Good day, ladies and gentlemen, and welcome to TRACON Pharmaceuticals’ Third Quarter and 2020 Earnings Conference Call. At this time, all callers are in a listen-only mode. After the speakers’ prepared remarks, we will conduct a question-and-answer session, and instructions will be given at that time.
During today’s call, we will be making certain forward-looking statements, including statements regarding expected timing of clinical trials and results, regulatory activities, future expenses and cash runway and our development plans and strategies. These statements are subject to various risks that are described in our filings made with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2019, and subsequent quarterly reports on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements.
Now I would like to turn the call over to Dr. Charles Theuer, President and CEO of TRACON Pharmaceuticals. Dr. Theuer?
Thank you for joining TRACON’s third quarter 2020 financial results and business update call. I will begin with an update on our pipeline, and then review our recent activities. Following that Scott Brown, our Chief Accounting Officer will review our financial results for the three and nine months ended September 30, 2020. Finally, we will conclude by taking your questions.
Our developmental efforts continue to center on the pivotal ENVASARC trial, which is designed to allow approval Envafolimab in the sarcoma subtypes of undifferentiated pleomorphic sarcoma, or UPS and Myxofibrosarcoma or MFS. During the third quarter, we received FDA clearance of the pivotal ENVASARC trial protocol, and we expect to enroll multiple patients before the end of this year.
As a reminder, and Envafolimab is a potential best in class PD-L1 checkpoint inhibitor, which may confer additional clinical benefit by virtue of its convenient and rapid subcutaneous route of administration.
The ENVASARC trial includes two cohorts of 80 patients each. One cohort will receive single agent Envafolimab and the second cohort who will receive and Envafolimab in combination with Yervoy, a second checkpoint inhibitor targeting the CTLA-4 receptor that is marketed by BMS.
The trial will enroll patients with UPS and MFS who have progressed on one or two prior lines of treatment that have not received prior checkpoint inhibitor therapy. The primary endpoint in both cohorts is objective response rate by RECIST as confirmed by blinded independent central review, with duration of response being a key secondary endpoint.
In each cohort the demonstration of nine out of 80 objective responses or an 11.25% objective response rate, confirmed by independent radiographic review, defines the level of response that satisfies the primary objective of the study, which is to statistically exclude the known 4% response rate of Votrient, the only approved treatment for refractory UPS and MFS.
To reiterate, unfortunately, the one approved treatment for refractory UPS and MFS has only a 4% objective response rate. This is a clear example of an indication with a high unmet clinical need. We are studying the sarcoma subtype of UPS and MFS because they are responsive to checkpoint inhibition based on data presented at ASCO 2019 and ASCO 2020. At ASCO 2020, investigators from the Alliance for Clinical Trials in Oncology reported an impressive 29% confirmed objective response rate in patients with highly refractory UPS who received OPDIVO in combination with Yervoy.
These data builds upon data presented at ASCO 2019 showing that single-agent Keytruda demonstrated a 23% response rate in highly refractory UPS and MFS patients. The ENVASARC trial was designed on the basis of activity reported for PD-1 and PD-L1 antibodies as single agents and in combination with Yervoy in the soft tissue sarcoma subtypes of UPS and MFS.
The activity of Keytruda and OPDIVO in UPS and MFS is clear. Our target product profile based on data for these checkpoint inhibitors and sarcoma is to achieve a 15% response rate with Envafolimab as a single agent, and a 30% response rate with Envafolimab combined with Yervoy to provide data to gain FDA approval of Envafolimab as a single agent, and also in combination with Yervoy.
The dual arm design of our study provides for risk mitigation should combination treatments be required for robust responses.
Notably, BMS executed a similar dual cohort clinical trial strategy for OPDIVO in MSI colorectal cancer that resulted in OPDIVO’s approval as a single agent, and in combination with Yervoy, and both approvals were based on objective response rate.
