I-Mab (NASDAQ:IMAB) Q2 2023 Earnings Call Transcript August 17, 2023
Tyler Ehler: Good morning, everyone, and thank you for joining us this morning and for standing by. I’d like to take this opportunity to welcome you all to the I-Mab Biopharma Mid-Year 2023 Financial Results and Business Update Conference Call. My name is Tyler Ehler, and I’m I-Mab’s Senior Director for Investor Relations. At this time, all participants are in a listen-only mode. At end of this call, we will conduct a Q&A session and instructions will follow at that time. Earlier today, we issued a press release providing a review of our financial results for the mid-year ended June 30, 2023, as well as an overview of our recent corporate highlights and upcoming milestones. The press release can be accessed on the Investor Relations tab on our website at ir.i-mabbiopharma.com.
Joining me today on the call from I-Mab’s senior management team are Raj Kannan, CEO; Dr. John Hayslip, Chief Medical Officer; Dr. Andrew Zhu, President and Head of R&D; and Richard Yeh, Interim CFO and COO. Raj will provide a high-level overview of our recent achievements and upcoming milestones, and John will provide an update on our R&D progress. Richard will then provide a summary of our financial results for the six months ended June 30, 2023, before we turn the call over to Raj for a few final comments. And then back to the operator to take your questions. Please note that today’s discussion will contain forward-looking statements relating to the company’s future performance and the forward-looking statements are made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995.
Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company’s control and could cause actual results to differ materially from those mentioned in today’s press release and on this earnings call. A general discussion of the risk factors that could affect I-Mab’s business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including, but not limited to, the Risk Factors section in I-Mab’s most recent annual report on Form 20-F as well as discussions of potential risks, uncertainties and other important factors in I-Mab’s subsequent filings with the SEC. Moreover, we operate in an evolving environment.
New risk factors emerge from time to time, and it’s not possible for us to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in today’s press release and on this earnings call relate only to the events or information as of the date on which the statements are made. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
We’ll also discuss specific non-GAAP financial measures during today’s call, the presentation of which is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. Please see the financial results press release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. And with that, I’ll now turn the call over to our CEO, Raj Kannan. Raj, please go ahead.
Raj Kannan: Thank you, Tyler, and good morning, everyone, and thank you for joining us. It has been an energizing few weeks for me since I came on board as CEO in June. I came to this new role with much confidence in I-Mab’s innovative programs and an understanding that we have a great deal of work ahead of us. Today, I’m pleased to speak with you and set out a clear direction for I-Mab that could potentially unlock the significant inherent value that I see in this company for our shareholders. During our call, I will provide you with a high-level update on our performance in the first half of 2023 and importantly, frame our strategic direction and plan. I will ask John Hayslip, our Chief Medical Officer, to provide you with an update on the two prioritized clinical assets in oncology that we plan to rapidly advance in the US and globally and finally, review the recently released positive Phase 3 results from our lead program in China.
Richard Yeh, our Interim Chief Financial Officer, will review the financial results for the first six months of 2023 and then hand it back to me for closing remarks. The first eight months of 2023 have been productive for I-Mab. We made significant progress on our innovative assets, including uliledlimab, our differentiated CD73 antibody, givastomig, our novel Claudin 18.2 and 4-1BB bispecific antibody and eftansomatropin alfa, our long-acting human growth hormone that reported out positive Phase 3 results today. As we look to building out the future for I-Mab, we plan to focus on three strategic pillars. First, rapidly advance our two promising clinical assets globally within oncology. Two, maintain our strong balance sheet. And three, focus on establishing a new operating model to become a US-based global biotech company.
Taking them one at a time. One, we plan to advance uliledlimab, our novel CD73 antibody and givastomig our differentiated Claudin 18.2 and 4-1BB bispecific antibody in the US and globally. We believe that both uliledlimab and givastomig each have interesting biology, encouraging early clinical data and differentiated characteristics that have enabled them to stand out from other drugs in development. We believe that uliledlimab could be a critical value driver for I-Mab and if approved, could be a unique and differentiated immuno-oncology agent, which has the potential to be the preferred adjunct to immunotherapies across a wide range of tumors. Our goal is to submit an IND in the first half of 2024 for uliledlimab in combination with chemomotherapy and checkpoint inhibitors in newly diagnosed patients with advanced non-small cell linked cancer.
