Debanjan Ray - CFO Sean McCarthy - President & CEO.

Mohit Bansal - Citigroup Christopher Marai - Nomura Biren Amin - Jefferies Boris Peaker - Cowen Mara Goldstein - Cantor Fitzgerald Robert Driscoll - Wedbush Securities Ying Huang - Bank of America, Merrill Lynch.

Good afternoon and Welcome to the CytomX 2017 Full Year Financial Results and Operational update. [Operator Instruction] Please be aware that today's conference call is being recorded. I'd now like to introduce the first speaker Debanjan Ray, CytomX Chief Financial Officer and Head of Corporate Development, you may begin..

Thank you, operator, good afternoon and thank you for joining us for our 2017 full year results review and operational update for CytomX Therapeutics. Here with me today is CytomX's President and Chief Executive Officer, Dr. Sean McCarthy.

Before we begin I would like to remind you that we will be making forward-looking statements during the call including guidance on cash utilization, the evolution of our pipeline and expectations for our collaborations.

Because forward-looking statements relate to the future they are subject to inherent uncertainties and risks that are difficult to predict and many of which are outside of our control. Important risks and uncertainties are set forth in our most recent public filings with the SEC at sec.gov, including our form 10K filed today on March 7, 2018.

We undertake no obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise. A webcast of this call will be available on the investor relations page at CytomX's website at cytomx.com. I would now like to turn the call over to Sean..

Thanks, Debanjan and good afternoon everyone, I'm very pleased to be here with you today to review our impressive operational achievements in 2017 and to provide a look ahead to 2018.

During 2017, we continued to advance our deep and differentiated oncology pipeline of potentially transformative Probody therapeutics, by bringing two wholly owned programs and one partner program into the clinic.

In 2018, we expect to file two additional INDs and therefore by year end we expect to have a total of five clinical stage Probody programs all of which we consider to be compelling product candidates for the treatment of cancer.

In this regard 2017 was a pivotal year for CytomX in which we matured into an integrated highly innovative research and development company. Before I review our accomplishments in 2017, and anticipated milestones for 2018 I'd like to provide a brief overview of our Probody approach.

Probody therapeutics are engineered therapeutic antibodies designed to exploit certain unique conditions present in the tumor microenvironment to more effectively localize antibody binding and activity while limiting activity in healthy tissue and in circulation.

With this unique platform approach we aim to reinvest therapeutic antibodies for the treatment of cancer.

The CytomX pipeline includes potentially best in class cancer immunotherapies against clinically and commercially validated targets such as PD-L1 and CTLA-4 where our goal is to drive towards differentiated, safer and more effective combination therapies by reducing systemic autoimmune side effects.

We are also developing first in class product candidates with potential across a wide range of tumor types, including Probody drug conjugates against highly attractive targets such as CD166 and CD71.

This new class of targets has previously been considered inaccessible to conventional antibody drug conjugates, given their presence on many normal tissues. But the Probody platform affords us a unique opportunity to evaluate their clinical potential.

In addition to our wholly owned pipeline CytomX has borne strategic collaborations with several leading biopharma companies, including AbbVie, Amgen, Bristol-Myers Squibb, and ImmunoGen. I'll cover updates for our collaborations later on today's call including a discussion around the termination of our 2013 Pfizer alliance which we announced today.

Now let's turn to our 2017 accomplishments and our 2018 anticipated milestones, starting with our most advanced drug candidate, CX-072, a Probody therapeutic that targets the clinically and commercially validated anti-cancer target PD-L1.

The PD pathways the target of several approved antibody therapies including Merck's Keytruda, BMS Opdivo, and Roche's Tecentriq that has quickly become a central intervention point for the treatment of a wide range of cancers.

At CytomX, we believe the full potential of inhibiting the PD pathway for the treatment of cancer has yet to be realized because systemic PD pathway blockade can result in impairment of normal immune tolerance for healthy tissues and serious and sometimes life-threatening immune related toxicities can emerge, particularly in combination with other anti-cancer agents.

CX-072, our wholly owned PD-L1 Probody therapeutic is designed to uncouple anti-cancer immunity from autoimmune toxicities by inhibiting PD-L1 more locally in the tumor microenvironment, thereby potentially creating new monotherapy and combination therapy opportunities.

