Nov 3, 2017
Executives
Sarah Kiely - Director, Investor Relations Mark Enyedy - Chief Executive Officer Anna Berkenblit - Chief Medical Officer Dave Johnston - Chief Financial Officer Rich Gregory - Chief Scientific Officer
Analysts
Biren Amin - Jefferies Michael Schmidt - Leerink Boris Peaker - Cowen Mara Goldstein - Cantor Fitzgerald Andy Hsieh - William Blair John Newman - Canaccord
Operator
Good day and welcome to today’s ImmunoGen Conference Call covering operating and financial results for the Third Quarter 2017. Today’s call is being recorded.
At this time, I would like to turn the conference over to Sarah Kiely, Director of Investor Relations for introductions. Please go ahead.
Sarah Kiely
Thank you. 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 and our financial results for the third quarter. This press release and a recording of the call can be found under the Investors section of our website at immunogen.com.
On the call today are CEO, Mark Enyedy, will provide a summary of the key events for the quarter, including our strategic collaboration with Jazz Pharmaceuticals and the steps we have taken to strengthen our balance sheet. Anna Berkenblit, our Chief Medical Officer, will provide an update on our development programs, including our lead asset, mirvetuximab soravtansine, as well as our earlier stage programs.
Dave Johnston, our CFO, is joining us remotely today and will cover our third quarter financial results and our updated guidance. We will then open the call for Q&A and Rich Gregory, our Chief Scientific Officer will also join the team for this portion of the call.
During today’s call, we will use forward-looking statements and 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.
With that, I will now turn the call over to Mark.
Mark Enyedy
Thank you, Sarah. Good morning, everyone and thank you for joining us today.
We are pleased to be with you to discuss the progress we have made during the third quarter. This was an excellent quarter for ImmunoGen both operationally and financially as we strengthened the business model on multiple fronts and positioned the company for long-term value creation.
Last fall, we set a new direction for the business. We have restructured our operations to become more efficient and better manage our cash.
We prioritized our portfolio that focused on our highest value programs and we defined our strategy with a clear set of priorities. First, complete the development and launch mirvetuximab in 2020, accelerate our early stage portfolio, extend our leadership position in ADCs through continued innovation and strengthen our financial position through strategic partnerships.
For each of these priorities, we developed a set of operational milestones that would reflect material progress in the business, including clinical trial startup, accrual and data generation, manufacturing to support development and commercialization, transaction execution with respect to both business development and financing, and cultivating a high performance culture that fosters continued innovation. Over the last 12 months we have delivered on these milestones and in the process generated significant momentum in the business and made material progress towards our strategic priorities.
Focusing on the third quarter, in the clinic, we have activated over 90 sites in FORWARD I, which is our Phase 3 registration trial for mirvetuximab monotherapy. With this study, we are on track to complete enrollment by the middle of 2018 and readout on the primary endpoint in the first half of 2019.
We have also demonstrated clinical proof-of-concept for mirvetuximab as a combination therapy and have advanced the expansion cohorts with Avastin and Keytruda in our FORWARD II trial, which will provide the foundation for a broader label for mirvetuximab. In addition, following a review last quarter of our data and competitive environment, we are moving forward with a triple combination of mirvetuximab with Avastin and carboplatin to address patients with platinum-sensitive disease.
Turning to our heme-focused programs, we have accelerated our early stage pipeline with 779 in Phase 1 testing for AML and the filing the IND for 632 in mid-September. The 632 trial will open for enrollment later this quarter.
779 and 632 formed the basis of the strategic collaboration with Jazz that we announced in the third quarter. This partnership generates substantial funding to advance these programs at scale, provides us with access to global development and commercial capabilities, allows us to participate in the late stage development and commercialization of at least one of these programs and more broadly strengthens the financial position in the business.
To that end, since May, we have added over $235 million of capital through a combination of the proceeds of the Jazz collaboration, a recent follow-on financing and our transactions with Debiopharm and Sanofi earlier in the year. Together with our existing cash, these funds give us at least a 2-year operating run-rate, which takes us through a number of important events, including the expected timeframe for the results for the pivotal trial with mirvetuximab.
Additionally, we converted roughly $97 million in debt off of our balance sheet reducing the outstanding amount to just over $3 million. So, we have now delivered four consecutive quarters of strong clinical, operational and financial execution.
We will carry this level of momentum and performance through the end of the year and confidently look forward to a productive 2018. With that, I will turn the call over to Anna to review our recent pipeline progress with mirvetuximab 779 and 632.