John will further provide details on the data that we presented at ASCO and why these results give us the confidence that uliledlimab can be a differentiated entrant and a significant value driver for I-Mab. We believe that givastomig has a potential to be a differentiated agent in gastric cancer. This unique bispecific antibody was designed to target Claudin 18.2 positive tumors and stimulate pro-immune 4-1BB signaling. Givastomig was designed to selectively target 4-1BB expressing cells in the tumor microenvironment, potentially reducing the risk of systemic toxicity. Claudin 18.2 targeted therapies could represent an important new treatment option, especially for patients with gastric cancers, including tumors of the gastroesophageal junction or GEJ, and esophageal cancer.
With encouraging signs of monotherapy efficacy, including in tumors with lower levels of Claudin 18.2 expression, we believe that givastomig has the characteristics that could potentially position the program as a leading candidate in these tumors where there remains a significant unmet medical need. Our goal is to initiate a Phase 1b dose escalation study in the US, Japan and China, in combination with standard chemotherapy and immunotherapy regimens for patients with treatment-naive gastric, GEJ and esophageal cancer in the first half of 2024. John will review our early results and explain why we believe our program could potentially be a valuable treatment option for patients. Lastly, we’re pleased to report hot off the press positive Phase 3 data from eftansomatropin alfa, our long-acting human growth hormone candidate being developed for the market in China.
This represents a significant milestone for the company as it is the first completed Phase 3 data that we have reported. The new eftansomatropin alfa data met the primary endpoint and achieved non-inferiority compared to Novo Nordisk’s Norditropin. These results and the compound’s weekly delivering formulation should position eftansomatropin alfa to be a key player in the human growth hormone market in China, which is a market currently dominated by once-daily injectables. This multibillion-dollar market in China is expected to grow over the next five to eight years. with long-acting growth hormones estimated to significantly build market share. As you may know, we have an agreement in place with Jumpcan to commercialize eftansomatropin alfa in China.
We have two other clinical assets specifically being developed for the China market, felzartamab, our CD38 antibody, and lemzoparlimab, our CD47 antibody. We expect to commercialize these assets through partners, and John will review the clinical results to date and provide an overview of next steps with these programs being developed for the China market. Now, moving on to our second strategic pillar, we continue to maintain a strong balance sheet. I-Mab’s $414 million cash balance adequately supports the execution of the company’s strategic plan. We’ve begun streamlining our spend for the second half of this year to support our key global assets in oncology and rationalizing our spend in other areas. In addition, we will continue monetizing non-global core assets and make the difficult choices where needed in our pipeline to earmark cash for the most promising programs, including exploring external opportunities.
And now, the third strategic pillar. We’re focused on establishing a new operating model as a US based global biotech company, as this will position us to unlock the inherent value in the single largest pharmaceutical market in the world and the area in particular, where our stakeholders expect to derive the most value from our innovative assets. We embark on this change by building on the company’s strong foundation from a core set of differentiated oncology assets, a strong balance sheet and a skilled R&D organization in China now. As I just noted, we also remain open to bringing in new assets that we view as value-driving to complement our existing pipeline. We recognize that to make this company into a truly US-based global biotech, it will involve significant changes ranging from governance, stock market listing, culture to talent management.
It is important to emphasize that the full I-Mab Board and I are in full alignment with regard to the future direction of the company. I look forward to providing you with those updates on our progress on this strategic pillar in early 2024. Now, before I hand the call over to John, I would like to recognize the leadership of Dr. Andrew Zhu during his time as Interim CEO. Also, I’m grateful for the dedication and hard work shown by the entire I-Mab team. With that overview, I’d like to hand it over to John to provide clinical details on our key global assets and the novel programs being developed specifically for the China market. John?
John Hayslip: Thank you, Raj, and good day to everyone on the call. My name is John Hayslip, and I’m pleased to provide you with a clinical overview. First, I’d like to provide updates about uliledlimab, our CD73 targeting antibody designed to block a key pathway that tumor cells may use to evade the immune system, adenosine production. As previously reported, uliledlimab is differentiated by design to avoid hook effect biology, which is a potential liability of other competitor drugs in development. Simply put, the hook effect may prevent other drugs from achieving complete inhibition of enzyme function. The uliledlimab is designed to allow up to 100% inhibition due to its unique functionality. At the American Society of Clinical Oncology Meeting in June of this year, we shared encouraging clinical and translational findings from a Phase 1b/2 study indicating patients with advanced non-small cell lung cancer receiving uliledlimab and PD-1 inhibitor toripalimab.
