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spk13: Good afternoon and welcome to the CGEN third quarter 2021 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Peggy Pinkston, Vice President of Investor Relations. Please go ahead.
spk11: Thank you, Operator, and good afternoon, everyone. I'm pleased to welcome you to CIGIN's first quarter 2021 financial results conference call. This afternoon, we issued a press release with our results, and the press release and supporting slides are available on our website in the investor section events and presentations page. Speakers on today's call will be Clay Segal, President and Chief Executive Officer, Todd Simpson, Chief Financial Officer, Chip Romp, Executive Vice President, Commercial U.S., and Roger Danzy, Chief Medical Officer. Following our prepared remarks, we'll open the line for questions. We aim to keep this call to one hour and so ask that you limit yourself to one question to give everyone an opportunity to participate in Q&A during our call today. Today's conference call will include forward-looking statements regarding future or anticipated events and results, including the company's 2021 financial outlook, anticipated product sales, revenues, costs, and expenses, and potential clinical and regulatory milestones, including data readouts, regulatory submissions, and approvals. Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Factors that may cause such a difference include the difficulty in forecasting sales, revenues, and expenses, impacts related to the COVID-19 pandemic, and the uncertainty associated with the pharmaceutical development and regulatory approval process. More information about the risks and uncertainties faced by CGEN is contained under the caption, Risk Factors, included in the company's quarterly report on Form 10-Q for the quarter ended June 30th, 2021, filed with the Securities and Exchange Commission, and the company's subsequent reports filed with the SEC. And now I'll turn the call over to Clay.
spk07: Thank you, Peg. Good afternoon, everybody, and welcome to our third quarter call. We look forward to providing updates today on recent commercial, regulatory, and clinical achievements. We reported net product sales of approximately $1 billion for the year to date and $366 million for the third quarter, reflecting growth across our expanded portfolio of approved medicines. We continue to demonstrate robust financial strength fueled by product sales, royalties, and multiple strategic collaborations. Our strong balance sheet allows us to advance and expand our pipeline, both internally and through external business development efforts that you will hear more about shortly. Our first strategic priority is to maximize the global potential of our products through exceptional commercial execution, clinical development, and strategic partnerships. We've expanded our commercial portfolio from one product to four in less than two years. which is a remarkable achievement by our team. Last month, FDA granted accelerated approval to Tisodimab-vidodin or TIDDAC, a tissue factor targeted antibody drug conjugate, which we are co-developing with our partner, GenMab. TIDDAC is the first and only FDA approved ADC for patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. Upon its accelerated approval in September, TIVDAC became CGEN's fourth commercial product and marks an important milestone for women with recurrent or metastatic cervical cancer. We are focused on strong commercial execution and early launch feedback has been positive. We are also conducting a broad clinical development program intended to expand TIVDAC's future potential and support global regulatory applications. Although the initial indication represents a modest market, we have already presented promising data investigating TIDDAC in combination with other therapies in earlier lines of cervical cancer, which may represent important clinical advancements and much larger market opportunities. Tucaisa, our best in class HER2 tyrosine kinase inhibitor, has become an important option for the treatment of second and later line HER2 positive breast cancer patients with and without brain metastasis. Tucaisa is approved in 36 countries, and in addition to the U.S., we have commercially launched in Germany, France, Switzerland, and Austria. A year and a half after U.S. approval, we are pleased with Tucaisa's uptake healthcare provider feedback, and inclusion in key treatment guidelines. We continue to engage with European authorities to secure broader reimbursement for TUKAISA, which could take up to two years, depending on the country. Our strategic collaboration with Merck will help further accelerate TUKAISA's global reach in regions outside of the U.S., Canada, and Europe. We believe Teqiza has broad potential in HER2 cancers, and to that end, we recently completed enrollment in the Phase II Mountaineer Trial in advanced HER2-positive metastatic colorectal cancer, which could potentially support registration under FDA's Accelerated Approval Pathway. Tukeise's broad clinical development program also includes evaluation in HER2-positive breast cancer, gastric cancer, and other HER2-amplified or mutant tumors. PADSEV is a first-in-class ADC that has quickly become standard of care in previously treated metastatic urothelial cancer. Earlier this year, FDA granted PADSEV a second indication, making it the first and only FDA-approved therapy for patients with locally advanced or metastatic urothelial cancer who have received immunotherapy and cannot receive cisplatin. PADSF also received regular U.S. approval, enabling us to promote to the impressive overall survival data, a key benefit. We have also been able to leverage with etcetris and tukaiza. Outside of the U.S., PADSEV recently received approval in Japan, and we and our partner, Astellas, continue to make progress with global regulatory submissions across Europe, Asia Pacific, and the Americas. We have positioned PADSEV strategically to benefit from changing urethelial cancer market dynamics, and we are advancing a robust clinical development program. Notably, we recently completed enrollment in cohort K of the EV103 trial, evaluating PADSAB in combination with Keytruda as first-line treatment in patients with metastatic urothelial cancer who are unable to receive cisplatin-based chemotherapy. The results of this cohort could potentially support registration under FDA's Accelerated Approval Pathways. Lastly, at Cetris, the foundation of care in multiple CD30-expressing lymphomas is commercially available in 76 countries, along with our partner, Takeda, and is a key part of our core business. A decade after approval, Cetris maintained solid performance with record quarterly sales and will be featured in multiple abstracts at ASH in December. We continue to progress a comprehensive