We expect Envafolimab to be as active as Keytruda and OPDIVO in sarcoma, based on data presented at ASCO 2020, which was updated at the Chinese Society of Clinical Oncology meeting this September.
These data showed the activity of single agent Envafolimab is similar to that of Keytruda and OPDIVO in a well-defined patient population.
Single agent Envafolimab demonstrated a 32% confirmed objective response rate in 39 patients with MSI high colorectal cancer who failed three approved chemotherapy. A fluoropyrimidine, oxaliplatin and irinotecan. Impressively, this level of response was nearly identical to the 28% confirmed objective response rate reported for OPDIVO in the checkmate 142 trial, and the 33% confirmed objective response rate reported for Keytruda in the KEYNOTE-164 trial.
Each of these trials similarly enrolled MSI-high colorectal cancer patients defined by a genetic test who failed those same three standard care chemo therapies.
From a safety standpoint, Envafolimab has been shown to cause typical immune related toxicities like rash, hyperthyroidism, and liver inflammation at rates and severity typically seen with checkpoint inhibitors; however, Envafolimab is a rapid subcutaneous injection that avoids the need for an infusion. And as expected, there have been no cases of infusion related reactions.
Additionally, the overall safety profile of Envafolimab in more than 700 treated patients indicates a lower frequency of pneumonitis and kaleidos compared to intravenously administered checkpoint inhibitors.
Envafolimab’s rapid subcutaneous routes administration achieves low variability in serum levels, without the peak concentration effects noted intravenously administered checkpoint inhibitors. This potential safety advantage for the combination of Envafolimab and Yervoy could be a key differentiator in comparison to the combination of the OPDIVO and Yervoy.
One additional potential advantage of Envafolimab is based on the fact that ENVASARC enrolled patients who have progressed following only one or two prior lines of treatments, which makes them potentially less refractory than the UPS and MFS patients who are enrolled in the single Agent Keytruda for the OPDIVO plus Yervoy combination trials.
In contrast, those patients receive two, three or four lines of prior therapy, and in some cases, up to six. Collectively, we believe these data and trial protocol differences bode well for the ENVASARC study. Given the 4% objective response rate of Votrient, we believe Envafolimab combined with Yervoy could provide a transformative new standard of care for refractory sarcoma patients. Moreover, the response rate of first line chemotherapy in sarcoma is only 17%, providing the rationale for advancing the combination Envafolimab and Yervoy into first line treatment based on expected clinical response.
Given the unmet clinical need, physicians are motivated to advance Envafolimab in refractor UPS and MFS patients; as well we’ve learned that physicians are motivated to participate in the ENVASARC trail due to the unique convenience of Envafolimab’s rapid subcutaneous dosing, especially in this time with COVID-19.
For reference, Envafolimab can be dosed in less than 30 seconds in a volume of less than two milliliters without requiring the use of [Indiscernible] or another adjuvant. That is not much different than administering a flu shot.
We recently open several of the approximately 25 ENVASARC sites, which represent top US clinical cancer centers. Furthermore, we have at least one site initiation visit scheduled during each of the next four weeks. And we expect to dose several patients before the end of the year.
From a financial perspective, we estimate the cost of conducting this pivotal trial using TRACON CRO independent product development platform, including thing for Yervoy will be approximately $15 million that will be spent over the next eight to 10 quarters.
We expect six near term Envafolimab milestones this year, in 2021 or 2022. First, we anticipate dosing multiple patients in the ENVASARC trial before the end of the year. Second, we anticipate submitting early response assessment data to the FDA in the first half of next year as part of our orphan drug designation application.
Third, we intend to report recommendations by the independent data monitoring committee on interim safety evaluations expected in the first half of 2021. Fourth, we expect the availability of interim data around the time of ASCO 2021, which could serve as the basis for breakthrough designation. Fifth, we anticipate reporting final response assessment data in 2022 and six, assuming positive data, submit BOA for accelerator approval that, if approved, could allow for product launch in the US in 2023.
