Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS) Q3 2023 Earnings Call Transcript

Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS) Q3 2023 Earnings Call Transcript November 7, 2023

Corvus Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-0.12, expectations were $-0.16.

Operator: Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Corvus Pharmaceuticals Third Quarter 2023 Business Update and Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. It is now my pleasure to turn the call over to your host, Zack Kubow of Real Chemistry. Please go ahead, sir.

Zack Kubow: Thank you, operator, and good afternoon, everyone. Thanks for joining us for the Corvus Pharmaceuticals third quarter 2023 business update and financial results conference call. On the call to discuss the results and business updates are Richard Miller, Chief Executive Officer; Leiv Lea, Chief Financial Officer; James Rosenbaum, Senior Vice President of Research; and Ben Jones, Senior Vice President of Regulatory and Pharmaceutical Sciences. The executive team will open the call with some prepared remarks followed by a question-and-answer period. I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements. Forward-looking statements are based on estimates and assumptions as of today and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by those statements, including the risks and uncertainties described in Corvus’ quarterly report on Form 10-Q, which was filed today with the SEC and other filings the company makes with the SEC from time to time.

The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law. With that, I’d like to turn the call over to Leiv. Leiv?

Leiv Lea: Thank you, Zack. I will begin with a quick overview of our third quarter 2023 financials and then turn the call over to Richard for a business update. Research and development expenses in the third quarter of 2023 totaled $4 million compared to $10.4 million for the same period in 2022, the decrease of $6.4 million was primarily related to lower clinical trial and manufacturing costs associated with the development of mupadolimab, our anti-CD73 antibody. The net loss for the third quarter of 2023 was $6 million, including a $0.9 million non-cash loss related to Angel Pharmaceuticals, our partner in China. This compares to a net loss of $14.8 million for the same period in 2022, which included a $2.7 million non-cash loss related to Angel Pharmaceuticals.

Total stock compensation expense for the third quarter 2023 was $0.5 million compared to $0.7 million for the same period in 2022. As of September 30, 2023, Corvus had cash, cash equivalents and marketable securities totaling $32.2 million as compared to $42.3 million at December 31, 2022. Looking forward, we expect full year 2023 net cash used in operating activities to be between $22 million and $23 million, resulting in a projected cash balance of between $27 million and $28 million as of December 31, 2023. As stated last quarter, we continue to prudently manage our cash burn rate by focusing on our most promising opportunities and establishing collaborations that help support development of our product candidates. Based on this trend, our current plans and our focus on soquelitinib, we believe our cash will provide runway into late 2024.

I will now turn the call over to Richard, who will discuss our clinical progress and elaborate on our strategy and plans.

Richard Miller: Thank you, Leiv, and good afternoon, everyone. Thank you for joining us today for our business update call. We continue to make remarkable progress in the development of our selective ITK inhibitor, soquelitinib, which provides a platform opportunity across hematologic cancers, solid tumors, immune mediated — and immune-mediated diseases. Since our last earnings call in early August, we have accomplished the following key milestones. Number one, we met with the FDA in an end of phase Phase 3 meeting to discuss and review registration plans for soquelitinib for the treatment of relapsed peripheral T cell lymphoma or PTCL. Number two, in this meeting, we obtained alignment and agreement on our plans for a registration Phase 3 trial.

Subsequently, a finalized complete protocol has been submitted to FDA, and we now have all FDA regulatory allowances required for starting the clinical trial. Number three, concurrent with our interactions with FDA, we continued recruitment of leading academic sites for the trial, which are now progressing through the usual contract and institutional review board approval processes. Number four, in terms of our ongoing clinical program, we continued enrollment and follow-up of patients in our Phase 1/1b trial of soquelitinib in T cell lymphoma with an abstract accepted for poster presentation at the ASH meeting in December. Number five, moving to soquelitinib opportunity in solid tumors, we reached alignment with investigators at the Kidney Cancer Research Consortium on a protocol to evaluate soquelitinib monotherapy in patients with recurrent renal cell cancer that have failed checkpoint inhibitor therapy.

