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Operator
Good morning. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Agenda Second Quarter 2022 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star and the number 1 on your telephone keypad. Thank you. Mr. Ethan Lovell, Chief of External Affairs and Communications Officer, you may begin your conference.
Abby
Thank you. Good morning, everyone, and welcome to our second quarter earnings results conference call. I'm Ethan Lovell, the Genesis Chief External Affairs and Communications Officer. And I have with me today on the call a Genesis chairman and CEO, Gero Harmon, and the company's vice president of finance, Christine Klaskens. Also joining us today is the Genesis chief medical officer, Dr. Steven O'Day, who will be available during the Q&A portion of this call. Before I turn the call over to Gero for his prepared remarks, I would like to read our forward-looking statement disclosure. This call will include forward-looking statements, including statements regarding our clinical development regulatory, and commercial plans and timelines, including timelines for data release and partnership opportunities. Such statements are subject to risks and uncertainties and speak only as of the date they are made. Agenis is under no obligation to update any of these forward-looking statements, and we refer you to our SEP filings for more details on these risks. With that, I'd like to turn the call over to Gero Harmon. Gero?
Ethan Lovell
Thank you very much, Ethan, and thank you for joining us today. We will concentrate to start on our priority clinical programs, which have demonstrated highly exciting activity. We will also provide updates on our earlier stage programs, which we expect to deliver successful outcomes in the clinic based on the robust research and preclinical data that's been generated so far. Agenis had a successful second quarter capped by a groundbreaking presentation at the World Congress on Gastrointestinal Cancer in Barcelona. Our late-breaking submission was offered prime of place at the conference's opening session, and Dr. Anthony El-Kahouri presented on heavily pretreated MSS colorectal patients who were treated with our novel adaptive innate immune activator called botansilamab, in combination with our anti-PD-1 antibody, bostilamab. We will call these BOT-BAL for short, but this combination delivered 24% overall response rates and 73% disease control rate. with a substantial number of these patients showing responses at data cutoff. No grade four or five events were reported, and the combination was generally well-tolerated. What makes these responses unique is the fact that these patients had cold tumors, and cold tumors are historically not responsive to immunotherapy. In addition, these patients had tumors which were PD-L1 negative with low tumor mutational burden. Responsive patients included those who had failed prior IO therapies. All of these make the patients treated in our trial highly unlikely to respond to immunotherapy or conventional immunotherapies, and certainly not other treatments either. While this trial was not randomized, experts in the field were satisfied with our criteria for selecting patients who were heavily pretreated and that were not confounding factors which would subjectively favor outcomes achieved in the study. We observed 24% objective response rates when compared to 1% to 2% responses in similar patients are achieved with current standards of care. This is a clear demonstration of a potentially groundbreaking therapy by the account of the experts in the field. For those of you who were unable to attend the conference, we've provided a video link to the full presentation on our website. We're also pleased with the enthusiastic response of the ESMO GI leadership and in our subsequent meetings with IO leaders in the field who regard the outcomes as potentially paradigm changing. This data has translated into significant interest in our upcoming clinical trials with bonansilumab and we have received a substantial number of unsolicited the field to participate in our upcoming CRC melanoma and pancreatic cancer trials. The unique attributes of Botansilumab and the unprecedented responses it has achieved in patients with cold tumors has also generated significant interest in future trials of other cold tumor cancers, such as gynecological cancers, gliomas, breast cancer, and pediatric cancers. We're currently working with the FDA and other global regulatory agencies to start randomized phase II clinical trials, which we hope will begin very shortly. Our strategy is to pursue the expeditious development of approval of our promising pipeline in as many markets geographically as practicable. This includes potencylumab as a monotherapy and in combination with bostilumab, zolastrilumab in combination with bostilumab, and others in clinical development. All of our pipeline products have been designed, and this is a very important point to note, to perform in unique ways as combination or monotherapies, and all of our programs are designed to address the limitations of current IO treatments to deliver improved and differentiated patient benefits. We do not take a me-too approach in any of our development strategies. With potencyrimab, We're very encouraged to see the design performance of this molecule play out in what clinicians describe to be the unprecedented