Sean McCarthy - President and CEO Debanjan Ray - CFO Christopher Keenan - VP, IR and Corporate Communications.

Terence Flynn - Goldman Sachs Peter Lawson - SunTrust Robinson Humphrey Mohit Bansal - Citigroup Robert Burns - H.C. Wainwright Biren Amin - Jefferies.

Good afternoon, and welcome to CytomX Therapeutics Third Quarter 2018 Financial Conference Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be provided at that time. [Operator Instruction]. As a reminder, this conference is being recorded for replay purposes.

With that, I will turn the call over to Christopher Keenan, Vice President of Investor relations. Please go ahead..

Thank you, operator. Good afternoon and thank you for joining us to discuss the company’s third quarter 2018 financial results. I’m joined today by CytomX President and Chief Executive Officer, Dr. Sean McCarthy; and Debanjan Ray, our Chief Financial Officer.

Before we begin, I would like to remind you that we will be making forward-looking statements during this call, including guidance on research and development activities, including data from preclinical and clinical programs.

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 our control. Important risks and uncertainties are set forth in our most recent public filings with the SEC at sec.gov.

We undertake no obligation to update any forward-looking statements whether as a result of new information, future developments or otherwise. A replay of this call will be available on the Investor Relations page at CytomX’s Web site at www.cytomx.com. I will now turn the call over to Sean..

Thanks, Chris, and good afternoon, everyone. I’m pleased to be here to review our third quarter achievements.

2018 has continued to be a big year for CytomX, in which we have disclosed the first clinical data for our lead program, the anti-PD-L1 Probody CX-072, a molecule we see as a potentially differentiated centerpiece of combination anticancer therapy.

Specifically, during the third quarter, we made substantial progress across our entire therapeutic pipeline, strengthened our balance sheet with a follow-on financing and recently presented our latest clinical findings on CX-072 at ESMO.

This continued progress across the board is consistent with our goal of ultimately building an integrated commercial stage oncology company. At CytomX, we are reinventing therapeutic antibodies for the treatment of cancer with our highly innovative Probody platform.

Probodies are fully recombinant antibody therapeutics engineered to have masked target binding sites. The mask blocks the ability of the antibody to bind to its target until the mask is removed selectively in the tumor microenvironment by tumor associated proteases.

Mask removal in the tumor allows the antibody to bind to its target on cancer cells while maintained masking in the periphery substantially diminishes antibody binding to the target in normal healthy tissues, potentially reducing systemic side effects.

Probodies are our versatile modality applicable to multiple antibody classes and they leverage a fundamental property of cancer tissue, namely the up regulation of protease activity during tumor cell growth, proliferation, invasion and metastasis.

This is an elegant system and we believe a really big idea that can change the way we think about antibody therapeutics. We’ve been learning a tremendous amount about the performance of our platform throughout the year as we have analyzed our first clinical data to CX-072.

Data from two arms of our PROCLAIM-CX-072 clinical program were first presented at ASCO in June and more recently with the subject of two poster presentations at the 2018 ESMO Annual Meeting.

Since the data presented at ESMO were reviewed in detail as part of a recent press release and conference call, both of which are available on our Web site, I’ll review here only the summary findings and next steps for the programs.

Fundamentally, we believe that the data we presented over the course of the year on CX-072 demonstrates that this agent is a potentially differentiated PD pathway inhibitor. Monotherapy CX-072 is generally well tolerated, demonstrates single-agent anti-tumor activity while remaining in the masked form in circulation.

These data suggest that the mask comes off in the tumor as designed, but not in the periphery. Our combination data with ipilimumab has begun to validate the potential of CX-072 as a centerpiece of cancer therapy. CX-072 is well tolerated in combination with the full label dose of 3 mg/kg of ipilimumab.

The safety profile we have seen looks very much like ipi monotherapy and the combination is clearly active with several deep and durable responses being seen in dose escalation. Looking at the next steps for CX-072, for the monotherapy, we’re advancing the Part D expansion arm in eight undisclosed tumor types at the dose of 10 mg/kg.