clinical development program to maximize etc. potential to benefit patients. Our second strategic priority is to advance our programs towards securing approvals for new products. In August, we added a late-stage asset to our pipeline through an important license agreement with Remagen for Decidimab-Bedotin, or DV, outside of Remagen's territory of Asia, excluding Japan and Singapore. DV is a novel ADC that is active across a broad range of HER2-expressing solid tumors and is being developed as monotherapy and in combination with PD-1 inhibitors. TB has already received conditional approval in China for third-line gastric cancer, and their National Medical Products Administration accepted the supplemental biologics license application for second and later lines of metastatic urothelial cancer. The deal represents a strong strategic fit as it harnesses our ADC technology expertise, development experience, and our expanded global infrastructure. These elements will help to maximize DV's potential value and global reach. We believe DV is an important and differentiated asset, and Roger will go into further detail. Our third strategic priority is to expand our deep and diverse early-stage pipeline through innovation encompassing ADCs, immuno-oncology agents, corporate development, and strategic partnerships. Importantly, we are submitting at least two INDs for additional ADCs, including those targeting B7H4 and PD-L1, further bolstering our early-stage pipelines. Across our early and late stage pipeline, we are advancing 13 programs in a range of solid tumors and hematologic malignancies, including four novel programs that are expected to enter the clinic next year. Next, I'll turn the call over to Todd, who will discuss our financial results. Then Chip will provide an update on our commercial performance. After that, Roger will provide further detail on our clinical development activities and pipeline. Todd? Thanks, Clay, and thanks to everyone for joining us on the call this afternoon. Our financial results reflect significant advances made across the business. Today, I'll summarize our financial results for the third quarter and year to date, and then discuss our outlook for the remainder of 2021. Total revenues were $424 million in the third quarter and $1.145 billion for the year to date in 2021. Product sales totaled $366 million in the third quarter, representing 37% growth over the third quarter of last year. This was driven by a growth in product sales across our portfolio. In addition, third quarter results for PADSEV included $7 million in sales to another company for a combination clinical trial that they are conducting. Given the growing interest in the use of our drugs in combination settings, We are pleased to see this and wanted to highlight the impact on PABSEP sales growth this quarter. Lastly, TIBDEC was launched late in the quarter, bringing a fourth product to our commercial year-to-date in 2021. Growth over 2020 reflected increasing sales of Etcetera by Takeda, as well as higher royalties on sales of PolarV by Roche and BlendRep by GSK. Collaboration revenues were $17 million in the third quarter and $24 million for the year to date in 2021. Third quarter revenues reflect the achievement of a regulatory milestone under our ADC collaboration with GSK, as well as sale of product supply to one of our collaboration partners. Cost of sales was $83 million in the third quarter and $225 million for the year to date in 2021. This included product cost of sales and royalties for each of our brands, the PADSEV gross profit share to Astellas, and non-cash amortization of acquired technology costs for Takaiza. R&D expenses were $459 million in the third quarter and $924 million for the year to date in 2021. These are increases over 2020 as third quarter expenses included the $200 million up front payment due to Remagen for the licensing of Bacitimab-Bidotin, as well as continued investment across our early and late-stage pipeline. SG&A expenses were $180 million in the third quarter and $505 million for the year-to-date in 2021. These are increases over 2020 reflecting investments to support ongoing Ticaida launches across Europe and, more recently, the launch of TIVDAC in the U.S., I'll now provide several updates to our financial outlook for the remainder of 2021, beginning with product sales. We are increasing our 2021 product sales guidance for all three brands. Etc. sales are now expected to be in the range of $700 to $710 million, PADSA in the range of $330 to $335 million, and Takaiza in the range of $315 to $325 million. Chip will provide more context on market dynamics later. We are increasing our 2021 guidance for royalty revenues to a range of $140 to $150 million, primarily reflecting stronger sales of etc. by Takeda in its territory. And lastly, we are increasing our 2021 collaboration revenue guidance to a range of $25 to $30 million, Turning now to expenses, we are increasing R&D expense guidance to $1.19 to $1.24 billion, primarily as the result of the $200 billion upfront amount due under the Remagen collaboration. We are also increasing our cost of sales guidance to a range of $295 to $315 million, primarily reflecting higher sales of PADSEVs. And lastly, we are narrowing our SG&A guidance to $675 to $725 million. Non-cash expense guidance remains unchanged. We ended the quarter with $2.4 billion in cash and investments. This does not reflect the $200 billion payment to Remagen made in the fourth quarter. Our financial strength allows us to continue investing in our pipeline in business, and we're pleased with the progress so far this year. Now I'll turn the call over to Chip for an overview of our commercial performance. Thank you, Todd. Performance across the commercial portfolio was strong in Q3. Etcetera, PADSEP, and Tecasa all delivered growth in the quarter, and we are pleased with the approval and launch of TIDDAC, our fourth product. Etcetera's third quarter sales were $185 million, a 13% increase over Q3 2020. we continue to focus on the landmark five-year Echelon 1 progression-free survival data in frontline Hodgkin lymphoma. These are meaningful data to physicians and patients and solidify the et cetera regimen as the best option for frontline stage 3 or 4 patients. August marked the 10-year anniversary of the first et cetera's approval, and I would like to thank the dedicated commercial teams that work diligently to ensure this important product gets to appropriate patients. Moving on to PADSEV. Third quarter sales were $95 million, a 54% increase over the third quarter of 2020. Physician adoption of checkpoint inhibitors for post-platinum maintenance continues to increase, and this has generated more addressable patients for PADSEV. We are also promoting to the additional indication for therapy and continue to see incremental uptake.
