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spk07: Good day and thank you for standing by. Welcome to the F-Star Therapeutics 3rd Quarter 2021 Earnings Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Ms. Lindsay Trickett. Please go ahead, ma'am.
spk06: Hi, good morning, everyone. Thank you for joining us. With me today is Elliot Forster, our CEO, and Darlene Deptula-Hicks, our CFO. We announced financial results pre-market today for the year ended September 30, 2021. You can access the press release on the investor relations page of our website at fstar.com. Before we get started, let's quickly run through the forward-looking statement. Please note that as a part of our discussion today, management will be making forward-looking statements. These statements are not guarantees of future performance, and therefore you should not place undue reliance on them. Investors are also cautioned that statements that are not strictly historical constitute forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause the actual results to differ materially from those anticipated. These risks include risks and uncertainties detailed in FSTAR's filings with the SEC. The company undertakes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this conference call. With that, I'll hand the call over to Elliot. Elliot?
spk00: Thank you, Lindsay. Good morning, everyone. Welcome and thank you for participating in FSTAR's third quarter 2021 earnings call. It's great to speak with you today and provide a corporate update on what's been another positive past three months. As well as reviewing this past quarter, I'll also reflect on our first year since becoming a public company. But first, our progress in this past quarter further demonstrates the successful advancement of our clinical programs and an important expansion of our partnering activities, all in keeping with our financial plans. As a demonstration of our growing confidence in our most advanced program, FS108, we're initiating a trial in checkpoint inhibitor naive patients with non-small cell lung cancer and diffuse large bile cell lymphoma. As highlighted in our last earnings update, this reinforces our belief in the program and its potential impact in larger patient groups. Progress this quarter in FS120, our first-in-class dual agonist, and SB11285, our next-generation sting agonist, are clinically encouraging. And we're excited to make further progress in their respective ongoing phase one trials. And while I'll not be providing a specific update today, FS222 is also progressing well through its phase one trial. As important and further validation of our platform, we've entered into a new license and collaboration agreement with Janssen Biotech, one of the Janssen pharmaceutical companies of Johnson & Johnson. Under the terms of the agreement, F-Star will grant Janssen a worldwide exclusive royalty-bearing license to research, develop, and commercialize up to five novel bispecific antibodies using F-Star's proprietary platform technology. The deal is worth up to $1.35 billion, including a $17.5 million upfront payment and as well as potential tiered royalties on product sales. We're delighted to have Janssen as our newest technology partner joining Merck KGAA, AstraZeneca, and Denali Therapeutics. It's been almost a year since FSTAR was listed on NASDAQ. Since then, in spite of being in the COVID pandemic, we've been resolute in our commitment to generate transformative immunotherapies for patients with cancer, having added three new programs into the clinic. And we've also leveraged our platform and established partnerships with AstraZeneca and Janssen. Our four next-generation immune oncology therapeutics in the clinic are directed towards some of the most promising immune oncology targets in drug development, including LAG3 and CD137. We continue to strengthen the protection of our programs and platforms with over 500 patents granted or pending. And finally, we've established a strong shareholder base with a new group of leading biotech investors joining the company. And from a standing start, we've attracted and gained coverage from seven respected analysts. As a reminder, our bi-specific antibody technology allows us to create two new additional and distinct antigen binding sites in the FC region of a natural human antibody, giving us a 2 plus 2 or tetravalent binding. These two new binding sites allow simultaneous targeting of two different antigens, and importantly, enable a unique set of pharmacology that we call the three Cs. Cross-linking can form the bridge between two cells, and our platform has architecture to perform this function with great effectiveness. Clustering is needed for our chosen receptor targets to elicit their pharmacology, and by balancing affinity with avidity, we believe our tetravalent bispecifics are amongst the best in class. Finally, with respect To conditionality, the third C, for our potent bispecifics, we only want the pharmacology