Roche Holding AG (ROG) Earnings Call Transcript

Ladies and gentlemen, welcome to the Roche Virtual Early Drug Development gRED Event 2020 Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Karl Mahler, Head of Investor Relations and Roche Group Planning. Please go ahead, sir.

Yes. Thanks a lot, Sandra. Good afternoon, good morning, ladies and gentlemen. Warm welcome from our side here from Basel. This is actually the second event we do for those -- for these kind of more fundamental insights into the Roche, where we had one done for pRED a few weeks ago. We will have one in May on digital -- digitization. And today, we want to focus on Genentech's early research and development known as gRED. We have with us today Mike Varney. He is the Head of Genentech Research and Early Development of the entire setup. He will give us an overview and strategic insights. We have Andy Chan with us for the non-oncology pipeline overview part. He is the Senior Vice President at Research Biology. And we have Stuart Lutzker. He will focus on the oncology pipeline. He's the Vice President for the Oncology franchise in Early Research and Development for gRED and at the moment also Ad Interim Head for the Early Clinical Development. Last but not least, Ira, many of you also know him, Vice President, Cancer Immunology, also for Exploratory Clinical Development. And I already wanted to thank all the speakers today that they help us to give additional insight into the gRED setup. And I also wanted to thank Lisa from our team who we will you also see later on via the camera for setting up, taking the initiative on this pipeline call and also helped out to prepare the presentations. The next slide, please. You can see here on this slide, which is -- that we have -- that we do expect a short -- a strong, short-term news flow. Risdiplam will be launched in 2020. Satralizumab will make it on the market. We have 5 trial readouts for etrolizumab. PDS will read out. This is also actually from the shop of gRED, Faricimab in DME. There are lots of readouts also on the oncology franchise, and some of these assets, you will hear more about later on by our colleagues here. Next slide, please. So I thought maybe a good start to the day could be the scientific achievements which gRED had over the past years. And to put these publication -- the total publications of gRED into perspective, I mean, usually, if you have a high-energy group, whether there's -- there are lots of collaborative, large projects, I mean, you talk about several publications per year in peer-reviewed journals, I would say maybe a rule is 1 to 2 maybe of really high-quality publications in high-quality journals. And that puts the publication rate here into consideration or in perspective because Genentech has a very high rate over the past years. Know that they are particularly proud of the Cell, Science & Nature publications, every year, above 10. And then those who work in the scientific publication or in the scientific area, they know how valuable it is and how impactful that is also when it translates later on into real drugs. And with this one, I would like to hand over to Mike.

