Innate Pharma Full Year 2014 Results

Innate Pharma Full Year 2014 Results - Earnings Call Text
Feb. 20, 2015 2:30 PM CET
This text contains certain forward-looking statements. Although the company believes its expectations are
based on reasonable assumptions, these forward-looking statements are subject to numerous risks and
uncertainties, which could cause actual results to differ materially from those anticipated. For a discussion
of risks and uncertainties which could cause the company's actual results, financial condition, performance
or achievements to differ from those contained in the forward-looking statements, please refer to the Risk
Factors (“Facteurs de Risque") section of the Document de Reference prospectus filed with the AMF, which
is available on the AMF website (http://www.amf-france.org) or on Innate Pharma’s website
(http://www.innate-pharma.com).
This text and the information contained herein do not constitute an offer to sell or a solicitation of an
offer to buy or subscribe to shares in Innate Pharma in any country.
Hervé Brailly, CEO and co-founder of Innate Pharma
Thank you. Good afternoon, everyone in Europe, and good morning for those in the U.S. I
am Hervé Brailly, CEO and co-founder of Innate Pharma. I have with me today Catherine
Moukheibir from the Executive Board in charge of finance. We are pleased to welcome you
to today’s conference call to discuss our financial results for the full-year 2014.
Just let me remind you that this presentation will contain forward-looking statements.
Although the company believes its expectations are based on reasonable assumptions, these
forward-looking statements are subject to various risks and uncertainties. Please refer to the
Risk Factors outlined in the Company’s regulatory filings.
So first, I will give you an overview of the progresses we have made this year, and Catherine
will further comment on the financial results. And after that, we’ll open to questions.
In 2014, we have progressed on all our strategic axes:
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We have strengthened our pipeline with the acquisition of a new first-in-class Phase
II antibody, IPH2201, an anti-NKG2A;
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We have advanced the development of our drug candidates with the progression and
broadening of the clinical program of lirilumab - which is partnered with BristolMyers Squibb, the beginning of the Phase II program of IPH2201 and the preclinical
development of IPH4102 and further down the road of IPH43;
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Lastly, we have made progress in our technology development.
Regarding the different programs, first we end the year with two first-in-class checkpoint
inhibitors in Phase II, which as you know in this space of immuno-oncology, is a quite unique
situation.
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On lirilumab, the anti-KIR, partnered to Bristol-Myers Squibb: this summer we have
completed the enrollment of the EffiKIR Phase II trial, testing lirilumab as a single-agent for
the maintenance of elderly patients having achieved complete remission suffering from
Acute Myeloid Leukemia.
There were now three DSMB meetings reviewing the safety data. The last one took place in
October and all those DSMB meetings recommended continuation of the trial as planned.
The next DSMB meeting will take place next month in March. As you know, there will be no
interim analysis for efficacy on results on the primary efficacy endpoint, leukemia-free
survival. We do confirm that they are expected by the end of 2015.
In October, the exploratory clinical program for lirilumab was extended in hemato-oncology
with two new combinations. One exploring the combination of lirilumab and elotuzumab in
Multiple Myeloma, based on preclinical data demonstrating a synergistic effect that have
been published last year. And another trial, exploring the combination of lirilumab and
nivolumab in various hematological malignancies.
In December, the enrolment for the trial exploring the combination of lirilumab and
ipilimumab was stopped during dose escalation. There was no safety issue leading to this
decision. Patients still under treatment or in active follow-up will continue as planned in the
study protocol.
So all in all, there are now four trials ongoing, which will deliver activity data, investigating
different settings or rationales in more than 10 different tumor types:
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The rationale of NK cell enhancement is tested with lirilumab as a single-agent for the
control of residual disease in acute myeloid leukemia, which is both a proof-ofconcept trial but also addresses a very clear medical need that might provide a clear
path to registration.
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Enhancement of immunogenicity is tested with lirilumab in combination with a T-cell
checkpoint inhibitor in solid and liquid tumors.
-
Eventually the enhancement of antibody-dependent cellular cytotoxicity, so a third
mechanism of action, is tested with lirilumab in Multiple Myeloma.
We are confident that with this program, the potential of lirilumab is now broadly explored,
addressing all three envisioned mechanisms of action, and 2015 will be a very important
year that will deliver the first key data for this program. Of course we will have more data
going onward.
Now with respect to IPH2201. We have been able to bring a newly acquired program to a
first patient in Phase II in only nine months after acquisition of the right which from an
execution perspective is, I do believe, quite an impressive performance. In December 2014,
we opened the first trial of the Phase II program, the first patient was treated. This trial tests
IPH2201, anti-NKG2A, as a single-agent in a pre-op setting, prior to surgeries - so neoadjuvant treatment - in a trial that will recruit 43 newly diagnosed head and neck patients.
