Innate Pharma S.A. (NASDAQ:IPHA) Q4 2022 Earnings Call Transcript

Innate Pharma S.A. (NASDAQ:IPHA) Q4 2022 Earnings Call Transcript March 23, 2023

Operator: Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Innate Pharma Full year 2022 Financial Results Conference 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. It’s now my pleasure to turn today’s call over to Mr. Henry Wheeler, Vice President of Investor Relations and Communications. Sir, please go ahead.

Henry Wheeler: Thank you. Good morning. Good afternoon. And welcome everyone. This morning, Innate issued a press release providing a business update for our full year ’22 results. We look forward to highlighting the progress made during the year as well as addressing future goals and milestones. The press release and today’s presentation are both available on the IR section of the website. On Slide 2, before we start, I would like to remind you that we will be make forward-looking statements regarding the financial outlook in addition to regulatory and product plan developments. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. Turning to Slide 3, on today’s call, we will be joined by Mondher Mahjoubi, our Chief Executive Officer; who will then hand over to Joyson Karakunnel, EVP and Chief Medical Officer.

He will cover updates on lacutamab and monalizumab. Yannis Morel, EVP of Business Development and Product Portfolio Strategy will then cover some updates on partnering and ANKET; who will then turn the call over to our CFO, Frederic Lombard later on our financials. Mondher, I will now hand the call over to you. Sorry, Mondher, I think you might be on mute.

Mondher Mahjoubi: Sorry, I’m on mute. Thank you, Henry. Yes, thank you, Henry. Please move to Slide #4. Let me start by demanding you our strategy. As an early clinical stage company, our business model centers around three key priorities where we look to drive value from our early R&D efforts through later stage partnership where it makes sense to do so. Our ambition is to develop innovative drug candidates that contribute to transform cancer care for a strong pipeline of differentiated antibodies. First, we look to create near-term value driven by our lead proprietary product candidate lacutamab, which is, as you know, in development for T cell lymphoma with final CTCL readouts expected happening in the second half of this year, early PTCL data are underway.

Second, we continue to fuel our pipeline and create longer term value by leveraging our antibody engineering capabilities to develop innovative molecules with a primary focus on our multi-specific NK cell engagers platform called ANKET. As we develop targeted antibodies for our ANKET platform, we recognize some of these binders may be more applicable for ADC technology and we look to further reinforce our expertise in this setting. Last, but not least, we are building a strong and sustainable foundation for our business with various partnerships across industry and academia. Here, our AstraZeneca partnership with monalizumab is continuing in early stage lung cancer. Our focus remains to leverage the value of our products as much as possible.

We want to ensure if we can gain valuable competencies via our partner agreement, we will consider that in our development plans for our product. This will further validate our signs and offer capital that we can reinvest to advance our early R&D engine. Please move to Slide #5. 2022 was a year of clinical and partnership validation for Innate where we continue to deliver on our strategic objective and we have demonstrated the steady progress across all key strategic pillars as can be seen on this slide. Starting with lacutamab we presented proof-of-concept preliminary Phase 2 data in a heavily pretreated Sézary syndrome, and further important Phase 2 mycosis fungoides data in EORTC meeting end of last year. PTCL Phase 1b and Phase 2 signal seeking trials are well underway.

In the R&D pipeline section, we were very pleased to see Sanofi sign a second deal on our ANKET program as the Phase 1 for IPH5201 sees good progress, and IPH6401 had a target selected. We were also pleased to share data on CD20 proprietary ANKET program, which continues toward R&D enabling studies. As we turn to monalizumab, we were very pleased to see our partner AstraZeneca progress to Phase 3, with the PACIFIC-9 trial in the Stage III unresectable non small cell lung cancer and the further Phase 2 study NeoCOAST-2 in the neoadjuvant setting of non small cell lung cancer. Finally, our anti-CD39, IPH5201 is also starting a Phase 2 with AstraZeneca in the same setting of adjuvant lung cancer. Before I hand over to Joyson, on Slide 6 is an overview of our pipeline, which shows how we continue to translate our science into our robust portfolio of proprietary and .