In January 2017, we began enrollment for cancer patients in PROCLAIM-CX-072, and ambitious Phase 1/2 study evaluating the safety, activity and translational biology of CX-072 as monotherapy and in combination with the CTLA-4 inhibitor Yervoy or the BRAF inhibitor Zelboraf. I would now like to provide an update on the various arms within the study.

Let's start with our evaluation for the CX-O72 monotherapy for which we have three arms in progress. Part A, our first clinical experience with the Probody platform is monotherapy arm enrolling PV inhibitor naïve patients in tumor types that do not have an approve PD inhibitor available to them.

This arm was designed to provide our first look of the safety profile of CX-O72 at various doses and also to provide insight into how they properly perform behavior in patient while also allowing for the opening of subsequent study arms as those escalations progressed.

Enrollment in product phase now complete and we expect to present a comprehensive summary based on arm mid-2018.

Part A2, our second CX-O72 model therapy arm is an expansion of several doses in the middle of the dose escalation range and Part A in the same patient population with the additional requirements that patients must be publicly to PD-L1 and to biopsies are mandatory. We expect to report initial results for Part A2 in the second half of 2018.

The third CX-O72 monotherapy arm is part D an initial expansion out of single dose level and accounts the type that has demonstrated sensitivity to other PD pathway inhibitors, we initiated enrollment into this arm in late 2017.

Given the competitive nature of PD inhibitor of clinical trials we’re not disclosing the specific indication at this time but right now we do believe this cancer type could have registrational potential if we further expand this arm at a future time.

So, in summary for the CX-O72 monotherapy arms, the study is progressing well from an executional perspective, and we expect to be in a position to share data starting with Part A and beginning midyear. The combination arms of PROCLAIM CX-O72 were initiated in the second half of 2017 and continued to enroll patients.

Part B is assessing CX-O72 in combination with Yervoy. Now in contrast to current certain current clinical trials where dose levels are schedules of Yervoy are being significantly reduce we’re combining various doses of CX-O72 with the full approved label dose of Yervoy of 3 milligrams per kilogram every three weeks in this part B.

This protocol also allows for the escalation of Yervoy dose to 10 mg per kilogram and we expect to present initial findings from part B in mid-2018. Part C of PROCLAIM CX-O72 is assessing CX-O72 in combination with Zelboraf the BRAF inhibitor and PD naive V600E mutated BRAF melanoma patient.

In this arm we’re combining CX-O72 again with a label dose of Zelboraf of 950 milligrams twice daily. Standard care for patients with V600E mutated melanoma in the U.S has evolved to a BRAF inhibitor in combination with a MAC inhibitor, we are enrolling this study outside of the US and primarily in Eastern European.

We expect to possess initial findings from part C in 2019. Now turning to our second program in the clinic CX2009, a Probody drug conjugate targeting CD166, antigen that’s broadly and highly expressed in many types of cancer. CD166 illustrates our approach to the selection of novel first in class drug conjugates.

To avoid unacceptable toxicity traditional antibody drug conjugates are limited to targeting those few proteins that are expressed highly in tumors but that are absent or poorly expressed in normal tissues. Very few cancer associated proteins have this profile of high expression on the tumor and low expression on normal tissues.

Because Probody Therapeutics are designed to minimize binding of drugs to normal tissues we have the opportunity to pursue an entirely new class to the target with attractive features that were previously unsuitable because of expression of normal tissues.

CD166 is an example of this kind of target, and CX-2009 is a Probody Therapeutic directed against CD166 and conjugated to the cytotoxic agent, DM4 under license from ImmunoGen.

Enrollment began in June 2017 in Part A of the PROCLAIM CX-2009 Phase 1-2 trial evaluating the safety and pharmacokinetics of CX-2009 in multiple solid tumor the types that are known to highly expressed CD166 including non-small cell lung cancer, prostate cancer, cholangiocarcinoma and ovarian cancer.

Enrollment is ongoing and we also recently began enrolling patients in a second monotherapy arm that we call Part A-2 at several doses from the higher end of the dose escalation range and in the same subset of cancer patients now selected for the highest levels of CD166 expression.

We're also requiring mandatory biopsies in this arm to inform our translational program and we plan to present initial data from PROCLAIM CX-2009 in the second half of 2018.