spk08: Transitioning
spk07: The Kaiser third quarter sales were $87 million, representing 104% increase over the third quarter of 2020. This marks our fifth consecutive quarter of sequential growth with contributions from the U S and Europe and patients with brain meds to Kaiser is the most utilized product in second and later lines in the U S in Europe trial, along with favorable clinical guidelines gives us confidence as we seek reimbursement in additional European countries.
spk08: Finally, we are excited that TIVDEC has launched, and we are pleased with early reaction from oncologist C-GEN Secure to help navigate TIVDEC's eye care requirements. TIVDEC provides an important new medicine for patients in the second and third line setting, where previous options
spk07: have typically offered low objective response rates and poor outcomes.
spk08: I look forward to providing more details on TIVDAC as we get further into the launch. Now, I'll begin my remarks with TIVDAC, which is approved for the treatment of adult patients. It was based upon data from the Innovative 204 trial,
spk03: as well as other supportive studies. A global phase three trial in cervical cancer, Innovative 301, is currently enrolling a similar population and is intended to serve as the confirmatory trial in the United States and to support global regulatory applications. Our next goal is to bring TIVDAC into earlier lives of metastatic or recurrent cervical cancer. And for that purpose, we are conducting the Innovative 205 trial in the first and second line setting. Combination data from Innovative 205 were recently presented at ESMO. The combination of TISDAC and carboplatin in the first line setting resulted in a confirmed overall response rate of 55% with a complete response of 12% and a duration of response of 8.3 months. In the second-line setting, the combination of TIBDAC and Keytruda resulted in an ORR of 38% with a median DOR of 13.8 months. We are encouraged by these data, which will inform a TIBDAC-based combination approach for frontline cervical cancer. In addition, the recent accelerated approval of Keytruda in the first-line setting further defines the treatment landscape in which a TIRP-DAC combination will need to be tested. Turning now to Tukeiza, in the evolving HER2 treatment landscape, we continue to progress our broad development program in breast and GI malignancies, as well as other solid tumors. In breast cancer, the Phase III trial HER2CLIM-02 is evaluated in Tukeiza plus CAD-SILA versus CAD-SILA alone in the first and second line metastatic setting.
spk08: As a reminder, this trial is enrolling patients with active brain metastases with similar eligibility to HER2-CLIM.
spk03: In high-risk adjuvant breast cancer, enrollment continues in the randomized COMPASS HER2-RD trial, which is being run by the Alliance Cooperative Group. This study is evaluating to Kaiser plus Capsaicin versus Capsaicin alone. In GI cancers, as Clay mentioned, we have completed enrollment in Mountaineer, which is assessing to Kaiser and Herceptin as treatment for patients with advanced 30-positive colorectal cancer. We anticipate results next year, and if the data are compelling, Mountaineer could potentially support accelerated approval in the United States. Additional studies are evaluated to Kaiser in combination with oxaliplatin-based chemotherapy in first-line GI cancers, as well as in a basket trial for solid tumors with HER2 alterations. Finally, we are conducting a study of tuchizer in combination within HER2 for HER2-positive breast cancer. I will turn now to PADSEV, where we remain focused on moving into earlier lines of urethelial cancer. In the first line, metastatic setting, we have completed enrollment of EV103 cohort K, which is testing the combination of PADSEV and Keytruda as treatment for patients who are ineligible for cisplatin therapy. This trial is intended to support an application for accelerated approval in the United States, and we expect to report top-line results in 2022. We are also enrolling patients into the Phase III EV302 global trial, which includes both duplatin containing chemotherapy. EB302 is intended to be a confirmatory trial as well as supporting global marketing applications. In muscle invasive bladder cancer, we, together with Estelis and Merck, are advancing two Phase III trials, both of which are testing path-saving in combination with Keytruda. The keynote B15 or EB304 trial is enrolling cisplatin-eligible patients and the Keynote 905 or EV303 trial is enrolling cisplatin ineligible patients. Additionally, we have now opened the EV104 trial of single-agent PADSAVE in non-muscle-invasive bladder cancer. In this study, PADSAVE is administered intravesically in BCG non-responsive patients. Nectin-4 is highly expressed in this disease state, and preclinical data support this as a potential opportunity for PADSAVE. We are also evaluating perhaps even a basket trial of high nectin-4-expressing solid tumors, including lung, breast, head and neck, gastric, and esophageal cancer. This study is enrolling, and we await initial data to inform our next steps. Now on to a set list. At the upcoming ASH meeting in December, we expect to have several presentations. Notably, we plan to present data for the first time from an ongoing Phase II study, assessing et ceteras in combination with nivolumab, edremicin, and dacarbazine as frontline treatment for advanced Hodgkin lymphoma. We continue to advance our clinical development program including Echelon 3, the Phase 3 trial in relapsed diffuse large B-cell lymphoma, which compares Ectrus plus Revlimid and Rituxan to Revlimid and Rituxan. Our newest entry into late-stage development is Acetamabidotin, which has already received conditional approval as monotherapy in China for gastric cancer. The antibody, which has a high affinity for HER2 and block signaling, also demonstrates