Summit Therapeutics Inc. (NASDAQ:SMMT) Q1 2024 Earnings Call Transcript

Summit Therapeutics Inc. (NASDAQ:SMMT) Q1 2024 Earnings Call Transcript May 1, 2024

Summit Therapeutics Inc. reports earnings inline with expectations. Reported EPS is $-0.06 EPS, expectations were $-0.06. SMMT isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, ladies and gentlemen, and thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Summit Therapeutics First Quarter 2024 Earnings Conference Call. [Operator Instructions] Also please note that today’s call is being recorded. Thank you. And I would now like to turn the conference over to Mr. Dave Gancarz, Chief Business and Strategy Officer. You may begin.

Dave Gancarz: Thank you. Good morning, and thank you for joining us. Our press release was issued this morning and is available on the homepage of our website. Our Form 10-Q was also filed earlier this morning and is available on our website. Today’s call is being simultaneously webcast, and an archived replay will be available later today on our website, www.smmttx.com. Joining me on the call today is Bob Duggan, our Chairman of the Board and Chief Executive Officer; Dr. Maky Zanganeh, our Chief Executive Officer and President; Manmeet Soni, our Chief Operating Officer and Chief Financial Officer; and Dr. Allen Yang, our Chief Medical Officer. Before we get started with the rest of the call, I would like to note that some of the statements made by our management team and some of the responses to questions that we make today may be considered forward-looking statements based on our current expectations.

Summit cautions that these forward-looking statements are subject to the risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Please refer to our SEC filings for information about these risks and uncertainties. Summit undertakes no obligation to update these forward-looking statements, except as required by law. Following comments from Bob, Maky and Manmeet, we will take questions. With that, I would like to turn the call over to Bob.

Bob Duggan: Thank you, Dave. Good morning, everyone, and thank you for joining us today. Before handing the call over to Maky and Manmeet, I’d like to say a few words about our progress and the recent accomplishments of Team Summit. As a reminder, we are enrolling patients in our 2 multiregional registrational Phase III clinical trials, HARMONi and HARMONi-3. Along with our partners at Akeso, we have had ivonescimab data featured multiple medical meetings, including ASCO, American Society of Clinical Oncology; SITC, Society for Immunotherapy of Cancer; and the European Lung Cancer Conference or ELCC as well as the ENA Triple meeting, the annual joint meeting of the European Organization for Research and Treatment of Cancer, the U.S. National Cancer Institute, NCI, and the American Association of Cancer Research, AACR.

This is in addition to more focused meetings where the potential of ivonescimab has been discussed, including Targeted Therapies of Lung Cancer 2024 meeting and the 2024 Texas Lung Cancer Conference. These have been excellent settings to allow for some of the nations and world’s leading KOLs to come together to discuss the future of cancer therapy, including the potential for ivonescimab. We continue to receive inbound interest in IST proposals for ivonescimab, and we are moving forward with accepting multiple IST proposals to allow these investigators to start these trials with ivonescimab in multiple different settings, including non-lung settings. This is in addition to our continued collaboration with our partner, Akeso, who continue to generate data in Phase II settings in both lung cancer and solid tumors outside of lung cancer, data which can help support additional late-stage clinical trials.

These conferences have been foundational to our 2024 goals of successfully executing on our registrational Phase III trials while expanding our clinical development plan. In addition, I’d like to take a moment to acknowledge that we strengthened our excellent team recently with the appointment of renowned executive and genomicist, Dr. Mostafa Ronaghi to our Board of Directors. Dr. Ronaghi has played a leading role in the development of technologies, which has helped improve the odds for patients with cancer, including biomarker-driven diagnostics, such as next-generation sequencing technology and platforms. He has cofounded several companies as well as being Illumina’s Chief Technology Officer from 2008 to 2021. In addition to its unmatched technical prowess, passion for improving the lives of cancer patients and has 25 years of experience in the oncology space, Dr. Ronaghi is also a great business leader in addition to being one of the world’s most accomplished scientists.

