Corvus Pharmaceuticals, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Corvus Pharmaceuticals fourth quarter and full year 2022 business update and financial results conference call. At this time, all participants will be in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. It is now my pleasure to turn the call over to Zach Kubo of Real Chemistry. Please go ahead, sir.

Thank you, Operator, and good afternoon, everyone. Thanks for joining us for the Corvus Pharmaceuticals' fourth quarter and full year 2022 Business Update and Financial Results Conference Call. On the call to discuss the results and business updates are Richard Miller, Chief Executive Officer, Leif Le, Chief Financial Officer, and James Rosenbaum, Senior Vice President of Research. The executive team will open the call with some prepared remarks, followed by a question and answer period. I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements. Forward-looking statements are based on estimates and assumptions as of today and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by those statements, including the risks and uncertainties described in Corvus's annual report on Form 10-K, which was filed today with the SEC and other filings the company makes with the SEC from time to time. The company undertakes no obligations to publicly update or revise any forward-looking statements, except as required by law. With that, I'd like to turn the call over to Leif Lang. Leif?

Thank you, Zach. I will begin with a quick overview of our fourth quarter and full year 2022 financials, and then turn the call over to Richard for a business update. Research and development expenses in the fourth quarter of 2022 totaled $4.1 million compared to $4.8 million for the same period in 2021. The decrease of $0.7 million was primarily related to a decrease in personnel costs. R&D expenses for the full year 2022 totaled $24.5 million compared to $29.1 million for the full year 2021. The net loss for the fourth quarter 2022 was $9.8 million, including a $4.6 million non-cash loss related to Angel Pharmaceuticals compared to a net loss of $9.2 million, including a $2.6 million non-cash loss related to Angel for the same period in 2021. The net loss for the full year 2022 was $41.3 million, including a $10 million non-cash loss related to Angel compared to a net loss of $43.2 million including a $4.8 million non-cash loss-related angel for the full year 2021. Total stock compensation expense for the fourth quarter and full year 2022 was $0.6 million and $2.7 million, respectively, compared to $0.7 million and $4.2 million for the same periods in 2021. At December 31, 2022, Corvus had cash, cash equivalents, and markable securities totaling $42.3 million as compared to $69.5 million at December 31st, 2021. Looking forward, we expect full year 2023 net cash used in operating activities to be between $19 million and $22 million. At the midpoint, this is a 24% decrease from 2022, demonstrating our continued focus on prudently managing our cash burn rate by focusing on our most promising opportunities and establishing collaborations that help support development of our candidates. Based on this trend and our focus on CPI 818, we believe our cash will provide runway into 2024. I will now turn the call over to Richard, who will elaborate on our strategy and plans.

