Affimed N.V. (NASDAQ:AFMD) Q2 2023 Earnings Call Transcript

Affimed N.V. (NASDAQ:AFMD) Q2 2023 Earnings Call Transcript August 10, 2023

Affimed N.V. misses on earnings expectations. Reported EPS is $-0.2 EPS, expectations were $0.22.

Operator: Good day, everyone, and welcome to Affimed’s Second Quarter 2023 Earnings and Corporate Update Call. As a reminder, today’s conference call is being recorded. I would now like to introduce your host for today’s call, Alex Fudukidis, Head of Investor Relations at Affimed. Please go ahead.

Alex Fudukidis: Thank you, Chris, and thank you all for joining us today for our second quarter 2023 update call. Before we begin, I’d like to remind everyone that we issued the relevant press release and presentation earlier today, which can be found on the Investor Relations section of our website. On the call today, we have the members of our management team, including our Chief Executive Officer, Adi Hoess; Andreas Harstrick, our Chief Medical Officer; Arndt Schottelius, our Chief Scientific Officer; Wolfgang Fischer, our Chief Operating Officer; and Denise Mueller, our Chief Business Officer; and Angus Smith, our Chief Financial Officer. The team will be available for Q&A after the prepared remarks. Before we start, I’d like to remind everyone that today’s presentation contains projections and forward-looking statements regarding future events.

These statements represent our belief and assumptions as — only as of the date of this call. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons why actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. These forward-looking statements are subject to risks and uncertainties and actual results may differ materially from those expressed or implied in these statements due to various factors including, but not limited to, those identified under the section entitled Risk Factors in our filings with the SEC, and those identified under the section entitled Forward-Looking Statements in the press release that we issued today and filed with the SEC.

With that, I’ll turn the call over to Adi. Adi?

Adi Hoess: Thank you, Alex. Good day, everyone, and thanks for joining us today. I’m delighted to welcome you all to our second quarter results and business update call for 2023. I will take a moment to reflect on the good progress that we have made in Affimed over the past few months. Let’s move to Slide 5, please. Firstly and foremost, I’m pleased to share with you that we are continuing to make significant progress across all of our pipeline. We have three ongoing clinically programs and we have the potential to generate meaningful data over the next 12 months. As presented, our innate cell engager molecules are capable of delivering single agent activity and show a benign safety profile in a broad number of [hem] (ph) and solid tumor indication.

This benign safety profile now allows us for a number of different therapeutic combinations and our focus is on combinations with allogeneic NK cells and checkpoint inhibitors. Now for both combinations, we have generated impressive proof-of-concept data with AFM13. The success of AFM13 in combination with NK cell in Hodgkin lymphoma patients who have exhausted any of its prior treatments as we know today. We’re now leveraging this valuable experience in the AFM13-203 LuminICE-203studies where we will combine AFM13 with the allogeneic NK cell product AB-101. This promising combination holds tremendous potential for revolutionizing treatment for Hodgkin’s and T-cell lymphoma patients. We continued our discussions with the FDA. And based on their feedback, we have requested a Type C meeting to further discuss the requirements for an accelerated approval based on the LuminICE-203 study.

Our FDA approved protocol includes key learnings from earlier clinical studies. Now to AFM24, we announced that ASCO that going forward, we will be focusing our development assets on the combination with atezolizumab. The data we presented from our monotherapy study created optimism within the medical community and we are working to capitalize on this momentum. We have seen activity of AFM24 mono in all three indications tested, EGFR mutant non-small cell lung cancer, renal cell carcinoma, and colo cancer, including partial responses, tumor shrinkage, and/or durable stable diseases. The activity now AFM24 was most pronounced in the EGFR mutant non-small cell lung cancer cohort with two partial responses and five stable diseases observed in only 15 patients.

And just to remind us, these are heavily pretreated patients. From the Phase 1/2 mono study, we have further learned that there’s not only an activation of NK cells, but also of T-cells. And both are redirected now into the tumor upon AFM24 therapy. This is why we have added an additional expansion cohort to the atezolizumab combo study to investigate EGFR mutant NSCLC with this combination. In fact, we have received a regulatory approval and the new cohort is now open for recruitment in Europe and in the U.S. Now we believe this new expansion cohort will bring us valuable data that demonstrate the potential of 24 in this very difficult to treat solid tumor indication. Shifting gears again. I’m now pleased to share with you that our third innate cell engager in the clinic, AFM28, is advancing rapidly through those escalation.