Number six, outside of oncology, we published a preprint in bioRxiv, presenting research conducted by an international group of scientists, demonstrating robust activity of soquelitinib in several animal models of immune diseases and a description of a novel mechanism that provides the rationale for the potential utility of ITK inhibition in multiple inflammatory immune-mediated diseases. And last, we continued enrollment in the Phase 2 portion of a Phase 1b/2 trial with ciforadenant combined with ipilimumab and nivolumab in relapsed renal cell cancer. I will now provide further details on some of these accomplishments, starting with our progress towards our Phase 3 registration clinical trial of soquelitinib in PTCL. Since our update call in early September, we have refined the study protocol to incorporate FDA’s feedback, we recently finalized the study protocol and submitted it to FDA.

I can confirm that there were no substantial changes from what we proposed in the design of the trial or our registration strategy and plans. From a regulatory perspective, we are clear to initiate the trial. Briefly, the trial was planned to enroll a total of 150 patients with relapsed PTCL, 75 patients per arm that have received one to less than or equal to three prior therapies. The restriction on number of prior therapies is important because it also identifies immunocompetent patients, which are those with absolute lymphocyte counts above 900. Patients will be randomized to receive soquelitinib 200 milligrams two times a day or the standard-of-care chemotherapy agents. The standard-of-care agents will be physician’s choice between pralatrexate, belinostat or gemcitabine.

The primary endpoint will be progression-free survival determined by an independent review committee. Secondary endpoints will include objective response rate and overall survival, the study also will include an interim analysis. Our trial should support FDA approval if statistical significance is achieved and the study is well conducted. Concurrent with finalizing the protocol, we have been recruiting investigators for the study. We have found very strong interest in participating in the study from a number of leading centers in the United States, and we are in the process of executing contracts, securing IRB approvals and the other usual steps needed to initiate the study. The interest from U.S. sites is exemplified by the quality of centers involved so far and includes Memorial Sloan Kettering, Stanford, Dana Farber, UCSF, City of Hope, MD Anderson, Fred Hutchinson Cancer Center and many others.

The high level of interest from U.S. centers is reducing our needs for utilizing centers outside the U.S. We believe the greater participation from U.S. sites provides several advantages, including greater control over data quality, stronger package for regulatory approval in the U.S., reduced execution risk and reduced cost. We anticipate about 40 centers will participate in the trial, the vast majority will be in the United States. We are making good progress on all fronts and anticipate that we can initiate the soquelitinib Phase 3 trial by the second quarter of 2024. We are also continuing on with our Phase 1/1b clinical trial in T cell lymphoma. We and collaborators at the Beijing Cancer Center plan to present additional data from the Phase 1/1b clinical trial of soquelitinib in T cell lymphoma along with correlative data in a poster presentation at the ASH meeting in December.

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On a related note, there is a growing body of evidence supporting the potential of selective ITK inhibition in oncology. In July, we published our preclinical data on soquelitinib that highlighted its potential to enhance anti-tumor immune response to hematologic and solid tumors and provide a novel approach to cancer immunotherapy. In September, an independent academic group led by a team from Erasmus University Medical Center in Rotterdam, published a paper confirming and extending the potential of ITK inhibition for the treatment of solid tumors. The preclinical and laboratory results were aligned with our preclinical and clinical data on soquelitinib, and provide additional evidence confirming the potential of selective ITK inhibition to enhance immune responses to solid tumors.

We remain on track for the initiation of a Phase 1b/2 solid tumor clinical trial in relapsed renal cell cancer in early 2024. I will now pass the call to Dr. Jim Rosenbaum to review recent developments for soquelitinib in inflammatory and immune diseases.