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I would like to emphasize that this pre-operative setting allows testing IPH2201 in the
absence of any confounding factor. Patients will be their own control and we will look at
responses at eight weeks after four doses of IPH2201.
Furthermore, the major interest of having these pre-surgery, pre-op setting is that we will
have access to tumor samples, before and after treatment and at the moment of surgery.
That provides the opportunity to look at the NKG2A positive effector cells and the
exploration of the ligand HLA-E and many other biological parameters, providing a lot of
valuable information for the mechanism of action of this first-in-class agent.
The trial takes place at the Charité Comprehensive Cancer Center Hospital in Berlin,
Germany, which actually is the center where the Phase I trial of the anti-NKG2A was
performed. Other centers will be added after the first run-in part of the trial, which will
recruit six patients.
We do believe that IPH2201 is an anti-NKG2A checkpoint inhibitor which has a unique
potential. It has a different mechanism of action - it can actually enhance both NK cells but
also affects CD8 T-cells that infiltrate the tumor, therefore pointing to a favorable
benefit/risk ratio in a way that it preferentially stimulates cells which are engaged in an
active cytotoxic response to the tumor.
Lastly, we have a biomarker: the expression of HLA-E on tumor cells is very useful for the
exploratory development, and further down the road, it could be used as eligibility criteria
for patients in late stage of development.
We are very enthusiastic about this agent, and we are indeed working full speed to start new
trials and get activity data from 2016 onwards.
With respect to our next clinical compound, this is IPH4102, we do plan to start clinical trials
to have this compound in development in 2015. This is actually a compound that has been
fully developed in-house. As a reminder, this is a cytotoxic antibody, IgG1 subclass, which
targets KIR3DL2, an antigen which is expressed on a very tiny subset of CD4 T cells in healthy
patients and selectively expressed on cutaneous T-cell lymphoma subset. It could therefore
be the very first cytotoxic agent in this disease which is a very high medical need.
Lastly, a brief comment on our discovery activities that are in early stage pipeline. We have
continued to progress and are working on a number of undisclosed first-in-class targets. The
one we have announced is IPH43, which targets MICA/MICB, the ligand of NKG2D. We now
have humanized antibody candidates which have been tested with the purpose of validating
one candidate for further development to enter regulatory preclinical studies.
We do expect to reach this stage of having a preclinical development candidate before the
end of 2015. We also published a number of interesting data on our ADC site-specific
conjugation technology, demonstrating that this site-specification conjugation technology
allows an improved therapeutic index compared to conventional site-specific conjugation
technologies.
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Before I leave the floor to Catherine to comment on our results, I would like to give you a
quick look into 2015. That’s going to be a very important year for Innate Pharma with the
results of the first trial for lirilumab.
We are expecting to see efficacy data for the Phase II Acute Myeloma Leukemia trial, singleagent by the end of this year and we do confirm this timeline. We are also expecting that the
Phase I trial of lirilumab in combination with nivolumab will read out in 2015. We have
worked to broaden our pipeline and now give Innate Pharma multiple chances to create
value in the mid-term. The broadening of lirilumab exploratory program goes as well into
this new direction with the new focus in hematology with the opening of new trials and will
continue to build for the future and start new trials for IPH2201, as well as IPH4102.
I will move back over to Catherine Moukheibir to run through our financial results for the full
year 2014.
Catherine Moukheibir, Senior Advisor, Finance
Thank you, Hervé Brailly. So now for the discussion of the numbers which you have seen
published this morning and their relevance for Innate.
The first number is the cash position at the end of the year. So 69.2 million euros net at the
end of December 2014, essentially coming on the strength of the capital increase, which
brought in 50 million euros in June 2014.
What the 69 million euros mean, is that we are funded till the end of 2017 on the basis of
the programs that Hervé has just described. So the entire Company minus lirilumab, which
doesn’t cost us anything anymore. The other thing it means is that most of this money goes
to IPH2201, the NKG2A program, to the four clinical trials that we are starting this year.
The second number to look at is the debt. The debt is 4.2 million euros versus 4.8 million
euros last year in 2013. What the difference means is simply depreciation, repayment of the
debt. There is no new debt being taken on by Innate, this is simply the lease of the facility
which is running down as planned, no new items.
In terms of revenue: Revenue and other income have gone down to 7.6 million euros versus
16.7 million euros in 2013. This is simply an accounting artifact, as you know the source of
our revenue continues to be simply two things. One, partner income. In this case, the
partner income is the upfront from BMS which was recognized over a number of years on
the schedule mimicking the rate of drawdown of the work that was planned to be done.