clinical benefit in heavily pretreated cold tumor cancers. And this, of course, is beyond the next three cancers that we have defined as our Phase II clinical protocols to commence shortly. Botancilimab was designed to deliver multiple functions in a single antibody, T-cell priming, T-cell activation, suppression of regulatory T-cell, and avoidance of complement-related toxicities, among others. Among the attributes of Botancilimab is consistent activity we're seeing across nine solid tumors, including as we've talked about earlier, gynecological cancers, sarcomas, which have not responded to available IOP treatments. We have several other pipeline candidates that I'd like to mention now for which we've employed a similar approach. Powered by our sophisticated discovery antibody engineering and vision platforms, we've designed, for example, our CD137 agonist, agent 2373, to retain or enhance the efficacy of first-generation CD137 agonists while avoiding liver toxicity that derailed the development of other such molecules. Thus far, we've seen early signals of activity with no liver toxicity in the clinic and are to complete our enrollment in a combination study of AGEN 2373 and botansilumab in relapsed refractory melanoma to start. We also recently announced that we've begun dosing patients in our phase one study of novel, our own novel, anti-ILT2 antibody. This is AGEN 1571. AGEN1571 is a potent inhibitor of ILT2, a broadly expressed receptor that suppresses myeloid and lymphoid responses, and which is believed to contribute to PD-1 and CTLF4 resistance. That is, suppression of myeloid and lymphoid responses we believe are responsible for resistance. We're very optimistic about Agent 1571. Given our competitive positioning in this case and the encouraging activity of a similar antibody, we discovered and licensed to Merck. The Merck antibody, codename MK4830, targets among members of the LILRB family shown as IL-T4. Merck has published data demonstrating strong activity in heavily pretreated patients with solid tumors when combined with anti-PD-1 therapy, including a 45% response rate in patients who have progressed on prior PD-1 therapy alone. Naturally, the question of access up from time to time in both internal and strategic planning and external discussions. Throughout our company history, we have managed and balanced our ambitions and our ability to tap resources. Tactics we've used included prioritization of key near-term value drivers, building internal capabilities to reduce dependence on outside vendors, including soup-to-nuts commercial manufacturing of our products, clinical trial management and execution through our own CROs, and, of course, our own internal discovery engine and development. We have balanced the need to properly resource our priorities with prudent efficiency measures and cost cutting. You've seen this in our spending trends from the first quarter of this year to the second quarter of this year. We expect these trends to continue. We have also been resourceful with inputs of cash resources. Our largest cash resources over the past half a dozen years have been corporate transactions, which have netted us over $800 million. We've also selectively utilized ATM sales designed to keep dilution to a minimum. We expect corporate transactions to continue to be the dominant source of our cash until we have a sustainable cash flow from our products and our revenues from products to finance our operations going forward sustainably. Regarding our partnered antibodies in active development, in addition to the earlier mentioned Merck-licensed antibody, MK4830, the list includes our anti-tigit bispecific, Agen 1777, licensed to Bristol-Myers, along with our four immunotherapies licensed to Insight. These are all advancing in the clinic. And as these programs successfully progress, they have the potential to trigger milestone payments to agenists totaling close to $3 billion in addition to sales-based royalties for those molecules that reach commercial launch. In the past half a dozen years, agenists has delivered exceptional productivity by advancing 15 antibodies and cell therapies. Biopharmaceutical discovery and development is a high-risk, high-reward endeavor, and we believe we have a powerful set of capabilities when it comes to choosing targets, combinations, and design elements for IO innovation and sustainability. All the molecules in our pipeline were chosen based on their potential for unique advantages in clinical setting. And elements of their design have been carefully tailored with the intention of creating differentiated best or first-in-class molecules and cell therapies. We are confident that our current and future partnerships will position the company to fund a substantial portion of our development activities over the coming years, and that our discovery, antibody engineering, and vision platforms will fuel continued innovation and growth of our pipeline. We're excited to enter the third quarter from a place of strength and innovation, as we have seen with the remarkable results that have been achieved with Potencilumab and Balfilumab combination in MSS-CRC patients, and more to come on that. The future holds great things for the field of immunotherapy, and Agenis looks forward to contributing to the advancement of these life-changing medical developments. With all of that, I'll turn the call over to Christine to cover our financials.
