Earnings Transcript for AGEN - Q3 Fiscal Year 2022

Operator: Thanks for holding, and welcome everyone to the Agenus Third Quarter 2022 Financial Results Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I'll now turn the call over to Nico Frelick from Investor Relations. Mr. Freelik, please go ahead.

Nico Frelick: Thank you, Jack, and thank you all for joining us today. Today's call is being webcast and will be available on our website for replay. I'd like to remind you that, this call will include forward-looking statements, including statements regarding our clinical development, regulatory and commercial plans and timelines as well as timelines for data release and partnership opportunities. These statements are subject to risks and uncertainties and we refer you to our SEC filings for more details on these risks. Joining me today are Dr. Garo Armen, Chairman and Chief Executive Officer; and Christine Klaskin, Vice President of Finance. Our Chief Medical Officer, Dr. Steven O'Day, will be joining us for Q&A. Now, I'd like to turn the call over to Garo to highlight our progress and speak to our outlook for remainder of the year. Garo?

Dr. Garo Armen: Thank you, Nico. Once again, good morning and thank you for joining [Technical difficulty] yesterday for our third quarter update and numbers discussion. It is an exciting time for Agenus and we believe also for the field of immuno-oncology. The Society for Immunotherapy of Cancer otherwise known as SITC Conference starts today in Boston, our home turf, during which we expect to highlight the significant unrealized potential for a new generation of I-O regimens, I-O being immuno-oncology, that potentially would transform the way we treat cancer. We anticipate that one of our most promising clinical assets balstilimab, a novel adaptive innate immune activator in addition to being a CTLA-4 binder can provide important future therapeutic options for patients with tumors that are particularly resistant to current therapies, including very importantly immunotherapies. On today's call, we will provide an update on balstilimab development programs, including our participation at SITC as well as recent initiation of two Phase 2 ACTIVATE trials, in advanced colorectal cancer for one and in melanoma for two to be followed by trial in pancreatic cancer, before the end of the year. It's important to point out that, all of these trials are randomized trials. We will also highlight progress on several of our earlier stage clinical programs, including our ILT2 antagonist, AGEN1571 and our CD137 agonist AGEN2373 and provide also a financial update. Let me start with SITC. We will be sharing expanded clinical data from our Phase 1 study of balstilimab across multiple tumor-specific mentioned cohorts of heavily, and this is very important, heavily pretreated consumers, where we presented the data in colorectal cancer several months ago, at ESMO GI in Barcelona. The experts at that time scrutinized the heavily pretreated nature of these patients and it was the consensus that the data presented was unique in that. It was both in heavily pretreated patients as well as in cold colorectal tumors. Both of them, by the way, increase the odds of non-responsiveness and the fact that we have seen responses in that population is the impetus for enthusiasm by experts for balstilimab. So now these data will be presented at an oral plenary session on an expanded patient population whereas we presented the data in colorectal patients at ESMO GI SITC presentation will encompass expanded cancers. And it will be on November 12 at 10

Christine Klaskin: Thank you, Garo. We ended our third quarter 2022 with a cash, cash equivalents and short-term investment balance of $218.2 million, as compared to $238.3 million and $306.9 million on June 30, 2022 and December 31, 2021 respectively. Cash used in operations was $32.2 million for the quarter ended September 30, 2022 and $128 million for the nine months then ended. We recognized revenue of $22.8 million and incurred a net loss of $56.7 million or $0.19 per share for the third quarter ended September 30, 2022. For the nine months ended September 30, 2022, we recognized revenue of $69.6 million and incurred a net loss of $156.6 million or $0.54 per share. Non cash operating expenses for the third quarter and nine months ended September 30, 2022 were $22.2 million and $62.8 million respectively. I'll now turn the call back to Garo.

