IGM Biosciences, Inc. (NASDAQ:IGMS) Q4 2019 Earnings Conference Call March 26, 2020 4:30 PM ET
Fred Schwarzer – CEO
Misbah Tahir – CFO
Bruce Keyt – Chief Scientific Officer
Dan Chen – Chief Medical Officer
Conference Call Participants
Stephen Willey – Stifel Nicolaus
Michael Schmidt – Guggenheim
Good day, everyone and welcome to the IGM Biosciences Fourth Quarter and Full Year 2019 Financial Results. Today’s call is being recorded.
At this time, I’d now like to turn the call over to Misbah Tahir, Chief Financial Officer of IGM.
Thank you, operator. Welcome and thank you to those of you joining us today to discuss IGM’s fourth quarter and full year 2019 financial results. With me this afternoon to discuss the financial and to provide general corporate update are Fred Schwarzer, Chief Executive Officer; Bruce Keyt. Chief Scientific Officer and Dan Chen, Chief Medical Officer.
Before we begin, please note that we’ll be making forward-looking statements on this call including statements about IBM’s plans, expectations and forecasts and about future events. Actual results may differ materially as a result of various risks and uncertainties including those discussed in the company’s most recent annual report on form 10K as well as its other filings with the SEC. Any forward-looking statements represent IGM’s views as of today March 26, 2020 only and the company disclaims any obligation to update these statements except as required by law. Following this call a replay will be available on the company’s website www.igmbio.com.
With that, I’ll now turn the call over to Fred.
Thank you, Misbah. Good afternoon, everyone and thank you for joining us on this call to discuss our fourth quarter and full year 2019 financial results. Obviously the COVID-19 pandemic is at the forefront of everyone’s thoughts and concerns at this time. We’re very pleased and relieved to advise you that to date none of our IGM employees have reported that they have been infected.
However, to reduce the risk that any such infection would spread among the IGM team, we have adopted a general work from home policy pending further clarity. While none of us can accurately assess the medium and long-term impacts of the COVID-19 pandemic, as of now we’re hopeful that the impact on our current timelines will be modest. Of course if the current level of restrictions and limitations were to be expanded or continued for several months, we expect that we might start to see a greater impact on our timeline.
Fortunately, as Misbah will discuss we’re in a strong position from our cash reserves perspective. We have adequate cash to last us into 2022 and as the financials situation appears concerning later this year, we can take steps to extend that cash runway. Notwithstanding the overhang of COVID-19 we remain excited about the potential of our pipeline and we’re eager to see the clinical results of the dose escalation portion of the Phase 1 clinical trial of IGM-2323, our CD20 by CD3 T cell engaging antibody towards the end of this year.
We continue to hope that IGM-2323 will prove to be a best in class antibody for the treatment of resistance and refractory non-Hodgkin’s lymphoma. Dan will shortly provide an update as to the current status of that clinical trial. We were also excited by the prospects for IGM-8444 or IGM-DR5 agonist antibody which we believe may have application in the treatment of a broad range of cancer types. As Bruce will discuss shortly, we currently remain on track to file an IND for IGM-8444 this year and our preclinical toxicity profile and therapeutic index appear to be very encouraging.
Finally, as Bruce will describe we’re excited about the prospects for IGM-7354 our targeted IL-15 immune cell stimulating that antibody. We expect to file an IND for this product candidate next year. So all these exciting pipeline events are now coming at relatively rapid pace for IGM. This progress has been made possible by a decade of dedicated, creative and inventive effort focused on the engineering and enhancement and manufacturing of IGM antibodies.
As a reminder IGM antibodies are one of the five classes of natural antibodies and you all have lots of IGM antibodies in your body, but IGM antibodies are the only antibody class with 10 binding units as compared with only two binding units for IGG antibodies. Nonetheless, all of the currently market and antibody drugs are IGG based, we believe that the 10 binding units inherent in IGM antibodies enable them to buy more strongly the cell surface targets relative to IGG antibodies.