Jim Rosenbaum : Thank you, Richard. One of the more remarkable discoveries with our ITK inhibitor platform is that we continue to generate evidence supporting its potential as a novel treatment approach for a multitude of immune-mediated diseases. Last week, we published results in bioRxiv supporting the potential of ITK inhibition across several preclinical models, including acute asthma, chronic asthma, psoriasis, pulmonary fibrosis, scleroderma and graft versus host disease. This paper is available on our website and provides an in-depth review of the data supporting each of these models. The key finding is that selective ITK inhibition blocks production of T cells that are critical in the pathophysiology of many immune-mediated diseases.

We believe that soquelitinib and our second and third-generation ITK inhibitors get to the root cause of many of these diseases by inhibiting the production of a wide range of inflammatory cytokines produced by these cells. More specifically, the mechanism of action described in our paper involves the blockade of Th2 and Th17 cell differentiation, and the subsequent inhibition of their production of cytokines such as interleukin-4, IL-5, IL-13 and IL-17. These are the same cytokines targeted by a range of established successful medicines that cut across medical categories and indications. So called an ITK inhibition provide a small molecule, orally administered, targeted approach with a novel mechanism that works upstream to block the production of multiple inflammatory mediators.

At the same time, soquelitinib spares Th1 cells that play a vital role in responding to infection. As a consequence, opportunistic infection has not been observed to date in our lymphoma trial treating patients with a compromised immune system. As noted previously, the activity of soquelitinib and our other second and third-generation compounds are amplified by blocking the T cells responsible for production of multiple mediators. Contrast this with administration of a soluble receptor or antibody that blocks a single cytokine, this is a stoichiometric or one-to-one relationship as opposed to blocking the source of multiple cytokine production. I encourage you to review the paper and our accompanying press release for details. I will now turn the call back to Richard.

Richard Miller: Thanks, Jim. Given the broad potential of ITK inhibition in inflammatory and immune-mediated diseases, we plan to partner with biotech or pharma companies that have established development and commercialization capabilities that match up with the various opportunities. We believe we are in a strong position to attract partners given the unique features of ITK inhibition, human safety data with soquelitinib from our lymphoma work, large and diverse market opportunities, and our strong intellectual property position. We will continue to focus on cancer, where we have expertise and a track record of success. Turning to our partner-led programs. The Kidney Cancer Research Consortium is currently enrolling patients in a Phase 2 portion of the Phase 1b/2 clinical trial evaluating ciforadenant or adenosine 2a receptor inhibitor as a potential first-line therapy for metastatic renal cell cancer in combination with ipilimumab and nivolumab.

The clinical trial is expected to enroll up to 60 patients, and based on current time lines, we anticipate initial interim data in early 2024. At this time, I am pleased to report that the deep response rate exceeds our 32% benchmark based on eight evaluable patients that have received at least one follow-up assessment. Recall, deep response rate is complete responses plus partial responses that exceed 50% tumor volume reduction. This endpoint has been shown by others to predict prolonged progression-free survival and is 32% with the ipi/nivo combination. For mupadolimab, our partner, Angel Pharmaceuticals, is continuing to enroll patients in a Phase 1/1b clinical trial in China with mupadolimab alone and together with pembrolizumab in patients with non-small cell lung cancer and head and neck squamous cell cancers.

Taken all together, we have many opportunities with multiple upcoming catalysts across our pipeline, led by our foundational work on ITK inhibition and its myriad of biologic activities in the immune system. Over the remainder of the year and into 2024, our upcoming milestones include new interim data from the Phase 1/1b clinical trial of soquelitinib in T cell lymphoma at the ASH meeting in December, the initiation of soquelitinib Phase 3 registration clinical trial by the second quarter of 2024, the initiation of a Phase 1b/2 solid tumor monotherapy trial of soquelitinib in relapsed renal cell cancer in early 2024, and initial interim data from the ciforadenant Phase 1b/2 trial in frontline metastatic RCC in early 2024. Let me summarize a few points.

Corvus has a pipeline of novel products that address large markets in diverse areas of cancer and immune diseases. We are advancing along the clinical development pathway with one indication about to enter a Phase 3 registration trial. We have prudently managed our cash while effectively advancing our products. The breadth of indications and products provides potential partnering opportunities. In closing, we look forward to providing updates on our programs in the coming quarters. I will now turn the call over to the operator for questions and answers.