Our third wholly owned program advancing towards the clinic is CX-188 a PD1 one targeting Probody Therapeutic as with anti PD-L1 therapies PD1 monotherapy and combinations have been associated with significant toxicities.

Our preclinical studies have shown the CX-188 has the potential for an improved safety profile relative to PD1 antibodies and given the size of the market and the potential opportunity for differentiated PD pathway inhibitors we're progressing development of CX-188 in addition to CX-072.

CX-188 is currently in IND enabling studies and we expect to file an IND during the second half of this year. Now I'd like to turn attention to our pharma partnerships. Today we announced that on March 6, 2018 CytomX received notification of Pfizer's intent to terminate our research collaboration option and license agreement.

The Pfizer collaboration entered into in 2013 included the selection of up to four PDC targets for the treatment of cancer and this was our first pharma partnership formed at a time when our platform was very early in its development.

The initial target selected was EGFR which Pfizer had previously discontinued with certain rights reverting to CytomX. The second and third targets were terminated during the first quarter of 2018 and Pfizer had previously declined this option to select a full target.

Although we believe that our approach improves the properties of each of the PDCs generated during the collaboration these PDCs did not meet Pfizer's internal criteria with respect to projected clinical and/or commercial potential to warrant further advancement in the Pfizer pipeline.

Pfizer has been very supportive of CytomX over the past four years including leading our Series B financing and investing in our IPO and we learned a great deal in this collaboration.

We're obviously disappointed that we were not able to advance any of our Pfizer collaboration programs to the clinic but we do continue to make excellent progress in our other alliances and I'll now turn to our foundational alliance with BMS.

In the fourth quarter of 2017, BMS initiated a Phase 1/2 study of a Probody therapeutic version of Yervoy, BMS-986249, as monotherapy and in combination with Opdivo in advanced metastatic solid tumors. BMS-986249 is the first program to advance into the clinic under the company's strategic collaboration formed in May 2014.

The initiation of this clinical study by BMS reflects the strength of the preclinical data package generated by the collaboration teams to date, and IND clearance resulted in $10 million milestone payments to CytomX and we are very excited to have this program in the clinic.

Based on early successes in this alliance, during the second quarter of 2017, CytomX and BMS agreed to a major expansion of the collaboration for which BMS paid CytomX a $200 million upfront payment for access to up to six additional oncology targets and to non-oncology targets.

This broad alliance now encompasses up to 12 targets and up to $4.8 billion in potential milestones and royalties that are payable to CytomX as and when program evolves through development and towards commercialization.

Turning now to our collaboration with AbbVie, first formed in 2016, the lead program in this collaboration is CX-2029, a CD71 directed PDC, CD71 also known as transferrin receptor 1 is highly expressed in a number of solid and hematologic cancers and has attractive molecular properties for efficient delivery of cytotoxic payloads to tumor cells.

As with CD166, CD71 is a highly attractive target but to date has been considered inaccessible and thus [undruggable] by conventional antibody drug conjugates, given its expression and function in many normal tissues.

CytomX is leading the preclinical and early clinical development for CX-2029 and is responsible for filing the IND for the program and generating initial clinical data. AbbVie will lead later development and commercialization with global late stage development costs between the two companies.

We and AbbVie continue to make excellent progress with this program and during the third quarter of 2017 CytomX received a $15 million milestone payment from AbbVie in conjunction with meeting certain criteria, allowing the initiation of GLP toxicology studies for the program.

We expect to file an IND application for CX-2029 in the first half of this year and to initiate a clinical study shortly thereafter.

And lastly on the partnership front and consistent with our ongoing focus of forming new strategic partnerships, we entered into an important new immuno oncology alliance in 2017 with Amgen in the field of Probody T-cell engaging by specific antibodies or Pro-TCBs.

The leading edge of this new alliance is the co-development of a Pro-TCBs against EGFR with CytomX again as in the AbbVie collaboration leading early development, Amgen will lead later development and commercialization with global late stage development costs shared between the two companies.

Amgen made upfront payments of $40 million to CytomX and purchased $20 million of CytomX common stock in association with this new alliance. Further details of the collaboration can be found in our 10-K, and we are very excited about this new alliance and we look forward very much advancing this noble modality towards clinical studies.