Okay. Thank you very much, Karl, and welcome, everybody, online and who is on the video. I am Mike Varney. I'm in charge of gRED. And I will walk you through just an overview to set up really the 3 presentations that we have afterwards, which -- by Andy and Stuart and Ira. So we'll start with really, we have a drill-deep science strategy. And on a long-term basis, this delivers breakthrough therapy designations and also transformative medicines. I'll show you some of that in a more quantitative way. And then Roche has a very substantial, what you might call, innovation-focused investment, which means that we spend an enormous amount of our resources in the research area really trying to understand the biology of disease and then using that information to ultimately generate transformative medicines. And I'll show you some of that in detail. We have a robust portfolio in what we would call the nononcology space made up of immunology, ophthalmology and neurodegeneration and a small effort in infectious disease. Andy will talk about that. And then we have what I would characterize certainly as an industry-leading oncology portfolio. And Stuart and Ira will focus both on the molecular oncology and on the immuno-oncology. And then we'll have a small focus really on the importance of drug platform technologies and how they ultimately drive long-term success. So if you think about the superstructure of Roche, it is really designed with a focus on innovation. And what I say here is, is on the left, you can see there, this is Slide 8, that there are 3 of what you would refer to as research and early development independent business units. These are autonomous innovation centers in effect within the organization. And our job in this early part of the effort is to find targets to develop drug candidates, to test them in the early clinical trials and to demonstrate their effectiveness or not, and then ultimately move that into what we call a worldwide execution organization, which is our pharma organization, which is manufacturing, commercialization and then importantly, the product development group that takes the molecules from the REDs and then moves them forward from there. We are geographically located in South San Francisco. And years ago, when Genentech was founded, there was a very simple rationale for that, that we are embedded in the middle of 3 of the largest biomedical universities in the world in UC Berkeley, UCSF and Stanford. And then it turns out that we are also roughly about 30 miles north of Silicon Valley where, as you can imagine, all of -- really, the kind of technology center of the world, in many respects, is just down the highway from us. Now we benefit from this proximity to these various organizations. gRED itself is roughly about 2,200 people. We've had over 20,000 patents. As Karl mentioned, I'll show you some detail on the publications. We have many collaborations. And in this local environment where we reside, there are almost 83,000 employees working in biomedical sciences in one form or another. And just funding of local small biotechs translates into over $5 billion of venture capital funding for the small company world and then over $1 billion of NIH funding in the university centers around us. Our publication record is something that I would say that we take some pride in. We publish, on average, about 400 peer-reviewed papers per year. 2019, as you saw, we did 377 of them, 13 of which were in Cell, Science & Nature. We are part of a scientific community. And as a scientist and a scientific community, it is important that we publish our work. And of course, the benefits that we get from that is that we get to progress the science, which is a good thing. But in addition to that, the outside world gets to see our science, and many things flow from that visibility. One of them, of course, is that outside scientists get to see our work and posters and in presentations at meetings or in the journals themselves. And they say, "That's pretty interesting science or that's a place that I'd like to work." It gives recognition for our scientists. Many of our scientists now are world-recognized scientists in various disciplines. And then, in addition to that, it helps us attract business partners, either in the biotech or even in the academic world, to collaborate with us to solve some of the hard problems that we are all working on. Now I just wanted to show you a little bit of, on a long-term basis, what that translates into. And if you look on the left panel here -- we're on Slide 11 now. If you look on the left panel, these are the products, the new product launches that have happened in the last 5 years. You can see the list of them. And then over the course of the last 4 years, you can see the growth of those products and the percent that they are contributing to the total revenue now, which is 31% in 2019. If you look at the right panel very quickly, you can -- just look at the green bar there, the second from the right that I put the box around. And what that shows you is the growth of those products during 2019, those ones on the left. And then if you just look at the red bars on the right in that right-hand graph there, you see that is the loss of revenue from the biosimilars in both Europe and Japan and the U.S. during the course of 2019. What you can see, just based on the size of the bars, that those products that are the new launched products in the last 5 years are actually outstripping the loss of the revenue from the biosimilars. And this is something that we expect should continue going forward. Now our approach has 4 of what we would characterize as important pillars to drive our success going forward. And from the left now, we have putting the patients first, treat, restore, cure. These are essentially our approaches for how we might develop therapeutics. We have a pillar that we call science without borders, which is -- there's an enormous amount of high-quality science that goes on outside of our doors, and we want to maximally interact with those scientists and those organizations doing that high-quality science because we want to develop partnerships. Now to the third from the left, we have the human-machine partnership. And this is really how does and how will informatics continue to contribute in new ways to find new targets, for example, or help us to essentially turn our mass amounts of data into knowledge for scientists. And then lastly, on the right, we would call this drugging the undruggable, and I'll show you a little