Immunocore Holdings plc (NASDAQ:IMCR) Q2 2023 Earnings Call Transcript August 10, 2023
Immunocore Holdings plc beats earnings expectations. Reported EPS is $-0.37, expectations were $-0.4.
Operator: Greetings. Welcome to the Immunocore Second Quarter 2023 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I would like to hand the call over to Clayton Robertson, Head of Investor Relations. Thank you. You may begin.
Clayton Robertson: Thank you. During today's call, we'll be making certain forward-looking statements including about financial projections, development activities, business strategy, and the timing and impact of future events. Actual results could differ materially from those projected by these statements, which are based on management's views as of today and subject to risks and uncertainties, including those noted in our most recent Form 20-F and any 6-Ks we filed with the SEC, in the earnings press release, we issued this morning. You are cautioned not to place undue reliance on these statements and Immunocore disclaims any obligation to update that. We'll also disclose certain non-IFRS measures on today's call which are reconciled to comparable IFRS measures in today's slides. I will now hand over the call to our CEO, Dr. Bahija Jallal.
Bahija Jallal: Thank you, Clay. Good morning and good afternoon. Welcome everyone. I'm here today with Brian Di Donato, our CFO; Ralph Torbay, Head of Commercial; David Berman, our Head of R&D; and Mohammed Dar, our CMO. We will answer your questions after my closing remarks. During this call, we will share an overview of our second quarter and first half of the year performance, as we continue to deliver our mission to radically improve outcomes for patients with cancer, infectious disease, and autoimmune diseases. I am proud to report that we have delivered another excellent quarter of performance, both commercially and in terms of progress with our pipeline. In the first half of the year, KIMMTRAK revenue was $111 million.
That growth reflects a robust commercial execution and the recognized benefit that KIMMTRAK provides to patients. Now approved in over 35 countries, KIMMTRAK has recently launched in four additional countries. Ralph will share some insights on the Q2 commercial execution and the growth drivers for the second half of the year. Disciplined expense management and our strong cash position allow us to continue to advance and invest in the pipeline in oncology and infectious diseases and we are thrilled to announce that we will start with the first Phase 3 randomized trial with our PRAME-targeted ImmTAC. David will walk you through the trial design today and provide an update on the durability from the melanoma patients we presented at ESMO last year.
And we have continued to treat patients in the PRAME Phase 1 monotherapy and combination cohorts with plans to present data in the first half of next year. We are also randomizing patients in the Phase 2/3 late-line cutaneous melanoma trial with KIMMTRAK. The expansion of our oncology pipeline continues as our teams are working on IND or CTA application for three new products with PIWIL on track for IND by year's end. And finally, trials with our infectious disease candidates investigating the potential for a functional cure for people living with HIV and HBV are ongoing and enrolling patients as we speak. I will now hand over to Brian.
Brian Di Donato: Thank you, Bahija. Good morning, everyone. Earlier today, we released our financial results for the second quarter ending June 30. I invite you to review the release and our SEC filings for more details. I'll share some of the key highlights. On Slide 7, you'll see the summary of our financial results. I'm delighted to report that our teams have delivered another impressive quarter of KIMMTRAK sales. Net KIMMTRAK revenue grew to $57.8 million in Q2 from $52 million in Q1, primarily driven by growth in the United States. We have now launched with reimbursement in seven countries, including Italy. I'm pleased to announce that we have reached a reimbursement agreement with Germany, which is slightly improved from our accounting assumptions.
We expect Germany to publish the price in September. Ralph will take you through the launch details. Both R&D and SG&A expenses for the quarter were broadly flat with Q1 with the net loss for the period of approximately $18 million. Year-to-date, SG&A expense includes approximately $12 million of currency mark-to-market and $14 million of non-cash share-based payment expenses. So in total, $26 million for net cash, year-to-date SG&A expense of roughly $60 million. Looking ahead, we expect R&D expense to increase gradually over time as we expand our PRAME investment. Including the new Phase 3 melanoma trial announced today. Our cash position of $435 million has continued to increase over the past three quarters, driven by KIMMTRAK revenue, U.K. tax credits, and disciplined expense management.
With that, I'd like to congratulate the teams on another great quarter and we'll turn the call over to Ralph, who will review the KIMMTRAK commercial performance.
