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spk05: Thank you for standing by. My name's Juan Deeb and I'll be your operator today. I'd like to welcome everyone to the I-Avance third quarter, financial results call.
spk04: I would now like to turn the call over to Sarah.
spk09: Thank you, operator. Good afternoon and thank you for joining this conference call and webcast to discuss our third quarter and year to date 2024 financial results, as well as recent corporate and development program updates. Dr. Fred Voth, our interim chief executive officer and president will provide an introduction and summarize the latest progress with our US commercial launch of Amtagsy, including revenue and revenue guidance, patient demand and market access, an update on our global regulatory submissions and a high level summary of our key pipeline. Dr. Brian Gassman, our executive vice president medical affairs will highlight adoption and demand at authorized treatment centers or ATCs, as well as our community outreach initiatives to drive additional growth for the US commercial launch of Amtagsy in advanced melanoma. Dr. Igor Volinsky, our chief operating officer will cover our commercial manufacturing experience and the status of our ongoing capacity expansion. John Mark Bellemin, our chief financial officer will review our financial results, including revenue and revenue guidance, growth margin and the strength of our balance sheet. And Dr. Frederick Graf Finkenstein, our chief medical officer will review key pipeline highlights, including recent updates related to our clinical program in frontline non-small cell lung cancer. Dr. Raj Puri, our EVP of regulatory affairs and Anne Brooks, senior vice president commercial are also on the call and available for the Q&A session. Earlier this afternoon, we issued a press release that can be found on our corporate website at iovance.com. Before we start, I would like to remind everyone that statements made during this conference call will include forward looking statements regarding iOvanse's goals, business focus, business plans and transactions, revenue and revenue guidance, commercial activities, clinical trials and results, regulatory approvals and interactions, plans and strategies, research and preclinical activities, potential future applications of our technologies, manufacturing capability, regulatory feedback and guidance, payer interactions, licenses and collaborations, cash position and expense guidance and future updates. Forward looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our FTC filing. Our results may differ materially from those projected during today's call. We undertake no obligation to publicly update any forward looking statements. With that introduction, I will hand the call to Fred.
spk02: Thank you, Sarah. I am pleased to host this afternoon's conference call to discuss our financial results for the third quarter and year to date of 2024, as well as our recent corporate highlights. iOvanse is nearing the end of a successful year following our first FDA approval and a strong start to the US commercial launch of Amtagb B for patients with advanced melanoma. We are rapidly advancing our robust pipeline of current, future generation, till cell therapies across all stages of development to expand our commercial opportunities. I would like to begin by highlighting the exceptional continued demand for Amtagb B. Our third quarter total product revenue was $58.6 million, surpassing the top end of our third quarter total product revenue guidance of $53 to $55 million. Total product revenue in the third quarter included $41 million for Amtagb B and $16.5 million for Prolucan. As a reminder, Amtagb B revenue is recognized upon infusion to the patient. Prolucan revenue is recognized upon delivery to distributors or hospitals, typically a few months prior to Amtagb B infusion. Year to date total product revenue was $90.4 million through September 30th, including $54.9 million for Amtagb B and $35.5 million for Prolucan. Third quarter and year to date revenue reflects robust initial uptake and increasing strong demand and adoption of Amtagb B as well as sales of Prolucan used with Amtagb B. Since the first infusion in April through today, 146 patients have been infused with Amtagb B, keeping us on track towards our 2024 guidance and representing about $75 million 2024 revenue from Amtagb B alone with more to come. Infusions over time also reflect an increasing rate of adoption with 25 in the second quarter, 82 in the third quarter, and 39 in the fourth quarter to date. Our team's successful execution as well as the unmet medical need in advanced melanoma, high awareness, broad patient access, and a motivated and expanding network of authorized treatment centers or ATCs continue to drive strong adoption and uptake of Amtagb B and Prolucan. With 56 current ATCs, we remain focused on our goal of onboarding approximately 70 total ATCs by year end. Our community referral initiatives are also driving additional demand as our ATCs continue to scale up to treat more patients. In addition to robust demand, favorable medical coverage policies and reimbursement are facilitating broad access to Amtagb B. Approximately 75% of Amtagb B patients are covered by private payers. More than 250 million lives or more than 95% of US covered lives currently have access to reimbursement through positive medical coverage policies or pharmacy benefit plans. And positive payer coverage has been consistent with the label, clinical trials, and National Comprehensive Cancer Network or NCCN guidelines. As EGLE will further summarize, we are manufacturing