Affimed N.V. (NASDAQ:AFMD) Q4 2022 Earnings Call Transcript

Affimed N.V. (NASDAQ:AFMD) Q4 2022 Earnings Call Transcript March 23, 2023

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to today’s Full Year and Fourth Quarter Earnings and Business Update Conference Call by Affimed N.V. Please note, this conference call is being recorded. I would now like to hand the call over to your host for today, Alex Fudukidis, Director of Investor Relations at Affimed. Please go ahead.

Alex Fudukidis: Thank you, Olivia and thank you all for joining us today for our full year 2022 update call. Before we begin, I’d like to remind everyone that we issued the relevant press release 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 Adi Hoess, our Chief Executive Officer; Andreas Harstrick, our Chief Medical Officer; Arndt Schottelius, our Chief Scientific Officer; Wolfgang Fischer, our Chief Operating Officer; Denise Mueller, our Chief Business Officer; and Angus Smith, our Chief Financial Officer. The team will be available for the Q&A session after the prepared remarks. Before we start, I’d like to remind you that today’s presentation contains projections and forward-looking statements regarding future events.

These statements represent our beliefs and assumptions 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 thank you for joining us for our 2022 year-end results and operational update call. I’d like to begin by reviewing the key highlights of 2022, during which we made exciting progress across all our pipeline. Let’s jump to Slide 4 of the presentation. And importantly, in 2022, we generated highly compelling results with AFM13 in combination with natural killer cells. We did sign a partnership with Artiva. Now, that gives us success to a commercially viable co-plus derived natural killer cell and we advanced our other clinical programs, AFM24 and now most recently AFM28. From the data we reported, there are a number of key findings about our innate cell engagers and a specific mode of action which we believe are differentiating features versus other NKs and innate cell approaches as well as engineered NK cells, including CAR-NK.

The unique mode of action of our innate cell engagers generated from the ROCK platform has always included the ability to engage different innate immune effect cells, such as NK cells and macrophages. And this effective engagement of the innate immune system has proven now to trigger an adaptive immune response, leading to a full immune response during T cells. We believe that this feature is unique to our innate cell engagers. As we show on Slide 5, this differentiating feature of our innate cell engagers molecules was demonstrated through our work in our AFM24 monotherapy cell. And last year, we presented data on AFM24 monotherapy, showing this readthrough to the adaptive immune system, the activation and migration of cytotoxic T cells into the tumor.

We can further strengthen the full immune response through combinations with PD-1 or PD-L1 checkpoint inhibitor which allow now these cells to attack the tumors in the tumor cell. The well-established safety profile of our innate cell engager molecule enables these combinations to deliver additional clinically meaningful benefit to cancer patients that indeed remain underserved. This potential success of this combination approach was most recently observed in our AFM24 combination study with atezolizumab, where a gastric patient who had disfiguring skin lesions and failed to respond to any previous treatment, including a checkpoint inhibitor that has skin lesions nearly fully eliminated with a substantial reduction in the primary gut GI tumor.

Now let’s jump to AFM13. With the completion of our Phase IIb REDIRECT study, we demonstrated that AFM13 has single-agent efficacy and is safe and well tolerable for patients. REDIRECT indeed showed good efficacy in a very difficult to treat patient population that currently only has very limited treatment options, in particular, one relapsed/refractory. As of the end of 2022, we have treated overall approximately 200 patients across all our AFM13 programs and saw a very consistent and manageable safety profile. Now even though we saw efficacy for monotherapy, we made the decision to pursue the treatment based on the combination therapy of AFM13 with natural killer cells. The much stronger efficacy seen with this type of treatment and the ability to address a much larger patient population led us to the decision to move forward with this combination.