Thank you, Leif, and good afternoon, everyone. Thank you for joining us today for our business update call. Today, I will start by highlighting three important new developments that we believe further underscore Corvus's opportunity to advance CPI 818 in oncology and support our prioritization of this program. First, strong data. Enrollment in our clinical trial is accelerating and data in the peripheral T cell lymphoma continues to be promising with durable and deep tumor responses. In addition, we have identified a biomarker that should enable us to select patients most likely to benefit from CPI 818, which is important as we plan for our next trial. Two, which brings us to the second new development, pathway to registrational trial. In a recent communication, the US Food and Drug Administration indicated that they would like us to request a meeting to discuss a randomized phase three registration clinical trial for CPI-818. We anticipate this meeting will take place in the next few months. And third, expanding to solid tumors. We will present new preclinical data at AACR demonstrating that 818 stimulates anti-tumor immune responses to solid tumors, expanding the potential of ITK inhibition in cancer. With that as an introduction, I will now review the momentum we have built with 818 over the last several months and the key elements of planned development for T cell lymphoma. CPI-818 is a very specific covalent ITK inhibitor and binds to ITK similar to the way ibrutinib binds to BTK. We believe the opportunity with CPI-818 to target T cells is similar to that of BTK inhibitors and anti-CD20 antibodies that target B cells for the treatment of B cell lymphomas and autoimmune diseases. We are using a similar playbook. Data in lymphoma accelerates development, and then we expand into other cancers and immune diseases. Our understanding of the function of ITK in the immune system has been strengthened by our ongoing T cell lymphoma clinical trial and by additional laboratory and preclinical animal studies. Simply stated, as we learn more, we believe 818 has broader opportunities in multiple areas, including solid tumors, autoimmunity, and allergy. We have shown that ITK is a critical target in the immune system, playing an important role in T helper cell differentiation. Specifically, at the ASH meeting in December, We presented data showing that CPI-818 modulates the immune function of T cells by blocking both Th2 and Th17 cells and skewing toward Th1 cells. This is especially important for cancer therapy because Th1 cells are required for elimination of tumor cells, and Th2 and Th17 cells are the culprit cells responsible for many autoimmune and allergic diseases. We are not aware of any other selective ITK inhibitors currently in clinical development, and we believe we have a strong intellectual property position covering 818, ITK inhibitors, and methods of use. Based on all of this, we have prioritized the development of CPI-818 and have a focused strategy on T cell lymphomas to efficiently build value with our existing resources. Diving deeper into scientific and clinical momentum for CPI-818, we have checked a number of important boxes that de-risk our lead indication and confirm the broad potential for ITK inhibition across a number of diseases. We successfully elucidated the dosing, biologic, and immune effects of 818 in vitro in preclinical models and in our phase one clinical trial. This is particularly important with regard to dosing, as the induction of Th1 skewing requires different dosing than general blocking of T cell receptor signaling, a concept that we have pioneered. In cancer, our phase one T cell lymphoma trial is demonstrating activity in patients with refractory peripheral T cell lymphoma, or PTCL. Since the last data update at ASH in December, enrollment in the 200 milligram cohort has continued and accelerated. As of February 15th, 2023, 20 patients have been enrolled, including 13 available for tumor response. The updated data highlights are as follows. There has been one complete response of 24 months duration, one equivocal complete response of 13 plus months duration awaiting a PET scan for confirmation of CR. This was from a patient who had a previous partial response and has continued to demonstrate tumor regression. There's one nodal complete response of 21 months duration and a partial response of seven months duration. Ten patients continue on therapy, including seven who have not yet been evaluated for tumor response. The swimmer and waterfall tumor plots for these patients are shown in our fourth quarter results press release issued today. Our goal is to present updated data from this cohort at a medical meeting later this year, most likely at the International Conference on Malignant Lymphomas, which is meeting in June in Lugano, Switzerland. Further supporting this opportunity, we believe we have identified an important predictive biomarker that should allow us to enrich our trials for patients that are most likely to benefit from CPI-818. We now know that 818 induces a host antitumor cell mediated response that requires normal functioning T cells. We have observed that a minimum absolute lymphocyte count, or ALC, above 900 per cubic milliliter of blood is required for response. Normal ALC ranges from 1,000 to 4,000. Today's press release summarizes some of the data. Four of eight patients with ALC above 900 have objective tumor responses, and all eight have demonstrated disease control with a median progression-free survival of 28.1 months. No responses were seen in five patients with ALC below 900, and the PFS in that group is only 2.1 months. This biomarker is easy to measure, fits with 818's presumed mechanism of action, And based on our experience so far, about 70% of patients meet this criterion. This biomarker has now been incorporated as an eligibility criterion for our ongoing Phase I trial. As mentioned in my introduction, we