Good afternoon, and welcome to the CytomX 2018 Full-Year Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. Please be aware that today's conference call is being recorded.

I'd now like to turn the call over to Chris Keenan, CytomX's Vice President of Investor Relations. You may begin..

Good afternoon and thank you for joining us for our 2018 full-year financial results conference call. Here with me today is CytomX President, Chief Executive Officer, and Chairman, 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 the call. 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 10-K filed today. 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, Chris, and good afternoon, everyone. I'm very pleased to be here with you today to review what has been a highly productive year for CytomX and also to outline what to look for in the year ahead.

Over the past year, we've generated meaningful total proof-of-concept data for the Probody platform across both of our lead, wholly owned programs as we presented at ASCO, ESMO, SITC, and also yesterday, at our inaugural Research and Development Day held in New York.

I'm pleased with the webcast from yesterday's event for a full update on our programs and pipelines. I would like to make a few brief comments here on our lead programs CX-072 and CX-2009 on our PD-1 Probody CX-188 and also on our BMS alliance.

Our PDL-1 Probody therapeutics CX-072 is active across a range of tumor types and has a potentially differentiated safety profile as monotherapy and importantly in combination with other agents such as ipilimumab.

CX-2009 our first-in-class CD166 Probody drug conjugate is generally well tolerated and has demonstrated anti-tumor activity across multiple tumor types.

In 2019, we will continue to explore the full potential of these innovative product candidates as we maintain our intense focus on discovery, development, and ultimate commercialization of the new generation of differentiated cancer therapeutics.

Regarding CX-2009 we're encouraged by the Phase 1 safety and efficacy data that we presented yesterday that shows that this is an active drug candidate across several tumor types with intriguing anti cancer activity in heavily pre-treated patients.

CD166 is a very novel target and CX-2009 has the potential to be a first-in-class targeted anti cancer agent. Our next step with the program is to select good dose for further expansions into select tumor types and additional work to this end is well underway.

Regarding CX-188 our PD-1 Probody we recently decided to de-prioritize this program despite the fact the IND was readily cleared by the FDA in Q4. We made this decision principally because of the ongoing success we are having with the anti-PDL1 Probody CX-072.

We feel that capital allocation at this time for PD-1 in addition to PDL-1 is not the most efficient use of our resources given the many other opportunities at our pipeline. Now turning to our BMS alliance. This partnership was first entered into in 2014 and was expanded in 2017.

In total, the alliance provides BMS with access to up to 12 discovery targets. The lead program in the alliance the anti- CTLA-4 Probody, BMS-986249 continues to progress through a Phase 1/2 clinical trial being run by BMS. In conjunction with our broad R&D update yesterday, we announced that BMS has de-prioritized three collaboration targets.

This reflects the natural ebb and flow of a long-term multi-target discovery stage biotech pharma partnership. The collaboration remains in full force in effect and we look forward to continuing to make progress on existing collaboration programs and future targets that BMS may select.

Now with that, let me turn the call over to Debanjan, who will review the financial results. I'll come back shortly after that for a look at the year ahead..

Thank you, Sean. I would like to review selected financial highlights for the year. We ended the year with cash, cash equivalents, and investments totaling $436.1 million compared to $374.1 million as of December 31, 2017.

The increase is driven primarily by the $134.6 million we raised in our July follow-on offering and the $21 million milestone payment we received from AbbVie related to the clearance of the CX-2029 IND. These cash proceeds were partially offset by cash used to fund operations.

Our strong balance sheet allows us to fund operations into 2021 assuming no new collaborations or financings. Our cash guidance has not and does not include any material assumptions for milestone payments from the three BMS programs that Sean referred to.

Research and development expenses were $103.9 million for the year compared to $92.3 million in 2017. This increase in research and development expenses was primarily attributable to additional costs related to our maturing pipeline including personnel related expenses.

G&A expenses increased by $7.9 million for the year compared to the corresponding period in 2017 and was largely attributable to personnel related expenses. With that, I will turn the call back over to Sean..