and delivering Amtagb B to patients at an increasing pace. We can meet current demand by increasing capacity in headcount each month to match ongoing growth. As the launch continues, the treatment journey is also speeding up for patients. Financial clearance currently averages approximately three weeks, representing a significant reduction from four to six weeks at initial launch. ATCs are saving additional time by scheduling in parallel with financial clearance and or initiating the preconditioning regimen in conjunction with or several days prior to product arrival. We are consistently delivering on our turnaround time of 34 days for manufacturing and release testing and expect this turnaround time to decrease as the launch continues. Looking ahead, we are reaffirming our full year 2024 total product revenue guidance of 160 to $165 million. We also reiterate our full year 2025 guidance of 450 to $475 million in total product revenue. We expect a significant increase in year over year growth as ATCs broaden utilization and new ATCs as well as community referral networks contribute to additional demands. We anticipate significant additional revenue growth in 2026 and beyond. In the currently approved Advanced Melanoma Indication Loan, Amtagny and Prolucan represent more than a billion dollar peak opportunity in the US market. Globally, Amtagny represents a multi-billion dollar opportunity to address more than 20,000 previously treated advanced melanoma patients annually in the US and in our initial ex-US markets. Gross margin, which Jean-Marc will highlight in a few minutes, is also expected to increase to greater than 70% over the next several years. And our third quarter gross margin is more than halfway toward that target. With a fully integrated infrastructure and growing interest in Amtagny outside the US, I've advanced as well positioned to continue scaling globally. Our ex-US teams are being built and regulatory dossiers are under review, submitted or planned across multiple international markets with the potential for a first ex-US approval in the first half of 2025. The European Medicines Agency validated and accepted our Marketing Authorization Application, or MAA, for review for all EU member states with potential approval in the second half of 2025. The Medicines and Healthcare Products Regulatory Agency in the United Kingdom is reviewing a separate MAA submission for potential approval in the first half of 2025. Our new drug submission is also underway for near-term submission in Canada and will include a prioritized review process for potential approval in mid-2025. Additional regulatory dossiers remain on track for submission in Australia and Switzerland in 2025. And we'll target additional markets with highly concentrated populations of advanced melanoma patients in the future. I've advanced as poised to remain the global leader in innovating, developing and delivering current and future generations of TIL cell therapies for patients with cancer. The first approval, launch and large-scale manufacturing with TIL cell therapy, together with our intellectual property position and deep pipeline, provide us with distinct competitive advantages. Future growth drivers include global label expansions in the frontline advanced melanoma, other tumor types and next generation programs that we'll discuss in more detail today. I'll hand over now to Brian, our Executive Vice President of Medical Affairs, who will summarize our ATC network in US field activities. Brian.
spk13: Thank you, Fred. We're excited about the potential for mTAGV to improve the lives of thousands of patients with advanced melanoma. Our ATCs continue to share positive feedback and stories about their patients who have benefited from mTAGV since approval. My objectives today are to highlight, one, demand and adoption and utilization across our expanding ATC network, and two, our field support for ATCs as well as targeted community oncologists. First, our ATC network is scaling and expanding as planned, and we expect robust demand growth to continue. mTAGV's early inclusion in the NCCN guidelines combined with strong clinical data has supported broad and successful market access. Today, mTAGV is available at 56 United States ATCs, and our goal is to reach approximately 70 total ATCs by the end of 2024, with more to come in 2025. Our field medical team is composed of highly experienced medical science liaisons and former healthcare providers, including oncologists and surgeons. They understand the unique needs of each ATC and proactively provide support, training, and -to-peer conversations around patient selection and surgical resection to maximize successful outcomes with the mTAGV treatment regimen. As we expand our ATC network to bring treatment closer to patients, more than 90% of treated patients are located within 200 miles of an ATC today. Nearly all melanoma patients will be within a two-hour drive to the closest center by year end. Community referrals are also driving patient volume and demand growth across our networks of ATCs. IOVAN's field teams are currently targeting top community practices and large community-focused professional organizations. The primary objective is to drive earlier referrals by identifying patients with advanced melanoma who are currently receiving frontline treatment and may be eligible for mTAGV upon disease progression. In summary, we are extremely pleased with the early launch performance as our ATCs successfully adopt and broaden utilization of mTAGV. I will now pass the call to Igor Bolinsky, our Chief Operating Officer, to highlight our manufacturing progress.