recently received a communication from the FDA regarding our clinical development plans for 818. Based on the current enrollment rate of our ongoing Phase I 1B clinical trial, we believe that the number of patients treated in this trial would provide adequate safety and preliminary efficacy data to inform the design of a registration clinical trial. As recommended by FDA, we now plan to request a meeting with them to discuss a registration clinical trial. Our current strategy is to conduct a randomized trial in refractory PTCL comparing 818 to standard single-agent chemotherapy using our new ALC biomarker for patient selection. Standard single-agent chemotherapy has an expected median PFS of three months. We believe 818 can significantly improve on this PFS, which we can demonstrate with a modest-sized clinical trial on the order of approximately 150 patients total. This trial will potentially deliver definitive randomized data in a similar timeframe to our previously planned SingAlarm phase two trial that required an interim analysis and related meeting with the FDA. This plan is consistent with guidance for the industry just published by FDA yesterday. That document discusses considerations for a single randomized controlled trial that can support both accelerated approval based on a surrogate endpoint-like response rate, and with continued follow-up, verify or confirm clinical benefit in support of a full approval using an endpoint such as PFS. Another key update for 818 is a new opportunity in solid tumors. In a few weeks at the AACR meeting, we will present preclinical data in several models demonstrating that 818 enhances anti-tumor immune responses to solid tumors based on the modulation of T cell differentiation and resulting increase in T effector cells in tumors. Moreover, this has already been seen in our ongoing T cell lymphoma trial and will be presented at the Lugano meeting in June. This work reinforces the importance and value of ITK as a therapeutically actionable target In immune diseases, we have demonstrated 818 activity, including preclinical models of psoriasis, asthma, lupus, and fibrosis. We also demonstrated proof of concept for 818 in atopic dermatitis in companion dogs with naturally occurring disease, which is very similar to human disease. In February, we added to the list of potential opportunities with a presentation of new data by researchers from UCSF demonstrating the potential of 818 to reduce the need for chronic HIV therapy. The UCSF team will continue studying the potential for ITK inhibition to provide anti-proliferative and block and lock HIV cure strategies. This work adds further validation to the critical role of ITK in immune modulation. In the near term, we will be laser focused on enrolling in our ongoing phase one T cell lymphoma trial and meeting with FDA to discuss a randomized Phase III registration trial. For atopic dermatitis, we have decided to pause this work. This will allow us to intensify our focus on T-cell lymphoma and cancer and conserve cash while we push forward with our R&D to further strengthen the foundation for use of 818 in immune diseases. We remain excited about the potential of 818 in atopic dermatitis, In an increasingly crowded space, we have a novel approach with many potential advantages. In addition to the anticipated T-cell lymphoma milestones noted above, there are additional potential catalysts from our other two programs. Ciforadenant, our adenosine 2A receptor antagonist, and mupidolamab, our B-cell activating antibody targeting CD73. CIFO is currently in a phase 1B2 clinical trial as a potential first-line therapy for metastatic renal cell cancer in a triplet combination with ipilimumab and nivolumab. This trial is being run by the Kidney Cancer Research Consortium led by MD Anderson with participation from other member institutions, which include Vanderbilt, Beth Israel Boston, Duke, University of Michigan, University of Pennsylvania, and UT Southwestern. This trial is based on our publication in 2018 showing synergy of cifir-admin with anti-CTLA-4 antibody in preclinical tumor models and data from our Phase I studies demonstrating anti-tumor activity of cifir-admin. The trial was planned to enroll up to 60 patients with endpoints of safety, tolerability, and anti-tumor activity. The primary endpoint is the percent of patients who achieve deep responses, defined as CRs and PRs with greater than 50% reduction in tumor volume. This reflects our goal to raise the plateau on PFS and improve survival by adding cifir adenine. Historical data have shown that deep responses correlate with prolonged progression-free survival and are seen in approximately 32% of patients receiving IPI and NEVO. The complete response in those groups is only about 10%. As a reminder, This is an open-label, single-arm trial, so we anticipate that we will get a good feel for efficacy early in the trial. For mupidolamab, our partner, Angel Pharmaceuticals, has started enrolling a Phase I 1B clinical trial in China with MUPA alone and together with pembrolizumab in patients with relapsed refractory non-small cell lung cancer and also in patients with head and neck squamous cell cancer. In closing, We believe Corvus is uniquely positioned with a prioritization of 818, the most advanced ITK inhibitor in development. The key upcoming milestones for our program includes continued enrollment in our Phase 1 1B at the 200 milligram dose, including the use of our new biomarker. Updated data from our 818 Phase 1 T cell lymphoma trial will be presented at the Lugano meeting in June. meeting with FDA to discuss a randomized phase three registration trial, and from our partner-driven programs, we anticipate interim data from the SIFO trial by mid-year. We look forward to providing updates on these key initiatives in the coming quarters. I will now turn the call over to the operator for questions and answer period. Operator?