Operator: Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from Aydin Huseynov with Ladenburg. Please proceed with your question.

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Q&A Session

Aydin Huseynov : Hi, good afternoon, Richard and Corvus team, congratulations with the quarterly results and the progress. I have a couple of questions. So regarding the upcoming ASH conference next month, could you give us a flavor what kind of data we expect — we should expect there? I think previously, Corvus reported 43% or are six out of 14 responses, disease control rate 86%. But how many more patients’ data or how many more patient data are you planning to report at ASH? And do you expect the overall numbers to change in either direction?

Richard Miller: Is that the first question or the second question?

Aydin Huseynov: It’s —

Richard Miller: Okay, I’ll take my first question. So the first question, what are we going to present at the ASH meeting? So the poster — the abstract and the poster was submitted in collaboration with our colleagues at Peking University Beijing Cancer Center. And what they focus mostly on our single-cell RNA sequencing to elaborate on the mechanism of action of soquelitinib. And they’ve been confirming on various biopsy and blood samples that indeed, we do induce these Th1 cells and block Th2 and Th17, which leads to more cytolytic T cells, more or less things that you’ve heard before. In parallel with that, Corvus intends to issue in its press release and update on the clinical data. Now there will be a couple of things that we’re going to include in that update.

One is patients, a number of responses, stable disease and durations, waterfalls, swimmers. We also — because we had questions on this absolute lymphocyte count versus using prior therapies to identify suitable candidates or eligibility candidates for our Phase 3 trial. So we’ll be showing data on that. So I don’t expect a substantial change in response rate. We do have more follow-up. I think that more or less our response rate and durability of responses are consistent and holding up.

Aydin Huseynov: Thank you. This is helpful. And the previously reported CRs are — and PRs, are they still ongoing?

Richard Miller: I believe there’s not really been a change in the duration of those. I think the CR is definitely still ongoing down positive of, and that’s out now at 21 months or so. And I just can’t — off the top of my head, I can’t recollect the duration on those other patients.

Aydin Huseynov: Okay. Understood. All right. And another question —

Richard Miller: Let me just — the durability is very good on our responses. And I think that you’re putting your finger on a really important point because the standard therapies have been notable in that they have had very short durations of disease control.

Aydin Huseynov: Right. Yes. This is helpful. So another question I have is on soquelitinib renal cancer monotherapy trial design. So obviously, the expectation for any monotherapies to have ORR. So what do you think is the sort of minimum threshold for ORR in renal cancer? Can we expect similar types of responses as we saw in PTCL? Or do you think this is a little bit — it’s a different type of cancer and the threshold is different here?

Richard Miller: Well, I think that’s a difficult question to answer without knowing exactly what kind of patients are coming into the study. So eligibility is — you have to have failed a checkpoint inhibitor. And we’re allowing one or two prior therapies. So a lot will depend on the patient selection. But I would say, any responses in a relapsed patient — relapsed patient following CTLA-4 or PD-1 would be notable. I would say, hey, if you saw a 15% response rate to monotherapy in that setting with a novel mechanism of action oral drug that’s quite well tolerated, I think that would be a big breakthrough. I mean, ultimately, the drug, of course, would be evaluated in combinations. But this is a novel mechanism of action. So I’d say it’s a little bit difficult to say what my threshold would be, I would say, 10%, 20%, you’d have yourself a very interesting molecule.

Aydin Huseynov: Right, yeah. Make sense, make sense. Okay, all right. Thanks so much for taking questions and congratulations for the progress.

Richard Miller: Thank you, Aydin.

Operator: Our next question is from Jeff Jones with Oppenheimer. Please proceed with your question.

