Immunocore Holdings plc (NASDAQ:IMCR) Q2 2025 Earnings Call Transcript

Immunocore Holdings plc (NASDAQ:IMCR) Q2 2025 Earnings Call Transcript August 9, 2025

Operator: Greetings, and welcome to the Immunocore conference call and webcast. [Operator Instructions] As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to Clayton Robertson, Investor Relations. Please go ahead, sir.

Clayton Robertson: Good morning and good afternoon. Thank you for joining us on our Q2 and first half 2025 earnings call. During today’s call, we will make some forward-looking statements, which are qualified by our safe harbor provision under the Private Securities Litigation Reform Act of 1995. Please note that actual results can vary materially from those indicated by these forward-looking statements, including those discussed in our filings with the SEC. On today’s call, I’m joined by Bahija Jallal, CEO of Immunocore. Ralph Torbay, Head of Commercial, will review our KIMMTRAK sales for the second quarter and first half of 2025 and discuss our life cycle management plans for KIMMTRAK. David Berman, our Head of R&D, will provide key updates from our 3 Phase III clinical trials. Travis Coy, our CFO and Head of Corporate Development, will also provide some key highlights from our financial results reported earlier this morning. Bahija?

Bahija Jallal: Thank you, Clay. Good morning, and good afternoon, everyone. Thank you for joining the call today. We are pleased to report that 2025 is off to a strong start, reflected in our robust half year financial results and the progress of our diversified pipeline as we continue to deliver on our mission. Our strategy is anchored on 3 core pillars: maximizing the value of KIMMTRAK, advancing the clinical portfolio, and innovating for sustainable growth. For the first half of 2025, we generated $192 million in KIMMTRAK revenue, representing 32% growth year-over-year, an impressive milestone 4 years post-launch. These results underscore the real-world impact of our therapies and the trust that patients, health care professionals and partners place in our science.

Expanding global access to KIMMTRAK remains our top priority. At the same time, we are executing with discipline and urgency across 3 Phase III melanoma trials, spanning adjuvants, first-line and late- stage setting. Beyond KIMMTRAK, we are progressing multiple early-stage programs in oncology and infectious diseases. We remain on track to file the CTA for our autoimmune candidates in type 1 diabetes by year-end 2025, and anticipate starting the Phase I trial in 2026. We also expect the CTA for our second autoimmune program next year. Our pipeline is built on rigorous transformational science, always focused on addressing significant unmet medical needs. We recognize the urgency for patients and are committed to advancing our programs thoughtfully and efficiently.

Finally, our strong balance sheet enables us to invest in innovating while maintaining financial discipline. This approach ensures we are well positioned to deliver long-term value for our shareholders. So now the team will walk you through the details of the quarter, and I’ll turn it over to Ralph. Ralph?

Ralph Torbay:

EVP of Commercial: Thank you, Bahija. Hello, everyone. I am delighted to share our continued momentum in bringing KIMMTRAK to patients worldwide. We have now launched in 28 countries and are approved in 39 globally, representing exceptional progress in our mission to reach more patients with this transformational medicine. I’m proud that shortly after a very successful launch in the United Kingdom, KIMMTRAK received its fourth Prix Galien this time for Best Biotech Product. To support our growth and our mission to reach more patients globally, we have expanded our distribution of KIMMTRAK into Turkey and MENA regions through a partnership with Er-Kim. Now let me take you through our strong commercial performance in the next slide.

We delivered $192 million in net sales for the first half of 2025, representing a 32% year-on-year growth. This exceptional performance demonstrates the continued strength of KIMMTRAK across all our markets. In Q2 specifically, we achieved $98 million in net sales, marking our 13th quarter of consecutive growth, a testament to our team’s dedication and KIMMTRAK’s transformational impact. In the United States, we delivered $64 million in net revenue during the second quarter, representing a 15% increase compared to Q2 ’24. We continue to see strong duration of therapy at 13 months with a growing market penetration now around 68%. I am pleased that 70% of prescriptions in the United States now come from the community, highlighting the broad acceptance and confidence physicians have in KIMMTRAK.

As we enter our fourth year of launch, we continue to expect modest but meaningful growth in this well-established market. In Europe, we delivered $33 million in Q2 net revenue, representing an exceptional 115% year-on-year quarterly growth. While we are very pleased and well-penetrated across most major European markets, this growth was driven by successful launches in the U.K., Poland and Netherlands, continued growth in mature markets like Germany as well as strong market access achievements. Going forward, we expect to see incremental growth coming from Europe as these launches reach maturity. Looking ahead, KIMMTRAK is well positioned for long-term growth with 2 Phase III clinical trial programs ongoing. Starting with TEBE-AM in cutaneous melanoma, which is on track to complete enrollment within the next 12 months.

