financial Results Conference Call. As a reminder, today's conference is being recorded. [Operator Instructions] It is now my pleasure to turn the call over to Zack Kubow of Pure Communications.

Please, go ahead..

Thank you, operator, and good afternoon, everyone. Thanks for joining us for the Corvus Pharmaceuticals second quarter 2019 business update and financial results conference call.

On the call to discuss the results and business highlights for the second quarter of 2019 are Richard Miller, Chief Executive Officer; Leiv Lea, Chief Financial Officer; and Mr. Mehrdad Mobasher, Chief Medical Officer.

The executive team will open the call with some prepared remarks followed by a question-and-answer period.I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements.

Forward-looking statements are based on estimates and assumptions as of today and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by those statements, including the risks and uncertainties described in Corvus' quarterly report on Form 10-Q filed with the SEC today and other filings the company makes with the SEC from time to time.

The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law.With that, I'd like to turn the call over to Leiv..

Thank you, Zack. I will begin with a quick overview of our second quarter financials and then turn the call over to Richard, for a business update.At June 30, 2019, Corvus had cash, cash equivalents and marketable securities totaling $96.8 million as compared to $114.6 million at December 31, 2018.

Research and development expenses in the second quarter 2019 totaled $10.6 million compared to $9.7 million for the same period in 2018. The increase of $900,000 was primarily due to an increase in CPI-006 program costs. The net loss for the second quarter of 2019 was $13 million compared to a net loss of $11.6 million for the same period in 2018.

Total stock compensation expense for the second quarter of 2019 was $1.9 million compared to $1.7 million of total stock compensation expense for the same period in 2018.I would like to note that we continue to carefully manage our expenses and currently expect full year 2019 net cash used in operating activities to be between $38 million and $42 million with a 2019 year-end cash balance between $73 million and $77 million.I will now turn the call over to Richard..

Single agent and in combination with ciforadenant. To date, we are seeing a continuation of the trends reported at ASCO, and we have been pleased that our presentation at ASCO has stimulated increased interest in our study, which is now enrolling very well.

We plan to provide an update from our 006 study at the SITC meeting in November with more patients, more immunobiology and longer follow-up both for the monotherapy and ciforadenant combination arms.I would now like to discuss ciforadenant, our small molecule drug that is an antagonist of the adenosine A2A receptor.

Ciforadenant is the most advanced candidate in development across the landscape of A2A receptor antagonist, with more than 250 patients receiving treatment to date.

It has demonstrated antitumor activity as a monotherapy and in combination with atezolizumab in patients that have failed a median three prior therapies and the drug's exhibited strong safety, PK and PD profile. Some of our patients have experienced durable responses and disease control out to now over 30 months.

Some patients have been on therapy in excess of 2.5 years. We continue to enroll patients in our Phase Ib/II clinical trial evaluating ciforadenant in combination with atezolizumab.

This study has most recently been focused on patients with advanced refractory renal cell cancer, which is a significant unmet need.We are also enrolling patients with prostate cancer.

On our Q1 call, we noted that we have seen activity in prostate cancer and that AstraZeneca presented Phase I data for their oral A2A receptor inhibitor, also showing signs of efficacy in prostate cancer patients including responses in patients receiving monotherapy.As part of these protocols, we are testing patients for the Adenosine Signature to evaluate its use as a predictive marker for future studies.

To date, we have treated about 14 patients with metastatic castration-resistant prostate cancer with ciforadenant as a single agent in combination with atezolizumab or in combination with CPI-006.

We plan to deepen our experience with prostate cancer for both ciforadenant and for CPI-006 going forward.Related to the adenosine pathway and with the goal to broaden our pipeline, we continue to study and advance our selective adenosine A2B receptor inhibitor through preclinical studies.

Our research has shown that inhibiting the A2B receptor does not have meaningful effects on the immune system, but it does have effects on fibrosis and other related processes. This activity has been reported by other scientists in the literature and is something we plan to continue exploring.