to happen in the right place. Therefore, our conditionally active molecules deliver their effects only where both of the cancer targets can be engaged simultaneously, focusing their activity in the tumor microenvironment. All of this means our platform enables the prospective design of natural, full-length human bispecific antibodies for safe, potent immune activation in the tumor. And with so few changes to the natural human antibody format, with the additional benefit that our manufacturing process is straightforward, giving antibody-like yields and stability. As you can see on slide six, we continually expand our intellectual property estate, which now includes over 500 granted and pending patents, all relating to our platform technology and product pipeline. We have an exceptional team that has the experience to deliver with our existing differentiated and protected technology. On slide seven, we show the whole portfolio, including our two new partners, AstraZeneca and Janssen, bringing the total potential remaining value of our partnerships to over $2.2 billion. Moving to slide eight and starting with our most advanced asset, the first in class, FS118. You'll recall that FS118 targets two clinically validated inhibitory checkpoint, PD-L1 and LAG3. As proof of concept, trial is ongoing in checkpoint failure patients with PD-1 and PD-L1 acquired resistance in head and neck cancer. This study is progressing well, and despite the pandemic, we're anticipating a preliminary clinical FSC readout in mid-2022. Additionally, we're initiating a clinical trial in checkpoint inhibitor naive patients with non-small cell lung cancer and diffuse large B-cell lymphoma to expand the opportunity for FS118. We're excited about the prospects for FS118 in both checkpoint failure and checkpoint naive patient settings and look forward to updating you in due course. FS222 is designed to target a wide range of patients, including those with low PD-L1 expressing tumors and benefits from all of the differential advantages of our platform technology. FS222 is tuned for avidity against both the co-stimulatory CD137 and the inhibitory PD-L1 targets. We believe this will provide clinical outcomes that separates us from the competition. The Phase 1 trial continues best well and will provide a clinical update at the end of this year. FS120 aims to improve checkpoint inhibitor and chemotherapy treatment outcomes for patients. and its tumor type agnostic. It co-stimulates OX40 and CD137, two key targets found on the surface of T cells. In preclinical studies, FS120 generates a triple immune response. In the tumor microenvironment, that includes CD4, CD8, and Treg cells. During the ESMO meeting this past October, we provided a phase one trial-in-progress update on FS120. Today, we're pleased to report that FS120 has cleared the accelerated dose titration phase and is well tolerated to date. And moreover, whilst we're not ready to share data details, we're encouraged by the newly emerging pharmacology in patients from the ongoing clinical trial. And these are in line with the triple immune response mechanism of action. We're excited to continue the progress of FS120 in the clinic. We plan to initiate a study of FS120 in combination with pembrolizumab next year, and we'll present preclinical data on this mechanism of action at CITSE later this week. Earlier this year, we provided an interim update on safety tolerability and pharmacokinetics of SB11285, a next-generation intravenously administered novel sting agonist. Alone and in combination with tizolizumab, SB11285 was well tolerated. across five dose levels as a monotherapy and the three dose levels as combination. Based on these positive emerging clinical data, we've continued with dose escalations and further clinical update is planned for next year. Before I hand over to Darlene, slide nine shows the multiple programs and multiple clinical readouts this coming period continues to promise to be one of the opportunities for both patients and shareholders alike. Let me give you some highlights. At or around the end of this year, we anticipate a clinical trial update on FS222. And next year, we plan to share data on FS118 in the acquired resistance patient population, further updates on FS120 as we move towards that combination with Keytruda, preliminary efficacy data with FS222, and an update on the continued clinical progress of SB11285. As you can see, it's been a year full of accomplishments. and we have an exciting period ahead of us, made possible by the team at F-Star who tenaciously pursue our goals in order to keep to the promises we make. We're committed to continuous outreach to all the investment community and grateful for the investor support that we've received to date. It's been a pleasure to share this corporate update with you, another good quarter in a good first year as a public company. And with that, I'll hand over to our CFO, Darlene, to give you an update on our financials. Darlene.