Our commercial analysis as well as insights from our work on AFM13 with NK cells strongly now suggest that we can deliver more benefit to CD30-positive lymphoma patients with this approach, including Hodgkin lymphoma and T-cell lymphoma patients. Treating patients with a combination therapy is expected to deliver better and more durable efficacy. It is the right thing to do for patients and it’s also the most efficient use of company resources. Now let me jump to Slide 6 which shows our priorities for 2023. Our number 1 this year is the execution of the AFM13 AB-101 clinical development plan. We call the program AFM13-203. We’re looking forward to submitting the IND and getting this important study up and running. We know from the data and our work with our partners at MD Anderson that the combination of AFM13 with NK cells can deliver meaningful therapy to patients with significant medical need.

Let me just give you an example. A patient that always comes to my mind is a young 54-year-old woman who was being sent to hospice after 5 lines of therapy that included combination chemo, brentuximab vedotin and an anti-PD-1 antibody. Now this patient had a complete response with the AFM13 NK cell combination. This is the type of patient outcome is why we come to work every day. We believe Artiva cell as the key features that will allow for similar clinical results as those we solve with the MDN cell and very importantly, meet critical commercial requirements. Today, we can share with you that the data Artiva has seen so far from the AV-101 rituximab combination study looks quite encouraging, particularly given that several patients are relapsed or refractory to prior CAR-T cells.

Artiva expects to provide an update on this clinical trial later in the year. Moving on to AFM24. We’re generating data that will inform critical decisions on the future development path. As Andreas will discuss, we expect to have data from all 3 studies this year, and this will allow us to analyze where we are seeing the most promising activity, thereby enabling our decision on where to focus further investments. Our third asset in clinical development is AFM28. Key activities for the monotherapy trial in Europe are underway with multiple , 4 approved sites and enrollment initiated at our lead site in Spain. Our goal in the Phase I study is to confirm the safety profile and understand potential cytotoxic activity. Once we begin to understand the monotherapy profile, we intend to swiftly advance into a combination study with an NK cell as we believe the science supports this approach as a compelling differentiated therapy.

Now with that, let me turn the call over to Andreas, who will provide additional insights on our clinical pipeline. Andreas?

Andreas Harstrick: Yes. Thank you, Adi and a warm welcome to everybody on the phone. It’s my pleasure now to give you an overview of our 3 clinical programs and the progress we are making. Let’s turn to AFM13. And on Slide 9, you can see that we are making progress in our AFM13 program. As we show on Slide 10, at ASH in December 2022, we reported data from the Phase I/II study of AFM13 combined with cord blood-derived NK cells that we are conducting in collaboration with investigators at MD Anderson, in patients with relapsed and refractory CD30-positive lymphomas. In the 35 patients are treated as a recommended Phase II dose, we saw a very high overall response rate of 94% and a complete response rate of 71%. Important, 31 out of these 35 patients that were treated at the recommended Phase II dose were Hodgkin lymphoma patients.

In this subgroup, the overall response rate was 97% and the complete response rate was 77%. In the 4 non-Hodgkin lymphoma patients that were treated, the antitumor activity was also encouraging with an overall response rate of 75% and a complete response rate of 25%. Another important finding was that 4 patients with Hodgkin lymphoma in this cohort had been previously treated with CD30 targeting CAR-T cell approaches and had either not responded or immediately relapsed after CAR-T cells. In this cohort of patients, all 4 patients also achieved a complete response. We are also encouraged by the durability of the responses observed so far. Specifically, 63% of the 24 patients treated at the recommended Phase II dose and who had at least 6 months of follow-up at the data analysis remained in complete response for 6 months.

Photo by National Cancer Institute on Unsplash

We, together with our colleagues from MD Anderson expect to provide additional data from the study at a scientific conference towards the end of the year. I think it is also important to put things into perspective. This study was done in a very heavily pretreated patient population. The median line of prior therapies that patients received prior to enrollment into the study was 7. In addition to chemotherapy, all patients had received rituximab vedotin and all Hodgkin lymphoma patients had also been pretreated with PD-1-containing regimens. A high proportion of patients, 78%, had also previously received a stem cell transplant. Probably even more important than this extensive pretreatment of the individual patients’ characteristics. Important to note that none of the patients treated in the study had shown a response to their most recent previous line of therapy, indicating that the expected response rate that you could achieve in this specific patient population with available treatment is zero.