spk03: Thank you, Brian. Today, I'd like to highlight our commercial and clinical manufacturing capabilities, the progress of our commercial launch, and the status of our ongoing capacity and facility expansion. Our manufacturing capacity continues at steady ramp up month over month to support the growing and mTAGV commercial demand. We continue to actively hire manufacturing and quality control staff as well as supporting functions and have significantly increased our staff capacity at IOVAN's Self-Therapy Center, or ICTC, since launch in February. We have two manufacturing facilities approved by the FDA for commercial manufacturing of mTAGV. One is our internal manufacturing facility, IOVAN's Self-Therapy Center, located in the Navy Yard in Philadelphia. It is one of the largest self-therapy manufacturing facilities in the world. In addition, our contract manufacturer's facility provides us with further capacity and scheduling flexibility to serve mTAGV patients. We are pleased with our commercial manufacturing experience to date, which remains consistent with prior clinical experience. The medical affairs team is doing a tremendous job sharing best practices among ATCs, such as optimal tumor selection and sample procurement for manufacturing, which contribute to improving manufacturing success rates. The turnaround time has been consistent at 34 days from receiving cells at the manufacturing facility to mTAGV being ready for return shipment to the ATC. As Fred mentioned, we're working on optimizing our processes to further shorten the turnaround time. As we scale up, we also expect to improve the cost of goods over time, through economies of scale and operational efficiencies, as well as by leveraging our competitive advantage and unique position as the leader in the TILB self-therapy space. Our manufacturing network is currently running at high capacity utilization, while ensuring slot availability for our ATCs. In anticipation of potential regulatory approvals of mTAGV outside the US, we are establishing logistics and distribution to support a successful commercial launch in new markets, such as the EU, UK, and Canada. The ICDC already serves patients in our clinical trials in Europe, Australia, and other geographies, and we intend to manufacture global commercial products from our Philadelphia sites as well. In anticipation of the longer term growth of global commercial demand in Naloma and other indications, we are expanding our manufacturing network. ICDC, as built today, has the capacity to provide TILB products for more than 2,000 patients annually. Building out the existing shell space at ICDC is expected to bring that capacity to over 5,000 patients annually upon completion, which we expect within a couple of years. Further expansion of our manufacturing campus in Philadelphia, along with process optimization and automation, is expected to bring the capacity to over 10,000 patients annually. The Ivan manufacturing supply chain and quality team is committed to operational excellence in providing untimely to patients. In the spirit of doing everything right first time, every time, I'd like to thank them for their continued dedication 24-7, 365, in serving out patients who need this paradigm changing and potential life-saving therapy. Importantly, our expertise in TILB cell therapy as well as manufacturing capabilities are protected by a robust intellectual property portfolio. Ivan currently owns more than 230 granted or allowed US and international patents and patent rights for untagly and other TILB related technologies that are expected to provide exclusivity through at least 2042. I am available to answer additional questions during the Q&A and I will now hand the call to Jean-Marc, our chief financial officer.
spk11: Thank you, Rigo. Today I will review our current cash position as well as our results for the third quarter and nine months ended September 30, 2024. I will also highlight our financial outlook including revenue and expense guidance as well as our gross margin. As of September 30, 2024, our unadded cash position was approximately $403.8 million, including approximately $200 million in net proceeds from the market equity financing facility during the second and early third quarters of 2024. We expect the current cash position and anticipated product revenue to be sufficient to found current and planned operation into 2026. I will now transition to our financial results. Net loss for the third quarter of 2024 was $83.5 million or 28 cents per share compared to a net loss of $113.8 million or 46 cents per share for the third quarter and the September 30, 2023. Net loss for the first nine months of 2024 was $293.6 million or $1.03 per share compared to a net loss of $327.7 million or $1.44 per share for the nine months period and the September 30, 2023. Transitioning to revenue, which Fred previously summarized, our total product revenue includes Amtac-V infusion in the US and global sales of pro-looking primarily used in the Amtac-V treatment regimen and other commercial and clinical settings. As previously discussed, pro-looking revenue is recognized upon delivery to distributors and hospitals and generally purchased several months in advance of anticipated infusions and Amtac-V revenue recognition. Total product revenue was $58.6 million for the third quarter of 2024, including $42.1 million for Amtac-V and $16.5 million for pro-looking. Total product revenue for the first nine months of 2024 was $90.4 million and consisted of $54.9 million for Amtac-V and $35.5 million for pro-looking. Revenue for the first three and nine months of 2023 was $0.5 million and $0.7 million respectively for global sales of pro-looking. Revenue increases in both periods of 2024 over the prior year periods were primarily attributable to the US commercial launch of Amtac-V and the related strong demand for pro-looking for use with Amtac-V, beginning in the second quarter of 2024. I will now highlight our cost of sales, which includes cost of inventory, overhead, and related cash and non-cash expenses that are directly associated with sales on Amtac-V and pro-looking, as well as manufacturing cost of Amtac-V. Cost of sales for the three months ended September 30, 2024 was $39.8 million, primarily attributed to $8.3 million in period costs associated with patient drop-off and manufacturing success rates, $6.9 million for non-cash expenses, including fair market value step-up and intangible asset amortization, and $3.9 million in royalties payable on product sales. Notably, our third quarter costs associated with patient drop-off and manufacturing success rate have decreased over our previous quarter's report of $8.7 million, even though volume and activity greatly increased. In the prior year three months period, cost of sales was $4.3 million, primarily related to non-cash amortization for intangible assets. Cost of sales for the nine months ended September 30, 2024 was $78.5 million, primarily related to $17.2 million in certain costs associated with patient drop-off and manufacturing success rates, $20.3 million in non-cash expenses, including fair market value step-up and intangible assets amortization, and $8.2 million in royalty payable on product sales. In the prior year nine months period, cost of sales was $6.4 million, primarily related to non-cash amortization for intangible assets. The increase in cost of sales in the third quarter of the year, near today 2024, over the prior year periods, were primarily attributable to the US commercialization of MTAGV, beginning in the first quarter of 2024, as well as related increase the sales of Prolooking, including the initiation of product sales, commercial manufacturing, and related cash and non-cash expenses tied to MTAGV and Prolooking. Since the initial launch of MTAGV, cost of sales is improving as we increase volume and capacity utilization due to continued strong demand and launch ramp up. In addition, as Brian and Igor mentioned, the ongoing support, education, and training with our ATCs, as well as a continued focus on operational efficiency in manufacturing and release testing, can further optimize our cost of sales and translate to a higher gross margin over time. I will briefly comment on third quarter gross margin. Our cost of sales in the third quarter includes $6.9 million of non-cash expenses, such as fair market value and amortization related to the Prolooking acquisition, resulting in a third quarter gross margin of $25.6 million against a revenue of $58.6 million. The improvement in gross margin over the second quarter reflects our ongoing focus on profitability and positions us more than halfway towards our target of a gross margin above 70% in the coming years. I will now shift to our operating expenses. Research and development expenses were $68.2 million for the third quarter of 2024, a decrease of $19.3 million compared to $87.5 million for the same period ended September 30, 2023. Research and development expense were $210.1 million for the nine months ended September 30, 2024, a decrease of $46.5 million compared to $256.6 million for the same period ended September 30, 2023. The decrease in research and development expenses in the third quarter and first nine months of 2024 over the prior year periods were primarily attributable to the transition of antagony to commercial manufacturing and lower clinical costs and lower costs resulting from the completion of pre-commercial qualification activities in 2023. These decrease in research and development were partially offset by increasing account and related costs, including stock-based companies. The increase in research and development expenses were mostly due to the increase in the general and administrative expenses of the third quarter of 2024, an increase of $12.6 million compared to $27 million for the same period ended September 30, 2022. Selling general and administrative expenses were $110.5 million for the first nine months of 2024, an increase of $33.5 million compared to $77 million for the same nine months period ended September 30, 2023. The increase in selling general and administrative expenses in the third quarter and first nine months of 2024 compared to the prior year periods was primarily attributable to increasing account and related costs, including stock-based compensation to support the overall business and related infrastructure growth, as well as legal costs and commercial related costs. Looking ahead, I would like to briefly summarize our financial outlook. As Fred mentioned, we reiterate our guidance for total product revenue within the range of $160 to $165 million for the full year 2024, and $450 to $475 million for the full year 2024. And $325. Regarding our operating expenses, we reiterate full year 2024 cash bond guidance in the range of $320 million to $340 million, excluding one-time expense. We will also keep leveraging opportunities to optimize spending in the coming quarters. For additional information, please see the companies who selected consolidated balance sheets and statement of operation in this afternoon's press release and a form 10-Q to be filed later today. I will now hand the call to Frederick, our chief medical officer, to discuss our clinical pipeline.
