May 1, 2016
Executives
Carol Hausner - Executive Director, Investor Relations and Corporate Communications Dan Junius - CEO Charlie Morris - Chief Development Officer Dave Johnston - CFO
Analysts
Michael Schmidt - Leerink Partners Mara Goldstein - Cantor Fitzgerald Jessica Fye - JPMorgan Simos Simeonidis - RBC Capital Markets John Newman - Canaccord Biren Amin - Jefferies Chris Marai - Oppenheimer
Operator
Good day and welcome everyone to the ImmunoGen Third Quarter Fiscal Year 2016 Financial Results Conference Call. Today’s conference is being recorded.
At this time for opening remarks and introductions, I would like to turn the call over to Executive Director, Investor Relations and Corporate Communications, Carol Hausner. Please go ahead.
Carol Hausner
Thank you and good morning. At 6:30 this morning, we issued a press release that summarizes our financial results for the quarter ended March 31, 2016 the third quarter of our 2016 fiscal year.
I hope you’ve all had a chance to review it. If not, it’s available on our website.
During today’s call, we will make forward-looking statements. Our actual results may differ materially from such statements.
Descriptions of the risks and uncertainties associated with an investment in ImmunoGen are included in our SEC filings, which can be accessed through our website. In our call today, our Chief Executive Officer, Dan Junius, will provide an update on ImmunoGen; our Chief Development Officer, Dr.
Charlie Morris, will discuss our wholly-owned compounds in greater depth; and our Chief Financial Officer, Dave Johnston will discuss our financial results and guidance. We will then open the call to questions.
Dan?
Dan Junius
Thank you, Carol and good morning everybody. Today we are a key stage in our development of mirvetuximab soravtansine, which is our lead wholly owned product candidate.
We want to use most of today’s call to update (inaudible) with this program. We now have experience with this novel ADC in over 160 patients with folate receptor alpha positive previously treated ovarian cancer dosing these patients at 6 mgs per kg every three week.
The findings in the 46 patients phase 1 expansion cohort will be presented at ASCO on June 6 and shortly after that serve as the basis of our meeting with the FDA on our planned registration trial. As you recall, and we initially had data for 20 patients and we are awaiting findings from the expanded cohort before finalizing the design of the second stage of our FORWARD 1 trial.
The stage comparing mirvetuximab soravtansine to current single agent standard of care. Based on the expanded body of data now available, we are FORWARD 1 from a two-stage phase 2 trial designed to support accelerated approval to a single stage phase 3 trial designed to support full marketing approval of mirvetuximab soravtansine for folate receptor alpha positive ovarian cancer in early alliance of platinum-resistance diseases.
There are several reasons behind these changes which Charlie will be discussing in more depth. First, the findings in the more recently enrolled patients indicate that the measures that we’ve introduced to manage ocular adverse event appear to be working, and thus we no longer need to access a less intense dosing schedule which had been the purpose of stage 1 of the prior design.
Second, increasing the experience base from 20 to 46 patients has allowed us to explore subset for additional insight in to patient selection. A key observation coming out of this assessment is that the confirmed responses were primarily in patients who received three or fewer prior treatment regimen.
Consequently we are changing the inclusion criteria for FORWARD 1 to cap the number of prior regimens at three rather than stipulating three or four prior regimens. This continues to allow enrollment of patients who’ve received two platinum regimens, as well as Avastin in combination with chemotherapy for the proved use in platinum resistant disease.
Consistent with moving mirvetuximab soravtansine to an earlier line of treatment, we’ve also changed the primary endpoint of FORWARD 1 from response rate to a more robust one, progression free survival. With positive results, FORWARD 1 is intended to support full marketing approval.
Charlie will now discuss these decisions in more detail and provide additional program update. Charlie.
Charlie Morris
Thanks Dan and good morning everyone. As you’ve heard from Dan, we’re making some piece of changes to the design of our FORWARD 1 trial based on the findings and the full phase 1 ovarian cancer cohort that will be presented at the ASCO meeting on June 6.