Also our IGM team has developed a unique bio specific antibody format, which we believe may have certain safety and efficacy advantages in the treatment of cancer when compared to IGG antibodies.
At this point is my pleasure to turn the call over to Dan who will describe IGM-2323 and the current state of our clinical trial.
Thank you, Fred. So we’re very happy to be in the clinic with our first high affinity, high ability engineered IGM T-cell engager and that of course is IGM-2323, IGM-2323 is a CD20 by CD3 biospecific IDM antibody designed for the treatment of patients with CD20 positive cancer including non-Hodgkin’s lymphoma. CD20 is a protein commonly expressed on the surface of non-Hodgkin lymphoma cells as well as chronic lymphocytic leukemia cells and even multiple myeloma cells albeit at low levels.
CD3 is a protein expressed on the surface of T cells. In our preclinical studies IGM-2323 strongly bound to CD20 positive cancer cells and demonstrated two distinct mechanisms to potently eliminate those cancer cells. These are T cell -dependent cytotoxicity and complement dependent set of toxicity. This cell killing was even possible for cancer cells expressing very low levels of CD20.
We also observed that the potent elimination of cancer cells by T cells with IGM-2323 occurred with very low levels of cytokine release, relative to comparable IGG based CD20 by CD3 antibodies. In nonhuman primate studies with the CD20 by CD3 IGM we again observed very low levels of detectable cytokine release and importantly, no observable safety findings despite elimination of all detectable CD20 expressing cells in circulation and in tissue compartments.
So last October we announced the initiation of our first inhuman Phase 1 clinical trial of IGM-2323 in relapse and refractory B cell lymphoma patients. This trial is a multicenter open label trial intended to assess the safety, pharmacokinetics and preliminary efficacy of intravenous IGM-2323 in patients with relapsed refractory B cell non-Hodgkin’s lymphoma.
IGM-2323 is being administered at a planned fixed dose as part of the dose escalation protocol. Our initial six clinical trial sites are now open and they include City of Hope, Sarah Cannon, M.D. Anderson, Fred Hutch on her health and Dana-Farber. We also hope to open additional US and ex-US centers later this year in preparation for our Phase I expansion.
We’ve been able to readily dose escalate IGM-2323 per our clinical trial protocol and we’re currently recruiting to our 30 mg fixed dose which happens to be the fourth dose cohort in the phase I. Escalation has gone well to date and with no obvious signs of cytokine release syndrome. This is consistent with what we observed with our CD20 by CD3 IGM in our nonhuman primate studies.
We look forward to gaining further characterization of the clinical performance of IGM-2323 during dose escalation as the data from the Phase 1 study is collected, analyzed and verified. While we do not yet have experience — while we have not yet experienced a significant slowdown in our Phase 1 enrollment due to COVID-19 we do recognize that this is possible. That said our goal is to begin dosing at the 100 milligram dose by the summer and complete dose escalation by the end of the year.
We continue to target presentation of initial safety and efficacy data from this clinical trial at a future meeting such as the ASH 2020 conference.
At this point, I will turn the call over to Bruce who will discuss IGM-8444 and IGM-7354.
Thank you, Dan. IGM-8444 is an IGM antibody targeting death receptor number five. This is which is expressed on a broad range of solid tumors as well as on leukemias and lymphomas. When DR5 receptors are bound on the surface of a cell, they act and commit suicide or apoptotic signal to the cell. This intracellular apoptotic signaling requires efficient cross-linking of at least three DR5 receptors on any given cell — on any given cell at that location.
Now IGM with its 10 binding sites is an especially appropriate format for an antibody to induce productive cross-linking of DR5 receptors on cancer cells. In preclinical studies our DR5 IGM antibodies demonstrated significantly enhanced apoptotic signaling compared to an IGG antibody with the same binding domains. That resulted in greater that 1,000 fold increase potency in killing cancer cells and this has been seen with multiple cancer types.
