Arcus Biosciences Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 8, 2024

There are 13 speakers on the call.

Operator

Hello all, and welcome to Arcus Biosciences' Q1 2024 Earnings Call. My name is Lydia, and I'll be your operator today. I'll now hand you over to Leah Eaves, Vice President of Investor Relations and Strategy.

Speaker 1

Hello, everyone, and thank you for joining us on today's conference call to discuss Arcus' Q1 2024 financial results and pipeline update. I'd like to remind you that on this call, management will make forward looking statements, including statements about our cash runway and our expected clinical development milestones and time lines. All statements other than historical facts reflect the current beliefs and expectations of management and involve risks and uncertainties that may cause our actual results to differ from those expressed. Those risks and uncertainties are described in our annual report on Form 10 ks and quarterly report on Form 10 Q, which have been filed with the SEC. We strongly encourage you to review our filings.

Speaker 1

Today, you'll hear from our CEO, Terry Rosen COO, Jennifer Jarrett and CFO, Bob Galz. We'll also be joined first by our CMO, Dimitri Nauten and President, Juan Haiyan for questions after the prepared remarks. For ease of listening, we will be referring to abbreviations of our molecule names, dombenelumab as DOM, cimberelumab as ZIM, casatifan as CAS, quemliclustat as Quemly and etrimaditan as etrima. During today's call, we'll refer to slides in our corporate deck, which can be found on the Investors section of our website. With that, I'll turn the call over to our CEO, Terry Rosen.

Speaker 2

Thanks very much, Pia, and thanks to all of you on the call for listening in today. As you know, 2024 is shaping up to be an incredibly catalyst rich year for Arcus. By the end of this year, we'll have data to support all 4 of our later stage clinical programs, domethym in lung and upper GI cancers, CAS and clear cell RCC, polynomial and pancreatic cancer, and etruhman colorectal cancer. We'll spend most of the call today setting a stage for these upcoming data events. With over $1,000,000,000 of cash on hand, runway into 2027, partnerships with Gilead, AstraZeneca, Taiho, others along with a very diversified pipeline, we're extremely well positioned to capitalize on these datasets and advance our potential first and also best of class treatments towards approval and commercialization quickly and efficiently.

Speaker 2

Let me start with ASCO. ASCO is less than a month away, so we're almost there. We're thrilled and honored to have 2 oral presentations, both of which will provide strong support for efforts and programs in the GI cancer field. Importantly, both datasets are in settings where there's limited competition and huge unmet need. These are genuine opportunities to make a meaningful difference for patients.

Speaker 2

So first off, on Saturday, June 1st, we'll have updated data from cohort A1 of the Phase 2 EDGE gastric study evaluating DOM plus ZYN plus chemo in first line gastric cancer. As you're aware, DAMA is the only Fc silent anti tigid antibody in late stage clinical development And we believe that the data presented today indicate that Dom may potentially have improved safety profile when combined with chemotherapy relative to that of the Fc enabled anti TIGIT antibodies when they're combined with chemotherapy. As a reminder, we presented initial data from this cohort of EDG gastric at the ESCO virtual plenary session in November of last year. At the time, median PFS was immature. However, we did present mature landmark 6 month PFS numbers, which you can see on Slide 16 of our corporate deck.

Speaker 2

What you can see is that 6 month landmark PFS was 77% for the overall population and 93% for the PD L1 high population. So given that the median PFS for standard of care in this setting ranges from 7 to 8 months, These data were obviously very, very encouraging. At ASCO, we're very excited to be presenting mature median PFS data. We expect the updated data will further support the potential for Domzim to provide clinically meaningful benefit relative to the standard of care in gastric cancer. Importantly, Edge Gastric evaluated the same setting and similar patient population as our ongoing Phase 3 study, STAR-two twenty one.

Speaker 2

So therefore, we expect these data to foreshadow what we're our confidence in our STAR-two twenty one study. In that context, enrollment in STAR-two twenty one is expected to complete by mid year. The incredibly rapid enrollment of the study is indicative of the lack of competition in gastric cancer market, and the immense need for new therapeutic options. Particularly with overall survival in this patient population ranging from only 13 to 14 months in studies with anti PD-one antibodies and chemotherapy. We also felt that we actually achieved some tailwinds with our data presentation at the end of last year.

Speaker 2

So putting this all together, you can infer that there's a line of sight to data and that damaZim will have a very substantial head start over potential competitors, given there are no other anti Kigene antibodies in Phase 3 development for the study. So we think we're going to have a clear first to market advantage. This creates an exciting opportunity for us to be first in this setting with an addressable patient population of over 25,000 patients in the U. S. Alone and 100,000 patients in the G7 countries.