spk08: Thank you, Jean-Marc. As my colleagues have conveyed, MTACV is only the tip of the iceberg for the potential of tilt cell therapy and solid tumors, which represent more than 90% of all diagnosed cancers in the US. Today, I will focus on our clinical programs in lung, frontline melanoma, and endometrial cancers, as well as our exciting next-generation pipeline. This week, we are attending the Society for Immunotherapy and Cancer Conference, or CITC, annual meeting in Houston. Here, we have a number of invited presentations focused on MTACV and our pipeline. In the late-breaking poster, we are presenting updated preliminary results from Cohort 3A and the IOV COM202 trial, including additional patients and longer-term follow-up. Cohort 3A is investigating life elucidal plus pembrolizumab in patients with advanced non-small cell lung cancer who are naive to checkpoint in the hip hybrida therapy. I'll review and analysis of Cohort 3A patients with EGFR wild-type disease, regardless of PDL-1 status, who represent the majority of patients in the frontline non-small cell lung cancer setting. The confirmed objective response rate, or ORR, was .3% among these patients, including .5% ORR in patients who have difficulty to treat PDL-1 negative disease, which is higher than reported responses in these patients to currently approved therapies. Remarkably, five of the six responses in EGFR wild-type tumors were ongoing as of the last follow-up visit, with four ongoing for more than 20 months from till infusion. In addition, median duration of response was not reached at a median study follow-up of 26.5 months. The robust response rates and meaningful durability for Cohort 3A demonstrate the potential for the life elucidal regimen to drive meaningful benefit when added to -of-care frontline non-small cell lung cancer treatment. The results are available in the late-breaking poster, as well as in our corporate deck at iobanz.com. Based on Cohort 3A data, we plan to open a new Cohort 3D in the IOVCOM202 clinical trial. Cohort 3D will investigate a regimen that adds life elucidal to the frontline standard of care of chemotherapy and pembrolizumab for patients with EGFR wild-type non-small cell lung cancer. Cohort 3D results will inform the design of a planned confirmatory trial in frontline non-small cell lung cancer. We expect that the integration of the life elucidal regimen into current frontline standard of care with chemo and pembrolizumab will further augment the strong efficacy seen in Cohort 3A and has the potential to establish a new frontline regimen in non-small cell lung cancer. To address unmet medical need among patients with advanced non-small cell lung cancer in the -PD-1 setting, we are investigating life elucidal monotherapy in the single arm registrational phase two IOVLUN22 clinical trial. Single agent chemotherapy, the current standard of care in this setting, provides limited rate and duration of responses. Investigators are excited about the opportunity to advance the first cell therapy for patients with non-small cell lung cancer in the IOVLUN22 trial. Site activations and enrollment continue to accelerate. We are also confident in our approval strategy based on the positive preliminary data and prior FDA feedback for IOVLUN202. We expect to report additional data for the registrational cohorts in 2025 and achieve a potential accelerated US approval for life elucidal and non-small cell lung cancer in 2027. Expanding the commercial opportunity for mTAGV into frontline advanced melanoma is also a top priority at IOVANCE. Our global registrational phase three trial, TILVANCE301, remains on track to support accelerated and full approvals of mTAGV in combination with Pembrolizumab in frontline advanced melanoma, as well as regular approval of mTAGV in -PD-1 melanoma. We continue to see strong momentum with enrollment and high enthusiasm among clinical sites. Nearly 50 sites are currently active across 11 countries in North America, Europe, and Australia. And more than 50 sites, 50 new sites across 15 additional countries are lined up to join TILVANCE301. As a reminder, TILVANCE301 is supported by results from IOVCOM2 to cohort 1A in patients with advanced melanoma and naive to immune checkpoint inhibitors. In the most recent cohort 1A data presentation at ASCAL, Life Elucidal plus Pembrolizumab demonstrated an unprecedented rate, depth, and durability of responses, including a 30% confirmed complete response rate, as well as a safety profile that is differentiated from combination checkpoint inhibitor therapies. In addition, we are exploring a potential -in-class frontline alternative for physicians and patients in the US. Coord1D in the IOVCOM2 trial will investigate a life elucidal in combination with nivolumab and rilatlimab in patients with frontline advanced melanoma. Moving along the pipeline, we are excited about our first clinical trial in advanced endometrial cancer. Recent approvals of immune checkpoint inhibitors in combination with chemotherapy for frontline endometrial cancer have created an unmet need for patients who progress. There are no currently approved therapies after -PD-1, which represents a significant new opportunity for tail cell therapy. Patient enrollment has commenced in our IOV END201 phase two trial to investigate life elucidal after frontline standard of care of chemotherapy and -PD-1 therapy in patients with both mismatch repair or MMR deficient and proficient tumors. This trial is supported by published preclinical and manufacturing success data, as well as positive feedback from gynecological oncology experts. As the leader in tail cell therapy, IOVANCE is also at the forefront of next-generation approaches to optimize tail and tail treatment regimen. We are investigating a next-generation PD-1 inactivated tail cell therapy, IOV4001, in the IOV GM1-201 clinical trial. Genetic modification using the TALENT technology to inactivate PD-1 may enhance the efficacy of IOV4001 in place of systemic -PD-1 