We are fortunate to have his perspective and expertise joining us now. On today’s call, in addition to covering ivonescimab’s differentiated mechanism of action and our financial results for the quarter, we will provide details and context around what drives our belief and conviction around ivonescimab’s potential in non-small cell lung cancer and beyond. We are a mission-driven organization with a collective goal to improve quality of life, increase potential duration of life and resolve serious unmet medical needs. We believe we have the right team and the right platform molecule in ivonescimab to help us realize this goal. Maky and I are thrilled with our progress as Team Summit continues to drive our development path forward and making every effort to collapse time and reach critical milestones faster.

With data expected this quarter from Akeso’s Phase II AK112/301 trial, otherwise known as HARMONi-A, we remain eager to share additional details, which will inform both the near and longer-term development strategies for ivonescimab. With that, I will turn the call over to Maky for additional context and recent highlights for consideration. Maky?

Maky Zanganeh: Thank you, Bob, and good morning, everyone. As Bob mentioned, we remain incredibly enthusiastic about the accomplishments of Team Summit only one year into our partnership with Akeso. Before touching on ivonescimab’s unique mechanism of action and clinical highlights, I would like to remind you of clinical work that has been conducted today with ivonescimab. Over 1,600 patients have been treated with ivonescimab. Currently, between Summit and Akeso, there are 19 clinical trials around the globe evaluating ivonescimab, four of which are Phase III clinical trials, along with 15 Phase I or II trials; seven of these 19 trials are evaluating ivonescimab in solid tumor setting beyond non-small cell lung cancer. We are sponsoring two of these clinical trials, HARMONi and HARMONi-3 2 Phase III clinical trials in non-small cell lung cancer.

We are fortunate to have created such a strong partnership and foster an ongoing collaboration with Akeso and the ability to leverage data for multiple solid tumor studies supporting and informing Summit on clinical development in our licensed territories. As a reminder, ivonescimab is our lead investigational compound and the only PD-1, VEGF bispecific antibody in Phase III in the U.S., Canada, Europe or Japan or licensed territories, ivonescimab brings these two highly validated mechanics together into one novel molecule targeting both PD-1 and VGEF. What differentiates ivonescimab and its intentional design is its cooperative binding characteristics. Basically in the presence of VEGF, the binding affinity of ivonescimab to PD-1 in vitro increases by 18-fold.

In the presence of PD-1, the binding affinity VGEF by over fourfold in vitro. In addition to the half-life of ivonescimab, which is approximately 6 to 7 days compared to the estimated half-life of bevacizumab of 20 days or pembrolizumab of 23 days, combined with a cooperative binding characteristic of ivonescimab and it’s purposely engineered structure, we believe that ivonescimab can go beyond the sequential administration of anti-PD-1 and anti-VGEF therapy. Our goal is to improve up on previously established efficacy standards and safety profiles associated with these two targets, and we believe ivonescimab has the potential to achieve this. Next, I would like to review our two ongoing Phase III trials, HARMONi and HARMONi-3 that are designed with registrational intent.

As Bob mentioned, our partner, Akeso is expecting Phase III data this quarter, which will play a key role in supporting and informing our own clinical development efforts. Starting with our registrational Phase III HARMONi trial, this is our fast-to-market approach where we are evaluating ivonescimab as a second-line treatment in non-small cell lung cancer patients with EGFR mutations who have progressed following a third-generation TKI such as osimertinib. We intend to complete enrollment in this trial in the second half of 2024. In addition, our partners at Akeso have run a parallel trial known as HARMONi-A or AK112-301. This is a trial run specifically in China, evaluating patients who have progressed after an EGFR TKI, a very similar population.