Thanks, Debanjan. Whereas 2018 was in large part a year of platform proof-of-concept for CytomX, throughout 2019 we anticipate seeing the utility and potential differentiation of our lead product candidates come into sharper focus as we continue to advance the CX-072 and CX-2009 clinical programs. We have much work to do.

And here are our key milestones for the year. For CX-072, we anticipate additional updates on the monotherapy expansions which will inform next steps on potentially advancing towards registrational studies in one or more specific indications.

For the CX-072 ipilimumab combination, we expect to initiate one or more expansion arms at a defined combination dose and an indication to be disclosed. We also expect to present an update on our ongoing study of the combination of CX-072 with the BRAF inhibitor vemurafenib.

For the CX-2009 program as I mentioned earlier, we anticipate advancing into expansion cohorts in multiple tumor types. As you will note from AACR abstracts that we just published this afternoon, we will be presenting three posters on preclinical and clinical data on CX-2009 at AACR.

The clinical update at AACR will comprise a deeper dive on the Phase 1 dose escalation data that we presented yesterday in New York. Regarding the BMS led CTLA-4 Probody program, BMS has publicly indicated that they anticipate providing an update on this program in 2019.

So we're excited about our continued progress with the platform, and the pipeline, the emerging clinical data from our two lead programs support the utility of our technology and maintain us on the path to building a really great company. So with that, we will now move to Q&A..

[Operator Instructions]. Our first question comes from the line of Ying Huang of Bank of America Merrill Lynch. Your line is now open..

Hey guys. This is Alec on for Ying. Thanks for taking our question. Two questions on CX-2009. So given the cancer of patient enrollment and the data for CX-2009 you've seen to-date, how quickly do you think you can come to a recommended dose for the expansion. I know you're sort of homing in on the 8 to 10 range.

And then my second question relates to the tissue distribution or frequency of CX-2009 to binding to cells outside of the tumor. How many of the treatment related adverse events were due to non-specific trafficking of the impact Probody drug conjugate or binding to CD166 outside of the tumor? Thanks..

Yes, thanks, Alec, for the questions. So we're not guiding on specific timing to get into our expansion dose. We are making terrific progress there. And certainly these expansions are going to be initiated this year but we're not ready to guide to you specific timing.

In terms of binding outside of the tumor, it's very hard to say that the integrated pharmacology of CX-2009 is illustrated in the data that we presented anti-tumor activity a generally well tolerated safety profile with certain toxicities emerging particularly at the higher doses as you've seen which of course is what you want to see with anti-cancer agent you push the dose until you get to see toxicity.

As we've described previously, and yesterday, many of the toxicities are anticipated based on DM4. There are other toxicities we need to understand in more detail but it's very difficult of course at this point to ascribe any toxicity to whether it's target or payload.

We just need to think about the integrated pharmacology and ultimately explore our expansion dose in a lot more detail, in a lot more patients..

Okay.

And then one more question from me based on what you've seen in other DM4 studies for the ocular toxicity, how effective would you say prophylaxis is mitigating the tolerability issues there?.

Yes, we believe it can be -- it can be very effective and is well precedented and it has been used in a number of other clinical studies. So we feel optimistic about the prospects for the prophylaxis program..

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

Great. My first question is on 072 combo with Zelboraf, I'm just curious can you comment on the rationale for doing this as a combo instead of a triplet and the timeline when we may anticipate results.

And lastly, what would you consider to see positive data for further development?.

Yes, hey, Boris. Thanks for the question. So our goal for the program is really unchanged from when we initiated it a couple of years ago in that, it presents another effective opportunity to see how the background of the PDL-1 Probody can lead to a differentiated overall safety and efficacy profile for the combination.

Of course, we have a growing and strengthening body of data with ipilimumab combination, so with a checkpoint -- checkpoint inhibitor, the vemurafenib Zelboraf combination is asking a different question with a kinase inhibitor. We continue to enroll patients, as you know, we began enrolling this study ex-U.S. and that took some time to get going.