diagram that really illustrates what this means. But the bottom line here is that all the easy targets are done. What's left behind are the hard ones. And now it's really left to us to figure out how to attack these very difficult targets. And then we have a cultural approach that we take to pursuing our science, and that is really clear the path. And the very simple concept there is, is that if there is something in the way of a scientist and that gets in the way between them and the patient, then they should feel free to move that hurdle out of the way and then ask for permission later. We work in 5 therapeutic areas primarily: oncology, neuroscience, ophthalmology, immunology and infectious disease. We have an opportunistic area that is basically, we do a lot of pathway investigation. And if we find targets in those pathways that could impact the disease, we bring that to the table for consideration. And then on the bottom, I've listed treat, restore, cure. And you can think of this really as the approach that we would take. In certain circumstances, we might be able to treat somebody with the disease. In other circumstances, we might be able to restore lost tissue to treat that disease. And then really, the ultimate goal in the end is for us to find cures for some of these very recalcitrant diseases. There's a particular approach that we take scientifically that we would call the drill-deep science approach, and I'll just illustrate this using 2 examples. So the drill-deep science approach starts with a deep biological insight of a pathway that we know that pathway, when modulated, can impact diseases that we care about. And on the center there, we have the HER2 pathway, I'll use as an example. And then on the right, we have the B-cell biology and the various growth pathways and control pathways in the B-cell lineage. So initially, of course, what we did using this understanding is we developed Herceptin, and then on the right, in the B-cell space, Rituxan. And then with that deep knowledge, of course, we expanded our labels and various other forms of HER2-positive breast cancer and then in other B-cell type diseases. Now we could have stopped here and this would have been what I would characterize as a reasonable successful endeavor, but we developed all those biological insights and we knew there was more to drill out. So now you can just look in the HER2 space and you can see that we've drilled out Kadcyla and Perjeta out of the HER2 space using that deep insight that we have developed. And then in the B-cell lineage, quite a number of products have come out of this, Gazyva, venetoclax and more recently, Polivy. And then as you can see, and with this deep knowledge, we can even push deeper into other areas outside of those mainline original indications that we have pursued with Rituxan in immunology and rheumatoid arthritis and then more recently, OCREVUS, which has transformed, really, the treatment paradigm for multiple sclerosis. Now what you get with this kind of an approach over time is you develop transformative and/or breakthrough therapies. And so over the last 7 years, for example, Roche as a broad organization has had 31 breakthrough therapy designations as defined by the FDA in this case, and this is an industry-leading number of breakthrough therapy indications over the course of -- since really the concept was invented. Now if you look long term and you say, "Well, what's special about our launches," I think for me, what would really be the defining characteristic is that 70% of our new drug launches are first-in-class molecules either because they have a new mechanism or they have a different approach to a known mechanism that allows you to improve on a previous drug. So this visibility, as I mentioned, in the scientific community, does provide us this opportunity to really be viewed as the partner of choice by the outside innovators, be that companies or the academic world. And this slide really just illustrates Slide 17, a number, a small number of the deals that we and gRED did last year. Now let's look forward for a second before I hand it over to the other speakers and really kind of set the stage for the difficulty of what the endeavor is that we are involved. In the human genome, there is estimated roughly 20,000 functional genes. And it is estimated and, of course, this is still something that is not defined really and not counted, but estimated that roughly about 1/5 of those or 4,000 of those genes, if you modify those genes, you can modify a disease. Now what's interesting is, is in the red circle there, you see that 3/4 of those disease-modifying genes have so far been undrugged. Only 1/4 of them in the green circle have been drugged. Now of course, that green circle, that was the easy targets that were developed and chased using old technology. What we are left with, as I always like to say, is basically, we are left with making the molecules that nobody has made the drug -- the targets that nobody has drugged. So that's the kind of -- I mean that is really the task that is at hand. So now in our research organization, we essentially live in this undruggable space. Now the approach that we take to that is what we would call a platform diversity approach, and that is that you don't make a molecule to attack a target because that's the molecule that you can make. You make a molecule to attack a target that, that target needs. And to do that, you need to have access to and/or the skills to make these various kinds of molecules. And I just illustrate a number of them ranging from peptide macrocycles to bispecific antibodies to antibody drug conjugates to degraders to cystine kinase knots -- I mean cystine knot peptides, for example, and of course, a number of the undisclosed drug platforms that we will talk about as we go forward in the future. But really to say that it is this approach that we -- what is the molecule that the target needs and what kind of molecule does that need to be to effectively attack the target, and that is the approach that we are currently taking and will be taking moving forward. Here is our current portfolio here. And what you can see is, is in the dark blue, roughly 50% are oncology programs; roughly about 30% in the light blue are immunology programs, which is a broad space; and then the remainder of the portfolio, roughly 20%, is made up of neuroscience, ophthalmology and infectious diseases. So with that, I will go ahead and hand it over to Andy Chan who will talk about the nononcology pipeline.

