TRACON Pharmaceuticals, Inc.

Stand by. Your conference will begin momentarily. Again, please stand by. Your conference will begin momentarily. Thank you. Good day, ladies and gentlemen. and welcome to Traken Pharmaceuticals' first quarter 2021 earnings conference call. At this time, all callers are in a listen-only mode. After the speaker's prepared remarks, we will conduct a question and answer session, and instructions will be given at that time. During today's call, we will be making certain forward-looking statements, including statements regarding expected timing of clinical trials and results, regulatory activities, future expenses and cash runway in our development plans and strategy. These statements are subject to various risks that are described in our filings made with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2020, and subsequent quarterly reports on Form 10-Q. You are cautioned not to place any reliance on these forward-looking statements and we disclaim any obligation to update such statements. Now, I would like to turn the call over to Dr. Charles Stewart, President and CEO of Tracon Pharmaceuticals. Dr. Stewart?

Thank you for joining Tracon's first quarter 2021 financial results and business update call. I will begin with an update on our pipeline and then review our recent activities. Following that, Scott Brown, our Chief Financial Officer, We'll review our financial results for the three months ended March 31, 2021. Finally, we will conclude by taking your questions. Our development efforts continue to focus on the pivotal ENVASARC trial. ENVASARC is designed to allow potential approval of envafolimab in the sarcoma subtypes of undifferentiated pleomorphic sarcoma, or UPS, and myxofibrosarcoma, or MFS. As a reminder, envafolimab is a potential best-in-class PD-L1 checkpoint inhibitor, and may confer additional clinical benefit by virtue of its convenient and rapidly delivered subcutaneous route of administration. We continue to make progress on the Envisarc pivotal trial, where we have initiated 22 sites and expect to achieve our goal of initiating 25 sites by the end of this quarter. Accrual remains on track, such that we expect multiple Envifolumab milestones this year, First, we have enrolled more than 20 patients, which has triggered the initial data monitoring committee review of safety data from each cohort. We expect a DMC recommendation later this quarter. A further DMC safety review is expected next quarter. Second, we resubmitted our orphan drug application to the FDA in response to a request for preclinical or clinical evidence of activity for endofolimab and sarcoma. We expect correspondence from the FDA this quarter based on the amended application. Third, we expect the availability of interim MVSARC efficacy data in the second half of this year. The DMC-mandated interim efficacy analyses are scheduled at least three months after the enrollment of the 36th and 92nd patient to allow for determination of the preliminary objective response rate. Per the futility rules of the study, There must be at least one response among the initial 18 patients and three responses among the initial 46 patients enrolled into each cohort to continue enrollment of that cohort. We expect to present interim efficacy data following the initial DMC review later this year at a scientific conference or in a top line data release. Fourth, we expect interim efficacy data will be the basis for submitting a request to the FDA for breakthrough therapy designation or for fast-track designation, as either designation permits a rolling BLA submission that will facilitate the timely review of a BLA. Looking forward, we anticipate reporting final response date in 2022 and assuming positive data, submitting a BLA for accelerated approval that, if approved, could allow for product launch in the U.S. in 2023. We reviewed the design of the ENVISARC trial at a poster in the Trials in Progress program of the AACR virtual meeting in April, and we'll also present a poster reviewing the trial design at ASCO in June. As a reminder, the ENVISARC trial includes two cohorts of 80 patients each. One cohort receives single-agent Envifolimab, and a second cohort receives Envifolimab in combination with Yervoy, a second checkpoint inhibitor targeting the CTLA-4 receptor that is marketed by BMS. The trial enrolls patients with UPS and MFS who have progressed on one or two lines of prior treatment and have not received prior checkpoint inhibitor therapy. The primary endpoint in both cohorts is objective response rate by resist, as confirmed by blinded independent central review, with duration of response being a key secondary endpoint. In each cohort, the demonstration of nine out of 80 objective responses or an 11.25% objective response rate confirmed by independent radiographic review, defines the level of response that satisfies the primary objective of the study, which is to statistically exclude the known 4% response rate of Votrien, the only approved therapy for refractory UPS and MFS patients. We are studying the sarcoma subtypes of UPS and MFS because they are responsive to checkpoint inhibition based on data presented at ASCO 2019 At ASCO 2020, investigators from the Alliance for Clinical Trials in Oncology reported an impressive 29% confirmed objective response rate in patients with highly refractory UPS who received Opdivo in combination with Yervoy. These data built upon data presented at ASCO 2019 showing that single agent Keytruda demonstrated a 23% response rate in highly refractory UPS and MFS patients. From a financial perspective, we estimate that the cost of conducting the pivotal trial using TRACON's CRO-independent product development platform, including paying for Urovoid, will be less than $20 million that will be spent over the next eight to 10 quarters. In parallel, our corporate partners, 3D Medicines and AlphaMap Oncology, submitted endofolumab data from the completed pivotal trial in MSI-high cancer in China as part of a new drug application that was accepted for