spk05: Thank you, Elliot, and good morning, everyone. I'll now go through the financial results for the third quarter of 2021. As Elliot stated, it's been another positive and productive quarter. We're confident our effective financial management provides a solid platform for executing on the company strategy, including our significant clinical milestones and our expanding partnership collaborations. We'll be happy to take questions at the end. Cash and cash equivalents as of September 30, 2021 were $71.1 million. Additionally, we expect in Q4 to receive the $17.5 million upfront payment from Janssen Biotech, resulting from our very recently announced collaboration. We expect this will provide sufficient cash to fund our currently projected operating plan including multiple clinical milestones across all four programs through mid-2023. Revenue for the quarter ended September 30, 2021 was $751,000 as compared with $9.2 million for the same period in 2020. This decrease in revenue is due primarily to a reduction of $7.7 million of licensing revenue and $0.7 million reduction in R&D services revenue. Our revenue consists of collaboration revenue under our license and collaboration agreements with Merck, KGAA, Denali Therapeutics, AstraZeneca, and most recently Janssen Biotech, which include amounts that are recognized relating to upfront payments, milestone payments, option exercise payments, and amounts historically due to us for research and development services. Currently, we do not have any ongoing R&D service arrangements with partners as those parts of the program have come to the end of the research phase and now have transitioned to the milestone phase as expected. This is consistent with our collaboration strategy. Research and development expenses were $5.1 million for the third quarter of 2021 as compared to $5.3 million for the prior year third quarter. This $0.2 million decrease was due to an increase in clinical CRO costs of $1.6 million, resulting from a full quarter of Phase I clinical trial costs for FS-120, FS-222, and SB-11285 in 2021, and a $0.9 million increase in R&D staff-related costs and $0.3 million increase in lab consumables, all of which were offset by a $2.3 million reduction in the UK R&D tax credit and decreases in manufacturing costs of 0.4 million and other allocated costs of 0.3 million. R&D expenses include 1.1 million of non-cash-based stock compensation expense for both the third quarter of 2021 and 2020. Total general and administrative expenses were $5.2 million for the quarter ended September 30, 2021. compared to $7.2 million for the preparable third quarter of 2020. This approximately $2.0 million decrease is primarily due to a decrease in legal and professional expenses of $2.6 million, resulting from costs incurred in Q3 2020 relating to the share exchange transaction with Springbank Pharmaceuticals, and a decrease in staff-related costs of $0.6 million. offset by increases in rent and repairs of $0.5 million, which were primarily due to the cost of leased buildings acquired in the Springbank transaction, an increase in insurance costs of $0.5 million, and other general administrative costs of $0.2 million. G&A expense also includes $0.4 million and $59,000 of non-cash stock-based compensation expense for Q3 2021 and 2020, respectively. Turning to net loss, net loss for the third quarter of 2021 was $10.8 million, or $0.52 per basic and diluted share, compared with a net loss of $3.5 million, or $1.88 per basic diluted share for the third quarter of 2020. In closing, effective financial management continues to underpin the significant milestones for our programs in the clinic. Elliot highlighted the multiple upcoming milestones with more exciting updates to come as we look ahead to the fourth quarter and beyond. We're encouraged by the interest and engagement from the investor community in our unique bispecific platform. We'll continue to build on the really positive relationships we've established during our first year as a public company and focus on delivering the potential of our tetravalent bispecifics for patients and investors. And with that, we'll now open the call for questions.
spk07: As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Harthaj Singh from Oppenheimer and Company. Your line is open.
spk08: Great. Thank you. And thanks for a couple of questions on a very busy day. Very nice updates. You know, Elliot, I guess, you know, a test of one's progress really is not just how you're doing against your own expectations, but, you know, other competitors around you by specifics are getting very busy. But, you know, Bristol has presented more data on its combination, Rilatilumab and Nivolumab. So can you just talk a little bit about what the insights you've gained from that in terms of FS118? And has that added to your certainty around adding, you know, non-small cell lung cancer and DLBCL You know, those are, I guess, you know, fairly different tumor types on FS118. And then in FS120, you indicate that you got past the accelerated, you know, dose escalation pretty quickly. Could you just sort of give us an update as to, you know, aside from data presentations, what will be the next steps there in terms of your clinical, you know, strategy and when we could expect an update there? Thank you.
spk00: Hey, Harthash. Look, thanks very much for the questions and for joining us today. So with respect to FS118, yeah, sure. I mean, we, as you know, have got a twin tracks chapter with 118. You know, the first is the kind of fast track to market through that refractory group of patients who have been pretreated with a checkpoint inhibitor. And as we were looking at the emerging data, not just from BMS but from Regeneron and others, and, of course, continue to look at data internally, we – grew in confidence that we can find a route into the checkpoint naive marketplace, which will allow us ultimately potentially to leapfrog some of the other players in the space. And in particular, as you'll recall from prior conversations, we're focused on the co-expression of LIK3 and PD-L1 and that being a marker for activity. And we continue through non-small cell lung cancer and diffuse large B-cell lymphoma to believe that's a potential route to success. in these much larger patient populations. So yes, and of course, we continue to monitor progress, and we're excited to see any updates that arise as we go forwards. With respect to FS120, look, as I noted, we're excited to see the emergence of some really interesting pharmacology data in the clinic. That's very much in keeping with that we showed at ESMO in our recent posted, and we've expected to come along from those preclinical data we've been establishing. So PK is in keeping, and the data we have seen is very much in keeping with that triple immune response that I described briefly in the presentation. The next steps for it, of course, are expansion into the 3 plus 3 cohorts, and we are moving as quickly as we can, and certainly over the next six to nine months, to start that combination study with pembrolizumab, because although non-clinically FS120 did certainly have some monotherapy benefits, we saw real synergies either in the combination with the PD-L1. And really interesting, and some of this thinking has begun to emerge very broadly through ESMO, the use of combination with chemotherapy. And so we're excited about both of those, but we're going to start with Pembro and Keytruda, which is supplied under agreement with MSD in 2022. So we're moving forward to that. But really, I'm really excited about what we've seen so far.