enhanced internalization when compared with Trastuzumab. This is an important characteristic for an antibody drug conjugate. The ADC also delivers our proprietary vedotin payload, the same as in our three commercial ADCs. Initial data in metastatic urethelial cancer was impressive and has already garnered breakthrough therapy designations from the FDA. Additionally, PD-1 inhibitor combination data were presented at ASCO this year, demonstrating high response rates, and these will also inform our clinical development plans. We are in active discussions with FDA on our urethelial cancer development strategy. With regard to breast cancer, our partner Remagen has generated initially encouraging monotherapy data in HER2-low breast cancer, and we are evaluating the potential here for future development. Turning now to Lidirituzumabidotin, or LV, which is being developed with our partner Merck. At ESMO this year, we presented initial efficacy data with the weekly dosing regimen of LV in patients with triple negative breast cancer. Data demonstrated that weekly LV results in a confirmed OR of 28% in the second and third line setting. We continue to evaluate the optimal dose and schedule of LV both as monotherapy and in combination with Keytruda to optimize efficacy and safety. I'd like to now briefly mention our early stage pipeline. We are advancing seven programs in Phase I clinical trials across a range of solid tumors and hematologic malignancies, including the ADCs SGN CD228A, B6A, and STMV. We expect IND submissions for at least two more novel ADC programs this year targeting B7H4 and PD-L1. At CITC in November, we will present posters on these programs which will highlight robust anti-tumor activity in preclinical models. We also have four effective function-enhanced antibodies utilizing our SEA technology, including SEA CD40, CD70, BCMA, and TIGIS. Later this year at ASH, we will be disclosing initial results of SEA BCMA in subjects with relapsed or refractory multiple myeloma. With regard to SCACD40, as previously discussed, we completed enrollment of a cohort of patients with pancreatic cancer. We expect to report clinical data from this cohort early next year. We have also initiated a basket trial to assess SCACD40 and other solid tumors, including melanoma and non-small cell lung cancer.
spk07: in closing we continue to reach important development milestones and make meaningful progress with our pipeline and we look forward to providing you with further updates on future calls i'll hand the call now back to claire thank you roger cj has a resilient core business and solid foundation which fuels our ability to continue expanding and evolving our capabilities technology and business throughout this year we have achieved multiple important milestones. We have a strong portfolio of approved medicines and a proven commercial engine, which allows us to compete in the global marketplace. We have robust clinical development capabilities and a deep pipeline of tomorrow's potential first and best-in-class therapies. strategic partnerships, our international infrastructure, and substantial financial power enables our ability to develop, advance, and launch exceptional oncology therapies. The future for CGEN is exciting, and we remain passionate and committed to improving the lives of cancer patients worldwide. Operator, please open the line for Q&A.
spk13: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. And our first question will come from Jeff Mitchum of Bank of America. Please go ahead.
spk01: Jeff Mitchum Hey, guys. Thanks for the question. Maybe one for Clay and one for Chip. First off, Clay, now that you have your fourth approved product in the portfolio, maybe talk about how you're thinking about the balance of investing and keeping that early pipeline engine running while also moving toward sustained profitability. And then on the Tokizo launch, OUS, maybe just help us understand what the reimbursement pathway looks like over the next three to six months, or maybe 12 months even, as you guys secure different geographies in the EU. Thank you.
spk07: Thanks for the questions. Okay, first of all, we do have four products now. We've had three products approved in the last two years. We're very proud of the products we have that really make a difference in patients' lives. We continue to invest strongly in our late stage, mid stage, and early stage products. We just submitted two INDs recently that Roger mentioned. We will continue to push forward there. We intend to be profitable. We're not giving guidance today on when we're profitable, but it's something that's important to us But it's also important to us to continue to build our pipeline. We're working together with our board of directors on the future of SGEN and where we're going, and also working with some of our biggest investors who continue to encourage us to make great medicines and move on. And this is the time to do that. We are investing heavily in our pipelines. So that is where it is now. But please note, we do intend to be profitable. And we could be profitable now by, you know, basically not working on our pipeline, not expanding our products. But that we don't think is the right way to build a big, profitable, self-sustaining organization that makes a huge difference in patients' lives. So we're pursuing that. As far as TIDDAC and reimbursement, Chip, do you want to talk a little bit about the initial – I'm sorry? Tocasa. Tocasa, I thought he was asking. Oh, that's right. Tocasa, sorry. Go ahead. Sure. So as far as the XUS goes, launches continue with strong uptake in Germany and France. We're working through the submittal process for the next countries that are in line. We're in price negotiations with several of them. So as we move forward, we look forward to expanding the footprint of REACH for the product.
spk01: Okay, great. Thanks, guys.