As a reminder, we reason we expanded this cohort from 20 to over 40 patients was to gain additional experience and increase our confidence in patient selection. We believe the changes we are making give us the best chance to success, while only modestly adding to the timeline.
With the expansion of our data set to 46 patients, we have a better understanding of the tolerability and efficacy of mirvetuximab. On the tolerability side, we’ve noted a reduction in both instance and severity of ocular adverse events, since we introduced a number of proactive prevention and management recommendations into our protocol.
In fact, we and our advisors feel that this is now at such a level that stage 1 of the study which was intended to see if ocular events could be reduced with a [four] weekly dosing schedule is no longer necessary. Therefore we are discontinuing stage 1 and we'll proceed directly to the comparison to physician's choice of chemotherapy using the three weekly schedule.
Based on our latest efficacy data, we also have a deeper understanding of which patients we should be including in the FORWARD I study. You will remember that FORWARD I was designed to look at mirvetuximab efficacy in patients with medium or high FR Alpha expression.
At the Triple meeting last fall, we presented data looking at preliminary information on the relationship between the level of Folate receptor alpha expression on patient tumors, high, medium or low, and response to treatment. In the initial 20 patients, all of the confirmed responses were in patients with high folate receptor alpha expression, with tumor reductions in all medium expressing patients, though none had reached a confirmed response at that time.
In the more recent data, we have now seen confirmed responses in patients with medium expression, and even in a couple of patients with low expression. On that basis, we plan to continue to include medium and high expressions in FORWARD I.
We also plan to do further Phase 1 work in lower expressions to understand whether that is truly a viable population for benefit from mirvetuximab. The confirmed response rate among the high plus medium expresses in the expanded patient population is a little below the 30% threshold that we have always felt would be important for single agent development.
Our Phase I population includes platinum resistant patients, who have received as many as five (inaudible) lines of therapy, and analysis of the data shows that we have observed response rates for the higher in less heavily pre-treated patients. While this is not a surprising finding, the difference was notable enough that we chose to act on it.
As a consequence, we are modifying the patient inclusion criteria from patients with medium- or high folate receptor alpha expression, who must have had 3 or 4 prior regimens to patients with medium or high folate receptor alpha expression with platinum resistant ovarian cancer, who’ve had no more than three prior regimens for whom single agent therapy is appropriate. In the expansion cohort, response rate in this population is well above the 30% level I mentioned a couple of minutes ago, with encouraging preliminary progression pre-survival.
We estimate this population to be about 5,000 to 7,000 patients per year in the US, up from 2,000 to 3,000 with the previous criteria. There are approved single agent therapies for this population, i.e., Doxil and (inaudible), but the unmet need in this population remains high, given that these agents have response rates in the 15% to 20% range with PFS around 3 to 4 months and challenging tolerability profiles.
As before, patients in FORWARD I will be randomized 2 to 1 to mirvetuximab soravtansine or physician's choice single agent chemotherapy agents, including these two approved agents. We will discuss with the agency whether it is appropriate to include other agents.
As Dan noted, we'll be changing the primary endpoint from FORWARD I to PFS with the trial now intended for full marketing approval. We're sizing the study to ensure we will be able to detect clinically meaningful and statistically significant benefit in progression-free survival.
To enhance the likelihood of success, the statistical plan will call for PFS to be separately assessed in high expresses, as well as in the combined high plus medium expresses. All-in-all we believe this is the more robust strategy from a regulatory perspective, and we plan to meet with the FDA this summer to get their input prior to starting this phase 3 trial.
Turning now to other programs; patient enrollment is going well in our FORWARD II trial evaluating mirvetuximab soravtansine in combination regimens. It's currently being assessed separately with bevacizumab, carboplatin and Doxil, and we're preparing to add a cohort to evaluate it with Merck's PD-1 inhibitor, pembrolizumab, later this year.
Once mirvetuximab dose with bevacizumab is established, we have planned to open expansion cohort assessing the combination specifically in the treatment for bevacizumab naive patient. And assuming it is well-tolerated with bevacizumab and carboplatin individually, we plan to assess a triple combination of these agents.
