Arcus Biosciences Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 7, 2023

There are 13 speakers on the call.

Operator

Thank you, and welcome to the call. Following prepared remarks from the company, we will open the call for questions. This call is being recorded and will be available on the Investors section of the Arcus website. I will now turn the meeting over to Pierre Eaves, Head of Investor Relations and Strategy.

Speaker 1

Hello, everyone, and thank you for joining us on today's conference Call to discuss Argus' Q3 2023 financial results and pipeline updates, including today's presentation of data from our EDGE GASTRIS trial At the ASCO Monthly Funnery. Today, you will hear from Terry Rosen, Chief Executive Officer Dimitri Nauten, Chief Medical Officer Jennifer Jarrett, Chief Operating Officer and Bob Galtz, Chief Financial Officer. For Q and A, we will also be joined by Juan Haiyan, President and Head of Research. I'd like to remind you that on this call, management will be making forward looking statements, including statements about our cash runway, Our investigational products, our expected clinical development milestones and timelines and the potential market opportunity and drug treatable population of any indications being All statements other than historical facts involve risks and uncertainties that may cause our actual results to differ. Those risks and uncertainties are described in our most recent quarterly report on Form 10 Q that has been filed with the SEC.

Speaker 1

We strongly encourage you to review the filings. For today's call, please refer to our latest corporate deck, which can be found on the Investors section of our website. With that, I'll turn the call over to Terry.

Speaker 2

Thank you very much, Peon. Thank you all for those who are on the line. This is the 1st quarterly earnings call we've had in some time. So in addition to the dumvinoamab data that was just presented at ASCO Plenary, we're also going to discuss our other upcoming data readouts. Specifically for AB-five twenty one, our potentially best in class HIF-two alpha inhibitor and quemiclustat, our 1st in class Small molecule CD73 inhibitor, both of which we'll be sharing data with you just in the next few months.

Speaker 2

So just a few hours ago, many of you likely watched Doctor. Jan Jigian present initial data from our Phase 2 study, Edgastric from domvenilumab and first line metastatic upper GI adenocarcinomas. As a reminder, DARM is the only Fc silent anti TIGIT antibody in late stage development. And we and our partner Gilead Pursuing a very broad development program that includes 4 Phase 3 studies in non small cell lung and upper GI cancers. Today's data are extremely encouraging on all fronts.

Speaker 2

ORR for the PEL1 high population Clearly, it exceeded historical benchmarks in this setting. Eta in the overall patient population appears differentiated, Particularly relative to the most contemporary Phase 3 studies in this patient population, ORC's KEYNOTE-eight fifty nine and BeiGene's Rational 305. Most importantly, 6 month landmark PFS data for both the PD L1 high And overall patient population appear to be quite differentiated from benchmarks. These data are very supportive of our ongoing Phase 3 study STAR-two twenty one, which is evaluating DALM in the same combination, same setting underlying today's data set. DART-two twenty one is enrolling extraordinarily well and we expect that today's data will further enhance interest And actually accelerate recruitment in the study.

Speaker 2

In addition to DAMA, we continue to execute on the remainder of our pipeline, Including our HIF-two alpha and adenosine pathway programs. Regarding our HIF-two alpha inhibitor, AB-five twenty one, Early next year, we will be sharing detailed safety, pharmacokinetic, pharmacodynamic and preliminary efficacy data From the dose escalation portion of ARC-twenty, which is a Phase 1, 1b trial for AB-five twenty one. We're close to completing enrollment in fact of the dose expansion cohort that's evaluating 100 milligram daily of AB-five twenty one, The dose that we believe will hit the target substantially harder than the approved 120 milligram dose of Merck's belzutafan. Most recent data sets for belzutifan presented at ESMO continue to enhance our conviction around the opportunity for AB-five twenty one. Those data were just what we've been expecting for months, if not the past year.

Speaker 2

Later in this call, we'll describe this program In much more detail. With respect to our adenosine programs, we'll discuss our ARC8 trial evaluating our CD73 inhibitor, Quemly. This is in combination with gemcitabine and the impact with taxol with or without our anti PD-one zembrolumab in first line pancreatic cancer. As you may recall, ARC8 completed enrollment way back in November of 2021. So the median follow-up, the most recent data cutoff exceeded 21 months and we just now achieved a sufficient number of events For mature median OS estimate, these data show clear differentiation from contemporary benchmarks For gemabraxane in this setting, one with huge medical need.

Speaker 2

Furthermore, we've generated a rigorous synthetic control data set for gemabraxane, which also shows very meaningful differentiation from our combination therapy. We also continue to work tirelessly to advance new molecules into the clinic. We just initiated our Phase 1 study for AB-eight zero one, our highly selective axon inhibitor, and we expect to select the development candidate with potential best in class So I'll now turn the call over to Dmitry To describe in more detail, the EDGE gastric data that were presented earlier today.

Speaker 3

Thank you, Terry. I'll start by directing our audience Slide 9 of our updated corporate deck. The data presented today are from Cohort A1 from our Phase 2 adhes gastric platform study, This is evaluating DAWN based combinations in both the first and second line setting. The Avon cohort is evaluating DAWN plus SYM plus FOLFOX chemotherapy In first line gastric, gastro, esophageal junction and esophageal adenocarcinomas. As Terry mentioned earlier, this is the same setting and Setting we are evaluating in our Phase III study, STAR-two twenty one.

Speaker 3

This cohort was specifically designed to generate safety and efficacy data To support regulatory requirements for the initiation of STAR-two twenty one in certain countries outside of the U. S. Turning to Slide 11, we described the baseline characteristics of this cohort. 41 patients were enrolled and all patients are included in the efficacy analysis. The cohort enrolled a relatively diverse patient population from 20 different sites in the U.

Speaker 3

S, France and South Korea. There was an even distribution of patients included in Asia versus the rest of the world and 63% of patients had gastric cancer, 24 had junction tumors and 12 percent esophageal adenocarcinomas. PD L1 status was evaluated using the TEP scoring method 24 patients having TEP less than 5 and 15 patients or 37% with a TEP greater than or equal to 5. 2 of the 41 patients included in the overall population did not have tumor samples available for PD L1 testing. Note that the CPS and TAP are 2 methods for PD L1 assessment and both are used in gastric cancer.