That part has gone down from 12.5 million euros in 2013 to just under 1 million euros in
2014. So that is where the big chunk of the decline in revenue for 2014 was.
And the other source of income is of course the research tax credit, the French government
financing at the rate of 30% of our research expenditure conducted in Europe. That has gone
up from 4 million euros to 6.7 million euros, reflecting the increase in R&D spend over the
year.
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So revenue for Innate, unfortunately will continue to be on a non-comparable basis year-onyear, non-recurring basis, simply because the source is not driven by anything that we
control such as sales or regular income stream. That is likely to remain, certainly for the next
couple of years anyway, then we’ll see what happens.
Operating expenses have also increased very much. They’ve gone from 19 million euros to
28 million euros in 2014. The good news is that the justification for the increase continues to
be the R&D programs. So 80% of all of our expenses continued to be in R&D and that reflects
the fact that we are starting further clinical trials and that we have beefed up the clinical
organization among others, during the year 2014. So we now have an organization that is
essentially fully staffed going forward.
So the operating loss for 2014 was nearly 20 million euros, 19.6 million euros at the end of
’14 as a result of all these movements. The concomitant element with the capital increase of
the month of June is that the shareholding structure of Innate has also changed significantly
during the year.
Today, we believe that we have about 40% of our shareholding in addition to BPI and Novo
in the hands of U.S. specialist investors. The June capital increase also saw the entry of
European specialist investors into the Innate stock for the first time in a long time. And as a
result, the French retail share has gone down to somewhere around 15%, no more than that.
So we feel that we now have a shareholding structure with liquidity and volume that reflects
a good situation for a European biotech playing in this space and we will continue to
reinforce our efforts in that area. That is for the financial highlights.
In terms of details, if you see on Page 2 of the press release that was sent to you, the key
numbers continue to be the movement in the research tax credit. We expect the 30% to
continue to apply going forward. You may wonder what the share of profit/loss of associates
and joint-ventures as 170,000 euros is. That is simply the part sale of the equity of Innate
Pharma in Platine Pharma Services, which is the company that we have created separately to
provide services, which we have now partly sold to another player, a specialist in the field in
the U.S. and France. So that is the amount that is afferent to this particular sale.
Another interesting element that happened in December 2014 is the inclusion of Innate
Pharma in December in what is the index called the SBF 120 Index, which is a French index of
120 quoted companies based on certain capitalization, free flow and liquidity criteria, which
simply means that we are now included in another French index, which allows other founds
to come in and raise the visibility of the company among another group of investors, which is
all to the good.
Those are the highlights of the numbers for 2014. I will be very happy to take any questions
you have on this or Hervé on anything else.
Hervé Brailly
Thank you, Catherine. I will now hand over to the operator for questions.
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Question-and-Answer Session
Michael Schmidt, Leerink Partners
Hi there. Thanks for taking my questions. Hervé, I have one on IPH2201. I was wondering if
support of investigator sponsored studies is something that you are contemplating as a cost
efficient way to expand the indications that are being studied. And then for lirilumab, I was
wondering if you could comment on the Phase I combination study with nivolumab. It looks
like the study is still enrolling patients. How far along is the study? And number three, I was
wondering if you have submitted any abstracts to ASCO and if so, what to expect in terms of
data there? Thank you.
Hervé Brailly
Thank you, Michael. It’s a pleasure. First, the support of investigator sponsored trial. Yes,
indeed we do believe this is very interesting opportunity to expand an exploratory program.
We have a number of discussions in this direction and there are also big initiatives there in
North America regarding the testing of immuno-oncology agents. So nothing that we have
communicated up to now, but definitely we share your view that this is an opportunity on
the scheme that deserves being explored, as soon and of course as we have established the
safety of the current profile of the agent, which as far as IPH2201 is concerned, we feel very
comfortable with. So therefore, yes.
Second question is the Phase I regarding the nivolumab/lirilumab combination. So the dose
escalation has been absolutely completed there. We have reached the maximum dose for
both agents. As you know, BMS is in charge of this trial and will communicate the
corresponding data. But what we can tell is that we are now well advanced for having the
cohort fully recruited at this maximum dosage and then BMS will communicate in due time
on this trials.
Your third question is the abstract to ASCO regarding the lirilumab program, the
communication is in the hand of BMS. So this is rather a question for BMS now.
On our side, regarding the IPH22 and other programs, we are more inclined to communicate
on preclinical data. So if there is communication on this program which is in its early stage,
launching of the Phase II program, you might expect to see them probably in other forums.