We continue to enroll, we are now enrolling patients here in the U.S. and we anticipate having an update on the program sometime this year. We haven't provided any specific guidance on exactly what success would look like, that will come when we present the data.

In terms of the triplet, I think we've mentioned previously that is a fair question given the standard of care it has evolved to particularly in the U.S. which is why the enrollment in the U.S. was challenging early on.

But what we're trying to do here is show that we can capitalize on the benefits of full dose vemurafenib in combination with the PDL-1 Probody and if we can that that could potentially show a path forward for the doublet, that's been our goal from the outset and that continues to be our goal..

And just the last part of my question in terms of efficacy to move this forward, any kind of a line in the sand that you could draw?.

Not right now..

And our next question comes from the line of Raghuram Selvaraju of H.C. Wainwright. Your line is now open..

Hi guys, thanks for taking my questions. This is Robert Burns on for Ram. So just three from me, I guess the first one would be a follow-up to Boris was asking you, as we look at Melanoma space you're starting to see these triplet combinations, you're starting to move forward.

So once you see the data for CX-072 vemurafenib are you thinking about potentially adding one additional agent to potentially make that type of combination more competitive and the landscape as we move forward? And then the second question I have relates to something that -- something intentionally [ph] and how Amgen terminated two molecules in the EGFR project.

I just why instead of that was EGFR CD3 bispecific drug need optimization looks if not or if so how does this sort of -- how is the pipeline look for that? And then I’ll hold off for the last one. Thanks..

So with regards to the first question on the triplet, we haven't provided any guidance that we would move into from the doublet to the triplet. I think we need to see how the doublet data comes out first and then take a look at the broader landscape at that time. But it's something that we'll look at.

I didn't quite understand the Amgen question, could you repeat that? I'm not aware of those developments on the Amgen side..

Yes. So in the 10-K in the fourth quarter of 2018, the Joint Steering Committee terminated the work on two molecules in the Amgen EGFR project due to unacceptable test results.

I just wanted to see if you could counter a little bit more?.

Yes, I can cover that, Robert. This is Debanjan. So as we've always said in the Amgen collaboration, one of the value propositions of working on this program with Amgen is they have excuse me -- lots of expertise in the T-cell bispecific space.

So the right way to think about the collaboration is we've brought our Probody technology which potentially enables EGFR as a solid tumor T-cell bispecific target, that's exactly the sort of target that we feel like we can address with our Probody technology and Amgen brings for lots of different T-cell bispecific technologies.

So secondly outside of the collaboration there's a lot of lead selection that's ongoing in the collaboration and that lead selection is essentially testing our Probody technology with several different bispecific formats.

And that's exactly what we're doing right now is we're leveraging our program, our technology against their bispecifics and we're trying to find the best molecule. So part of that we're testing lots of different molecules and that's where we are in the process.

They continue to be excited about the collaboration and we're making good progress from a lead selection perspective..

Awesome. And I just wanted a little more clarification. That makes complete sense. And then I guess the last one is, as you start working more with the expansion cohorts so Centerline you're starting this year, the AbbVie combo expansion cohorts.

Any guidance as to how we should be thinking about R&D expenditures in 2019 and 2020?.

Yes, we haven't given any specific guidance on R&D expenditure. As you'll note, our R&D expenses went up this year primarily related to the fact that now we're enrolling three clinical stage programs or we did enroll three clinical stage programs in 2018 in between 072, 2009, and 2029. So R&D expenditures will continue to increase.

We haven't given any specific cash guidance but for the fact what I said earlier which is we expect cash and cash equivalents we have on our balance sheet to allow us to move the company into 2021 without any additional financings or new partnerships..

Awesome. Thanks for taking my question guys..

And our next question comes from the line of Mohit Bansal of Citi. Your line is now open..

Great. Thanks for taking my question. Just trying to understand, so there was in the CX-2009 trial, there was one toxicity which you characterized as nervous system disorder. Can you characterize that toxicity for us, help us that.