Speaker 3

We'll show you later on this call Some of these methods sorry, that these methods have been high concordance. BMS and Merck have historically used CPS for their Phase 3 studies of anti PD-one plus chemotherapy, while BeiGene is using TEP including in the Phase 3 gastric cancer trial, rationale 305. The following slide describes the overall response rates of the data cutoff of September 4, 2023. In the TEP high population, we observed a 73% confirmed overall response rate and an 80% best overall response rate. These results exceed historical Phase 3 benchmarks for anti PD-one and chemotherapy.

Speaker 3

For example, in CheckMate649 and KEYNOTE-859, The overall response rate was 60% or 61% for anti PD-one plus chemotherapy in the CPS high arms And in rationale-three zero five, Beijing study in gastric cancer, which is the most contemporary Phase 3 data set in the setting, there's a 50% overall response rate in the tab high population. For the overall population in S gastric, the confirmed overall response rate was 59%, Which is very encouraging, particular given that approximately 60% of our patients are TEP low, which is Higher than the 40% PD L1 low patients in CheckMate649. The overall response rate in Merck's KEYNOTE-eight fifty nine trial Was 51%. I'd also note that we have seen 2 confirmed complete responses so far. The median duration of response has not been reached and given the time it takes to get to a complete response and the fact that many of our patients are still on treatment, The CR rate might go up over time.

Speaker 3

We believe that the overall response rate results seen in EdCastro demonstrate the additive benefit As an anti digit agent can provide above and beyond PD-one chemotherapy PD-one excuse me and chemotherapy in upper GI cancers. On Slide 13, we show the waterfall plot and as you can see the vast majority of patients experiences tumor volume reduction. Well, there is a difference in the overall response rates between the TEP high and low tumors. You can see in the chart We have observed very deep responders in both patients with high and low expression. You can also see that in addition to the 2 complete responders, There are other patients with very significant tumor volume reductions that could convert to CRs over time.

Speaker 3

The next slide shows We'll continue to have stable disease and remain on treatment. On Slide 15, we show the overall response rate table again, But here we show the data using both the TEP and the CPS method. And as you can see, there is strong concordance between these two methods. The next slide, Slide 16 shows the Kaplan Meier curves for progression free survival. Here we call out the Levmark 6 month PFS, Which is mature in our trial with a minimum follow-up of 6 months for all patients.

Speaker 3

These data are extremely promising for both the high and the low patient population. Specifically, we observed a 77% in the overall population and a very impressive 93% in the For 6 month landmark PFS. While we recognize that these are small numbers, the 6 month PFS numbers compare Very favorable to the benchmark Phase 3 studies, which have been in the 50% to 60% range. You can see here in the curves We have not reached the medium PFS for either the TEP high or overall population with a medium follow-up of 8.1 months. Given that the historical benchmarks have shown a PFS in the range of 7 months to 7.5 months, we believe these data put us on track to Exceed those benchmarks and importantly a substantial number specifically 24 out of 41 patients enrolled in our study continue to be on treatment Lastly, I will cover the safety and tolerability profile we've seen so far in etch gastric.

Speaker 3

The most common treatment Emergent adverse events, which are shown on Slide 17, were neutropenia, nausea and anemia, which is very consistent with We will expect from chemotherapy alone. In fact, the vast majority of Grade 3 or higher drug related treatment in emerging adverse events Were contributed to chemotherapy and only 12% were contributed to Dalmarsim. No serious treatment emergent At first events were related to dolmarsen. Of note, all infusion related reactions shown on Slide 18 were deemed related to oxaliplatin. Overall, the regimen was well tolerated with a similar AE profile to that expected from FOLFOX plus anti PD-one.

Speaker 3

These results add to the growing body of evidence supporting a potentially differentiated safety and tolerability profile for DOME relative to Fc enabled Before I turn it over to Jen, I wanted to spend a minute on some key elements of the design of our Phase 3 study STR-two twenty one, which is Shown on Slide number 20. First, we are stratifying by TEP greater than 5% or less than 5%. So this is Well balanced between the two treatment arms. We are also closely monitoring the percentage of patients who have tumors with a TEP score of more than 5% To ensure that the percentage of these patients in our study meets the pre specified percentage per our statistical analysis plan. 2nd, The study has dual primary endpoints of overall survival, one for the TEP more than 5% and the other one for the ITT So we have 2 opportunities to win in this study.

Speaker 3

With that, I'll turn it over to Jen to talk about the market opportunity for TIGIT.

Speaker 4

Thanks, Dimitri. I'd like to start by talking about the TIGIT field overall. Our most recent feedback from KOLs indicates a Clear and growing data driven enthusiasm for anti TIGIT is an innovative therapy. Following the release of data from the 2nd interim analysis of Roche's TypeScript 1, We engaged a third party to conduct a survey of 7 of 30 oncology KOLs regarding their sentiment on the anti TIGIT. You can see these results on Slide 35 of our investor deck.

Speaker 4

Approximately 80% of respondents believe it is likely that Tarrago plus atezo, Roche's anti TIGIT and PD L1 combination will receive FDA approval. Additionally, based on data they've seen to date, 83% expect anti TIGIT to play a moderate or larger role in the treatment of first line PD L1 high non small cell lung These survey results are telling. As the evidence on anti TIGIT accumulates, physicians are increasingly convinced of the potential for this mechanism to change the treatment paradigm in lung cancer. Since we are combining DALM with the current standard of Chemo plus anti PD-one and adding almost no toxicity, this is a very easy value proposition for physicians. Today's results continue to demonstrate the potential for anti TIGIT to improve outcomes and indications where anti PD-one is successful.

Speaker 4

As Terry mentioned, gastric, GE junction and esophageal adenocarcinomas represent a $3,000,000,000 plus market opportunity with approximately 25,000 patients in the U. S. Alone and over 100,000 patients across the G7 countries. Note that we are pursuing adenocarcinomas, a different histology than that which is being pursued by Roche and BeiGene in their respective Phase III and II studies. In fact, we and Gilead have the only anti TIGIT and Phase III development for first line upper GI adenocarcinomas, Many of you are aware that there is another class of agents being developed in gastric cancer directed against claudid 18.2s, which were also discussed in today's plenary session.