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.

Our first question comes from Aiden Husinov with

Radenburg, please go ahead.

Hello. Good afternoon. Richard Lee. Thank you very much for the update. And congratulations with the biomarker, predictive biomarker. So it seems that all eight patients had above 900 absolute lymphocyte count. those who responded at stable disease. But what about the others? I believe there were 11 patients. What was the ALC for the other three patients?

Just curious. So four out of eight patients had ALC. Of patients where we have tumor evaluations, four out of eight, sorry, eight had ALCs above 900. Four of those eight had objective responses, PR or CRs. Eight out of eight, that is the other four, had stable disease. So all eight had disease control. Four of the eight, objective tumor responses. Of the other five patients who had ALCs below 900, zero had objective responses, and how many had disease control? Two. And of course, if you look at the PFS curves, there's... remarkable difference in the duration of the time to progression, as I mentioned, 28 months versus two months. And the two months, by the way, is very similar to what you see with chemotherapy. So we think that we like this biomarker a lot. Here's why. Number one, it's consistent with the mechanism of action. If you don't have normal lymphocytes, you can't stimulate your immune system. number one. Number two, easy to measure. This is a freebie in a CBC. So when you get a complete blood count and differential, you calculate the absolute lymphocyte count based on that, and that's done every day in every patient. And the third reason is ALC is, you know, kind of well known to oncologists. We know other tumors where absolute lymphocyte count is also a prognostic feature.

Okay, yeah, that makes sense.

One final thing, Aidan, I forgot to mention. All of the new patients on the trial now, in our ongoing trial, the seven patients I think you can look at our swimmer plot in the press release, the seven arrows down at the bottom of that swimmer plot, those are all patients who were selected with our new criterion. That is, they have more than 900 lymphocytes per cubic millimeter.

Okay, understood.

And what does it say about potential combination of the ITK inhibitor with chemotherapy possible at all? And what does it say about moving to the earlier lines of therapy? You would probably expect patients having higher ALC in their earlier lines of treatment, right?

Absolutely true. It portends that more patients will be eligible if you select them earlier. No question about that. The less lines of chemotherapy you've had, the less beat up you are, the higher your lymphocyte count is going to be. So that's for sure, I would say. Secondly, in terms of chemotherapy, even patients who get chemotherapy tolerate better if they have absolute lymphocyte counts that are higher. So I think that... I think that, as you know, T cell lymphoma, by its very nature, is a very immunosuppressive disease. These patients have a lot of immune problems. And on top of that, if they're lymphopenic, if their normal lymphocytes are low, they're really incapacitated from an immune standpoint. So this really does fit nicely with our presumed mechanism of action, which as I tried to indicate in my talk, we now believe can be extended beyond T-cell lymphoma to other cancers.

Yeah, this is indeed interesting.

Yeah, at the Lugano meeting, our colleagues, well, both here and our collaborators at Peking University have done biopsies and done single-cell RNA sequencing and show that there's not only an increase in T-effector cells in the tumors, but their cytolytic capacity, their ability to kill is increased.

Right, right. Okay, understood. And the question regarding the Phase III registration, potential registration trial. So, yeah, FDA published recently, and previously in PTCL, the FDA approved other drugs in single-arm trials. So do you think this is already sort of set in stone to have a phase two randomized trial design or the FDA may still kind of go with the precedence?