And then the second part is, so the CX-2009 it seems like a lot of these toxicities are probably payload related but trying to understand if the therapy is targeted and then given that the mask and inter are working, what could be the tactical reason that high doses we are seeing toxicity here which could have been mitigated by masking of Probody as something, well your basic question.

But I would love to understand that thought? Thank you..

Yes, hey Mohit. Thanks for the questions. So with regards to the nervous system disorders as you might imagine that is peripheral neuropathy and that's very much anticipated for the DM4 payload. So I have that specific clarification helps.

With regards to the masking and tox of higher doses, I think, as you appreciate the dose escalation in this study really both surprised and impressed us in terms of the doses we've been able to get up to this 9, 10 big fatigue range and we're not entirely surprised to see a tox profile emerge those doses where we're really pushing the envelope.

That may have elements that in addition to what we would expect at DM4. Again this is a -- think about the integrated pharmacology of this molecule it's an antibody, so CD166 has a mask on it, it then has a payload on it.

And at these higher doses, it could be that there's some small amount of binding to target because masking is at the end of the day a dynamic process. It relates to the affinity of the mask for the antibody. So as we really push the envelope, is it possible there could be some low amount of binding to target in certain cases.

I think it's a theoretical possibility. It's a difficult thing to tease apart which is why we have to think about the integrated clinical pharmacology. But that's one thing to just think about..

And our next question comes from the line of Christopher Marai of Nomura. Your line is now open..

Hello. This is Jackson Harvey on for Christopher Marai. Thanks for taking my question. And thank you for clarifying the nervous system disorders. That's very helpful. With respect to that, I noticed that the peripheral neuropathy was a parent in kind of the mid-range of the dosing cohorts but not in the highest dosing cohorts.

Do you think this could be related to prior treatment with micro physio agents in the affected patients?.

I think it's very difficult to know. I mean the patient numbers here obviously on the dose- by-dose basis relatively small and the incidence of the tox in those particular cases is also relatively low. So I think it's a very difficult question to answer.

I think we're going to have to of course learn more about the integrated tox profile of this molecule as we treat more patients.

You're right to point out though that these are heavily pre-treated patients and I think that probably is a reflection to some extent in the overall tox profile of the molecule that we're seeing in this early dose escalation that I think that have to be taken into account as we look at this data.

It is after all an early Phase 1 study which what we think is actually very, very encouraging safety profile given the highly express nature of this target in most normal tissues. We think it's actually quite remarkable that we've been able to get to these doses at all..

Got it.

And along those lines, did you see any hematological toxicity such as neutropenia?.

Nothing, nothing. I shall -- I'll ask you to hold that question until you see the full safety update in the AACR posting that will present a more integrated update. But the principal toxicities have been reported in this presentation that we released yesterday in New York..

And our next question comes from the line of Joe Catanzaro of Piper Jaffray. Your line is now open..

Hey, thanks guys for taking the question. I guess Sean you may have started to answer my first question.

So at AACR, what additional data can we expect from 2009 that we didn't see yesterday?.

Yes, as I said, it will be a recap of the data that we presented yesterday but with a deeper dive in particular on the safety profile, so that with full safety tables and more detailed information on patient demographics, it will be usual in a more complete clinical presentation yesterday obviously with a high level summary given the nature and format of the day..

Okay. Got it. And then maybe my other question just ask you to maybe speculate a little, so I understand the 072 AbbVie expansion cohorts will initiate in this year. So let's say you get the data there and it continues to suggest that that combination is much better tolerated.

How do you envision maybe a registrational directed program looking like moving forward?.

Yes, that's a great question. I think it's always going to -- I will give you the -- it depends answer, if I may. Of course it will depend upon the level of activity that we see in the chosen indication with that combination.

So as we said yesterday, we've learned a lot from the dose escalation, dose escalating on both the Probody and also on the Epi side. We've zeroed in on what most likely would be a dose of 10 plus 3, 10 of the Probody 3 of Epi. We know from the data that Rachel presented yesterday that that it's looking like a very active combination.

It's looking like a very safe combination. We're not ruling out the possibility of registering on a single arm study but we are in the early days of really thinking that through, so is it possible or even likely that we would need to go to a randomized study.