As we prepare for the potential expansion of KIMMTRAK, we are well positioned with around half of cutaneous melanoma treaters already experienced with KIMMTRAK due to the overlap with uveal melanoma. Providing positive data, this experience, coupled with a robust Phase III study design and OS endpoint, will give KIMMTRAK a very strong value proposition in the setting of high unmet need. Second, we have the ATOM study, the only registrational Phase III trial in the adjuvant uveal melanoma setting, where there is currently no standard of care. Together, these could bring the benefit of KIMMTRAK to up to 6,000 patients across U.S. and Europe. I’m confident in our team’s ability to execute on this vision and continue delivering exceptional long-term growth.

With that, I would like to hand over to David to discuss these trials in more depth, our clinical progress and pipeline developments.

David Berman: Executive Vice President of Research & Development Thank you, Ralph. I am pleased to share an update on our clinical portfolio. We have a truly unique and broad clinical pipeline, 3 Phase III trials in oncology with line of sight to completing TEBE-AM. We look forward to new insights maturing over the next 12 months in our earlier-stage oncology and infectious disease clinical programs. And in 2026, we will see the first clinical experience for our platform in autoimmunity. I will now highlight the 3 registrational trials, starting with TEBE-AM. TEBE-AM is a Phase III randomized trial in melanoma patients who have progressed on checkpoints and targeted therapy. Patients are randomized to KIMMTRAK alone, KIMMTRAK plus pembrolizumab and to a control arm, the primary endpoint being overall survival.

This study is enrolling well globally and we project to complete enrollment in the first half of ’26. In first-line cutaneous melanoma, patients receive either an anti-PD-1 with or without additional checkpoints or BRAF-targeted therapy. In second-line cutaneous melanoma, patients can switch between these classes of therapy where appropriate. After this, however, there remains the large unmet need. Chemotherapy, retreatment with the same therapies and clinical trials are frequently a primary option. The only new therapy in this setting are TILs, and no therapy in this setting has yet demonstrated an overall survival benefit, which is the gold standard. This is where we believe the opportunity for KIMMTRAK lies. TILs are approved under accelerated approval and only based on response rate.

Other options are commonly used but are not considered as having proven benefit. If TEBE-AM is positive, then KIMMTRAK would be the first new therapy with overall survival benefit in second-line melanoma. In addition, KIMMTRAK will provide an off-the-shelf therapy that is easy to administer and familiar to melanoma doctors. There’s also another unique factor for KIMMTRAK, the safety profile. Having treated over 1,000 patients with KIMMTRAK, we have established a very clear AE profile that is unique in melanoma. The most frequent treatment-related AEs are mechanism-based, cytokine release syndrome and rash. They are transient and reversible. They occur early in the first few weeks with no cumulative or novel treatment-related AEs after month 1, and we expect KIMMTRAK to have a similar profile in cutaneous melanoma.

ATOM is the only ongoing Phase III in adjuvant UM. High-risk adjuvant UM patients are randomized to KIMMTRAK for observation, the primary endpoints being relapse-free survival. The study, which is sponsored by EORTC is activated in multiple European countries and EORTC expects to start in the U.S. this fall. ATOM is currently in the initial stages of site activation and patient accrual. I will now turn to the third Phase III trial, PRISM-MEL. PRISM-MEL is randomizing first-line cutaneous melanoma patients to brenetafusp plus nivolumab versus either nivolumab monotherapy or Opdualag. The primary endpoint is progression-free survival. We have successfully activated 150 sites globally. In a preplanned analysis conducted earlier this year, the IDMC reviewed only the safety of the first 30 patients randomized and advised us to continue with no changes to the study.

The next step is for the IDMC to select the go-forward dose from the ongoing Phase III study, and I will now give you some context to this. In the Phase I trial, we observed that both 40 and 160 micrograms had similar clinical activity and both were well tolerated. However, this was from a non-randomized Phase I. Therefore, in discussion with the FDA and as per Project Optimus, we agreed to compare these 2 doses in a randomized fashion within the ongoing Phase III study. After the first 90 patients are randomized, the IDMC will review safety and RECIST efficacy endpoints such as response rate and disease control rate. The decision on the go-forward dose will be based on a benefit-risk analysis by the IDMC. The IDMC will not review or compare the efficacy from the control arm.

Finally, I will turn to the early to mid-stage clinical pipeline. As we anticipate significant clinical progress over the next 12 months. In addition to the PRISM-MEL trial in cutaneous melanoma, our PRAME program includes brenetafusp combinations in ovarian and lung as well as the Phase I dose escalation of PRAME half-life extension. Over the next 12 months, we plan to complete this exploration of PRAME to inform next steps. For PIWIL in colorectal cancer, we expect to complete monotherapy dose escalation and initiate combinations in earlier lines of therapy. For HIV, we plan to complete dose escalation, including evaluation of HIV viral control and also we plan to initiate an expansion. The final data for the single-dose escalation of HBV will be presented in a few months at AASLD.