therapy, which is associated with short and long-term systemic adverse events or AEs. IOV GM1-201 has cleared the phase one safety lead-in and is currently enrolling two phase two courts of patients with previously treated advanced melanoma or non-smart saline cancer, with high interest by investigators to contribute to this trial. The pace of enrollment is increasing, and this trend is expected to continue through 2025. Building on our successful pro-lucan franchise, IOV3001 is a second-generation modified IL-2 analog designed to enhance pill survival and cellular proliferation. IOV3001's favorable pharmacodynamic and pharmacokinetic characteristics may result in a better safety profile and may support less frequent dosing compared to pro-lucan. An investigation on new drug or IND application was allowed to proceed for a phase one two clinical trial of IOV3001 for use in the TIL therapy treatment regimen, and clinical enrollment is expected to begin soon. Lastly, IND enabling studies are proceeding for IOV5001, the genetically engineered, inducible and tethered IL-12 TIL cell therapy. The prior generation IL-12 TIL product demonstrated an impressive ORR of 63% in advanced melanoma patients at doses 10 to 100 volt lower than conventional TIL products. However, the product secreted IL-12, which resulted in adverse events. IOV5001's design includes inducible IL-12 expression restricted to the tumor and tethering of IL-12 to the cell surface, which prevents IL-12 secretion. We expect IOV5001 to allow higher cell doses over the prior generation product and improve TIL efficacy while ensuring safety, potentially allowing for expansion into a wide range of common solid tumor cancers beyond our current pipeline with significant market opportunity. Preclinical results supporting IOV5001 will be featured in a poll thread SITC on Saturday, November 9. We plan to submit a pre-IND meeting request to FDA this year to support clinical development of IOV5001 in many common solid tumor cancers with large populations in unmet need in 2025. Preclinical results for IOV5001 will be featured in a poll thread SITC on Saturday, November 9. Additional details about our development programs are included in today's press release, as well as the corporate slide deck and the data presentations I mentioned are currently available to view on the scientific presentations and publications page on our website. I'm happy to address questions about these programs and additional trials during the Q&A session. I would like to acknowledge the significant progress we have made in advancing our clinical and preclinical pipelines this year and thank our talented multidisciplinary team and research partners. I'm excited to see what's next as we continue to develop and deliver TILS cell therapy to cancer patients in additional therapeutic settings and with additional tumor types. I now turn the call over to the operator to begin the questions and answer session.
spk05: Thank you. We will now begin the question and answer session. If you'd all then like to ask a question, please press star one on your telephone keypad to raise your hand during the queue. If you'd like to withdraw your question, please simply press star one again. If you're called upon to ask your question or are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is on mute when asking your question. Again, please press one star one to join the queue and we do ask that you please limit yourself to one question for today's session. Our first question comes from the line of Taylor Van Buren with TD Cowan. Please go ahead.
spk15: Hey guys, thanks very much. Congratulations on the quarter and all the progress. So the 39 patients treated to date are 30% above the 30 infusions reported at the same time point last quarter and so if you just simply apply that to Q3 sales, to Q4 and pro-lucan sales are stable, you should obviously meet your annual guidance. However, there are significant holidays coming up next quarter so can you talk about the potential impact of the holidays and have you seen any infusions scheduled around those holidays yet?
spk02: Yeah, Tyler, we can talk about that a bit. We actually project infusions out over through the entire quarter and we can see them far in advance and yes, of course, during the holidays there is going to be some patients that either try to get their infusion or carryovers to try to get the infusion ahead of the holidays or after the holidays for family reasons as well as the physicians wanting to take time off. So there is a bit of a lull during that period but I think what you've calculated there is a fair estimate regardless of any lull. I think we'll still perform quite well in the quarter. We've
spk04: accounted for that when we do our projections.
spk05: Our next question comes from the line of Peter Lawson with Sparkways. Please go ahead.
spk12: Gotcha, thank you so much. I guess just a question around the IR2 stocking level. How does that change over time? I've seen there's gonna be less stocking each quarter but just if you walk through the dynamics of the stocking and the dynamics of what you think the IR2 number would look like for both use and then the stocking level. Thank you.
spk04: Thanks, Peter. The level,
spk02: we're currently stocking up three specialty distributors which represent the three large distributors in the United States, the big three. We primarily focused on one in Q2, another one in Q3 and there'll be another one we expect in Q4. I think as I said before, the numbers will be steady. They could go down and up 10% or so. You see we did more last quarter, we did less this quarter. I would strongly advise against anyone thinking we can't do more. We can do more pro-Luken in the fourth quarter and that may be the case, we'll see. But after that, we'll have all the main distributors stocked up and as I said on the last earnings call, we expect after that, growth to then start in 2025 and go up more
spk04: traditionally quarter over quarter. Great, thanks so much.