Depending on these data, our goal is to advance one or more indications into registrational trials. Regarding the combination of CX-072 with ipilimumab, we’re further escalating ipi and currently dosing patients at 6 mg/kg of ipi and 10 mg/kg of CX-072.

I will guide on our expansion plans and specific tumor types in 2019 after we have completed dose escalation. Results suggesting an important technical question we’re exploring will be presented later this week.

Tumor biopsy data from Part A2 of the CX-072 monotherapy trial will be presented as a poster and in a rapid-fire oral presentation at the 33rd Annual Meeting of the Society for Immunotherapy of Cancer or SITC.

These data will add to the overall emerging picture of Probody mechanism of action by describing how the Probody is behaving in the tumor microenvironment. We will also be hosting an investor event on Saturday, November 10, to take a deep dive on these new results. This event will be webcast.

Now I would like to turn to our second most advanced clinical program, CX-2009, our wholly owned Probody drug conjugate targeting CD166.

Our overall strategy for our Probody drug conjugate program is to explore whether we can turn novel targets that have previously been considered undruggable into effective first-in-class drug targets for anticancer therapy.

Our rationale is that there are many highly expressed cell surface tumor antigents that are present on many cancer types and they have the molecular properties to internalize antibody drug conjugates, but they have not been targeted previously because of their presence on normal tissues.

Said another way, these targets break the rules of ADC target selection, but could potentially be great targets for PDCs because, of course, Probodies are designed to be active in cancer tissues, but to not bind significantly to normal healthy tissue because of the presence of the mask.

CD166 is one of these targets and the first for which we have advanced the PDC into the clinic. In mid-2017, we initiated the PROCLAIM-CX-2009 Phase 1/2 clinical program with the goal of evaluating the safety and preliminary efficacy of CX-2009 at PDC-targeting CD166 and conjugated with the cytotoxic payload, DM4.

We gained access to DM4 through a licensed agreement with ImmunoGen. CD166 is highly and homogeneously expressed in many tumor types.

Accordingly, we’re investigating CX-2009 in the following seven cancer types; breast cancer, castration-resistant prostate cancer, cholangiocarcinoma, endometrial cancer, head and neck cancer, non-small cell lung and ovarian cancer.

Before I discuss the current status of PROCLAIM-CX-2009, let me first describe our expectations on the program when we initiated the clinical study. In addition to being expressed at high levels on many tumor types, CD166 is highly expressed on many healthy tissues, including lung, liver and the GI tract.

The first clinical question we have therefore asked is whether we can safely dose escalate to anything approaching the typical maximum tolerated dose for DM4, which has been previously characterized to be in the 6 mg/kg range. With this in mind, our initial dose range in Part A of this clinical design was from 0.25 mg/kg to 6 mg/kg.

I’m pleased to report on this call that we have in fact successfully escalated to well beyond 6 mg/kg in Part A and as of November 2, we’re dosing patients at 10 mg/kg of CX-2009. Part A2 of PROCLAIM-CX-2009 is also well underway.

This arm is exploring the safety and preliminary efficacy of CX-2009 in patients selected for high level expression of CD166 starting at a dose of 4 mg/kg. I’m also pleased to report here that as of November 2, we were dosing patients at 9 mg/kg.

In summary, for CX-2009, we’re pleased with how this study is progressing and we anticipate providing a comprehensive safety and efficacy update on the program in the first half of 2019, when Parts A and A2 are substantially complete. We also continue to make progress with Probody drug conjugate programs beyond CX-2009.

In collaboration with AbbVie, we have continued to advance the Phase 1/2 clinical program for CX-2029, a PDC directed at CD71, another very unique and broadly expressed target. We filed an IND on this program in the middle of 2018 and are currently in the early stages of dose escalation.

In addition, ImmunoGen is also advancing a preclinical stage PDC directed at EpCAM under license from CytomX. In fact, last week at the 2018 European Antibody Congress, ImmunoGen presented a comprehensive preclinical update on this program. Returning now to our cancer immunotherapy programs.