Before turning the call back over to the Debanjan I'd just like to reiterate the continued clinical and operational execution.

We are now in integrated research and development company with very strong capabilities in the development of mobile biological with two wholly-owned programs and one partner program now in the clinic initial data readouts for our first two wholly owned programs this year, we tend to file IND for PD1 targeting Probody therapeutic during the second half of 2018, so our partner program was at B, we tent to file an IND with CX2029 during the first half of this year.

In total by year-end we expect our five outside clinical stage Probody programs investigating compelling and potentially differentiated product candidates for the treatment of cancer patients and we’re well-positioned to continue our momentum and expect that our existing capital resources will be sufficient to fund operations into 2020.

So now I would like to turn the call back over to Debanjan for a summary of our 2017 results..

Thank you, Sean. Prior to turn the call over for questions I would like to review selected financial highlights for the year. We ended the year with cash, cash equivalent and investments totaling $374.1 million compared to $181.9 million as of December 31. 2016.

The increase reflects cash provided by operations resulting primarily from the $200 million upfront payment from BMS for Alliance expansion, the $40 million upfront payment and the $20 million of proceeds from stock sold as part of the Amgen agreement and $15 million milestone receive from AbbVie.

These cash proceeds were partially offset by cash used to fund operations. As Sean mentioned our strong balance sheet allows us to fund operations into 2020 assuming no new collaborations or financings.

Research and development expenses were $92.3 million for the year compared to $54.8 million in 2016, the increase in research and development expenses was primarily attributable to additional costs related to our maturing pipeline, along with a non-cash charge of $10.7 million of in profit, research and development expense recognized related to an asset that we received as part of our Amgen collaboration and $10 million one-time sublicense payment made to UCSB which was triggered by the $200 million upfront payment made by BMS in connection with our expanded collaboration.

With that operator we would now like to turn the call over for questions. .

[Operator Instructions] Our First Question Comes from Line of Mohit Bansal with Citigroup. Your line is now open. .

Great thanks for taking my question and congrats on the progress. Maybe if I could ask couple of questions here.

First of all you mentioned that you will now have data from the Part B of your CX-072 program as well, could you help us understand that in the middle of ’18, if we have those, you’re looking for -- are you looking for the same venue, where you would present Part A data, if you can confirm that. .

Hi Mohit, good question, you’re right. And I think we said this fairly consistently over the last year that as we come up on midyear, we would be, we will be hoping to present a snapshot of the part B and that's still our intention.

So, as we said earlier the Part A arm update should be fairly comprehensive by midyear but we do hope to be in a position to give an initial update or snapshot if you like of what we're beginning to see in Part B. .

Got it, thank you, and then the second one on the data for Part A1 which we are expecting to see in middle of the year.

So could you please help us understand what answers we get from the efficacy point of view and how we should interpret the data when they become available because the way I understand it we are looking at tumors which traditionally do not respond to an anti-PD1 therapy, PD1-PL1 therapy and I think biopsy may not be a major part of this Part A1 so if you could help us understand how much data we'll have on efficacy and then how should we interpret the data from the target engagement point of view..

Absolutely and obviously the first answer to the question is we'll share the full update midyear but I do think it's important and again I think we've been pretty consistent in guiding to your first things first if you like with Part A1 which is the monotherapy dose escalation we're looking principally at safety of the Probody this is the first experience we've had, we're putting a Probody into cancer patients and so some very basic questions we are looking to answer, safety, tolerability some basic platform questions including how the Probody behaves in circulation and when it comes toto activity you're absolutely right to point out that the patient population in Part A is not directed or designed to demonstrate efficacy of CX-072 because this is PD naïve patients for whom PD agents are not otherwise available.

So, it will by definition be a very mix and heterogeneous and late stage patient population. I think we've said previously that any evidence of clinical activity of the Probody in that patient population we would consider upside..

Got it, and then from the point of view of starting any expansion cohort if you see any activity, do you see that as a 2018 event or more like '19 event for this program..

Well just to clarify the Part B is of course already underway, as we mentioned and we're not guiding currently on when we would be in a position to present data on Part B, we'll provide additional guidance as the year progresses, it's obviously something that we'll look at is as the year progresses also is the potential initiation of additional Part Bs if you like depending how the data comes out to Part A..