We have successfully completed the second dose cohort without any dose limiting toxicities. And we are now actively treating patients in the third dose cohort, which is a flat dose of 100 milligrams once weekly. Finally, we continue to be in a good position. We have ample cash to execute our business plan into 2025. And this financial stability provides us with the freedom to pursue our focus goals without compromised, while we continue to drive innovations in cancer treatment. Now as we move forward, we’re eagerly anticipating several upcoming inflection points. The next few months hold the promise to further revealing the potential of our therapies to provide clinically meaningful benefits in difficult to treat cancer. For AFM13, we’re expecting to have further discussions with the FDA regarding the suitability of the LuminICE-203 study to support the potential accelerated approval.

Next, we are expecting initial efficacy data from this study in the first half of 2024. We’re also expecting more mature data from AFM13-104 to be presented by MD Anderson at ASH in December. For AFM24, we are expecting to report data on the combination of AFM24 with atezolizumab at a company event in the fourth quarter of this year. And with AFM28, we are developing a novel therapy for one of the most in-need patient population in relapsed/refractory AML. Our recent progress with the dose escalation is very promising and we will continue to update you as we proceed. In our view, we’ve made solid progress and look forward to meaningful updates over the next few months. With that, let me turn the call over to Andreas, who will provide to you additional insights.

Andreas?

Andreas Harstrick: Yes. Thank you, Adi, and also welcome from my side. And thanks to everyone on the phone for listening in. I’m happy to give you an update of the clinical progress of our three programs. And here, I will start with the progress in AFM13. As we told you on our last call, we have received clearance from the FDA to proceed with the initiation of a Phase 2 clinical trial, in which AFM13 will be evaluated in combination with AB101, the allogeneic NK cell product. We have made significant progress towards our goal of getting the study up and running and have generated interest from over 25 sites in the U.S. to participate, showing our commitment and dedication to advancing this innovative treatment. We are now in the final stages of site activation and expect to have the first sites open for patient recruitment in the September-October timeframe.

Importantly, we believe that this will enable us to report initial data from the study in the first half of 2024. As all patients will be treated with active doses of AFM13 and AB101, even in the initial cohorts, we believe this initial data update will provide already a meaningful insight into both efficacy and safety of this treatment regimen. Furthermore, as Adi mentioned, we have taken proactive steps to follow up and to engage with FDA, and have requested a Type C meeting with the agency. The purpose of this meeting is to further discuss the requirements for an accelerated approval based on the LuminICE-Liminise 203 study. Based on FDA guidelines, we expect the meeting to be scheduled in the fourth quarter of 2023. Our proposed clinical study design is shown on Slides 7 and 8.

As shown on Slide 7, the study will commence with four cohorts evaluating two different doses of AFM13 and two different doses of AB101, focusing on patients with relapsed and refractory classical Hodgkin’s lymphoma. It’s important to note that all four cohorts will use doses of AFM13 and AB101, respectively that we believe are active doses. Two of these four doses will then be selected for the next step, the first part of the Simon Two-Stage Design. And finally, our intention is to select one schedule for the final expansion part. This design addresses FDA’s guidance to generate data on different doses early in the course of clinical development and to make informed decisions on the dose that will be fully developed for the market. As for example, outlined in the Project Optimus guidelines.

In addition, we plan to start a fifth cohort treating peripheral T-cell lymphomas, CD30 positive, and this cohort should commence next year. On Slide 8, you see the design of an individual treatment cycle of the study. After lymphodepleting therapy with modest doses of cyclophosphamide and fludarabine, a regimen that has been tested and demonstrated to be safe even when used multiple times, patients will receive AB101 cells and AFM13 on three consecutive weeks once weekly, followed by three weekly applications of AFM13 single agent. It is planned to give up to three cycles in patients who show a response. This design builds on experience from other NK cell studies and on our experience with AFM13 in the AFM13-104 study. The weekly application of NK cells may offer more and longer exposure to the tumor to NK cell-mediated cytotoxicity.

Of note, early data of AB101, again, given weekly, in combination with [rituximab] (ph) has shown good safety profile and promising activity in patients with refractory B-cell lymphomas as recently published at ASCO. The application of weekly AFM13 for three additional weeks is based on data from the 104 study, where it could be shown that three AFM13 is capable to load repopulating patients’ own NK cells, thus providing a dual attack on the tumor. We are also reducing the interval between cycles, thereby preventing regrowth of tumor cells between cycles. Taken together, we think that the study design gives us the best chance to produce deep and lasting remissions in these difficult-to-treat patients. Additionally, as Adi already mentioned, as far as the 104 study is concerned, we expect MD Anderson to present updated data from this study at ASH later this year.