spk13: The next question comes from Corey Casimals of JP Morgan. Please go ahead.
spk07: Great. Hey, this is Thomas. I'm for Corey. Thanks for taking the question.
spk05: Maybe just one on the updated revenue guide here. The new numbers seem to imply a sequential downturn in product revenues on Q4. Is that due to conservatism on your end, or are there other market dynamics that we should be thinking about as we look ahead to Q4 here? Thank you.
spk07: So thanks for the question. First of all, we are very pleased with our quarterly and year-to-date performance. Our net product sales were up 37% year-over-year in third quarter of 21. So, you know, that's great. They have great products that make a difference in patients' lives. We have increased not only the three Our three initial products, Tibdex is too new for guidance right now. But we also increased our other revenue metrics, which is royalties and partnering. So all five of our revenue metrics, we increased. Our focus is on the long game, making a difference in patients' lives, expanding our labels, maximizing the potential and reach of our drugs. going worldwide. We're investing and going into much bigger footprints globally to help more patients. And we believe that this is going to make the company stronger in the not-too-distant future. It takes some investment to do that, and we're really excited about that. As far as thinking about the fourth quarter, Todd, do you want to give a little color onto that? Yeah. So you mentioned, are we trying to be conservative? We're actually trying to just be as accurate as we can. You know, we recognize that COVID continues to create a lot of just uncertainties and, you know, our drug sales fluctuate quarter to quarter.
spk06: So, you know, with that in mind, what we've always tried to do is just do the best job we can on annual guidance. And we look forward to giving our 2022 guidance on the next quarterly call.
spk07: But, you know, as Clay mentioned, we're really pleased with how the year has gone. You know, second and third quarter in particular were very strong and as a result we did you know a modest up guide in our product sales guidance today and we're you know really pleased with how we're doing great thank you the next question comes from salveen richter of goldman sachs please go ahead
spk12: Good afternoon. Thanks for taking my questions. Could you just comment on any granularity on the TIVDAC launch at this point and then just timeline updates or what we should expect next on the TIGIT and LV programs? Sure.
spk07: So we are really excited about getting TIVDAC on the market. And, you know, it's early, but really good feedback. Kip, would you like to talk a little bit about what's it like out there, you know, in the field and with commercial scene? Sure. We're really pleased with the initial reactions we've had from oncologists. We look forward to continuing to work closely with our partner, GEDMAP. Physicians are excited about having the option of TIPDAC. It represents the first and only FDA-approved EDC in the metastatic cervical cancer settings. And then switching to your second question. So let's start with one at a time. So TIGIT is a product we're really excited about. It's in clinical trials. We think it's differentiated from the other TIGITs out there because of our SEA technology. And that's in trials. And LB is also in a number of trials. Roger, can you comment a little bit about TIGIT and where we are and what we're thinking and then about LB?
spk03: Sure. Thanks, Clayton. So with regards to TIGIT, we understand the environment around us. There are lots of other companies working on the TIGIT program, for good reason, because the early proof of concept is there. So we understand that time is of the essence. We also need to essentially develop TIGIT in the way that we can, if we are differentiated clinically, be able to demonstrate that. So I can just say we're working hard on the TIGIT program. We're not ready for prime time yet, but we are moving along expeditiously. With regard to LV, as you know, we have presented multiple data sets now that LV is an active drug, both as a monotherapy and in combination. And we're continuing to work hard with our partners, Merck, to see if we can optimize dose and schedule and then move it into a pivotal trial. But we're not there yet. Again, stay tuned for more data as the program unfolds.
spk13: Thank you. The next question comes from Michael Schmidt of Guggenheim Securities. Please go ahead.
spk14: Hi, this is Ige for Michael. Thanks for taking our questions and congratulations on the impressive results of this quarter. We have a question to Kaisa. Now that being heard two reported positive results in the second line breast cancer, Do you think this will drive the HER2-CLIM-O2 study towards enrolling more patients with brain meds? And what proportion of patients do you expect to have brain meds in that study? And perhaps a related question to this, on the Phase 2 study of TKAISA-plus in HER2, what are you specifically looking at in that study and what could be the potential next step? Thank you.
spk07: So thanks for the questions, two good questions on Chikiza. Roger, can you start with the brain mets question that they had concerning HER2 climb? Sure. Yeah, and then the next one on HER2 plus Chikiza.
spk03: Right, sure. So with regard to our development program, as you know, we've demonstrated remarkable treatment effects in patients with brain metastases, such a high unmet need. And also, as we know, HER2-positive metastatic breast cancer does have a high frequency of brain meds. Up to 50% of patients will develop brain meds through their disease course. And so it's expected that a program such as HER2-CLIMB, HER2-CLIMB-O2, where we are allowing patients with active brain meds to enroll, will in fact enroll a a decent proportion of patients with brain metastases. We can't share with you any of the information on HER2-CLIM-O2 as it is, but just in principle, a drug like Teqiza, you know, will be attractive for patients with brain metastases. With regard to in HER2, from a sort of development perspective, the two most interesting drugs in the HER2 breast cancer space right now are Teqiza and in HER2. From a mechanistic perspective, you know, combining an ADC like in HER2 together with Tecaiza makes complete sense. As you can see in our development program, we've done that. We've had that same approach with CatSider. So we're looking forward. We're still in the process of enrolling. We're looking forward to what those results may produce. And, of course, if those results are compelling, we will need to think through what next steps there could be. But, again, we wouldn't disclose any of that at this point. They're still in the process of data generation.