Great. Thank you, Mike. So I want to share with you a few highlights today from our additional areas of focus. Stuart and I, we're going to cover the oncology portfolio. And here, I'm going to just give you highlights in the areas of neuroscience, ophthalmology, immunology, infectious diseases and other scientific opportunities. And today, I'm going to give -- today, I'm going to begin with a deep -- a little bit of a deeper dive in our efforts in inflammatory bowel diseases and then provide you with an update on our ongoing efforts in Alzheimer's disease for neuroscience and geographic atrophy for ophthalmology and then close my section with our commitments for combating antibiotic resistance, and then we'll turn our discussions over to oncology. So beginning our discussion in inflammatory bowel disease. IBD consists really of 2 forms: ulcerative colitis and Crohn's disease. Disease onset typically begins early in life, in the second or third decades of life, and it's chronic in nature. In ulcerative colitis, there's a long-term increased risk of colon cancer. And with Crohn's disease, patients are subjected to frequent surgeries due to usually the development of intestinal strictures. In the right here, the disease is actually quite multidimensional. Common genetic variations account for only about 10% of disease liability. And environmental factors and in particular, data over the past 5 or 6 years have demonstrated that in inflammatory bowel disease, a limited diversity in the microbiome is associated with disease. There is significant immune dysregulation, and this is where the therapeutic focus of the industry to date has been on immune modulators. But central to inflammatory bowel disease, human genetics, clinical as well as preclinical data all implicate a defect in the epithelial cell barrier that separates our intestinal microbiome and the host. So our lead program, originating from gRED, is etrolizumab. Etrolizumab targets 2 gut-specific integrins, alpha 4 beta 7 and alpha E beta 7. And targeting alpha 4 beta 7 limits and prevents the homing of T cells into the lamina propria of the gut, while targeting of the alpha E beta 7 integrin interferes with the retention of intestinal epithelial lymphocytes in the gut. And the second mechanism is unique to etrolizumab as vedolizumab only prevents homing and only targets the alpha 4 beta 7 integrin. Importantly, what we in the field have demonstrated over the past decade is both of these lymphocyte populations are pro-inflammatory in the human intestines. And in preclinical models shown here in the bottom left, targeting both integrins is superior than just targeting one in decreasing intestinal inflammation. So we have broad and robust Phase III development programs in both ulcerative colitis and Crohn's disease with 6 Phase III clinical programs and 2 rollover open-label extension studies. In the upper right, you'll see that we have recently reported the first cohort of our BERGAMOT Crohn's disease study where 70% of the patients were actually TNF inadequate responders. And we're encouraged with the clinical activity that was seen in this cohort, in particular, the rapid onset of symptomatic remission as well as in the improvement in objective endoscopic scores. These studies will be reading out probably by about mid part of this year. And the growth of administration, the speed in which efficacy might be afforded in patients and the overall efficacy are encouraging for us in terms of differentiating this drug, etrolizumab, compared to the rest of the field. So moving on from the immunomodulators. As I told you earlier, the epithelial barrier is central in this disease. And our Phase II interleukin-22 cytokine program represents a novel nonimmunosuppressive approach to inflammatory bowel disease. So the cytokine actually has multiple different mechanisms. It heals the epithelial cell barrier. It stimulates intestinal stem cell growth. It increases production of mucus and antimicrobial peptides by the gut epithelium so that it can restore a more diverse microbiome. And these -- each one of these mechanisms have been demonstrated by preclinical studies. In our Phase I clinical studies, the cytokine is well tolerated and has an acceptable safety profile. And in a sample patient, in the lower left here, from our Phase Ib ulcerative colitis study, while this patient's baseline colonoscopy on the very bottom left at day 0 revealed significant mucosal ulcerations and hemorrhage, the posttreatment colonoscopy at day 80 revealed a normal colon. Concurrently, their clinical symptoms and the Mayo Clinic scores also improved. So based on these and additional biomarker data, we're presently conducting a Phase II proof of concept, dose ranging and head-to-head comparative study using vedolizumab in patients with moderate to severe ulcerative colitis. Each treatment group receives an induction regimen for 3 months, and the durability of response will be assessed by the re-randomization of responders to the maintenance as well as placebo groups. In the -- we're extremely excited about this approach because of its nonimmunosuppressive mechanism. And we will further assess how best to be able to combine this nonimmunosuppressive modality with existing immunomodulators that include etrolizumab, the anti-TNF and other therapies to be able to maximize clinical benefits for patients. We are also advancing a third novel -- nonimmunosuppressive therapy that preserves epithelial cell survival