Ethan
Thank you, Garo. We ended our second quarter 2022 with a cash and short-term investment balance of $238 million. This compares to $263 million at the end of the first quarter and $307 million at year end. We recognized revenue of $21 million for the second quarter ended June 2022, which represents an increase of $10 million from the $11 million reported for the same period in 2021. Revenue for the six months ended June 2022 was $47 million, an increase of $25 million from the same period in 2021. Amounts include revenue under our collaboration agreement, in 2022 milestones earned, and revenue related to non-cash royalties earned. For the second quarter ended June 2022, are cash used in operations with $43 million compared to 56 million for the same period in 2021. Our net loss for the quarter ended June 2022 with $49 million, or 17 cents per share, compared to a net loss of $84 million, or 37 cents per share, for the quarter ended June 2021. Non-cash operating expenses for the second quarter ended June 22, were $19 million compared to $30 million for the second quarter ended of 2021. Our cash used in operations for the six months ended June 2022 was $96 million with a net loss of 100 million or 35 cents per share compared to cash used in operations of $98 million and a net loss for the same period in 2021 of $138 million or 65 cents per share. We'll now turn the call back to Garo to handle our Q&A. Garo?
Ethan Lovell
Thank you very much, Christine. And I think we're ready for any questions that you may have from the field.
Christine
And at this time, I would like to remind everyone, in order to ask a question, please press the star key followed by the number one on your telephone keypad. And we'll pause for just a moment to compile the Q&A roster. Your first question comes from Mayank Mamthani with B Reilly Securities. Your line is now open.
Mayank Mamthani
Good morning, team. Thanks for taking our questions. So maybe first on the ILT2 program that just entered clinic, could you just review with us the rationale for combining with both PD-1 as well as your next-gen CDLA-4, and also would love to hear what we already know and should look out for in the field with these ILT drugs in the clinic and how those might be evolving going forward for validation of use in a combination setting.
Ethan Lovell
Sure, Mayank. I think if your question is... the rationale for combining ILT2 with valstilamab and botansilamab. Is that the question?
Mayank Mamthani
Yes, the first part of that.
Ethan Lovell
Okay, so I'm going to ask Dr. Odey and perhaps even Dan Chen, who has joined us today, for why we have queried this in preclinical models and the research rationale, and perhaps Dr. Odey can elaborate on that more.
Odey
Thank you, Gaurav, and thank you, Mayoung, for the question. So there are a couple of evidence that support the combination of agent 1571 with both encelamab and valencelamab. The first is that you will recall from our ACR poster actually earlier this year demonstrating the high expression of ILT2 and ILT2-positive myeloid cells in patients that did not The second is that we've demonstrated in preclinical disease-relevant models that the combination of PD-1 and agent 1571 enhances T-cell activation, NK-cell activation, and NKT activation, and the combination of both instilimab and agent 1571 potentiates immune activation. One of the reasons for this is that LT2 is known to inhibit FC gamma-R signaling, which is critical for therapies like botansilumab, and agent 1571 relieves that. And then lastly, when you look at patient samples, particularly tumor infiltrating lymphocytes and tumor cells, as shown in our ACR poster, you'll notice that PD-L1 and HLA-G, the ligand for IL-T2, are expressed on different subsets of tumor cells and immune cells. Same goes for ILT2 and PD1. This suggests that the combination of balsalimab, botansilumab, with agent 1571 will leverage different arms of the immune system to potentiate anti-tumor immunity. I'll turn it over to Stephen to add a bit more color in our clinical rationale.
Gaurav
Yeah, thank you, Myron. And yeah, we're very excited about class based on, Dan said, the preclinical data suggests that we have both a myeloid and a lymphoid checkpoint that could be quite synergistic and really build into some of the mechanism of resistance of PD-1 and CTLA-4. And obviously, the ILT4 program that we, our antibody that Merck is using is obviously advancing in the clinic with in this myeloid class, but we think we have a more broad myeloid lymphoid checkpoint that may answer some of the resistance issues to first-generation checkpoints. And as you know, we dosed the first human patient with our ILT2 several weeks ago, and what's exciting about this program is we will be looking for monotherapy single-agent activity, but obviously the program is designed to fold in both valve ILT2 combinations, and botanosilumab combinations. So we have the flexibility to move forward quickly with combinations as well as monotherapy. So more to come, but a very exciting program that's now in the clinic after some tremendous preclinical work and drug design. Thank you.
Mayank Mamthani
Thank you so much for that comprehensive overview. And then just maybe a follow-up, more focused on Botansilumab. Could you just give us an update on how far along you are with the melanoma cohort? And how might your progress to date is informing your thinking for a future development plan, which is looking like you are working towards some sort of a phase 2 trial starting later this year or next year?