Anna Berkenblit
Thanks Mark. During the third quarter, we continued enrolling patients in FORWARD I, our Phase 3 trial evaluating mirvetuximab in patients with platinum-resistant ovarian cancer.
The trial is designed to support full approval. We began enrolling patients in FORWARD I in January of this year and expect the trial to be fully enrolled by the middle of 2018.
Our clinical team has been busy opening sites in the U.S., Canada and Europe and we are on track to have more than 100 sites opened by the end of the year. We are pleased with how the study is progressing and as previously mentioned expect to have an interim analysis for futility only in the first quarter of 2018.
Based on the anti-tumor activity and tolerability profile we have demonstrated thus far, we believe mirvetuximab monotherapy has the potential to displace chemotherapy in the platinum-resistant setting. In addition, the promising combination data we have generated thus far in the FORWARD II trial positions mirvetuximab for development in earlier lines of treatment further expanding the opportunity for our lead candidate.
We have demonstrated that full dose mirvetuximab combines safely with full doses of Avastin, carboplatinum, pegylated liposomal doxorubicin or Doxil and Keytruda. We are currently enrolling patients and expansion cohorts with Avastin and Keytruda combinations and we are planning a triplet evaluating mirvetuximab in combination with Avastin and carboplatinum in recurrent platinum sensitive ovarian cancer.
In parallel with our mirvetuximab program, we are continuing to advance IMGN779 and IMGN632, which are ADCs for hematologic malignancies that use our novel DNA alkylating IGN payloads. At the upcoming ASH annual meeting, we will have presentations highlighting clinical and preclinical data for IMGN779 and preclinical data for IMGN632.
As a reminder, 779 is a novel CD33 targeted ADC that we are evaluating in patients with acute myeloid leukemia. We are continuing to dose escalate on an every other week regimen and we have recently initiated a weekly dosing schedule as well.
At ASH, we will present updated clinical data for 779 from the dose escalation portion of the ongoing Phase 1 study in patients with relapsed refractory CD33 positive AML. We will also present preclinical combination data for 779 with cytarabine, a commonly used chemotherapeutic for the treatment of AML.
The poster will describe the mechanism anti-leukemia activity and tolerability of the combination using in vitro and in vivo human AML preclinical models. Additionally, at ASH, we will present preclinical data with 632, our novel CD123 targeted ADC demonstrating anti-leukemia activity in acute lymphoblastic leukemia cell lines and patient samples.
These initial data are very encouraging and we look forward to sharing more details at the meeting next month. With regard to 632, during the third quarter, we filed an investigational new drug application to support clinical testing of 632 in patients with CD123 positive hematologic malignancies, including AML and blastic plasmacytoid dendritic cell neoplasm, or BPDCN.
We announced last month that the FDA completed the safety review and the IND is now active. We are rapidly moving this compound to the clinic and expect to open the Phase 1 study before the end of the year.
In summary, we have made significant clinical progress. Our Phase 3 mirvetuximab trial is on track.
We have multiple combination assessments in progress for mirvetuximab and we have a second clinical program 779 progressing nicely through Phase 1 and we will have a third novel program, 632 entering the clinical development before the end of the year. We look forward to sharing further progress with these programs with you.
Now, I will turn it over to Dave.
Dave Johnston
Thanks, Anna. Our financials were discussed in some detail in our press release issued this morning.
So, I am going to review the highlights and talk about our updated guidance for 2017. We continue to operate with financial discipline focused on executing against our strategic priorities and this is reflected in our operating expenses in the third quarter of 2017, which were approximately $40 million driven by $32 million of R&D expenses with the remainder being G&A.
Revenues for the third quarter were approximately $8.5 million, which includes approximately $6.5 million in non-cash royalty revenue with the balance of our revenue from research and development support and clinical materials. Importantly, the $75 million upfront payment from Jazz that we received in the third quarter is being handled as deferred revenue and will be recognized as the options were taken.
For the third quarter, ImmunoGen reported a net loss of about $57 million or $0.61 a share, which included the non-cash charge of just over $22 million in connection with the conversion of debt. We ended the third quarter with approximately $195 million of cash and cash equivalents and just $3 million of convertible debt outstanding.
With $101 million net proceeds from our public stock offering last month and the collaboration with Jazz in the third quarter, we are updating our guidance for 2017. We now expect to end the year with between $260 million and $265 million of cash compared with previous guidance of between $90 million and $95 million.