in Phase I clinical trials. So these 3 assets, I think, illustrate for you how we're taking a multipronged approach to address the various different mechanisms that contribute to disease in -- for patients with inflammatory bowel disease. So moving on from gastroenterology into neuroscience. I would just like to briefly highlight our anti-tau program for the treatment of Alzheimer's disease. The 2 pathological hallmarks of Alzheimer's disease are the presence of amyloid extracellular plaques and intracellular neurofibrillary tangles. And these neurofibrillary tangles consist of hyperphosphorylated forms of the tau protein. In addition to AD, the presence of tau deposits are also seen in a number of other neurodegenerative diseases that include frontal temporal dementia, Parkinson's disease and a number of other tauopathies. And in contrast to amyloid deposition, which is diffuse and global, tau deposition occurs in a temporarily coordinated fashion. And as shown in the upper right, it begins in the brain stem and then spreads to the allocortex, which includes the olfactory system in the hippocampus before extending to the temporal and associating cortices. And while amyloid deposition occurs decades prior to loss of cognition, as shown in the bottom right, we in the field have demonstrated that the tau deposition and the presence of these neurofibrillary tangles correlate well with a loss of cognition. To support our anti-tau antibody program, we have developed a PET probe to detect tau. Our tau PET probe, GTP1, correlates well what has been described pathologically, and this is just shown to you in the bottom left, where early on, it goes -- it lights up in the brainstem before extending into the cortices. And importantly, this probe allows us and permits us to have an important pharmacodynamic tool to be able to support our anti-tau program. So at present, our Phase I study, which we just reported last year, the drug was very well tolerated at single doses up to 16.8 grams and also well tolerated in our multi-dose regimen of 4 weekly doses of 8.4 grams each. And shown in the right, the pharmacodynamic response based on the plasma accumulation of tau appear to saturate at about 4.2 grams. So based on these Phase I data, we're presently advancing and evaluating anti-tau in 2 indications. The Tauriel program is a 72-week double-blind placebo-controlled trial in prodromal and mild AD. The primary outcome endpoint is the Clinical Dementia Scale Rating Sum of Boxes, CDR-SB. The Lauriet is also a 48-week double-blind placebo-controlled trial in moderate AD. And the primary outcome measures here are twofold: the AD assessment scale, the cognitive subscale, ADAS-Cog11, and the ADCS-activities of daily living. Both studies also have an optional open-label extension, and we're very excited to see how our anti-tau program impacts patients with both of these forms of Alzheimer's disease. So moving on to ophthalmology. A program that we've recently publicized is our anti-HtrA1 protease antibody program for geographic atrophy. So the HtrA1 arms to gene locus on the long arm of chromosome 10, has strong linkage equilibrium for the development of age-related macular degeneration. Our internal data, including eQTL data, supports that HtrA1 is the causal gene because there are 2 genes within this locus. So HtrA1 is a serine protease that's expressed by the retinal pigmented epithelial cell and regulates the extracellular matrix in the eye. It forms a trimeric structure and, when overexpressed in mice, causes corneal neovascularization that compromise the retinal vasculature. We have developed a high-affinity potent humanized Fab fragment for intravitreal use in geographic atrophy. And in our Phase I study of patients with geographic atrophy, it was well tolerated with no dose-limiting toxicities. And shown on the bottom right here is one of our pharmacodynamic markers demonstrated that the HtrA1 Fab can inhibit greater than 80% of the baseline substrate protease activity and that this PD effect is sustained at least for 8 weeks and enables our present Phase II proof-of-concept study in geographic atrophy. And finally, in this precarious time when we're facing the COVID-19 epidemic, we have to be vigilant of all infectious threats. And hence, I'll end my session with -- by reiterating our commitment to antibiotic-resistant gram-negative bacteria. Enterobacteriaceae, Klebsiella, Acinetobacter and Pseudomonas represent WHO's Priority 1 infectious threats. And we have discovered and are developing a novel class of antibiotics against lepB, which is a type 1 signal peptidase that is essential for gram-negative bacteria viability. Our lead candidate is potent. And as shown in the bottom -- it's extremely potent, as shown in the bottom left, and is efficacious in multiple preclinical models of infection that's shown in the bottom right. And since it is a novel target, there is a low intrinsic resistance at this juncture of time. And we are looking forward to the advancement of this novel antibiotic mechanism with first-in-human studies in 2020. So this concludes my highlights of a handful of projects on the OMNI portfolio. I only had an opportunity to talk about a very small portion, and there are a number of different additional mechanisms of action that are novel, that will -- to pursue a number of different therapeutic areas. And so on this, I'm going to turn our discussion over to my colleague, Stuart Lutzker, to start the oncology discussion.