Ethan Lovell
So the question is to be answered at an upcoming major conference that's going to release data not just for the additional patients that have been enrolled and studied in the CRC cohort, but some of the major cohorts as well. So unfortunately,
Mayank Mamthani
course of this year. Got it. And my final question on financials, could you just remind us what outstanding non-dilutive milestones remain for the remainder of the year? Can you just comment on that or even into early next year?
Ethan Lovell
So, once again, given the sensitivity of this very subject, we will not comment on any specific deal structures or I should say the numerical relevance of anything such as that. Now, as far as any particular milestones, As we've said publicly, and I think we've alluded to this during the course of our press release, that we expect this year to receive a total of approximately $25 million from the payment that's due to us as part of the transaction that we consummated with HCR for QS21. So that will happen during the course of this year, and that's, of course, a non-dilutive component. But additional partnership discussions and consummation of these discussions to take them to conclusion, we'll wait for more specific deal announcements for that.
Mayank Mamthani
Thank you, Gary, for that helpful overview.
Christine
And your next question comes from the line of Matt Fitz with William Blair. Your line is now open.
Matt Fitz
Good morning, Gero. Thanks for taking the question. I'm just curious when we might get some more details on the design of these impending Phase II studies for blimpfilumab. Can you comment on if the MSS-TRC arm will require a monotherapy bowel or butt arm and maybe any thoughts on comparators?
Ethan Lovell
So I think in terms of the specific design of the trials, as you know, Matt, we have said specifically that we expect to start three randomized phase two trials. Those will commence soon. I think the first cohort of details will be disclosed during the week of ESMO coming up.
Matt Fitz
Interesting. Okay. And I guess as far as the expansion cohorts coming up later this year, is there any details you can give on maybe how many patients you expect total in the expansion cohorts that are still not updated?
Ethan Lovell
So the plan is for us to present a number of cohorts of this study at another major conference coming up, which we have not announced yet.
Matt Fitz
Okay. All right. Great. Well, look forward to updates. Thank you. Thank you very much, Matt.
Christine
Again, if you would like to ask a question, please press the star key and the number one on your telephone keypad. Your next question. My apologies. The question has jumped out of queue. Okay. Here we go. Kelly Shai with Jefferies. Your line is now open.
Kelly Shai
Hi. Thank you for taking our question. This is Dave on for Kelly Shai. And my question is, could you talk about potential impact of Retalimab plus NEVO approval in melanoma on your phase 2 trial design in melanoma?
Ethan Lovell
So... I think Dr. Odey will tackle that question.
Gaurav
Sorry, the question is, what is the impact of NEVO LAG-3 in the melanoma space with our trial design? Is that the question?
Kelly Shai
Yes, so the approval of Talimab and NEVO, how does it impact your design for melanoma?
Gaurav
Yeah, well, you know, I think that the exhaustion checkpoints like LAG-3 and TIM-3 and obviously PD-1 are obviously very different targets than CTLA-4. So obviously, with first-line melanoma, now there's three frontline options, CTLA-4 with PD-1, PD-1 monotherapy, and then PD-1 LAG-3. So we'll be addressing all those cohorts with our design of our abotensilumab, which we think is obviously checkpoint than the exhaustion checkpoint. But we will address it and look forward to getting data around all those subgroups.
Kelly Shai
All right. Great. Thank you.
Christine
And there are no further questions at this time. Mr. Armin, I would turn the call back over to you.
Ethan Lovell
Thank you very much for your attention and interest in our company. In closing, I'd like to just reiterate the point. that with the data disclosure of botansilumab plus postulumab, we have received many accolades about the robustness of the responses that we've seen. In fact, many of the long-term experts in the field, including certainly CRC experts, have commented on the fact immunotherapy. So clearly this is a very exciting period for the next steps of immunotherapy, and we're delighted to have Potencil and MAP lead that effort for the future of these patients and their well-being. So with that, please stay tuned for additional information that we will be disclosing between now and the end of the year. and that will set the stage for us to be able to do our next set of trials, randomized trials, with the hope that we will get to the finish line with the collaboration of many of the experts in the field as well as regulatory agencies around the world. So I'll end my comments, and if you have any additional questions and queries, please don't hesitate.
Christine
This concludes today's conference call. You may now disconnect.
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