Speaker 4

While the efficacy data are encouraging, published literature estimates Only anywhere from 20% to 40% of patients are high expressers of claudin18.2 and these molecules are associated with significant GI toxicities. We also expect it will take several years for claudin 18.2 testing to be successfully rolled out. With anti TIGIT, we believe we have the potential to achieve similar efficacy Without the toxicity associated with the anticlaudins and potentially avoid the need for any testing allowing patients to go directly to treatment. Today's data set will support both study recruitment and regulatory filings for a combination, and we are moving aggressively to secure our position as first to market and best in class in this indication. I'll now turn it back to Terry to discuss our HIF-two alpha and CD73 programs.

Speaker 2

Thanks very much, Jen. So first, let me start by a level setting a bit on HIF-two alpha. It's a transcription factor, It has no ligand binding domain. And as a result, it's proven very difficult to create molecules that are high quality inhibitors, But also that have ideal drug properties against target. That's why there are very few other HIF-two alpha blockers in clinical development today.

Speaker 2

Belzutifan is the 1st and only HIF-two alpha inhibitor to be approved to date and it's only approved for BHL associated cancers, Although Merck recently filed for belzutifan's first approval in clear cell RCC, Slide 47 of our corporate deck Describes the value proposition for AB-five twenty one. It's really pretty simple. The primary limitation of belzutifan is substantial. Its oral absorption saturates at a dose of 120 milligrams. So what does that mean?

Speaker 2

Even when higher doses of belzutifan are administered, Systemic drug exposure does not meaningfully increase. In fact, it's very clear from the published data for belzutifan That the approved dose of 120 milligrams was chosen because doses beyond 120 milligrams did not result meaningfully higher plasma levels. This had nothing to do with dose limiting toxicity. Merck in fact just released results For LightSpark, 13 at ESMO, which evaluated doses of 120 milligram versus 200 milligrams of belazutifan. No surprises.

Speaker 2

They concluded that there was no difference in ORR between these two doses and that the results support their dose selection 120 milligrams for their trials. However, it's super important to note that they made no mention Whether they were achieving higher levels of drug exposure with the 200 milligram dose and they did not share any PK or PD data For this study, so consistent with the previous literature, we just view this as more evidence of belzutifan's PK and PD limitations And the ability inability in fact to achieve meaningfully greater plasma concentrations with doses that are above 120 milligrams, Our fundamental thesis going into this program. The primary objective of our HIF-two alpha program then was to create a molecule without this pharmacokinetic Liability enabling us to hit the target harder. In a Phase 1b study in second line clear cell RCC, Nalzutifan demonstrated an ORR of about 25% and approximately half of these responses We're not achieved until 6 months or more of treatment. These ORR data were essentially recapitulated in the Phase 3, LightSpark 5 study, which showed a 22% ORR for belzutepan versus 3.5% for evrolimus in a 5.6 month median PFS.

Speaker 2

While these results are actually Quite encouraging, we believe they show clearly room for improvement. And with AB-five twenty one, we could observe a higher response rate, deeper responses or faster response kinetics, all of which should translate into longer PFS. In our healthy volunteer study, we demonstrated that AB-five twenty one has an ideal profile, Including dose proportional pharmacokinetics. That's important. Dose proportional pharmacokinetics is the huge differentiator here.

Speaker 2

In our dose escalation study in patients, we replicated the pharmacokinetics that we observed in healthy volunteers And now have dosed up to a daily dose of 100 milligrams, which we believe has the potential to achieve at least 3 times higher levels of AB-five twenty one, those equivalent to the approved dose of dolzutifan. Importantly, and this is a key finding, We have not seen any dose limiting toxicities. So based on these data, we've initiated our 30 patient expansion cohort A dose of 100 milligrams daily in clear cell RCC patients. There has been a great deal of investigator enthusiasm around the study. In fact, the cohort is almost fully enrolled.

Speaker 2

Early next year, we're very excited to have the opportunity to present PK Pharmacodynamic safety data as well as the initial efficacy data from the 12 patients in the dose escalation portion of the study. Approximately half of these patients have RCC and all were treated at a dose of 50 milligrams or 100 milligrams daily. So both of these doses are pharmacologically relevant. The safety data support our view that the enhanced target coverage by AB-five twenty one Relative to that obtained by belzutifan does not result in an increased safety liability. We also expect to present data from the expansion cohort We're progressing the molecule rapidly and expect to start a Phase 2 TKI combination study And second line clear cell RCC are year end with a goal of getting a Phase 3 study for AB-five twenty one as quickly as possible.

Speaker 2

So now let me shift over to ARC8. Really excited to talk about this study, our Phase 1, 1b study That's evaluating Quemly in first line metastatic pancreatic cancer. Quemly is a highly selective An extraordinarily potent small molecule inhibitor of CD73, a key differentiator of Quemly Compared to the most advanced CD73 antibody in clinical development is that it blocks both the membrane bound and the soluble forms of CD73, enabling it to achieve complete inhibition of the enzymatic activity. This is a huge difference Because CD73 is readily shed from cells resulting in significant levels of soluble CD73. So in contrast, the most advanced CD73 antibody is only partially effective in inhibiting the enzymatic activity Of either membrane bound or soluble CD73.

Speaker 2

So I think an important concept here is that although they share the same target CD73, Quemly is highly differentiated by its mechanism of action, which as I said, enables it to fully inhibit Both forms of the enzyme. We also believe that a small molecule may penetrate tumors better than an antibody. Pancreatic tumors are notorious for being very fibrotic. What does fibrotic means? Think about it like scar like tissue.