spk08: Great. Thank you, Elliot. And then just a quick follow-up for Darlene. In terms of, you know, your OpEx was pretty tight this quarter. Your programs keep on wrapping up. Darlene, any thoughts of how we should be thinking, you know, about next year? I mean, not guidance, but just any kind of color on the OpEx evolution into next year. Thank you for all the questions.
spk05: Yeah, I think the way I would think about that, Hataj, thank you for that question, is, you know, as we get, as these programs move along through the clinic, we've got one in a phase two, three in phase ones. As we move into kind of the latter half of next year, towards the end, you know, I would expect to see some of these expenses start to ramp as we move these things along further. But I think for kind of the 12-month timeframe-ish here, we won't quite see that ramp yet. It'll kind of start next year.
spk08: Great, thank you.
spk07: Your next question comes from the line of Dana Graybosh from SVB Lyric. Your line is open.
spk03: Hi, thank you for the question. I wonder if you guys had a chance to review the Merck lag data that's going to be in an oral at SITSE. They saw a pretty interesting signal of their lag in PEMBRO in frontline lung cancer, TMB high. And I just wonder if you had any reflections and if you've been looking at TMB in your previous studies or plan to look at it in your FS118 studies going forward.
spk00: Hey, Dana. Nice to speak to you. Thanks very much for the question. So we haven't taken a close look actually at those Merck-Lag3 data yet, but we certainly obviously would be interested to see that correlation with PEMBRO and see how it plays out. In terms of the kind of mutation burden of the different patient populations we look at, there are... There are groups of patients that we are interested in from a specific TMB set, but we've not disclosed what they are. And we are continuing to look at ways in which we can examine patients from that different subgroups. I'm trying not to give the game away by saying anything So for instance, as we've moved towards non-small cell lung cancer and with DL-BCL, you know, we're looking for particular pairs of biomarkers in those settings that would direct us to those patients as opposed to the kind of more agnostic, you know, TMB high patient set that we would typically think about in immune oncology. So it's a kind of more precise approach. With respect to the Merck data, frankly, you catch me a little bit cold on that, and we'll just need to take a reflect as we see it.
spk04: Well, I think we'll all see more detailed data actually at SISI, so I'll have to ask you again.
spk00: All right, that's the call. Thank you for that cold answer. Next week. I appreciate it. No worries. Thanks, Dana. Nice to talk to you. See you at the weekend.
spk07: Your next question comes from the line of Justin Walsh from B. Reilly Securities. Your line is open.
spk02: Hi, congrats on the progress. I think we've all seen companies claim plug-and-play versatility, but with your pipeline and collaboration agreements, it seems that the platform is delivering on the promise of rapid drug discovery. Can you provide some additional color on how you approach early discovery efforts and how your platform facilitates this?
spk00: Yeah, sure. I think we have not made as much as we should in the past about the adaptability, um, and versatility of the platform. But I think, um, to some extent the, the, uh, Janssen, uh, deal, you know, adding to Merck KGA and Denali, um, really speaks to that wide range. Um, and in particular, of course, Denali, uh, in, in CNS, uh, versatility, you know, we've got three programs, um, in the clinic from the platform. Um, I believe Merck KGA are about to publish on, um, something that will emerge from our collaboration with them at CITSE, and we're really excited about what's coming in the future. I think the real benefit, however, is not just the kind of volume of programs that we produce, but we continue to be able to deliver at monoclonal-like scale in terms of manufacturing, really stable molecules through that natural IgG format, as you know, And then one of the things I think is becoming really important in the bispecific world is relative affinities versus avidity in that cross-linking and clustering setting. And one of the real strengths that we have, which of course we've protected with around 500 granted or pending patents, is our ability to create those finely tuned molecules. And the molecule we haven't given much of an update on today, FS222, I think, exemplifies that tuning really, really well. And as we see data emerging, I'm sure we'll be able to reaffirm the power of that plug-and-play mechanism. And we continue to be excited by the occasional partnership, which is right for us and right for a third party like the one we just announced with Janssen.