spk05: Our next question comes from Andrea Neuwerk-Kirk with Golden Socks, please go ahead.
spk01: Thanks so much for taking my question. Fred, I was wondering if you could provide more color on your comment that preconditioning is happening sometimes in parallel or before MTGV actually arrives at the ATC. Just curious how common this is and does this suggest that your manufacturing out of spec rates are improving sufficiently such that ATCs are willing to do this at risk? Thanks so much.
spk02: Yeah, that's right, Andrea. The ATCs that have a lot of experience with both our manufacturing process and our out of specs as well as with their patients are getting more and more comfortable doing this. So yes, I think you're correct. That does reflect that kind of confidence. I can't tell you exactly how common it is. What I can tell you is it's more common at the larger ATCs that are more sophisticated, that have more experience. I think many quarters in the launch will probably see that for a good number of patients. I don't know, I can't really guess, but
spk04: it's
spk02: either a majority or significant minority as we go out in time because what we know is that everybody's getting the message that the sooner you get this product into the patient, the better. So I think it's a lot of them feel confident
spk04: they'll want to do this more generally.
spk01: Great, thank you.
spk05: Our next question comes from one of, Yen-Nan Tzu with Wells Fargo. Please go ahead.
spk06: Great, thanks for taking our questions. Congrats on the quarter. I was wondering about the 82 infusions in the last quarter. How were they distributed across the month? And if they're a clear trajectory of growth and going into fourth quarter, how do you feel about the month to month prospects? And if I may also wondering, like the month to month growth, is that mainly from demand growth and ATC center number increase, or are there any elements of improved manufacturing and logistics that makes you comfortable about forecasting growth? Thank you.
spk02: So yes, Yen-Nan, in cross 82 infusions in the third quarter, there was month over month growth. It basically plotted on a chart. You would see it go up month over month. And we expect that to continue through Q4 with the 39 that we've already reported. With respect to your question about whether that's driven by ATC growth, meaning growth and demand at the ATCs or adding new ATCs, yes, that's a big factor in driving that. And the availability of slots above all is what drives that. So the fact that we're scaling on manufacturing is really what's driving that growth. It links up with the manufacturing capacity. Now, I can add, since you asked, yes, I think we're getting better and better with our out of spec rate. I can't say it's month over month, but quarter over quarter, I think that's what's happening. And I expect that to continue in the 2025 and beyond. So yes, month over month, you see growth and we expect that to continue. It's largely driven by capacity, but I'm sure there's an element of, I'm sure there's an element of improved out of spec rate and stuff like that, also adding some wind to those sales.
spk04: Great,
spk06: thanks for the comment.
spk05: Our next question comes from the line of Ben Burnett with CIFL, please go ahead.
spk14: Just a question on just the profitability and kind of the gross margin goals, where you think you mentioned getting to 70%, sounds like you're halfway there. How are you realizing that? And I guess what are the operational levers that will get you to that 70% goal?
spk02: Oh yeah, maybe I can start Ben and then jump, Mark can jump in and help you a little bit. So as we scale up a launch, especially using our ICTC facility, COGS goes down very quickly just on the capacity utilization. So that's a big factor in improving gross margin at the end of the day, because that's a major component of COGS, a major component of cost of sales. That'll drive margins up from where they are right now, which is in the mid forties to somewhere up closer to 70%. We've got all sorts of other initiatives, including operational excellence type work that we use to conduct projects to also improve margins. This includes some things that are quite confidential, obviously, the things that we do to improve our manufacturing process, things we do to scale things up. A lot of those things have to be followed with the FDA and take some time to go through, but they're all in progress right now. And then I think we have pretty good management of our expenses too. We try to bring those down and keep those steady at least, as we expand our clinical portfolio. Jean-Marc may be able to add a little bit more on the accounting side to that as well.
spk11: Yeah, thank you, Fred. I think you said it all, and Ben, if you think about the margin, we do expect the cost of goods sold in general to improve over time. We are only in the second quarter of launch, so obviously, there is a lot of optimization which is currently happening. And as you have seen in terms of the significant jump of improved gross margin between Q3 and Q2, we know that in the future, as mentioned by Fred, with automation, optimization, also working on some of the costs even related to raw materials, the cost of goods sold, particularly for MTAGV, we're out. That's the beauty of having your own ICTC and being in charge and control of the cost. So that's why we are confident and expect the gross margin to go to the 70%, above 70% in the future years.
spk04: Okay,
spk14: thank you very much.