Uliledlimab was well tolerated using an every three-week dosing regimen in combination with toripalimab. Most treatment-related adverse events were Grade 1 or 2 in severity. In the 67 efficacy evaluable patients, the objective response rate, or ORR, was 31%, regardless of CD73 or PD-L1 expression. Notably, patients whose tumors had high levels of CD73 expression experienced a higher response rate than those with lower CD73 expression. The response rate increased to 63% in patients who had both high levels of CD73 expression and a PD-L1 tumor proportion score, or TPS, of greater or equal to 1%, whereas patients with low CD73 expression had an ORR of [28%] (ph). We are excited by these preliminary findings of a correlation between higher CD73 expression and an increased response rate.
With this chemotherapy-free uliledlimab and checkpoint inhibitor combination. Data from other studies have suggested that chemotherapy may increase CD73 expression in cancer cells, and we are eager to begin combination studies of uliledlimab with chemotherapy in the near future. Additionally, at the time of the data cutoff, with a median follow-up of 10.4 months, 18 of the 21 patients whose tumors had achieved an objective response remained on treatment, and the median duration of response was not yet reached. Progression-free survival and overall survival data will be analyzed when the data are fully mature. Additionally, we continue to enroll patients with previously treated ovarian cancer to the combination regimen of uliledlimab and toripalimab and expect to report preliminary results in 2024 for this Phase 2 cohort of patients.
Building upon these encouraging clinical findings and other non-clinical investigations, we plan to file a new IND with the FDA to expand the uliledlimab program and combined with chemotherapy and checkpoint inhibitors for patients with newly diagnosed advanced non-small cell lung cancer. Owing to the potential effect of chemotherapy to upregulate CD73 in tumors, we hope this combination may benefit in even broader group of patients, potentially regardless of pretreatment CD73 expression. I’d like to emphasize this important point. We plan to evaluate uliledlimab with chemotherapy and checkpoint inhibitors in patients regardless of the CD73 expression before initiating treatment. Non-small cell lung cancer is one of the most common and deadly cancer diagnoses globally.
And we believe that uliledlimab has the potential to improve upon currently available care. We plan to discuss further details regarding the planned studies in the first half of 2024 after we have had initial discussions and alignment with regulatory agencies. Next, I’d like to provide an update on givastomig, our Claudin 18.2 x 4-1BB bispecific antibody, a program that has made significant clinical progress. As you may know, other groups have attempted to develop 4-1BB engaging drugs in the past because 4-1BB is a strong stimulant to the immune system. Unfortunately, earlier attempts to develop 4-1BB drugs caused severe toxicities because the widespread effects of 4-1BB stimulation cannot be tolerated by patients. Therefore, we developed the unique approach of this bispecific antibody in that it first binds to tumor cells expressing the Claudin 18.2 protein and then the 4-1BB arm can stimulate immune cells in the immediate environment of the tumor.
More specifically, givastomig was designed to do two important things. First, to become conditionally active only upon consumer engagement while remaining silent elsewhere to avoid or minimize liver toxicity and systemic immunotoxicity commonly seen with 4-1BB antibodies as a drug class. And second, to effectively maintain strong tumor binding and antitumor activity attributable to a synergistic effect of the bispecific Claudin 18.2 antibody and 4-1BB antibodies. We believe givastomig has achieved our design goals for this molecule based on early clinical data. This July, the Journal of Immunotherapy of Cancer, or JITC published a paper detailing the significant potential givastomig in treating gastric cancer and its unique molecular design and properties.
Looking forward, I am happy to report that the first clinical abstract for givastomig has been accepted for presentation at the European Society of Medical Oncology, or ESMO, in October of this year. While the specifics of the study results are embargoed until the meeting, I’m happy to report that in the dose escalation Phase 1 study, objective responses have been observed with single agent givastomig amongst patients who have received multiple previous treatments for their cancer, including chemotherapy and checkpoint inhibitors. A dose expansion cohort in this Phase 1 study continues to enroll patients with previously treated Claudin 18.2 positive gastric, gastroesophageal junction or GEJ and esophageal cancer with givastomig monotherapy, and interim results for these patients are anticipated in the first half of 2024.