Yes. And, Stuart, before you start, just one thing. In the very beginning of the webcast, there was obviously an issue with the external link, but everything works well. And we have at the moment about 250 people on the webcast. So -- and 160 people, actually, via the phones. We have lots of people attending. I just wanted to make sure that everybody gets the right access to this webcast however they want to access it. So just to make sure, if you want to try it again via webcast. If you're not in already, please try it again, but it doesn't seem to be a major issue because we have lots of people on, but just to make sure. Thank you.

Great. Okay. I'm going to continue with an oncology pipeline overview. My name is Stuart Lutzker. I head the Oncology Early Research and Development group. And as Mike spoke to, we have access to a broad number of platforms that we utilize for developing therapeutics. And this is very much evidenced in our oncology portfolio, which includes drugs such as antibody drug conjugates, which kill tumor cells directly, and having launched Polivy last year in DLBCL. We also have access to a number of other platforms, including bispecific molecules, which kill tumor cells by directly engaging the immune cells either through CD3 in the case of T cells or CD16A for NK cells. We also employ antibodies and engineered cytokines to amplify the endogenous adaptive immune response and have recently moved into newer platforms such as personalized mRNA vaccine and personalized engineered T cells where we are stimulating the adaptive immune response or engineering T cells to directly seek and kill tumor cells. So I'm going to provide you with some updates to some molecules in this portfolio, and I'm going to start with the small molecules, which have been utilized in our molecular oncology program to target oncogenes and key growth pathways within the tumor. So the first one to talk about are our small molecule efforts targeting the PI3-kinase/AKT pathway. This pathway is activated in a large number of human tumors. Most frequently, this occurs through mutations in the PIK3CA gene, which encodes the alpha isoform of PI3-kinase. And you can see that these mutations occur across a broad array of solid tumors with the highest frequency being present in HR hormone receptor-positive breast cancer at 40%. And you can see overall that 17% of human cancers harbor mutation in PIK3CA. So this is a large opportunity to benefit cancer patients. GDC-0077 is an alpha-selective PI3-kinase inhibitor that we've moved into clinical development. This is selective for the alpha isoform and by being selective, provides a broader therapeutic window for this molecule. Interestingly, this molecule also appears to have a preferential ability to degrade the mutant form of PI3-kinase alpha over the wild type, and this also contributes to the therapeutic index of the molecule. Preclinically, this molecule is extremely potent and in nonclinical studies, had a great -- had improved safety margins over prior PI3-kinase inhibitors that we had moved into the clinic, such as Taselisib. And the improved therapeutic index of this molecule, we believe, potentially will allow combination therapies to be brought forward with standard of care agents such as in hormonal breast cancer, estrogen therapies as well as CDK4/6 inhibitors. So at the San Antonio Breast Cancer Conference in 2019, we presented the initial first-in-human data for GDC-0077. This comprised a single-agent dose escalation and expansion phase of the program. This was Arm A where we declared 9 milligrams is the recommended Phase II dose. And in the single agent, we saw approximately a 22% response rate in HR-positive breast cancer patients harboring a PIK3CA mutation. And this response rate is higher than what has been seen with other PI3-kinase inhibitors, which really speaks to the potency of this molecule. We also conducted combination studies with standard of care agents in hormonal -- HR-positive breast cancer. This includes estrogen therapies such as letrozole and fulvestrant as well as combination with CDK4/6 inhibitor, in this case, palbociclib. And what was gratifying from these experiments is that we're able to utilize the same single-agent recommended Phase II dose, 9 milligrams. That was also the recommended Phase II dose in combination with these standard of care agents. So Arm B was the combination arm that -- where we had the fullest data set, which I'll drill down a little bit in this slide. As I mentioned, we're able to combine it with the 9-milligram dose. And you can see in the right panel the waterfall plot of the response rate that was seen in the expansion cohort of this Phase Ib study, demonstrating a very significant overall response rate of 52%. I should note that this was a very heavily pretreated population, many of these patients having received multiple therapies in the metastatic setting, including fulvestrant as well as harboring poor prognostic features, such as liver metastases. And this molecule now has moved on into Phase III studies, which I show here on this slide, this is Slide 42. This is a study in first-line PIK3CA-mutant HR-positive breast cancer, which we'll compare GDC-0077 plus palbociclib, plus fulvestrant to the control arm, palbociclib/fulvestrant. This is the PALOMA 3 regimen in first-line HR-positive breast cancer. So continuing in HR-positive breast cancer, I wanted to speak to you about our development of selective estrogen receptor to greater molecules, in this case, GDC-9545. At Genentech, we've had deep research into this -- the estrogen receptor signaling pathway, and this research has recently resulted in a publication from Genentech scientists. They've really refined the model around how SERDs operate and demonstrates that SERDs that have the ability to be fully antagonistic, these are molecules such as fulvestrant as well as GDC-9545, they actually function through a mechanism where they prevent the mobility of the estrogen receptor on DNA. And as a result of this immobilization, then subsequently causes the degradation of the estrogen receptor. And these molecular insights into how estrogen receptor inhibitors can function really led us to the development of GDC-9545, which we believe is a best-in-class SERD molecule. Importantly, this molecule is orally administered unlike fulvestrant, which is an intramuscular injection. And GDC-9545 also has been extremely potent as well as having good PK properties that allow us to fully inhibit the estrogen receptor pathway. And in nonclinical studies, this molecule also had very wide safety margins, which, in fact, allowed us to enter into the clinic at what were therapeutic doses. On Slide 44, I'm showing you some of the data from the Phase I dose escalation. And you can see in the waterfall plot that efficacy was seen across a range of dose levels, including the first dose level, 10 milligrams, responses we're seeing in patients who had prior fulvestrant as well as prior CDK4/6. And we also saw activity in patients that had ESR1 mutations, which speaks to the ability of this molecule to potentially prevent the immersion of ESR1 as a resistance mechanism to hormonal therapy. Further data is being collected in the expansion cohorts in combination with CDK4/6 inhibitors. The safety of this molecule has also been very acceptable. You can see in the right panel that the -- we've seen no Grade 3 adverse events. Mostly, we've seen Grade 1, 2, and no patients have had to withdraw or reduce the dose due to adverse events. Bradycardia has been, what we believe, an on-target toxicity. This is a sinus bradycardia, all Grade 1, asymptomatic and reversible. And this safety profile has allowed us to advance this program to Phase III, and we hope to be initiating Phase III study shortly. Turning to our immune cell bispecifics. These are molecules that engage the immune system through one arm, either the CD3 arm in the case of T cells, or in a new platform we're developing through CD16A to activate NK cells. We have 3 clinical stage programs, one, CD20/CD3. This is mosunetuzumab for B-cell malignancies. We're also in the clinic with FcRH5 for multiple myeloma and a -- one against HER2 for breast cancer as well as eventually, we hope, gastric cancer. We also have a pipeline of molecules coming up behind where we will take advantage of the scientific and clinical insights that we've learned from these clinical stage molecules and advance these other molecules in the future. Showing some of the -- just some mechanistic insights into these molecules. People are aware that the CD3 bispecifics activate T cells through the CD3 by the T cell receptor complex and by forming an immune synapse to directly kill tumor cells. Importantly, this is an off-the-shelf therapeutic and unlike CAR Ts, does not require a prolonged manufacturing step so that all patients potentially can benefit from these therapies. Mosunetuzumab is our most advanced bispecific molecule that's currently in Phase I study in indolent and advanced NHL. The -- here, I'm showing you the data from -- that we've shown at the ASH meeting and this is an aggressive NHL. Showing in the waterfall plots as well as the table on the right, the high response rate, including complete responses that we're seeing in aggressive NHL patients, response rates of approximately 20%. Importantly, we also enrolled patients in the study who had previously received CAR T therapy. There are about 18 patients with previous CAR T. And the response rate was also -- the CR rate in that patient group was also about 20%, really speaking to how broadly these drugs can work. We've also conducted studies in follicular lymphoma. And there, the response rate is about 40%. And these responses have been quite durable even off drugs. So these drugs definitely have a significant potential for patients with NHL. And finally, just one slide on our iNeST, our Individualized Neoantigen Specific Immune Therapy. This is a personalized cancer vaccine that's manufactured for each patient based upon neoepitopes derived from mutations in coding genes that we identify in each patient's tumor. This then goes into a manufacturing step and that eventually allows us to provide a personalized cancer vaccine for all patients. We've been in the clinic with this program, conducting Phase I testing. And we've recently moved the program into Phase II, a trial in first-line melanoma as well as a trial in high-risk ctDNA positive adjuvant non-small cell lung cancer patients. I should mention that this is a liposomal formulation, which allows for systemic delivery with iNeST. And we hope to be able to provide some of our initial clinical data in the first half of 2020. And with that, I'm going to hand over to Ira who will provide some of the scientific basis for our cancer immunotherapy portfolio.

