Feb 17, 2017
Executives
Sarah Kiely - Manager, IR & Corporate Communications Mark Enyedy - President & CEO Dave Johnston - CFO Anna Berkenblit - Chief Medical Officer Richard Gregory - Executive Vice President and Chief Scientific Officer
Analysts
Biren Amin - Jefferies John Newman - Canaccord Cyrus Amoozegar - Morgan Stanley Jessica Fye - JPMorgan Boris Peaker - Cowen
Operator
Good day. And welcome everyone to the ImmunoGen December 31, 2016 Financial Results and Operating Conference Call.
Today's call is being recorded. At this time for introduction I would turn the call over to Sarah Kiely, Investor Relations and Corporate Communications.
Please go ahead, ma'am.
Sarah Kiely
Good morning and thank you for joining today's call. Earlier today we issued a press release that includes a summary of our recent progress, our financial results for the period ended December 31st, 2016 and our financial guidance for 2017.
You can find this press release on our website, immunogen.com. On the call today has accompanying slides which can also be found our website under the Investor section.
On our call today are CEO, Mark Enyedy, who will ImmunoGen's recent highlights and upcoming anticipated events, and our CFO, Dave Johnston will discuss our financial results and guidance. We will then open the call to questions, and Anna Berkenblit, ImmunoGen's Chief Medical Officer and Rich Gregory, ImmunoGen's Chief Scientific Officer will join Mark and Dave for this portion of the call.
Looking at slide two, during today's call, we may be making 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 also be accessed through our website. With that, I'll now turn the call over to Mark.
Mark Enyedy
Thanks, Sarah. And good morning, everyone.
We're pleased to be with you today to review the progress we made during the second half of 2016 and how we build on that momentum in 2017. We'll also discuss our financial and operating results for the six months period in the quarter ended December 31.
Looking back at 2016, we took a number of important steps during the second half of the year, strengthen the business and positioned us to deliver on significant clinical milestones this year. These steps included developing a new and simplified strategy for the company and completing the comprehensive review of our operations to ensure that we execute efficiently across the business and most effectively manage our cash.
Turning to slide four, just to briefly review our strategy. Our goal is to build a fully integrated biotech company that sustainably delivers innovative ADC therapies to cancer patients around the globe.
To achieve this goal, we are focused on four strategic objectives. First, as some of you will have heard me saying, ImmunoGen is been a business for 35 years and it’s time for us to a product on the market.
So our number one priority is to complete the development and obtain approval from mirvetuximab in ovarian cancer by 2020. Second, we will accelerate the development of our early-stage portfolio with an emphasis on our IGN programs.
With a potentially broad therapeutic index we believe we can markedly increase the number of cancers addressable by ADC therapies with this technology. Third, building on our leadership position in ADCs.
We will continue to drive innovation in this space to unmatched depth and breadth of expertise in new payloads, linkers and methods of conjugation. And finally, we will continue to lever our platform to support our existing relationships and pursue new collaborations that would generate revenue, mitigate expenses, enhance our capabilities and expand the reach of our innovation.
Moving to slide five. Over the last six months we made substantial progress toward these priorities.
First, we positioned mirvetuximab for pivotal development with compelling data from our Phase 1 expansion cohort, which we recently published in JPL, positive meeting with FDA and EMA supporting the design for our Phase 3 FORWARD I trial, which will allow for full approval with a single study, pursuing combinations to expand the potential market for mirvetuximab and most importantly activating multiple sites in dosing the first patient in FORWARD I. We also advanced our early-stage portfolio by enrolling patients in the Phase 1 study of 779 with our new DNA alkylating payload and AML and delivering an oral presentation at ASH, demonstrating a differentiated profile with our alkylater platform using IMGN632 in comparison to crosslink agents in hematologic malignancies.
Our partners also continue to make this progress, including most recently, Sanofi advancing isatuximab for CD38 targeting antibody into a Phase 3 clinical trial in combination with pomalidomide and dexamethasone in multiple myeloma and Novartis dosing the first patient with HKT288 in Phase 1 study in ovarian cancer and renal cell carcinoma. And finally, we restructured our operations to strengthen the business and reduced our burn rate.