I think that a randomized trial is better for us. I think this is a good thing. Here's why. First of all, if you start a single arm trial, there's no assurance you're going to get the results that are going to be, you know, successful enough to achieve accelerated approval, even by the old policies, number one. Number two, you still have to meet with them and you have to commit to or have to have the data already baked for a phase three definitive trial. So you have to have all those activities going on previously. You've got to have the data from your open label study. You have to have started and now fully enrolled your definitive trial. And so you put all that together, it's actually more work and takes longer. What I think is better for us on this is we can now do a randomized trial, go up against chemotherapy. Chemotherapy has, and we can make a dealer's choice, pick three or four drugs. We've already been discussing that with our experts. The expected median PFS with those drugs is about three months, maybe less, and we have to beat that in our single agent 818 arm. So the plan might be to look early, look at response rate. If you get a meet a threshold for response rate, you get accelerated approval, but you've got your definitive trial already cooking, and then you wait for PFS. Now, in this case, I believe, and we have to do a little bit more work running these numbers, the PFS is so short in the chemotherapy arm, I'm not sure you would save much time by looking at response rate for accelerated approval when just probably a few months longer and you've got the definitive PFS data. Do you follow that?

Got it. Yeah, it makes sense. So you don't have to wait like 24, 28 months. Yeah, right.

The difference between when you have your response rate and when you have your PFS, you know, enough PFS data is going to be pretty short.

Right. Yeah, you just have to beat that.

Okay, that makes a lot of sense. Aidan, the key here is that this is a definitive trial. You don't have to then go do a confirmatory trial. Obviously, it's positive.

Yeah, makes sense.

Makes sense. And when do you think you can start the trial?

We think we can start this trial before the end of the year. Okay. Got it. Got it.

All right. Thank you for taking my questions, and congratulations with this biomarker. Thank you.

Our next question comes from Mara Goldstein with Mizuho. Please go ahead.

Oh, great. Thanks so much for taking the question. Hey, I wanted to just go back for a second to the biomarker. Understanding that there's a normal level for ALC, do you have a sort of sense of, you know, with these patients, I know you talked about a little bit with, you know, earlier line versus later line, but, you know, what percentage of patients are likely indeed to have, you know, to meet that sort of 900 threshold that you've identified? Yeah.

Okay. So in our, Mara, in our experience so far, now we've got a lot of late-line patients. Our experience so far, about 70% of patients are greater than 900. I think as we move earlier, if we were to move earlier, you would get that number would probably go up.

Okay. And... Okay, perfect. And then I also wanted to ask, just on the meeting with FDA about, you know, starting a registration program you mentioned later this year, are there gating factors for you to request the meeting, like things that you need to do ahead of the meeting at this point? Because it certainly does accelerate and change your clinical plan.

Well, we have to prepare a package that summarizes our safety and efficacy data and a few other things. So that's a gating item. But we should be able to do that. I mean, that's straightforward. We have the experience and the team that can do that.

Okay. So is it reasonable that you might be requesting the meeting kind of, you know, around either sort of end of second quarter, early third quarter, that kind of timing?

Yes. I think we could be meeting with them in the next few months.

Okay. Thanks. I really appreciate it.

Our next question comes from Roger Song with Jefferies. Please go ahead.

Great. Thanks for the update, and thanks for taking the question. You know, maybe just commenting this potential phase three design, Rich, I understand you have been seeing this biomarker ALC greater than 900, see the difference, huge difference between treatment and above and below 900. So just curious how confident you are about this cutoff and how much data you actually need, how much more data you actually need to make sure that the cutoff you will propose to the FDA or you're waiting for, you know, you have seven patients still ongoing and they are all selected for the ALC and how likely you will need to change the cutoff Similarly, for the dose selection, it seems 200 milligrams is the dose you'll move forward, and how likely you need to do additional, you know, dose ranging or optimization before you can start the pivotal.