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Ralph Torbay: Thank you, Brian, and hello, everyone. KIMMTRAK is approved in over 35 countries and we have launched in four additional markets this year, including Italy, Austria, Finland, and Israel. With U.S., Germany, and France, we estimate these seven markets represent 3/4 of KIMMTRAK's global potential sales. In Q2, we had our strongest revenue quarter-to-date with $57.8 million in net sales, up 11% quarter-over-quarter. Importantly, this represents the fifth quarter of growth. Next slide, please. There are three factors underpinning our growth this quarter. First, we saw 14% demand growth in the U.S. where we increased our first-line market share from around 50% in Q1 to 60% in Q2. The second driver of growth is that patients are appropriately remaining on therapy.
This is a result of our focus on educating healthcare professionals around the importance of continuing treatment in the presence of clinical benefit. Lastly, in Europe, nearly all first-line patients in Germany and France received KIMMTRAK. We have seen incremental growth driven by our new launches, including Italy, where the team transitioned all patients to reimbursed KIMMTRAK in a record three months. Looking ahead in the second half of the year, we see two significant revenue drivers for KIMMTRAK. In the U.S., we expect further growth from our continued educational push into the community while supporting patients on therapy. KIMMTRAK's three-year overall survival data expected later this year will be instrumental in achieving this goal.
We also expect to grow Italy and continue to launch in several additional European countries by the end of the year. Let's move on to reimbursement updates. As we shared with you in the July 6-K, the CMS in its draft rule named KIMMTRAK as meeting a unique circumstance for an increased exemption threshold. If this language is maintained in the final rule, expected in Q4, it would functionally exempt KIMMTRAK from a refund. In Germany, we successfully completed price negotiations and the agreed price will be published in September. We're pleased with the outcome, which is not materially higher than our accruals to date. The price remains confidential until publication. In the U.K., we expect reimbursement discussions will continue well into 2024.
It has become, unfortunately, more common for innovative products to receive a negative funding decision from NICE and the process to be extended. In France, we're confident going into reimbursement negotiations with KIMMTRAK having had a strong ASMR III rating from the Commission de transparence and plan to have an updated agreement in place in 2024. So to sum up, I'm delighted with our continued progress in the second quarter and we remain firmly committed to our mission of making KIMMTRAK available to over 1,000 patients per year by 2025. I'd now like to pass the call to David to walk you through our exciting R&D plans.
David Berman: Thank you very much, Ralph We continue to make good progress in our oncology and infectious disease clinical pipeline. And today, I'm going to focus on two programs. First, I'm going to share recently published KIMMTRAK data, which we believe provide insights for how we will develop PRAME. And second I'm going to update you on PRAME, including the original 18 melanoma patients from ESMO, and I'm very proud to also introduce our new Phase 3 study in first-line cutaneous melanoma. We presented the Phase 3 first-line ctDNA data for KIMMTRAK result at AACR earlier this year. And there are two points that I take from these data. First, a majority of patients are benefiting from KIMMTRAK since most patients are having ctDNA reduction.
And second, KIMMTRAK has higher activity in first-line compared to second-line based on the three-fold higher rates of ctDNA clearance. This informs for our platform including PRAME, that where possible we should strive to move to earlier lines of therapy. Also at AACR, we presented that KIMMTRAK at three years has long-term survival benefit in second-line uveal melanoma compared to historical controls. We have been following these patients to look for a long-term survival tale since this is the hallmark of other IO therapies such as checkpoints. These data are very encouraging and we will share that three-year survival update on the first line Phase 3 study later this year. The emergence of the long-term survival benefit, however, increases our confidence that this platform can be transformative to patients, and we hope to extend with PRAME to other tumors.
Turning to cutaneous melanoma. We recently published the final results for KIMMTRAK plus checkpoint combinations. Most of the data has previously been shared. However, there were several insights I would like to emphasize. First, the durability of partial responses and disease control for this combination is remarkable with some ongoing for over two years. This increases our interest to study PRAME plus checkpoints. Second, the safety profile was consistent with each therapy alone, providing confidence for combining PRAME safely with checkpoints. And finally, we have historically dosed ImmTAC's monotherapy on a weekly basis. However, we had hypothesized that we can switch to less frequent dosing when impacts are combined on a backbone of an active therapy and after initial disease control.
In this study, we successfully piloted switching from weekly to monthly KIMMTRAK at one year with most of these patients maintaining their disease control. This provides confidence for doing similar with PRAME. These are some of the many insights we are applying to the PRAME program. At ESMO '22, we shared the initial PRAME monotherapy Phase 1 data that led to the expansions in melanoma, lung, endometrial, and ovarian carcinoma as a monotherapy in heavily pretreated patients and in combination with standards of care, since this will allow us to move into early lines of therapy. We always anticipated to see signals earlier in some tumors that would provide confidence to start registrational trials. And today, I am very pleased to announce our first Phase 3 registrational trial, PRISM-301 in first-line cutaneous melanoma.
