Summit Therapeutics Inc. (NASDAQ:SMMT) Q2 2023 Earnings Call Transcript

Summit Therapeutics Inc. (NASDAQ:SMMT) Q2 2023 Earnings Call Transcript August 9, 2023

Operator: Good morning, everyone, and welcome to the Summit Therapeutics Second Quarter 2023 Earnings Call. Please note that this call is being recorded. [Operator Instructions]. I would now like to turn today’s call over to Dave Gancarz. Please go ahead.

Dave Gancarz: Good morning, and thank you for joining us. Our press release was issued earlier this morning and is available on the homepage of our website. Today’s call is being simultaneously webcast and an archived replay will also be made available later today on our website, www.smmttx.com. Joining me on the call today is Bob Duggan, our Chairman of the Board and Co-Chief Executive Officer; Dr. Maky Zanganeh, our Co-Chief Executive Officer and President; Ankur Dhingra, our Chief Financial Officer; and Dr. Allen Yang, who I’m happy to introduce is our new Head of Research and Development. Welcome, Allen. Before we get started, I would like to note that some statements made by our management team and some 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 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 statements, risks and uncertainties. Summit undertakes no obligation to update these forward-looking statements, except as required by law. Following comments from Bob, Maky and Ankur, we will take questions. And with that, I will turn the call over to Bob.

Robert Duggan: Thank you, Dave. Good morning, everyone. Thank you for joining us today. I’d like to say a few words about what our amazing team has accomplished, then I will hand it over to Maky to add more color and then Anker will provide some updates regarding our financial positions and outlook. In terms of blending high-quality work output with speed and efficiency, you can match the skills of Team Summit. In January 2023, we closed our transaction with Akeso to in-license ivonescimab. And since that time, we have launched 2 Phase III clinical trials both with the registrational intent, and most importantly, in alignment with our Summit mission statement to improve the quality of the lives of patients with all due speed.

As I spoke about last quarter at the end of our business development process in 2022, we chose ivonescimab to be the foundation of Summit moving forward and Akeso chose Team Summit as the caretaker of their premier pipeline product candidate in the major Western markets. Team Summit takes full responsibility for maximizing the beneficial impact of ivonescimab in the United States, Europe and Japan, all the while making significant difference for the betterment in the lives of patients we treat. We take full responsibility for developing ivonescimab in the United States, Canada, Europe and Japan, and all should make that significant difference in patients’ lives. This is our commitment. We continue to build upon the established and continuing success and patient results created by Akeso.

Our team has made multiple visits to Akeso in the past few months and spent meaningful time in person with Akeso’s leadership over the past year, including our most recent trip to China during the second quarter. As we propel our collaboration forward, we continue to work together to achieve the best possible results and realize the potential of ivonescimab. Our clearly-aligned missions, each of which focus on the needs of patients and improving patient lives, allow for coordinated actions within our partnership as we curate the future of our business map. In a highly positive manner, Team Akeso has changed the paradigm in patient care in specific cancers and continues to make this progress every day. Continuing with this trend, Team Summit has 1 multiregional Phase III clinical trial underway, and we are about to dose our first patient in the second multiregional Phase III trial.

We have chosen to work with Akeso in each trial not because we had to, but because we wanted to and it’s in the best interest of all stakeholders. And they have collaborated fully in working with us. In our second Phase III trial for first-line squamous cell carcinoma lung, they have their own trial in a similar setting specific to China. But alongside that, they’ve chosen to participate and enroll patients to participate in the Summit-led multiregional trial as well. This demonstrates their dedication to the partnership, their commitment to becoming a worldwide biopharmaceutical company and their desire to bring ivn to as many patients as possible as quickly as possible. We chose the right partner, and we believe they chose a pretty good 1 as well.

And we are excited about what intent — our intent to accomplish with ivonescimab in the coming couple of years. With that, I would like to hand it over to Maky to provide additional context as to our accomplishments and next steps. Maky?

Mahkam Zanganeh: Thank you, Bob, and good morning, everyone. I’m incredibly enthusiastic about ivonescimab, its potential and what we have already accomplished. In the past 6 months since we closed our deal with Akeso in January, we have held interactions, including 3 large meetings, with the FDA surrounding 3 separate non-small cell lung cancer indication. In addition, we have communicated with other major health authorities and regulatory bodies in each of our other licensed territories: Europe, Canada and Japan. We have launched 1 Phase III clinical trial and will soon treat patients in a second Phase III clinical trial for non-small cell lung cancer in the United States, Canada and Europe, and we plan to begin dosing patients with ivonescimab in Japan early next year.

We have 2 Phase III clinical trials for ivonescimab. The first patient treated in the United States in our first Phase III trial was during the second quarter, just over 4 months after the deal closed. We previously announced that we would treat our first patient in the second Phase III trial in the second half of this year, and we are actively working to open up sites within the next month. With true conviction and purpose, our belief in ivonescimab to help accomplish our mission, to benefit patients facing difficult odds with unmet medical needs comes the incredible running power of Team Summit at speed accomplished by a few, if any, in the biotech space. Our conviction has been in place since we were working through our due diligence on ivonescimab and Akeso.

Obviously, our upfront payment of $500 million to Akeso spoke volumes about our conviction and belief in ivonescimab. However, at ASCO 2023, some of the data that backs up that conviction was displayed. Last year, at ASCO 2022, amongst other data, Phase II data for 43 patients in frontline treatment of non-small cell lung cancer who received ivonescimab plus chemotherapy was released. At this year ASCO in June, for the Phase II study, AK112-201 data was updated to display results to data for 135 patients in China with a median follow-up time of over 13 months. While over 825 patients have received ivonescimab in clinical studies in China and Australia, this was a good look into a larger subset of these patients well over 100 in a single-arm study to speak to the potential of ivonescimab.

Of this 135 treatment-naive patients in this Phase II study, 63 patients had squamous cell carcinoma of the lung and received a combination of ivonescimab and chemotherapy. 2/3 of these patients experienced a response to the combination, and there was a 93% disease control rate. Of the 67% of patients who responded to the treatment in the Phase II study, the median duration of response was 15 months. The median progression-free survival rate for the 63 patients was 11 months. The 95% confidence interval for progression-free survival range from 9.5 months to 16.8 months. While overall survival was not yet reached after a median follow-up time of 13.3 months, the estimated 9 months overall survival rate for these 63 patients was 93.2%. We believe the safety profile of ivonescimab plus chemotherapy has thus far been acceptable, with the most common treatment-related adverse events being anemia, decreased neutrophil counts and hair loss in this population.

We believe that this very promising study data when considering the current standard of care, pembrolizumab plus chemotherapy, and helps support our decision to move forward directly into first-line therapy with our second Phase III trial — clinical trial. We are extremely encouraged by what we continue to see with ivonescimab, and our speed is based on our continuously-growing conviction on the potential for ivonescimab to make a significant difference in patients like. We are encouraged by the other data presented at ASCO, including 72 treatment-naive, non-small cell lung cancer patients receiving ivonescimab plus chemotherapy with non-squamous histology in a Phase II study. Across all TPS scores, meaning patients with tumors that did not express PD-(L)1, those with low expression and those with high PD-(L)1 expression combined, the median PFS observed was 12.3 months.

The 95% confidence interval for the median progression-free survival range from 8.3 months to 19.3 months. We believe the safety profile was acceptable in these patients as well with 19% of Grade 3 or higher treatment-related adverse events reported. In addition, brief updates were provided second line or later patients Phase II data associated with 19 patients with EGFR mutant lung cancer who had progressed after the initial targeted therapy and 20 patients who had progressed after taking a PD-1 therapy like pembrolizumab. We remain encouraged by the maturing data for patients who received ivonescimab plus chemotherapy in these 2 cohorts. Of note, 32% and 35%, respectively, of patients in this cohort who are receiving their second line or later therapies for their respective disease remain on treatment at 12 months.

We believe that the encouraging data that continue to mature and that we continue to observe relates back to what we believe to be the mechanism of action for ivonescimab. Ivonescimab is not designed to be the same as the administration of an anti-PD-1 and then an anti-VEGF. Ivonescimab is an innovative, potentially first-in-class bispecific antibody that builds upon this established 2 cancer target. Anti-PD-1 therapy assist the immune system in culling tumor cells by attaching to the part of the T cell that actually prevent the T cell from doing its job in the first place. Anti-PD-1 therapy stops the build in checkpoint in the T cell, hence, it is referred to as a checkpoint inhibitor, allowing the T cell to do its job without a checkpoint or break.

Anti-VEGF therapy helps deplete the tumor of nutrient and blood by binding to VEGF. VEGF helps build the new blood cells to supply blood to the tumor. Anti-VEGF therapy also allows the immune system to better fight the tumor, but we believe ivonescimab goes further and act with that — with what we refer to as cooperative binding. Ivonescimab’s tetravalence structure enables cooperative binding between PD-1 and VEGF. In preclinical experiments, we saw that ivonescimab’s binding to PD-1 is actually over 10x stronger in the presence of VEGF in vitro in tumor cells. Ivonescimab is designed to have the higher affinity binding in the presence of both targets, PD-1 and VEGF, and therefore, may have the strongest binding affinity where both targets are found like the tumor macro environment.

The operative binding of ivonescimab may have advantage over targeting PD-1 and VEGF individually with 2 different molecules. It also has the potential to focus the antitumor activity of both target to the side of the tumor and metastasis as compared to separate anti-PD-1 and anti-VGEF compounds dosed together. Ivonescimab was designed such that the novel compound is greater than just the sum of its parts. With that in mind, we plan to continue to expand our clinical development program from here. As we have stated since the announcement of the deal in conjunction with our actions and following through of our commitments to start in this non-small cell lung cancer, these 2 clinical trials are only the first step into our plans for ivonescimab.

We have confidence in ivonescimab to continue to expand both within additional indications in the non-small cell lung cancer and in other solid tumors during its development life cycle. Our deal was constructed with this mindset, as is evident from the number of indications for which regulatory milestones are scheduled to be paid as well as the size of the potential milestone. We believe strongly in the potential of ivonescimab. A key part of our strategic plan for broadening the value of ivonescimab will be to engage in investigator-sponsored studies or ISP programs. As we continue to broaden our message related to SMT112 with key opinion leaders and physician leaders, we are experiencing a higher enthusiast for what ivonescimab can do aside of lung cancer.

We have received multiple inquiries related to potential ISP programs that we can consider, and we are excited to share additional information in the coming quarters, continue to examine additional uses for ivonescimab. This will be in addition to potential sponsored studies that we continue to consider as we move forward. This is just the beginning. Now, I will let Ankur give some more details on our financial position and outlook. Ankur?

Ankur Dhingra: Thank you, Maky. I’m incredibly optimistic with the great opportunity we have in front of us with ivonescimab and the progress that we have made as a team. I’ll give you an update on the financial developments during the quarter and our financial position as of the end of the quarter. About the P&L. Net loss for the quarter was $14.7 million compared to a net loss of $16.8 million in the second quarter of 2022. As mentioned, we have engaged in 2 Phase III clinical trials for ivonescimab, and majority of our spending now reflects investments in development of this molecule, ivonescimab. At the same time, we continue to ensure that we are focused and remain well disciplined with our spending to extend our cash runway as long as possible.

Speaking about our cash position, we exited the quarter with $220 million in cash, investments and receivables. We believe this is to fund our operating cost and working capital needs with currently planned clinical trials for SMT112 going into the second half of 2024. This includes appropriately building an experienced oncology team capable of executing multiple large clinical trials and the development work, as well as initial investments to begin setting up manufacturing for ivonescimab in our territory. We have a loan of $100 million on our balance sheet that becomes due in September 2024 and the ability to repay in certain scenarios, if we complete a capital raised transaction prior to September 2024. Our cash equivalents and short-term investments are held in highly-liquid and highly-rated money market funds on U.S. treasuries.

Our cash is held in large, reputable U.S. and European banks. I feel very good about our overall financial position at the company. And with that, I will hand it back over to Dave.

Q&A Session

Dave Gancarz: Thank you, Bob, Maky and Ankur. We can now transition into the Q&A session. I will start, as we’ve received a number of questions already. And then from there, I will hand it back over to the operator who may open the line for live participants.

A – Dave Gancarz: First question comes in with respect to enrollment progress on our Phase III clinical trial. Could we give some updates on the enrollment progress and when the expected completion time of enrollment will take place?

Robert Duggan: I’ll take that, Dave. So we don’t give specifics on enrollment numbers, but I will say that we’re enrolling well to plan. And then the completion of the study will be in the first half of next year. This is the 301 study, yes.

Dave Gancarz: Yes. We’re targeting in the — to the later end of the first half of the next calendar year 2024 for completion of enrollment. When should investors expect HARMONi-3, the Phase III clinical trial for first-line squamous cell carcinoma, to kick off in the United States and Europe? And so as Maky had mentioned earlier, we are guiding towards the second half of 2023 at this point. We haven’t given more specific guidance, other than we’re very quickly getting sites up and activated and are on track from that perspective. The next 2 questions, more financial. The first of which is the expected cost of that Phase III clinical trial in squamous cell carcinoma, which is head-to-head against pembrolizumab and chemotherapy? As well as potential financing over the next 12 months to continue supporting the HARMONi-3 study?

Ankur Dhingra: Sure. Let me address both. So regarding the cost, not provide the specifics, but it is a Phase III trial in the U.S. and Europe in the lung cancer space. As you know, there are several trials that, broadly, in the lung cancer space happens, so it’s not going to be materially different. So you can estimate the cost for about 400 patients in our lung cancer Phase III clinical trial. Regarding the financing question, as I just mentioned, we have $220 million in cash and receivables at the end of the quarter, which is sufficient to fund both the trials that we have announced and some more, at least for the next 12 months. We’ve also mentioned that our strategy is to continue to expand our development program for ivonescimab beyond the 2 trials that we have announced. So any financing plans and decisions that we will make will consider both these trials as well as any other plans that we have for ivonescimab, and we’ll discuss accordingly.

Dave Gancarz: Thank you, Ankur. The next question really relates, maybe a little bit more in the plain English. So as we’re looking at the data that’s come in, how do we feel about that data? And then specifically with respect to our comment that median overall survival has not yet been reached, is that a bad thing? Or maybe could — Allen, you just give a little bit of plain English context to that statement?

Allen Yang: Yes. The fact that the patients are still alive is a terrific thing. And I think you’re asking about the approvability of this product, that’s ultimately decided by the FDA. But 1 of the reasons I joined Summit is when I looked at that data, I was very excited about the performance of this molecule, and that’s why we’re conducting these Phase III studies. There’s good clinical and scientific rationale for the 2 sort of studies that we’re doing right now, so I’m very excited.

Dave Gancarz: Thanks, Allen. And then specifically, a couple of questions have come in with reminders to the study size overall. So could we give a little bit of context with respect to how many patients we plan to enroll in our 2 Phase III clinical trials?

Robert Duggan: So for the first study, 301, in our region in North America and Europe, we’re planning to enroll 150 patients. And then for the Phase III, the 303, which is the front line non-squamous — squamous non-small cell lung cancer study, the sample size, have we publicly disclosed it? 400? Yes.

Dave Gancarz: And then second to the last question, with respect to data that is being generated by Akeso in Australia. Is that data that can be submitted to the FDA?

Robert Duggan: Yes. So I think you’re referring to the Phase 1 that was run in Australia. That was an Akeso-run study, and so they ultimately control that data. However, as part of an FDA package, in my experience, the FDA will want to see all the data and so they’ll probably want to see that in some form.

Dave Gancarz: And then final question, Maky had spoken to this a little bit during the prepared remarks. But Allen, could you give a high level 3 with respect to the mechanism of action of ivonescimab and why you’re excited about it?

Allen Yang: Yes. Ivonescimab is a really exciting molecule. I have a lot of experience with bispecifics. This 1 is unique. It takes 2 validated targets, PD-1 and VEGF. So if you think of pembrolizumab and bevacizumab, they are well-validated targets in oncology. I don’t — what people don’t realize is that there’s cooperative binding between the 2 target sites. So finding of 1 ligand increases the binding affinity of the other ligand. So what you have is when VEGF binds, PD-1 binding increases many fold. That means that the highest affinity binding for both targets will be at places where both targets are highly expressed or about. So that’s really exciting in the MOA. We will disclose additional information on the MOA as it comes out, and there’s other data that we have that’s also very exciting.

Dave Gancarz: Thanks, Allen. And so that covers a number of questions that have been received prior to the call, so I appreciate those questions coming in. I’ll now turn it over to , our operator, for any additional live questions.

Operator: Thanks, Dave. [Operator Instructions]. Seeing no live questions come in, I will turn the call back to Dave for closing remarks.

Dave Gancarz: I want to thank everyone very much for attending our call this morning. As I mentioned earlier, an archived version of this webcast will remain available on our website, www.smmttx.com. Thank you very much for your participation, and hope you enjoy the rest of your day.

Operator: This will conclude today’s conference call. Thank you for joining us. You may now disconnect.