Speaker 2

So this equates to potential worldwide market of over $3,000,000,000 Now moving on to our second presentation at ASCO. On Sunday, June 2nd, we'll be presenting data from our ARK9 study in third line colorectal cancer. This will be the first presentation on this study. The data will be from Cohort D, which is evaluating etruma in combination with ZYN, FOLFOX and bev versus regamirafenib, one of the standard of care treatments for 3rd line colorectal cancer. On Slide 41 of our corporate deck, you can see the study design in the conclusion criteria for this portion of the study.

Speaker 2

Patients in this cohort must have received bev unless contraindicated, a prior axaloplatin based regimen and in a renal tequin based regimen. These are the current standard of care therapies for first and second line CRC. 105 patients were enrolled, who were randomized 2:one between the etruma arm and the regorafenib arm. So this is a relatively large data set. ARG9 also include 2 additional randomized cohorts, which evaluated etruma plus VIM plus FOLFOX and bev versus FOLFOX and bev in second line colorectal cancer.

Speaker 2

These data are not yet mature and will be presented at a later time. 2nd line setting as you know has a substantially longer OS. The ASCO presentation will include mature PFS and OS data with a median follow-up of over 20 months. And our data will include patients with and without liver mets. This is important since patients with liver mets tend to have a poor prognosis and they're not always included in late line CRC trials.

Speaker 2

As many of you know, there are very limited options in third line plus colorectal cancer. Patients are typically treated with rigorafenib and more recently with the combination of Lonza or FINBET based on the SUNLIGHT study, which showed a PFS of 5.6 months in OS of 10.8 months in the 3rd line patient population. While acknowledging the limitation of cross trial comparisons, but we all do it based on our data, which will be shared with you next month, the etruvate combination regimen may represent a very substantial improvement over current options for patients in the 3rd line setting. I also want to point out a small data set of 35 patients that was just presented in a poster at AACR, which actually captured quite a bit of interest to further support our hypothesis that adenosine blockade enhances the immune activating benefits of chemotherapy. These data were from the Morpheus PDAC study, a randomized Phase 1btwo trial operationalized by Roche that evaluated our molecule etruma plus Roche's anti PD L1 atezo in chemotherapy versus chemotherapy alone in first line metastatic pancreatic cancer.

Speaker 2

We've highlighted the design on Slide 37. On Slide 38, we've shown the spider plots for both the control arm and the etruma based regimen, which showed durable responses. In this trial, the etruma containing arm demonstrated a meaningful improvement in both PFS and OS. And we've shown these data on Slides 3940 of the corporat stat. Specifically, the PFS hazard ratio was 0.48 and the OS hazard ratio was 0.67 with the Atruma based regimen yielding an absolute improvement in median over survival of 4.4 months over chemotherapy alone.

Speaker 2

The median OS for the Atruma containing arm was 16.5 months, very similar to what we saw in our gate. Before we leave Atruma, I want to highlight that now with the ARK9 data presentation, we'll have 3 datasets presented in a very short period of time for our 2 molecules that inhibit the ATP adenosine pathway, Quemly anti tumor. Between our gate, which evaluated Quemly in combination with chemotherapy in first line pancreatic cancer, Morpheus PDAC very similar, which evaluated e truma with chemo in first line pancreatic cancer. And now ARP9, we have 3 independent but similar datasets, which together provide compelling evidence demonstrating that mitigating the immunosuppressive action of adenosine combined with immunogenic chemotherapy may prolong survival relative to that associated with chemotherapy alone. For those of you who've been following us for a long time, keep in mind, this was the original hypothesis, which drove us to the adenosine axis in the 1st place.

Speaker 2

So we're getting to the point where the data are matching the hypothesis. Importantly, 2 of these studies showed meaningful improvement in OS versus the standard of care control and all three showed substantial improvement about historical benchmarks when adenosine blockade was combined with immunogenic chemotherapy. Now that we've covered with what we'll be sharing at ASCO, I'd like to turn it over to Jen to discuss expectations for our HIF-two alpha inhibitor program later this year.

Speaker 3

Thanks, Terry. I'll now turn to our data events for the second half of twenty twenty four and specifically for CAP, our HIF-two alpha inhibitor, which we are developing in clear cell renal cell carcinoma or cCRCC. As a reminder, HIF2 alpha is a validated mechanism with belzutafan recently approved as monotherapy for baseline clear cell rcc patients. CAST has PK and PD advantages over bells, which should enable it to hit the target harder with the goal of achieving greater clinical efficacy than that of belzutafan. As we talked about on our last earnings call, there are multiple opportunities to improve upon the profile of belzutafan, a lower rate of primary progressive disease, a higher overall response rate and more prolonged responses, any of which could translate into a higher PFS and ultimately longer OS for cats relative to that of belzadipan.