In parallel, our corporate partners, Reddy medicine and Appelbaum oncology are conducting multiple clinical trials, including two pivotal trials in China in additional indications, and we expect them to submit Envafolimab for approval in MSI high colorectal cancer in China this year.
We recently received the results of a third-party market assessment of TRACON commission. The analysis concluded that Envafolimab if FDA approved for refractory UPS and MFS to generate peak annual revenue of approximately $200 million in the US, assuming parody pricing to Keytruda or OPDIVO.
The adoption rate is forecasted to be relatively rapid using Envafolimab’s target product profile, which was based on the clinical results that I discussed earlier in my remarks. And importantly, the very high unmet clinical need in this setting.
Envafolimab’s sales revenue could increase further if treatment through label expansion or compendia listing into other refractory sarcoma subtypes that have been shown to be responsive to checkpoint inhibition, such as angiosarcoma, alveolar soft part sarcoma, and dedifferentiated liposarcoma, which our market assessment study indicated could generate an additional $100 million in peak annual revenue in the US.
For a total of $300 million combined with UPS and MFS. Of course, our goal is to expand the use of Envafolimab into the first line setting and the adjuvant setting in many other sarcoma subtypes that could substantially increase sales revenue.
In this regard, we are currently discussing potential trials of Envafolimab with anthracycline chemotherapy, and Envafolimab with kit inhibitor and gastrointestinal stromal tumor that may be funded by third parties.
So Envafolimab is our most advanced product candidate, we continue to progress three other clinical stage assets. TRC102, our second clinical stage assets is a novel small molecule inhibitor of the DNA base excision repair pathway that is intended to reverse resistance with certain chemotherapeutics.
The NCI supporting four ongoing Phase 1 or Phase 2 trials that are focused on patients with mesothelioma or non-small cell lung cancer.
In addition, our academic collaborators continue to evaluate biomarkers in tumor specimens from glioblastoma patients treated in a completed Phase 2 trial and in tumor specimens from patients in ongoing TRC1012 trials.
With the goal of identifying a protein or gene expression profile that correlates with clinical response. We expect TRC102 to continue to advance through NCI sponsorship in two indications. We anticipate further development in lung cancer in combination with chemotherapy and radiation therapy based on data presented at ASCO 2020, showing that TRC102 in combination with chemo radiation resulted in a 100% response rate in 15 patients with non-squamous, non-small cell lung cancer, including in three patients who had a complete response to treatments.
These data compare favorably to prior trials of chemo radiation therapy and advanced non-small cell lung cancer. The proclaim clinical trial reported an objective response rate of 36% and the Pacific clinical trial reported an objective response rate of 51% in non-squamous non-small cell lung cancer patients using alimata/cisplatin in thoracic radiation without TRC102.
We also expect further development in glioblastoma based on data showing that TRC102 in combination with Temodar resulted in durable survival in glioblastoma patients previously treated with Temodar and radiation therapy. Importantly, these prolonged survivors had a unique biomarker expression profile. Notably, in October, TRC102 is granted orphan drug designation by the FDA in malignant glioma that includes glioblastoma.
We’ll now move on to TRC253, our Phase 3 ready assets, based on preclinical data indicate our TRC253 is as active as expanding in prostate cancer cell lines and in-patient derived xenograft models. We believe there is an opportunity for this product candidate to be developed and commercialized in countries where prostate cancer patients generally do not have ready access to Xtandi.
We continue to pursue an out-licensing process to identify a corporate partner to develop and commercialize TRC253 with our primary focus being Greater China.
Our fourth clinical stage asset is the CD73 antibody, TJ4309, also known as TJ5, that we are evaluating in a Phase 1 dose escalation study as a single agent, and in combination with Tecentriq. We’re developing TJ4309, in collaboration with I-Mab Biopharma through one of our two strategic agreements with them, whereby we are responsible for the regulatory and clinical development of TJ4309 in the US and Europe, and are entitled to receive escalating portions of non-royalty and royalty payments if I-Mab elects to license TJ4309 to a third party in any region outside of China, Macau or Taiwan.