When we first began our efforts with the Probody platform in the cancer immunotherapy space, we focused initially on PD-L1 since this target is expressed directly on tumor cells and seem to fit most comfortably with the Probody hypothesis.

More recently, through preclinical work that we have done with a PD-1 Probody and work we have done in collaboration with BMS for the CTLA-4 Probody, we have found that the Probody platform works very well preclinically on T-cell targets.

I’m very pleased to announce that in October, CytomX filed an IND application for [indiscernible] our wholly owned PD-1 Probody, and we expect to commence Phase 1 shortly after IND clearance. This is another great achievement by the team and marks the fifth Probody moving into clinical development.

With CX-188 now advancing towards the clinic, CytomX now has clinical stage Probodies against all three clinically and commercially validated checkpoint targets; PD-L1, PD-1 and CTLA-4. I’ll now turn the call over to Debanjan to review our July follow-on financing and our third quarter 2018 financial results..

Thank you, Sean. Before I get into the details of our July 2018 financing, first let me remind you of our financing strategy at CytomX. Our goal since the early days of the company has been to raise capital of roughly equally between equity capital and non-dilutive capital from partnerships.

On the latter, since our 2015 IPO, we have done three significant business development transactions bringing in over $300 million in upfront milestones over that period of time. In July 2018, we executed our first equity raise since our public offering, a follow on with approximately $135 million in net proceeds.

All told, we have raised approximately $800 million in capital at CytomX since inception, about equally split between equity capital and capital from partnerships. Now turning to our Q3 2018 financial results.

We ended the third quarter with cash, cash equivalents and investments totaling $464.6 million compared to $374.1 million as of December 31, 2017.

The increase reflects primarily the $134.6 million in net proceeds received from the July underwritten public offering; the $21 million milestone received from AbbVie on the CD71 program, which is net of a $4 million sublicense payment; and the $10 million milestone received in early 2018 from BMS for the IND filing of BMS-986249, our CTLA-4 Probody.

Our strong balance sheet allows us to continue advancing our deep and growing pipeline of Probody therapeutics. These cash proceeds are partially offset by cash used to fund operations. Research and development expenses were $76 million for the nine months ended September 30, 2018 compared to $72 million for the same period in 2017.

The increase in research and development expenses was primarily attributable to additional costs related to our maturing pipeline and an increase in personnel-related expenses related to our increased headcount.

General and administrative expenses were $25 million during the nine months ended September 30, 2018 compared to $18 million for the same period in 2017. This increase was primarily attributable to an increase in personnel-related expenses due to increased headcount and an increase in consulting expenses.

With that, I’ll hand it back to Sean to wrap up..

Thanks, Debanjan. In summary, Q3 was very productive for CytomX as we continue to make progress with our depreciated platform and pipeline. I’d now like to open the call up to questions..

Thank you. [Operator Instructions]. Our first question comes from Terence Flynn with Goldman Sachs. Your line is now open..

Hi. Thanks for the taking the questions. Maybe just two from me. The first is just what percentage of patients enrolled in the 2009 Part A trial have high CD166 expression? And then can you tell us if you’ve seen any antitumor activity at this point in the study, either in Part A or Part A2? And then my second question relates to 2019 spend.

Just wondering if you can give us any sense for, at a high level what to think about. Is the fourth quarter – is the third quarter run rate the right level to think about or should we anticipate a step up? Thank you..

Yes. Hi, Terence. This is Sean. With regard to the expression level, so Part A of the study for 2009 is in unselected patients. So as I mentioned on the remarks, we’re in those seven tumor types, patients unselected for target expression.

However, we know from published work and some ongoing work of our own that target is expressed in these indications anywhere from 30% to 90% or more depending upon the indication. So we would expect a significant proportion of those patients to be CD166 positive. In the A2 arm, which is also the biopsy arm, we are requiring patients to be CD166 high.

Our definition of high is CD166 3+ by IHC in 50% or more of the tumor over the visual field. So that’s the expression levels. We’re not in a position to comment on antitumor activity at this time.