Speaker 3

Our Phase 1b study for CAS, ARP-twenty, now has enrolled over 80 patients at 80. It was designed to answer numerous questions. So I want to spend a minute describing the various components of this multi cohort study, which is summarized on Slide 27 of our corporate deck. First, for the dose escalation. As of our last earnings call in February, we had completed enrollment of the 20 mg, 50 mg and 100 mg dose cohorts with no dose limiting toxicities observed.

Speaker 3

We have now completed enrollment of the 150 mg cohort. And again, we did not observe any DLTs and we just cleared that dose. Additionally, we continue to see Lanier dose proportional PK for TAS even at the 150 mg dose. The dose expansion portion of ARC-twenty was designed to serve a few purposes. 1st and foremost, to generate data for a proposed Phase 3 dose of 100 mg of CASK.

Speaker 3

These data will be used to support initiation of our 1st Phase 3 study, which is in the advanced stages of playmaking for CAS. The monotherapy dose expansion portion is enrolling patients that have received at least one prior anti PD-one therapy and at least one TKI. In the 100 mg dose cohort, approximately 1 third of patients had received 4 or more prior lines of therapy. So these patients were relatively advanced. On our last earnings call, we disclosed that while the majority of patients in this cohort had only received 1 or 2 scans, we were already seeing a response rate, including responses pending confirmation in line with LightSpark O05, the Phase 3 study for beltedafam.

Speaker 3

We also mentioned that we observed a lower rate of primary progressive disease, where the percent of patients that progressed prior to their first scan that was reported for LightSpark 5. This is important as one weakness in the LightSpark 5 dataset, as we've heard consistently from clinicians, is the high rate of primary progressive disease. Bringing this rate down should result in more patients benefiting from treatment to prolong PFS and survival. We are very excited to present detailed data from this cohort at a medical conference in the second half of this year. We also designed the dose expansion portion to satisfy the dose optimization work required for regulatory submissions.

Speaker 3

Specifically, we included 2 additional monotherapy cohorts in our 20, which are evaluating a 50 mg dose and 150 mg dose. We have now completed enrollment of the 50 mg cohort and we just initiated enrollment of the 150 mg cohort. So in addition to enabling us to complete the dose optimization work required for Project OPTIMIS, these cohorts will also generate a lot of additional data that will further elucidate the clinical profile of CAS. In addition to the 3 monotherapy expansion cohorts in our 20, we are about to initiate enrollment as a cohort to evaluate CAS in combination with cabo, the most commonly used TKI and clear cell RCC. Data generated from this cohort, in addition to the data generated from STELLAR-nine, our Phase II study being operationalized by Exelixis, will be used to support the planned initiation of at least 1 Phase III study for cats in combination with the TKI.

Speaker 3

Given the enthusiasm for cats and the rapid enrollment of our 20, we expect our 100 mg dose expansion cohort data presentation later this year to be followed quickly by data from the various other cohorts. We are aggressively advancing CAAS towards the initiation of our first Phase III trial early next year. Importantly, we are taking a strategic approach to our development plan to maximize the value of what we believe is a best in class KIT2 alpha inhibitor. For example, the STELLAR-nine study is evaluating CAP with a next generation and potentially best in class TKI vamsolitinib. We believe that both ZANZZA and cabo could have advantages over belzutifan's TKI partner, lenvatinib, with a better tolerated AE profile.

Speaker 3

And therefore, we expect our cast TKI combination can be differentiated from both an efficacy and safety and tolerability perspective relative to vosutifan plus lenvatinib. I'd like to end by spending a few moments on the RCC market, of which approximately 80% of patients, 80% of patients have the clear cell histology. The annual addressable patient population for first line clear cell RCC includes over 12,000 incident patients in the U. S. And approximately 30,000 in the G7 countries.

Speaker 3

Around 2 thirds of these patients progressed on first line treatment and are addressable in the second line, resulting in more than 8,000 patients in the U. S. And approximately 20,000 across the G7 countries. The CCRCC market is fragmented, The cabo is the most frequently used TKI. Cabo sales in 2023 in the U.

Speaker 3

S. Alone were over $1,600,000,000 driven almost entirely by RCC and with only 1 quarter of market share in first line and under 50% market share in the second line setting. In terms of the treatment paradigm for first line RCC, patients are typically treated with anti PD-one plus a TKI or a combination of nivolumab plus ipilimumab. When patients experience tumor progression on frontline therapy, they cycle through different TKIs frequently for a few years or more. With few options beyond TKIs, the clinician community has been eagerly waiting for the introduction of HIF-two alpha inhibitors, particularly given the relatively benign safety profile relative to TKIs.

Speaker 3

And so not surprisingly, the positive Phase 3 data for belzutafan resulted in an immediate and steep inflection and script trajectory. Monthly scripts are now at twofold since top line data for Bell's Sinclair Cell RCC was released in August 2023 and up 50% in just the 1st 4 months after belzutifan's approval in the study. Based on just March script, belzutifan is now at an approximately $400,000,000 run rate in the U. S. Alone and growing.