Thanks. Okay. Regarding the 900 ALC cutoff, the data is in the press release, and I mentioned it, 8 out of 8 disease control, 4 out of 8 objective response versus 0 in the other group, 28-month PFS versus 2-month. There's a very substantial difference between 900 and above 900 and below. You know, could we use 1,000, 900, 1,000? Yes. That's almost within experimental error of the test. Normal is 1,000. Lower than 1,000 is lymphopenia. 1,000 has been used in other settings. It's a prognostic. It was, for example, a very important prognostic feature in hospitalized COVID patients. If they were under 1,000, they did very poorly. In head and neck cancer, it's a prognostic feature. And there are other cancers as well where it's been a prognostic feature. That is, using lymphopenia or not, 1,000. We find that 900 is a really good cutoff, and we wanted to give ourselves a little bit more room. But so, I mean, I think that that cutoff makes sense. from looking at our data. It makes sense from mechanism of action. And, you know, I don't have any reason to think we would want to change it. Now, with regard to the dose, we have a lot of information now on dosing. I don't think we're going to have to explore other doses. Number one, we know that 200 milligram dose, first of all, as you know, we've looked at 100, 200, 400, 600 milligrams BID. We know that 200 gives you near complete receptor occupancy. We've done very careful studies on that. So 600 is not better than 200 in terms of occupying your receptor, your ITK target, number one. Number two, we see more efficacy at 200. Not only in our lymphoma patients, we see that in animal models, in immune disease models. There is a, some people have referred to it as the Goldilocks effect or a, There is an effect here where you have an impact on the differentiation of T cells. We think that's best at around 200 and 400 milligrams BID. But when you go too high, you get general immunosuppression. And that's probably not a good thing. So the 200 milligram dose looks really good for us, both from an efficacy standpoint, mechanism of action, et cetera. And then finally, from a safety standpoint, Most companies go into FDA and they want to use the highest dose they studied. We're actually going to say, no, we don't want to use our highest dose we studied. We actually want to use a dose that's one-third of what we studied.

Roger, does that answer your question? Absolutely. Really appreciate it. That's very, very helpful. Thank you, Rich. Our next question comes from Lee Wacek with Cantor Fitzgerald.

Please go ahead.

Hi, this is Rosemary Lee. I'm from Lee Wacek. Thanks so much for taking our questions. Just a couple of quick ones. Regarding this 200 milligram cohort, you said that enrollment has accelerated. Do you potentially know why this might be the case? Like could it be driven by data you've let out or are there other factors?

Very clear. Oh, sorry. Easy question. Accelerated because of ASH. Okay, people at ASH saw, holy mackerel, this is a really novel mechanism of action. It's active in refractory patients. ASH, I think it's really ASH. Now, of course, we made some amendments to the protocol right before that, enrolling on the lymphocyte count, et cetera. But we have a lot more interest in this trial now.

Got it. Thank you. And then just moving on to the biomarker, beyond this 900 cutoff, do you see any correlative data with, you know, with responses and 900 and above, like any linear correlations? And also, have you potentially seen any validation from the new patients you've enrolled with this selective criteria, or is it too early to tell?

So in terms of having a straight line linear correlation, I don't think we have enough data to say that and enough responders yet. But clearly, the people who have done the best have had normal, I mean, I think one of our CRs has got to have a lymphocyte count of 4,000, which is right in the normal range. So we're getting the suspicion that there might be some relationship there. In terms of the new patients, they're now being selected on the basis of ALC above 900. You know, stay tuned for that. We're seeing some really, I think, really interesting things there.

Great. Thank you so much.

It looks really good. Now, just one other question. There are some other biomarkers that we're interested in. And we just don't have enough data yet. But one of the biomarkers that we are interested in, and we've talked about before, is what's a transcription factor called GATA3, G-A-T-A-3. GATA3 is in Th2 helper T cells. GATA3 positive tumors are bad. GATA3 positive peripheral T cell lymphomas are the worst, the worst of the worst. All of our responders are GATA3 positive.

Okay, got it, got it.

I'll note that. Thank you so much. Our next question comes from Ryan Koenig with Titan Partners Group. Please go ahead. Hello?

Pardon me, Mr. Koenig, is your line on mute perhaps?

Yeah, I think we lost Titan Partners there. But are there any other questions? I don't see any. Well, I want to thank everyone for participating in our call today, and we look forward to updating you on our subsequent quarterly conference calls. Thanks a lot, and take care.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.