The treatment was also very well tolerated in the later patient population, with minimal side effects beyond the expected mylosuppression that results from a lymphodepleting chemotherapy. Important to note, no instances of cytokine release syndrome were observed, no immune effector cell-associated neurotoxicity and no graft versus host disease were encountered. In summary, the data from the study demonstrated that the combination of AFM13 with national killer cells is highly effective and well tolerated for patients who have limited or no other treatment options. This makes the next step in the development for us even more important which is trying to bring the combination therapy to more patients in need. As Adi has already mentioned, the next step is now to initiate our AFM13-203 trial in collaboration with Artiva.

In this study, we will combine AFM13 with Artiva’s NK cell product, AB-101. As previously reported, we have been closely working with FDA in the pre-IND process on the design of the study. And here, we can reiterate our guidance that we will submit an IND in the first half of this year. and initiate the clinical study in the later course of this year. As you know, AB-101 is an allogeneic, cryopreserved cord blood-derived NK cell product and it is already in clinical development. This off-the-shelf product offers a consistent and high CD16A expression, is produced at a GMP-grade manufacturing site with the right scale for larger clinical trials and future commercialization and a viable cost of goods structures. The new co-administered combination therapy of AFM13 with AB101 is designed to treat patients with relapsed refractory Hodgkin’s lymphoma.

The planned study will also have a separate exploratory cohort to evaluate the combination in relapsed/refractory CD30-positive non-Hodgkin lymphomas. Let’s switch to the AFM13 monotherapy study, our REDIRECT trial. As we announced last week, we will present detailed data from this study in an oral presentation at AACR 2023. At our company event during ASH, we already presented top line data showing that AFM13 is active as a single agent in pretreated patients with peripheral T-cell lymphomas and is well tolerated. Now we look forward to share more information from this study with the scientific community. Let’s now move to AFM24. As you will see on Slide 11, we have made progress with our solid tumor ICE candidate. Important to note, we expect to report data from all 3 AFM24 studies at scientific conferences in the second or third quarter of 2023.

For the monotherapy study, AFM24-101, the company expects to present data from approximately 15 patients from the non-small cell lung cancer and the colorectal cancer cohort. In the Phase I/IIa combination study of AFM24 with the anti-PD-L1 checkpoint inhibitor atezolizumab and from the AFM24 combination study with autologous NK cells. The company expects to report data from the dose escalation phases of both studies. In the AFM24 monotherapy trial, we are continuing to enroll patients in the expansion phase at the recommended Phase II dose of 480 milligrams weekly. As you know, these expansion cohorts include patients with renal cell carcinoma non-small cell lung cancers who are EGFR mutant and colorectal cancer . New qualitive science data that we published at SITC last year demonstrate that AFM24 effectively activates the innate immune system and also triggers the adaptive immune system in the periphery and in the tumor.

We believe this is a significant new finding as we are observing the activation of cytotoxic T cells in the periphery and in tumor biopsies, pointing to the activation of the adaptive immune system in addition to engagement of NK cells and macrophages. NK cells and cytotoxic T cells increased in biopsies of AFM24-treated patients who received doses of 160 milligrams and above indicating that cytotoxic cell function of both NK cells and T cells are increasing. We believe this finding provides strong evidence for the cross activation of the adaptive immune system has an additional mechanism of action of our innate cell engagers. We believe that this data strongly supports the combination with checkpoint inhibitors as we are doing with AFM24-102.

On Slide 12, we have shown the initial data from the study as that’s presented at SITC last year. Here, we show gastric cancer patients that has already been pretreated with pembrolizumab and chemotherapy combination with first line, followed by 3 lines of various chemotherapies before being included in the study. This patient showed a partial response, including noticeable reductions of the skin metastases which had not responded to any of the prior treatment lines. It’s important to note that this patient had a short-lasting response with previous treatment of a combination of chemotherapy and PD-1 which was followed by a progression while still receiving PD-1. And thus, it represents a patient in whom the response to PD-1 we challenge is very unlikely.