Speaker 3

As we've discussed, we believe that CAS may improve clinical outcomes relative to belzunafan, and we plan on developing CAS in differentiated combinations, all of which support a very meaningful market opportunity for CAF, which we believe is north of $2,000,000,000 Before we conclude, I'll now turn the call over to Bob to review our quarterly financials.

Speaker 4

Thanks, Jen. ARCUS continues to be in a strong financial as of December 31, 2023. Turning to our P and L, we recognized GAAP revenue for the Q1 of $145,000,000 which compares to $31,000,000 in the Q4 of 2023. Our revenue is primarily driven by our collaborations with Gilead and Taiho and in the first quarter included a cumulative catch up of $107,000,000 resulting from the Gilead amendment we executed in January. We expect to recognize GAAP revenue of approximately $30,000,000 per quarter for the remainder of 2024.

Speaker 4

Our R and D expenses for the Q1 are stated net of reimbursements from Gilead and were $109,000,000 as compared to $93,000,000 in the Q4 of 2023. In the Q1, non cash stock compensation represented $10,000,000 of our R and D expenses. The increase in the Q1 was related to higher clinical manufacturing, clinical trial and headcount related costs associated with early stage programs. We continue to expect modest increases in R and D expenses as our Phase III studies mature and spend will fluctuate primarily based on the timing of clinical manufacturing activities and the purchase of standard of care therapeutics for our clinical trials. G and A expenses were $32,000,000 for the Q1 compared to $29,000,000 in the Q4 of 2023.

Speaker 4

Non cash stock compensation represent $10,000,000 of our G and A expenses for the Q1 and we expect G and A to remain stable for 2024. Total operating expenses in the Q1 were impacted by a $20,000,000 non cash impairment charge resulting from the intended sublease of a portion of our office space. Finally, we continue to expect our cash balance at the end of 2024 to be between $870,000,000 $920,000,000 and to fund operations into 2027. This guidance includes a $100,000,000 partnership continuation payment from Gilead in the 3rd quarter and excludes potential opt in payments and approval milestones from our partners. For more details regarding our financial results, please refer to our earnings release from earlier today and our 10 Q.

Speaker 4

I'll now turn it back over to Terry for concluding remarks.

Speaker 2

Thanks, Bob. As you've heard from us today, we are genuinely at a significant inflection in the evolution markets. With completion of enrollment of STAR-two twenty one first line cancer expected by mid year, we're turning our attention to our 1st Phase 3 readout. Behind this, we'll have Phase 3 data from our 2nd registrational study for domsim, STAR-1 hundred and twenty one in first line non small cell lung cancer with enrollment for this trial also expected to complete year. In addition, we'll be starting at least 2 additional Phase 3 trials by early next year for CAF in clear cell RCC and Quemly in first line pancreatic cancer.

Speaker 2

And as we talked about today, we have several important near term datasets, which may provide further validation and meaningful de risking of several of our programs. This will all kick off shortly at ASCO with 2 oral presentations for damexim and etrumazim and together they'll showcase our emerging GI cancer franchise. And we're of course looking forward to sharing much more on our HIF-two alpha program later this year from the dose expansion cohorts of ARC-twenty. I want to highlight how unusual it is for an early stage company to be executing multiple Phase 3 studies for several different molecules, all targeting massive opportunities in doing so in parallel. This is obviously all enabled by our current cash position and our partners that include Gilead, AstraZeneca, Exelixis and Tahoe.

Speaker 2

These partnerships have and will continue to provide a combination of development funding through the receipt of opportunities, milestones and cost sharing to reduce our overall development expenses. I want to conclude by thanking all of you for your continued and ongoing support of Arcus and our mission to bring innovative therapies to patients in need. We'll now open the call for questions.

Operator

Thank Our first question comes from Kaveri Polman of BTIG. Your line is open. Please go ahead.

Speaker 5

Yes, good evening. Thanks for taking my questions. For HIF-two alpha, some of the literature suggests that HIF-two alpha is upstream of VEGF and it leads to its production. So they're basically in the same pathway. Do you think that could make cabozonephants patients more sensitive to 521?

Speaker 5

And because of the same biology, do you expect to see any overlapping toxicities with Danza, which is also topic VEGF?

Speaker 2

Yes. So, they are in the same pathway. We do believe that HIF-two on the other hand though, since it controls probably 100 genes, there are other effects ongoing in cancer. We don't really expect and in fact we know what the side effect in AE profiles are. So we do not expect that you would see overlapping toxicities.