priority review by the NMPA earlier this year. We believe Envifolmab could be approved in China later this year. Returning to Tracon's development in sarcoma in the US, our market assessment concluded that Envifolmab, if FDA approved for refractory UPS and MFS, could generate peak annual revenue of approximately $200 million in the US assuming parity pricing to Keytruda or Avdevo. The adoption rate is forecasted to be relatively rapid using EnvifolMap's target product profile, a 15% response rate as a single agent, and a 30% response rate when combined with Yerboy, which would compare favorably to the 4% objective response rate of the one approved treatment for refractory UPS and MFS patients. EnvifolMap's sales revenue could increase further, through label expansion or compendia listing into other refractory sarcoma subtypes that have been shown to be responsive to checkpoint inhibition, such as angiosarcoma, alveolar soft part sarcoma, and dedifferentiated liposarcoma, which our market assessment study indicated could generate an additional $100 million in peak annual revenue in the U.S. for a total of $300 million when combined with UPS and MFS. We believe dual checkpoint inhibition with a combination of Envifolimab and Yervoy should also be advanced into first-line treatment. Notably, the response rate for dual checkpoint inhibition with Opdivo and Yervoy in refractory sarcoma subtypes other than UPS and MFS was 16%. Given the response rate of first-line chemotherapy in sarcoma is only 17%, we expect to dose Envifolimab with doxorubicin in a phase one trial later this year to assess safety of the combination and then move quickly into a potential pivotal trial. The trial could include a combination of doxorubicin, envafolumab, and a CTLA-4 inhibitor. That CTLA-4 inhibitor could be Yervoy or another proprietary CTLA-4 inhibitor, as one of our business development priorities is licensing another immune oncology asset. We are also discussing a clinical trial of envafolumab with an approved CKIT inhibitor in gastrointestinal stromal tumor, or GISTs. We believe thorough label expansion in sarcoma, including in the first-line setting, in GIST, as well as for neoadjuvant treatment prior to surgical resection, and for adjuvant treatment following surgical resection, could substantially increase sales revenues to over $1 billion in sarcoma. While InfoFoldMap is our most advanced product candidate, we continue to progress two other clinical stage assets. We expect TRC-102 to continue to advance through NCI sponsorship in lung cancer in combination with chemotherapy and radiation therapy. Data presented at ASCO showed that TRC-102 in combination with chemoradiation resulted in a 100% response rate in 15 patients with advanced, localized, non-squamous, non-small cell lung cancer, including in three patients who had a complete response to treatment. These data compare favorably to prior trials of chemoradiation therapy in these patients. In FENZI, a PD-L1 checkpoint inhibitor is now approved for patients with unresectable localized non-small cell lung cancer whose disease has not progressed following chemoradiation. And we believe a randomized trial of TRC102 with chemoradiation and in FENZI in these patients is warranted. Based on NCI data reported in cancer cell in December 2020 and Phase II data in refractory glioblastoma patients treated with TRC-102 and Temodar, inhibiting base excision repair with TRC-102 is able to induce synthetic lethality in MGMT methylated patients. Based on these data, we expect further development by the NCI in glioblastoma, including a trial in the first-line setting of Temodar, radiation therapy, and TRC102. Notably, in October 2020, TRC102 was granted orphan drug designation by the FDA in malignant glioma that includes glioblastoma. Our third clinical stage asset is the CD73 antibody TJ4309 that is being evaluated in an ongoing phase one dose escalation study as a single agent and in combination with a checkpoint inhibitor, Ticentric. Data from the ongoing phase one trial were accepted for poster presentation at the 2021 ASCO virtual meeting in June. We are developing TJ4309 in collaboration with IMAP BioPharma through one of our two strategic agreements with them, whereby we are responsible for the regulatory and clinical development of TJ4309 in the U.S. and Europe. Per the license agreement with them, we are entitled to receive escalating portions of non-royalty and royalty payments if IMAP elects to license TJ4309 to a third party in any region outside of China, Macau, or Taiwan. Following the completion of Phase 1, IMF has the option to terminate the agreement for a payment of $9 million. From a business development perspective, I would like to note that we continue to evaluate additional clinical stage assets to potentially add to our pipeline this year in order to leverage our CRO-independent product development platform that includes U.S. commercialization expertise. We believe our product development platform will continue to allow us to establish key new partnerships that will drive significant long-term shareholder value. At this time, Scott will provide an update on our financials.

Thank you, Charles, and good afternoon, everyone. TRACON's research and development expenses were $2.3 million for the first quarter of 2021 compared to $2 million for the comparable period of 2020. Increase was related to enrollment in the pivotal NVSARC trial in 2021. General and administrative expenses were $2.7 million for the first quarter of 2021, compared to $1.9 million for the comparable period of 2020. Our net loss was $5.1 million for the first quarter of 2021, compared to $4 million for the comparable period of 2020. Turning to the balance sheet, at March 31, 2021, our cash, cash equivalents and investments totaled $30.4 million compared to $36.1 million at December 31, 2020. We expect our current capital resources to be sufficient to fund our planned operations into the second half of 2022. With that, I'll turn the call back over to Charles. Thank you, Scott.