Michael Schmidt
Okay, great. Thank you very much, and congrats on a great 2014.
Hervé Brailly
Thank you Michael.
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Steve Chesney, Goldman Sachs
Yes, good afternoon. Thanks for taking my question. Just to kind of follow-on the
nivolumab/lirilumab combination trial questions. I mean, do you have any sense for how
Bristol wants to communicate these results? Do you think they have a preference for top line
press release, or do you think that they’re going to hold back and do this in the form of an
abstract at a medical conference? And then the second question which relates to that Phase
I combination trial, how should we be kind of looking at this in terms of the readout and
what would you guys consider a win for the trial? And then finally, given the recent initiation
of additional lirilumab clinical trials and the impending readout from two of the studies this
year, do you have any greater visibility on additional milestones from Bristol? And then just
around that, if you have any kind of qualitative commentary on sort of the top line and OpEx
outlook for 2015, that’d be very helpful. Thank you.
Hervé Brailly
Thank you, Steve, for all those question which unfortunately are questions which are mostly
directed to BMS, and I’m afraid to say that, but as you know in the context of very fierce
competition in this field of immuno-oncology now, we see that the big firms are quite
reluctant to communicate early on in the programs. We have seen this year announcement
of start of large trials before the initial trial in the same indication has even been published.
So we are in a peculiar situation where communication is handled by our senior partner; we
have a limited, if no control over it. That being said, since we are not far from completion of
recruitment of this trial, it’s not unlikely that we hear from BMS regarding the results either
top line or next steps possibly for the nivolumab/lirilumab trial.
It might even be situation where we hear about the next steps without having heard about
the details in a congress or abstract. So I don’t know if I addressed all your questions.
Regarding the milestone payments, obviously we have milestones attached to the significant
progress in the development of the programs, the details of the milestones have not been
communicated, but we have told the market that those milestones were pre-commercial, so
that’s $430 million. Obviously a fraction of that is attached to significant progresses in the
program.
So we might expect that if we have the initiation of next step in clinical development, there
might be some financial counterpart for Innate.
Steve Chesney
Okay, thanks. And then just any other comments on kind of top line and operating expenses
for 2015?
Catherine Moukheibir
No, that is one thing I didn’t say, Steve. Unlike previous years, we don’t know what the
breakdown in terms of cash burn is going to be in each of ’15, ’16 and ’17 because it would
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depend largely on the rate of initiation recruitment and conduct on these trials that we are
bearing internally on our own.
All I know is - and what I can tell you with confidence is that three-year horizon, full-year ’15
to end of ’17, is covered in terms of what the expected costs of these four trials for NKG2A
and whatever advancements we make with 41, plus the discovery and the rest of the
organization, without taking into account anything that might show up from milestones.
Okay? But I cannot today anticipate if you want to, what the ’15 cash burn will be compared
to the ’14 or to the ’16.
I would like to be able to come back to you maybe at the half-year 2015 results when we
have greater visibility on how the trial initiation recruitment is going, if that’s okay.
Steve Chesney
Okay. Great. Thanks very much.
Sebastien Malafosse, Oddo Securities
Yes, hi. Good afternoon. Thank you for taking my question. Actually I am very interested to
know what is your opinion regarding the changes in the clinical program for lirilumab that
were made by BMS last year, first on the combo with ipilimumab, what is your feeling on the
reason why BMS has stopped the trial? You said that it’s not for safety reasons. So is it for
efficacy reason or any other reason at all? And second on the new trial that was announced
head-to-head trial versus urelumab. So it means that at some point BMS will be in the
position to maybe make a choice whether in favor of lirilumab or urelumab. So what is again
your feeling about this new trial that was announced? Thank you.
Hervé Brailly
Okay. First question, lirilumab, ipilimumab trial. And indeed in November/December, early
December, we announced that the recruitment was stopped, which by the way doesn’t
mean that the trial is stopped, but the recruitment is on hold. I think that answer to your
question is exactly in this sentence. Indeed there was no safety issue. There were very few
patients being recruited, 22. So nothing in dose escalation that allows for a conclusion for
efficacy.
For sure then that is pure speculation, but recruiting a combination that comprise anti-CTLA4
antibody which from a safety standpoint is not exactly the same profile as PD-1 one. The PD1 is available, but it might be more attractive for patients and for investigators to direct
patients to combination that comprises the PD-1.
So in fact I would like also insist that on this aspect we have absolutely no recruitment issue
with the nivolumab/lirilumab trial, which is ongoing at very good pace. So I don’t think we
can comment any more. Maybe BMS would provide more details on that. But again I
reemphasize that there was no safety concern there on that. Obviously efficacy could not be
evaluated on this very small heterogeneous subset of patients.
