CytomX Therapeutics, Inc. (NASDAQ:CTMX) Q3 2023 Earnings Call Transcript

CytomX Therapeutics, Inc. (NASDAQ:CTMX) Q3 2023 Earnings Call Transcript November 8, 2023

Operator: Good day and thank you for standing by. Welcome to the CytomX Therapeutics Third Quarter 2023 Financial Results. At this time, all participants are in a listen only-mode. After the speaker’s presentation there will be a question and answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Ogden, Senior Vice President, Finance and Accounting. Please go ahead.

Chris Ogden: Thank you. Good afternoon and thank you for joining us. Before we begin, I would like to remind everyone that during this call, we will be making forward-looking statements. 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. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise. Earlier this afternoon, we issued a press release that includes a summary of our third quarter 2023 financial results and highlights recent progress at CytomX.

We encourage everyone to read today’s press release in the associated materials, which have been filed with the SEC. Additionally, the press release, a recording of this call and our SEC filings can be found under the Investors and News section of our website. With me on the call today is Dr. Sean McCarthy, CytomX’s Chief Executive Officer and Chairman. Sean will provide introductory comments on entitlements his progress and key milestones before we cover our pipeline progress and financials for the third quarter. With that, I will now turn the call over Sean.

Sean McCarthy: Thanks, Chris and good afternoon, everyone. Thanks for joining us for an update on CytomX continued progress in 2023. At CytomX, we are highly focused on the discovery and development of novel cancer medicines, utilizing our Probody Therapeutic platform to localize potent biologic modalities into deceased tissue via conditional activation, increasing therapeutic index and offering new options for patients. Given the continued challenging external environment for biotech, I’d like to start with an overview of the strong fundamentals of CytomX today with three areas of particular focus, outlining why we believe we are very well positioned as we move towards 2024 and beyond. Firstly, our pipeline. CytomX is active across our pipeline in key areas of current oncology R&D.

Two of the biggest highlights recently at ESMO 2023 were new breakthroughs in the use of antibody drug conjugates and T-cell engagers. ADCs and T-cell engagers are poised to be therapeutic platforms with potential to transform the treatment of solid tumors. I am very pleased to say that for many years, CytomX has been building significant expertise across these important modalities and we currently have differentiated lead programs in both areas. Our pipeline has never been more relevant or had more potential. 2023 has been a year of intense focus and exceptional execution for CytomX that has set the stage for key value creating milestones in 2024 and 2025, starting with CX-904, our Probody T-cell engagers targeting EGFR and CD3. Coming out of ESMO last month, there is clear momentum and increasing clinical evidence that T-cell bispecifics can have a meaningful clinical impact in solid tumors.

However, a central challenge in this highly potent modality is that the majority of solid tumor targets are also expressed in normal cells limiting therapeutic window. CX-904 is designed to address this challenge for EGFR, which is one of the most highly validated and broadly expressed solid tumor targets. CX-904 has continued to advance through Phase 1 and we are in the process of starting to backfill certain cohorts as we continue dose escalation. We remain on track for initial data in the first half of 2024. Our first-in-class EpCAM targeting Probody ADC CX-2051 is on track for IND filing by the end of this year and Phase 1 initiation in 2024. CX-2051 is an excellent example of CytomX differentiated ability to pursue novel ADC targets. We are particularly excited about EpCAM given its high expression level across multiple tumors, including colorectal cancer and its prior clinical validation as a target for cancer therapy.

We presented the full preclinical profile of CX-2051 at World ADC in October and the presentation can be found on our website. We plan to execute on Phase 1a dose escalation through 2024 and data permitting to initiate Phase 1b expansion cohorts in 2025. We have also continued to advance our first Probody cytokine CX-801 towards the clinic. CX-801 is a masked version of Interferon Alpha-2b for which we see enormous potential as a novel centerpiece of cancer immunotherapy in the future. Last weekend, we presented updated preclinical data at SITC. This presentation is also available on the CytomX website. IND filing for this program is also anticipated by the end of the year. Continuing in the field of cancer immunotherapy, our partner BMS is advancing the masked, non-fucosylated CTLA-4 program, BMS-986288 in Phase 2, which includes proof-of-concept studies in microsatellite stable colorectal cancer and in non-small cell lung cancer.