Jeff Jones : Good afternoon, guys. And thanks for taking the question. Richard, just a quick question on that ASH related press release for the updated data. Is that going to be — do you have sort of a feel for timing on when that announcement will come out? And then in terms of the data itself, as Aydin had mentioned, you’ve previously shown an ORR around 43% or around 40%. And there’s an abstract out at ASH with the similar ORR. So I guess similar to what was just asked on the RCC, how are you thinking about the efficacy bar for soquelitinib in PTCL?

Richard Miller: So regarding to the timing of the announcement, we would put that out concomitant with the disclosure of the poster. So around when is ASH December 9 or so, around that date. Regarding the data, I think the data is pretty consistent. Now you asked what do I consider a good response. I consider anything above 25%, again, with durability and safety, oral drug to be a good outcome.

Jeff Jones: Okay. No, I appreciate that. And then on partnering, as you discussed in your prepared remarks, would this be limited to soquelitinib in the autoimmune inflame indications? Or would you also consider oncology partnerships for soquelitinib or other programs in oncology, perhaps by territory?

Richard Miller: I think what we’re thinking now, Jeff, is that the inflammation immune disease represents a good partnering opportunity because we have a series of backup molecules that are pretty close to the clinic. We know they work in animal models. They have desirable pharmaceutical properties. They’re separate from the oncology molecule, which a lot of people want. And it’s such a novel approach and potentially advantageous over the other approaches as Dr. Rosenbaum mentioned. And I think we have a really strong intellectual property position. And we’re already getting significant inbound interest on partnering the immunology part of it, the immune disease part of it. Now, we like that because our expertise is cancer, and autoimmune disease, as you know, there are many different types of autoimmune disease that crosses disciplines like pulmonary medicine and dermatology and rheumatology, et cetera.

So we think a company at our stage with our resources, partnering the immune disease aspects makes the most sense and allows us to continue to focus on T cell lymphoma and solid tumors. So that’s sort of our strategy now. Now things could change, obviously, depending on the interest of partners and so forth. Does that answer your question?

Jeff Jones: Yeah. No, I appreciate it. Richard, I’ll jump back in the queue.

Operator: Our next question is from Roger Song with Jefferies. Please proceed with your question.

Roger Song : Great. Thanks for update and taking my question. Maybe a quick one — two quick questions. So one is, Rich, you said you will start a Phase 3 PTCL trial in second quarter next year. Maybe just help us to understand what’s left before the initiation. And I think you talked about IRB approval, any other logistics kind of steps you need to compete? And the other thing is — another quick question is regarding the runway and the funding. Your runway is towards the later part of the 2024 while you’re starting Phase 3. How should we think about the funding of the Phase 3? Thank you.

Richard Miller: Okay. Thanks, Roger. The first — the answer to the first part — the first question is, from a regulatory perspective, protocol, all that sort of stuff, everything is complete. The reason — it takes a few months to complete protocols to get through IRBs. Most institutions now not only have an IRB, they have a research committee. So that’s just the paperwork of getting through these centers. We’re not anticipating any problem. Most of these institutions now will not evaluate. They will not consider a study unless it has been gone through the FDA approval process, and we’ve done that. So really, there’s really no hurdles with respect to getting the study going. And as I mentioned, we have had a very good response to people who want to be involved in the study, really the best people in the country. And I’ll let Leiv answer the second question?

Leiv Lea : So Roger, we know we’re going to need to raise additional capital. However, we’re very excited about the broad potential of soquelitinib in both oncology and inflammatory and immune-mediated diseases. Thus, as Richard mentioned, it opens up partnering opportunities for us. We believe our pipeline of novel products that address large markets and diverse areas of cancer and immune disease will enable us to finance Corvus to benefit both the company and its stockholders. So we like our product candidates. So very excited about soquelitinib, and we’ll finance the company as appropriate to benefit both for the company and the stockholders.

Roger Song: Yeah, that make sense. Thanks for taking the question.

Richard Miller: All right. I think, I don’t see any more questions. So I want to thank everyone for participating in the call. We look forward to updating you on our future progress. Thanks, everyone.

Operator: This concludes today’s conference. You may disconnect your lines at this time, and we thank you for your participation.