Although reported by one group, we do not believe there is persuasive evidence to explore the dual simultaneous in addition of A2A and A2B receptors for immunotherapy, either with combinations of selected A2A drugs and A2B drugs or with a dual inhibitor that we have synthesized.Outside of the adenosine pathway, we are enrolling our Phase I/Ib study of CPI-818, our small molecule ITK inhibitor in patients with T-cell lymphomas, including peripheral T-cell lymphoma, cutaneous T-cell lymphoma and others.

We believe CPI-818 has the potential to be directly cytotoxic to T-cell lymphomas and also may lead to enhancement of the immune system by increasing what is called the TH1 immune response, which could provide a therapeutic benefit for lymphomas and for solid tumors.

Some of our research also indicates that this drug may be a very attractive candidate to examine in autoimmunity.As a reminder, the development of CPI-818 was based on a similar targeting strategy to that of BTK inhibitors, such as ibrutinib, and members of the scientific team at Corvus, including myself, led the development of ibrutinib, the first BTK inhibitor, which is now approved for the treatment of several types of B-cell lymphomas.

We treated the first patient in our CPI-818 study during the second quarter, and the study is now open in the United States, Australia and South Korea. So far, CPI-818 has been well tolerated, and we are pleased with the PK and PD findings.

We expect early clinical data to be presented in late 2019 or early 2020.In summary, we continue to believe Corvus is well positioned with three unique candidates in the clinic.

We are encouraged with the latest data presented at ASCO, demonstrating that CPI-006 is unique among CD73 antibodies based on its dual mechanism of action, immunomodulation and adenosine blockade.

We are seeing positive early signs of antitumor activity in the CPI-006 study and look forward to presenting additional more mature data later this year at the SITC meeting in November.Ciforadenant continues to demonstrate attractive pharmaceutical properties, including complete receptor blockade and high specificity for A2A.

And importantly, ciforadenant and CPI-006, which are wholly owned by Corvus, appear to be complementary with attractive potential as a combination therapy.Outside of our three programs in the clinic, we are also advancing our pipeline assets, but the majority of our focus continues to be on our clinical work.

We look forward to providing updates on our progress with our pipeline at upcoming medical meetings and in future business update calls. Let me remind everyone about SITC in November, where we anticipate presenting more clinical data and hosting an investor reception.I will now turn the call over to the operator for a question-and-answer session.

Operator?.

[Operator Instructions] We'll take our first question from Michael Morabito with Credit Suisse..

I just have two for you. One on CPI-006, I was trying to find out if I heard you correctly, are you still increasing the dose beyond 12 mg per kg in that? And how many new patients should we expect roughly when the data comes on SITC? And also, the OpEx guidance that you gave.

You said you saw net 2019 cash use of $38 million to $42 million, but the first half use was already $26 million.

So I was just wondering where the savings would be coming from?.

Okay. So there's two questions. I'll take the first one. So we have continued to increase the dose of the antibody to now 24 milligrams per kilogram, not yet seen any MTD or DLT dosing toxicity. 24 milligrams per kilogram is the highest dose we're going to test. We know we're super saturating the antigen.

And the dose that we'll use for our expansion part of the trial will be lower than 24 milligrams per kilogram. We're still working out the details of our pharmacokinetics and pharmacodynamics, but we're at higher than the dose we expect to use this in the future. And the financial question, Leiv, I'll let you take that one..

Sure, Mike. So for the first 6 months, our net cash used in operating activities was $18 million, which is a little bit half the $40 million at the midpoint of our full year forecast..

Michael, and also -- sorry, I forgot to answer the second part of your question, how many more patients. You're going to see at least a doubling of the patients..

We'll take our next question from Biren Amin with Jefferies..

This is Jed [ph] on for Biren. Just a couple from me.