We'll be making next step decisions for the other agents, including pembrolizumab based on the findings in this initial assessment. We currently expect preliminary findings from one or more of the cohorts from FORWARD II to be reported at ASCO 2017.
I'll finish by noting that last Monday we’ve announced the start of patient dosing with our CD33, targeting IMGN779, a potential new treatment for acute myeloid leukemia. It is the first ADC to utilize one of our new IGN payload agents, which have a different mechanism of actions than other DNA acting approaches.
We think IGNs are an important innovation in the ADC space, as they are much more potent than our maytansinoid and have a different mechanism of action. Overtime, we expect them to meet many lower expressing targets, CD33 being a good example viable for IGN ADCs.
Our phase 1 trial is designed to efficiently inform IMGN779 development pathway and will evaluate 779 in two specific patient populations; patients with AML and first relapse and patient with relapsed refractory disease. Our preclinical research indicates that IMGN779 may have a very different tolerability profile than other CD33 targeting approaches, and we look forward to gaining clinical experience with it.
As you may have noticed, our partner Takeda recently disclosed that they too are developing an IGN that is utilizing ADC. Their targets’ GCC which will provide experience in the solid tumor indication.
At this point, I would like to hand it over to Dave for the financials.
Dave Johnston
Thanks, Charlie. As Carol noted we issued a press release this morning with our third quarter fiscal year 2016 financial results, and I'm going to review the highlights of that as well as updating our guidance for the fiscal year.
Revenues in the third quarter of our fiscal year 2016 were $19.7 million as compared to 11.4 million for the same quarter of last year. The current period includes $10 million of cash milestones earned from Bayer with their advancement of Anetumab ravtansine into a clinical trial that's designed to support registration, while the prior year included a $5 million cash milestone payment from Novartis.
Revenue in the current period also includes $7.4 million of non-cash royalty revenue on sales of Kadcyla for the three months ended December 31, 2015. As a reminder the royalty is passed to the purchaser of the royalty stream, and we report non-cash Kadcyla royalty revenue that is partially offset by non-cash interest expense, resulting in non-cash net income.
Operating expenses for our third quarter fiscal year were 47.3 million compared to 32.7 million in the third quarter of last year. Driving the change from the previous fiscal year are increased personnel expenses and increased third party costs related to the advancement of our product candidates, primarily mirvetuximab soravtansine, as well as some non-cash stock compensation charges resulting from the CEO transition.
For the quarter, we reported a net loss of 31.9 million or $0.37 per share, compared to a net loss of 21.6 million or $0.25 per share for the same quarter last year. Cash used on operations was 91.6 million in the first nine months of 2016, compared to 26.8 million in the same period of last year.
Prior year benefit from $25 million in upfront payments received including $20 million in connection with the execution of our right to a test agreement with Takeda in March of 2015, as well as lower operating expenses. Our capital expenditures were $8.6 million in the first nine months of 2016, compared with 4.5 million in the same period of last year.
And lastly, we ended the quarter with $182.9 million of cash and cash equivalent, compared to 278.1 million as of June 30, 2015, and we continue to have no debt. We're updating our guidance for the fiscal year, which ends this June 30.
Expected revenues are now expected to be between $60 million and $70 million, compared to our previous guidance of $70 million to $80 million, and this change is primarily due to the changes in the expected timing of partner events, and is mainly non-cash related. Operating expenses are now projected to be 180 million to 185 million, compared to previous guidance of 175 million to 180 million.
The change is primarily related to greater clinical cost and non-cash stock compensation charges. Net loss is now expected to be between 135 million and 140 million, compared to its previous estimate of 120 million to 125 million, with most of this change being non-cash related as well.
Cash used in operations is now expected to be between $110 million and $115 million, which has been previously between $100 million and $105 million. [Technical Difficulty].
Cash equivalents at fiscal year-end to be between $155 million and $160 million, compared to previous guidance of $165 million to $170 million. As you've heard from Dan and Charlie, we're advancing our portfolio of product candidates led by mirvetuximab and we believe these investments will result in the greatest value for our shareholders and important new therapeutic options for both physicians and patients.