We’ll present an integrated overview of antitumor activity and safety when these studies have substantially completed enrollment, and we expect that to be in the first half of 2019..

And Terence, this is Debanjan. On the spend question, we’ll not ready to comment on our 2019 operational expenses.

What we can tell you though is given the fact that we now have by the end of this year five programs in the clinic, four of which CytomX is running, we’ll continue to see some escalation on spend in the fourth quarter of 2018 and then going into 2019..

Okay. Can I just ask one follow up on Part A2? Can you tell us how many cohorts have been enrolled to date, and if that includes both solid and liquid tumors? Thanks..

On the latter part of your question, it’s all solid tumors. Again, they were listed in my comments earlier on and they’re also on various of our poster presentations previously. So they’re all solid tumors. And the A2 arm began at 4 milligrams per kilogram. And as I mentioned, as of November 2, we were dosing at 9 mg/kg.

So we continue to escalate pretty effectively in that arm..

Okay.

So it’s just those two cohorts or are there other cohorts in between 4 and 9?.

It’s a capital step up through those different dose levels; multiple cohorts..

Okay. Thank you..

Thank you. Our next question comes from Peter Lawson with SunTrust Robinson. Your line is now open..

Hi. Thanks for taking my questions.

Just on CX-2009, what level of PDC do you think you need to drive efficacy or what points do you think you’re worried about adverse side effect profile in the level of antibody?.

Well, if we talk more generally about DM4 and maytansine conjugates in terms of their activity and safety, as I mentioned earlier, specifically for DM4, the published data shows that typically maximum tolerated dose is observed at around 6 mg/kg plus or minus and that’s around – again, for published data for other ADCs, that’s about where activity begins to declare itself as well.

We’re not in a position to comment on the 2009 program at this point..

Got you. Thank you.

And then just as you think about selected patients for CD166 high, will you be deselecting patients that have high levels on normal tissues or will you be looking at the ratio of normal tissue versus cancerous tissue?.

No, we’re not doing anything like that. We’re just – it’s reasonably well established that the target is present on many normal tissues at high levels, but we haven’t integrated any screening like that. It’s really from the standpoint of the expression on normal tissues, it’s really an all-comer type of approach.

So we’re really planning in this study to put the molecules through spaces.

But thanks for bringing that point up because I think as we’ve been saying for quite some time, the principal goal of the dose escalation of course as we entered this study has been to dose escalate and see if we can dose escalate safely given that there is target on normal tissue at pretty high levels on multiple tissues.

And we’re obviously very encouraged that we’ve been able to go significantly beyond the typical MTD of DM4, which we think does speak somewhat to the design of the Probody to protect binding in normal tissues in the periphery..

Thank you.

And then I guess as we think about kind of the appetite for further future partnerships or collaborations and – what’s the right number of pipeline molecules to have at the moment and then as you kind of exit 2019?.

I’m not totally sure I understand the question.

Could you try that one again?.

Just firstly on the number of pipeline molecules you kind of want to have exiting 2019? So if it’s three things, four things or five things in the pipeline? And then just how you’re thinking about further collaborations and partnerships?.

Great. Thanks. That’s helpful clarification. So we’ll have five programs in the clinic by the end of the year. As I mentioned, we just recently filed the CX-188 IND.

So the team has done a terrific job of advancing multiple programs and they’re all asking slightly different questions – of course, we’ve got 072, we’ve got the BMS-partnered CTLA-4 Probody and have the PD-1 Probody, CX-188, asking questions of Probody versions of checkpoint inhibitors.

And then we’ve got the two probody drug conjugates, CX-2009, which we’ve mentioned on the call and 2029, which is the partnership with AbbVie. In terms of – I think that’s a pretty aggressive number of molecules to have in the clinic in parallel. That said, we continue to advance on the preclinical programs.

We’re not providing guidance at this stage on when we would file our next IND, but we have plenty to digest with those existing five programs. With regard to additional partnerships, as Debanjan mentioned in his comments, business development has been an important part of our business model to this point and we’ll continue to be for the future.