Speaker 2

This makes it hard for drugs to infiltrate the tumor and therefore a small molecule approach may be particularly advantageous in the setting. We chose pancreatic cancer as the first indication for Quemly because this tumor type is associated with extremely high CD73 level and in fact High CD73 expression has been shown to result in poor overall survival outcomes in patients. Slide 42 highlights the design of our gate. We enrolled approximately 30 patients evaluating 100 milligrams of Quemly plus ZYN plus gemabraxane in the dose escalation and expansion portions of the study. Subsequently, we enrolled the randomized portion of the study and this evaluated quemly plus gemabraxane with And without zembrolumab in 90 patients with the goal of determining whether anti PD-one therapy provides any clinical benefit on top of what we're from Quemly in this setting.

Speaker 2

We've already disclosed that zembrolumab did not add any benefit to Quemly plus gemabraxant in this study. We completed enrollment of this randomized portion in November of 2021. At the most recent data cutout, Median follow-up was 21 months. This data set we will share early next year will therefore include mature overall survival data For all 122 patients enrolled in the study, this is a substantial data set. They are all at the 100 milligram dose of Quemly.

Speaker 2

There There have been several recent data sets, good data sets that provide benchmarks for how gemabrancine performs in the study. And overall survival for these contemporary datasets falls in the 9 to 11 month range. The data are really pretty tight. The NAFLD III study, which was just presented at ASCO this year, demonstrated 9.2 months overall survival for the gemabraxane arm. Fofiranox is also used in the setting, but it's often reserved for healthier patients given its toxicity profile.

Speaker 2

Polferonox demonstrated a median overall survival around 11 months in the NAFLD III study. We plan to share the full data set from ARC8 early next year. The disclosure will be comprehensive. It's going to include ORR, PFS and OS landmark 12 and landmark 18 month OS. We also plan and this is important update, we plan to share data From an externally generated synthetic control arm of gemabriaxane, which we believe will further validate the clear benefit That was observed with Quemly.

Speaker 2

We'll also spend more time on the mechanism for Quemly in pancreatic cancer and why we might We'll be seeing such a meaningful benefit in overall survival. Briefly, we believe that there are 2 mechanisms at play, Both of which are very well supported by extensive literature on the role of CD73 in pancreatic cancer. First, by inhibiting adenosine formation in response to chemotherapy and essentially blowing up cancer cells, We may be enhancing a T cell response in the tumor. And second, by interfering with the effects of adenosine on well known fibroblast biology In tumor fibrosis, we're really very excited about the data and we believe these results support further development of PEMLI Patients with this devastating cancer, there's really been no advances in this field for the better part of a decade. As you know, pancreatic cancer is a disease with Extremely high unmet need.

Speaker 2

It affects 37,000 patients in the United States alone. We believe the global market opportunity Could easily exceed $3,000,000,000 I'd like to turn it over to Bob now to review our financials from the quarter. Thanks, Terry.

Speaker 5

Arcus continues to be in a very strong financial position. Our cash at the end of September 30, 2023 was 9.50 And our net cash utilization through 3 quarters of 2023 has been $188,000,000 Importantly, we share costs fifty-fifty with our partner Gilead on a large portion of our portfolio, including all of our ongoing Phase 3 studies. We now expect cash utilization for full year 2023 to be between $265,000,000 $290,000,000 Down from our prior guidance of $295,000,000 to $325,000,000 and we continue to expect our cash balance The fund operations into 2026. Our cash runway guidance excludes potential opt in payments and approval milestones from our partners. Turning to our P and L, we recognized GAAP revenue for this quarter of $32,000,000 which compares to $29,000,000 for the Q2 of this year.

Speaker 5

Our revenue is primarily driven by our collaboration with Gilead, and we expect to maintain similar levels of revenue in the near term with small fluctuations due to updates to our clinical development plans and timelines. In addition to our partnership with Gilead, Taiho is our partner for Daum in Japan. In the Q4, we received a milestone payment of $14,000,000 from Tay Ho related to their participation in our STAR-two twenty one pivotal study We'll receive another $14,000,000 in the Q1 of 2024. We are also eligible for additional milestone payments from Taiho related to STAR-1 hundred and twenty one.

Speaker 2

Our R and D expenses for the

Speaker 5

Q3 are stated net of reimbursements from Gilead and were $82,000,000 as compared to $84,000,000 in the Q2 of this year. In the current quarter, non cash stock based compensation represented $8,000,000 of our R and D expenses. We expect modest increases in our R and D expenses as For example, in the Q3, spend in these areas was lower than in the preceding quarters of this year. G and A expenses were $30,000,000 for 3rd quarter of 2023 compared to $28,000,000 in the Q2 of this year. Non cash stock compensation represented $10,000,000 of our G and A expenses for this quarter, and we expect G and A to remain stable over the remainder of 2023 through 2024.

Speaker 5

For more details regarding our financial results, please refer to our earnings press release from earlier today and our 10 Q. I'll now turn the call back over to Terry for some closing remarks.

Speaker 2

Thanks very much, Bob. So to wrap up, first off, we're really excited about today's data set. It provides evidence that supports DAMA's potential best in class anti digit in first line upper GI adenocarcinomas, A setting we're well on track to be 1st to market and 1st to market by a distance with an anti TIGIT antibody. I It's also important that in a high if you elevate a bit, it really continues to support Domzim is a best of class anti TIGIT, anti PD-one doublet, the combined holistic profile of efficacy and safety profile. As we execute on our 4 Phase 3 trials for DAAAM, we continue to advance the remainder of our pipeline We're really looking forward to sharing more data in the very near term on Quemly and pancreatic cancer in our HIF-two alpha program.

Speaker 2

Both of these programs have been ongoing for some time. I think we're going to have some data that you can really look at as inflections for both. So with that, we'd like to thank you for your continued support as we work to develop, we believe, very innovative combination cancer therapies For patients that are in need. With that, I'll open up the floor for questions.

Operator

Thank Our first question comes from Yigal Nochomovitz from Citigroup. Please go ahead.

Speaker 6

Yes. Hi. Thanks very much for taking the questions. I just wanted to follow-up on the comment Dmitry made around the design for STAR-two twenty one. Dmitry, you mentioned that you And the plan for the stats to pre specified percentage of tap high and tap low, can you comment on what that is?

Speaker 6

And is it similar to what you've seen in the Edge Gastric?