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Now your second question relates to the combination of agents, the lirilumab + elotuzumab
trial which has two arms, lirilumab + elotuzumab and urelumab + elotuzumab. This trial is
not designed to provide any significant data with respect to the comparison of these two
agents in terms of neither efficacy nor tolerance.
It’s designed to provide for both combination element of safety, and element of possibly
efficacy signals, though this is not primary endpoint there, so actually to move forward in the
development with more informed critical set of information. So it was randomized to ensure
certain level of homogeneity in the population, but it’s not dimensioned, it’s not designed to
compare head-to-head both agents, which by the way act through different mechanisms.
Lirilumab, anti-KIR, as shown in our Blood paper directly enhances the effector function of
NK cells, which are the main effectors for ADCC. Urelumab works through a slightly different
mechanism involving also the release of certain cytokines in the environment. So we are
looking forward to having data on hopefully to see the translation in clinics of what we’ve
seen in different model that makes a very strong case for the combination of lirilumab with
an IgG1 type of antibody, elotuzumab being one of these.
Sebastien Malafosse
Okay. Thank you very much.
Ram Narayanan, Citi
Hi there. Thank you very much for taking my question. I’ve got three questions. Clearly
lirilumab is having a second coming in Myeloma in combination. So I just wanted to get a
sense of where do you think lirilumab might fit in, given so much is happening in that space?
Is it as an immune doublet with the PD1 or 4-1BB, or is it more in combination with an antiCD38 antibody? So any thoughts that you can share there? The second question is on the
dose selection for IPH2201. I see that there is a dose escalation run-in in the ongoing Head
and Neck study. I’m just curious as to how confident are you that you have the right dose for
IPH2201 in oncology? And lastly, can you confirm, yes or no is fine, whether you have any
discussions with other companies, other immuno-oncology companies for partnering on
IPH2201 or any other assets? And better are you open to non-exclusive licensing agreements
with individual PD-1 sponsors?
Hervé Brailly
So three slightly different questions. Thank you, Ram, for those questions.
The first one, lirilumab in Multiple Myeloma. I think it’s too early to talk about positioning
that is really further down the road when we get a sense of efficacy. The only point that I
would like to mention is that of course the mechanism of action of a synergistic effect with
an IgG1 antibody would also work with other antibodies than elotuzumab, and specifically
that’s also relevant for CD38 as there are quite interesting responses that come out with it.
Other strategies are also in the hands of BMS because that’s definitely BMS which makes the
decision about next step of the program.
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Now about dosing of IPH2201 in oncology. Yes, we do believe that we have selected a
dosage - that’s the 10mg/kg - which is far above the level where you have the full receptor
saturation, as shown in the Phase I. We have a margin that takes into account the fact that
there might be issues in the pharmacokinetic associated with reaching the solid tumor tissue
in contrast with mechanisms of action where you have a soluble site for the pharmacological
action, which is readily accessible from the blood stream.
10mg/kg is going to be reached after a run-in start of 4mg/kg. We do not expect any
tolerance issue there since we have the Phase I data. In the Phase I data, at the highest
saturation of the receptor, there is no issue with tolerance. So, relative to the saturation of
the receptor, we go a bit higher than with the Phase I trial. That is what I can tell for the
dosing of IPH2201.
Now your third question is the broadest, the partnering strategy, non-exclusive or exclusive
partnering strategy. Yes, we do see in the industry a number of strategic agreements that
provide companies’ access to assets that can be developed in the context of combination
trials. Indeed this is an interesting mean to develop combinations, provided of course that
there are no strings attached, that would in a way create liability for the owner of the
immuno-oncology asset. But that said, that is certainly a very interesting route to pursue.
That said again, we have a plan that comprises for IPH2201 both monotherapy and
combination trials. There are also, given the mechanism of action targeting both CD8 T-cells
and NK cells, a number of exciting combinations that could be tested. In fact the space of
opportunities that you might explore with the anti-NKG2A is very broad on non-exclusive
partnering is certainly an interesting means to extract some of the value exploring some
combination that makes sense with this mechanism of action.
Ram Narayanan
Thank you.
Hervé Brailly
Thank you, Ram.
Hervé Brailly
So if you have no other question, let's close this conference call for our annual results.
Thanks again for your interest in Innate Pharma. And of course we will be pleased to remain
in touch for the next important news and hopefully 2015 will be a very interesting year with
a rich newsflow for Innate Pharma. Thanks for your attention and have a great day. Bye.
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