Finally, we expect to start dosing the type 1 diabetes program, our first autoimmune indication. And we plan to submit the CTA for our second autoimmune program for CD1a in atopic dermatitis. We are in a unique position for a biotech of our size. We have a commercial product and have invested in 2 life cycle management Phase III registrational trials, including 1 in the adjuvant setting. And we have a third Phase III registrational trial in first-line cutaneous melanoma for brenetafusp. Randomized trials take longer to recruit and to read out. But once we have the data, it is definitive. We believe we have line of sight to the first of these Phase III trials, TEBE-AM. For our earlier-stage programs, 2026 will be an important year to inform the next steps for PRAME and PIWIL as well as for our HIV and HBV programs.

Finally, the next 12 months will bring our first clinical experience in autoimmunity. We believe that this will be the first clinical test ever of a purely PD-1 agonist and one that is tissue-targeted. This is a robust pipeline and I have confidence that our R&D teams will continue to hit our operational milestones. I will now hand over to Travis.

Travis A. Coy: Thank you, David. Good morning, and good afternoon, everyone. Earlier today, we released our financial results for the second quarter and 6 months ended June 30, 2025. Please refer to the press release and our latest SEC filing on Form 10-Q for our full financial results. Let me share some of our key financial highlights for the quarter and touch on expectations for the remainder of 2025. We are pleased to report strong performance for KIMMTRAK with Q2 net sales reaching $98 million. This represents a 4% sequential increase over Q1 sales and a 30% increase over Q2 of last year and was driven by volume growth in both the U.S. and Europe. Recently, quarterly revenue from KIMMTRAK has grown sequentially in the range of 4% to 7%.

Moving forward, we expect KIMMTRAK to continue growing, albeit more modestly, given that we are in our fourth year on the market. One other revenue-related item to note is that throughout 2024, we booked revenue reserves due to ongoing pricing negotiations in Europe, most notably in France and Germany. The success of those price negotiations in Q1 of this year now results in favorable year-on-year comparisons for Europe. As we think about future performance for Europe and the international regions, we expect incremental growth to come from additional launches. While we continue to advance our portfolio, we saw an increase in our operating expenses this quarter. The growth in R&D spending was primarily driven by ongoing investments in our 3 Phase III trials as well as advancement of our early-stage research programs as we progress towards initiation of clinical studies.

Consistent with what we said at the beginning of this year, we expect our R&D expenses to increase versus last year as we make data-driven investments in our pipeline. Our SG&A expenses versus last year have increased slightly, primarily due to an increase in general business functions needed to support our growing operations. We will continue to be disciplined with our SG&A investments. We have averaged $42 million per quarter for the last 3 quarters and expect those investments to be mostly flat for the remainder of 2025 while allowing for typical quarterly variability. Through the first half of this year versus the same period last year, we are pleased to have our net loss decrease from $36 million to $5 million as revenue has grown more than our operating expenses.

As of the end of June, we have a strong balance sheet with $883 million in cash and marketable securities. In the second half of 2025, we expect to pay approximately $65 million related to European rebate accruals from prior periods. With a robust foundation built upon strong revenue from KIMMTRAK, expense discipline and data-driven strategic investments, we are advancing our portfolio to deliver transformative medicines across all 3 of our therapeutic areas while continuing to expand our reach to patients globally. I’ll now turn the call back to Bahija.

Bahija Jallal: Thank you, Travis. With our solid first half year results, we remain focused on delivering continued progress with the life cycle management plans for KIMMTRAK as well as enrolling patients across the multiple ongoing clinical trials from Phase I to Phase III in oncology and infectious diseases. I’m really excited by the expansion of our diversified pipeline into autoimmune as we plan the CTA for our type 1 diabetes candidate before the end of 2025 and starting clinical trials in the first half of 2026. So there’s a lot to come over the next year. I want to thank our shareholders, our partners and, most importantly, the patients and families who inspire us every day. In addition, none of this progress would have been possible without the dedication and expertise of our employees.

Their commitment and passion drive our mission forward and are fundamental to our continued success. Together, we are making a difference and I am confident that 2025 will be another year of meaningful progress. So thank you for your continued support, and the team and I will be happy to take your questions.

Q&A Session

Operator: [Operator Instructions] Our first question today is coming from Gil Blum from Needham & Company.

Gil Joseph Blum: Congrats on the advancement in this quarter. Maybe a quick question for David as it relates to the design of the study. So we’re removing one of the doses. What happens to the patients whose dose is being discontinued? Are they crossing over? Or how will this be analyzed in the larger statistical analysis? Just remind us.