Akeso completed enrollment in HARMONi-A, performed its PFS analysis, its primary endpoint and submitted its NDA application for marketing approval in China to the Chinese regulatory authority, the CDE. Akeso has previously announced earlier this year that we expect to receive a decision from the CDE in this quarter, the second quarter of 2024. If approved by the CDE, we anticipate the result of HARMONi-A to be disclosed along with an approved label. This decision, we believe, could be a catalyst event for ivonescimab and therefore, Summit for two reasons: one, the HARMONi-A trial is conducted in a very similar patient population as our Phase III HARMONi trial. And two, recall that earlier, we discussed that our HARMONi trial is a multiregional trial enrolling patients in North America, Europe and China.

For those patients coming from China, given the overlapping patient population and similar clinical trial design, a large number of those patients enrolled by Akeso in the HARMONi-A trial are also intended to be included in our analysis for our HARMONi trial. We expect to include all patients except those who did not receive a third-generation TKI in China into our analysis for our HARMONi trial. That means we would include approximately 80% to 85% of the HARMONi-A patients from China in our HARMONi trial. Therefore, while we are adding additional patients from North America and Europe, we believe a positive readout and result for the trial in China by our partners at Akeso in China could be a positive signal for our multiregional HARMONi trial.

As previously discussed, we expect to complete enrollment of our multiregional HARMONi trial in the second half of this year. Moving next to our Phase III HARMONi-3 trial, we are evaluating ivonescimab as frontline treatment for patients with squamous non-small cell lung cancer. This head-to-head trial is designed to compare ivonescimab plus chemotherapy against the current standard-of-care pembrolizumab plus chemotherapy. We began enrollment in this trial in the fourth quarter of 2023 and are continuing to open sites and expand the reach of the clinical trial as quickly as possible. Across both these trials, we continue to work tirelessly to achieve our aggressive but realistic goals for ivonescimab and ultimately improve up on existing treatment options for the many lung cancer patients with serious ongoing unmet needs.

Our conviction and belief in the potential of ivonescimab and our decision to quickly pursue two registrational Phase III trials has come in part from data generated from Phase II clinical trials conducted by Akeso. Data announced in the first quarter this year and later presented in March at the European Lung Cancer Conference from Akeso Phase II AK112-201 trial, evaluating ivonescimab plus chemotherapy in multiple lung cancer settings showed patients with first-line advanced or metastatic squamous non-small cell lung cancer without actionable genomic alterations, a patient population that align closely with our HARMONi-3 trial, achieving a medium progression-free survival of 11.1 months. Median overall survival has not yet been reached after a median follow-up time of 22.1 months.

In this cohort, treatment-related adverse events leading to discontinuation of ivonescimab was 11%, and there were no treatment-related adverse events leading to that. In a separate cohort from this trial, which support our HARMONi trial, patients with advanced or metastatic non-small cell lung cancer with tumors positive for EGFR mutations and having progress following an EGFR TKI achieved median progression-free survival of 8.5 months and a median overall survival of 22.5 months was observed. In this cohort, there were no treatment-related adverse events leading to discontinuation of ivonescimab or death. In both settings, the Phase II data for ivonescimab plus chemotherapy shows favorably when considering the historical results seen from the standard of care in each setting.

Also presented recently at ELCC 2024, ivonescimab has promising Phase II data in non-small cell lung cancer patients with brain metastasis. The analysis consisted of 35 patients from Akeso Phase II trials, AK112-201 and AK112-202 with advanced or metastatic non-small cell lung cancer who had asymptomatic brain metastases at baseline and receive ivonescimab alone or in combination with chemotherapy across all patients analyzed, and intracranial response rate of 34% was achieved by renal criteria and median and intracranial progression-free survival of 19.3 months. All patients who did not achieve a response, demonstrated stable disease or non-progression. No patient experience intracranial disease progression at the time of the initial follow-up scan and importantly, no cases of intracranial bleeding complications were observed in these patients.