We anticipate completing dose escalation from this Phase 1 trial before the end of the year. During the third quarter, we raised a total of approximately $16 million at market prices and welcome new dedicated healthcare funds to our shareholder base. This is accomplished through multiple transactions. In late August, we executed two private placements. The first private placement was with Mobileye Capital, whereby they purchased approximately 3.1 million shares of common stock, or in lieu of common stock pre funded warrants to purchase common stock for aggregate gross proceeds of approximately $5 million.
Shortly thereafter, Mobileye and Watermill Asset Management collectively purchased approximately 3 million shares of common stock, or in lieu of common stock pre funded warrants to purchase common stock for aggregate gross proceeds of approximately $5 million.
Earlier in the third quarter, we utilize our existing equity line of credit with Aspire Capital to raise approximately $6 million. Collectively, we expect that these transactions will extend our cash runway well past the expected interim analysis through the pivotal ENVASARC trial and into 2022.
At this time, Scott will provide an update on our financials.
Thank you, Charles, and good afternoon, everyone. TRACON’s research and development expenses were $1.8 million and $6 million for the three and nine months ended September 30, 2020, respectively, compared to $3.1 million and $12.6 million for the comparable periods of 2019. The decrease was primarily attributable to lower manufacturing and clinical trial expenses related to the termination of the TRC105 program in April of last year.
General and administrative expenses were $2.1 million and $6 million for the three and nine months ended September 30, 2020, respectively, and $2.0 million and $5.9 million for the comparable periods of 2019.
Our net loss was $4 million and $12.5 million for the three and nine months ended September 30, 2020 respectively, compared to $5.2 million and $18.7 million for the comparable periods of 2019.
Turning to the balance sheet; at September 30 2020, our cash and cash equivalents total $26.5 million compared to $14.5 million and $16.4 million at June 30, 2020 and December 31, 2019, respectively. As Charles mentioned, with the $10 million at the market investments from Mobileye and Watermill Asset Management in Q3, we expect our current capital resources to be sufficient to fund our planned operations into 2022.
With that, I’ll turn the call back over to Charles.
Thank you, Scott. To recap, we continue to execute our clinical development plan around our lead product candidate Envafolimab and recently diversified our shareholder base by adding multiple dedicated healthcare funds. We have recently opened several of the approximately 25 end research sites, which represent top US clinical cancer centers and expect to dose several patients by the end of this year.
We believe the ENVASARC trial provides multiple near-term milestones and provides a potential fast to market opportunity to provide Envafolimab to sarcoma patients in significant need of a new therapy as expeditiously as possible. Addressing this high unmet clinical need is clearly important to investigators, and they’re very enthusiastic about initiating the ENVASARC trial.
We are additionally excited about Envafolimab’s convenient and rapid subcutaneous route of administration. Importantly, we believe our existing capital will be sufficient to deliver the expected ENVASARC interim data in mid-2021, which could demonstrate the potential for Envafolimab to rapidly transform the standard of care for refractory sarcoma patients.
We look forward to providing further updates in the coming months and remain confident that we have the right strategy in place to deliver on our development and business plans for the benefit of patients and shareholders. Thank you for your time and attention and we are now available to answer your questions.
Ladies and gentlemen, if you’d like to ask a question, please press star then one on your touch tone telephone. To move yourself in the queue. press the pound key again that star one ask a question.
Our first question comes from Maureen Raycroft of Jefferies your lines open.
If your telephones muted please unmute
Maury Raycroft your telephones muted please unmute.
Again to ask a question, please press star then one.
Any additional questions? I’ll now turn the call back over to Mr. Brown and Mr. Theuer for any further remarks.
We appreciate your time and look forward to discussing next quarter’s results with you. Stay safe and have a great day. Thank you.
Ladies and gentlemen, this does conclude the conference. You may now disconnect. Everyone have a great day.