So with that, I'll turn the call back over to Dan.
Dan Junius
Thanks, Dave. As you've heard we’ve got a lot going on, and we look forward to continued progress and a steady news flow.
Our anticipated events for single agent mirvetuximab soravtansine include abstracts being public for ASCO in the middle of May. With those, we'll provide data updates when the embargo lifts.
The ASCO presentation on finding from the expanded phase 1 cohort will be on June 6 at ASCO, and we'll be meeting with the FDA this summer on the design of the FORWARD I phase 3 trial that you heard Charlie just describe. And from that we would expect to start dosing patients in the phase 3 FORWARD I study by year-end.
Going beyond mirvetuximab as a single agent we look for the initiation of the IMGN 529 combination study in combination with rituximab to start very shortly. Phase 1 data will be presented at ASCO for three programs in development by our partners: Bayer's anetumab ravtansine, and from Sanofi both isatuximab as well as SAR-566658.
We also look to achieve the pembrolizumab FORWARD II cohort, targeting early in the second half of 2016, so sometime later this year, as well as discussing our next wholly owned product candidate. We'll be disclosing that sometime in the back half of this year.
Finally, we expect there'll be partner progress or events on various compounds over the course of 2016. The partner pipeline continues to be quite active.
Before we go to the Q&A and I'll turn it back to Carol, a couple of comments from me. As many of you are aware I'm going to be retiring soon as ImmunoGen's President and CEO.
That will take place roughly in the middle of May. I'd just like to take the opportunity to thank all of you for your interest in ImmunoGen.
The Company has developed and is advancing an important technology; one that I'm convinced will be a key part of cancer therapy going forward. I'm grateful for the opportunity that I've had to be part of that for the past 11 years, and 7 plus years as ImmunoGen's CEO.
It's truly been an honor to be associated with such a dedicated group of people, who are driven to find better cancer therapies. Mark Enyedy will be taking over as President and CEO on May 16, I think is an excellent candidate to lead ImmunoGen.
I've been impressed with Mark getting to know him through the recruiting process. I'm excited by the capabilities he brings to the company, and I'm confident he will lead ImmunoGen to many, many future successes.
So with that, Carol, let me turn it over to you to moderate the Q&A.
Carol Hausner
Thanks, Dan. We are about to open the call to questions.
We ask that these be limited to one to two questions per person until each analyst has had a chance to ask a question. Operator, we are now ready to open the lines for questions.
Operator
[Operator Instructions] It appears our first question comes from Michael Schmidt with Leerink Partners.
Michael Schmidt
I just wanted a clarification, Charlie you made some comments regarding response rate, and I may have misunderstood that. But you said the response rate in the expanded phase 1 study for mirvetuximab was lower than 30%.
Is that correct?
Charlie Morris
So in the overall population, regardless of the number of (inaudible) lines of therapy, the response rate is a little below 30%. So what we observed was that there was clearly a higher response rate in those patients who’d had the lower numbers of lines of therapy, which is one of the reasons for the change.
Michael Schmidt
I see, understood. So on the updated FORWARD I trial design, can you just help me understand the powering assumptions here in those slightly earlier stage patients?
What is the hurdle in terms of response rate and PFS compared to standard of care?
Charlie Morris
I think the thing to really be focusing on based on the design of the study will be progression-free survival. Progression-Free Survival generally in these studies seems to be in the 3.5 to 4 month range.
So I think that's something upon which we can improve. Response rate tends to be in the 15% to 20% range, but response will now be a secondary endpoint, not a primary endpoint.
We believe that if we can move the Progression-Free Survival to six months or higher, then that would be a substantial improvement, both clinically and statistically. And that's the kind of thing we'll be powering for.
Michael Schmidt
And then you made some comments on the managing the ocular side effects better now than previously, and I was just wondering if you could provide some more information on some of those measures?
Charlie Morris
Yeah, you may remember from previous calls, we've had a little bit more restriction on patients based on their history of any eye conditions. We ask the patients not to wear their contact lenses during the study.