So 2016 was a very productive year and look forward to further progress in 2017. So moving to slide six.
Looking ahead, we expect a data rich year in 2017 with several key readouts from our proprietary pipeline, as well as advancements in the programs of our partners. These milestones include presenting an expanded Phase 1 data from the biopsy cohort from mirvetuximab at SGO March.
As a reminder, these data look at FR alpha expression levels in archival tumor tissues compared to fresh biopsy. The data we will present support our patients screening strategy FORWARD I.
In April, we will present nine abstracts at AACR which highlights the productivity of our platform in generating novel and differentiated ADC candidate. Moving into the second quarter of this year, we expect to report initial data from our FORWARD 2 trial evaluating mirvetuximab in multiple combinations, regimens that include Avastin, Carboplatin, Doxil and Keytruda.
We will also present data for more than 100 patients treated in our Phase 1 program to include new data from a 40 patient cohort administered steroid eye drop to better manage ocular events and a pooled analysis for multiple Phase 1 cohort that will include the JCO expansion cohort, a 27 patient biopsy cohort in those 40 patients steroid eye drop cohort. In the middle of 2017 we will also have data for our AML study with 779 which will be the first clinical data to be reported with our acculator payload family and we expect to file an IND for 632 in the third quarter of 2017.
And lastly, we are intensely focused on patient enrollment for FORWARD I and we will bring on more than 100 sites over the course of this year to meet our accrual targets for this study. So an important year ahead of us, and with that I'll hand the call over to Dave to review our financials.
Dave Johnston
Thanks, Mark. Moving on to slide seven.
Our financials were discussed in detail in our press release this morning, so I'm just going to review some of the highlights and then talk about our guidance for 2017. Revenues for the six-month period ending December 31, 2016 were approximately $22 million, which included a $5 million partner milestone from Novartis for the start of a Phase I trial that Mark just mentioned and we expect the cash from that to be received in the first quarter of 2017.
It also includes about $13 million of non-cash royalty revenue on the sales of Kadcyla with the balance of our revenues in this period being R&D support and clinical materials fees. Operating expenses for the six-month period were approximately $89 million, which included $67 million of R&D expenses and $18 million of G&A expenses, as well as approximately $4 million of restructuring charge related to the workforce reduction we announced in September of 2016.
Net loss for the six month fiscal year transition period was about $79 million or about $0.91 per share. And we ended the year with approximately $160 million of cash and cash equivalents and had a $100 million of convertible debt outstanding.
Now turning to our guidance for 2017. We project revenues are expected to be between $70 million and $75 million, including about $28 million of upfront and milestone from our partners.
Operating expenses between $175 million and $180 million and we expect to end 2017 with between $35 million and $40 million in cash. We expect that this will enable ImmunoGen to fund our operations into the second quarter of 2018.
So with that, I'll turn the call back over to Mark.
Mark Enyedy
Thanks, Dave. Just to wrap up on slide 10.
In 2016, we strengthened ImmunoGen operationally and financially with a focused strategy and disciplined execution. Building upon this momentum, we entered 2017 well positioned to deliver significant value for our patients, shareholders with a lead program in Phase 3, a strong team, a productive platform, high-value partnerships and a solid financial position that will enable us to execute on our strategy.
So we look forward to keeping you up to date on our progress over the course of year. And with that, we'll turn it over to Q&A.
Operator
Thank you. [Operator Instructions] And we will take our first question from Andy from William Blair.
Go ahead sir.
Unidentified Analyst
Hi, thanks for allowing me to ask the question. So looking at the FORWARD I design, the primary end points are PFS and high expressers and the overall population.
Just how should we think about the powering assumptions among the high expresser cohort given that the high expressers will be about two-thirds of the entire population?
Mark Enyedy
Anna?
Anna Berkenblit
Hi, Andy. Thank you for your question.
The study is designed and powered as a robust Phase 3 study. And we have ensured that we had sufficient power for the overall population, which is about a - third of the patients will have medium expression, and as he said about two thirds of the patients will have high expression.
So we are using a Hochberg procedure, which allows for testing in both the overall population, and the high subset at the same time. This procedure is not a hierarchical testing, but rather allows us to claim success on either the entire population or the high subset or depending on which p-value is more significant.