Our guidance for revenue is unchanged and expected to be between $115 million and $120 million and we expect operating expenses to be between $170 million and $175 million which is $5 million lower than previous guidance. We have been diligent about evaluating all available options to ensure we have adequate funding to continue advancing our programs in a meaningful way.
As you heard from Mark, in the last 6 months, our transactions with Debiopharm, Sanofi and Jazz, along with our financing, have added over $235 million to our balance sheet, giving us a 2-year cash runway into the fourth quarter of 2019. So with that, we stand very well financed today.
And as we look forward, we continue to evaluate all mechanisms to maintain our financial strength and execute on our development programs to bring these to market. So with that, I will turn the call back over to Mark.
Mark Enyedy
Thanks, Dave. I am encouraged by the tremendous progress we have made over the course of 2017 and look forward to a number of important upcoming events.
As Anna mentioned, we will have several poster presentations at ASH this year, which include updated clinical data from the dose escalation portion of the 779 AML trial, preclinical data evaluating the mechanism anti-leukemia activity and tolerability of repeated dosing of 779 and cytarabine in combination and preclinical data generated in collaboration with MD Anderson for 632 looking at the prevalence of CD123 expression and acute lymphoblastic leukemia and the effect of 632 in ALL assays. Before the end of the year, we will also open the Phase 1 trial for 632 in AML and BPDCN.
And as we look forward to the first half of 2018, we anticipate presenting additional data from ongoing Phase 2 trial and FORWARD II with the Keytruda and Avastin cohorts. We plan to report the dose escalation finding from mirvetuximab and Keytruda combination, including efficacy data at the Society of Gynecologic Oncology Meeting in March and then we are planning to submit the data from the Avastin expansion cohorts for presentation at ASCO in June.
So, we will exit this year with significant momentum generated to sustain the operational execution and enter 2018 with confidence as we look to complete enrollment in our registration study in ovarian cancer, generate additional data assessing mirvetuximab’s potential as a combination therapy, accelerate our IGN clinical programs, and advance our research program, all with a strong balance sheet to finance these efforts. This is an exciting time for ImmunoGen.
And with that, we will open the call for questions.
Operator
Thank you. [Operator Instructions] We will go to our first question with Biren Amin with Jefferies.
Biren Amin
Yes, thanks for taking my questions. Maybe if I could just start on 779 in the ASH abstract and what additional data points we hope to see at ASH, will we get additional patients at ASH, additional follow-up on the ASH abstract patients?
Anna Berkenblit
Hi, Biren. Yes, at ASH, we will present data from all of the patients that have been enrolled in the trial thus far.
We presented initial data at EHA earlier this year from patients through dose Level 7. And since then, we have enrolled additional patients on that schedule, every other week schedule at additional dose levels without seeing any DLPs.
And over the past few months, we have opened up a weekly schedule as well.
Biren Amin
And then just on the abstract itself, there was one patient that died in Cycle 2, it was stated that the cause was unrelated. Can you tell us what the cause of that was?
And then I think on the hepatotoxin bilirubin elevations, when did those occur, do they occur in the first cycle, is there any correlation to the dose, just trying to get further insights into those efforts of that?
Anna Berkenblit
None of the deaths that have been observed in the trial with relapsed refractory AML patients have been attributed to drug. There has been as expected some deaths related to infections, including respiratory infections.
And again, that’s common in this population that is pancytopenic essentially and at risk for infections. With regard to hepatotoxicity and elevated bilirubin, we are monitoring patients closely and we have not seen any drug related hepatotoxicity or VOD.
Again, that is something that we are quite vigilant about, Biren.
Biren Amin
Great, thank you.
Operator
Okay. We will go to our next question with Michael Schmidt with Leerink.
Michael Schmidt
Hey, guys. Congrats on all the progress in the third quarter.
I had one regarding the triple combination study in platinum-sensitive patients. And I was just wondering so far in the resistant setting, you have obviously PARP inhibitors, but in the sensitive setting, there will obviously be some overlap with the market for PARP inhibitors, just wondering how you see the triple combo fitting into that portion of the ovarian cancer market?
Anna Berkenblit
Great question. Thank you.
So, as you point out, PARP inhibitors are not particularly effective in platinum-resistant disease. In platinum-sensitive disease, they are effective, but remember that they are difficult to combine with other agents because of their safety profile and thus far PARPs have really only been able to demonstrate activity as monotherapy in the platinum-sensitive recurrent setting as maintenance.