Speaker 3

Thanks for the question. So as my standard answer around statistical analysis plans is we don't comment on the exact details. I made the comment specifically because I want people to be sure that the trial is designed to look at both the overall population And the high population in order to do that, we have specific criteria about the number of patients, number of events and thereby the power for the survival analysis in those groups. What I can say in general is what I've said before, we are expecting a slightly lower number of PD L1 high patients. As you can In our current data sets, we are at about 40% PD L1 high.

Speaker 3

That's something that we were expecting to be lower than CheckMate, given that CheckMate changed standard of care more for high expresser than low expressing tumors and thereby we anticipate that patients with PD L1 low disease Disproportionately would want to be on a clinical trial. That's why we've done comprehensive planning to make sure that both of the primary populations have a good shot on goal for success.

Speaker 6

And the primary endpoint is on the overall or do you have a how does it work? Do you have a primary on the PD-one high?

Speaker 3

So we have dual primary endpoints for overall survival in both the high expresses and in the full population, So both can be tested independently and the study will be declared positive if either one of those is positive.

Speaker 6

Okay. And then the discussion today mentioned that FcSilent might potentially be the reason why you saw the higher efficacy in the TAP high population that had We're more immune sensitive. Just can you comment on that? Do you agree with that hypothesis?

Speaker 2

I think so Yuval, I'll take that. I think it's An overstatement on the number of patients, etcetera, to get into any differences. And that's the one thing that we would comment The FcSilent is clearly that safety profile is something that enables patients to stay on better, Etcetera. So we think that manifests itself in a better overall profile. I think It's a little too nuanced to get into differences with respect to the PD L1 status of those patients.

Speaker 6

Okay, got it. And then one on 521, Terry. I'm just interested that you've made the argument that you have better PK than the Merck compound for Several quarters. Can you comment a little bit on what's driving that? I mean, some of the hypotheses I was thinking about was maybe less protein binding or Engineered to avoid certain metabolic pathways or better gastrointestinal absorption.

Speaker 6

Can you comment at all as to what design features you've introduced that are giving you that edge you refer to? Thanks.

Speaker 2

Yes. So what we know in a black box sense is simply Their absorption is limited and if they go actually if you look at the data closely, There is very little difference between 80 milligrams, 120 milligrams, 160 milligrams and 2 40 milligrams. You have An issue with absorption. In their case, it probably relates more likely than not simply to solubility. Our molecule doesn't have that liability and our molecule simply will behave like most Small molecule, organic molecules, and we don't have that problem.

Speaker 2

So It's probably something as simple as that, physical chemical properties.

Speaker 6

Okay. Thank you.

Operator

Our next question comes from Jonathan Miller at Evercore ISI. Please go ahead.

Speaker 5

Hey, guys. Thanks for taking the question. I'll follow-up on HIF-two. I guess it makes sense that You've got better exposure than Mark does. Let's take that as read.

Speaker 5

But I guess what we don't know yet is if hitting the target Harder really does result in better outcomes that Terry mentioned during the call. So I guess my question is, what data gives us that Clear signal of additional efficacy in addition to better PD. Is it likely that we could get something in escalation that does that? Or do we have to wait for expansion data later in the year.

Speaker 2

Thanks, John. It's a great question. Of course, that's The key question. I think the arguments that we make are a combination of factors from our own data As well as the data with the Merck molecules. So I'll start with the latter.

Speaker 2

What's clear from their data Is that if you look, the vast majority of the patients, for example, in their earlier study and as you see this 20 some odd percent response rate, You see tumor reduction, but you see slow kinetics, you don't see the sort of response rate that you might envision, Particularly in a setting that is known to be driven very strongly by HIF-two alpha. So you might expect that you would See stronger results. So for example, if you had an ORR that was 90% and you could hit the target much harder, That probably wouldn't buy you much. Now if you come to what we know about our molecule and first of all, let me finish on their molecule, We know that they can't hit the target harder. So as you know, usually in oncology, you've either modeled Something or you've hit an MTD, in their case, they simply can't get to a higher exposure.

Speaker 2

And in fact, That's been demonstrated in multiple ways by them. What we have shown, in fact, is that basically if you look at the pharmacodynamic endpoint That's easily detectable. We can get the same effect that Merck gets with their clinically used dose at about 1 third to one quarter the dose and the dose that we're using now go forward is 4 fold that dose. So clearly, we should be hitting the target harder. And then you said, the obvious question will be Now going to randomized study in a large trial, do we see that manifest itself?

Speaker 2

From our we certainly from the escalation data, you'll get a good feel that the molecule is behaving well, that Roughly half or a little more than half of that 12 patients that has RCC. Keep in mind, that's a very late line Our group of patients, it's heterogeneous, but you'll be able to pick those patients out and see that it looks like the drug is working. So I think that what we would say is that the Phase 2 data in the expansion cohort will be one that We will get the real true sense of how much better we might be doing by hitting the target harder.

Speaker 5

Great, great. That makes sense. And then I guess on TIGIT, it seems like the plenary discussion this afternoon wasn't very excited about the Edge results, I think because How early the PFS curve is at this point? So your PR suggests that mature PFS is coming second I know that the virtual plenary series usually comes with ASCO presentation. Is it fair to expect we'll get updated PFS at ASCO next year as well?

Speaker 2

So first, let me just come back to the actual data. We think the data actually look Quite encouraging. As you know, the 6 months PFS were mature and they're Quite meaningful, both in the high PD L1 as well as the totality of the patient population. So if you think about it, clearly that 93% landmark PFS for the high PD L1 It's quite meaningful. And even the 70 some odd percent is quite meaningful.

Speaker 2

If you go back and, for example, look at The CheckMate study, what you've got is a median on the order of 6 to 6 I'm sorry, 7 to 7.5 months. And that's in the PD L1 high. So in our total population, we're still at 73% landmark It's 6 months, which bodes pretty well, if you even start to compare it to like what would be 100% high PD L1 and more diluted. With that said, insofar as expectations, we do not know. Our guidance has been that we expect Medium PFS to be mature in the second half of next year.