Unidentified Analyst
Just a follow-up on that, so, does that mean the p-value would potentially - could potentially be lower than 0.05 for these two cohorts? And just thinking about scenario analysis, what is the regulatory path going forward if you hit on the overall population but not among the high expresser?
Anna Berkenblit
That would be an extremely unlikely situation, Andy, and I am saying that for two reasons, one is from all of the preclinical data that we have, as well as all of the clinical data that we've generated, I would find it an extreme unusual occurrence if we had significance in the medium patients that is so profound that it overcomes or negates a quote negative result in the high subset. It’s just - we have not modeled that because we do not think that that’s a possibility.
I can assure you that our biostatistician however has modeled a lot of potential scenarios to ensure the robustness of the design.
Unidentified Analyst
Okay. Thanks for that.
And just lastly, I think there's a partnered compound targeting CDH6 in ovarian cancer. Now is there a conflict between that and mirvetuximab soravtansine?
Mark Enyedy
This is the no virus compound, Andy, this is Mark, they just dosed their first patient and you know, Phase 1 study and ovarian cancer and in renal cell carcinoma. So I'd say, it’s pretty early to tell what that’s going to look like.
And maybe just one other point on the Phase 3, I mean, we did review the fiscal analysis plan was the FDA, and so they are signed off on using the Hochberg procedure for purposes of this study and that will be sufficient to support and approve if the p-value is right.
Unidentified Analyst
Great, thank you so much for all the insight.
Mark Enyedy
Sure.
Operator
Thank you. We'll take our next question from Biren Amin from Jefferies.
Go ahead sir.
Biren Amin
Yes. Hi, guys, thanks for taking my questions.
Just on the 779 Phase 1, I guess how many patients should we expect later this year? And I'm going to assume that these are primarily relapsed refractory patients in your trials, so are they eligible at some point for some cell transplant or are they coming into their trial already failing on transplant?
Thanks.
Anna Berkenblit
Good question. Our 779 trial is enrolling as quickly as the Phase 1 does escalation trial can enroll, so we expect in the middle of the year to present safety data from several cohorts.
In terms of the patient population you're absolutely right, since this is a Phase 1 trial, the patients have relapsed refractory disease, a subset of them have already had a transplant, and have relapsed after the transplant.
Biren Amin
Got it. Thank you.
Operator
We will take our next question from John Newman with Canaccord. Go ahead sir.
John Newman
Hi, guys. Thanks for taking the question.
I just wondered if there's been any changes to the approach to manage ocular toxicity at this point with mirvetuximab or if you're pretty satisfied with the methodology that you've been using up to this point?
Anna Berkenblit
We're very satisfied with the methodology that we've been using and there have not been any changes. As a reminder, we are including, not just lubricating eye drops, but also corticosteroid eye drops in all patients in our Phase 3 trial because we believe this will help us manage the ocular toxicities and maintain dose intensity.
John Newman
Great. Thanks.
Operator
We will take our next question from Matthew Harrison with Morgan Stanley. Go ahead sir.
Cyrus Amoozegar
Hi. Yes, this is Cyrus on for Matt.
Thanks for taking the question. I wanted to ask about the biopsy cohort.
What sort of information do you expect to learn? And then for the combination cohorts that we're going to see the data in the second quarter, what kind of info should we expect to see?
Anna Berkenblit
I'll take the biopsy question first. So those data will be presented in poster format at SGO next month.
And as Mark mentioned, it will show - the data will support the selection strategy that we're using in our Phase 3 trial based on archival tissue. The biopsy cohort is designed to select patient based on their archival FR alpha expression.
And then we had taken fresh biopsy prior to the first dose of mirvetuximab soravtansine for each patient, and then also patient received post-treatment biopsy as well. So there will be biomarker analyses as well.
But the key message from that presentation at SGO next month is that, our strategy for patient selection based on archival tissue is appropriate. Moving on to your question around the combinations, we will be presenting dose escalation data for all four combinations and the focus will primarily be on safety and whatever efficacy data we have available at the time of presentation we will present.