Thanks, Stuart. I think in the interest of time, I'll both be quick and skip over a few slides, and I'll let those who are not watching online know what slide I'm on by giving you the numbers. So just start here very briefly. We believe that we're still at very much the beginning of our understanding of the interplay between the immune system and cancer. And as a result, there's a lot to discover and a lot of new agents that have promise for patients yet to be developed. This is captured, I think, from a financial point of view, if you look at the fact that, by all estimates, new immunotherapeutics are, in fact, going to be the largest- and fastest-growing segment of the oncology market and therefore, the armamentarium that one can use for patients. Now this is on Slide 51. Just a brief comment that because we're both developing drugs and learning at the same time, can't really distinguish or can't separate between those 2 acts. From the very beginning, we've understood that every time we went to clinical trial, every time we treat a patient, there is an opportunity to learn about specifically this issue with how the immune system interacts with cancer. And as a result, almost all of our trials are accompanied by very detailed and aggressive biomarker studies that inform us about human immunology and cancer immunity as much as they inform us concerning whether or not a particular drug is performing the way we want. Now on Slide 52, I just want to say, we've taken a very systematic approach in terms of how we've developed these drugs. Of course, we started with our own in-house product, Tecentriq and were first to establish a beachhead by looking for those areas where Tecentriq could perform as a single agent, so this was the Wave 1 studies. We're now well into Wave 2 where, based on our mechanistic analysis, we understood that immunotherapeutics, such as Tecentriq, could be combined with existing cancer drugs and cancer medications. A number of these studies are ongoing, and some of them, in fact, are either approved or coming close to approval as a result. Wave 3 really represents a new space that we are just starting to get into, which represents the combination of Tecentriq or other modulators with another immunotherapeutic, not necessarily a prior approved cancer drug. One example of that, Stuart already gave, which is in the case of combining bispecifics such as mosun together with Tecentriq, and I'll turn to TIGIT and IL-15 in just a moment. And Wave 4, I think, enter into what I consider to be truly drugging the undruggable, which is coming up with personalized cancer treatments for each individual patient. And as Stuart mentioned, the iNeST vaccine program is one such example. When we look at cancer from an immunologic perspective, we break it down into 3 parts or 3 general types: immune inflamed, immune-excluded and immune desert tumors. These exist over all cancer indications that we know of, albeit at different extents. And this image, I think, frames the problem really very clearly, which is that those patients who don't respond, to a very large degree, don't respond because they haven't -- have an immune phenotype that is not addressed by the particular agent that is currently being used, in this case, the PD-1, PD-L1 blockers. So patients exhibiting the immune-excluded phenotype may have the T cell response, but those T cells are unable to enter the tumor as a consequence of being sequestered in the tumor stroma surrounding it. So we put all of this in context and try and understand what types of drugs are needed to overcome the rate-limiting steps associated with these lack of responses. I won't go through Slide 55. This is really for those of you who are interested to get some idea what the range of studies and agents that we're developing look like. And here on Slide 56, let me turn to TIGIT because I suspect this is probably a topic of interest to many of you. There are many modulators that exist on T cells. Some of them are positive regulators, some of them are negative regulators. Many of them are being explored in the clinic throughout the field. So an immediate question that comes up, why TIGIT? I think one of the reasons we've been interested in this is because we know a lot about it. TIGIT, in fact, was discovered at Genentech. We know that it's a negative regulator, but it has a specific target, which is CD226, which is a positive regulator. So one comes up with a mechanistic hypothesis very quickly. It's widely distributed in a wide range of cancers. And I think the most recent evidence that we have, which is really changing our entire concept about how these checkpoint inhibitors work, these PD-1 blockers as well as TIGIT, is that it works perhaps in addition to, but separately from the reversal of T cell exhaustion by enabling the expansion of tumor antigen-specific T cells. So this is the diagram previously published showing, on Slide 57, how TIGIT works. As I said, it's a negative regulator that complexes with CD226, which is an essential positive co-stimulatory molecule on T cells, both by interacting with it directly and directly competing for a shared ligand, PVR or CD155, so blocking the ability of TIGIT to bind PVR, enable CD226 to bind it and, therefore, creating a positive stimulus for T cells. This is just the obligatory preclinical data. Again, this has been published, I won't dwell on it. But what I do want to tell you about, because it's, I think, important to understand a part of the answer as to why TIGIT, is how we believe it works. So you're looking here on Slide 59, at a diagram that shows a lot of complexity with respect to how we believe T cells differentiate during the course of immune response, particularly to cancer. And the 2 red arrows that you see pointing up indicate the likely sites at which checkpoint blockade works. Thus far, the arrow on the right is the one that's really garnered the most attention, and that has to do with the hypothesis that blocking checkpoints will reverse the process, will prevent the process of T cell exhaustion, seeing to it that there are more functional T cells present in the tumor. This is probably true, although I must say the evidence for it is not overwhelming, but where there is starting to be overwhelming evidence is at a much earlier step where blockers, such as PD-1 and PD-L1 antibodies, such as Tecentriq, act on a recently discovered compartment of T cells referred to here as T stem-like memory cells, allowing them to expand and thereby geometrically enabling the production of more antitumor T cells. Now the one negative regulator, aside from PD-1, that is expressed by these T stem-like memory cells is TIGIT. All of the others on the list that you looked at on Slide 56, in fact, are not there, so that we feel that a compelling hypothesis is to find both a TIGIT blocker and PD-1 blocker on this critical key and small population cell type, the stem-like memory cells to enable their optimal expansion. Now how can you make all of these types of blockades work better? Again, if you're looking now at a situation where a large component of the activity of checkpoint blockade reflects the production of more T cells, and that is to supply patients with a cytokine that, in fact, can help with that. We've chosen to partner with Xencor to develop IL-15 or actually unique IL-15 construct that contains both the signaling or receptor-binding subunits as well as the high-affinity receptor as a complex, as shown here, which can be administered IV or in the skin to patients and has been optimized with respect to its pharmacokinetic characteristics to maximize the therapeutic index. So this is now on Slide 61. You're looking first at the first molecule that's just entering the clinic, which is an unadorned IL-15, IL-15R alpha. But waiting in the wings, not too far behind, is a targeted version of this molecule in which we've also fused an antibody moiety onto the IL-15, enabling us to target the IL-15 to whatever cell type we wish to target it to, thereby perhaps further increasing the therapeutic index. Now just to finish. I'll just close with one last thought, which is Stuart's already brought up to the fact that we have gone into the area of personalized cancer vaccines via our iNeST program. The reason for doing this is compelling, even though it is a very difficult enterprise. And that is because the evidence has been collected over the last several years, shows that the ability of cancer to generate mutations that drive the cancer also drives the acquisition of neoepitopes that can be recognized by a patient's T cells, and those T cells can also be stimulated in a variety of ways. So this first image on Slide 62 shows that, in general, T cells that are specific for neoepitopes are better than those that are specific for shared epitopes. Patients who have high tumor burden generally do better than those who have low tumor burden. And here, an experiment from Steve Rosenberg's lab at the NCI shows that if you administer T cells that are specific for a KRAS neoepitope, the G12D epitope harbored within the MHC HLA-C08 allele, you can actually resolve tumor lesions that are positive for this. So we've engaged with biotech to start an RNA vaccine. I won't dwell on this. Data from this will be coming out later this year. And Stuart has already told you about the new studies that are underway. I will now just end by saying we've also entered into another collaboration, which I think is even more exciting in a number of ways, to finally get into the area of cell therapy but also do this in a personalized setting. This is together with our colleagues at Adaptive Biotechnologies in Seattle. Here, what we do is look for both shared antigens and private antigens. In other words, new epitopes associated with patients, individual tumors, isolated T cell receptors that are specific for either or both of these isolated T cells from patients introduced by CRISPR, these TCRs or T cell receptors back into the T cells, and then we'll be administering these T cells into patients. Now this is a laborious process, but I think buoyed by our ability to have operationalized the vaccine approach, which is equivalently difficult with a turnaround time of 4 to 6 weeks, routinely now. Having gone through that workflow, we feel that we can very easily enable this workflow to also be able to produce patient-specific drugs in a reasonable and good time frame. So I think with that, let me turn it back to Karl to enable you all to ask questions. Thank you, Karl.