David Berman: Executive Vice President of Research & Development Thank you for the question. The patients who are in the not go-forward dose, the dose that’s dropped, they will continue on that dose, although the IDMC may also recommend that they switch to the go-forward dose. They will not be included in the ITT analysis.

Gil Joseph Blum: Okay, very helpful. And a question for you, Travis. Clearly, growth is continuing unabated and margins are looking pretty good. Should we start thinking about a breakeven point?

Travis A. Coy: Yes. Thanks, Gil. I think it’s a bit too early to be thinking about profitability. We continue to invest in our 3 Phase III trials as well as the remainder of the portfolio so we do expect our R&D expenses to increase. I think we continue to be pleased with the growth from KIMMTRAK, but we do expect that growth to moderate on a sequential basis moving forward, given that we are on the fourth year of market.

Operator: Our next question today is coming from Eric Schmidt from Cantor Fitzgerald.

Eric Thomas Schmidt: Can you hear me?

Operator: Yes, please proceed.

Eric Thomas Schmidt: Another question for David, this one on TEBE-AM, possible changing goalposts at the FDA with regard to oncology drug approvals. With regard to TEBE-AM, if you hit on the pembro combination arm but miss on the monotherapy arm, do you have enough evidence to support KIMMTRAK’s contribution to the effect?

David Berman: Executive Vice President of Research & Development Eric, thank you for that good question. So in that setting, I think there’s 2 arguments. One is the scientific argument that we designed the eligibility such that the patients are unlikely to respond to PD-1 or shouldn’t respond to PD-1. But the second is that we know from real-world analysis of patients who have the eligibility for our trial, that a significant proportion actually do get retreatment with anti-PD-1 even though it’s believed to be ineffective. So if our control arm reflects that real-world evidence, we do believe we’ll have sufficient anti-PD-1 monotherapy in our control arm to provide the contribution of compliance.

Eric Thomas Schmidt: Okay. And then a quick one for Travis. Can you quantify what the impact in Europe is from the previously deferred revenue component?

Travis A. Coy: Yes. As I mentioned, those pricing negotiations that we were completing in the first quarter of this year. We were booking revenue reserves last year. The total of those revenue reserves was about $18 million, roughly spread — roughly, roughly spread evenly [ each ] quarter last year. So that gives you some quantification how you can think about it.

Operator: Your next question today is coming from Tyler Van Buren from TD Cowen.

Tyler Martin Van Buren: Can you talk about where you think the average duration of therapy for KIMMTRAK will settle out at? Are we about there at 13 months? Or do you think we could add another month or potentially more than that? And then just the second question is, I think Eric alluded to this, but given the recent Replimune CRL, are you seeing a change in stance at the FDA based upon your interactions? Or do you think there’s any read-through to your ongoing programs?

Bahija Jallal: Great. I think Ralph will start and then David.

Ralph Torbay:

EVP of Commercial: Sure. Thank you, Tyler. So look, we’re very happy with what we’re seeing from a duration of therapy perspective because obviously, that means that patients are doing very well. In terms of where it’s going to go, it’s actually — this is my first experience with the medicine having a better real-world duration of therapy than in clinical trials, which — so it’s hard for me to give you exactly where this is going to go. That being said, we’re in our fourth year of launch so we do expect this to be significantly moderating and currently is at 13 months.

David Berman: Executive Vice President of Research & Development I think, Tyler, with respect to your second question, we haven’t seen any changes yet. And maybe the other thing just to mention is that the review division that reviews KIMMTRAK and [ tebentafusp ] is the melanoma solid oncology group. And so we have been getting insight from them before we started the trial and during the trial. Our Phase III trials are well designed. TEBE-AM uses a survival endpoint. It’s randomized with the homogenous population. And as I said to Eric, I believe we’ll have enough anti-PD-1 in the control arm to provide contribution of components. The PRISM-MEL first- line Phase III also well-designed randomized trial also with input from the FDA.

Operator: The next question is coming from Jessica Fye from JPMorgan.

Adam Ferrari: This is Adam on for Jess. Two for you. Can you share some details as to what drove the growth in the U.S. and will this trend continue? And my second one is, can you update us on the time line of the Phase III ATOM trial? When could we see data?

Bahija Jallal: Sure. Ralph, do you want to start? And Mohammed, do you want to…

Ralph Torbay:

EVP of Commercial: Sure. So Adam, again, really pleased with the growth that we’ve had, $64.1 million in the U.S. That’s a 15% year-on-year quarterly growth. Look, the progress has mostly come from what we’ve been saying, which is we’re trying to penetrate deeper into the community and get that experience with KIMMTRAK as well. So we went from 65% to 68%. And now we’re — with duration of therapy, we also see that increasing from 12 months to 13 months. That being said, we’re in our fourth year of launch so I do expect the growth to be moderating, as Travis has mentioned.