Additionally, based upon these encouraging observations and recent nonclinical studies indicating a positive benefit for the combination, we plan to launch new investigations of the combination of givastomig with standard chemotherapy and immunotherapy regimens for patients with treatment-naive gastric, GEJ and esophageal cancer. We anticipate enrollment to begin by the first half of 2024 and plan to provide further details once we finalize the trial design. Speaking of our clinical bispecific programs, TJ-L14B was designed to treat PD-1 or PD-L1 antibody resistant tumors. Like givastomig, the antibody acts by inducing conditional activation of 4-1BB when it binds to its target, in this case, PD-L1. A Phase 1 dose escalation study is underway in patients with progressive locally advanced or metastatic solid tumors that have relapsed or are refractory following prior lines of treatment.
A preliminary efficacy signal has been observed and a maximum tolerated dose has not yet been reached. The dose expansion portion of the Phase 1 study is underway in the US and South Korea. The program is being developed in collaboration with ABL Bio. Today, we reported the first positive Phase 3 results from an I-Mab sponsored program with the successful trial of eftansomatropin alfa with weekly dosing for children with human growth hormone deficiency. The results we are sharing today highlight that the Phase 3 study met its primary endpoint of annualized high velocity, or AHV, at week 52 and demonstrated that eftansomatropin alfa was non-inferior to Novo Nordisk’s Norditropin. As a reminder, eftansomatropin alfa was given as a weekly injection, while Norditropin was given as a daily injection in this study.
The mean AHV was 10.76 centimeters per year for eftansomatropin alfa versus 10.28 centimeters per year for Norditropin with a non-inferiority p value of less than 0.0001. Eftansomatropin alfa was well tolerated and no drug discontinuations were reported due to treatment-emergent adverse events. We believe the safety profile of eftansomatropin alfa appears comparable to Norditropin in this study. These data create a strong clinical database supporting the potential clinical utility of I-Mab’s long-acting human growth hormone candidate. We plan to submit a BLA in China in 2024. Next, I’d like to turn to felzartamab, a fully human monoclonal antibody directed against CD38, in development for the treatment of multiple myeloma. We have successfully completed the first trial with registration potential in China for felzartamab as a third-line treatment for multiple myeloma.
Our study confirmed the efficacy of felzartamab and with additional benefits such as a shorter infusion time and lower infusion-related reaction rate than reported for daratumumab in its IV form. These product attributes may allow felzartamab to be used in an outpatient clinic setting and together create a potentially differentiated product profile. We are evaluating our regulatory strategy and plan to provide an update following further discussions with the China CDE. We plan to share additional clinical data after those discussions are completed. In terms of the Phase 3 randomized study of felzartamab in combination with lenalidomide for patients who have received one prior line of treatment, enrollment was completed in September of 2021.
The primary endpoint for this study is progression-free survival, and we expect the study to read out in 2024, followed by a planned BLA submission. Lastly, the development of lemzoparlimab, focused on China, has the potential to be the first-in-class CD47 antibody for hematologic malignancies in this market. The Phase 3 program is evaluating lemzoparlimab in combination with azacitidine as first-line treatment for patients with newly diagnosed higher-risk myelodysplastic syndrome. Enrollment in the Phase 3 trial was initiated in April of 2023. The company will continue to review follow-up data from our Phase 2 clinical study in higher-risk MDS and while at the same time, analyzing details from trials evaluating other CD47 targeted agents as they are released to inform our decisions on the future steps for the program.
I’ll now hand the call over to Richard to discuss our financial results.
Richard Yeh: Thank you, John. Now I will review our first half 2023 financial results. As of June 30, 2023, the company had cash, cash equivalent, restricted cash and short-term investment of RMB3 billion or $414.6 million compared with $489 million as of December 31, 2022. I-Mab’s strong cash balance is estimated to provide the company with adequate funding to support the execution of the company’s strategic plan. As you may have seen today, we also announced that the Board has authorized a stock repurchase program of up to $40 million to enhance shareholder value of the company. Total revenue for the first six months of 2023 were $2.7 million compared with $7.7 million for the same period in 2022. Revenue consists of revenues recognized in connection with the strategic collaboration with AbbVie and the revenues generated from the supply of investigational products to AbbVie and Human Immuno Biosciences or HI-Bio.
Now let me turn to the R&D expenses. Research and development expenses for the first six months of 2023 were $61.6 million compared with $67.6 million for the same period in 2022. The decrease was primarily due to the reduced payroll expenses and share-based compensation expenses, partially offset by a slight increase in Chemistry, Manufacturing and Controls service fees. Administrative expenses for the first six months of 2023 were $33.8 million compared with $54.1 million for the same period in 2022. The decrease was primarily due to lower payroll expenses and share-based compensation expenses and related to management personnel and lower expenses for professional services. Non-GAAP adjusted net loss, which excludes share-based compensation expenses for the first six months of 2023 was $87.5 million compared with $116.9 million for the comparable period in 2022.