Speaker 2

And I would just say that with HIF-two alpha, those toxicities and AEs have already been well defined by belzutafan. What you primarily see is very manageable anemia. We've seen similar. And even though we believe and know in fact that we're hitting the target harder, essentially nature's built in a break because only so much HIF-two mediated EPO expression is happening in the kidney and there's other sources of EPO and we've seen a safety profile that continues to look very similar to what has been reported for belzutifan. As Jen noted, we've actually even completed 150 milligram cohort.

Speaker 2

Again, you have not seen any DLTs to date.

Speaker 5

Got it. That's helpful. And maybe a quick one regarding STAR-one hundred and twenty one trial for first line non small cell lung cancer. It has primary endpoints of PFS and OS. Do you have to win on both?

Speaker 5

And what are the expectations from the arm C? How much variation from the control arm and or TIGIT arm is acceptable? Thank you.

Speaker 2

Dmitry, do you want to handle that question?

Speaker 6

Sure, Terry. So the first question is relatively simple. So statistically speaking, the way it's set up, it's a dual primary endpoint, meaning that either PFS or OS, if either one of those is statistically significant, it would be a positive trial. I think we've been very clear in previous calls as well in lots of interactions that are in the public domain that from a regulatory perspective, OS is really the registrational endpoint, PFS is supportive. And your second question, can you repeat it please?

Speaker 6

I didn't get the entire question.

Speaker 5

Sure. And I just wanted to get some so the PFS and OS are really comparing arm A and B. B is, I believe, KEYTRUDA combination, but there was an arm C for ZYN. I was just wondering how much variation from that arm versus control arm KEYTRUDA arm or TIGIT arm is acceptable?

Speaker 6

Yes. That's a hard question. As the FDA would say, it's a review issue. That arm, as I think is clear from, let's say, the public domain, it's a 4 to 4 to 1 randomization. So a very limited number of patients is going on to ZYN and chemotherapy to establish contribution of components.

Speaker 6

Based on FDA guidance, I can share that contribution of components mostly is established by looking at the response rate. And of course, in a randomized fashion, a time to event endpoint could also be assessed. There's no absolute guidance on what the variability can be. That's a review issue. I can summarize.

Speaker 6

I'm very confident with the data we've generated for ZYN that a positive trial meaning that Dom and ZYN combined with chemotherapy clearly beat Keytruda that the contribution of components, let's say, discussion is a modest part of the discussion. And I'm confident that we will be able to achieve that successfully with the study design.

Speaker 5

That's very helpful. And thanks for taking my questions.

Speaker 2

Thank you, Kibari.

Operator

The next question comes from Peter Lawson of Barclays. Your line is open.

Speaker 7

Great. Thanks so much. Thanks for taking the question. Just around HIF-two alpha, for the second half data, kind of what defines success for you for that data set? And could you remind us what Gilead or what the trigger points are for Gilead to potentially update?

Speaker 7

Thank you.

Speaker 2

Sure. Thanks, Peter. So on the what defines success, as we've articulated, there's a number of variables and opportunities for differentiation from belzutafen. So starting with response rate, rate of primary progression, depth of response, even if we're if we have PFS by that point. So we want to do better than belzutifan.

Speaker 2

I'll remind you in thinking about our overall program though, based upon what we've already seen, the data look good and we're full speed ahead to registrational trial. And keep in mind that we are not going to be developing this at least in the near term as a monotherapy. And we also believe, as Jen was discussing, that we'll be combining with a better TKI than levatinib. So that will give us another opportunity for differentiation. So there's multiple places and we think that we have an opportunity to beat Bells on more than one of those.

Speaker 2

In terms of the Gilead opt in, that's something that we would expect. We've converged on what would define that opt in and we would expect a decision either towards the end of this year or early into next year.

Speaker 7

Great. Thanks so much.

Operator

The next question comes from Yigal Nochomovitz of Citi. Please go ahead.

Speaker 8

Hi, guys. This is Ashik Mubarik on Taze. Thanks for taking my questions. I have a few on the EDGE gastric update at ASCO. And obviously, based on the data you've already shared, it looks like the Kaplan Meier curves on PFS are obviously trending well beyond the 7 to 8 months hurdle I think you cited, but naturally with a small end.

Speaker 8

So I'm just curious how much greater you think the PFS benefit really needs to be to derisk STAR221? And a more theoretical question, I guess, how well do you think PFS correlates with OS benefit in this setting, given that's the primary endpoint in STAR221?

Speaker 2

So, thanks for the question. You're right on the sample size. And I think you'll be able to make your own call on that as you suggested. It's known and actually the data being pretty tight. So in addition to CheckMate 649, there's been 2 other registrational studies with anti PD-one and chemo and they've both come in and they have roughly just under 7 to 8 months PFS.

Speaker 2

So that's pretty a firm number. We think our data will be quite meaningful. I think one other thing to keep in mind you compare our data sets, interestingly enough, CheckMate 649 had sixty-forty high PD L1, low PD L1 and we're actually forty-sixty. So pretty substantial difference. And as you saw, even our numbers in the all comer population look pretty good.