Mirvetuximab is different because of our tolerability profile and our anti-tumor activity. Thus far, we have been able to combine full dose of mirve with everything that we have combined with and therefore we believe mirve will be the preferred partner for platinum-based combination therapy.
And remember that these patients who do benefit from PARPs all of them lined up initially getting platinum-based combination therapy. Also please remember that before the PARPs were approved in the U.S.
for maintenance, bevacizumab or Avastin was approved December of 2016 as part of therapy for recurrent platinum-sensitive disease. So, carboplatinum chemotherapy plus Avastin is approved in the recurrent platinum-sensitive setting and Genentech Roche just filed for a supplemental NDA in the first-line setting for ovarian cancer.
So, we believe that the future is bright for a platinum-based triplet therapy with mirvetuximab and Avastin.
Michael Schmidt
Great, thanks. And then a question on the FORWARD II combination arms with Avastin and Keytruda, just wondering what you are looking for there in the – on the efficacy side next year to make a go-forward decision for additional pivotal studies?
Anna Berkenblit
So, for the Avastin combination, we have already demonstrated pretty remarkable activity in a very heavily pre-treated population. You may remember that only one of the patients from dose escalation had one to two prior lines, everybody else had at least four prior lines of therapy, two-thirds had prior bevacizumab and we saw a 29% response rate there with nice progression-free survival of around 9 months.
So, if those data hold up in the expansion phase, we certainly could consider pivotal development for the mirve Avastin doublet in the platinum-resistant setting. I should also mention that in the coming months, there will be an ovarian trial readout looking at bevacizumab, continued use of bevacizumab after progression.
And if that turns out to be positive, there might be a resurgence of use of bevacizumab in the platinum-resistant setting even after patients benefit from it in the platinum-sensitive setting. So, I think there is opportunities for further development of mirve Avastin as a doublet.
With regard to Keytruda, ideally, we would love to see the response rate that we have seen with mirvetuximab of around 40% with a duration of response that is seen in the minority of ovarian cancer patients that do have some benefit from PD-1s at least three of them have been looked at as monotherapy in platinum-resistant disease and they only have about a 10% to 15% response rate, but it is a durable response. As a reminder, from a mechanism of action perspective, mirvetuximab soravtansine, based on its tubulin directed payload activity activates dendritic cells, priming the immune systems and that should enhance the anti-tumor activity seen by the immune system when you release the brake with a checkpoint inhibitor.
So, again those data will be available later next year.
Operator
And we will take our next question from Boris Peaker with Cowen.
Boris Peaker
Right. Thanks for taking my questions.
My first one is on the CD123 targeting, I mean it’s become a competitive space and we likely have the first drug approved in the middle of next year for BPDCN. I am just curious how do you see 632 differentiating from the competition?
RichGregory
Hi, this is Rich Gregory here. And the primary, I think we are actually going to differentiate in both aspects of the therapeutic index, meaning we have a drug which at least pre-clinically has demonstrated ability to treat a wide range of CD123 positive malignancies, including AML.
And if you look at stem line program, in particular which is I think what you are referring to, they have had some very good responses in BPDCN, but much less impressive data in AML. So, we think we are actually going to win on the and the other aspect of this of course is the safety issue vascular leak syndrome, that’s associated with that particular agent, which is a toxin conjugate and we don’t believe we are going to have anything near that level of toxicity.
So broadly speaking, I think we are going to broaden the therapeutic index on both ends of the spectrum, safer drug, but better potency allowing us to treat a broader range of CD123 positive malignancies.
Boris Peaker
Got it. And also on CD123, you have shown an abstract of looking at expression of CD123 in ALL with relatively high expression in these indications.
Do you plan to start a study specifically focused on ALL?
Anna Berkenblit
Our initial efforts will be in BPDCN and AML. However, once we have established a dose and schedule, we have already taken steps to build that into the Phase 1 trial as an expansion cohort.
And certainly wherever CD123 is expressed in heme malignancies, we would be quick to go once we understand the dose and schedule and safety profile.
Operator
And we will take our next question from Mara Goldstein with Cantor Fitzgerald.
Mara Goldstein
Great. Thank you very much for taking the question.
I just wanted to ask a follow-up on the Keytruda discussion. If indeed ovarian cancer patients, if PD-1 status is not a great indicator of efficacy in ovarian cancer patients, which I think the literature suggests it’s not and you are seeing the durable responses only about 10% to 15% of the population.
I am just curious as to the number of patients you think you will need to really look at in order to be able to figure out as you have got this observable fact?
Anna Berkenblit
So, the 10% to 15% response rate that you are quoting is for PD-1 monotherapy.
