Good afternoon, everyone, and thank you for standing by, and welcome to the Corvus Pharmaceuticals Third Quarter 2024 Business Update and Financial Results Conference Call. At this time participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

It is now my pleasure to turn the call over to Mr. Zack Kubow of Real Chemistry. Please go ahead, sir..

Thank you, operator, and good afternoon, everyone. Thanks for joining us for the Corvus Pharmaceuticals Third Quarter 2024 Business Update and Financial Results Conference Call.

On the call to discuss the results and business updates are Richard Miller, Chief Executive Officer; Leiv Lea, Chief Financial Officer; Jeff Arcara, Chief Business Officer; Jim Rosenbaum, Senior Vice President of Research; and Ben Jones, Senior Vice President of Regulatory and Pharmaceutical Sciences.

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 for the quarter ended September 30, 2024, that was filed 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 Lea.

Leiv?.

Thank you, Zach. I will begin with a quick overview of our third quarter 2024 financials and then turn the call over to Richard for a business update. Research and development expenses in the third quarter of 2024 totaled $5.2 million compared to $4 million in the same period in 2023.

The $1.2 million increase was primarily due to an increase in soquelitinib clinical trial expenses. The net loss for the third quarter of 2024 was $40.2 million, including a noncash loss of $0.7 million related to Angel Pharmaceuticals, our partner in China.

In addition, we recorded a noncash loss of $32.8 million from the change in fair value of Corvus' warrant liability during the third quarter of 2024. This compares to a net loss of $6 million for the same period in 2023, which included a $0.9 million noncash loss from Angel Pharmaceuticals.

Total stock compensation expense for the third quarter of 2024 was $0.7 million compared to $0.5 million for the same period in 2023. As of September 30, 2024, Corvus had cash, cash equivalents and marketable securities totaling $41.7 million as compared to $27.1 million at December 31, 2023.

Of note, associated with our financing in May 2024, we also sold common stock warrants that have an exercise price of $3.50 per share and expire on June 30, 2025. One investor early exercised their warrants in October, resulting in $5.9 million in cash to the company.

If all the remaining warrants are exercised, we will receive approximately $54 million in additional cash. Based on our current plans, we anticipate our cash, including the recent early exercise of common stock warrants, provides runway into 2026.

I will now turn the call over to Richard, who will discuss our clinical progress and elaborate on our strategy and plans..

number one, preclinical data presentation at the American College of Rheumatology meeting later this week; number two, initial data from Cohort 1 and Cohort 2 from our Phase I atopic dermatitis trial in December; number three, final data from all four cohorts of the Phase I atopic dermatitis trial in the first half of 2025; number four, initiating a Phase II clinical trial with soquelitinib in solid tumors in early 2025 with initial data anticipated in late 2025; number five, continuing to activate sites and drive enrollment in the registration Phase III clinical trial of soquelitinib in PTCL.

Our current cash plus the exercise of outstanding warrants gives us runway into 2026, allowing us to execute on these important milestones and further demonstrate the value of our programs and, in particular, the significant opportunity for ITK inhibition in immunology and cancer.

We look forward to providing updates on our programs in the coming quarters. I will now turn the call over to the operator for a Q&A period.

Operator?.

Thank you. Ladies and gentlemen, we will begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Li Watsek from Cantor. Please go ahead..

Hey, great. Thanks for taking my questions.

Rich, I wonder if you can just comment on the kinetics of ITK inhibition on the clinical scores in AD? And then, do you sort of expect the EASI score to further improve after the 28-day mark? And also, can you maybe just tell us a little bit about how you're thinking about the bar for success given it's an oral drug? Thanks..

Okay. Thank you for the question, Li. The kinetics of the response are very quick. We see improvement in about the first week. I'll elaborate more of this in our call in December. We expect the criteria for success to be similar to what you've observed for other approved agents, for example, Dupixent.

We'll be looking at the 28-day data and comparing it to 28-day data for similar compounds or for Dupixent and other approved agents. We do expect that there would be a very durable effect from soquelitinib based on its mechanism of action and potential for further improvement..

Okay. Thank you..

Thank you. And your next question comes from the line of Roger Song from Jefferies. Please go ahead..

Great. Congrats for the progress. And then -- so a couple of questions also related to the atopic dermatitis, the data release.