Speaker 2

So we're 3 weeks away. We're excited about the data. You'll make your own call on how much you think they've derisked the site. Interestingly enough, as we also mentioned, we're on the cusp of that registrational study being completed. So you'll see those data in a couple of weeks.

Speaker 2

In terms of the correlation, as you know, in general, PFS and OS, particularly in the context of immunotherapy, are certainly qualitatively correlative, but I wouldn't necessarily think that you can plot a line for them. But given our data set, I think you'll clearly be able to form some speculation as to what might happen on the OS, just like you formed some speculation on the 6 month landmark numbers, what might happen. I think those thoughts are going to connect at least qualitatively in a direction that we'll be confidence enhancing.

Speaker 9

And if you look at

Speaker 3

the CheckMate 649 dataset, I think you could say that the PFS and OS benefit was pretty correlative and pretty similar if you look at the hazard ratios. So that's at least one data point and I think shows that the correlation should be pretty strong between PFS and OS in this disease.

Speaker 8

Got it. Got it. And I have one more. Correct me if I'm wrong, but I think you said the data, the edge gastric data at ASCO will only be from cohort A1. So I'm curious I don't know where things stand with the other cohorts, especially cohort A2, which is I think the ZYN plus FOLFOX.

Speaker 8

And obviously, that one will be important to helping understand the contribution of Dom if that cohort varies from the 7 to 8 month number you're talking about. So I'm just curious where I can stand there.

Speaker 2

Sure. So that cohort actually enrolled sequentially to the first one. So the final patient actually just was enrolled a few weeks ago. Keep in mind, not only was it sequential, but since it's essentially a single arm study, the fact that you don't have an experimental arm is another thing that probably slowed its enrollment. So it's probably trending a year behind the initial cohort.

Speaker 2

I'll also mention that as you've probably seen on clinicaltrials.gov, we have 2 additional arms that are probably more designed to take on the contribution of components that will be run-in a randomized fashion and with a larger end. The other thing that may be important about that cohort that you just referenced that we recognize it's another opportunity, albeit a single arm, non randomized data set that will give people another look at how ZIM chemo compares to historical numbers for other anti PD-one such as KEYTRUDA or Nivo chemo. So we think it will be an interesting data set as well, but it's at least a year behind this cohort.

Speaker 8

Got it. Thanks very much.

Speaker 2

Thank you.

Operator

Our next question comes from Jonathan Miller with Evercore ISI. Your line is open.

Speaker 4

Thanks guys. A couple on HIF-two from me. Obviously, we're very excited to see the 100 milligram cohort release and get a better sense for HIF-two efficacy here versus the competitor. But I'm wondering why, well, specifically this 50 milligram cohort isn't going to be part of that same release that was enrolled before 100 milligrams? No.

Speaker 4

So I understand 150 just got finished, but why not include 50 in your end of year release? Secondly, this quarter as well as last quarter, you highlighted that you're already

Speaker 2

hitting I'm going to answer that one.

Speaker 4

Sure, sure, Abby.

Speaker 2

I was going to answer that because I forget what you said. Your brain is younger and faster than mine. So I'll forget the first question. Let me just answer the first one and I'll take your second question. So the 50 milligram cohort was actually enrolled after the 100 milligram cohort.

Speaker 2

And it was basically we added both the 50 and then we wanted to go with the higher in the context of OPTIMIST. So the 50 milligram cohort just very recently was fully enrolled. And in fact, it won't be part of the medical conference presentation because clearly it won't be mature. But whatever we know about it, you'll be able to get that out of me without much inducing. So we'll share whatever we know about it.

Speaker 2

And in fact, when we first saw the very earliest data, even when only 15 patients or so had been scanned. The data we're looking interesting. And to your point, it's actually even though it's 50 milligrams, that's 2.5 the PD equivalent of the Merck dalzutifan clinical dose. The 150 milligram cohort is just starting as you noted. So 50 came after 100.

Speaker 4

Okay, makes sense. Last quarter and this quarter both you highlighted that ORR at the 100 milligram dose I assume is already similar to belzutafan. The implication there being that given belzutafan's time to response, that ORR could in fact deepen as you get more scans under your belt. So in the intervening 3 months, have you seen ORR increase? I noticed that in both this quarter and last quarter similar language saying that you're hitting similar OR levels to belzutifan.

Speaker 4

But now that we've gotten presumably more scans on these patients, Do you see those late responses or I suppose I should say later responses more akin to belzutifan's time to response?

Speaker 2

Yes. So if we were using the same language, it was because we were reiterating what we said, at the end of the the when we gave the last update as opposed to like it's a fresh description. So all we would comment is the data continue to look good along the trajectory of what we were seeing then. And we have no plans to give updates until the medical conference and then you'll see the full picture.