Could you just reiterate again for the prostate cancer patients that you said you're including in the Phase Ib study, could you just clarify the breakdown of those patients from monotherapy and combo, and when can we potentially expect to see the data on those patients?.

I think we'll probably talk about some of that data at SITC. The breakdown, I don't have those exact numbers off the top of my head, but probably about half of more monotherapy, some of them were combo with Atezo while some are combo of 006 [ph]..

And just a second one for me as well. Just regarding the ciforadenant non-small cell data from the Morpheus ongoing study. I think on the Q1 call, you said that there might be a cut of the data that would be seen around about this time.

Is there any update on that, and when can we expect to see some data from that study?.

So I don't have a cut on that data yet. Patients have been enrolled in the study, and they're still under follow-up. We don't control that study, as you know. I would expect that we'll be able to look at that data later this year..

Okay, got it. And maybe just one more from me, more of a biology one on 818. Is RLK down regulation or lack of expression, a consistent observation that's been seen across human T-cell lymphoma subtypes, or is it observed in more select subtypes? Just looking for a general trend there..

So first of all, our 818 is an ITK inhibitor, just to be clear, not RKL. But RKL is a very interesting story. The unique feature of our drug is that it inhibits ITK without inhibiting RLK, and that turns out to be biologically crucial and very difficult to do chemically. That's one of the reasons why we get this TH1 skewing.

If you block -- this is a long story, but if you block ITK and not RLK, the differentiation of T-cells is such that you'll bias differentiation towards the TH1, which you want in cancer therapy.

Now in terms of T-cell lymphoma, specifically, there's very good reason to believe that many, many T-cell lymphomas have over expression of the T-cell receptor signaling pathway, of which ITK is a critical signaling molecule.

That was the whole rationale for going after ITK, similar to the rationale we used when we went after BTK in B-cell lymphomas..

[Operator Instructions] We'll take our next question from Tony Butler with ROTH Capital..

This is Deb [ph] on for Tony. Just had a quick follow-up for confirmation here.

Rich, did you say that for the combo data for CPI-004 and CPI-006, that you're currently at the 24 mg, or is that in the monotherapy cohort?.

The monotherapy is at the 24 mg per kg. The combo is just a little bit behind it. The combo is at 18..

18, okay. So you're definitely above the 12 hurdle, then..

Yes..

And then just a quick follow-up.

Have you enrolled anyone in the CPI-006 plus KEYTRUDA combo arm?.

Not yet. Our plan is to get more data on our own drugs, 006 and 444. And once we get more comfortable with that, then we'll open up the other arm..

Okay.

And just to make sure I heard this correctly, did you say that you were positive or leaning more towards CPI-006 plus CPI-444 for the prostate cancer combo, or you're still trying to figure things out versus Atezo or not?.

I would say we're still trying to figure things out. We've been extremely encouraged by what we're seeing with 006 and 444, and that has caused us to pay -- to look much more carefully at that combination..

We'll take our next question from Robert Driscoll with Wedbush Securities..

This is Ashwin [ph] on for Robert. I just wanted a quick clarification on the new prostate cancer arm, the Phase Ib/II study.

Will you be using the Adenosine Signature to help select for those patients, or will that be more of a retrospective analysis?.

We're going to use it retrospectively for two reasons. One, we need to also get more experience on Adenosine Signature negative as well as positive. And secondly, it really helps enrollment if you allow everyone in. If you require a biopsy and then tell patients you can't go on to the study, they get very irritated.

So it makes this study a lot more practical..

And that concludes the question-and-answer session. I'd like to turn the call back over to Richard Miller for any additional or closing remarks..

All right. Thank you, operator. First of all, thanks, everyone, for joining us on the call today. I appreciate everybody's interest. Again, let me remind everybody about SITC in November and hopefully, you can attend our presentations, and you can also attend the investor reception that we're hosting. Thank you, operator..

Thank you. And that does conclude today's presentation. Thank you for your participation. You may now disconnect..