spk14: That's very helpful. Thank you.
spk13: The next question comes from Kenan McKay of RBC Capital Markets. Please go ahead.
spk06: Hi. Thanks for taking the time. question and congrats on the Q3 performance. I had another question on the guidance, maybe for Todd, just on the increased guide for royalty revenues. I was wondering if you could help us with sort of where we should think about that coming from. Potentially, is that coming from POMIDI and the label there, or whether it's something else? And then just maybe going back to the PADSEP guide, after Really a quite impressive quarter, 15% quarter-over-quarter growth. Just wondering if you could help us understand what dynamics could be associated to then be expecting a decline in Q4 here or whether there's any seasonality. Again, just trying to understand the dynamics. Thanks and congrats again on the Q3 performance.
spk07: Thanks, Ken. So good questions. Let me start with the royalty up guide. As I think I mentioned earlier, the principal reason for that is related to Takeda's sales of Etceteras, you know, stronger than what we had thought of a year ago when we set our guidance. So we're delighted to see that Etceteras is doing so well in Takeda's territories. And then you mentioned Polo Bee and Glen Rep. Those two are starting to contribute to royalties. They're obviously lower in amount than the Takeda royalties, but it's great to see the benefit. like it's moving forward now in the front line so we're really happy with that and then on the pet set guide um you know i mentioned also that we had a clinical supply order from another company i wanted to call that out in the remarks i made earlier because while it is $7 million and not that significant to the overall picture, it nevertheless was a pretty meaningful driver of growth in Q3. We did see also commercial growth, so I wanted to point that out. And as we look into Q4, it's a situation where PADSEV has rapidly become a standard of care. We've now got Both the cohort one and the cohort two labels, we're super happy with where we are, but there's uncertainty and quarterly fluctuations. So we just try to do the best we can across the board, actually, with all of our guidance, but PADSA as well. Got it. Thank you for that call, Todd. Appreciate it.
spk13: The next question comes from Boris Peeker of Cowan. Please go ahead.
spk15: Great. My question is on the Daichi litigation. I was just wondering if you could comment specifically on maybe on the timing of the arbitration, but also second scenario is since there's a lawsuit and a trial starting next April, just curious what would happen if you win the arbitration, but then lose the lawsuit on the patent litigation, would they still owe you royalties? I haven't heard through in that scenario.
spk07: So, of course, thanks for the question on the thank you, thank you legal issues. So, first of all, as per our guidance, we have said that we believe there will be the arbitration and the retired federal judge in the arbitration will announce the findings from that before the end of the year. And so that's something we have been public about. And you're right, there is a patent infringement case that we brought forward, which is being heard in April. So you are correct on both of those. As far as really one reading on another, that's basically something we wouldn't comment on. It's an inner workings of the legal system. And we have a great legal team. We have a great case. in both regards, both for the arbitration, which is based on our contract that we had with Daichi Sankyo, and based on the patent infringement, based on issued patent that we have on our technology. So they're different cases. They're not the same. And we feel like we have a great case for both. So we're looking forward. The most important thing for us is to develop drugs and make a difference in cancer patients' lives. And so don't go away from that. But it's also, you know, we work with a lot of other companies. And when we work with a company and, you know, we do deals with them, we expect to continue to, you know, if they're using our technology, we expect to be their partner. And so that's where this is.
spk15: Got it. And maybe let me ask a follow-up question not related to the litigation issue. but I'm just curious with the strong data that we recently saw for HER2 versus Quetzila in breast cancer, how does that impact your development strategy for the, particularly the recently licensed HER2 ADT from Remagen?
spk07: Thanks for that. You know, the product from Remagen, it's really interesting. It internalizes very rapidly. Keep in mind that whether it's the original HER2-ADC, Quetzala, and HER2, they both use the same antibody component, which is trastuzumab, which we know as Herceptin. And that molecule internalizes, but it's kind of middle-of-the-road internalization. The antibody used in which is what we licensed from Remagen, that was a unique antibody and was selected based on incredibly rapid internalization. And one of the things that we've been able to see based on what Remagen did with their data, which we did a lot of diligence on, was its impact on too low patients. And that's a big area. In fact, it's a bigger area than HER2 high. And so we think this rapid internalization could be something really exciting. They have data. I mean, they're approved in gastric cancer in China. They have breakthrough designation for urothelial cancer in the U.S. with the FDA. And certainly the data they have in HER2 low breast cancer and other HER2 low tumors. It's very interesting. They even have data in combination with checkpoint inhibitors, which is not surprising to us since with our other ADCs that use vedodin, we see very nice activity with checkpoint inhibitors such as Keytruda. So we think all in all, we have a very nice profile there. And yes, Hercu is a good drug. It's an important drug. And we, on behalf of cancer patients, we love when we see new drugs.
spk08: This is great. That's our goal. But types of therapies. Roger, do you want to add anything to that?