Speaker 2

So we'll just have to see obviously that's event driven. We had a large as you saw, a large number of patients remain on the study. So we'll see how that plays out as the year goes along.

Speaker 5

But do you have a presentation at ASCO in the summer as well?

Speaker 2

Yes. Absolutely.

Speaker 5

Okay, thanks.

Speaker 1

Hi, everyone. This is Pia. If you could please keep it to one question as much as possible, we'd

Speaker 7

Steph, you can call the next person, please.

Operator

Thank you. Our next question is from Peter Lawson at Barclays. Please go ahead.

Speaker 8

Great. Thank you. Thanks for taking my question. I'll try and make it multipart for you. Just on your HIF-two alpha, The data we're going to see early 2024, do you think that differentiation starts Emerging whether it's in ORR or do you think it kind of has to we have to wait to see that emerging in PFS?

Speaker 2

Yes. Go ahead, Jen.

Speaker 4

Yes. I mean, I think so first of all, Terry started to talk about this, but maybe just Again, to tell you exactly what that data set is going to be. So the dose escalation is going to be 12 patients, approximately half of those patients, so approximately 6 of those All of those RCC patients were treated at a pharmacologically active dose. As far as like will the ORR be differentiated Relative to sort of the 20% to 24% you see in sales, I think the problem is this denominator is still going to be really small. So whether it's really high or really low or I think the The denominator is too small to really tell you much, which is why Terry was saying we wouldn't rely on the ORR from the dose escalation.

Speaker 4

So I think for the dose escalation, what's going to be most interesting One, just what does the waterfall plot look like? And then RCC patients, are you seeing activity? And 2, is there any signs that maybe the Responses are happening a little bit faster because as we know it's belzutifan for a lot of patients that can take 6 months or more to get a response. And then once we get to the expansion cohort, So that will be sometime in 2024. That will be a higher end in the denominator and so the ORR will start to be more meaningful.

Speaker 8

Great. Thank you so much.

Speaker 4

Does that answer your question, Peter?

Speaker 8

Yes. Thank you.

Operator

Our next question is from Robin Karnauskas from Truist. Please go ahead.

Speaker 9

Great. I have ten questions. I hope you can do them all in a very short period of time.

Speaker 2

It's Steve. Robert, you can have a 100 questions.

Speaker 9

All right. I just was noticing given the curves like Bill and I were talking about like how Patients who experienced tumor reductions were PD L1 negative and that's so unusual in the waterfall plot. So How do we think about that? How do we put that in perspective for PD-one high? And can you help us with Median 21 months of follow-up in pancreatic cancer and put that into context.

Speaker 9

Like those are 3. I'm sorry, I got 3, but like I'm just putting them out there. You can cut one off and give it to another It's fine. But I thought the waterfall pods are very interesting.

Speaker 2

So one thing to Keep in mind with PD L1 levels is that once you introduce chemo into the mix, You get you sort of have a dynamic situation and that's an important aspect of this therapy. So It's not surprising if you heard one of the discussions talk about immunogenic chemotherapy and What that does and so if you get an immune response now having immunotherapy, you can generate what might be surprisingly Good response. And I think it's something we talk about this since we work on a number of immunotherapies and we talk about this a lot In the context of Quemly, you can have a patient who might Not even have that much of a tumor reduction, but from a survival standpoint can really benefit because if they can amount the T cell response, You can enhance it. So we just feel that, that's certainly amongst the rationales for when you Start bringing in chemo together with immunotherapy that the PD L1 levels don't tell 100% of the story. What was your second question, Robin?

Speaker 9

So if you for the pancreatic trial, like with the median follow-up at 21 months, How do I put that into context? Is that a long time? That seems like a long time for pancreatic cancer?

Speaker 2

Yes, it's a long time. And to be clear, when we think about what the median OS Our readout is that tends to range somewhere between like 9 to 11 months on the high end. If you talk to clinicians, given this is so devastating, even something that was 2 to 3 months longer than that would be meaningful. So we think we're going to have something that really looks like it's moving the needle.

Speaker 9

All right. I'll put my another 8 questions back in the queue. Enjoy.

Speaker 2

Okay. We can always talk later.

Operator

Our next question is from Kaveri Polman at BTIG. Please go ahead.

Speaker 10

Yes, good evening and congrats on the etch gastric trial results. For PD L1 expression, you provide any color on your rationale for using TAP assessment and how different it is from the CPS score that was used For the 609 trial, also if you could tell us about your rationale for using cutoff of 5 versus 1 or 10 like some other trials have used?

Speaker 2

Dmitry will take that. Yes.

Speaker 3

So, the rationale to use STEP, there's a couple of different things, right? So, there's Scoring method, which is STEP or CPS and then there's the different assays and we need a combination of those for regulatory purposes And we need to have the work done as companion diagnostic to use it as stratification factor in a trial. That work cannot be done on every single assay. That's why we work with SB263. When it comes to TEP and CPS, my simplest way of answering the question is, As the discussion said, the TEP is kind of a visual scoring method.

Speaker 3

She didn't use those words, but it's easier for pathologists to do. CPS has a strong scientific rationale, but if you look at BMS's initiated trial that was published looking at 13 The pathologists who have been in practice for 20 plus years and got training, the concordance of the interop server variability CPS essay is not great. It's in the 50% to 60% range. So I think CPS is Somewhat challenging implementation in a larger setting and that has the benefit that it's easier to implement. The 5% threshold is a reasonable threshold extrapolators from the data for CPS in the public domain.

Speaker 3

We think it's a good threshold. And then lastly, there was one more subpart of the question. That was it. No, that was it. Okay.

Speaker 3

Did we get everything there?

Speaker 2

No, sorry. No.

Speaker 3

And I wanted to make the point, we showed the concordance, right. So That is easier. I think that that makes it easier to implement it on a larger scale also beyond clinical trials. But we have provided Let's say that the CPS data on our own data set in the corporate deck as well to provide confidence that The number of patients captured by both assays is not widely different as a high concordance between these two methods.

Speaker 10

Got it. And if I can just squeeze one more. For ARK8 trial, the comments you made about Sharing data from externally generated synthetic control with genabraxane. Can you give us some color around that?