Speaker 4

All right, fair enough. Correct.

Speaker 3

You're right. This is a mechanism where the response kinetics are on the slower side, and the average time response was about 4 months in the LightSpark study. So yes, similarly some of our responses may take more time.

Speaker 4

Okay. Makes sense. And then lastly, just as we think about the 2 different TKIs that you're exploring combinations here, can you give us a little bit of color about what you're looking for to pick between them? You've highlighted the importance of safety versus LENVIMA as a driver here. So are there clear no go signals that would push you one way versus the other or is it something else that you're really looking at?

Speaker 2

Yes. So I would say it's more strategic in timing and we're thinking about different settings. And I think what you're going to see and this is primarily for competitive reasons, not playing any games. As this year goes along, we'll be very transparent about our development strategy. Some of this is not even that we're in the decision making process we know, but we want to let time play out a little as we get closer to those studies coming online and you'll see there's different lines of therapies.

Speaker 2

There's other combinations we're thinking about. In addition, you can imagine even that we might go in both directions in different things. So we'll describe that as the year goes

Speaker 7

along. All right. Thanks very much guys.

Speaker 2

Thanks, Jasmine.

Operator

Our next question comes from Jason Zumansky with Bank of America. Please go ahead.

Speaker 10

Thank you. Good afternoon and congratulations on the progress. Really appreciate you taking our question. Maybe just to take a step back on the adenosine pathway, just starting development efforts, it looked like the pathway was up regulated across a network of tumor types. And while there's certainly very encouraging signals in colorectal and pancreatic cancer, there have been some admitted setbacks as well, both in cold tumors like prostate and mainly at this point NSCSC as well.

Speaker 10

I'm curious, have you cracked the code at this point in terms of which tumors are likely to respond, especially as your data sets emerge and mature? Are there additional signals that give you confidence in the mechanism at this point, especially as you start to look longer term at maybe some additional indications?

Speaker 2

Yes. Thanks, Jason. So I think what we're probably looking at right now when we think about, sweet spot from what we've learned and this was a big part of what we thought going in is less the organ and more the biology and therefore the treatment. And what I mean by that is what if you look at the 3 studies that we're pointing to right now, Morpheus, PDAC, our own pancreatic study and the colorectal study, they're both situations that we're going right on top of immunogenic chemotherapy. And that going into this, that was sort of down the middle of the fairway for us where you have a setting where you're killing cells, it's in this immunogenic way with chemotherapy and what's extraordinarily well understood about those settings is that if that ATP spills out from those initial cells dying, you produce a ton of adenosine.

Speaker 2

And so if you're able to mount any sort of immune response, those T cells are hit by adenosine and that's physics. That adenosine, there's a million papers that are going to tell you if a T cell sees adenosine, it's going to sleep. And so the phenotype of the response that we're seeing in each of these studies is very similar. So the places that we are thinking about beyond the current settings would be just those, something where the standard of care is an immunogenic chemotherapy, but there's headway above that to actually get the benefit of when you think about that immune response that might be induced by chemo that you can enhance that by mitigating the effects of the adenosine that forms. So that's the way we're thinking what's the most we've learned to date and there may be more you learn with time, but that's the primary learning to date.

Speaker 2

Go ahead, Juan.

Speaker 11

Sorry. I think a third element would be tumors that tend to be very high in CD73 expression. So that pretty much takes you to GI tract in long adenocarcinomas as the places where you have the convergence between a high level of CD73 immunogenic chemotherapy.

Speaker 10

Got it. Perfect. Thanks for the color.

Speaker 2

Thanks for the question.

Operator

Our next question comes from Dana Graybosch of Leerink Partners. Your line is open.

Speaker 12

Hi, this is Jeff on for Dana. Thanks for taking our questions. So we have one on the CAS and one on the TRUMA. So I guess starting with CAS, we noticed Novartis has an oral ASCO to their HIT2 inhibitor. How is CAS differentiated from that molecule?

Speaker 12

And in that context, what are your expectations for that ASCO presentation? And do you think Novartis' decision to discontinue it for the development has any read through to CASK and your program?

Speaker 2

I want you to comment what we know about the Novartis molecule. And I'll start off, 0 read through, but I'll let Juan comment on the Novartis molecule or whatever. Yes.

Speaker 11

So our in vitro evaluation of the compound suggests that it's a reasonably potent HIF12 inhibitor. In our hands, maybe an order of magnitude weaker than CAS is. As you know, there's much more that goes into making a high quality drug and what it does in terms of pharmacokinetics, drug interaction, PKPD, we'll have to see. But definitely going in, it was sort of not a great contender purely from a potency standpoint.