Thank you. And our next question comes from the line of Christopher Marai with Nomura, your line is now open..

Hi, good evening and thanks for taking the questions, first just on the Pfizer you know agreement termination, wanted to further clarify I hear you said it was regarding really just platform realignment on their end, just regarding any of the data that maybe have the access to on from your platform overall, have they looked at any current clinical data for the Probody technology or could you maybe comment further on that?.

Let me be completely clear that Pfizer hasn't seen any of our clinical data, the data that they have access to is data that's generated within the collaboration, and additional preclinical data that we've published in various formats..

And then a quick follow-up just regarding the data that we are going to see next for Part A, how much will you be able to determine regarding next half forward for the asset based on this next read out, is this something that you expect to provide some color at the cost of data, or do we need to wait more for the Part C and D component for the trials that you have?.

It's a little hard to comment right now on that, and we’ll provide further guidance as the year progresses..

Thank you. And our next question comes from the line of Biren Amin with Jefferies. Your line is now open..

Maybe if I could start with Part B for 072, do you think we can see safety data where we can get read through on the value of the Probody?.

Biren, the question was on Part B?.

Part B?.

Part B.

Well obviously, the design of that arm, the [Technical Difficulty] with Part A, the first question that we are asking there is the safety and tolerability of [AbbVie] various [ph] two doses, initially the full labeled full dose [AbbVie], so yes, we think safety from initial safety data from that arm, as it emerges has the potential to be quite significant..

And then as it relates to the Part C with Zelboraf, when should you expect in 2019 do you think early part of the year versus later just trying to get a sense of timing there, and how is that cohort enrolling?.

I don't really want to be any more precise at this point if you don’t mind. As we mentioned on the call, the -- we continue to believe that the clinical question that we are asking there is an important one and a relevant one, we are having to go outside U.S.

and principally to Eastern Europe to find the patients and we are enrolling, it's been a little slower than we perhaps initially expected and we just have to see how it goes as the year progresses..

And then maybe if I could ask a question on 2009, the expansion cohort, which tumor types are you going into for that expansion cohort and how was the expression or how was the expression to find in this cohort?.

So, I think you were talking about the A2 cohort, so again just to recap so Part A is monotherapy three plus three dose escalation to MTD, Part A2 is exploring the higher end of that dose range in CD166 positive patients, the same indications, so the same 7 indications that we are selecting patients for the very high expression which is to find that three plus five in immunohistochemistry and we’re actually using an in house develop antibodies an IFC assay to screen those patients, that’s the work that we’ve done ourselves.

.

Thank you. And our next question comes from the line of Boris Peaker with Cowen. Your line is now open. .

My first question is on the 072 plus Zelboraf combo arm. I’m just curious is the key goal of the study to show that 072 plus Zelboraf over doublet combo is better tolerated than the triplet combo with MAC and if so, will you have actually enough patience to make this determination..

Hey Boris, again I would point you to kind of the first things first philosophy where, what we know about [indiscernible] in the patient population is of course today has tremendous efficacy potential but it is very, very poorly tolerated.

And, moreover, it's a clear example, where adding PD-L1 blockade on top of another mechanism in this case BRAF which is in about relatively well-tolerated you add PD-L1 on top of that and very severe toxicities emerge.

So, the clinical question is can we damp down that toxicity that does appear to be driven in large part by PD-L1 blockade, can we damp that down with the PD-L1 Probody.

We think that’s an important platform proof of concept, if that then results in our ability to dose fully in terms of the actual dose or the length of the duration of dosing to maximize the efficacy potential there is a possibility that efficacy could beat the MAC doublet or could potentially beat the triplet.

We don't know but that’s something that we hold out and hope for but we’re really -- it's important to recognize that that's first question that we are asking, we think is a very important clinical question to answer. .

Got you and in answering that question I’m just curious, since this subgroup is based on Eastern European patients, how different is the overall standard of care with that somehow impact the result versus the U.S standard of care for these patients..

While the standard of care is different in the sense that these agents are not available in certain locations which is how we can actually provide access to our experimental therapies for patients. I don’t really want to comment right now, any more than that. It’s a good question. .

Okay lastly, for the data from part A which we expect in mid-2018. I’m just curious what would you consider to be a good result. Like what should we as investors bet as kind line in the sand..