It also illustrates how we are executing against our strategy with our lead property assets like lacutamab, ANKET, and the emergent ADCs supported by partner products with AstraZeneca and Sanofi from late to early stage development. We anticipate a series of potential clinical data readouts and catalyst in the upcoming couple of years as our R&D engine looks to leverage our scientific know-how to create a sustainable business. I would like now to pass the call over to Joyson, who will review the progress made with our portfolio starting with lacutamab, our most advanced proprietary asset. Joyson, please.

A – Joyson Karakunnel: Thank you, Mondher. On Slide 7, let me summarize the progress we are making with lacutamab. We are pursuing a faster market strategy for lacutamab in the niche setting of Sézary syndrome where lacutamab was granted U.S Fast Track designation in EU prime designation in 2020. We have expanded past Sézary syndrome to mycosis fungoides, where we have been — seen encouraging preliminary data from our Phase 2 trial in both cohorts. For the Sézary syndrome and mycosis fungoides, enrollment is on track with final data due for both cohorts in half — the second half of 2023. Finally, we are continuing to enroll into peripheral T cell lymphoma in the Phase 1b and 2 monotherapy and combination trials in the relapse setting with initial data expected later this year.

On Slide 8, let me remind you the design of the TELLOMAK trial. Cohort 1 is recruiting Sézary syndrome patients that could potentially be a pivotal cohort. For mycosis fungoides, we have Cohorts 2 and 3 where we are testing the hypothesis of non-expressors and expressors of KIR3DL2 using the frozen companion diagnostic assay. We now have an cohort where we will further evaluate our diagnostic assay. On Slide 9, we have the data published at the ASH Annual Congress 2022 in December. The presentation shows that in heavily pretreated, post-mogamulizumab patient pool with a median prior line of therapy of 6 and 10.9 months of median follow-up. The ORR in the ITT population was 21.6% with an ORR of 35.1% in the skin and 37.8% in the blood. It was very encouraging to see activity replicated in the larger Phase 2 trial in these late line patients.

A favorable safety profile was also seen. We look forward to further interactions with the regulators as we get the final data later this year. Slide 10 summarizes the preliminary Cohort 2 and 3 data in mycosis fungoides presented at EORTC in September last year. As a reminder, from data presented previously, as expected, our scientific hypothesis was confirmed in Cohort 2, high global response rates in comparison to the benchmark were seen and in non-expressing cohort, a low global response rate. At the EORTC Congress last year, and this data presentation in the KIR3DL2 expressing Cohort 2, we were encouraged to see that these late line patients with a median of four prior treatments of lacutamab demonstrated a 28.6% ORR and six responses.

We are particularly encouraged by the responses in the skin where we saw 57.1% ORR, and 12 responses. A reminder that skin response is an important response in this skin-based disease. As many of you know, a clarification of the guidelines for CTCL have been released this year and we will be issuing more guidance on our strategy based on these new criteria. In addition, we continue to engage with the FDA as per our FDA Fast Track designation. On Slide 11, I would like to update you on monalizumab. To remind you, monalizumab is an anti-NKG2A, which acts upon the checkpoint pathway to potentiate NK cell activation that we have licensed to AstraZeneca for oncology. On this slide, you can see an overview of the late stage development plan for monalizumab in lung cancer.

Based on the AstraZeneca sponsored Phase 2 COAST data, AstraZeneca commenced PACIFIC-9 a Phase 3 trial, evaluate the combination of either mon or oleclumab plus durvalumab in the unresectable Stage 3 non-small cell lung cancer setting who have not progressed after concurrent chemoradiation therapy. For the Phase 2 COAST study, the three arms evaluated the combinations of durvalumab plus monalizumab and durvalumab plus oleclumab AstraZeneca’s anti-CD73. As published in the Journal of Clinical Oncology by AstraZeneca after a median follow-up of 11.5 months, the results of an interim analysis showed a hazard ratio of 0.42 for durvalumab plus monalizumab versus durvalumab alone. The results also showed an increase in the primary endpoint of confirmed ORR for durvalumab plus monalizumab over durvalumab alone of 36% versus 18%, respectively.