In addition to the encouraging signs of preclinical efficacy, our current preclinical data for IGM-8444 indicates that we have a very strong safety profile and an excellent therapeutic index of safety versus efficacy. So we are currently expecting to file an IND with the US FDA for IGM-8444 this year and initially for the treatment of patients with solid tumors.
Now I would also like to introduce IGM-7354, our targeted immune stimulating IL-15antibody which we hope will have broad oncology applications. This product candidate demonstrates another use of our novel J chain-based biospecific technology. In this case the immune stimulating IL-15 is attached to the J chain of an anti-PDL1 specific IGM antibody which serves to display the immune stimulating IL-15 on the surface of PDL1 positive self such as cancer cells.
In our preclinical studies this targeted IL-15 creates strong proliferation of CD8 type T cells also called killer T cells and natural killer cells or NK cells. Both of these cells play important roles in the treatment of cancer. We are currently expecting to file an IND on this molecule 7354 with the US FDA in 2021.
Now finally we continue to make excellent progress with our manufacturing efforts. We have now completed our fourth GMP manufacturing run of IGM-2323 with yields improving on each run. In addition we’ve manufactured enough IGM-2323 to meet our currently contemplated clinical trial needs for at least the next 12 months. We also continue to make progress with yield and process improvements on our pipeline programs as part of the overall evolution and growth of our IGM antibody expression and manufacturing capabilities.
To that end we are in the process of preparing to build out a GMP manufacturing facility at our site here in Mountain View, California. We expect to build out to begin once restrictions related to COVID-19 are lifted.
Now I’ll turn the call over to Misbah to review the financial results from this quarter and for the full year 2019.
Thank you, Bruce. In addition to the brief financial overview I’ll provide on the call today you can read additional detail on our fourth quarter and year-end financial result in our press release issued prior to this call and in our 10K which was filed with the SEC.
2019 was a very strong fundraising year for IGM. We raised gross proceeds of $201 million in our initial public offering in September and gross proceeds of $102 million in our series C private placement in June and July. As a result, we are fortunate to be in a strong financial position with cash and investments totaling $236.6 million as of December 31, 2019.
In the fourth quarter our research and development expenses were $12.8 million. For the full year 2019, R&D expenses were $35.3 million, general and administrative expenses for the fourth quarter of 2019 were $3.2 million and $9.2 million for the full year of 2019. Our net loss for the fourth quarter of 2019 was $14.8 million or a loss of $0.49 per share. For the full year of 2019 our net loss was $43.1 million or a loss of $4.80 per share.
Turning now to the financial guidance for 2020, we will continue to invest in our R&D programs. By the end of this year our goal to generate initial data from our ongoing trial IGD-2323 and to file an ID for IGM-8444. Also as Bruce noted we’ll look to start the buildout of our Mountain View GMP manufacturing facility. As a result, we expect our full year 2029 non-GAAP operating expenses to be between $75 million and $85 million. This excludes estimated non-cash stock-based compensation expense of approximately $8 million based on the recent trading range of our stock.
Including non-cash stock-based compensation expense our 2020 GAAP operating expenses are expected to be between $83 million and $93 million. We also expect to end 2020 with a balance of over $140 million in cash and investments providing IGM with an expected cash runway into 2022.
With that, I’ll now turn the call back over to Fred.
Thank you, Misbah. I’d like to take a moment just briefly to thank the IGM team for their excellent work. I believe that they have established IGM as the global leaders in the research and development of engineered IGM antibodies. The first inhuman application of our engineered IGM antibody technology IGM-2323 is now smoothly dose escalating in our phase 1 clinical trial. Our DR5 antibody IGM-8444 is expected to follow into the clinic this year in our targeted IL-15 immune stimulating antibody IGM-7354 is expected to move into the clinic next year.
We believe that we’re well-positioned to begin to realize the potential of IGM antibodies and to possibly change the course of therapeutic antibody development. We greatly appreciate your interest in IGM and we look forward to keeping you all informed as to our progress towards this mission.
With that operator, I’d like to open the call for questions.
[Operator instructions] Our first question comes from Stephen Willey with Stifel Nicolaus. You may proceed with your question.