This data will provide a comprehensive analysis of the efficacy, durability, and safety outcomes observed in patients with CD30-positive lymphomas, further demonstrating the potential of AFM13 in combination with NK cells. And now let’s return to AFM24. As announced during ASCO we will focus our clinical development program with AFM24 on the combination with atezolizumab in the near term. In our AFM24 monotherapy study, as you know, we investigated AFM24 in patients with colorectal cancer, renal cell carcinoma, and EGFR mutant non-small cell lung cancer. Important to note, that in this study we were treating late-line patients that have often failed multiple prior lines and have no further treatment options. As shown on Slide 9. At ASCO, we presented data that showed clear signs of activity across all three cohorts.

We are particularly encouraged by the partial responses, tumor shrinkage and stable diseases that AFM24 could produce in heavily pretreated patients with EGFR mutant non-small cell lung cancer, including two confirmed partial responses and five patients with stable disease, which includes additional three patients with tumor volume reduction. Importantly, AFM24 exhibited a favorable safety profile, with manageable infusion-related reactions being the most common side effect. AFM24 did not induce severe EGFR-mediated toxicity in the skin or mucosa, which is commonly associated with other EGFR targeting agents. As said earlier, the study also investigated patients with colorectal cancer and renal cell carcinoma, and again, the data demonstrated tumor shrinkage or reductions in target lesions across both tumor types.

Some of these patients showed prolonged stability of their once-progressive disease, including, for example, one renal cell carcinoma patient, achieving a substantial 28% reduction in target lesions, just shy of another partial response. As shown on Slide 10, based on the very encouraging activity of AFM24 monotherapy, in EGFR-mutated non-small cell lung cancer, we have added a fourth cohort to the ongoing combination study with atezolizumab. Based on an amendment filed earlier with regulatory agencies, this cohort is now open for patient enrollment. Moving forward, we believe that AFM24’s role in activating the immune system by specifically triggering NK cells and macrophages to destroy tumor cells and liberate tumor-associated antigens is crucial.

These antigens can then be processed by macrophages and dendritic cells, leading to the activation and clonal expansion of tumor-reactive T-cells, as shown in our earlier studies. The combination of AFM24, which activates the innate immune system with atezolizumab, which enhances the adaptive immune system, therefore has a logical rationale. As Adi also mentioned, we plan to present an update from the ongoing combination trial with atezolizumab at a company event in the fourth quarter. Finally, data from the dose escalation portion of AFM24 in combination with the autologous cell product – NK cell product SNK01 was recently presented at ASCO Breakthrough. In this study, seven patients with a mean number of five prior lines of therapy received the combination of AFM24, SNK01.

No unexpected or dose-limiting toxicities were observed, and the PK properties of AFM24 were similar to AFM24 monotherapy. We believe that this first human study of an ICE in combination with adaptive NK cell transfer establish the feasibility of this novel combination approach. Of note, the stabilization of disease in heavily pretreated patients with microsatellite stable colorectal cancer was considered by our lead investigator, [indiscernible] is clinically meaningful. Based on the learnings from this study, we are evaluating options to advance AFM24 with an allogeneic off-the-shelf NK cell product, which we believe will better be suited for the combination with AFM24. Let’s now turn to AFM28, and on Slide 11 we are providing the update of AFM28, which is specifically designed to address CD123-positive myeloid malignancies, including acute myeloid leukemia.

We have made significant progress in advancing the clinical development of AFM28. First, we have successfully cleared the second dose cohort, administering 50 milligrams of AFM28 weekly to patients with heavily pretreated AML, without encountering any dose-limiting toxicities. Building on these data, we have now started the third cohort, where we are administering 100 milligram flat dose once weekly to AML patients. This positive development highlights the favorable safety profile and tolerability of AFM28. Moreover, we were also encouraged by data presented at ASCO with a different NK cell engager, also targeting CD123, that validated this target as a drugable target and showcased an acceptable safety profile. This is of importance, as many other CD123-directed approaches, such as T-cell engagers, CAR-Ts, or antibody drug conjugates have shown high toxicity, including fatal cases at low doses, leading often to terminations of these programs.

In our assessments, the new data likely mean that targeting CD123 is possible with NK cell engagers with minimal toxicity. This is important, as CD123 is considered a highly promising target, being expressed not only on leukemic blasts, but also on leukemic stem cells. We believe these results further emphasize the potential of AFM28 as a therapeutic target for AML patients. Additionally, preclinical data presented at the European Society for Blood and Marrow Transplantation Conference earlier this year highlighted the promise of AFM28. The data demonstrated the effective induction of NK cell-mediated lysis of AML blasts and leukemic stem cells. Notably, AFM28 exhibited activity even at low CD123 expression levels and remained unaffected by the CD64 expression on leukemic cells.

We believe these characteristics distinguish AFM28 from other approaches and suggest the possibility of deeper antitumor activity, more frequent remissions and associated with a safe toxicity profile. Given the aggressive nature of AML and the urgent need for viable treatment options, we are diligently working to expedite the availability of AFM28 for relapsed and refractory AML patients. With this, I will conclude my update on the clinical progress and turn the call over to Angus to update you on the quarterly financial numbers. Angus, please.