We’re not in any hurry to do additional deals. The company is well capitalized as you heard on the call and have Q3 cash of $460 million plus. We’ve always said we’ll do the right deals at the right time.

But yes, we will continue to explore over time additional platform partnerships as potential sources of additional fundraising and putting additional shots on goal whilst also potentially exploring partnerships on one or more of the lead programs, which have the potential to get quite broad. Take CX-072 as an example.

There’s a lot that we’d like to do with that program and it could potentially benefit from a partnership at some point in the future, we think..

Great. Okay. That’s great. Thanks you so much..

Thank you. Our next question comes from Mohit Bansal with Citigroup. Your line is now open..

Thanks for taking my questions and thanks for providing the safety update for CX-2009. A broader question on strategy. So I remember when you set out to select these targets, you wanted a balance of validated targets plus normal targets.

So now that you have data from both these targets, how should we think about your strategy going forward? Do you think it will be easier to develop more normal targets or – like CX-2009, or you want to take the broader view here?.

Yes, that’s a really interesting question, Mohit. Thanks for asking it. And you’re right that the way that we’ve designed the pipeline as it exists today has been a quite deliberate mix of the validated and what I’d like to refer to as the indisputably first-in-class like CD166 and CD71.

On the validated side, of course, we’ve gone further to study validated I/O targets. I think we would all agree that the emergence of new I/O targets with the level of clinical validation has been a bit disappointing over the last couple of years. And I think we’re seeing some of that in market sentiment at the moment.

So there’s not a whole lot that has emerged on the I/O side that excites us either to be honest. But we’re keeping a very close eye on it and as we see additional targets where there’s room for improvement in therapeutic window, we may welcome this. The first-in-class targets continue be of very high interest to us.

And then in between the two, as you know, we’re working on another format, T-cell engaging bispecific Probodies, where we see enormous potential. As we get increasing validation of our technology and what it can do on the safety and efficacy side, we can advance T-cell bispecifics into the clinic in a very effective way we think.

In the leading edge of our Amgen collaboration, as you know, is the EGFR-CD3, which kind of straddles both EGFR as a very well validated target as is CD3. No one’s put them together to move into the clinic. So we think there’s a lot of different ways we can go with the technology as we gain additional validation..

Got it, helpful. Thank you..

You’re welcome..

Thank you. Our next question comes from Ying Huang of Bank of America Merrill Lynch. Your line is now open..

Hi, guys. This is Alec [ph] on for Ying. Thanks for taking our questions. So I’ve got two.

The first for the CX-072 program, I didn’t see from your abstract for SITC, but did you measure the levels of naked antibody that’s cleaved in the tumor microenvironment versus the periphery?.

Yes, that is measured.

And what you’ll see in the abstract and what will be presented in considerable detail in our investor event at SITC on Saturday is the translation of the amounts of intratumoral activated unmasked Probody, which we are measuring directly into a calculation of percentage receptor occupancy, which at the end of the day is what this is all about, right? We need to occupy sufficient receptors to drive sufficient levels of antitumor activity.

And you’ll see in the abstract the description of – in terms of receptor occupancy..

Okay, great. Thank you. And for the CX-2009 program, how many patients and what sort of length of follow up do you have on the trial right now? And as we go into the first half of next year, what kind of data should we expect? Thanks..

Yes, too early to comment on patient numbers directly. As I mentioned, we’ll be giving a comprehensive update on the program, both safety and efficacy, first half of next year. That said, of course, this is a standard three plus three design across both arms.

So you can kind of back of the envelop the number of patients if you look at some of our prior poster presentations..

Thank you..

Thank you. Our next question, and I apologize if I get the pronunciation wrong here, comes from Raghuram Selvaraju with H.C. Wainwright. Your line is now open..

Hi. This is Robert Burns on for Ram. So thanks for the CX-2009 update and for taking my questions. I just really have two, if I may. So can you provide some insight into the metrics you’re looking for CX-2009 to hit in which you say, you know what, let’s advance this program further? And then the second question is related to CX-188.

