Earnings Transcript for TCRR - Q1 Fiscal Year 2019

Operator: Good afternoon, ladies and gentlemen, and welcome to the TCR2' First Quarter 2019 Earnings Conference Call. As a reminder, this conference call maybe recorded. I would now like to introduce your host for today’s conference call Carl Mauch, Director of Investor Relations and Corporate Communications. Sir, you may begin.

Carl Mauch: Thank you, operator. Good afternoon and thank you for joining us on today’s call. After market close today, we issued a press release announcing our first quarter 2019 financial results, which is available in the Investor section of our website at www.tcr2.com. Today joining me on the call, we have Garry Menzel, our Chief Executive Officer; Ian Somaiya, our Chief Financial Officer; Alfonso Quintás, our Chief Medical Officer; and Robert Hofmeister, our Chief Scientific Officer. Before we begin our discussion, I would like to remind everyone that this call will include forward-looking statements including statements regarding the potential of therapeutic candidates and our development pipeline. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described in our SEC filings and our 10-Q filed after market close today. We undertake no obligation to update or revise the information provided on this call as a result of new information or future results or developments. With that, I'll now turn the call over to Garry.

Garry Menzel: Thank you, Carl, and good afternoon everyone. We appreciate you joining us today on our first ever quarterly conference call and I am delighted to report that the first quarter of 2019 was marked by continued progress in our quest to provide new effective treatment options for cancer patients suffering from a wide range of hematologic cancers and solid tumors. Most important, we crossed the threshold into the clinic with our first therapy TC-210. As you may know, we are pioneering the development of a novel T cell engineering platform, which we believe can address the shortcomings of both CAR-T and TCR T cell therapies. The key differentiating factor is that our proprietary TRuC T cells can harness the entire signaling complex that the natural T cell receptor independent of HLA expression. In preclinical studies, we have already observed greater antitumor activity, longer persistence and the less cytokine release and we believe that these properties could translate into more durable responses with potentially fewer adverse events for patients with cancer. Today, in 2019, our key achievements have been consistent with the timelines in our corporate plan. These include

Alfonso Quintás: Thanks, Garry. The first quarter of 2019 has been very important for us. In January, we received clearance from the FDA of our IND for TC-210, our lead drug against mesothelin. And in February, TC-210 was also granted orphan drug designation by the FDA for the treatment of mesothelioma. Currently, we have two high quality sites actively screening patients for Phase 1/2 clinical trial for TC-210. Our study will enroll patients with either cholangiocarcinoma mesothelioma ovarian cancer or non-small cell lung cancer over expressing mesothelin. The Phase 1 portion of this study will evaluate four escalating doses for TC-210. At each dose level, the first patient enrolled will receive TC-210 without lymphodepletion and then following a 28-day safety observation period the subsequent three patients will receive TC-210 at the same dose following lymphodepleting chemotherapy. Dose escalation will follow a standard three by three design. Upon infusion of the last patient in any given cohort there will be a 28 day safety observation period. The focus of our Phase 1 study is patient safety with the key objective to determine the recommended Phase 2 dose. Additionally, we will be conducting multiple translational studies to assess patients' tissues for key attributes of TC-210 TRuC-T cells such as expansion, trafficking, and persistence. Our translational studies will enable us to confirm inpatients unique characteristics of our TRuCs, which we observe in our pre-clinical studies. In the Phase 2 portion of the clinical trial we will plan to enroll approximately 50 patients who will receive TC-210 at the recommended Phase 2 dose in four distinct cohorts based on tumor histology. Each cohort will include 10 patients with the exception of the non-small cell lung cancer cohort, which will enroll 20 patients. Eight patients will receive TC-210 as a single agent and 12 patients will receive TC-210 in combination with a PD-1 blocking antibody. These will allow us to evaluate potential synergy of the two therapeutic modalities. We anticipate providing an update of the Phase 1/2 trial for TC-210 in the fourth quarter of 2019. Now to briefly touch upon are earlier stage programs. The Company held a pre-IND meeting with the FDA for TC-110 our lead TRuC-T cell candidate targeting CD19 positive hematological malignancies in the first quarter of 2019. Our focus for TC-110 continues to be on three specific areas, adult acute lymphoblastic leukemia, aggressive and indolent B cell lymphomas, all of which are indications for which CAR T-cells have either not yet being approved or have phase clinical limitations in terms of toxicity and or efficacy. We remain on track to submit an IND in the second half of 2019 for TC-110. With TC-220 our TRuC-T cell candidate targeting MUC16 positive tumors we are conducting IND enabling studies. We are attracted to MUC16 as a target because of its high expression in many solid tumors and low expression in normal tissues. We are currently pulling together our preclinical package and our goal is to file an IND for TC-220 in the first half of 2020. I'll now turn the call over to Ian for an update on the quarterly financial results.