The AstraZeneca sponsored NeoCOAST-2 study is also underway in an earlier lung cancer setting, evaluating monalizumab and durvalumab with chemo in neoadjuvant non-small cell lung cancer patients. We look forward to further updates from these studies from AstraZeneca. I will now hand over to Yannis to cover our AZ relationship on monalizumab and the ANKET platform. Yannis?

Yannis Morel: Thank you, Joyson. So let’s move on Slide 12 where there is a summary of our monalizumab agreement with AstraZeneca. To date, we have cashed in $450 million, including $50 million last year with the start of the PACIFIC-9 Phase 3 trial in lung cancer. The total milestone package sign was up to $1.275 billion with royalty on net sales outside Europe, plus 50% of the profit share Europe with the option to co-promote the drug in this region. We look forward to continuing our relationship with AstraZeneca on the monalizumab as well as our — on our anti-CD39 IPH5201. Indeed IPH5201 has moved into Phase 2 in early lung cancer with trial in a neoadjuvant and adjuvant setting, which trigger a $5 million milestone payment last year.

Now moving to Slide 13, I wanted to highlight our proprietary multi-specific NK cell engager platform that we call ANKET. ANKET standing for antibody-based NK cell engager therapeutics. ANKET is a versatile fit-for purpose technology made of various building blocks that is creating an entirely new class of tri or tetra-specific engager to induce synthetic immunity against cancer. This technology platform, which is leveraging our scientific expertise in the NK cell space, will be an enzyme for our pipeline creating value via multiple drug candidates addressing multiple tumor target. The backbone of this ANKET platform is based on the unique engagement of the activating NK cell receptors NKp46 and CD16 on the NK cells, which allows for the optimal harnessing of the NK cell effector functions, which can be further increased by addition of variant that induce their proliferation.

Now moving to Slide 14, I wanted to share our enthusiasm for this platform in the context of the growing interest in the NK cell space. Our expertise in antibody engineering has enabled us to develop this platform which generates ANKET molecule designed to engage efficiently the patient’s own NK cells against its own tumor. On the left panel, you can see the detailed mechanism of action of the ANKET, which we have recently published in a couple of article in high impact factor journals. As shown in our natural biotechnology paper describing the joint work that with Sanofi on the CD123 NK cell engager, the engagement with of NKp46 and CD16 on NK cells triggers potent antigen dependent killing of the tumor as well as production of key cytokines for the anti-tumor response, but without systemic cytokine release, which is a major dose limiting factor for T cell engagers.

In addition, as shown in our Cell Reports Medicine paper, the addition of interleukin-2 variant into an ANKET in use of preferential NK cell proliferation within the tumor microenvironment increasing therefore the number of anti-tumor effector cells. Overall, this platform demonstrates compelling preclinical activity as evidenced in these two publication. In the middle panel, you can see the most recent presentation we had on the — at the ASH annual meeting in December, some with our partner Sanofi. We had a trialing process poster for the CD123 targeted IPH6101, also called SAR’579, which started Phase 1 trial in December 2021. Then we showcased our technical data again with Sanofi on the BCMA NK cell engager showing strong efficacy against multiple tumors again without inducing systemic cytokine release.