Angus Smith: Thank you, Andreas. Balance sheet and income statement highlights are shown on Slide 13 and 14 of the presentation. A quick reminder that Affimed’s consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board or IASB. The consolidated financial statements are prepared in euros, which is the company’s functional and presentation currency. Therefore, all numbers that I’m going to call unless otherwise noted will be in euros. As of June 30, 2023, cash and cash equivalents totaled EUR120.1 million compared to EUR190.3 million as of December 31, 2022. Based on our current operating plan and assumptions, we anticipate more cash and cash equivalents will support operations into 2025.

Net cash used in operating activities for the quarter ended June 30, 2023 were EUR33.3 million compared to EUR26.5 million in the second quarter of 2022. Operating cash flow for the quarter was adversely impacted by a change in working capital of EUR7.5 million, which included EUR4.3 million for changes in trade and other payables and EUR2.7 million for changes in other assets and prepaid expenses. The change in trade and other payables was driven primarily by payment of manufacturing costs for AFM13 and AFM24 that were expensed in prior periods, while the change in other assets and prepaid expenses was driven by EUR3.1 million of prepayments associated with the LuminICE-203 trial, partially offset by a reduction in the amount of certain insurance prepayments.

Total revenue for the quarter ended June 30, 2023 was EUR1.4 million compared to EUR7.3 million for the quarter ended June 30, 2022. Revenue predominantly relates to the Roivant and Genentech collaborations. R&D expenses for the quarter ended June 30, 2023 increased by 21.3% from EUR20.8 million in the quarter ended June 30, 2022 to EUR25.3 million in the quarter ended June 30, 2023. The increase was primarily due to higher expenses associated with the development of AFM13 and AFM24, a result of increased costs related to the scale up of production of AFM13 for commercial purposes, as well as costs incurred for procurement of clinical trial material, increased clinical trial costs and manufacturing costs and an increase in costs associated with other early stage programs and infrastructure.

G&A expenses decreased 25.1% from EUR8.4 million in the quarter ended June 30, 2022 to EUR6.3 million in the quarter ended June 30th, 2023. The decrease was due to a decline in legal, consulting and insurance expenses, as well as share based payment expenses. Worth noting is that, total operating expenses for the second quarter were down 15% as compared to the first quarter of 2023. We expect to see a continued reduction in operating expenses over the next several quarters due to the reorganization that we announced in May, the completion of our work on the Genentech and Roivant collaborations and the completion or wind down of certain clinical activities such as AFM13-202, AFM13-104, AFM24-101 and AFM24-103, as well as the timing of certain manufacturing expenses for AFM13, which were weighted towards the first two quarters of 2023.

Net finance income and costs for the quarter ended June 30, 2023 decreased from income of EUR2.3 million in 2022 to income of EUR47,000 in the quarter ended June 30, 2023. Net finance income costs are largely due to foreign exchange gains and losses related to assets denominated in US dollars as a result of currency fluctuations between the US dollar and the euro. Net loss for the quarter ended June 30, 2023 was EUR29.4 million or EUR0.20 per common share compared with a net loss of EUR19.4 million or EUR0.13 per common share for the quarter ended June 30, 2022. The weighted number of common shares outstanding for the quarter ended June 30, 2023 was 149.3 million. Additional information regarding the results is included in the notes to the consolidated interim financial statements as of June 30, 2023, which are included in Affimed’s filings with the US Securities and Exchange Commission.

I will now turn the call back to Adi for closing remarks. Adi?

Adi Hoess: Thanks a lot, Angus. Let’s move to Slide 16. On this slide, now we show a snapshot of all our programs and upcoming milestones. In summary, as I already introduced, we have multiple meaningful milestones that we can meet within the next 12 months. This includes the initiation of LuminICE-203, targeting relapsed refractory Hodgkin and peripheral T-cell lymphoma patients. Our data already has shown that we can achieve higher response rates in patients that have exhausted all prior approved treatments. Our deep and careful analysis shows further more than about 10,000 relapsed refractory Hodgkin and peripheral T-cell lymphoma patients comprise this market opportunity. So, however, as we’ve learned from the KOL and [indiscernible] study, the data from AFM13 in combination with allo NK cells was so intriguing that this may offer a price at or even above CAR-T.

With this, I’d like to express my sincere gratitude to our dedicated team whose tireless efforts have propelled us to where we stand today. Their unwavering commitment and passion for improving patient outcomes have been the cornerstone of our success. Together, we will continue to push the boundaries of medical innovation and bring hope to those cancer patients who need it most. Now, thank you all for your support and I look forward to an engaging and informative session today. We’re now ready to take questions. Operator?