Given you will have the initial data readout in December and then the final data early 2025, how should we think about the follow-up time period for those cohorts? And then, in terms of the efficacy endpoint, do you see those endpoints will have a different kinetics with different follow-up? Thank you..

We will report in December 28-day data. We'll report on the kinetics of -- as I mentioned to the last question, we are seeing responses rapidly like within a week. We'll report the 28-day data. I would expect -- of course, we'll have complete follow-up on the Cohort number 1. Cohort number 2, we won't have the entire 58-day follow-up.

As we get into Cohort 3 and 4, we'll start to evaluate the kinetics and durability of the responses over the two month period..

Got it. Thank you. Maybe to follow up on the dose. Based on the PK/PD and then maybe preclinical modeling, do you expect to see the dose dependence for the four arms you're testing in Phase I? Thank you..

Well, the purpose of the study was to determine the optimum dose, and we've looked at four different doses, dosing regimens and doses. I would expect the efficacy to improve as we go higher in the dose just based on what we've seen in lymphoma studies and getting more saturation of the target.

However, atopic dermatitis is a different disease than lymphoma. So I'm not sure that, that would turn out to be the case. But the purpose of our study was to determine what would be the optimal dose, and we benefit from the lymphoma studies, which gave us sort of a lower end and a higher end to examine..

Got it. Thank you, Rich. That’s it from me..

So, Roger, just to maybe elaborate a little bit on that. We know that 100-milligram dose, the first cohort, and we know this from our lymphoma studies, gives you reasonable saturation of the target, but not complete, reasonable.

And we're able to -- we have measurements from our lymphoma patients where we've been able to measure that immediately after taking a dose and then at the nadir at the low point. And we know that 100-milligram dose gives you reasonable coverage, but not total coverage.

We know at a higher dose, for example, that 200, you get better coverage, et cetera. Now the question is, what kind of coverage do you need for atopic dermatitis? That's not lymphoma. Do you really need 100% occupancy all of the time? Nobody knows the answer to that question, and we're going to figure that out. Does that make sense..

Thank you. And your next question comes from the line of Aydin Huseynov from Ladenburg. Please go ahead..

Hi, everyone. Hi, Richard, congratulations on the progress this quarter. I got a couple of questions. So, first, a question again on atopic dermatitis. So you got 64 patients enrolled in the trial.

Could you share what is the most typical prior therapy that these patients have? Is it local regimen like ruxolitinib? Is it systemic like dupilumab? And is there any physician feedback in terms of the enthusiasm of the patients and et cetera, if you could share any details?.

Okay. So first, Aidan, we don't have all 64 patients enrolled yet. The intent is to have 64 patients enrolled. We're enrolling Cohort number 2 now. The eligibility for entry is, you have to have failed a systemic or topical therapy for your AD, yet you have moderate or severe disease.

So far, the patients enrolled, and we'll present more of the details on this in December, have not failed a systemic therapy, but have failed topical therapies. Just about all of the patients that we've treated so far have discontinued their topical therapy while they're on our drug..

Okay. Understood. So mostly, this is sort of topical failure, not -- its pre-Dupixent essentially patient population..

So far. So far. Now we're in the middle of the study..

Okay. Makes sense.

And yes, so I also want to go back to PTCL indication and maybe it's sort of outdated question, but do you have any updates on Phase Ib patients? Any CRs turned into PRs or any PRs -- any sort of PRs turned into CRs or any updates on the duration of response from Phase Ib?.

So, the -- I mentioned in my remarks that there's four patients still on therapy. The six of those are CRs that are oh God months, I don't remember six to 12 months out there at least.

One of the PRs has continued tumor regression, that patient has been on treatment about 18 months now and just has slow improvement, slow continued improvement in his disease. It is not yet a CR, but it's looking pretty promising for that. Now one of the CRs, we stopped therapy while in CR per protocol, we can't treat beyond 24 months by our protocol.

So that patient discontinued therapy while in CR..

Okay. So one PR may potentially turn into CR. And how do you explain overall such a broad availability of CRs versus PRs? We have more CRs and PRs, which is unusual.

So how do you explain -- what does it tell us about the mechanism of action here?.

Well, I think it tells us that it's effective at eradicating microscopic disease, and it's effective at eradicating -- remember, these tumors are very heterogeneous. So they have a lot of different mutations and a lot of different clones, et cetera.