Ian Somaiya: Thank you Alfonso. In today's press release, we reported our first quarter 2019 financial results. Following our initial public offering in February, I'm happy to report that we're in a strong financial position and are well capitalized to further advance our pipeline and enhance our platform. As of March 31, 2019 TCR2 had $192 million in cash, cash equivalents and investments compared to approximately $123 million as of December 31, 2018. This increase was due primarily to the $80 million in net proceeds from our initial public offering. Net cash used in operations was approximately $11 million for the first quarter compared to $3 million for the same period last year. For the first quarter of 2019 R&D expenses were approximately $8 million compared to $3 million for the same period last year. The increase was primarily due to activities related to the start of the Phase 1/2 clinical trial of TC-210 and increase in headcount. General and administrative expenses were $3 million for the first quarter compared to $1 million for the same period last year. The increase in G&A expenses was primarily due to an increase in personnel costs and costs of operating a public company. Our net loss for the first quarter of 2019 was $10 million compared to $4 million for the same period last year, driven primarily by our increased R&D expenses in the quarter. Now turning to financial guidance, we expect our full-year 2019 net cash expenditure to range from $45 million to $55 million and aim to end 2019 with a healthy $148 million to $158 million in cash and cash equivalents. With that operator, can you please open the lines for Q&A?

Operator: Thank you sir. [Operator Instructions] Our first question comes from Biren Amin from Jefferies. Please go ahead.

Biren Amin: Yes. Hi Guys. Thanks for taking my questions. Maybe, let me just start with the TC-210 program. I noticed that, back in February the CDRH deemed the IHC Assay to be significant risks but you amended the protocol where they then deemed it to be a non-significant risk. Can you just walk through how the protocol changed that allowed the CDRH to have better confidence in the assay?

Alfonso Quintás: Yes. Hi Biren, this is Alfonso, thanks for the question. So, you are correct. We received that letter from the FDA back in February, requesting that we submit an IDA request to them. Upon discussion with the FDA, what they really wanted to make sure is that in the design of the clinical protocol, we had specified that each one of the patients, for each one of the indications included in the study, had received all of the FDA approved agents prior to being enrolled on in the study. And more specifically, they wanted very specific and explicit language with regard to two specific patient populations. One is that patients with ovarian cancer in BRCA1 or BRCA2 mutations, they wanted to make sure that we had language describing that those patients should have failed prior PARP incubator therapy. And number two, for patients with non-small cell lung cancer, they wanted to make sure that if they had an EGFR mutation and they had received TKI inhibitor therapy and developed subsequently a T790M mutation, they wanted to make sure that they had received osimertinib prior to being enrolled or considered for our study. So those two were the main changes to the protocol, which was amended, and then resubmitted and added to the FDA upon which the FDA communicated to us that we need not submit an IDA application.

Garry Menzel: And Biren, it's Gary. Just to further emphasize, these were minor changes as you just heard and required literally two to three sentences in our resubmission.

Biren Amin: Got it. And then just on the Phase 1 dose finding aspect, I know you've got four different dose levels, but are you also investigating potential changes across lymphodepletion regimens? Is that – will that dose finding allow you to evaluate different regimens?

Garry Menzel: No, the way the protocols stand right now is such that we will evaluate escalating dose of TC-210. We're not contemplating right now exploring different combinations uplift for the 210 regimen or different doses of those agents.

Biren Amin: Great. And then maybe just at the end of the year you're expecting to present or publish some data. What could we expect, I guess, how many patients, how much follow-up will we get at that point?