Dr. Garo Armen: Thank you very much, Christine. In closing, I just want to reiterate three things. One is the fact that, we have an important pipeline of agents, a very important pipeline of agents that allows us to be able to assemble the right combinations at our own terms. And this is very important, not because only the fact that these pipeline of agents have very unique attributes that allow us to expand our horizons beyond just, let's say, a segment of cultures like potentially to earlier stage disease as well as hard tumors. So, it's a very exciting pipeline, and we're very, very heartened by some of the data that we will be disclosing in the first half of next year that highlights the important attributes of our pipeline. Now, secondly, I should also say that there are questions, for example, about our ability and our efforts to finance our pipeline because as we have a robust pipeline and it takes resources to advance this pipeline. And let me make a couple comments and some historical reflections on how we have done this in the past and how we will continue to do it? For example, if you look at the past 10 years, we have funded our operations largely from two sources. One, the largest source cash received from partners and royalty financing transactions in combination partnership and royalty financing transactions have netted us over $900 million over these last 10 years. In addition to that, we have also done equity offerings primarily through our ATMs. And ATMs are an important instrument for us because they allow us to manage our cash balances quarter to quarter, year to year to make sure that cash balances do not drop below a certain level based on our anticipated uses of cash, it is very important. And this flexibility has allowed us to be able to finance our needs until the next large infusion of cash, which typically is through anticipated partnerships. So with that, I think I will conclude my remarks and we will of course disclose much more data that hopefully will shed light into our excitement during our weekend activities, both at the SITC plenary session, SITC poster sessions, as well as at our Road Taken event on Saturday from 2 to 5. Thank you very much for your time, and I will be open to questions from the audience

Operator: [Operator Instructions] David Dye with SNBC. Your line is open.

David Dye: Thanks for taking my question. And congrats on the progress especially on the balstilimab update on SITC. So first question just around the SITC update for balstilimab and we saw at the SITC abstract earlier this morning that the cutoff is in April. So, I'm wondering if you can share any kind of color on the increment updates we'll be expecting from the update at the SITC?

Dr. Garo Armen: So, a couple of comments on this end and I will turn it over to Dr. O'Day to answer the rest of it. But as you know, we provided results from our colorectal cancer trial with botensilimab plus balstilimab at ESMO GI at the end of June. Now since then, we have additional patients from CRC that will be presented also SITC. I cannot disclose exactly how many patients, but there'll be a meaningful addition to the denominator that was disclosed at ESMO GI at the end of June. In addition to that, we will be presenting several other indications with data that is mature and data that has been cleaned up. Both are very important requirements, so it has to be matured and cleaned up. And we are reserving, of course, additional patient data to be presented at major conferences in the very early part of next year as well. So Steven, would you like to add to that?

Dr. Steven O'Day: Yes. Good morning. Dr. Steven O'Day, the Chief Medical Officer at Agenus. I mean, Garo summarized it well. Obviously, the SITC abstract went in months ago with a cutoff of April. As you can imagine, this is a large Phase 1 trial that's rapidly accruing expansion cohorts, and we look forward to updating the data with the oral plenary session on Saturday, which will be a more mature update of data cut and expansion of these cohorts, so looking forward to sharing that this week.

David Dye: That's really helpful. And then just want to follow up on the SITC abstract, we saw some data from the ovarian cancer, especially from the platinum-resistant ovarian cancer where we saw 28% ORR. This to me seems to be quite impressive because historical response for PD-1 in platinum-resistant ovarian cancer is around 10%. And so, I'm just wondering, can you share with us your thoughts around potentially moving into the platinum-resistant ovarian cancer, as another indication. Any thoughts around that would be helpful?

Dr. Garo Armen: Sure. Other than the fact that we have to be careful about disclosing specifics before the actual plenary session, Steven, can you provide additional color on specifically ovarian cancer in the comment about 10% being the response rates PD-1?

Dr. Steven O'Day: Yes. I think all of the subgroups of patients that we're expanding and getting data on are in very difficult to treat settings in which they are, what we call cold tumors or already exposed to PD-1 based therapies and refractory. So certainly, a refractory platinum-resistant exposed ovarian population has been a weak sort of immune opportunity in terms of PD-1 monotherapy, as you've indicated. So, we we're obviously excited about this as well as other diseases that are showing this kind of promise with response rates that appear higher than -- substantially higher than what you would expect with PD-1 monotherapy. And we look forward, again, to updating this cohort and others on the plenary session on Saturday.

David Dye: Got it. That's really helpful. And then just one last question on the 1571 the ILT2 antagonist program. Maybe I missed it earlier, Garo, when you mentioned the kind of incremental updates from that program. Can you share with us when should we be expecting to hear from you on the data front from that program?