Thanks for taking the questions and congratulations on the progress. I was maybe just point of clarification. So are you going to commit to a year-end dose escalation presentation kind of regardless of just whether or not some of the timing gets potentially delayed here in terms of your ability to ramp up additional cohorts?
Steve, this is Fred. I would say that our current expectation is that we will update the market by the end of the year as to where we stand and on what we’ve learned so far in this clinical trial. I suppose we’re in very uncertain times and that could change but that very much is our intention.
Okay. And question for either Dan or Bruce it sounds like you’re in the 30 mg fixed dose cohort now. Can you maybe just talk about what that dose from a molar equivalency perspective the nonhuman primates buys you in terms of — in terms of B cell depletion?
Sure and why don’t I turn that question over to Bruce since it’s a preclinical question.
Right so at that point Steve at the 30 mg per cg equivalent in a monkey model, we had seen depletion of peripheral B cells and normal peripheral B cells circulating in the monkey on the order of 50% or more of those peripheral B cells had been depleted at that site and of course that functions in a sense as a biomarker the circulating B cells and the next question, the next clinical question will be how well that occurs on tumors of course.
Okay. And then just lastly you talked about some of the other programs and the timing associated with those with respect to IND filings. I know you guys have also talked about wanting to go after other tumor antigens on the biospecific front I think CD123, CD38. Can you maybe just talk a little about what the cadence of those NexGen programs is and I guess how — what is happening to 2323 dictates the pace at which those things progressed through various IND enabling studies. Thanks.
Sure this is Fred. I’ll turn that question over to Bruce in a second but I guess I would say that at this point nothing that we’ve seen in 2323 would indicate that we wouldn’t want to push forward with 123 and 38 as quickly as possible. So we are pushing those preclinical programs as fast as we can subject to current limitations of course. So Bruce, you want talk about this?
Yes Fred. Thank you. I agree that we are moving as fast as we can on both of those programs. They are — they slated for an IND in likely the year after the immune stimulating program possibly that same year, but right now the data looks very good in vitro and in vivo and we’re encouraged with the platform. So we’re moving full steam ahead on both of those programs.
And Bruce you might mention that we’re seeing the same type of cytokine release data on preclinically on 123 and 38 that we saw on 20.
Absolutely Fred. As we’re well aware and we’ve described in great detail with the CD20 program 2323 we get very strong efficacy without cytokine release in our preclinical studies both in vitro and in vivo and both with CD-123 program as well as the anti-CD 38 program we see the same responses. We’ve seen strong, profound and potent tumor cell killing without the attendant cytokine release. So we’re seeing a really confirmation of this safety advantage of the platform.
Your next question comes from [indiscernible] with Jefferies. You may proceed with your question.
Hi guys. Thanks for taking my questions and hope you guys are staying safe. So maybe I just want to start with the 2323 program, can you talk about your expectations on data later this year? I know clearly it’s a fluid situation, but if everything goes according to plan and you’re not — and if you don’t observe any dose line cost, do you think we could see the 1,000 milligrams dose being presented at ASH or is it more likely the 100 and 300 mg doses that we’re going to see at Ash, thanks.
Thanks for that question. I’ll take that a top line and just say we still hope that we’re going to be through with 1,000 mg by the time of Ash but at this point I’ll turn it over to Dan and he can go into more detail.
Yeah thanks Darin for that question. So we are targeting being having dosed IGM-2323 at 1,000 milligrams dose level by the time of ASH-2020. Now course a lot can happen between now and then. In terms of our continued enrollment onto the study at the pace that we would like it to go, but we continue — what we continue to see is we believe right now our ability is there to get through the 1,000 milligrams cohort.
Whether we’re able to do that enough ahead of Ash 2020 will ultimately determine whether data — any data presented at a meeting like Ash 2020 includes the 1,000 milligram cohort. You can imagine safety from 1,000 milligrams generally could come in very quickly whereas efficacy requires follow-up. So you imagine that we would have depending on when that cohort gets enrolled, will determine what potentially is there for that potential presentation.