Promising development and improved therapy options are needed for patients with lung cancer as is expected that up to 20% who developed brain metastases across all type of lung cancer. And for those with common driver mutations such as EGFR mutation, it is expected that 50% to 60% may develop brain metastases over the course of their disease. We believe that the study data is very promising, especially when considering the current therapeutic options and standard-of-care in these settings. Ivonescimab’s favorable Phase II data has supported and continue to support our decision to confidently move forward in both of our Phase III clinical trials and continue to build out our development strategy beyond lung cancer. While non-small cell lung cancer indicates represent our initial development plan for ivonescimab, we will continue to expand our clinical program.

HARMONi and HARMONi-3 represent the first step in our strategy, and we believe ivonescimab has strong potential to make a difference in several other solid tumors as well. We have received a high level of interest from key opinion leaders and other physician leaders for what ivonescimab may do make a significant positive difference in and outside of lung cancer. We continue to receive and are considering multiple inquiries for potential investigator-sponsored trials or IST programs, and we expect to share additional information later in 2024. In addition, as we have been discussing this year, we plan to expand our reach beyond non-small-cell lung cancer response studies as well. We continue to work with our partners at Akeso to review Phase II clinical trial data in order to determine our next steps forward.

As you can see from this slide, there are a number of potential indications rising from gynecological tumors, head and net cancer, Triple-negative breast cancer, colorectal cancer and other solid tumors where we may be able to further explore ivonescimab. We continue to be very optimistic about the promising potential of ivonescimab, including working through designing future clinical trials and working through the diligence process to optimize these trials while obtaining more matured [ph] trial clinical data. We are excited over the coming six to nine months to provide more details regarding our clinical development plan for ivonescimab. Finally, to capitalize on and expand our reach with physicians from KOL and academic leaders to community physicians and local caregivers, we continue to participate in key medical meetings and well participating in the upcoming ASCO conference, where two ivonescimab abstracts for presentation have already been accepted, including the expected HARMONi-A trial data from China.

We intend to educate and activate as many physicians and health care leaders as possible regarding ivonescimab and its potential. With that update, I will now ask Manmeet to provide details on our financial position and outlook.

Manmeet Soni: Thank you, Maky and Bob, and good morning, everyone. We filed this morning, our 10-Q for the first quarter of 2024. Today, I will provide you with an update on the operations and financial position. On the operations front, we continue to enroll both HARMONi and HARMONi-3 trials. We are on track to complete enrollment for patients in HARMONi trial during the second half of this year. We have also initiated to prepare for technology transfer to enable the second supply source for manufacturing of ivonescimab in our territories. On the financial front, I’ll discuss for Summit’s cash position, updated cash runway guidance and provide some color on our operating expenses. Starting with cash, we ended our first quarter of 2024 with a strong cash position of $157 million.

Based on our planned operations, we expect that we have sufficient cash to run our operations through the first quarter of 2025. Turning to expenses. I will speak to both GAAP and non-GAAP numbers. You can refer to our press release for a reconciliation of GAAP to non-GAAP financial measures. To remind, non-GAAP expenses exclude stock-based compensation and onetime charges related to in-process R&D. During the first quarter of 2024, our GAAP R&D expenses were $30.9 million compared to $24.8 million in the fourth quarter of 2023. And non-GAAP R&D expenses were $28.5 million in the first quarter of 2024 compared to $22.4 million for the fourth quarter of 2023. Turning to G&A. Our first quarter 2024 GAAP G&A expenses totaled $11.7 million compared to $11.6 million in the fourth quarter of 2023.

And non-GAAP G&A expenses were $4.6 million in the first quarter of 2024 compared to $5.3 million for the fourth quarter of 2023. Non-GAAP operating expenses were $33 million. Aligned with company’s focus, the majority of our spending is towards research and development, which is $28.3 million for the quarter on a non-GAAP basis and its focus towards clinical development of ivonescimab, including the clinical trials and technology transfer. And the G&A spend for $4.6 million for the quarter on a non-GAAP basis represents all the functions that provide infrastructure and support for this development. And with that, I will hand it back over to Dave.

Dave Gancarz: Thank you, Bob, Maky and Manmeet. We’ll now see if there are any questions that our team can help answer for anyone on the line. Operator, if you could please open the line for any questions.

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Q&A Session

Operator: [Operator Instructions] And your first question comes from Brad Canino with Stifel. Your line is open.

Bradley Canino: Hey good morning and thanks for the question. A couple from me. First, can you start by framing how you view the Phase II updates at ELCC? I mean you made the strategic choice to pursue frontline squamous lung as that first Phase III where you’re conducting head-to-head against KEYTRUDA, how do these data support that specific strategy?

Bob Duggan: Yes, Brad, I’ll take the question. So a couple of things. First, the data is an update, and it’s consistent. So I think that’s important for the update. There weren’t any major changes. I mean the data still remains strong at squamous as well as non-squamous cancer. I think the purpose for that update was really to make more European investigators aware since we’d only presented at ASCO previously. What was the second question, again?

Bradley Canino: Well, let me ask another question then — because you’ve got the HARMONi-A cohort from your partner Akeso set for presentation at ASCO on May 31. The question is, what does this imply about the potential China CDE decision timing for your partner’s second-line EGFR filing? And could the regulatory decision still come after these data?

Dave Gancarz: Sure. Brad, this is Dave Gancarz. I think — so we don’t, at this point, have any insight within — beyond the update that we’ve given with respect to the timing of the data we still expected in the second quarter based on the guidance that’s been given from Akeso at this point. So I think that this is, again, Akeso’s trial that they’ve both sponsored and analyzed the data for us. So we remain blinded from that front but we’re working through the details as they become available. But at this point, we can only go on the fact that they have announced that the Q2 timing is expected and so we’re proceeding as is.

Bradley Canino: Okay. And then a similar type of question. Could I ask for a status update for Akeso’s 303 interim analysis plan?

Dave Gancarz: Sure, Brad. This is Dave, again. So I think, again, that is a trial that’s sponsored and the data would then be analyzed on the Akeso side, so that’s separate from Summit. But at this point, as far as we’re aware, we have not — as far as we know, there’s been no interim analysis performed yet at this point. Again, they’ve guided to the second quarter generally on that point.

Bradley Canino: Okay. And then last for me, just a question on the broader plans for the company at ASCO. And what, if any, gating factors remain for the announcement of some broader pivotal development plan for ivonescimab in the U.S. and EU that was into that on the call? Thank you.

Dave Gancarz: Yes. We’re actively engaging health authorities to sort of put Phase III data or Phase III trials together, rather. It’s based on the upcoming Phase II data from Akeso, we’ve seen very exciting data coming out. We haven’t disclosed it, but it should be done shortly.

Operator: We will take our next question from Carter Gould with Barclays. Your line is open.

Carter Gould: Good morning. Thanks for taking the questions. Maybe just to sort of follow up on Brad’s question and maybe put a finer point to it. So just to be clear, when we think about sort of the disclosure that comes from Akeso in sort of 2Q on the back or on relation to 301. Essentially, are you going to be finding out that data at the same time as us? Or will there be some sort of gap there that we should be aware of? And I guess the follow-on to that is on the back of those data, have you contemplated any potential changes or amendments to HARMONi-1?

Bob Duggan: Yes. So let me take the second question. No, we’re not contemplating any changes to the HARMONi study. We’ll become aware of the HARMONi data when you become aware of it. We became aware of the abstract title release. We’ll be eagerly looking for the abstract releases as well as attending the presentation. With that said, the other potential public disclosure is if there’s an approval, there would be a release of the label as well in China.

Carter Gould: Thank you.

Operator: [Operator Instructions] And with no further questions at this time. I would now like to turn the call back to Mr. Dave Gancarz for closing remarks.

Dave Gancarz: I’d like to thank everybody for taking the time to join us this morning on our quarterly earnings call. I hope you have a wonderful day, and thank you very much for your time.

Operator: Ladies and gentlemen, this concludes today’s call, and we thank you for your participation. You may now disconnect.