And I think what this tells us is the mechanism of action is able to handle a broad spectrum of tumors and the associated mutations. Whereas if you treat with, let's say, a chemotherapy agent, you're going to eventually select out resistant clones. We seem to be less susceptible to the emergence of resistance.

And I think that's because we're inducing an immune response and an immune response, as you know, can respond to different antigens and different diversity of antigens.

Makes sense?.

Yes, absolutely. Absolutely. And the last question I have on systemic sclerosis, the preclinical data that they will present. So another hard-to-treat indication, autoimmune indication. So historically, there's been two endpoints that Dave was looking for, for systemic sclerosis. One is lung FVC, another one is Rodnan skin score.

So what do you think soquelitinib may focus? I know this is too early, but this is an active drug, one indication in oncology, one indication autoimmune. So wouldn't be totally unexpected if you start directly from Phase II at some point. So just wanted to get your thoughts on systemic sclerosis..

Yes. I mean, people die from the lung disease, interstitial rheumonitis and fibrotic lung disease -- interstitial lung disease. So that would be the thing to focus on. And that's what we have focused on. So, the model that's going to be -- and the abstract is already out on this.

I think the paper is on Sunday at AACR is a very interesting model, a very good model, probably the best model -- animal model for systemic sclerosis. These animals get -- they have what's a Frat2 mutation. It's very much a Th2 disorder.

And they have fibrosis, fibrotic lung disease, they get right heart failure, and all of that responds to treatment with soquelitinib. In addition, we've also tested soquelitinib in your typical bleomycin fibrotic interstitial lung disease, and it's very active in that model as well.

So I think down the line, systemic sclerosis, I mean, the thing that we would focus on would be lung disease because that's what kills people. And that's the biggest -- the most serious part of the problem. And as you know, lung disease and right heart disease go together in arterial hypertension and so forth.

So that would be -- that's an interesting disease for us. It also gives us a window in fibrotic diseases. Fibrosis is very much Th2. We block Th2 very well. And so, this opens up a whole new set of diseases that have to do with fibrosis, everything from scleroderma to cirrhosis to other fibrotic diseases..

Right. Yes, makes sense. And I'm sorry, just the last question I want to ask, how do you dose differentiate between oncology and autoimmune diseases? These are two big sort of indications. Just wanted to hear your thoughts on this..

Well, I think it's a little early to speculate on that. I mean, we're in the middle of a trial now where we're going to learn a lot about dosing and regimen. But I think I'll go out on a limb here and say, I don't think we're going to need to treat atopic dermatitis continuously. I think cancer, you will..

Got it. Yes, it makes sense. Okay, thanks so much Rich. Congrats for the progress this quarter..

Thank you, Andin..

Thank you. And your next question comes from the line of Graig Suvannavejh. Please go ahead..

Hi, thanks so much for taking my questions here. Congratulations on all the progress that you've been making. If I could just revisit the readout, the interim readout in atopic dermatitis that you're expecting in December. As it relates to EASI, just if you could clarify, will you be specifically reporting on both EASI-50 and EASI-75.

And then a follow-up is just going back to comments, Richard, you made in response to, I think, one of the first questions on the Q&A, which was expectations around what the bar for success would be.

I think you had mentioned you would expect something similar to approved agents such as dupi, but I'm wondering if -- since you're an oral therapy, if you feel the need to be as effective as perhaps some of the injectables like a dupi? And then I have a follow-up..

Okay. So let me -- thank you for the question. So we expect to report for Cohort 1 and Cohort 2. Now we'll have more follow-up on Cohort 1, of course, because it was enrolled first. We expect to report on the mean percent EASI score reduction for placebo and for active, we expect to report on EASI-50, EASI-75, EASI-90. We expect to report on IGA 0 and 1.

Those are very typical things. So we will be reporting on that. Obviously, we will report on safety as well. Now your question about -- oh, what will we compare to? Well, there is -- our regimen, again, this is the first dose we've tested. It's 28-day dosing.

We can compare and we'll compare to, let's say, Dupixent Phase I trial where they had already optimized their dose and treated for four weeks and 12 weeks. So we can compare to things like that. And that's what we plan to do.

Now your question about do we have to be as good because we're oral and safe and more convenient, we're pretty excited about the mechanism of action of our drug. So I want to be better, I plan to be better..

Okay. Appreciate that, and appreciate the confidence that you have in the potential readout there. And then a follow-up is almost a segue from the topic of an oral agent.