BMS anticipates data will be available from this program in 2024. Taken together, our pipeline is deep, strong, relevant, and poised to drive value inflection in the near-term. The second area I’d like to highlight today is our partnerships. CytomX created the field of protease-based conditional activation more than a decade ago and our substantial and consistent investments in our platform technology have allowed us to attract many high quality partners. We currently have alliances with Moderna, Regeneron, Astellas, Amgen, and BMS that each bring value to CytomX in the form of technical validation, increasing the reach of our platform, I am providing non-diluted financing. Together with our partners, CytomX today has more than 15 active R&D programs.

In addition to upfront cash infusions from these partnerships and potential future product royalties, each partner program has the potential for near and long-term cash milestone payments. CytomX has a strong track record of earning milestones under our alliances, including most recently, a $5 million payment from Astellas for our first clinical candidate nominated in the collaboration. Thirdly, I would like to highlight our strong financial position. Chris will review shortly how we are continuing to manage the financial resources of the company in the context of the challenging external environment. Before handing over to Chris and continuing on the theme of fiscal discipline, I would like to provide a brief update on CX-2029, our Probody ADC targeting CD71.

We have been encouraged by the anti-tumor activity. We have observed with CX-2029 to-date. However, based on current priorities, we will not be directing significant additional investment in this program in the near-term. Now, let me turn the call over to Chris, who will walk you through our financials.

Chris Ogden: Thank you, Sean. I am pleased to be able to share an update on our third quarter 2023 financial results with everyone today. As of September 30, 2023, we had $194 million in cash, cash equivalents and investments, which includes $30 million received in July, as a result of a successful and strategic private placement financing with BVF partners. Overall cash burn in the third quarter was $16.8 million, comparing to $33.9 million in the equivalent period of 2022. The reduction in cash burn for the same period in 2022 reflects our continued focus on discipline capital allocation, and cash management as well as increased R&D reimbursement under our collaborations. I’d also note that our cash balance of $194 million for the third quarter of this year is flat to the third quarter of 2022, which also highlights the company’s ability to balance costs prioritization, business development, milestones, and equity financing to maintain a strong financial position in a very challenging biotech environment.

This balanced capital formation and allocation strategy has remained consistent over time and aligns well with our focus to build near and long-term stakeholder value. In terms of cash runway, we expect our current cash resources to fund operations into the second half of 2025. This guidance does not assume any additional milestones from partnerships or any additional progress in new business development. Now moving to revenue and operating expenses for the quarter. For the third quarter of 2023, revenue was $26.4 million, compared to $11.1 million for the corresponding period in 2022. Operating expense for Q3 2023 was $23.3 million. R&D expenses decreased $14 million from the corresponding period of 2022 to $16.4 million during the 3 months ended September 30, 2023.

General and administrative expenses decreased by $3.7 million during the 3 months ended September 30, 2023 to $6.8 million, compared to $10.5 million for the corresponding period in 2022. So you can see from these operating expense numbers, how we have continued to thoughtfully manage the company. Now, I’ll turn the call back to Sean for closing remarks.

Sean McCarthy: Thanks, Chris. And thanks to everyone for your time this afternoon and for your interest in CytomX. Looking ahead to 2024 and 2025 CytomX is very well positioned. This is an exciting time for us, and we remain highly focused on delivering in our pipeline. Our current pipeline encompasses highly relevant and diversified modalities, including T-cell engages, ADCs, and cytokines that each have their own unique contribution to make to the treatment of cancer. Let me briefly recap our key priorities and milestones for the remainder of 2023 and through 2024. CX-904 continues in Phase 1 dose escalation, initial Phase 1a data is anticipated in the first half of 2024 with the potential for a decision to initiate Phase 1b next year.