spk03: Yeah, I think we're in a fortunate position in that we have a highly valuable and active small molecule TKI antikyzer, which is in the HER2 space. We now have a HER2-directed antibody with properties that we think are very interesting. And we have the external environment, which includes drugs like Tadxila, which we're combining with and in HER2, which we're exploring in combination with tukiza. So there are lots of possibilities for us going forward. We are not changing our tukiza development program as it is right now, but what are the next steps with regard to things like tesifimab-vidotin in combination with tukiza or in HER2 in combination with tukiza? I think all of those things are on the table for exploration going forward.
spk15: Great. Thank you very much for answering my questions.
spk13: The next question comes from Gina Wang of Barclays. Please go ahead.
spk10: Thank you for taking my questions. So maybe just follow the IP, the arbitration. Just want to make sure, Clay, so would the timing still be focused? And how would you share that information with investors? And then also, you know, another question regarding Remagen's, you know, the DEV compound, just wondering, How is the data comparison efficacy safety, especially, say, NHER2 low compared to, say, NHER2, the ADC profile?
spk07: Sure. Well, I'll try to take the first part of the question about the arbitration, and then I'll turn it over to Roger to talk about his view of the differences in safety between RC48 and the Bedodans versus NHER2. So on the arbitration, you know, we feel that we're confident based on, you know, where we sit and based on hearing from our internal and external counsel that there'll be a resolution of some type in the arbitration case, not in the patent infringement case, which starts in April, but in the arbitration case prior to the end of year. And that's something that, you know, I think would be shared with the investors. We've probably put out some sort of press release or something like that on it. We look forward to that. Once again, we think we have a strong case. We've been going at this now for some time and look forward to getting it resolved. Roger, on the safety?
spk03: Sure. With regard to the clinical profile, The data that Remagen has generated today looks pretty impressive. It's not that dissimilar from in HER2. And I think we obviously, Cgen, need to generate our own data with the population defined as a HER2 low and determine what our next steps are. But we see this as a really meaningful opportunity. And it may not necessarily be limited to breast cancer. With regards to the efforts that the HER2LO program in China has generated, we will obviously also leverage as much as possible data from China to supplement whatever efforts you make in the United States.
spk10: Thank you.
spk13: The next question comes from Andy Shea of William Blair. Please go ahead.
spk05: uh great thanks for taking my questions and congratulations on the beat and race quarter um i have a question about the ev 104 study that um that you kind of availed uh today um so in terms of the intravascular administration and pat says curious how you think about the dosing since we usually think about that as in in a systemic sense and also for the uh maintenance phase I'm also curious about your thinking about stopping dosing at month 10 to 11 versus maybe a longer treatment duration. Thank you.
spk07: Andy, thank you for those questions. Roger, you want to take those?
spk03: Sure. Thanks, Andy. So, yeah, we're excited. The non-muscle-invasive bladder cancer opportunity for PADSAVE could be very meaningful. Just to remind you, at least in our hands, when we introduce PADSAVE into the bladder and not expose it systemically, we really expect that the safety profile will look more favorable and systemic therapy. Obviously, you have to generate the data in humans, but the preclinical package supports that, so very little systemic exposure. With regard to dose, it's a great question. You know, the trial has just begun. We are using the current, you know, commercially available PADSERV image, and we're hoping that we will be able to define an efficacious dose using that current formulation. That's certainly in our plan. With regard to beyond the initial sort of induction through to maintenance, Andy, I think when we share details of the trial itself to things like poster presentations, I think that would be a good time to address some of those points. But obviously we're just beginning, so understanding all the way through what our eventual plan may look like is a little difficult at this point to predict.
spk11: Operator, we'll take the next question.
spk13: The next question comes from Jay Olson of Oppenheimer. Please go ahead.
spk09: Oh, hey, guys. Congrats on the quarter, and thank you for taking the question. Can you talk about your first-line combination strategy that you're planning for TIVDAC? And also, when should we expect to see some data for TIVDAC in other tumor types? Thank you.
spk07: Thank you for the words about our quarter. You know, we are really excited about TISDAC. We presented some combination data two different ways at ESMO, and certainly going to earlier lines is very important for us. Roger, do you want to talk a little bit about that?
spk03: Yeah. So, you know, frontline cervical cancer, you know, the standard of care is combination chemotherapy with or without bevacizumab. The recent, you know, reveal of Keytruda as an addition to that combination adds another layer of drug but actually produces a much better outcome. So when you think about how to move into a frontline space and create a regimen that is competitive, that is potentially better than the various current standards of care, we see with TIVDAC as the sort of backbone of that regimen. We believe combining it with chemotherapy, certainly based on the carboplatin-tifdac combination we've seen, will be an important element. We also believe that pembrolizumab will be an important element. And we've shown already the doublets. We need to go further. We need to put into the clinic and test what we would consider to be the final regimen that would be included in the... Tumor types? With regard to other tumor types, yes, we We are working on a plan to present data publicly at an appropriate time. Okay, great. Thank you.
spk13: The next question comes from Zaiquan Xu of Barenburg. Please go ahead.
spk02: Great, thank you. Congrats on the quarter as well. I'd like to ask about the SEA BCMA program that you're going to present at ASH. what are we going to see in this initial data presentation? And I guess, can you comment on the market opportunity for this drug? Thanks very much.