The second patient in the study, a patient with pancreatic adenocarcinoma exhibited clinically meaningful, stable disease on the combination of AFM24 with atezolizumab after showing progression on 3 different chemotherapy regimens prior of being enrolled into the AFM24-102 study. The second combination of AFM24 is investigating the combination of AFM24 with SNK01, the ex vivo expanded and activated autologous NK cell therapy from NKGen biotech, both given weekly to patients with non-small cell lung cancer, neck and colorectal cancer. In this study, we are currently confirming the recommended Phase II dose of 48 milligrams on 3 additional patients. Now let’s move to AFM28. And on Slide 13, we show the progress of the ICE designed to bring an immunotherapeutic approach to patients with CD123 positive, myeloid malignancies, including AML and myelodysplastic syndrome.

AFM28 engages cells to initiate tumor cell killing via antibody-dependent cellular cytotoxicity, even at low CD123 expression levels. Given the aggressive nature of the disease and need for viable treatment options, we are working hard to bring this treatment option to refractory and relapsed AML patients as quickly as possible. As a reminder, the most recent poster presented at ASH 2022 showed that AFM28 induces NK cell-mediated lysis of CD123-positive tumor cells with high efficiency and potency. ADCC activity in vivo was not affected — in vitro was not affected by high mutational status or low 123 expression. And in contrast to Fc-enhanced monocline antibodies, activity is also unaffected by CD64 expression. AFM28 demonstrates that ex vivo AML and MDS patients’ bone marrow samples efficiently can be depleted of both 123-positive leukemic cells and importantly, also of leukemic stem cells.

And AFM24 has exhibited potent antitumor activity in urine AML models. In the meantime, we have received clinical trial application approvals in 4 European countries, including Belgium, France, Denmark and Spain. As Adi mentioned, the study is open for patient enrollment now. With this, I will turn over the call to Angus to update you on our quarterly financial numbers. Angus, please?

Angus Smith: Thank you, Andreas. Balance sheet and income statement highlights are shown on Slides 15 and 16 of the presentation. Affimed’s consolidated financial statements have been prepared in accordance with IFRS as issued by National Accounting Standard Board, or IASB. The consolidated financial statements are prepared in euros which is the company’s functional and presentation currency. Therefore, all financials that I will present in the call today, unless otherwise noted, will be in euros. We ended 2022 with cash and cash equivalents of €190.3 million compared to €197.6 million on December 31, 2021. Based on our current operating plan and assumptions, we anticipate that our cash and cash equivalents will support operations into 2025.

Cash used in operating activities for the year ended December 31, 2022, was €104.9 million compared to €86.6 million in 2021. Total revenue for the year ended December 31, 2022, was €41.4 million compared with €40.4 million for the year ended December 31, 2021. As a reminder, revenue predominantly relates to the Genentech and Roivant collaborations. Research and development expenses for 2022 increased by 21% from €81.5 million in 2021 to €98.8 million in 2022. The increase was primarily driven by higher expenses associated with the development of AFM24 and AFM28, a result of an increase in manufacturing of clinical trial material and cost for the preparation of the filing of an IND application, an increase in costs associated with other early programs and infrastructure and an increase in share-based payments.

General and administrative expenses increased 32% from €24.2 million in 2021 to €32.1 million in 2022. The increase predominantly relates to higher personnel and share-based payment expenses and an increase in insurance premiums and higher consulting costs. Net finance income for the year decreased from €6.5 million for 2021 to €2.1 million in 2022. Net finance income is largely due to foreign exchange gains related to assets denominated in U.S. dollars as a result of currency fluctuations between the U.S. dollar and the euro during the year. Net loss for the year ended December 31, 2022, was €86 million or €0.60 per common share compared with a loss of €57.5 million or €0.48 per common share for the year ended December 31, 2021.

The weighted number of common shares outstanding for the year ended December 31, 2022, was 142.4 million. Finally, we encourage shareholders to also review our 20-F filing for the year which will be filed with the SEC later today. I will now turn the call back to Adi for closing remarks. Adi?