Mara Goldstein
Right.
Anna Berkenblit
But PD-1 monotherapy is really not being developed in ovarian cancer, avelumab has a Phase 3 trial in platinum-resistant disease as monotherapy versus Doxil monotherapy versus the combination. And if that trial turns out to be positive, I would be pretty certain that it would be the combination, but I think proof-of-concept really has not been achieved for these PD1s.
What we are hoping to see Mara is levering the activation of the immune system with our taxane directed payload from our ADC to enhance the immune system’s response and sighting of the ovarian cancer. So, I would expect to see a higher response rate more in the lines of 40% and the durable response and by the way, if we do achieve that in a platinum-resistant population that would form the basis potentially for accelerated approval.
Mara Goldstein
Okay, thank you. And if I could just ask for an update on the potential out-licensing for coltuximab and the thoughts around the timing of that?
Mark Enyedy
Yes. I mean, the interest there has been tepid frankly.
And so we have got an active conversation there, but as I say, the interest is tepid given the competitive environment there and so there is no predicted timeframe for completing a transaction there. We had significantly more interest in the CD37 program, which resulted in the relationship with Debiopharm, which we are completing the tech transfer as we speak which will generate a $5 million milestone, but the CD19 for coltuximab, the interest is limited.
Operator
And we will take our next question with Andy Hsieh with William Blair.
Andy Hsieh
Thanks for taking my question. I am just curious about the weekly dosing for 779, is that stemmed from the half, biological half-life observation, is it new potentially maybe you can optimize on the efficacy, just maybe talk a little bit about that decision?
Thank you.
Anna Berkenblit
Sure, Andy. We had actually built the weekly scheduling at the very beginning of the trial based on the CD33 receptor turnover kinetics.
So, it really has more to do with the biology of the CD33 receptor than anything that we knew about the pharmacokinetics of our antibody drug conjugate, but given this was the first time we put this new toxic potent payload into patients, we wanted to make sure it wasn’t toxic initially and therefore we started with a conservative every other week schedule really from a safety perspective and our plans all along have been once we have understood the safety profile and had some initial PK to move into a weekly schedule. I hope that’s clear.
Operator
Okay. We will take our next question with John Newman with Canaccord.
John Newman
Hi, guys. Good morning.
Thanks a lot for taking my questions. I am just curious in terms of the plans going forward for 779 in the next study.
Are there things that you have learned from the Seattle Genetics experience from a clinical trial perspective? We know that your compound has the differentiated mechanism, but I am wondering if there are things that you can do from a clinical trial perspective going forward to give yourself additional layers of assurance that you can really keep that safety as clean as possible?
Thanks.
Anna Berkenblit
Great question, John. So I think, there are two components here, one is around the VOD signal that they saw and then the other was really around the fatal infections that caused them to stop the Phase 3 trials early.
So, around the VOD perspective, we are following patients closely monitoring for LFTs and working closely with investigators. Again, it’s not a target related phenomenon, it’s probably more a class effect if you will.
So, we are monitoring patients closely. That being said, we are not restricting eligibility to patients who have not, for example, had a transplant.
We have enrolled a handful of patients who have had a transplant and so far folks have done fine from that perspective. So, I think vigilance there.
With regard to the excess of fatal infections, I haven’t seen their data, but right now based on what we learned from the press release, it had to do with an excess of fatal infections and one can imagine that based on their known prolonged myelosuppression that puts patients at risk for a longer period of time with a low white count so that they can’t sight infection and the longer your white count is low, the more likely you are to have something bad happen in terms of an infection that your immune system can’t fight. So for us, the most important thing that we are monitoring is the blood counts in the patients treated on our trial.
And right now, we are focused on relapsed refractory patients who are coming in with pretty much wiped out bone marrows. They are based on their prior therapies and their leukemia, but as we continue developing our drug, we will move into first relapse and then into first line.
So, we should be able to as the program progresses monitor the blood counts carefully and if we are not seeing that prolonged myelosuppression, which we shouldn’t based on our mechanism of actions, we don’t anticipate having the excess fatal infections in our program.
John Newman
Okay, great. Thank you.
Operator
It appears that there are no further questions at this time. I would like to turn the conference back to today’s speakers for any additional or closing remarks.
Mark Enyedy
Great. Well, thanks again for joining us today for your interest in ImmunoGen and we look forward to seeing you at ASH.
Operator
And this does conclude today’s call. Thank you for your participation.
You may now disconnect.