So I noticed that the trial is now in clinical trial.

Can you provide some additional color as to the alternative dosing, specifically what dosing schedules are you looking at? Are there indications that you’re thinking about pursuing that are different from CX-072 expansion indication? And have there been any modifications with the cleavable link relative to protease specificity compared to CX-072? Thank you..

Thanks. Great questions. With regards to 2009, as I mentioned earlier, Part A, the initial dose escalation that began at 0.25 mg/kg, of course was designed to gain our first experience in man with this very, very unique agent and has principally been designed to look at safety.

So can we successfully dose escalate to anything approaching the MTD for DM4 conjugates safely? We already know the answer to that question is yes because as we’ve reported on this call, we are enrolling patients at 10 mg/kg, which is very encouraging. So the – and the principal goal of Part A is safety, a Phase 1 dose escalation.

A2, of course, we’re focusing the patient population here somewhat. We’re selecting for a high-level target expression. We’re beginning at a higher dose, 4 mg/kg.

And I should say by the way that the way that these two arms interact with each other, once we clear a dose level in Part A, we can then – we progress to the next cohort, we can then go to that prior cleared cohort in A2. So that’s the reason that right now we’re at 10 mg/kg in Part A and one dose level behind in Part A2.

If any of you were wondering about that, that’s what’s going on there. So Part A, safety is the goal. A2 is designed to further explore safety and give ourselves the opportunity for any initial evidence of antitumor activity because we’re selecting for high-level target expression. In terms of specific metrics, we’re not guiding on that at this point.

This is a very unique agent. No one’s done anything quite like this before. I think we have to wait and see what we see. In terms of CX-188, so IND is filed. Assuming we’re cleared to start enrolling patients, we would look to do that in the relatively near term.

And I don’t want to comment on the clinical design at this stage other than to say that the initial goal will be to move as we did with CX-072 through a fairly swift dose escalation to look at the safety of the molecule that’s likely to be in all kind of patient population as with 072 and see where we go from there..

Awesome. Thank you. And then just one lastly, so I just want to say to Debanjan that the [indiscernible] cost was pretty awesome..

Thanks..

Thank you. Our next question comes from Biren Amin with Jefferies. Your line is now open..

Hi, guys. Thanks for taking my questions. On the SITC abstract, Sean, I think in the abstract you have 13 evaluable biopsies that are available.

How many can we expect at the time of poster presentation? And do you expect to have correlation on detectable levels of 072 in the intratumoral to response rates?.

Biren, thanks for the question. There will be additional patients in the presentation at the weekend for sure. The abstract was written some time ago and the program has – the biopsy program has progressed very nicely at the company.

And I would say that I’m sure you appreciate how challenging these early biopsies that it can be in early clinical development. Gaining access to material is never particularly easy. So getting those kind of correlations tough, but we’ll tell you what we know at the weekend..

Got it. And then on 2009, you’ve dose escalated nicely in the A2 cohort. I just want to get a sense on what your plans are with 2009.

Do you think that you can move this agent forward as a monotherapy regimen in some tumor indications based on initial data that you’re seeing, or do you feel that you would potentially evaluate in combination?.

Not ready to comment on that at this point, Biren. And as I said, we’ll present a more integrated picture in first half of '19..

Got it. Thank you..

Thank you. I’m showing no further questions in queue. So I’d like to turn the conference back over for closing remarks..

Great. Thanks very much, and thanks everyone for joining the call. As I mentioned earlier, we’ve had a very productive year at the company. Q3 was also extremely productive. We’ve been moving this pipeline forward very aggressively. We’ve learned a lot about our technology, which really is very unique. We’re doing something very different.

No one has done this before with therapeutic antibodies and we’re encouraged by the progress across the board. Thank you very much for your interest and support, and we’re happy to take additional questions offline..

Thank you. Ladies and gentlemen, that does conclude today’s conference. Thank you very much for your participation. You may now disconnect. Have a wonderful day..