Adi Hoess: Yes. Thanks, Angus. As you have heard, we make progress across all our pipeline projects. And I believe we are putting the right pieces in place for a series of milestones now during 2023 and even beyond. Our pipeline is further enhanced through the initiation of the Phase I study of AFM28 in AML, more to come. We continue to make progress with our ongoing partnerships. In the case of Genentec, we have handed over several programs to them for further preclinical development. Now our second collaboration, Sciences, a Roivant company, submitted 2 preclinic labs abstract which have been accepted for poster presentation at the ACR annual meeting this year normally from AFM32 in the first half of 2022. With this, I’d like to thank you for all your continued support for the patients and their families and for our employees in the U.S. and Europe.

We’re passionately dedicated to our efforts to bring life-saving medications to cancel patients. We’re now ready to take your questions. Thank you. Operator?

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Q&A Session

Operator: And our first question coming from the line of Daina Graybosch from SVB Securities.

Daina Graybosch: I have a couple part question on the AFM24 data. You say — first one on the timing. You say Q2 or Q3. Is that because you’re submitting abstracts already, you have data in hand and it’s a matter of which conference or you’re still gathering data and haven’t decided which conference to submit to yet? And the second question also on AFM24. I wonder if you could give us some context of the type of patients to expect in the lung cancer and CRC monotherapy cohorts. For instance, in lung cancer, all presumably will be post an EGFR TKI. Will they — should we also expect them to have been exposed to amabantimab, for instance and for CRC exposed to cetuximab?

Adi Hoess: Yes. Thanks, Daina. I’ll hand over to Andreas. Andreas, can you take the question?

Andreas Harstrick: Yes, sure. Daina. So let’s start first with the timing. And you’re absolutely right. We are targeting a couple of conferences in the second search quarter of 2023. So for some of those, we have submitted abstracts for some of these will be submitting abstracts with updated data. And now we are awaiting feedback from these conferences are important to note at the time of the conference, we will always provide the most updated data that probably will include more patients or longer upset than even reported in the abstract. So this explains a little bit why we have this guidance Q2, Q3. Now in terms of patient populations, specifically for the 101 study. Let’s start with colorectal. For this specific colorectal cohort, we expect that patients will have in the majority 2 to 3 lines of chemotherapy, at least 2 lines of chemotherapy, they will all have been exposed to the standard drugs like , irinotecan in various mutations.

They can have additional drugs and they will also be exposed to Erbitux or another EGFR-targeting medication. In terms of our non-small cell lung cancer cohort, again, this is restricted to patients with activating EGFR mutations. The requirement here is that all patients have exhausted targeting therapy. So this could either be a osimertinib as a starting therapy or a sequence of a first second generation TKI followed by osimertinib. Patients can have also additional chemotherapy on top of TKI treatment but this is not an absolute requirement. So we probably have mixed population of patients who have exhausted all TKI options and also some patients who have TKI and chemotherapy and then go on the trial.

Daina Graybosch: And do you know if there’s amivantamab exposure in the cohort?

Andreas Harstrick: We have not specifically looked for that yet. It would be permittable to have it but it was not a requirement prior to going on to this trial.

Operator: And our next question coming from the line of Srikripa Devarakonda from Truist.

Srikripa Devarakonda: A couple of questions on AFM13. So for the combo study, I think you said in a recent investor call that you expect to file IND in first half and start treating patients in the second half. Can you help print time line for — from IND acceptance to when you will start treating patients? What sort of work you can do in terms of getting sites up and running before the IND acceptance on that? And then for AFM24, you have both — with AFM13, you have a partnership with cord-blood arrived cells. And then with AFM24, you have autologous. Based on the IND process that you’re going through with both of them, do you see one being easier than the other? Maybe it’s too early but just wondering if you have any thought process into that going out into the future.

Adi Hoess: Yes, let’s start with 24 first. Andreas can you go ahead with the 24 answer? And then we will jump back to the regulatory question.