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question will come from Maury Raycroft of Jeffries. Your line is open.

Maurice Raycroft: Hi, good morning, and thanks for taking my questions. I had a question on the AFM13-203 study. So the Type C meeting is expected to happen in fourth quarter. Based on your timeline, what data from the 203 study could you show to FDA by that point? I know it would be early, but could you potentially have initial overall response rate and safety data from the run-in phase by the time of that meeting?

Adi Hoess: I’ll hand this question over to Wolfgang, please.

Wolfgang Fischer: Yes. Hi, Maury, this is Wolfgang. As you might know from our previous discussions and disclosures, the Type C meeting is about to address the request from the FDA, which makes our LuminICE study feasible to be an accelerated for — registration directed study for accelerated approval. And we had interactions with the FDA and the FDA let us know that they are requesting the contribution of the single agents. That’s their question. And based on this, right, we put together all the documents, et cetera, and submitted a Type C meeting request where we will discuss with the FDA how to best address these requirements for an accelerated approval based on our LuminICE-203 study. And once we have had that meeting and aligned with the FDA on the approach we’ll disclose that. Does that answer your question?

Maurice Raycroft: Well, I think so. But it sounds like you may not have initial data from the 203 study to discuss at that point. Is that fair?

Wolfgang Fischer: This is not the objective of this Type C meeting, right? So, our questions are around the contribution of the simulation. And as Andreas mentioned in his part, we are about to activate the study site September-October. And of course, as soon as we have that, we will start recruitment of patients.

Maurice Raycroft: Understood. That makes sense. And what are your base case expectations at this point in terms of what a registrational study could look like?

Wolfgang Fischer: I mean, when you — also what we discussed and disclosed earlier, the FDA granted us that study. And we clearly asked for that registration-directed trial. And the FDA said, there is open questions from their side. And then we clarified that in the request for clarification. And the result was that they are asking for the contribution of the single agent. And that’s now what we are following up.

Maurice Raycroft: Understood. And last question, and then I’ll hop back into queue. For the first half of 2024 update for the 203 study, how substantial would that update be in terms of number of patients, what stage of the study, and how much follow-up could you potentially have?

Adi Hoess: Andreas?

Andreas Harstrick: Yes. So as you see from the trial design, the focus clearly will be on the patients who are treated in the first four cohorts, so four times six patients that go initially on study. Given that, as Wolfgang said, we will start or we have sites open in October, I think the main focus of this initial update will be clearly safety, but also response rate. Of course, by the nature of when we start the study and then when we want to give the updates, the follow-up at this point in time will be relatively limited. So focus will clearly be on response rate and safety.

Maurice Raycroft: Got it. Okay, thanks for taking my questions.

Operator: Thank you. One moment, please, for our next question. Our next question will come from Daina Graybosch of Leverink Partners. Your line is open.

Daina Graybosch: Hi, thank you for the question. I’m going to ask more about FDA’s request on contribution of components, so a multi-part question on that. When they asked about contribution of components, which components are they inquiring about? Obviously, AFM13 and the NK cells. Are they also including IL-2, which is new in asking about contribution of components? That’s the first question. And the second question is, how are you proposing to FDA that you show contribution of components of the NK cell specifically? And then maybe you could also address how you’re going to show contribution of components for AFM13. Thank you.

Wolfgang Fischer: Yes. Okay. Hi, Daina. This is Wolfgang. So number one, yes, the FDA asked for contribution of single agents, including AFM13, AB101, and IL-2. But the way how we are proposing that, I mean, we have a proposal and send that to the FDA. And of course, we first want to discuss with the FDA whether that approach is feasible. And then, of course, we disclose. In particular, when you ask for AFM13, for AFM13, we have — I do not know how many patients, but way more than 100 patients treated in Hodgkin lymphoma, where we clearly know what the contribution of the single agent is. And we know that the response rate is between 11% and 16%. So this is — does that answer your question?

Daina Graybosch: Yes, I agree. The AFM13, I think, is pretty clear on contribution. I think what’s less clear is the AB101 and the IL-2, how you’re going to demonstrate that. So I was interested in those proposals.

Wolfgang Fischer: Yes. No, we have a proposal, right? And that’s also what we sent to the FDA. And as soon as we have an alignment here, we are going to disclose that.

Daina Graybosch: Maybe one follow-up question. Which group at FDA is primarily asking these questions and leading the review? And which groups are involved in advising?

Wolfgang Fischer: Yeah, so it’s CBER and CIDR. Both of them are involved. So they gave that feedback together.

Daina Graybosch: All right. Thank you.