Speaker 2

I'll give you minimal. I mean, what I'll say is it was done with metadata. It was done in an Extremely rigorous way, very much get matched patients. And quite frankly, when you start to think about, particularly in trials that aren't like 1,000 patients or 800 patients. The reality is you actually from a control standpoint get a better patient Population that's more matched to your data set, assuming that they have a large enough well annotated data set, Which they do and that was even that took a couple of months to just even do that part of the analysis to make sure That they could do it.

Speaker 2

So I think everyone's going to be very pleasantly surprised by the quality of that data set. And I think it's going to Bring a lot of confidence. This type of data set that you can certainly even take to regulatory agencies in discussing your Our plans going forward. So we think that's going to be a big deal in part of our total package for that program.

Speaker 10

That's helpful. Thank you.

Speaker 2

Thanks.

Operator

Our next question comes from Mara Goldstein from Mizuho. Please go ahead.

Speaker 1

Great. Thanks so much. During the plenary today, there was a comment along the lines of The presentation of this data, there's a hope that this would also help facilitate, STAR-two twenty one enrollment. So can you talk a little bit about where that Trial is from enrollment characteristics perspective and what the timing looks like from here? Yes.

Speaker 2

So I love the question. Even though we can't give you bottom line answer, the trial is enrolling Gamebusters. So when we talk about how It isn't so much like, oh, it's in need of help. It's that it's enrolling incredibly well. In fact, I would go and say that more likely than not, if you ask us to bet, I think that's Probably going to be our 1st trial to read out.

Speaker 2

Our guidance has been that our trials will be, Let's say, 20, 25 plus, we're not changing our guidance, but it's enrolling well ahead of schedule. A couple of comments on the reasons. I think there's been a lot of enthusiasm that's Data driven, what's going on just in the TIGIT field. In this particular setting, as you could tell from the discussions, There's also a lot of clinical trial need. There's simply not a whole lot happening in an innovative sense.

Speaker 2

And we believe this data set unquestionably, So all of the investigators we've spoken to are really excited about the data and we think it's just going to Accelerate things further. So I keep an eye on this. I think what's interesting about this, when you think holistically about the field, For us, this trial is going to help us close the distance on who and what ends up being The first doublet that comes to market in the field.

Speaker 1

Okay. Thanks a lot. I appreciate it.

Operator

The next question comes from Dana Grobash from Leerink Partners. Please go ahead.

Speaker 11

Hi, Jeff on for Dana. Do you think you could share your thoughts on the potential differentiating characteristics of dasmodovs, The various digit antibodies beyond Fc function to these points,

Speaker 6

I mean, what else do

Speaker 11

you think could Arguably disappointing Phase 2 data that we saw from, osaprilumab, the competing antigen antibody that was recently presented to ESMO. Thank you.

Speaker 2

Yes. So I mean, I think primarily we're going to come to that It's absolutely clear that FC enabled anti TIGITs and you wouldn't know this until you get the empirical data, but they do deplete Tregs. And so by definition, that's not going to be a good thing. If you deplete Tregs in the periphery, you're going to see enhanced Immune AEs. But secondarily, dose is different.

Speaker 2

And in fact, I think it's telling. BeiGene is actually on the higher end of the spectrum for the Fc enabled anti TIGIT. And what you have to realize, It's sort of surprising when you think about because one of the fundamental it's not a shock that Anti TIGIT is turning out to have the safe mechanism that we see because it's a tumor specific Mechanism where you have that high CD155 is just being way over expressed as a survival advantage By the tumor. So people keep asking questions about TIGIT expression. The key thing is CD155 Expression, if you want to draw an analogy, you know how everybody focuses on PD L1.

Speaker 2

PD L1 is The correlate of CD155. So it's not the PD-one that's the driver, it's not TIGIT, that's the driver. But that component of then the higher dose, particularly with an C enabled anti TIGIT, you're simply getting don't forget that depletion of T cells, that's an on target mechanism. So by going a higher dose, you would expect to see more. And in fact, BeiGene is on the higher end of the spectrum.

Speaker 2

What's Counting, okay. So this is where we sort of look at these data and point people to the forest in addition to the trees. And so far as not just the setting, but as you know, Merck is using co formulation. And Not surprisingly, that co formulation is a lot about pembro. It's protecting pembro.

Speaker 2

And Merck explored 200 milligram dose of Vivo, they explored 700 milligram dose of Vivo and in the co form They're using 200 milligrams and that just speaks to this point we were talking about that going up in dose It's more likely to give you more on target AEs. And so we think that's it's as simple as that.

Speaker 6

Thank you.

Speaker 4

I think what I think I'll point out is, you know, ociparlimab, particularly the data Just printed it at ESMO within very different settings than anything that we're doing. And they've tended to be going after the second line setting. So Their data was presented 2nd line cervical, 2nd line esophageal squamous cell carcinoma, so a different histology that we're pursuing with gastric and esophageal. But like I said, going after the 2nd line setting without chemo and tumors that are progressing very rapidly where you have a PFS of sort of 2 to 4 months. So not only is there anybody different when you look at a superior lab, but their development plan and the tumor types that they've been pursuing and settings have been very different than ours.

Operator

Our next question comes from Lee Watsack from Cantor Fitzgerald.

Speaker 7

Hi, this is Rosemary on for Lee. Thanks so much for taking our question. So for SARS-two twenty one, Hypothetically, if you were to hit the survival endpoint for the PD L1 high patients, but not for all comers, do you think you still have a chance approved in that patient subset given that the PL-one status is a stratification factor?

Speaker 2

We don't just think that we know that. That's the study is set up for exactly That it was designed to detect both in that one, Dmitry was talking about the co primary endpoints. Both of those are opportunities for The way the trial is designed and both opportunities for approval. And we think it's a very meaningful opportunity.

Speaker 7

Thank you so much.

Speaker 2

Thank you.

Operator

Our next question is from Salveen Richter from Goldman Sachs. Please go ahead.

Speaker 12

Hey, thanks. This is Matt on for Salveen. On the gastric TIGIT data, could you share anything on how median PFS is currently tracking? I know you're going to share more next year. And what do you view as a meaningful improvement over the 7 to 8 months of standard of care?