Bahija Jallal: TEBE-AM, what’s the next growth then?

Ralph Torbay:

EVP of Commercial: And with TEBE-AM, we actually — we have line of sight to the final enrollment within the next 12 months, which actually puts us in the midterm growth potential if the data is positive. And then after that, we have ATOM, which is the question that you’ve asked, and I’ll pass it on to David for that answer.

Bahija Jallal: Mohammed?

Mohammed M. Dar: Yes, I can answer it. So with ATOM, obviously, it’s an adjuvant study. We’re in the early stages of site activation. Obviously, this is sponsored by the EORTC so they’re actually running the trial. For these type of trials, typically, it can take up to 3 years for accrual and then it’s an event-free survival endpoint. So I think we need to wait until we have the sites activated and we’re at steady state before we can make a more precise prediction of when to expect readout from the trial.

Operator: [Operator Instructions] Our next question is coming from Jonathan Chang from Leerink Partners.

Albert Agustinus: This is Albert Agustinus dialing in for Jonathan Chang. My question is, are you also still on track to present data for the TEBE-AM study in the second half of ’26?

David Berman: Executive Vice President of Research & Development So Albert, we’re on track to complete randomization of the TEBE-AM, that’s certainly within our control. The endpoint is always driven by events, so that obviously depends on when the events occur. Right now, we’ve speculated that it could be in the second half of ’25 now — sorry, of ’26, apologies. Now there’s always a cone of uncertainty. And as you get more events, you can narrow that cone of uncertainty more precisely. So as we get more events, we’ll be able to narrow that cone and predict better when those events can occur.

Operator: Next question is coming from Michael Schmidt from Guggenheim Partners.

Paul Jeng: This is Paul on for Michael. For KIMMTRAK, I had a quick follow-up on the duration discussion. Have you observed any meaningful differences in the real-world duration of therapy depending on whether patients are treated in academic settings versus the community where there might be some different logistical challenges? And then also on KIMMTRAK, I wondered if you could comment briefly on the potential evolution of competition in the uveal melanoma space. There’s a late-line oral regimen in development for the HLA-negative setting, that’s also generating some survival data across allcomers. How would you expect KIMMTRAK to be positioned against a possible off-label competitor, particularly in oral regimen? And in general, what does your sort of market research tell you about the longer-term role for KIMMTRAK in uveal melanoma?

Ralph Torbay:

EVP of Commercial: Thank you, Paul, for the questions. So with regard to the duration of therapy, it’s actually — we’re seeing very similar numbers in the academic setting in the community. Keep in mind, community is also closer to home. So for these patients, it’s a very convenient aspect to go in and out of the office. Importantly, actually, and I think one of the reasons the duration of therapy is being driven is the safety profile. We don’t see a lot of events happening after the first few cycles, which actually makes it a much more tolerable medicine for patients. In fact, we’ve seen patients who have been back to work 7 years after being on KIMMTRAK, which is actually very impressive. With regard to the therapies in development for HLA-A*02:01 negative patients, there, while we don’t underestimate competitors and it’s great to see development in this high unmet need population, for the positive, we have established KIMMTRAK as a standard of care.

It’s the #1 prescribed drug. We have completely shifted the OS bar to now 22 months of median. We have 3-year long-term overall survival, which is unprecedented in a setting like uveal melanoma. And as we discussed the long-term safety and patients doing well from a DOT perspective, it all speaks to this excellent profile and establishment.

Operator: Next question is coming from James Shin from Deutsche Bank.

James John Shin: First 1 is for Dave. Just to piggyback on what Eric and Tyler asked on TEBE-AM. And I appreciate all the comments you made about contribution component and OS being the primary, but the peers that had FDA turmoil, they also had agreement, it sounded like, but there was not complete agreement. So I guess a more pointed way to ask is has IMCR checked in with FDA, were the right people at CBER to confirm TEBE’s design is acceptable? And then could you — relative to, I think — and this one’s for Travis. I think you said duration is now 13 months in the U.S. How is — it’s very early in Europe, but how is duration trending relative to how duration trended in the U.S.?

David Berman: Executive Vice President of Research & Development Yes, so I’ll take the first one. There were 2 issues with the recent news. The first was the issue on a Phase II single-arm combination. And so that doesn’t apply to us because we’re having a Phase III trial that’s randomized with overall survival benefit. So that’s, I think, point number one. Within the Phase III trial, the last interaction we had was last year, but it was with the right folks at the FDA. And I will just repeat that our analysis of real-world evidence for the eligibility of our trial indicates somewhere in the mid-30s percent of patients still get retreated with an anti-PD-1, even though we know it doesn’t really work. And I do believe that, that will reflect in our trial. And if so, then we believe we will have sufficient COC, contribution of components if only the combination arm is the one that went.