Operator: Thank you. One moment, please, for our next question. Our next question will come from Li Watsek of Cantor Fitzgerald. Your line is open.

Li Watsek: Hey, good morning. Thank you for taking our question. I guess just follow-up on the Type C meeting for AFM13. And then in terms of the confirmatory state, can you just clarify if that will be part of the conversation at the meeting? And then in terms of [indiscernible] communication to the street about the feedback, would you wait for a meeting minutes? Or if so, should we still expect to hear back from you guys this year?

Adi Hoess: Wolfgang, do you want to take this again?

Wolfgang Fischer: Yes. I need to. Yes. The last question, whether you will hear from us this year, yes, because we expect the feedback according to the FDA guidelines in Q4 this year. But we all know what we experienced in the past, right? Where there was some delay. So but according to the FDA guidelines, as I said, we expect that in Q4, definitely. And then could you please repeat your first question? I didn’t get that completely. Sorry.

Li Watsek: So in terms of the confirmatory study, just wondering if that will be part of the conversation as well.

Wolfgang Fischer: No. It’s really about the contribution of the single agents. Because the confirmatory will then come after that.

Li Watsek: Okay. And then in terms of study starts for the phase 2 study, I guess, what are the gating steps here to sort of dosing the first patient in the next couple of months? And you mentioned there are 25 sites that are interested. So just trying to understand where you are in that and anything you can do to accelerate the process.

Adi Hoess: Andreas?

Andreas Harstrick: Yes, we are taking all possible measures already to accelerate the process. But as you may know, once you go to site initiation, there are certain legal contractual steps that you have to do on the site level. There’s often additional review committee involved. So we are working through all these steps. We are having very close contact to our primary investigators. So I think we are probably as fast as we can. But there are certain things in in-site initiation that just cannot be shortcut. But as we said, we have high interest from sites. And we expect to have a substantial number of sites open in the fourth quarter. And this has resulted also in our guidance that we are comfortable to provide first data updates first half of next year.

Li Watsek: Okay, thank you.

Operator: Thank you. And one moment, please, for our next question. Our next question will come from Yale Jen of Laidlaw and Company. Your line is open.

Yale Jen: Good morning, and thanks for taking the question. Just to follow-up a little bit in terms of the first half 2024 data release of 203 study, given that you will start the first two whole cohort first, and then subsequently the next two cohorts later, as well as the patient was sort of stacking between the first and second initially. So what — obviously, depending on the pace of enrollment, but what should we anticipate in general for the data release at that fourth quarter to — I’m sorry, in the first half of next year, what level of patient number — level of patients could be — we should be anticipating?

Adi Hoess: Andreas, do you want to take that?

Andreas Harstrick: Yes. The degree, of course, depends on the speed in which we can initiate the sites. As I said, we feel that we are on a good way here. Now, when you carefully look at the study design, these four cohorts are overlapping, so we only have a staggered approach for the first two cohorts, and here also not for all patients. So, basically once we have a couple of patients in the first two cohorts, all four cohorts can start to enroll patients more or less simultaneously. So we think that we should have all 24 patients enrolled, and for the majority of these patients we should have, as I said, safety and response data.

Yale Jen: Okay, great. That’s very helpful. And maybe just one more housekeeping question. You guys indicated that the two partnerships are going to renegotiate or discuss the future collaboration. So should we anticipate that at least in the short term, for example, starting next quarter or the third quarter, the revenue will be substantially reduced, or how should we look at that for modeling purposes? Thanks.

Angus Smith: Yes. It’s Angus. Let me just correct something you said. We didn’t say anything about renegotiating partnerships. What we said is that, we have completed the work that we were contractually obligated to do under Genentech and Roivant collaborations and handed the molecules over to them. So from that perspective, we made that comment to highlight the fact that our expenses per contract under those collaborations are now substantially complete. The go-forward development of the molecules that have been handed over are at the discretion of our partners. And as we’ve said in the past, you can get a pretty good sense for what we expect to recognize in revenue from those collaborations over the next 12 months by looking at the current portion of our contractual liabilities.

But since we recognize revenue on a percent of completion basis for each of those collaborations, and we have now substantially completed our work, it’s fair to assume that the revenue recognized under those collaborations will be lower than in past periods. But again, as a reminder, that revenue is non-cash and it’s recognition of upfront payments that were received under those collaborations.

Yale Jen: Okay, great. That’s very helpful. And best of luck and congrats on the progress.

Operator: Thank you. One moment, please, for our next question. The next question will come from Yanan Zhu of Wells Fargo. Your line is open.