Just reiterate its safety first, platform behavior second and then anything beyond that we will consider to be upside. .

Thank you. And our next question comes from the line of Mara Goldstein with Cantor Fitzgerald. Your line is now open. .

I had a question on 2029, anti CD1 Probody drug conjugates, the IND or rather the Phase 1, will you include both solid and liquid tumors in that initial IND and do you anticipate the dosing schedules will be consistent between those two tumor types?.

Yeah Mara it’s Debanjan thanks for the question. We haven't disclosed any details on the clinical plans for 2029 or disclosed do we expect to file an IND in the first half of this year, obviously as time progresses we will describe more about the actual clinical design of that study..

Okay, thank you and if I could just ask on Pfizer collaboration and the decision or rather decision to terminate the second and third target that just occurred, what happens then to those targets as well as the EGFR target that was previously returned to you.

Do you have current plans for them will you be entertaining that?.

So, we get the targets back and can develop Probody drug conjugates against those targets, what we don't get access to are the underlying antibodies that are Pfizer derived antibodies and we also do not get access to the linker-toxin technology, but we do get -- those targets are returned and we can move those forward if that’s our choice..

Thank you, and our next question comes from the line of Robert Driscoll with Wedbush Securities, your line is now open..

Good afternoon guys and thanks for taking the questions, just a general one to begin with, is there anything different about dose in the PDC versus ADC, especially with regards to potentially mitigating the off-target task..

Hey Robert, the answer is no. You know we -- in fact it's a good general question because it’s something that we take an even more general question about Probodies in general.

We have from the early days of the company designed Probody drug conjugates and other modalities so that we can dose them on the same schedules as typical their antibody, their corresponding underlying antibodies, so those schedules those amounts are in the same ballpark.

With the PDCs of course given that the typical toxicity seen in the clinic are a function principally of payload what we're exploring with CD166 and CD71 is first of all what the NPDs would actually look like for the Probodies and second of all approaching right those NPDs what the level of activity the molecules would be, but the dosing schedules are very conventional..

Got it, and then just last lastly, I just wondered how you're thinking about clinical development of CX-188 the PD1, would you do something similarly comprehensive with CX-072 or fast track it through development or even [indiscernible] thanks..

It's an important question but we're not providing any guidance on that just yet, we will as the year progresses..

Thank you, and our next question comes from the line of Ying Huang with Bank of America, Merrill Lynch, your line is now open..

Hey thanks for taking question, Sean maybe going back to the disclosure on the A1 portion in midyear can you remind us if you can release data of all doses and also if that’s case how many patients in total would we see at that point.

And then secondly as you mentioned the most important data probably will be on safety, so we can see that from how you market PDL1 therapies typically the grade three adverse events rate are maybe somewhere at 10% to 15%, what do you think will be considered a clinically meaningful improvement over that?.

So, with regards to the number of patients, I think as we've guided previously the A1 dose escalation again three plus three, design, the dose ranges are spelled out in our prior post the presentations and so you can without too much difficulty get to a computation of the number of about 20 to 30 patients based on study design.

And when I say that we’ll present a comprehensive -- our goal is to present a comprehensive overview of that arm, as the data develops in the coming months, and that will include data from the full dose escalation range, that will be our goal.

With regards to the safety question, when we think of safety, you are absolutely right, the PD-L1 and/or PD-1 inhibitors are relatively well tolerated compared to for example CTLA-4, and I think we've been very consistent in saying over the last year that we are not necessarily expecting to demonstrate that PD-L1 monotherapy in this initial arm, the Probody monotherapy is substantially safer than the underlying antibody because the numbers are so small and the event rate is small, that actually relates -- that relates more to the question that was asked earlier on by Mohit I think about safety in B1, where the safety signal should be more acute, so when we say safety in A, we really are talking more about the fundamental safety of this novel platform technology and patients, if you see what I mean..

Thank you very much. Ladies and gentlemen that concludes today's question-and-answer session. So, with that I'd like to turn the call back over to Debanjan Ray for closing remarks..

This concludes our call and Q&A session. Thank you very much..

Ladies and gentlemen, thank you for participating in today's conference, this does conclude the program and you may all disconnect, everyone have a wonderful day..