Travis A. Coy: With regard to the duration of therapy in Europe, I mean, it’s good to keep in mind that we were launched in 28 countries, many of which are European countries, and there are different launch stages. So where we see mature markets such as Germany and France, we actually see an excellent duration of therapy that is similar to what we see in the U.S., whereas obviously, some other markets like the U.K. where we recently launched, it’s still maturing. But we do expect to see some consistency across markets.

Operator: Our next question is coming from Graig Suvannavejh from H.C. Wainwright.

Unidentified Analyst: This is Doug on for Graig actually from Mizuho. Congrats on a strong quarter. I’m interested mainly in ex U.S. growth and what we could be looking forward to. So if we’re expecting sort of low to mid-single digits overall growth, how might this be broken down between the U.S., the EU and the rest of the world?

Bahija Jallal: Yes. I think Ralph and Travis, do you want to take that?

Ralph Torbay:

EVP of Commercial: Sure. I’ll start with the answer. So Doug, ex U.S., we’re seeing roughly that contributes around 65% of our revenue today. We do expect that to be the case — sorry, 35% of our revenue today. We do expect that to be the case moving forward. We delivered obviously $33 million, which is 115% year-on-year growth. That had to do with underlying demand, of course, growing, but also with some good news from a pricing perspective. Travis, anything you want to add from a growth perspective?

Travis A. Coy: I think you covered it well.

Operator: Next question today is coming from Patrick Trucchio from H.C. Wainwright.

Patrick Ralph Trucchio: Just a clarification question on KIMMTRAK. With the second quarter growth, have you or could you tell us how much of this was attributable to new patient starts versus those longer treatment durations? And then my question is on the HIV program. I think you mentioned ongoing dose escalation and plans to initiate an expansion. What criteria will you use to trigger the expansion? And what are the expectations around improved viral control at higher doses?

Bahija Jallal: Go ahead, Ralph.

Ralph Torbay:

EVP of Commercial: So it’s a little bit of both, right? I mean it’s mostly has come from penetration. We’ve gone from 65% to 68% in the U.S., as well as obviously, we see some growth in Europe from the new launches. So that’s, I think, what is the majority of the growth and what also remains ahead of us. DOT is obviously contributing from a tailwind perspective, which is great to see.

David Berman: Executive Vice President of Research & Development Patrick, with regard to the HIV, I think first, I will say just as a reminder that the data that we showed earlier was really exciting to us because we showed we were having some effect in viral control and time to rebound and reservoir. Now that obviously is not the TPP because you need to have viral control going out much longer. But the initial trial was limited to 12 weeks, the initial protocol, and so that’s what we showed. Now we’re continuing to go higher. And secondly, what we want to see is we want to see viral control beyond 12 weeks. So with the new amendment, we now have the option of extending viral control beyond 12 weeks. So we want to see in the small number of patients that at least we can have viral control beyond 12 weeks. And so that would trigger the expansion. And then…

Bahija Jallal: Get the right dose?

David Berman: Executive Vice President of Research & Development Yes. And yes, of course, get the right dose because we only have a few patients at each cohort so we need to get a larger cohort. In terms of viral control, this is — we’ve talked about the TPP, which is probably a couple of years of viral control. We don’t know what to expect. This is our first — this is the world’s first foray for this. And so I think we’re going with our eyes open but it is certainly intriguing where we are now.

Operator: Next question is coming from Jack Allen from Baird.

Jack Kilgannon Allen: Congratulations on the progress made over the course of the quarter. Two quick ones from me, the first of which is on TEBE-AM. I was just hoping you could provide any additional color on the powering assumptions you have there. I know you talked a little bit about the control arm, including PD-1 retreatment potentially, but I’d love to hear how you’re thinking about the control overall survival there. And then more of a logistical question, but you mentioned that you’ll have potential PIWIL data next year. I wanted to also ask if we could get PRAME half-life extended or PRAME-A24 data as well next year.

Bahija Jallal: David, do you want to start with AM, and…

David Berman: Executive Vice President of Research & Development Yes, I can. So with regard to the historical control arm, Jack, I think we’re looking at a 1-year survival of 55%. That’s been historically what the survival has been. And so that’s what we’ve modeled for the control arm and you can see that in multiple different trials. And we’ll have a better timing of the events within the next 6 to 9 months. With regard to the data release, so both PIWIL and HLE are dose escalating well, and we should complete dose escalation for both of them in the next 12 months. So it is possible HLE can be shared next year as well.

Operator: Our next question today is coming from Peter Lawson from Barclays.