Yanan Zhu: Hi. Thanks for taking our questions. I wanted to follow-up a little bit on the FDA question. In terms of your response, would you — would the response involve modification of the study design, for example, including more cohorts with varying doses of each component? Or would your response be mainly focusing on things like maybe preclinical evidence or literature research? And also, if there are any evidence in the literature that suggests NK cells alone, even with IL-2, could have any efficacy in Hodgkin’s lymphoma? Thanks.

Adi Hoess: Thank you for your question. Andreas, do you want to take that question first on the efficacy?

Andreas Harstrick: Yes, so on the efficacy part, this, I think, is an ongoing discussion. To our knowledge, there has not been a dataset generated, a clinical dataset that specifically looks at non-targeted NK cells in Hodgkin’s lymphoma. There are several datasets for, “non-targeted NK cells in non-Hodgkin’s lymphoma, which consistently show very modest activity, if activity at all”. So targeting really appears to be essential in the lymphoma tissues. And this will be one of the discussions with FDA, whether FDA would want to see a specific clinical testing of NK cell plus IL-2, or whether they basically acknowledge the experience since the data that had been generated in the non-Hodgkin lymphoma setting. So that is one of the, I think, key questions that will be discussed.

As I mentioned in my introductory remarks, we have already taken into account some guidance when it comes to different doses and schedules. So we are addressing the Optimus initiative of FDA. As you see, we start out with four, basically, cohorts with different dose schedules, narrowed down to two, and finally, based on the data, narrowed down to one. So we would not expect that the dose and scheduling question comes up with FDA. So I think [indiscernible] NK cell will be the key point that will be discussed with FDA.

Yanan Zhu: Got it. Thank you. That’s very helpful.

Operator: Thank you. One moment, please, for our next question. Our next question will come from Srikripa Devarakonda of Truist Securities. Your line is open.

Srikripa Devarakonda: Hey, guys. Good morning. Thank you so much for taking my question. So regarding the Type C meeting, I have a follow-up question. In terms of the package that you need to submit, do you already have that ready to go? I think you need to submit it a few weeks ahead of the meeting. And what is the likelihood that the FDA might say, wait for early preliminary data from Part 1 or Stage 1 of the study before they think it is meaningful to have this discussion? And on the partnership with Genentech and Affivant, do you completed your part of the work? Is there a time frame before which the partners are required to make a go-no-go decision on these assets? Thank you.

Adi Hoess: Yes. So I’ll hand it over to Wolfgang again.

Wolfgang Fischer: I’ll start with the Type C meeting. Yes, you are correct. You need to submit your package briefing book, et cetera, before the meeting. And, yes, we are preparing that, and we are on track to submit that in due time. That’s the first question. You said, what is the risk that the FDA say wait until you have first data before we discuss? We think that risk is small, because it’s really a specific request from the FDA. And the FDA invited us for an interaction for a Type C meeting to discuss that with them. So, therefore, it’s our belief that this risk is very small, if at all. Does that answer the question?

Srikripa Devarakonda: Yes. That’s very helpful.

Adi Hoess: Angus, do you want to speak about the collaborations?

Angus Smith: Yes, in terms of the collaborations, I mean, no specific time frame in which the assets would have to move forward. Again, as we said, the decision to move that forward is at the discretion of the partners, as well as, at this stage, of the collaboration, the communication around moving forward is also at the discretion with the partners. There are standard to kind of commercially reasonable effort type of clauses, as well.

Operator: Thank you. One moment, please, for our next question. Our next question will come from Andy Chen of Berenberg. Your line is open.

Andy Chen: Thank you for taking my question. So another question about the Type C meeting with the FDA. Is the FDA just curious about single agent contribution, or do they require single agent contribution for accelerated approval to be possible? Just if you don’t know, like, I’m wondering if you can speculate on, like, why the FDA is asking for this information and what they’re thinking in their head?

Adi Hoess: Wolfgang?

Wolfgang Fischer: Yes. Thanks for the question, Andy. The FDA is requesting that. And also, when you read the FDA guideline, it’s also there that when you have combinations, the contribution of single agents need to be investigated. So, that’s — it’s a request. It’s not — they are not just curious.

Andy Chen: Okay. So, it needs to be investigated, but it doesn’t need to be, like, strongly positive, right?

Wolfgang Fischer: Correct. You need to provide a plan. You need to provide an idea how you demonstrate that contribution of the single agents, right? And that’s what we are going to do and to discuss with the FDA during the Type C.

Andy Chen: Got it. And the other question is about Artiva’s ASCO data. So they saw, I think, two out of 15 — well, out of 15 patients, they saw two cases of CRS at one billion cells, single dose. And I’m wondering, because you’re — like, for your LuminICE trial you’re going to be doing higher doses and multiple cycles. And I’m wondering, like, how do you think about the risks of doing that in the trial?

Adi Hoess: Andreas, can you take that question?