spk02: Got it. One more quick question for me. Are there any specific takeaways that we should be looking for in your SITC presentations? I know we won't have any new clinical data, but what should we be on the lookout for?
spk00: Yeah, I think that's more of a kind of forward look. As you know, just because we've talked to you many times about this, one of the things that we do is we model using whole immune systems, all of the programs, and we look at you know, immune response, PKP day relationship. We're looking at biomarkers and so on. And we, you know, look to reflect that. And FS120 has really begun to reflect progress with respect to those models we've seen, as I've kind of hinted at during this presentation. So the CITSE poster we've got relates to a forward-looking plan with respect to the combination with Pembrolizumab and FS120. But I can't help and not use the opportunity to kind of advertise our FS118 project leader and head of biology, Michelle Morrow, is at a roundtable discussion on LAG3 at CITI as well. And those of you who are there or can tune in, please do. It will be something excellent to go on with your Sunday roast. Perfect. Thanks for taking the questions. Pleasure. Thanks, Justin. Nice to talk to you.
spk07: Again, if you would like to ask a question, press star one. If you would like to withdraw your question, press the pound key. Your last question comes from the line of Yale Jen from Laidlaw and Company. Your line is open.
spk00: Hello? Yale, if you're speaking, you may be on mute. Hello, can you hear me? Yes, got you, Yale. Yeah, sorry about that.
spk01: I apologize. I apologize. I apologize. And just in terms of 118, that... in a not so long study. Have you guys reviewed the clinical design? Could you give a little more color on that?
spk00: No, we haven't to date. We're in the process of initiating that study in Europe. And I think as soon as we are through some of the regulatory processes, which are going very well, we'll declare, we'll expose as we usually do with respect to clintrials.gov at the level that we post there, but no other detail at this time, I'm afraid, Joe.
spk01: Okay, that's fine. And maybe one question for Darlene, that the third quarter R&D expenditures certainly was much lower than the second and the first of this year. what has been the major differences in there and should we anticipate the current, I mean the third quarter figure could be a norm heading into the last quarter of this year?
spk05: Yeah, so thanks for that question. Maybe let me take G&A expenses first, I guess. If you're comparing them quarter over prior year quarter. Just remember this time last year was when we were working on the spring bank transactions. So we had a lot of professional fees, legal fees associated with that. So that's clearly not the norm. We're more in the norm going forward. So if you kind of look at Q3 in 2021, that's more the norm going forward. So again, a lot of sort of one-time expense a year ago. The other thing, earlier this year, in Q1 of this year, manufacturing costs were higher because we had, or R&D costs were higher because we had a large manufacturing batch in there. Those don't happen every month, but they do happen, you know, periodically. So there'll be some, there'll always be a little bit of up and down in different quarters, but I would think that, you know, if you kind of annualize this year to date, that's how I think about it for the next couple quarters out, a few quarters out. Does that help? Okay.
spk01: Oh, yeah, absolutely. That's very helpful and I really appreciate it. So, again, congrats on the progress and look forward to speaking to you guys soon.
spk05: Great. Thanks so much.
spk07: There are no questions at this time. I would now like to turn the call over to Mr. Elliot Foster for any closing remarks.
spk00: Great. Well, thank you everyone for joining us this morning and thanks for those questions. We've had another good quarter and a good first year as a public company. As promised, we've delivered on our corporate goals and clinical strategies and the new FS118 trial is huge potential for patients. I'm personally excited about the emerging pharmacology data from patients in FS120 trial and the other two clinical stage programs have progressed well over this period too. New partnerships with AstraZeneca and Janssen are highlights in our strategy for capitalizing on non-core assets. With a strong cash runway, we're excited to be on track to deliver many more clinical milestones over the coming months. And finally, I'd really like to thank the F-Star team, our partners, and our shareholders for your support. I'd also like to thank the patients participating in our trials and our expert clinical investigators. We're united behind our mission to develop next-generation immunotherapies to transform the lives of patients with cancer. And I look forward to sharing our successes with you every step of the way. Thank you.
spk07: This concludes today's conference call. Thank you for participating. You may now disconnect.
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