Peter Richard Lawson: Just like to ask on your kind of updated thoughts around the current shifts in U.S. trade policy, whether there’s anything we should think differently around tariffs, IP, et cetera, how that kind of affects your manufacturing costs or supply chain?

Bahija Jallal: Definitely. Travis, do you want to take that?

Travis A. Coy: Yes, happy to. Yes, thanks, Peter, for the question. Now regarding tariffs, there’s been — certainly has been a lot of uncertainty in the last few months and we continue to monitor the situation very closely. Europe is manufactured in — I’m sorry, KIMMTRAK is manufactured in Europe. So if tariffs do come to play, we do expect a potential, not immediate, impact on our cost of goods sold. But given that uncertainty that I referenced, what we’ve really been focused on is ensuring we have patient continuity and supply. And so we have about 18 months of inventory in the United States. So that impact, if it were to come to pass, would be not immediate, as I mentioned.

Operator: Next question is coming from Justin Zelin from BTIG.

Justin Reid Zelin: I’ll ask some commercial questions for Ralph. You mentioned growth coming from launch in new markets. Any particular you’d like to call out? And would you look to launch there with partnerships or on your own? And you’ve also mentioned increasing use in the community setting. Any tactics that were most effective in engaging new prescribers to drive the growth in the community settings?

Ralph Torbay:

EVP of Commercial: Thanks for the question, Justin. So in terms of new markets, we’re currently prosecuting 3 launches, the first one being the U.K., Poland and Netherlands, and that’s contributing to the growth that we’re seeing in Europe to a certain extent. We also recently announced a partnership with Er-Kim, which actually takes us into Turkey, which is actually a good market as well because it’s fairly sizable and has a high HLA-A*02:01 expression around 50%, so it looks like Europe from that perspective. And the Middle East and North Africa regions as well as part of that partnership. And then from there, in the U.S., we continue to work at going deeper into the community. Obviously, we’re not expanding our operations to do that.

We actually are leveraging a lot of triggers and next best action, the usual aspects, but we’re actually infusing a lot of AI that helps us with predicting where patients are going to relapse and sending our reps after that or NPP after that. So we’re doing it, but we’re doing it in a smart way.

Operator: Next question is coming from Rajan Sharma from Goldman Sachs.

Rajan Sharma: So it seems like having sufficient U.S. trial centers and representative patient populations in clinical trials is increasingly a focus at the FDA given recent Ad Comm. So it’d just be helpful if you could outline your confidence that both TEBE-AM and ATOM have sufficient U.S. trial centers but also have planned patient demographics, which are reflective of the real-world populations. And then just on KIMMTRAK, could you just talk to us about where penetration is in Europe relative to the U.S. and where you think that lands? And then specifically in the community setting in the U.S., where do you think that could land long term?

Bahija Jallal: David, do you want to start?

David Berman: Executive Vice President of Research & Development Sure, yes. So the bottom line is, yes, we have confidence that the site footprint will meet the requirements from the FDA. First of all, almost all of our trial sites are either U.S., Western Europe, Canada, Australia, U.K. so places where the standard of care is the same as the U.S. We do have enough sites in the U.S. for both trials, for all 3 trials actually to ensure that we will have sufficient patients from the U.S. But I will reemphasize that the standard of care and practice is the same in the countries, the most part where we are studying as the U.S.

Ralph Torbay:

EVP of Commercial: So Rajan, on KIMMTRAK in Europe, we see actually very good penetration in markets like Germany and France, where we’ve launched for over 4 years, we are seeing above 80% penetration. And actually, that’s a great guide because in the U.S., obviously, the U.S. is the size of many of these markets put together so there’s a lot more work to be done in the community. But we use that as a guide because we do think that we can get to higher numbers. That’s the effort that we’re putting in today. In the academic centers, we’re above 80%. In community, this is where the work, as I’ve been mentioning, needs to continue.

Operator: The next question for today is coming from Romy O’Connor from Van Lanschot Kempen.

Romy O’Connor: I just wanted to know whether you can update us on your current efforts of brenetafusp in lung and ovarian and whether the ctDNA and the T cell fitness data insights collected influence any strategies going forward with these programs.

David Berman: Executive Vice President of Research & Development Yes. I see our PRAME exploration as 3 clinical experiments, which are — certainly take into account everything we’ve learned. Following up on the signal of ovarian, the T cell fitness had — go into earlier lines of therapy, and there was reason to believe why addition of chemotherapy makes sense. So we are continuing that exploration. And yes, ctDNA and T cell fitness continue to be important. Same in lung cancer. It just happens, as we talked about that in lung cancer, in late-line lung cancer, T cell fitness is among the lowest of all the populations, and that’s why we need to look in earlier lines. And then finally, HLE is ongoing, and we’ve taken all of the insights from the brenetafusp and applied them to HLE as well.