spk07: Yeah, so first of all, on the market opportunity, this, you know, is in an area that is mainly targeted to multiple myeloma. You know, it's a substantive market. There's great drugs out there like Revlovid and Velcade and you know, antibodies to CD38 and other drugs. So there really is good different therapies out there. But, you know, the disease is certainly not cured, you know, where it sits. These are therapies that have extended the life of patients. But in MM, there really is still always room for great drugs to come in, especially ones that have very low, you know, safety signals. And like what we would expect with SCABC, TMA.
spk08: Roger, can you talk a little bit about the drug and what are our thoughts on there?
spk07: And, you know, obviously, as far as ASTRAs, until we present, we're not going to, you know, it's not appropriate to talk about the presentation. Roger, could you give you a little color on it?
spk03: Sure. So, the clinical trial program with the combination with dexamethasone, which is a essentially a almost sort of mandatory combination drug in multiple myeloma. And so it's that type of data in late patients that we will be presenting. And we obviously, at this point, we believe that the data is mature enough and meaningful enough that it's time for us to produce this in a public forum. So we're looking forward to presenting the BCMA initial data. It is initial data. at Astosia.
spk02: Great. Thanks very much.
spk13: The next question comes from Ren Benjamin of JMP Securities. Please go ahead.
spk07: Hey, good afternoon, guys. Thanks for taking the questions, and congrats on a great quarter. Clay, I guess I'd love to just learn a little bit more about the set of Mabvidot and the urethelial data to date.
spk05: Can you just remind us of that, and how should we be thinking about the development plan of this new asset, you know, kind of going forward? Are you guys only going to be focusing on kind of low HER2-expressing tumors, or are
spk07: Is bladder cancer or UC a potential option, and how do we think about, you know, Mectin-4 expression versus HER2 ultimately work together? Sure. So, you know, we have not laid out the entire plan at this point for cancer. to sit them at the DoCoDB. But, you know, you're touching on a lot of the important things that we considered when we did diligence, when we put it in. And now we have a very big plan that we've been hatching and building up. So I don't think you'll have to wait long to really hear everything. But clearly, we're looking at bladder cancer where there's already breakthrough designation. Clearly, we're looking at too low breast cancer where there's a big slug of data. And also, we can't look past gastric cancer. I mean, it's an important cancer that's already approved in China. So there's a lot of different know possibilities for this truck and i think you know we are very we're just well positioned to take this forward and make it into a real product that could get out on a global scale not just uh in china right now so uh roger do you want to comment uh more about the question yeah with regard to urothelial cancer the data that's been generated by remogen is really impressive
spk03: Bear in mind that this is a HER2-defined population, which is something that will need some work in data cancer because it isn't a population that has sort of up to this point been readily identified, but a biomarker-driven population of HER2 high expressors and perhaps the HER2 low group in data cancer is the population we're interested in. And as Clay mentioned, you know, essentially... As this drug comes into our hands, we'll look at all the opportunities in HER2 disease, whether it's traditional amplification or overexpression or HER2 low. So I think all possibilities are on the table, but our initial focus is on urethelial cancer and on HER2 low breast cancer.
spk07: And just as a follow-up, Roger, do you have a sense as to the potential overlap between that expression, the HER2 expression, and Nectin-4? or are they kind of, you know, maybe a little bit exclusive?
spk03: Yeah, the next in four expression we see is sort of near ubiquitous. The two expression is obviously more limited. I think the epidemiology of urothelial cancer is less well-defined, and that's something that we need to work on. And I think when we have a clear and accurate view of the distribution of traditional HER2 high versus HER2 low in beta cancer or urothelial cancer. We'll bring that forward. But it is not the whole thing.
spk08: Perfect. Thanks for taking the questions. Congrats.
spk13: The next question comes from Joe Catanzaro of Piper Sandler. Please go ahead.
spk04: Hey, guys, thanks so much for squeezing me in and taking my question here. Just maybe one quick one from me. So, Roger, you had mentioned a new basket combination trial for CCD40. I'm wondering if you could elaborate a little bit on that and maybe how your experience in pancreatic cancer and the combination you're looking at there informed your decision to start this trial. Thanks.
spk03: Sure. It's a great question. I think we believe strongly in the scientific hypothesis, which is the combination of an agonist, a CD40 agonist, together with agents that injure and kill cancer cells, and potentially also as well together with PD-1 inhibitors that relieve the exhausted T-cell population. That, as a scientific construct to test, we think is really interesting. Obviously, pancreatic cancer is our first foray into that. Pancreatic cancer, as you well know, is not an easy disease to treat. It is, I guess, traditionally considered to be less immune-responsive than other tumors, and that's why we're taking the basket trial further into diseases where, in fact, immunotherapy is already proven to work. So we think it makes sense to continue, you know, to test this approach in other tumors as well. So that's why we're opening up this basket trial, which will include diseases like non-small cell lung cancer and melanoma.
spk04: Okay, perfect. Thanks for taking my question.
spk13: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
spk11: Okay. Thank you, operator, and thanks, everybody, for participating in our call today. Have a good rest of your day.
spk08: The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.
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