Here with the ESMO melanoma data we shared last year, which included 18 melanoma patients; seven cutaneous melanoma, all had prior ipilimumab and either nivolumab or pembrolizumab; and 11 uveal melanoma patients, roughly half of which were tebentafusp naive and have had prior tebentafusp. Here is an update on those original 18 melanoma patients. We continue to see strong durability, including partial responses ranging from 6 months to 17 months. Even in some patients with tumor shrinkage did not meet the criteria for a RECIST partial response, we see durable disease control. Some of these patients are still on therapy. The cutaneous melanoma activity is remarkable to me given these patients are heavily pretreated and the fact that F106C is being administered as a monotherapy.
As a monotherapy, the durable responses and disease control from F106C in melanoma were clearly compelling. This, coupled with the well-tolerated safety profile, our belief in combinability with checkpoints and the insights that our platform will work best in a first-line setting let us to consider opening a Phase 3 first-line melanoma trial with the primary endpoint of progression-free survival. In additional to the original 18 patients, the emerging data from the newly enrolled cutaneous melanoma patients, which although has less follow-up, increases our conviction to start the Phase 3 trial now. Finally, the platform insights into how we can design a more patient friendly and less frequent dosing regimen in first-line solidified our decision to move forward.
We had a successful Type B meeting with the FDA who agreed to the Phase 3 design and for us to start the study now. And I will walk you through that study design. PRISM-MEL301 was designed with help from global melanoma experts and input from the FDA. We will randomize previously untreated metastatic cutaneous melanoma patients who are HLA-0201 positive in two arms, the experimental arm, nivolumab plus F160C versus a control arm of either nivolumab or nivolumab plus relatlimab. The selection of therapy within the control arm will be country-specific and will not be investigator choice. This is the first Phase 3 trial we are aware of to randomize to a controller that includes checkpoint doublet. The primary endpoint is progression-free survival and the secondary endpoint are survival and response rate.
The F106C regimen, shown on the slide, reflects a growing confidence on how to dose ImmTAC when in combination with an active backbone. Because we had multiple doses that were clinically active and well tolerated, we agreed with the FDA to include an initial randomization to two F106C doses, 40 micrograms and 160 micrograms. This approach is consistent with FDA's Project Optimus. We will drop one of the two F106C doses after an initial interim analysis. But importantly, there is no pause in their recruitment and all patients in the go-forward dose are included in the intent-to-treat analysis. This is a really exciting time for us at Immunocore. The PRISM-MEL-301 study represents the first Phase 3 study for the PRAME target and for a TCR therapeutic in first-line cutaneous melanoma, which is one of the largest melanoma indications, an opportunity of over 10,000 patients per year.
The Phase 1/2 Study 101 is still enrolling the four monotherapy expansions at the 160-microgram dose. And we continue to look at the other tumors, lung, ovarian, and endometrial for the next tumor for development. Per the Project Optimus FDA discussions, we will also enroll some more patients with the same tumor types in the 40-microgram cohort, which will serve to help confirm the dose. The combinations with standard of care are also progressing and these will provide safety that will allow us to move into the early lines where we believe our platform will be most active. Finally, based on our excitement for PRAME, we are building a franchise around this target with our half-life extension and our PRAME-A24 programs on track for regulatory submissions next year.
I'm now going to hand it back to Bahija.
Bahija Jallal: Thank you, David. Thank you, Brian and Ralph. As you can see, the team is not letting up, and I'm grateful for everything they do. So looking ahead to the second half of 2023 and into next year, the commercial and medical teams will be focused on maintaining the momentum to reach patients who could benefit from KIMMTRAK globally. By the end of this year, we expect to launch in additional European countries and to achieve reimbursement agreements in France in 2024. As you have heard, our commitment to people living with cancer is expanding as we embark on our first Phase 3 trial with our PRAME-targeted therapy with the aim to randomize the first advanced cutaneous melanoma patients by first - by Q1 2024. We will also continue enrolling more patients in the monotherapy and combination cohorts of the Phase 1 PRAME trial as we investigate the potential and further indications, and will share updated data at congresses during the first half of 2024.
Finally, in oncology, we plan to submit three INDs or CTAs over the next 18 months starting with the PIWIL-targeted candidates in Q4 this year. In infectious diseases, we intend to present data next year in our multiple ascending dose trial in HIV, and we continue enrolling patients with HBV as well as with hepatocellular carcinoma in the HPV trial. To conclude, Immunocore continues to execute on our strategy, and we remain really excited by the potential to reach even more patients with our ImmTACs platform. We will now open the call for questions.
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