Okay. And then maybe a question for Bruce, you in your prepared remarks mentioned about the manufacturing yield for 2323 in terms of the fourth manufacturing run. Can you just talk a little bit about the yield relative to the earlier runs on 2323 and also the yield compared to IGG on this fourth run and I think you mentioned that you have sufficient doses for the next 12 months. Are your assumptions based on dose level at the 1,000 milligrams or is it based on lower dose levels and I guess what duration of dosing are you assuming in your assumptions of 12 months, thanks.
Thank you, Darin [ph]. So let me go back to your first question. We’ve done four runs and we’ve steadily improved and I don’t see that we’re going to stop doing that. Our yields get better and better. Roughly we’ve doubled the yield since our first run and that puts us in very good range of other biospecific IGGs. Those types of programs don’t typically have the yield of a standard IGG. So we’ll be very much in the range and as we indicated, we’ll be improving all along.
Now the second half of the question on the clinical supply and inventory and we did take a high level look at this where we intended to be able to treat at 1,000 mg and at least for 10 to 12 doses. I would like Dan you could comment on that duration, but I think we will be able to handle dosing in this escalation and even in the expansion trials with the currently available inventory.
Yes and thanks Bruce. I think that as we think about dosing schedule and duration of therapy project of 2323 I think we have to realize that there are still not — we don’t know what that ultimate dose and schedule and duration of therapy will be and in fact we built this program to enable the clinical data coming in from the trial to help us make those determinations. So not just dose but the actual schedule that we take forward as well as how long we treat.
As a base case, the protocol was written to assume that we would initially target dosing of up to about six months, but we also built in provisions to both back off on the frequency of that dosing and potentially also further adjust the duration of therapy. So a lot will have to depend on the data itself but I think that I very much support what Bruce said which is I think we have a clinical supply right now that is well positioned to get us through this phase 1.
Your next question comes from [indiscernible] Your may proceed with your question.
I am thankful to here that everybody’s doing well and good to hear all of your voices on the call today. Thanks so much for the update, I am going to go kind of to some of the earlier states often. I am really excited about the 7354 in terms of IL-15. May be you guys can characterize that a little bit because we’re certainly seeing some other approaches here. So how did that IGM format really work to address these immune simulators?
May be I’ll ask Bruce to start and then now we can go to Dan if there is further follow-up.
Right. Thank you, Dan sorry Ted. Thank you for the question and we’re very excited about the IL-15 immune stimulating IGM. Of course it’s first and foremost it’s targeting immune cells. We have a specific targeting of IL-15 to PDL one positive cells and we’ve demonstrated as on all of our programs we’re able to target a lower expressing cells with the IGM compared to the corresponding IGG. So that gets us to even lower expressing PDL1 positive tumor cells.
The next important thing is of course we’re displaying IL-15 to incoming NK cells and CD8T cells and we get not only the high avidity of binding to PDL1 but we get a strong durable context-dependent presentation of the IL-15. So this is a different type of biospecific immune cell engaging mechanism where we have a durable stable platform to display IL-15 on the surface of the tumor cell and what we’ve seen in our preclinical studies is this is a robust enhancer of local IL-15 activity.
Dan did you want to offer some additional thoughts about the application of that?
So as you can imagine we’re very enthusiastic about our IL-15 by PDL1 program. I think we can set IL-15 does offer some really interesting characteristics in terms of being an immune modulator. Obviously in the clinic IL-15 as a cytokine tends to be much safer in dosing than for example the very closely related IL-2 as a therapeutic. IL-15 also tends to really push a more of a memory phenotype in the T cells that respond to it and so we think these two characteristics together make it a really excellent therapeutic for us to have in our pipeline for development.