Speaker 12

And then could you share anything on how current standard of care breaks down between KEYTRUDA and nivo combos and are most patients actually treated with an IO combo? Thanks.

Speaker 3

That's a lot of questions. So when it comes to our most patients treated with an IO combo, it depends on where you are, what the reimbursement Structure is and what the experience of investigators is. There are plenty of investigators, especially in the U. S. That give nivo based regimens to everyone Because you don't have to wait for the testing and there is a lot of benefit for low expressing and there is of course significant benefit for high expresses and the toxicity profile is very manageable.

Speaker 3

There's definitely markets where reimbursement would come to be an issue. And in that case, typically reimbursement focuses on 5% and higher. Your question about the median PFS, we can't really say anything about it. The median hasn't been reached. We need more follow-up to reach a median that Requires a number of events for Kaplan Meier to calculate that so that there's nothing what we can say except that we emphasize the numbers we have right now look Very, very promising.

Speaker 3

And obviously, they are significantly away from the mediums that we think we should be reaching. When it comes to a meaningful improvement, that to me is actually a question about survival benefit in a Phase 3. If the PFS benefit would be in the same range, then let's say, a hazard ratio of a 0.75 starts to get interesting for survival, Probably a little bit higher. That's as much as I can say when it comes to absolute differences in months. I think that's very hard to state on a single arm trial.

Speaker 3

I would be looking at the hazard ratios in the Phase 3 setting. I think you had another question in there.

Speaker 4

One other question you had was, I think the mix of nivo versus pembro maybe in gastric. And Today, nivo is the only PD-one that's approved. Merck has filed for approval with KEYTRUDA for their study. KEYNOTE-eight fifty nine was Conducted later, and I think our PDUFA date is in December. But our assumption is that nivo will continue to have the vast majority of share In the PD-one market for gastric, and that is the comparator for our Phase 3.

Speaker 2

One other thing I just probably worth highlighting because it's something that like Questions that somehow sometimes evaporate like FC versus non FC, which for a year or 2 was The continuous question and overnight somewhat evaporated. I think another one that's evaporating, but I'd like to address it is The ZIM KEYTRUDA comparison, I think this data set is another one that just The anti PD-one performance clearly looks good. It also was Got another approval in China recently, but I think that's another example of ZYN

Operator

Our last question for today comes from Jason Zumansky from Bank of America. Please go ahead.

Speaker 12

Thanks. Hey, guys. Congrats on the progress this quarter and appreciate taking the question. So I have to ask, during ESMO, one of the big debates Obviously over how the treatment paradigm would evolve in gastric. And I think one of the big kind of takeaways here was that in any cloud and positive patient who was also CPS The algorithm would likely move towards combining both agents to get that potential synergistic benefit.

Speaker 12

Now obviously, it's Still very early, but I'm curious how are you working to position TIGIT as the conversation starts to evolve? I mean if KOLs are already thinking about This type of combination, what do you need to do to enter the discussion in favor of a TIGIT PD-one combo, particularly as Cloudant is biomarker driven.

Speaker 4

Yes. And I think, I mean, we spent a lot of time with KOLs talking about anticlaudin and we're working with the same KOLs that the anticlaudin companies are. So the first thing that I'd say about anticlaudin, if you look at the prevalence Hi, Claudine 18.2 inpatient. I know there was a number cited today, 40%, which was the percentage that was seen in Spotlight. But there's literature out there that puts that number well below 20%.

Speaker 4

And my hunch is that if you're outside of Asia, the prevalence of high Claudine 18.2 is lower. The other thing that's interesting if you look at literature is there seems to be more of a prevalence of high Quadrant 18.2 in patients that are PD L went low for some reason. And we've heard statistics like only 10% of patients that are CPS high Our also high 118.2 Expressors. So even just looking at that piece, They may not be viewed as directly competitive. I'd say on top of that, when people are getting anti TIGIT versus anti clotting, we're obviously much less toxic.

Speaker 4

So if you look Particularly the Astellas antibody, which is the most advanced antibody in clinical development, there's a lot of GI toxicity. In the plenary presentation today, they We talked about some of the other toxicities that they're seeing with the ADC, so that's something else to keep in mind. And then the third piece is Claudine 18.2 testing does not happen today. And as we talk to the KOLs, they think it's going to take up to 5 years or more for that to roll out. There's a lot of sites that don't even test for PD L1 today and because PD L1s are relatively safe agent, they just feel like, I'm not going to test, I want to put my patient Right, on treatment.

Speaker 4

And so I'm just going to give them a PD-one antibody anyway. So we do think the need to roll out testing is going to be another impediment to the uptake of anticlaudin. So we're definitely keeping a very close eye on the class. But at least today, I think we feel very, very good about our chances to Compete with anticlaudin and maybe way down the road there's a potential to combine PD-one, TIGIT and the anticlaudin as well, anticlaudin ADC.

Speaker 3

Yes. And I do want to add to that, right. So people typically talk about toxicity in grades, but I would encourage you to look up what it actually means. So the clot in antibodies, they have at least 10% or 15% Grade 3 nausea and vomiting. If you hit that as a patient, that means you're Hospitalized, you're on tube feeding, you get parenteral feeding.

Speaker 3

It's a really, really big deal. We talk about grade 1 and 2 toxicities that are obviously a burden on patients, Grade 3 Narsion vomiting is a really, really big deal. So I think that's another uphill battle for the claudent field. Obviously, the efficacy data It's absolutely promising. But to the points that Jan made, I think it's going to be a small subset of patients that's funneled into the clot and high PD L1 high population.

Speaker 3

And then honestly ask yourself the question like could you deal with Grade 3 nausea and vomiting? I think that is incredibly, incredibly bad toxicity for patients to have to deal with.

Speaker 2

Got it.

Speaker 8

Thanks so

Speaker 12

much for the color.

Speaker 2

Thank you.

Operator

This concludes today's conference call. Thank you everyone for joining. You may now disconnect.

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Arcus Biosciences Q3 2023
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