As of June 30, 2023, I-Mab has approximately 190 million shares outstanding. I would like to reiterate our strong cash position of $414.6 million as of June 30, 2023, which allow us to execute our strategic plan. Lastly, please note that the conversion of certain RMB amounts into US dollars for historical periods presented in this call may not be identical to the ones that previously announced due to the differences in particular exchange rate used by the company for this one compared to the historical exchange rates. With that, I would like to turn the call over to Raj for the few closing remarks. Raj?
Raj Kannan: Thank you, Richard. To conclude, I’m even more convinced than before that I made the right choice to join I-Mab and that we’re on the right track with the strategic plan. Looking ahead, we intend to advance our two lead oncology assets, uliledlimab and givastomig rapidly into initial studies in the US and beyond in the first half of 2024. We plan to maintain our strong balance sheet by continuing to streamline and rationalize our spend to advance the most promising programs and we intend to focus on a new operating model to establish a US-based global biotech company with the full support of the Board. We’re excited about I-Mab’s new strategic plan and look forward to providing you with periodic updates on our progress. Thank you all for taking the time to join us today. I’ll now turn the call over to Tyler for the Q&A session.
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Q&A Session
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A – Tyler Ehler: Thank you, Raj. [Operator Instructions] I would like to direct our first question to Kelly Shi. Kelly, please go ahead.
Kelly Shi: Thank you, Tyler. And congrats on the great progress and thank you for taking my questions. Firstly, could you comment on the safety profile of your weekly injected growth hormone from Phase 3 trial and in comparison to other competitor weekly programs? And also, could you let us know the projected timeline for regulatory approval and also commercial launch? And I also have a follow-up. Thanks.
Raj Kannan: Yeah. Kelly, thank you for that question. We are quite excited about the potential of eftansomatropin alfa as a weekly option for our patients. And given the strong results that we just disseminated, I believe this will be a valuable option in the China market, especially in a growing multibillion-dollar growth hormone market. I think I’ll let John comment on it. And then Andrew, if you wanted to comment more on Kelly’s question and how it compares to other drugs in development, that would be great. John?
John Hayslip: Yeah. Thank you, Raj. Thank you, Kelly, for the question. As Raj mentioned, this trial is a randomized head-to-head trial against Novo Nordisk’s Norditropin. And as we review the results coming in from this trial, we’re quite pleased by the safety profile that we’ve observed in this trial as compared to Norditropin. In addition, I think we’re pleased with how the safety profile of this drug looks compared to other drugs in the field and we look forward to disclosing those more completely in the future as we disclose the full data set. I’d like to ask Andrew, if you’d like to add any additional comments.
Raj Kannan: Andrew, are you on?
Andrew Zhu: Yes, can you hear me?
Raj Kannan: Yeah, we can hear you.
Andrew Zhu: Yeah. Kelly, thank you for the question. As you know, we just actually released the results. All the secondary endpoints, including safety and also various variables of the clinical data are being actively analyzed. And right now, we can definitely say the safety profile compare very, very comparable to the weekly injection. And definitely, we will share the data very, very soon. With regard to the second part of the question, we are actively pursuing the BLA submission. Definitely, we think with the Phase 3 data this provide the solid foundation for us to engage this process. And obviously, we’re starting the engagement with regulatory agency. So hopefully, we will have additional timeline to report soon. Thank you.
Raj Kannan: Andrew, I just wanted to make one clarification. I think the safety profile compared very favorably to the once-daily injection Norditropin.
Tyler Ehler: Thank you for your question, Kelly. With that, I would like to direct the next question to Joe Catanzaro. Joe, please go ahead.
Joe Catanzaro: Hey, guys. Hopefully, you can hear me okay. I guess I had two questions. Maybe first one on givastomig and particularly as it relates to Claudin expression levels. Wondering with the potential approval of zolbetuximab, I guess, next year, whether based on what you’ve seen thus far, whether there’s opportunity to maybe capture a broader Claudin expression range with givastomig? Thanks, and I have a follow-up.
Raj Kannan: Thanks, Joe. As you can tell, we’re very excited about this particular program, including our TJ-L14B that we’re collaborating with ABL Bio. But in particular, we continue to believe that givastomig is quite differentiated from the agents that are in development. I’ll ask John to comment more on the specific area of Claudin 18.2 that you specifically referred to. John?