And finally I’m a strong believer as Bruce had mentioned that the stability of the IGM platform both for binding to a target cell so that it’s not coming on and off and also the ability to present in context. So recall that IL-15 in the human immune response is often presented to a T cell. It’s presented by generally things like myeloid cells dendritic cells and so you can imagine when that IL-15 signals presented that T cell, not only the T cell seeing the IL-15 but they’re seeing other molecules possibly present on the surface of those cells and that’s what we mean by context. And so I think the IGM platform really allows us to use that.
Yeah I really like the program. One another quick question if I may just in terms of scale and in terms of the ability of the new facility that you’re planning, how large do you think your will that facility be. What will your scale be when that is up and fully running thanks.
I’ll ask Bruce to answer that question.
Right. Thanks Ted. We are looking forward as we call it building two of our manufacturing site. We have put in plans to have two trains of production ending at 1,000 leaders. So initially we’ll build out the first train for 1,000 liter bioreactor and then coming on later we’ll bring in the second bioreactor at 1,000 liters.
[Operator instructions] Our next question comes from Michael Schmidt with Guggenheim. You may proceed with your question.
Hey guys thanks for taking my questions and appreciate the comment from the coronavirus outbreak. May be just a couple follow-ups on IGM-2323 maybe Dan or Bruce could you remind us at what dose you would expect a clinical activity-based on your animal data.
I’ll turn that question over to Dan to start. Dan do you want to take that?
Thank you, Michael. So recall that for IGM-2323 we used be homologous monkey model to really map out all of our expectations around this program and molecule and by using that data we set a Mabel dose which is minimally active biologic effect level that’s the first dose that we started the 500 microgram fixed dose and then we went all the way up to the planned dose of 1,000 milligrams fixed dose.
So throughout that entire range we observed biologic effect. It just was obviously increasing with dose. So when we set that minimal — that Mabel dose at 500 micrograms, that had a essentially reproducible 20% decrease observable in this for CD20 expressing B cells and so we observed a cost us preclinical studies activity throughout the entire dose range. And that is a relatively we believe a relatively simple biology to then try to translate into humans.
And as you go through dose escalation of 2323 what are your thought around the potential for initiating those cohorts below hypothetical MTD, should you not see toxicity by year end that remain.
Yes so that in the Phase 1 protocol for IGM-2323 we actually built in the ability to expand at any of the dose levels. Clearly dose escalation is mostly set at 3 plus 3, but we think it may be important to also further define all of the parameters at any of the given dose levels. So we have the ability to do that at any point in time once a given cohort is cleared.
And then a question on the DR5 program with the study initiation plans the IND filing can you maybe help us understand what types of patients you will be enrolling in the Phase 1 study. Will this be all commerce or will this cohort be enriched for patients that might be potentially respond to DR5 agonist?
Dan, do you want to talk about our strategy here for DR5 clinical development?
Absolutely so as you can imagine we’re very excited about our IGM-8444 program on multivalent DR5 agonist. It’s something that on the clinical side we’ve been preparing for quite some time engaging with investigators and preparing to initiate the phase 1 study. So that initial phase 1 study for 8444 would be in all solid tumors. We think that the biology for DR5 agonist is very broad, it extends from solid tumors into hematologic malignancies and we don’t think it’s limited to any one particular subset of human cancers.
So the Phase 1 dose escalation would essentially be in all commerce some tumors. We would add on hematologic malignancies after completing dose escalation and we would not initially be selecting because we want to understand those early efficacy and safety signals in a very broad range of patients. Once we’ve completed does escalation we can certainly target expansions in more discrete indications, but at this point in time based not only on our preclinical data and now understanding biology but also from the history of other DR5 agonist in the clinic, we think that these types of molecules have the potential to generate single agent and combination efficacy in a very, very broad range of cancer types.
Okay very good. Well thanks for the information and congrats on all the progress.
Thank you. And I am not showing questions at this time. I’d now like to turn the call over to Fred Schwarzer for any further remarks.
Well, thank you all for your support and interest in IGM and thank you for joining us on today’s call and we look forward to keeping you updated as to our progress.
Thank you, ladies and gentlemen. This concludes today’s conference call. Thank you for participating. You may now disconnect.