We use lubricating eye drops as part of the therapy, and we've also been using interventions including corticosteroid eye drops as an option in treatment. So what we're seeing now is that the event rate has really improved quite a lot with that, and we continue to do more work.
But it really has improved to the level that we were hoping to show by looking at different schedule. So we felt that if the question had been answered, then we may as well get right into the efficacy part of the study and really get the most robust design going where we could.
Michael Schmidt
And then regarding the folate receptor alpha expression levels, remind me what percent of patients fall into the low, medium and high expression category that you have seen enrolling in the Phase 1 so far?
Charlie Morris
So in the studies that we've been conducting, about 80% of patients had eligibility based on being at least the low express rate, 25% two plus or higher. Of those, about 50% were high and the rest were pretty evenly split between medium and low.
Operator
Our next question comes from Mara Goldstein with Cantor Fitzgerald.
Mara Goldstein
Just on the redesign of the trial moving into a Phase 3, can you just talk about timing assumptions and how long you think it will take to complete the trial? And then secondarily, on the data that is expected at ASCO, will all of those, the group of 46 be confirmed, responses in that trial?
Charlie Morris
The exact timing obviously will depend in part on reaching an agreement with the FDA on whether they think we’ve got the right design and the right trial size. If they like what we have currently put together, we should be able to start recruiting before the end of this year, and we anticipate that this would probably make the study about six months longer than we had previously projected, because it will be a larger study for PFS.
PFS requires a longer follow-up, and we require some more patients to do it. In terms of the data at ASCO, the focus of everything in terms of response will be on confirmed response rate.
So any comments I made today about response, should at least be interpreted as being unconfirmed response rates.
Operator
Our next question comes from Jessica Fye with JPMorgan.
Jessica Fye
I'm trying to understand why, if your response rates have come down that moving to a PFS endpoint would help your probability of success? Is the main sort of improvement in the study design here cutting out the later lines of the later stage patients or is it changing the endpoint?
Charlie Morris
There’s actually slightly disconnected things. In terms of the overall confirmed response rate in the population that we are now targeting i.e.
platinum-resistant three or fewer lines of therapy, I would not describe the response rates having come down. They're very much in the ballpark of where we've described previously and in an area where we would be very comfortable to go forward.
The difference is of course that we're in an area where I think, although they are clearly high unmet needs there are approved agents, and we feel that since we'll be having to go head to head with approved agents, that the likelihood of being able to get an accelerated approval on response rate is probably less and probably unnecessary if we can get a full approval on PFS without any great movement in the time line. So we felt that the best way to go was to target that population, where the results remain robust.
As I said in my remarks the preliminary view of the PFS is it's early, but its preliminary view of the PFS is very encouraging, so we felt that was the best way to go.
Jessica Fye
And the patients that you're enrolling now, will they all have had prior Avastin or will be Avastin be an option for patients on the control arm?
Charlie Morris
It won't be an option for patient on the control arm. So they will either have had it or not be considered eligible for it.
But we will compare it to single agent chemo.
Operator
Our next question comes from Simos Simeonidis with RBC Capital Markets.
Simos Simeonidis
Charlie I just want to understand the difference in the FORWARD I population from what you were planning to enroll and what you're going to enroll. Is the only difference in the population the exclusion of patients that have taken a fourth line regimen?
Charlie Morris
That's the major difference. We didn't actually specify the words platinum resistant in what we had said previously, because I think by the time you had entered those who had 3 or 4 prior lines of therapy, that became less of a consideration.
So the key difference is that it could be three, in theory it could be 2 or it could be 1 prior line of therapy. But it's now no more than three.
Simos Simeonidis
And then the number you referenced the slightly lower than 30% response rate, what are we supposed to compare that with in your prior guidance? Is it the 35% overall response rate in the 20 patients that were of all levels of expression of the folate receptor low, medium or high?
Is that would be appropriate comparison?
Charlie Morris
Yes.
Operator
Our next question comes from John Newman with Canaccord.