Speaker 12

Okay, great. And then on the STRUMA,

Speaker 8

how was the

Speaker 12

recent Roche PDAC data and the upcoming ARC9 data change your view at all on etruumma's potential therapeutic opportunity relative to QEMLI? And put another way, do you see any clinical settings or you'd expect Atreuma to outperform QEMLI? And do you anticipate initiating any additional randomized Phase 2 or Phase 3 trials for TRUMA this year? Thank you.

Speaker 2

So on the first question, while some people speculated otherwise, we look at both molecules as we sit here today as great molecules and great potential. And to be honest, if things continue along the way, we've said this from the beginning, once we started to get good data and the more good data that come, the more this is something one will contemplate. You might even think about combining the 2 at some point because there are certain situations where you may be able to generate adenosine through a mechanism that's non CD73 mediated, in which case blocking its action could be advantageous. So what we're going to say is, as of today, we've just seen and you'll see the data for yourself, so you can decide. We think we've got very compelling data with both molecules.

Speaker 2

And going to your question about Novartis, I'm just going to use this as an opportunity. We've lived under an umbrella of some early studies done that frankly with very bad molecules. And we always talk about it's a molecule quality, it's the combination and it's the setting that makes the difference. And so we think going forward, there's still a whole lot more to be learned with these despite the fact that each of them could be on a trajectory. In fact, we're starting the pancreatic trial as late as early next year and as early as late this year.

Speaker 2

And we do expect to do more with Etruma. The only reason we are sharing specific details of what the plan will be and obviously after you see the details of our data, there'll probably be more questions about exactly what we're going to do in the future. But we're still working through those details together with Gilead. We're preparing for discussions that we'll be having with the FDA. We want to think about exactly what would be the ideal control.

Speaker 2

That control and standard of care has evolved. When we started, it was regorafenib. Now it's moved much more to in the direction of Lonserf plus bev. So there's a number of things that we want to work through, but you can definitely expect and when you see the data, you will expect that we'd be crazy to not be doing something more with the molecule. So we're working through that.

Speaker 2

Yes.

Speaker 3

Well, I mean, obviously, it

Speaker 9

means a lot. I think it says a lot that

Speaker 3

I got an oral to get an oral presentation at ASCO, to get any presentation accepted at ASCO, has gotten to be a high bar. So So hopefully the fact that we had an oral presentation accepted tells you that the clinical community is at least finding the results and the study meaningful.

Speaker 12

All right. Fair enough. Thanks for taking my questions.

Speaker 4

Thanks.

Operator

Our next question comes from Lee Watsack of Cantor Fitzgerald. Your line is open.

Speaker 5

Hi there. This is Rosemary on for Lee. Thank you so much for taking your questions. Just a quick one on your next gen programs. How are you thinking about prioritization if you have all these late stage trials going on?

Speaker 5

And how does inflammation fit in

Speaker 3

with your oncology franchise? Thank you.

Speaker 2

Yes. So I think if I I think the question was sort of the early stage portfolio given that we have all these late stage things, how do we think about it? So we were talking about the collaborators and the collaboration and what it enables us. And in fact, it's another unusual aspect of like the dynamic that we created with this collaboration. When we set this up with Gilead Day 1, well, people don't always take these things at face value, was really designed to be an R and D engine type of collaboration.

Speaker 2

So clearly disproportionately given the number of late stage programs we have, dollars are being invested correspondingly. With that said, we've continued and this was when we discussed the most recent equity investment that Gilead made, one of the things that we discussed at that time and there's a $100,000,000 fee that they'll be paying shortly that maintains the relationship. There was a big emphasis on continuing to enable the discovery part of it. Because clearly, look, if you look at what we're generating, we started as blank piece of paper, we're generating what we believe are good high quality molecules for targets of interest. And the most notable one that's moving along nicely and we think is going to be a big deal is our XL inhibitor, which recently has gone into patients and it performed well in healthy volunteers and generating some initial PK data.

Speaker 2

And that will be the 1st axial inhibitor that actually tests the hypothesis. It's going to have the PK and the selectivity that we'll be able to hit axil hard and see how that works out. So the early stage portfolio continues with the same emphasis and investment that it has previously. To your question on the more immunological component of that, We haven't shared the most recent targets that we're working on and we'll probably hold off on that for sometime, maybe even be within a year that we'll start to talk about that. But we, along with Gilead, increased our emphasis there.

Speaker 2

As we built the company, we have a very strong immunology biology group. And I think you'll slowly see the percentage of the portfolio that looks like it includes immunology inflammation increasing, but it's not like we've defined some particular percentage. We're still are still at a stage of our evolution where the biggest driver would be best player. So best target, we will get the next emphasis in our drug discovery group, whether immuno oncology, oncology or I'll use the term, the jure INI.

Operator

We have no further questions in the queue. So this concludes today's call. Thank you very much for joining.

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Arcus Biosciences Q1 2024
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