This molecule called IP6401 or SAR’514 is moving through IND enabling studies. Finally, we presented at this meeting the technical characterization of our proprietary IPH6501, which is a CD20 targeted tetra-specific ANKET. Lastly, on the right you can see the overall growing pipeline of ANKET molecule we have with Sanofi adding licensed pre-molecule and having an option on two other undisclosed. Our most advanced proprietary ANKET IPH6501, we just talked about, is adding toward the IND this year. We have also other preclinical targets, which we hope to provide some updates in due course. Now moving to Slide 15, you can see a summary of our Sanofi partnership. In 2016, we signed an initial agreement for two ANKET molecule worth up to €400 million in milestone among which we received to date €40 million.

Both program have progressed with IPH6101 in Phase 1 for 15 months now, and IPH6401 progressing towards IND. In December last year, we signed a further agreement whereby Sanofi licensed the IPH62 ANKET program targeting B7-H3, which is a solid tumor target antigen with an option on two other targets. Sanofi paid €25 million upfront with a total of €1.35 billion in potential milestones and royalty. This now takes the total milestone package of our partnership with Sanofi to up to €1.5 billion plus royalty. Building on our existing and successful relationship, we look forward to continuing working with the Sanofi R&D team as we bring this molecule to the clinic. I will now hand over to Frederic, to cover financial update.

Frederic Lombard: Thank you, Yannis, and good day, everyone. So moving to the finance Slide 16, I will start with one of our key metrics as usual, our cash position. Our cash and cash equivalents amounted to €136.6 million as of December 31, 2022. Cash and cash equivalents as of December 31, 2022 does not include the €25 million of payment received from Sanofi in March 23. In addition, as you can see, we are efficiently managing our resources so that we can best capitalize on progress on data readouts to explore development pathways in different indications. We believe this approach ensures that we remain in position to strategically invest in our vision for Innate. Now, going into the P&L, I will only comment on the main and most significant lines, and you have very detailed comments in the appendix of the press release that you can refer to for more information.

I’ll start with our revenue and other income, which amounted to €57.7 million. It mainly resulted from revenues from collaboration and licensing agreements and governmental fundings. The revenue line is characterized by the spreading of the funds and opt-in payments received from AstraZeneca for monalizumab and from Sanofi, which I remind you are recognized on the basis of the percentage of completion of the growth platform by the company. I also remind you this has limited impact on cash. Operating expenses amounted to €74.1 million, an increase of 1% compared to 2021. R&D expenses were €51.7 million, an increase of 10% compared to 2021. The increase was mainly due to clinical and nonclinical research and development expenses. We took a full impairment on avdoralimab intangible assets of €41 million, which I’ll remind you is a non-cash expense following the company’s decision to stop the development of the molecule in the bullous pemphigoid indication in inflammation.

To recap, we have a strong cash and cash equivalent position with €136.6 million at the end of the year with €25 million from Sanofi, still to add to this. We estimate that we have enough cash to fund planned operation to at least mid 2025. I will now turn to Mondher, for a summary of the catalyst and close.

Mondher Mahjoubi: Thank you, Frederic. As you can see on Slide 17, we are really working diligently to execute across all our strategic pillars and we believe that we are laying the foundation to drive near long-term value. Looking at our clinical program first, we expect to achieve a number of milestones over the next 2 years. As you heard from Joyson, our Phase 2 TELLOMAK study for lacutamab continues to progress with final data due at the end of this year. In addition, we look forward to initial PTCL data later in the year. , we continue to develop our ANKET technology platform further reinforced by our partner Sanofi, and we are very encouraged by the preclinical results from the next generation of NK cell engager and the progress in the clinic.

We believe that this represents a natural evolution of our platform with data presented at conferences last year. For monalizumab, the lung cancer trials are underway, and we continue to advance the adenosine pathway agents in the clinic where the Phase 2 for IPH5201 in early non small cell lung cancer is starting. Let’s move to the conclusion slide now. Slide 18, please. As you can tell we continue our exciting journey at Innate. We look to build our business to create value for patient and stakeholders. In summary, we have positioned Innate Pharma for the future with our strategy and made meaningful progress throughout the year-to-date across all three strategic pillar. With our R&D engine and antibody engineering expertise, our science is producing more candidates to progress into the clinic.