John Newman
I just have one question this morning, which is the 46 patient dataset that you'll be presenting at ASCO, should we expect that would be stratified by both receptor level expression and prior lines of therapy? And also should we expect to see duration of response data from that 46 patient dataset?
Charlie Morris
Yes, obviously we intend to present the data in a way that clarifies who we believe the appropriate patients are for mirvetuximab and should allow an understanding of the way that the trial is being designed. And I forgot what the second half of the question --
Dan Junius
Duration.
Charlie Morris
Yes, we'll include both duration and progression for each survival information.
Operator
Our next question comes from Biren Amin with Jefferies.
Biren Amin
Why wouldn't FDA require OS as a primary endpoint, given you're now going to earlier lines of therapy?
Charlie Morris
If we look at the most recent precedence and perhaps the most obvious one being Avastin, progression-free survival has been - seem to be an acceptable endpoint and there are other phase 3 trials underway where we see progression-free survival being used an endpoint. I think obviously we will need to capture our overall survival data.
I think they will want to see a trend for overall survival. But I think there are precedence now that suggest that progression-free survival should be the appropriate endpoint.
But obviously that's part of the reason that we go to have the conversation with them.
Biren Amin
And then on this expanded cohort of patients it seems that the response rate degraded significantly. What are the reasons why you observed this given the first 20 patients you saw a 35% response rate?
Charlie Morris
I'm not sure I would call it significant. Clearly it is not as much.
We do have more heavily pretreated patients in the population that we've seen since ASCO. And I think the other thing is we now have more information.
We can get a more robust idea and we can look at the data more intently and get a deeper understanding of who is in there. I think it's just one of those factors of what happens as you start to get more patients, start to understand it more.
To say again, everything that we've mentioned today really speaks to the confirmed response rate, and these things are not major moves. But I think there's enough information there to say, look there is a population where there is a response rate meaningfully higher than 30%, and that's the one we're going to pursue.
Operator
Our next question comes from Chris Marai with Oppenheimer.
Chris Marai
[Technical Difficulty] we see at ASCO. What sort of duration of follow-up, and then two, how many patients will be high folate receptors expression levels?
Dan Junius
Chris, you're breaking up. Could you try again?
We didn't hear you.
Chris Marai
[Technical Difficulty]. I'm just wondering in terms of the ASCO data, could you tell us how many patients would be high folate expressing patients and how many might be medium folate expression patients in that dataset, and what's the duration to follow-up?
Charlie Morris
You're breaking up pretty badly there, Chris. But I think I got the question.
First one was the high and medium expression. In the population that you'll see, I don't have the exact numbers in front of me, but about 50% of the patients will be high and about maybe about a third of the patients will be medium.
In terms of the duration of follow-up, the median - I don't actually know that number, I got to be honest with you. But all patients will have been on sufficiently long to have had a number of assessments and been assessed for whether they can have a response.
Chris Marai
With respect to pretreatment, does that in any way correlate or is it related to folate expression levels? Are you aware of any data that might suggest that?
And then finally, do your new enrollment criteria for the phase 3, does the new phase 3 design in anyway speed enrollment of that trial?
Charlie Morris
In terms of the impact of prior therapies on folate levels, we don't have data at this point. As you know we do have a biopsy cohort, which is at least looking at the consistency between archival samples and fresh biopsies, and as those data mature we'll present those data in time.
The final transformation and enrollment.
Dan Junius
There are more patients, we intend to open more centers. And it will be not this sort of two-stage that we've done before, but it will be straight into a phase 3 portion.
So I think after the ramp-up, yes, I would expect a pretty rapid recruitment.
Dan Junius
It is more than twice the patient population. So that alone I think would afford us the opportunity to see more patients more quickly.
Operator
And it appears we have no further questions in the queue at this time.
Carol Hausner
Great, I want to thank you Dan, for your tremendous contribution to ImmunoGen over the past 11 years. I want to thank everyone for their interest in ImmunoGen, and if you have any subsequent questions, please don't hesitate to call.
Have a great day.
Operator
That does conclude today's conference. Thank you for your participation.