Could you just remind me, given, obviously, the promise of having an oral-based agent for atopic dermatitis versus an injectable, what the competitive landscape looks like in terms of orals that are in the clinic and kind of where are you relative in terms of clinical development time lines to perhaps some other oral higher profile oral programs that you're following closely?.

Well, that's a very hard question. So, as you know, there are many drugs in development for atopic dermatitis. Most of those are injectables, biologics. There are some oral compounds in the clinic. I don't know if I'm in a position to comment on those. I think they're pretty early. I don't really know what their data is.

I know there's some data readouts also before the end of the year. So I'm not sure I'm able to comment on our product relative to those..

Okay. Thank you very much..

Thank you. And your next question comes from the line of Jeff Jones from Oppenheimer. Please go ahead..

Good afternoon, guys. And thanks for taking the question. I guess I'll switch over from AD and go back to PTCL.

In terms of the Phase III trial and the primary endpoint of PFS, how do you deal in the trial with patients who are complete responders and go on to transplant? And then interested in your view on the bar for success here given some of the data we're seeing on the PI3K inhibitors at ASH right now? And then I've got a follow-up..

Okay. So first of all, Jeff, it is a randomized trial, and there's an equal number of patients in the standard of care, belinostat and pralatrexate and the soquelitinib arms. So, if you go on to a bone marrow transplant, you are censored at that point. We continue to follow you, but you're censored at that point.

The number of patients that's anticipated to go to transplant in a study like this, maybe 10%, maybe not even that high. So that's not going to be a huge factor. But the answer to your question is, they would be censored. You count their response and their PFS to the point in time that they go on for a transplant.

Now, the second part of your question was criteria for success, I think..

It was..

Yes. So, well, that's built into the protocol, as is the sensoring, that's all defined in the protocol, that's all been reviewed by FDA. So, the statistical plan gives us about a 90% power, actually. I think it's 89% power to see a 1.5-month improvement over the control arm. So that would give you a hazard ratio of about 0.56.

So that's what we need to do to win. Now just getting back to the transplant question, just so people understand, I mean, most patients are too old for a transplant. This disease is mostly a disease of older people. Most patients are too old and patients have to get into a good remission to get a transplant.

That's why it's been such a small subset of patients who gets the transplant. And why it's so hard to interpret the transplant data because you're selecting out a very favorable patient population to begin with. But in any event, in our study, we deal with that by censoring that data.

Makes sense?.

Great. Appreciate that. Yes, it does. And I guess -- so I mean, the data that's out at ASH right now on the PI3 kinase inhibitors, that's really -- it's ORR data at this point. But I guess, just your thoughts on what you're seeing there with some of those, I guess, between 40% to 60% ORRs in a couple of those studies..

Yes. So the PI3Ks have been around for a long time in PTCL. They give you reasonable responses. They're usually very short-lived. Those drugs are highly toxic with liver abnormalities and hematologic abnormalities as well. I don't really think that, that is a significant competitor to soquelitinib should our trial be positive.

And one other thing to point out there, really, the soquelitinib trial is setting one up for the next trial, which would be frontline. I mean, this is a registration approvable trial.

But the next study, which people already want to do is to combine soquelitinib with chemotherapy frontline, and perhaps use it as maintenance therapy because of its safety and convenience. You're not going to do that with a PI3K.

You can't just slam that together with a bunch of chemotherapy drugs that would be too difficult to do that from a safety standpoint. And using it as a maintenance would be also problematic..

Got it. Okay. I appreciate that. One quick follow-up on the renal cell study with soquelitinib.

In terms of selecting patients for enrollment there, are you looking -- going back to looking at absolute lymphocyte counts or using prior lines of therapy? How are you sort of looking at sort of T-cell health there?.

Yes. So well, we're not using that as an eligibility criteria, although we're going to be collecting that data. The renal patients are not as beat up immunologically as these lymphoma patients.

So I think we'll be in better shape there because, I mean, lymphoma patients are inherently pretty immunosuppressed from the disease as well as the types of therapy they've had. That's less of a problem in renal..

Okay.

So you're just collecting the data and sort of look at how it pans out for these endpoints or biomarkers post?.

Yes..

Okay. Great. Thank you very much. I’ll jump back into the queue..

All right. I think that is all the questions we have this afternoon. I want to thank everyone for participating, and we look forward to giving an update in December to everyone on our atopic dermatitis trial. Thank you very much..

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect..