Summit Therapeutics Inc. (NASDAQ:SMMT) Q3 2023 Earnings Call Transcript

Summit Therapeutics Inc. (NASDAQ:SMMT) Q3 2023 Earnings Call Transcript November 7, 2023

Operator: Good morning, and welcome to the Summit Therapeutics Third Quarter 2023 Earnings and Update Call. All participants will be able to listen only until the question-and-answer portion of this call. We do not expect any technical difficulties today; however, in the event that we lose the webcast connection and we are unable to provide any updates, please wait up to 10 minutes for resolution. Please refer to the Company’s website for updates. Please note that today’s call is being recorded. [Operator Instructions] At this time, I would like to introduce the call to Dave Gancarz, Chief Business and Strategy Officer. You may proceed.

Dave Gancarz: Thank you for joining us. Our press release was issued earlier 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; Ankur Dhingra, our Chief Financial Officer; Dr. Allen Yang, our Chief Medical Officer. And in addition, we are joined by a new Chief Operating Officer, Manmeet Soni. Manmeet joins us from Reata Pharmaceuticals, where he was the President, Chief Operating Officer and Chief Financial Officer.

Reata was recently purchased by Biogen for approximately $7.5 billion. Manmeet was previously the CFO at Alnylam Pharmaceuticals and ARIAD Pharmaceuticals. Before that, he was the CFO of Pharmacyclics. Manmeet will continue to serve on our Board, and he also serves on the Board of Pulse Biosciences. Manmeet will be responsible for all commercial activities, finance, clinical operations, manufacturing, legal, information technology, and human resources. In conjunction with Manmeet joining us, he invested $5 million in the Company in a private placement at market rates. We are excited to have Manmeet join Team Summit, and I’d like to welcome Manmeet to the team.

Manmeet Soni: Thanks, Dave, and I’m very excited to be here and be part of Team Summit. I worked with the team here at Summit for the last four years as a Board member, and I’m very thrilled to join as a member of the very accomplished and committed management team. I strongly believe that our pipeline candidate, ivonescimab with two Phase III clinical trials currently enrolling in the United States, Canada, Europe and China, has the potential to bring a paradigm shift in the standard of care for patients with solid tumors, starting with non-small cell lung cancer. I’m fully committed to our mission of developing new innovative and patient-friendly medicines for unmet medical needs, and I’m excited to contribute to making this positive meaningful difference.

Dave Gancarz: Thanks, Manmeet. Before we get started with the rest of the call, 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 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. With that, I will turn the call over to Bob.

A close up of a scientist in a labcoat admiring the progress of a biotech experiment.

Bob Duggan: Thank you, Dave. Good morning, everyone, and thank you for joining us today. I’d like to say a few words about what Team Summit has accomplished. Then I will hand it over to Mike to add more color. And then, Ankur will provide some updates regarding our financial position and current outlook. I’m very proud of the efforts and accomplishments of Team Summit since we have entered into our very fruitful partnership with Akeso. As we announced this morning, we have begun enrolling in our second Phase III clinical trial, HARMONi-3, in frontline population of patients suffering from squamous cell carcinoma of the lung. This is our second Phase III non-small cell lung cancer trial that is designed with registrational intent.

We have accomplished this based on and driven by conviction in our belief in ivonescimab. In just nine months since we have closed our deal to in-license ivonescimab, we have achieved these milestones with the intent of helping patients who need continuous innovation to improve quality of life and potential duration of life, consistent with our mission at Summit. Dedication to our mission and cooperating time, when and where possible, has provided Maky and me, along with our team, with success in the past, whether in networking technology, robotic surgery or with ibrutinib in the case of Pharmacyclics. Once again, we are committed to making a positive difference for patient betterment in the area of solid tumors. I’m also very proud of the organization that we have — that we continue to strengthen at Team Summit.

Highlighting this is the decision of Manmeet Soni to join us full time as our Chief Operating Officer. Manmeet is a seasoned executive with an excellent track record of success, as Dave highlighted earlier. He has also been a Board member and trusted adviser of the Company since 2019. An executive of the caliber of Manmeet joining our company and believing in our mission and pipeline, in addition to his personal investment, validates the confidence we have in our intention to make a significant positive difference to those patients who can benefit the most from the work we are doing. Also, in consideration of the accomplishments we have had as an organization, we’ve also elevated a number of specific members of our management team. Fong Clow is our new Chief Biometrics Officer.

Dave Gancarz is now our Chief Business and Strategy Officer. Urte Gayko is our Chief Regulatory, Quality, and Safety Officer. And Allen Yang is now our Chief Medical Officer. This team works tirelessly to advance Summit along with each of the leaders and team members that comprise our team. With that, I would like to hand it over to Maky to provide additional context as to our accomplishments and next steps. Maky?

Dr. Maky Zanganeh: Thank you, Bob, and good morning, everyone. I’m incredibly enthusiastic about ivonescimab, its potential and what Team Summit has already accomplished. As Bob said, we threw conviction and purpose along with our belief in ivonescimab to help accomplish our mission, to benefit patients facing difficult odds with unmet medical needs, comes the incredible power of execution of Team Summit at speed accomplished by few, if any, in the biotech space. We now have two actively enrolling Phase III clinical trials for ivonescimab. Our first trial is for those patients with non-small cell lung cancer harboring EGFR mutations who have progressed following a third-generation TKI such as TAGRISSO. We began enrolling patients in the second quarter of this year, and we can now state that we intend to complete enrollment in the second half of 2024.

As we have committed to along our tenure here at Summit, we work tirelessly to collapse time in order to achieve our aggressive but realistic goals. Our second Phase III clinical trial for ivonescimab is in frontline therapy. Those who have not yet received treatment for patients with squamous cell carcinoma of the lung, we will enroll patients in this trial across North America, Europe and China. The trial is designed to compare ivonescimab and chemotherapy against KEYTRUDA and chemotherapy in order to determine the efficacy and safety of our innovative bispecific antibody in this setting. Our conviction to move forward with all appropriate speed has been in place since we worked through our due diligence ivonescimab with Akeso. Obviously, our upfront payment of $500 million to Akeso spoke volumes about our conviction and belief in ivonescimab.

Disclosed in part at ASCO 2023, the large data set that Akeso has generated backs up our conviction of how ivonescimab plus chemotherapy performed in Phase II clinical trials supports our decision to quickly pursue a registrational Phase III study. We believe that the study data is very promising when compared with the current standard of care, KEYTRUDA plus chemotherapy and supports our decision to directly move forward into first-line therapy with our second Phase III clinical trial. In collaboration with our partners at Akeso, we published a poster further describing the mechanism of action of ivonescimab at the 38th Annual Meeting of the Society of Immunotherapy of Cancer, SITC 2023, one of the premium conferences of the year. Ivonescimab is not designed to be the same as the sequential administration of an anti-PD-1 and then an anti-VEGF.

Ivonescimab is an innovative, potentially first-in-class bispecific antibody that builds on these two established cancer targets. Ivonescimab tetravalent structure enables cooperative binding between PD-1 and VEGF. Our poster at SITC 2023 described that the binding of ivonescimab to PD-1 is actually over 18x stronger in the presence of VEGF in vitro. In addition, its binding affinity to VEGF is over fourfold stronger in the presence of PD-1 in vitro. Importantly, there is potentially higher expression or presence… [Technical Difficulty]

Operator: Ladies and gentlemen, this is the operator. We’ve had some technical difficulties. Please remain on the line.

Dave Gancarz: Thank you, ladies and gentlemen. We apologize for the technical issues. I’ll hand it back over to Maky to continue with her comments. Maky?

Dr. Maky Zanganeh: Thank you, Dave. Importantly, there is potentially higher expression or presence of both PD-1 and VEGF in tumor tissue and the tumor microenvironment, the area around the tumor as compared to normal tissue in the body. The tetravalent structure, the intentional novel design of the molecule and bringing these two targets into a single bispecific antibody with cooperative binding qualities have the potential to direct ivonescimab to the tumor tissue versus healthy tissue. Anti-PD-1 therapy assists the immune system in killing tumor cells by attaching to the port of a T-cell that actually prevent the T-cell from doing a job in the first place. Some cancer tumor cells take advantage of a built-in checkpoint on the T-cell that is intended to prevent the immune system from overreacting.

Anti-PD-1 therapy can bind to PD-1 on the T-cell, allowing the T-cell to do its job without a checkpoint or break; hence, it’s referred to as a checkpoint inhibitor. Anti-VEGF therapy helps deplete the tumor of nutrition and blood by binding to VEGF. VEGF helps build new blood cells to supply blood to the tumor. Anti- VEGF therapy also allows the immune system to better fight the tumor. We believe ivonescimab goes further than the sequential administration of an anti-PD-1 and anti-VEGF through this cooperative binding mechanisms, we just described. The intent is stronger ability in this design is to improve up on previously established efficacy standards in addition to the side effects and safety profiles associated with these two targets. Ivonescimab was designed such that the novel compound is greater than just the sum of its parts.

Our plans to continue to expand our clinical development program remain in place. Non-small cell lung cancer is only the first step. We have confidence in ivonescimab to continue to expand both in additional indications in non-small cell lung cancer and in other solid tumors during its development life cycle. Our agreement with Akeso was drawn up with this mindset. We believe strongly in the potential of ivonescimab. We have begun accepting requests for investigator-sponsored trials, IST programs, as we continue to broaden our message related to ivonescimab with the key opinion leaders as well as other physician leaders. We appreciate their high level of enthusiasts for what ivonescimab can do in and outside of lung cancer. We have received multiple inquiries related to potential IST programs that we are considering, and we expect to share additional information in 2024.

Finally, I would like to say a word about our team. Based on the accomplishments of Team Summit over the last couple of years, we have elevated certain members of our management team. I congratulate Dave, Urte, Fong, and Allen in their well-deserved new roles. I’m also very excited we have been able to attract outstanding physicians to complete our clinical development leadership team. Dr. Jack West and Dr. Laura Chow have each joined us over the past months. They have over 45 years of combined experience as practicing medical oncologists as well as substantial experience in the development of cancer treatment that now represent some of the most significant cancer therapies in present time. Dr. Jack West is a renowned lung cancer expert and Dr. Laura Chow is a trailblazer in the novel immunotherapies and anti-angiogenic treatment primarily focused in lung cancer as well as head and neck cancer.

Team Summit is a truly special place, and I would like to thank each member of our amazing team for their dedication to our mission and goals. Now I will ask Ankur to provide additional details on our financial position and outlook. Ankur?

Ankur Dhingra: Thank you, Maky. Very pleased with the progress, both in the development of ivonescimab and continued build-out of Team Summit. We believe ivonescimab has excellent potential and continue to build our development plans towards realizing that. I will give you an update on the financial developments and position as well as financial outlook for the upcoming quarter. Regarding the P&L, the majority of our spending is in research and development, focused on development of ivonescimab. We spent $15.2 million in R&D this quarter. As mentioned, we have engaged in two global Phase III clinical trials for ivonescimab, both of which are enrolling and treating patients. We’re also investing in technology transfer for manufacturing of ivonescimab in our territories.

We spent $5.4 million in general administration expenses during the quarter focused on providing infrastructure and leadership for our development efforts. We expect this quarterly run rate of spending to continue to increase next quarter as well as in 2024 as we scale both pivotal studies, adding sites and treating patients as well as continue to build our team. Similarly, investment in manufacturing capabilities will continue to increase in the next several quarters. At the same time, we continue to ensure that we remain disciplined in our approach of investment to extend our cash runway as long as possible. With respect to our cash position, we exited the quarter with $200.5 million in cash, investments and receivables. We have a loan of $100 million that matures in September 2024.

This loan has provided us significant non-diluted capital, enabling a strong foundation for development of ivonescimab via initiation of two pivotal clinical trials. Our cash position is sufficient to continue to make significant progress in the development of ivonescimab by funding the operating costs and working capital needs for HARMONi and HARMONi-3 clinical trials going into September 2024. As mentioned before, we continue to hold our cash equivalents in these investments in highly liquid and highly rated money market funds or U.S. treasuries, and all the money has been reputable U.S. and European banks. And with that, I’ll hand it back over to Dave.

Dave Gancarz: Thank you, Bob, Maky, and Ankur. We can now transition to see if there are any questions from anyone on the line that we could answer. If you can please open the line for questions.

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Q&A Session

Operator: [Operator Instructions] Your first question is from Brad Canino of Stifel.

Brad Canino: This has been a really busy quarter of external Phase III data disclosures and the tumor types for which you’re developing ivonescimab. I’m thinking specifically of the data in EGFR mutant lung from amivantamab and then some of the TROP-2 ADC broadly, in the later line setting, but knowing that those will be investigated early in frontline soon. It would be great to hear your view of this evolving competitive landscape and the opportunities that remain for ivonescimab?

Dr. Allen Yang: Yes. I don’t think it really changes too much of our landscape. We’re well underway in our Phase III program for these EGFR refractory patients. If you look at the FLAURA2 data, it was really looking at the frontline setting, and I don’t think that really changes our landscape per se. And then I think you’re talking about the MARIPOSA-2 data as well. What we think about osimertinib is that it is the standard of care for frontline EGFR mutant lung cancer. But for those patients who relapse, we think that this is a great opportunity. And we know that there’s good data for ivonescimab in this space. If you look back, there is a failure of PD-1s in this space, if you look at pembro and nivo. However, there is the ORIENT-31 study that looked at a PD-1 and bevacizumab biosimilar and that study was positive.

Getting to RYBREVANT, what we’ve heard from our sort of engagement with experts is that it is somewhat difficult to give. And so we don’t believe it will be significant competition. In addition, the EGFR refractory space is our fast-to-market strategy, and then we’re also simultaneously conducting a large frontline study in squamous non-small cell lung cancer.

Dave Gancarz: Brad, do you have any follow-up to that?

Brad Canino: That’s it for me.

Dave Gancarz: Thank you, Brad. Appreciate your question.

Operator: There are no further questions at this time. I will now turn the call over to Dave Gancarz for closing remarks.

Dave Gancarz: Thank you, gentlemen. And we have received a couple of questions from our current shareholders that I’d like to address as well. And so one of the questions relates to how clinical trials have progressed with respect to Akeso in China and Australia. And so at this point in time, I’d like to address that piece, and I’ll hand it over to Allen for any additional points. But Akeso has 23 clinical trials at this point that have either been started or have completed at this point from Phase I through Phase III. So they’ve treated over 950 patients with ivonescimab in their clinical trials, including the placebo arm have or the active control arm have included well over 1,000 patients. So the significant experience building up with respect to ivonescimab, in particular, in one of the settings, they will — Akeso will be looking to achieve approval in China in 2024 in the EGFR mutant setting in addition to continuing in multiple Phase III settings in China and Australia.

So that data is continuing to grow, and that growing dataset continues to give us confidence in our progression within our clinical development plan as well.

Dr. Allen Yang: Yes, the only thing I would say is that this is a very unique molecule. So maybe I can spend some time. This past weekend at SITC, there was a press release that’s Maky related earlier around the mechanism of action. So we do target PD-1. So PD-1, PD-L1 are well-validated targets. PD-1, of course, seems to be more popular. Ivonescimab is a bispecific in the sense it targets both PD-1 and VEGF. Now there are other strategies targeting PD-L1 and VEGF, but I believe there is a difference, and there was data released at this past ASCO for both ivonescimab and a series of PD-L1 VEGF. Now ivonescimab is also unique. Besides targeting two validated targets PD-1 and VEGF, as Maky alluded to earlier, there’s cooperative binding.