Dr. Garo Armen: So, let me ask than Chand, who is also here to give you a very brief rationale based on extensive pre-clinical data as well as the data from a similar family of compounds that we discovered in licensed to Merck, and that clinical data and perhaps you can draw some inferences then if Steven has anything else to add.

Dhan Chand: Yes. Thank you, Garo. So, AGEN1571, which is our ILT2 antagonist antibody designed to alleviate the suppressive, the myeloid suppressive function to microenvironment in addition to enhancing the lymphoid activity as well. We discovered that patients that do not respond to PD-1 or CTLA-4 not only have enrichment of myeloid cells, but also these myeloid cells express high levels of ILT2. And as such, we develop an antibody to block ILT2 inhibitory function in the two microenvironments. You would have seen from our disclosures earlier this year that, AGEN1571 demonstrates not only monotherapy potential, but also best-in-class activity compared to competing ILT2 antibodies. More importantly, we show synergy with botensilimab in preclinical models highlighting the importance of combining AGEN1571 with other agents in their portfolio. With respect to other family members, you would have seen data from Merck on our ILT4 antagonist that we licensed to them, demonstrating compelling activity in patients that did not respond or progress on pembro again consistent with the discoveries that we made that this family is important in extending therapy to patients that don't respond to conventional checkpoint therapy. This molecule is progressing, 1571 is progressing in the clinic quite rapidly. Let Steven provide you to an update on when you can expect data readouts.

Dr. Steven O'Day: Yes. as Garo said and as Dhan said, the myeloid compartment is becoming more and more important from an immuno-biologic point of view and our ILT4 that Merck has is obviously moving forward successfully in a Phase 2 program. We're particularly excited about ILT2 for the reasons Dhan described. It's in -- first in human studies which are going well. Obviously, we can't predict when data might be available, but certainly, the studies are accruing and moving forward, and we could have as early as the end of next year data to share with the world. But certainly, we will have just monitor the data and continue to progress these trials.

Operator: [Chi Wei] with Jefferies. Your line is open.

Unidentified Analyst: Hi. This is [Chi Wei] at Jefferies for Kelly Shi. Congrats on the balstilimab data. I just have two quick questions. So number one, for the response rates disclosed in the SITC abstract, so may I ask how many are confirmed and unconfirmed responses for each tumor type? And also, there are different doses of balstilimab used in this Phase 1 trial. So did you notice any dose dependent response from the Phase 1 data?

Dr. Garo Armen: So, the first question about confirmed versus unconfirmed, we only present confirmed responses at conferences. We do not do. We have additional unconfirmed data that is suggestible, for example, very strong disease control rate over a long period of time, but we don't register those as responses. They may in fact -- in a number of situations, these trending responses have translated to actual responses upon further scans. But in terms of the dose variances, Steven, would you like to address the fact that in the trial early on we had used lower doses and in fact that lower doses it seen some responses as well. But most of the data that you'll be seeing at SITC is at the equivalent of one make and two make.

Dr. Steven O'Day: Yes. I mean, as Garo said, the data is rapidly evolving in terms of confirmed and unconfirmed responses. Unconfirmed responses have in a rapidly evolving trial may just mean that they haven't had their subsequent follow up scans. So, I would be mindful of that. And we will obviously update data on Saturday with, our responses in terms of confirmed responses. In terms of doses, obviously, this trial is looking at a large number of doses initially, both monotherapy and combination. We are certainly concentrating in the combination expanded cohorts and with 1 and 2 milligrams every six weeks in combination with bowel. And we've certainly also centered on a dose range for botensilimab also as monotherapy. So, we're rapidly building databases with what we think are effective and safe doses, both for monotherapy and combinations. And I think the data speaks for itself in terms of the remarkable clinical activity in these very hard to treat cold or IO resistant solid tumors.

Operator: Matt Phipps with William Blair. Your line is open.

Matt Phipps: Hi, everybody. Thanks for taking my question. I am looking forward to event this weekend. In the CRC trial, I noticed the posting on -- came up and maybe you can just remind us what percentage of patients you expect to be free of liver mets post chemo? And then, I know liver mets are historically more difficult to treat with immunotherapies broadly. Anything in your pipeline that you guys think could target this patient population?