2051 – CX-2051 IND filing is on track for this year. We anticipate Phase 1 dose escalation in solid tumors with known outcome expression to commence in 2024 with metastatic colorectal cancer as a priority indication. Similarly, CX-801 remains on track for IND filing by the end of 2023 with clinical initiation in 2024. Also in 2024, we expect BMS to make continued clinical progress with the anti-CTLA-4 Probody, including proof of concept studies in MSS-CRC and non-small cell lung cancer, with data anticipated to be available in 2024. We also anticipate considerable progress across all of our collaborations as we continue drug discovery activities with Moderna, Regeneron, Astellas, Amgen, and BMS. I’ll close by thanking our exceptional team members who remain highly focused on making the biggest difference in the treatment of cancer.

This is an exciting moment for CytomX. And we anticipate multiple inflection points over the next 12 to 18 months, as we continue our work in such important and relevant areas of oncology R&D. With that operator, let’s go ahead and open up the call for Q&A.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question will come from the line of Roger Song with Jefferies. Your line is open.

Roger Song: Great. Thanks for the update and taking our questions. So maybe, let’s focus on the now for as the near-term pipeline. So maybe Sean, you can let us know. What is the expectation for upcoming data in first half next year, particularly, maybe any thoughts around the number of patient tumor types you will be able to share with us? And the second part is what will be the key consideration to move into the expansion cohort. My understanding is that decision will may – will be made later part of ‘24 with more follow-up maybe another data update. Yes, that’s the key question I have right now. Thank you.

Sean McCarthy: Right, yes. Hi, Roger. Thanks for the question. So to take a little step back on 904, let’s just recap our major objectives with the program. So as I mentioned, as we’re coming towards the end of 2023, we are now beginning to backfill certain cohorts in the dose escalation. The dose escalation is essentially being conducted in an EGFR, all comer setting, so we’re enrolling patients who are expected to have EGFR expression, we’re not actively selecting for EGFR expression, but their tumor types are expected to be EGFR positive. And this is Phase 1a right and as we saw ESMO, just a couple of weeks ago, Phase 1a early dose escalation and dose exploration for T-cell engagers needs to be done thoughtfully, needs to be done methodically, with the principal objective of evaluating safety.

And those things schedules for these potent agents. And so that’s what we’re doing. And our goal. As I said, next year will be to analyze the Phase 1a data with our partner Amgen, and in collaboration with Amgen, make a decision on the go forward plan for Phase 1b. And of course, a go forward to Phase 1b would involve expansions into select EGFR positive tumor types, to really gain additional experience with the drug candidate. So, we’re on track with the goals, we are on track with our guidance of initial data from Phase 1a, in the first half of next year. And not ready at this stage to talk about number of patients or specific tumor types. That will be a little premature, but we are on track and making good progress.

Roger Song: Thank you. Maybe just a quick clarification, when we see the initial data in that data set, you will make the expansion cohort decision or you will wait for later to make that decision. Thank you, Sean.

Sean McCarthy: Yes, that’s a great question. It’s a little hard to say at this point, I guess, as we’re in the throes of this study, again, pointing back to the very important updates that we saw from several companies ESMO in this modality. The early Phase 1a exploration of doses and schedules, can take some time to get that to a place that you’re ready to move into Phase 1b, and of course, increasingly, we’re expecting, we’re seeing that Phase 1b involves more than one dose, more than one dose and schedule per project optimist. I think the Amgen data for tarlatamab I think illustrated that very, very clearly and very, very nicely. So I think the short answer is will see. We will continue to collect data to make the best decision we can as we look to transition from Phase 1a to Phase 1b next year.

Roger Song: Excellent. Thank you, Sean.

Operator: Thank you. [Operator Instructions] And our next question comes from the line of Jade Montgomery from H.C. Wainwright. Your line is open.

Jade Montgomery: Hi, this Jade Montgomery from H.C. Wainwright for Mitchell Kapoor. So, when it comes to CX-801, is there any particular tumor type there that this particular interest like with CX-2051, you mentioned? That was the primary interest in the one type of tumor, the one for CX-801?