Garry Menzel: Well, this point we won't be commenting on any specific patient numbers. What we can say is that the screening, enrollment and manufacturing are progressing well within – well without any unexpected delays. What I think is worth reminding is the design of the study to give an idea of what the pace of enrollment will be. And so again, we will have four different dose levels of TC-210 within each dose we will first treat one patient without lymphodepletion. Then we will wait 28 days looking for safety signals. If we don't appreciate any safety signals, meaning we don't find any dose limiting toxicity, then we will open a cohort of three patients that we receive the same dose of TC-210, but this time following lymphodepleting chemotherapy. And so what happens is after the first patient will have to wait another 28 days looking for safety signals. And if no safety signals, then we will enroll two patients simultaneously. And then we will dose escalate following the rules of a three plus three design. And then at the next dose level we will repeat the same exercise. And so those are going to be the mechanics of study in the Phase 1 portion. Just to give you an idea of how patients we're going to enroll in the study.

Biren Amin: Great. Thank you.

Garry Menzel: So Biren, I think, the second part of your question was what should you be expecting at the end of the year?

Biren Amin: Correct.

Garry Menzel: So in that particular case, if you think of the data that we are collecting and Alfonso or Robert can certainly expand on this. We're collecting three different types of data as we perform the studies that Alfonso just described. First and foremost, of course we're collecting safety data. Our hope would be that we would see that early. Ultimately, of course we want efficacy. It's possible we see that early, but we may require higher doses. The other bucket of data that we're collecting is what you might call correlated. So where we are looking here is to try and determine whether or not our TRuC-T cells perform in humans the same way that they perform in animals. So the data we're collecting that involves looking at TRuC-T cell expansion and persistence because that's certainly an important early indicator of fent. We're looking at TRuC-T cell tumor infiltration, we're looking at TRuC-T cell immuno phenotype, so it's activation, exhaustion, memory, TRuC-T cell functionality, so we're looking at cytokine production, and so forth. So this correlates of data will act as a proxy for the efficacy going forward. So at some point during the year we’ll provide an update when we see fit as to what data we are seeing. And it might not be in the form of a presentation as you described it or a conference because we're not sure with any of those line up, it may be in the form of a press release.

Biren Amin: Great, thank you.

Operator: Thank you. Our next question comes from Jonathan Chang from SVB Leerink. Please go ahead.

Jonathan Chang: Hi guys. Thanks for taking my questions. First question, can you talk about the cell doses being evaluated in the TC-210 study? And how are you thinking about the cell dose level needed to achieve activity in this study?

Garry Menzel: Yes, thank you. So we don't comment on specifically on the doses we’re going to use. What we can tell you is that the selection of the dose has been informed by very importantly, my prior experience with both CAR-Ts, not just in hematology but also in solid tumors as well as TCR-Ts. So we've designed dose escalation schema that is throttled the doses used in CAR-Ts and solid tumors as well as TCR-Ts to cover the wide gamut of cell doses explored in cell therapies and also informed by our preclinical models in animal models.

Jonathan Chang: Got it. Second question, with your collaboration with the Cell and Gene Therapy Catapult, can you talk about what your manufacturing capabilities are currently and how do you see that evolving over time?

Ian Somaiya: Sure. Jonathan, it’s Ian, I'll take that question. Through our collaborations with the CDMOs, we're able to meet the demands for Phase 1/2 trial for TC-210. As you'll note, we've taken occupancy of Catapult, which allows us to increase our capacity to treat upwards of 400 patients. And there's a unique aspect of our collaboration with Catapult, where we have an option on a second clean room, which will in effect allow us to treat patients and meet the needs for a potential Phase 3 study.

Jonathan Chang: Got it. Thanks. And just one last question, what are your overall thoughts on mesothelin as a target for your platform? I'm curious to get your updated thoughts post recent data in the field at AACR. Thanks.