At this point, we have been able to give the highest dose of mirvetuximab soravtansine, which is 6 milligrams per kilogram, identical to the monotherapy dose in combination with each of the highest dose for each of the combination agent and those are the monotherapy doses that are typically used in ovarian cancer.
Cyrus Amoozegar
Got it. Thank you.
Operator
We will take our next question from Jessica Fye with JPMorgan. Please go ahead.
Jessica Fye
Hey there, thanks for taking my questions. Two from me, first with respect to the data coming out at ASCO and new patients that we will see on single agent mirvetuximab, can you help us understand how many more patients we'll get data for that look like the patients that you are enrolling in your phase 3?
Second, you gave an expectation for your cash balance at year end, can you talk about your expectations for how to fund the company over the next kind of couple of years? Thank you.
Anna Berkenblit
So I'll take the first question regarding the number of patients we have now who would meet our Phase 3 eligibility criteria and we've over doubled that population. So that really increases the confidence that we have - that our initial statistical assumptions use to design the Phase 3 are indeed ones that will lead to a trial with a high probability of technical success.
Dave Johnston
Hey, Jessica, Dave, here. The second part of the question, what we've said is that, as part of our strategic review that we undertook last summer, in looking at our portfolio, we decided that while we are enthusiastic about our DLBCL compounds, we have to focus and in deciding to focus on rituximab and AML products we chose to monetize the DLBCL assets and conversations are underway right now.
Additionally, we talked about partnering our other products that we have that are already in you know, our clinical trials right, particularly AML products, we think that they would be best developed with a partner on a worldwide basis, while we would retain you know our commercial rights. So we're not talking but out-licensing but a true co-development, sort of a proposition.
And you know, some - a partnership like that would have substantial upfronts, as well as sharing expenses moving forward, and it’s not out of the question at some point that something along those lines happens with rituximab, which would then once again have the same properties or probably even a larger sort of upfront, but also sharing expenses, while once again maintaining commercial rights, particularly in North America.
Jessica Fye
Okay. Understood.
So it sounds like partnering more for, say ex-US is on the table as a means of kind of financing?
Dave Johnston
Yes.
Jessica Fye
Okay. And just to follow-up on my first question.
I think you said you've double the number of patients would match the Phase 3 population, so that sounds like it would be at least another 16 or so, are we going to see data for all 16 of those at ASCO?
Anna Berkenblit
Yes. So we more than doubled it we have submitted a pooled abstract to ASCO focusing on the 113 patients in total from all three ovarian cancer expansion cohort and then drilling down into the subset that would be the FORWARD I eligible.
So yes, as we've over doubled it.
Jessica Fye
Okay great. Thank you.
Operator
And we'll take our next question from Boris Peaker with Cowen.
Boris Peaker
Great. My first question is on FORWARD I study, I'm just curious, are you specifically monitoring components with the eye drops used to manage the ocular tox?
Anna Berkenblit
So we are requiring that all patients have lubricating eye drops and corticosteroid eye drops and we are educating investigators and we have a materials to maximize the compliance. We also are ensuring that every site has an ophthalmologist that is appropriately trained as well to help us with the study.
Boris Peaker
Got you. Okay.
And then my next question is maybe for Dave regarding finances. So, perhaps a similar question to what we heard earlier, your guidance suggests ending the year with about quarter of cash which would be considered to be a running relatively low.
So if some of these partnerships don't materialize maybe in the next few months or by mid-year, are there other alternatives on cost reductions that perhaps may be available?
Dave Johnston
Hey, Boris. Yes, you know, that’s always a possibility.
As a finance head here I always have to look at all the alternatives, so I look at the upsides and downsides. So I assure you that, that all the scenarios have been analyzed that we're looking at and our first and primary goal is to put rituximab on to the market and we will do whatever it takes to make that happen.
Boris Peaker
Great. Thanks for taking my question.
Dave Johnston
Thanks, Boris.
Operator
It appears there are no further questions at this time. I'd like to turn the conference back over to Mr.
Kiely for any additional or closing remarks.
Sarah Kiely
Thank you all for joining us today and for your interest in ImmunoGen. If we can be of further assistance, please don’t hesitate to let us know.
Thank you.
Operator
That concludes today's conference. We thank you for your participation.
You may now disconnect.