Andreas Harstrick: Yes, I think, I would have to go back to the original data from the poster, but as far as I recall, these were very mild cases of CRS, often very difficult to distinguish from a classical infusion-related reaction. Overall, I think the cell so far has shown a remarkably good safety profile. And, of course, we will take somewhat higher doses, again, not higher than the doses that are tested now. As you may know, Artiva is currently looking at 4 billion NK cells per infusion per week, and we have not heard any indication of new or unexpected toxicity. So our current belief is that, this approach will be very safe and it could be administered for multiple cycles.

Andy Chen: Thank you.

Operator: Thank you. And again, one moment, please, for our next question. Our next question will come from Swayampakula Ramakanth of HCW. Your line is open.

Unidentified Participant: Thank you. This is RK from H.C. Wainwright. Good afternoon, Adi and Andreas. I’ve been juggling between calls, so I apologize if these questions have been answered before. Just in terms of AFM28, in terms of the monotherapy part of the study, what sort of data should we expect from here to the end of the year? And in terms of the combination part of the study, what else needs to get done before you could start that trial?

Andreas Harstrick: I just want to make sure, you’re meeting AFM28 because you said also combination part of the study, which AFM28 does not have. But let’s start with the first question. So as you know, we are in a dose escalation study. We have moved very quickly through the first two dose escalation cohorts, have not seen any dose-limiting side effects. We are currently enrolling into our third cohort. The study has a [Bayesian] (ph) dose escalation design, so we cannot predict at this point how many dose escalations that we will finally take. And as we said, we will provide you with updates on the progress as we go along during the course of the year. Now, I’m not sure what you mean with the combination study, because as far as AFM28 is concerned, currently we only have the dose escalation study in our portfolio.

As we said, we actively look also into options to combine with an NK cell, but this is a strategic effort that the company is currently undertaking without a firm protocol yet.

Unidentified Participant: Yes, thanks, Andres. My apologies. What I meant was, your plan to see whether the combination is feasible. That’s what I meant. I apologize for that.

Adi Hoess: Andreas?

Andreas Harstrick: Whether the combination with an NK cell is feasible, yes, we believe it’s feasible based on all what we have seen. But again, the first strategic effort that we have is to identify an NK cell that we could take forward into our AFM28 program.

Unidentified Participant: Thank you. Thanks for taking the questions.

Operator: Thank you. One moment, please, for our next question. Our next question will come from the line of Bradley Canino of Stifel. Your line is open.

Unidentified Participant: Hey, good morning. This is [Bajon] (ph) on for Brad Canino. Thanks for taking my question. Another question on the FDA Type C meeting. Is it going to require multiple FDA meetings to get clarity on the requirements for registration and the confirmatory strategy, or do you expect to have answers for both of those after this 4Q meeting?

Adi Hoess: Wolfgang?

Wolfgang Fischer: Yes, thanks for the question. As we said before, the Type C meeting is really focusing on the contribution of the single agent and to discuss with the agency how we can address that best to make LuminICE feasible for registration directed study for accelerated approval. That’s the focus of the Type C meeting. Now, when it comes to a confirmatory study, no, the confirmatory study will not be discussed at that Type C meeting. That will be separate.

Unidentified Participant: Yes. And just one more question on the AB101 ASCO poster. So what are the takeaways from that poster that give you confidence it will produce a similar effect in combination to MD Anderson’s NK cells?

Adi Hoess: Andreas?

Andreas Harstrick: Yes, I think, of course, it’s very early data when you look at the ASCO poster, it’s with very low numbers of cells, but still, even in patients who were coming from CAR-T treatment, they have seen complete and partial responses. Our confidence is not only based on the ASCO poster, but also on all of the extensive preclinical works that we have done with the AB101 cell. Again, hard to test head-to-head against the MD Anderson cell, as MD Anderson is a fresh cell product which could not be shipped, so we were not able to run a head-to-head comparison, but in very comparable models, and Arndt probably can speak more to that, but in every model that we tested the cell, we have seen at least comparable activity compared to the data that we have generated with the MD Anderson cell.

Arndt Schottelius: Yes, just quickly add. Bajon, this is Arne. As Andreas said, when we compare codosing to precomplexing, you remember in vitro we actually saw that slightly better than precomplexing, and the models we have done with the [indiscernible] are absolutely equivalent to the ones that we have done with MD Anderson. And you may remember of seeing the ICML poster where we again showed we have full saturation of [indiscernible] on AB101 after cryopreservation. It is very important that also it is possible after cryopreservation and have shown that convincing mouse model [indiscernible].

Unidentified Participant: Appreciate the answers.

Operator: Thank you. I see no further questions in the queue. This will conclude today’s conference call. Thank you all for participating. You may now disconnect, and have a pleasant day.