Dr. Garo Armen: Dr. Oday. Other than the fact that I just want to highlight, we are seeing responses in both liver mets and non-live mets, although the frequency of responses in non-live mets is higher. But further, also I'd like to draw your attention that treated liver mets. In other words tumors that were in the liver and ablated either with chemotherapy or other surgical needs, also respond to other well in our trial. But Steven, please.

Dr. Steven O'Day: Yes, Matt, it's a great question. Obviously, liver mets are a dominant feature of colorectal cancer, but there's a significant number of patients that have either never had liver mets because of the patterns of metastasis or have limited disease that is treated. And certainly, we've shown clinical benefit across all comers, including tumor reductions in active liver mets, marked reductions in tumor markers like CEA and prolonged stable disease. So, we think we have clinical benefit across metastatic colorectal cancer. Certainly, the active, the non-active liver mets meaning never had liver mets or had limited treated liver mets or an enriched population. That's going to be the focus of our Phase 2 trial as we furtherlook at dose and contribution. But we have every intention of looking at the all comers. In terms of -- in our pipeline, how do we address? Well number one clinicians both surgeons, radiation therapists and medical oncologists are -- can be much more active at treating the liver mets in conjunction with systemic therapies that are very active outside the liver. And this has been a limitation of the field. So that opens up considerably. And in terms of our pipeline, the myeloid compartment is a particular challenge to liver metastasis and in fact, myeloid cells defend the tumors very well. So, our ILT2 program, as Dhan just said, that's both a myeloid and a lymphoid checkpoint. We're particularly interested in combining that with our portfolio. And we do have plans in our Phase I ILT2 trial to add both balstilimab and botensilimab to our ILT2. So more to come, but we have every intentions of going after difficult to treat cancers in both liver and non-active liver mets with our portfolio.

Matt Phipps: Thanks, Dr. O'Day. One other question on that melanoma trial, can you give us any sense of kind of what it's designed to show any thresholds or bars, especially between the dosage arms and I mean, we've seen some data for Yervoy in a post PD-1 setting. But I guess, what would you even expect in a post PD-1 plus CTLA-4. Setting? Just I don’t know what you can provide there, Dr. O'Day?

Steven O'Day: Matt, what disease are we talking about?

Matt Phipps: In the melanoma trial that you guys opened the ACTIVATE [Multiple Speakers]?

Steven O'Day: Yes. So, that's a great question. So, we're obviously -- we've talked a lot about cold tumors or PD-1 resistant tumors. Melanoma is a good example of a hot tumor where we're going to be exploring a PD-1 resistant setting, second line both in PD-1 resistant, but CTLA-4 naive obviously and then PD-1 and CTLA-4 resistance setting. And we have reported responses in our monotherapy to both cohorts of patients previously. So, we're looking forward to that. In terms of what we'd expect, while the nice thing about a second line melanoma trial with monotherapy of botensilimab is, we have clear large databases of historic response rates. And ipilimumab is essentially a 10% to 15% response rate drug in the second line of PD-1 resistance, but CTLA-4 naive, so we have a very clear metric of showing differentiates of botensilimab in that setting. And in ipi/nivo failure second line, obviously, you'd expect a 0% response rate for a CTLA-4 agent. And obviously so we -- the bar is very low there to show differentiation, but as Garo said early on, we think of this as a CTLA-4 blocker, but as a really a novel, innate, adaptive activator on the backend through Fc-enhancement. What we're really doing is bringing these APCs to the T-cell to develop a more forceful potent priming and memory response. And so, we think this will be very active both in melanoma, hot like tumors, but also obviously in weak neo antigens where a more potent priming response is essential.

Operator: Mayank Mamtani with B. Riley Securities. Your line is open.

Mayank Mamtani: Good morning. Thanks for taking our questions and congrats on the progress. So Dr. O'Day, I'm digging into the SITC abstract here and also fortunate to compare it against the next generation CTLA-4 from one of your peer in [indiscernible] format. Can you talk to the importance of duration of response that you are seeing in your overall cohort? And the fact that you are seeing complete responses including with monotherapy, could you just touch on why that's important? And then I have a couple of follow ups.