Ian Somaiya: Yes, and without commenting on a specific data from other groups. I think the data we've seen at the AACR. On the one hand validates even further mesothelin, there's a significant body of work with a number of therapeutic modalities out there. But now having this robust CAR-T cell data further validates mesothelin and is telling us that targeted mesothelin is a good way of achieving clinical efficacy in patients with solid malignancies, but also I think it validates the field. It validates the field of adoptive T cell therapies in solid tumors. So overall, I think it's very positive that those data have come out and we’ll continue tracking data from other groups that will inform our own studies.

Garry Menzel: And maybe one other thing I could add, it also did highlight some of the limitations of CAR-Ts and the lack of persistency we’ve seen with CAR-Ts on their own and wherein the case of the AACR presentation, the combination arm was the one that produced the best results.

Jonathan Chang: Got it. Thank you.

Operator: Thank you. [Operator Instructions] Our next question comes from Do Kim from BMO Capital Markets. Please go ahead.

Do Kim: Good afternoon. Thanks for taking my questions. Just to follow up on that AACR data for mesothelin targeted CAR-T therapy. In your mind, does that potentially suggest that you should be adding anti-PD-1 to all the Phase 2 cohorts instead of lung cancer, I mean, instead of just lung cancer?

Garry Menzel: Well, not necessarily. In other words, yes and no. No, because I think what Memorial Sloan Kettering have done, which I think is the right thing to do is to follow their science. And they have published on their preclinical models that the efficacy that they achieve with local administration of the CAR-Ts. And especially in combination with PD-1 blocking agents is far superior to the IV administration of the CAR-Ts. And that's what they replicated in the clinical trial. We on the other hand after performing the run in the in vivo models, we haven't seen that difference. In other words, when we tweet locally and when we tweet IV, we see identical efficacy, which is why, again, following the science, we elected to pursue an IV administration of our TRuC-T cells. I should say that in addition to that, I think the adoptive T cell therapies are fundamentally IV therapies and if only one or two malignancies that will render themselves amenable to local administration of this T cell. So, as you can see in the design of our study, what we're going to do is we're going to give TC-210 IV. The consideration of local administration of TC-210 is one of the ideas that we are considering, but perhaps on a separate study and most likely in the context of an investigator initiated study. For the purpose of this Phase 1, Phase 2 study, we're going to focus on IV administration only.

Do Kim: I see. And you've also shown that in your preclinical studies that TRuC-T cells migrate toward the tumor a lot more quickly than CAR-Ts. Could you talk about how the full TCR plays in the homing toward the tumor.

Robert Hofmeister: Yes. Hello. This is Robert. Yes, indeed, we have shown in our preclinical models that TRuC-T cells compared to CARs migrates faster and accumulates faster there. And we attribute that to the full and broad signaling of the T cell receptor. So we do not only rely on one sub unit to say sub unit, but we are able to utilize the entire signaling complex. And with that entire signaling complex become a number of other attributes like for example, the upregulation of CXCR3 on the TRuC-T cells, which facilitates the migration into the tumors.

Do Kim: Great.

Garry Menzel: And then let me out on the question of the combination with PD-1. I think it's good to remind that in the Phase 2 portion of the study, we will have an arm specifically the non-small cell lung cancer arm, where we will combine TC-210 with a PD-1 blocking antibody. And of course, if the data that we see suggest synergies and you may see us expanding that paradigm to two other arms of the study.

Do Kim: Right. Thank you. And last question on TC-110. In your pre-IND meeting was there any new questions or concerns by the FDA compared to your interactions for TC-210? And since you've been through the process with 210, do you think that you'll be able to conduct a faster early stage program and potentially skip that without lymphodepletion part of the dosing?

Garry Menzel: Yes, you're exactly correct. So the conversation with the FDA for TC-110, basically revolves around the specific data that the agency want to see in the IND package. And on a clinical aspect of it, we focus the conversation on two aspects; one is the definition of the DLTs, which is something that we will very clearly and explicitly describe in the clinical trial. And secondly, the design of the dose escalation phase, which basically touch upon what you just ask on your question, the elimination without lean for the patient requirement. So you will see us progressing to that study much faster compared to the TC-210 program.

Do Kim: Great. Thank you for taking my question.

Operator: Thank you. I see no further questions in the queue at this time. This concludes our Q&A session and today's call. Thank you, ladies and gentlemen, for attendance. You may all disconnect.