spk04: Our next question comes from a line of David Dye with UBS. Please go ahead. Some of the things you did to improve dropout rate.
spk02: We
spk04: only
spk02: caught part of that, David. Could you please repeat that question?
spk16: My apologies. So just curious about the dropout rate. What are some of the activities you did to improve the dropout rate that you saw this quarter compared to last quarter?
spk02: I don't think we really did anything in particular. We are optimizing the launch as we go. We're teaching ATCs how to do that. How to get patients through better. We're teaching them how to do better quality surgical over sections. You heard a lot of that in the script from all of us, including Brian's part of the script. But we are, I think, just seeing the benefits of a launch that's ongoing. It's really only two quarters in the launch. So I think you can expect to see this improve quarter over quarter and we'll eventually get up to what we think will be the manufacturing success rate that we had, or at least manufacturing experience that we had during the clinical studies. So no, there's nothing I can really point to that we did specifically.
spk04: We're just optimizing across the board. Kyle, thank you very much. Our next question comes from the line of Michael Yee
spk05: with Jeffreys. Please go ahead.
spk10: Great, thanks. Fred, can you remind us about reimbursement? I know that since launch it's been sort of coverage by patient in single case deals. Can you remind, how does it work for commercial if you want a more broad-based contract where you can get approval very quickly, days or weeks rather than a month? I'm just wondering how that's going and if that could be a significant accelerator of the business. The second question relates to the lung cancer. Can you just remind us of your ongoing pivotal study and second line, is that something that could possibly read out next year? Maybe just right size by expectations, thanks.
spk02: Yeah, so in the point of reimbursement, like we noted during the prepared remarks there that we have cut the average reimbursement time from four to six weeks down to three weeks. That's the financial clearance time that includes prior authorization as well as the single case agreements. That's probably we think the sweet spot going forward. That's really realistically what the ATCs can do. The good news is they can select the manufacturing slot parallel, schedule the operating room time and bring the patient back in which takes typically about three weeks even at high speed given their operating room capacity and stuff like that. So really I don't think it's a drag at all. We don't anticipate really needing to further optimize that. If you take a look at our corporate deck that we posted today, you'll see a new slide that summarizes this I think that really helps highlight where we're going and where other areas we can optimize but that's not really one of them. We're already there I think on that one. On not so long, yes, our press release today talked about us having data out next year 2025 and us getting approval in 2027. That's what we think can happen based on the data and based
spk04: on the study as it's running right now. Perfect, thank you. Our next question
spk05: comes from the line of Astika Gunwardin with Trurst Securities. Please go ahead.
spk07: Hey guys, Astika Gunwardin and Trurst here. Thanks for taking my question. Wanna double click onto the improvement to the outer spec rate and now that you've had several centers treating a good number of patients, are you seeing any trends or factors that influence the OS? I'm particularly wondering, is it just a factor of centers having more experience or are you now getting new centers coming online that are just getting better and are just much better at performing the resections and producing the products right out the gate?
spk02: Well, both. We're trying, in the beginning we had centers come on that were good and some that struggled to do resections and select patients. We helped them out, they got better and now we learn from that as well and are teaching the new ATCs as they come on, the benefits of all that early learning so that they don't make the same mistakes. We plot out actual run charts for each ATC to see what they did. Look patient by patient for each ATC, give them a scorecard as to how they're performing and help them with our -to-peer team. Brian's team, Brian oversees the team, Peter Friedo's team that does that and others they go out and they talk to the surgeon and they make sure the patient selection's correct and they work with them on resection quality and now I think, I would just say that we're just gaining momentum and building momentum here. It's been a big rush and it's stepping up and up and going faster and faster. There's nothing really magical to it, it's hard work but once it's done, once it's done they can get the experience and I think what we're seeing is that any ATC can really get these
spk04: skills to do amputating therapy. Thank you.
spk05: That does conclude today's Q&A session. I would now like to turn the call over to Fred Voigt, interim CEO for Closed Zero Merge.
spk02: Thank you again for joining the I-Avance biotherapeutics third quarter and year to date 2024 financial results and corporate updates conference call. We're pleased to provide an update on our launch of the first commercial telecom service to cell therapy and look forward to providing further mTAGV launch updates as well as continued developments on our pipeline in the near future. It's already been a transformative year for I-Avance and we continue to be motivated as we hear frequent feedback from ATCs about advanced melanoma patients benefiting and finding hope with mTAGV in the commercial setting. As always, we're thankful to the patients, healthcare and advocacy communities, our partners and our exceptional I-Avance team. I would also like to thank our shareholders and covering analysts for their support. Thank you.
spk05: This does conclude today's call. You may now disconnect.
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