Some we are developing alone and some partnered. We have a focus on our NK cell engager platform, ANKET, as well as on ADCs. In parallel, our late stage portfolio continues to advance as we look to maximize the late stage portfolio assets of lacutamab and monalizumab. Number two, our partnership strategy continues to evolve with Sanofi doubling down on the ANKET platform with the second deal announced in December last year, and several programs now in early development. A later stage development, we continue to work with AstraZeneca for monalizumab and IPH5201 in lung cancer. Last but not least, we have carefully managed so we can continue a sustainable business to invest in progress in our pipeline. I’m very pleased that we continue to have a strong cash position with the runway into mid 2025.

Collectively, we are driving value across our business and ultimately advancing our goal to deliver innovative medicines to patient. We look forward to keeping you updated on our progress. That concludes our prepared remarks. We will now open the call to questions.

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Q&A Session

Operator: Your first question comes from the line of Yigal Nochomovitz with Citi. Your line is open.

Carly Kenselaar: Hi team, This is Carly on for Yigal. Thanks so much for taking our questions. We have two. First on lacutamab. Can you elaborate on how you’re thinking about the registrational pathway for mycosis fungoides, and I guess what you expect the comparator would be for a future Phase 3. And then the second question is, is on the ADC program that you disclosed. Just curious where the linker payload technology that you’re using comes from, and how far those programs are from IND. If you can comment. Thank you.

Mondher Mahjoubi: Yes, sure. Thank you, Carly, for the question. I’m going to maybe ask Joyson to start with the lacutamab registrational pathway, and then hand over to Yannis to provide an update on where we are with the ADC technology platform. So maybe, Joyson, if you can briefly remind the goal, our strategy for lacutamab in cutaneous cell lymphoma overall and in Sézary, in particular.

Joyson Karakunnel: Yes. So definitely, so just as a reminder, the TELLOMAK study has Cohort 1, which is with Sézary syndrome, and that itself can serve as a pivotal cohort. When looking at the registration strategy for mycosis fungoides, we’re keeping all our options open, including a complete registration trial on mycosis fungoides alone, or even a combination of mycosis fungoides with Sézary syndrome. We are ensuring that we’re continuing our conversations with regulators to make sure we are aligned with them in regards to the comparator as well as the design of the study. Yannis?

Mondher Mahjoubi: Thank you, Joyson. Yannis on the ADC.

Yannis Morel: question. So we indeed have an ADC program called IPH4501, for which we have selected a development candidate and that we are moving forward. And we will provide, obviously more update later during the year.

Carly Kenselaar: Okay. Thank you.

Mondher Mahjoubi: Thank you, Yannis. And maybe let me anticipate any further question on, as I said in my introductory remarks, we are an NK cell oriented and driven company. The ANKET platform technology is the center of our strategy, but as we develop targeted antibody, we develop binders, and some of those binders are more fit for an ANKET type of antibodies. Others could be used for other technology, in particular the ADC technology and how — that’s how we have been opportunistic in trying to develop those binders. So we’ll provide more data as we progress and certainly join the upcoming months. Thank you. Next question.

Operator: Your next question is from the line of Daina Graybosch with SVB Securities. Your line is open.

Daina Graybosch: Thank you. I also have two questions. The first one is on Sézary, lacutamab and the TELLOMAK study. You mentioned that there have been in the community some changes and how in the guidance for how outcomes are measured in CTCL. I wonder if you could describe the changes and what options you have with TELLOMAK, given those changes that you’re deciding and discussing with regulators? And then the second question is one on the ANKET. I noticed that the BCMA program that Sanofi has is a mix of ANKET and their technology CROSSODILE. I wonder if you could describe what CROSSODILE is and is there back and forth sharing, could you use that technology in your own ANKET, so do you anticipate them using that in their other programs?