Dr. Steven O'Day: Thank you, Mayank. It's a critical question. We're in the business of trying to cure patients with cancer. And CTLA-4 obviously I was part of the -- really the revolution with CTLA-4. It's primary sort of contribution in my mind where deep response is particularly evidence of CRs that are durable that lead to curative therapy. And so, we are very excited that our molecule both single agent and in combination is demonstrating single agent activity. I think the field is suffering tremendously from the lack of single agent activity as we look at other targets like three TIGIT and others. And so, I think IDOs, of course, were another example of that in melanoma that fell. So, we are excited to see single agent activity, but not just activity, but deep responses that are durable. They really do drive overall survival curves, and most importantly for patients meaningful clinical responses. Obviously, when we combine an active novel CTLA-4 with PD-1, not only you are driving priming and memory, but you are preventing exhaustion and our combination studies in cold tumors are particularly reassuring in that regard that we are continuing to see evolving deepening responses. So, it's critical to the field to demonstrate single agent activity that's meaningful and then use it as a combinational foundation.

Mayank Mamtani: Great. Thank you. And also would love to hear, how might you be making the decision to pursue pancreatic cancer, but maybe not yet refractory lung cancer and CRC where you do have these two responses? And I'm just curious, what the profile of these patients were, the two out of three response rate that we have, did they have higher CPI exposure and if it was both CTLA-4 and for another PD-1? And then I have one last question.

Dr. Steven O'Day: Yes, Mayank. What diseases are you speaking of?

Mayank Mamtani: I mean, you did say that you are moving forward with pancreatic, but we don't see that data in this abstract. But we do see -- what we do see is the lung cancer, the refractory lung cancer is -- yes.

Dr. Steven O'Day: So, I think to Garo's earlier points, we are framing and very focused on three very important foundational experiments with our Phase 2 programs. One is obviously single agent activity in melanoma with our reference second line that that will be differentiating and powerful. We are seeing obviously there is tremendous response and durability in [indiscernible] colorectal and we have a Phase 2 program. Pancreas, we haven't shared all of our data yet in the expanded Phase 1, but we have preclinical models showing really a very powerful chemo botensilimab data, and we have preliminary data in the clinic that's also supportive. So, that Phase 2 trial will be looking at botensilimab in a randomized Phase 2 trial with chemotherapy, so three separate experiments. But having said that, our development program is very thoughtful as going much deeper than those three programs, and so, you will see more data as we go forward in the next year and develop these plans and we will certainly reveal those. But we clearly have a lot of opportunity in big markets as that the data is showing us. So more to come on further development plans, but we do anticipate starting these trials this year and being very focused.

Mayank Mamtani: And my final question was, just remind us, what the comparator arm is in the ACTIVATE-Colorectal Phase 2 study? And any thoughts on how that may compare against there's a Phase 3 LAG-3 PD-1 combination study also running in MSS colorectal. So I'm just curious, if there are any design differences to be aware of?

Dr. Garo Armen: So, I'm not going to comment on differences between trials. Our trial is in the second, third line setting, obviously in patients who have failed chemotherapy and antibodies, and it will be compared -- there will be a standard of care arm, which in this case is long serve for regular afenib options as a standard second, third line therapy.

Operator: [Operator Instructions] We do have a follow up question from [Chi Wei] with Jefferies. Your line is open.

Unidentified Analyst: Just one additional question. Since you have seen a strong response in the NSCLC patients, could you comment on how many lung cancer patients have enrolled so far besides these three that you have disclosed?

Dr. Garo Armen: We're not commenting on any specific numbers of patients until the actual presentation.

Operator: I would now like to turn the call back over to our presenters for closing comments.

Dr. Garo Armen: Thank you very much everybody. Thanks again for joining us. We look forward to providing you with some more information in a few days. And please feel free to participate to our webcast. As I said earlier, in person attendance is closed at this time because of space constraints and the number of inquiries we've had. And but we look forward to our future interactions. Thanks again.

Operator: This concludes today's conference. We thank you for your participation. You may now disconnect.