Operator: Our next question is coming from Sean Laaman from Morgan Stanley.

Sean M. Laaman: I don’t think I quite got it. So at the risk of repetition, just the future competitive positioning for KIMMTRAK and particularly in relation to what we know so far about [indiscernible], that would be very useful.

Ralph Torbay:

EVP of Commercial: So look, I mean, first of all, not much is known to date but it’s good to see this development in the HLA-A*02:01 negative patients because there’s still a very high unmet need there. I mean, the median OS is 12 months. That being said, with KIMMTRAK and HLA- A*02:01 positive, the median OS is 22 months. We have 27% of patients alive at 3 years, which is exceptional, I mean, unheard of in this disease. So it is — we are standard of care across most major markets. In fact, 28 markets, as we mentioned, #1 prescribed medicine in HLA-A*02:01 positive. And I think, David, is there anything you’d like to add?

David Berman: Executive Vice President of Research & Development Yes, Ralph, thanks. A couple of things I’ll add from the analogs in cutaneous melanoma because right now, there’s only 1 therapy approved in uveal, that’s KIMMTRAK. But in cutaneous, you have targeted therapy and you have immunotherapy. And what we’ve learned in randomized trials is you get better long-term survival if you start with immunotherapy and then you go to targeted therapy. If you do the reverse, starting with just reducing the tumor and then getting immunotherapy, the survival isn’t good. So we don’t know how that plays out but that’s our best analog. As Ralph said, just as a reminder, we’ve established 22 months overall survival, and I think that’s the hurdle for any new therapy coming on the market.

Operator: Next question today is coming from David Dai from UBS.

Xiaochuan Dai: I have a couple. One is on the duration of therapy of 13 months. I’m just curious what do you think is driving that long duration of therapy in the real world. So our physician check suggests that a lot of patients are — continue to be on therapy after disease progression. Is that what you’re seeing in the real world versus the clinical experience? The second question is on the treatment in frontline melanoma for [ penetaxib ]. Curious in terms of your thoughts around the control arm. How many of those patients are going to — can you break down the percentage of patients who are going to be enrolled on the nivo monotherapy versus nivo plus rela?

Ralph Torbay:

EVP of Commercial: Sure. So happy to start with the duration of therapy question. So I think first and foremost, and this is true of any medicine is patients are feeling good. And David actually today spoke about our safety profile, our long-term safety profile. And you can see there’s not much happening, not much new happening, especially after several years. In fact, from a treatment beyond progression perspective, which is the characteristic of our therapy, we are seeing a lot of that happening in the community where patients are in stable disease or have progressed, and the physician keep them on because the patient is feeling good and it’s feeling that — and then we see the disease still in control. In fact, they also use sometimes radiation therapy and other local interventions to help control that disease.

So we’re seeing a lot of that in the real world. And I mean, I mentioned the patient that we recently met has been alive for 7 years. And they still have disease, they have for 7 years, going into the office every week to get KIMMTRAK and feeling good, so their job. So I think it’s this quality of life component that makes it compelling.

David Berman: Executive Vice President of Research & Development Yes. With regard to the question, a minority of the patients will likely get Opdualag, and we believe the majority will get nivolumab. However, David, I will say I remain confident that we will beat both of them. And the reason is because as a monotherapy in late- line, cutaneous melanoma, brenetafusp had greater activity in cross trial than Opdualag in a similar population. So it’s going to be a minority. I don’t yet know the exact number yet because we’re still enrolling.

Operator: Our next question is coming from Jeff Jones from Oppenheimer.

Jeffrey Michael Jones: Two quick ones from us. In terms of, as you noted, building an 18-month inventory in the U.S., can you remind us what the shelf life is on the product? And then in terms of the revenue reported, rest of world ex U.S. and ex EU revenues were down. And can you give us some color there?

Travis A. Coy: Yes. Thanks, Jeff. I’m happy to take both of those. We have a 3-year drug product stability, which — part of which is allowing us, obviously, to have that 18 months of inventory in the U.S. And then with respect to the international region, we typically see a lot of variability in the international region due to various buying patterns and just how that region operates. So it’s not atypical for us to have a little bit lower quarter. I’d consider this quarter within that typical variability that we’ve seen. If you look at the quarters last year, I think we ranged from about $1.5 million to about $4.3 million. So we’re — as I mentioned, there’s a lot of variability that we see throughout the international region. We do expect incremental growth to continue from additional product launches there.

Operator: Thank you. We reached the end of our question-and-answer session. I’d like to turn the floor back over for any further closing comments.

Bahija Jallal: Yes. Thank you very much. With that, we’ll conclude this call. I just want to reiterate one more time our thanks for all your support, and thanks to our patients and their families and our employees. Thank you very much.

Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.