I think that's probably fair to say but we're not guiding formally in either direction just yet..

And our next question comes from the line of Peter Lawson of SunTrust Robinson. Your line is now open..

Hi Sean, just on the toxicities around 2009, just which ones kind of concerning, which ones you think are more manageable, it seems like the ocular issues are manageable. I wonder if you could talk about the other toxicities and the severity and which ones do you think are controllable? Thank you..

Yes, it's a great, great question. Hey, Peter. Again small numbers right in this early study and in terms of tox that we anticipated to see that we expected to need to manage at the higher doses that of course is the ocular toxicity. Just let me just make a few more comments on that. And Rachel touched on this yesterday in R&D Day.

Going into this dose escalation as we began to realize that we could dose escalate beyond six mgs per kg and as we kept going, we made a very affirmative decision in collaboration with our Safety Review Committee to dose escalate initially without ocular prophylaxis so that we could get a clear sense of the overall profile of the drug from a safety and efficacy standpoint.

That was a very affirmative decision that we took early on in the program and we took that decision in the full expectation that once we learned about the safety and efficacy of the drug at these upper doses, we would then implement like most likely implement ocular prophylaxis, if needed depending upon what dose we got to which is exactly what we've done.

And so the toxicity that we've certainly paid the most attention to and that we have a really good, I believe a really good handle on moving forward is ocular toxicity. The others are do you really think about it.

You look at the safety table, it's still really early days in understanding what their incidence is, what their severity is because the patient numbers are still small, we need to learn more. So we're really quite focused on the ocular tox at this point. We think we've got a handle on it.

We're going to need to learn more about some of the other -- about the integrated safety profile as we move forward and there's much still to be learned for sure..

Thank you.

And then on 2009, can you give further updates beyond AACR in 2019?.

Well, yes, I mean the principal update will be -- will getting going on the expansion. So we'll be -- we aim to disclose obviously the indications that we're going into, the dose that we're going for -- going to these indications with and what our objectives are of those expansions and that will become a lot clearer as the year goes on.

And as I said in my introductory remarks really for both of the lead programs, we're at a point in time right now where as I said we're making that transition from the platform, proof-of-concept last year to 2019 where the development program supporting the product profiles is going to take more shape.

But we'll have more to say about that as the year goes on. We're just not quite ready to do that just yet. So hang in there, it's all coming..

Thank you.

And then just on the PD-1 programs and 188, what will make you return to that program, is it more of a partnership program? Or how should we think about --?.

I think that's probably right. Yes, I think that's right. I mean as I said it's a funny thing actually because we've had several discussions with investors over the last year where we've been asked, why you're doing both and it looks like CX-072 is working fine. We don't quite understand why you're doing CX-188.

And so I have to say we were rather surprised by some of the feedback yesterday and really a little taken aback by some of the comments in the biotech press which I think got the wrong end of the stick by a long margin.

So yes, I could see if I could see a situation develop as I said yesterday, where in a potential partnership, a partner may have interest in that molecule as well.

But for now, we're really thrilled with where we are with CX-072, it's a couple of years ahead in terms of the clinical program, it's performing just as we designed it to and from a capital allocation standpoint, it just makes all the sense in the world to put PDL-1 on the shelf for the time being..

And I’m not showing any further questions at this time. I would now like to turn the call back to Sean McCarthy for closing remarks..

Great, thanks very much and again thanks everybody for your time today and for those of you who were able to join us yesterday for our R&D events in New York. We did cover a lot of ground in that event. So if you haven't had a chance to go through all the data, I would encourage you to do so.

We certainly feel that it gave a very broad-based comprehensive and integrated view of everything that we're doing as a company. We're really excited about our technology; we've come a long, long way to have these two programs moving forward.

Admittedly, we still have work to do for sure but these two programs moving forward in a positive general direction, we're already thrilled with, there is a ton of other innovation going on in the lab and we think the company is right on track. So thank you for your interest and feel free to follow-up with us as convenient..

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