Yes. Thanks a lot for your help and your support. Just information for you. We have about 420 people now online via the webcast or via the phone. You can ask questions either via the webcast or the phone. And with this one, I would like to open the Q&A. Operator, the first question, please?

[Operator Instructions] Our first question comes from Tim Anderson from Wolfe Research.

A few questions on TIGIT. We've been tracking the program if only because there's been a randomized Phase II trial running looking at TIGIT plus Tecentriq versus Tecentriq in non-small cell lung. And now that program for TIGIT has advanced into Phase III, yet we haven't seen the Phase II data yet. So trying to understand what we may see in first half in terms of data presentation. Are we seeing the non-small cell lung cancer data? The reason I ask is that the Phase III program you're beginning is in small cell, not non-small cell. And can we assume that the Phase I/II data you have in hand at this point only supports advancing into small cell? And then lastly, on TIGIT, how -- in this Phase II trial that is now starting up in small cell, how are you enriching this trial? For example, is it only where you have T cell infiltration that can be confirmed by biopsy, for example?

Yes, well it's all yours now.

I think, well, Stuart may want to jump in as well, but the Phase I trial in expansion, although it wasn't a randomized trial, did cover multiple tumor indications. And we saw signals in them. And, of course, whenever you combine with an active agent, you don't know for sure whether or not the signal that you see is due to a combination effect or just your active agent is performing exceptionally well, which is the reason for the randomized Phase II. And the first Phase Ib data will, I believe, be out at AACR and the Phase II data, which did give us a lot of confidence to move forward with any place we saw a signal, will be -- we presented at ASCO. Do you want to add anything, Stuart?

Yes. The only thing to add is that we've included biomarker studies across all these indications, and we really feel that TIGIT will work broadly in -- particularly in solid tumors based upon the scientific understandings that Ira just presented. And the actual design of the small cell study, I can't comment on that, but obviously, health authorities have accepted that Phase III study. So we look forward to being able to enroll that study and present that data once the study is concluded.

Yes. I think just -- confidence in this comes from the randomized Phase II data, which I think differentiates this program significantly.

And so is that the data we're going to see first half is the non-small cell randomized Phase II, the ASCO data you referenced?

I mean we plan on presenting the data from the Phase Ib study, which was a large Phase Ib study. But as Ira pointed out, not randomized. And we will present the data from the randomized Phase II study in non-small cell lung cancer as well. And I think it really speaks to the importance of conducting randomized studies in the cancer immunotherapy space, particularly winning your diseases that are responsive to PD-1, PD-L1 inhibitors to really demonstrate, are you adding to standard PD-1 checkpoint inhibitors with your second immunotherapy drug? And I think the data that we have is very consistent across the Ib and the Phase II, and that's what gives us confidence.

The next question comes from Andrew Baum from Citi.

Three short questions, please. Firstly, Ira, could you comment for TIGIT on the potential in Microsatellite Stable colorectal cancer, which obviously is a non-PD-1 reactive indication with an unmet medical need? And then separately, you talked about solid tumors, but there is some preclinical data suggestive of a role in myeloma. That's the first question. Second question, could you confirm that you have already Phase I data combining tiragolumab, your TIGIT antagonist, with chemo? Obviously, you've moved it into a combination in small cell, but it wasn't apparent that you had combination data from earlier stages just that define tolerability. And then finally, obviously, there are a number of other competing TIGIT programs out there. It looks to me that structurally, your monoclonal is very similar to the monoclonal in terms of isotype and having FcR engagement. To what extent do you think having intact FcR and the ability to bind Fc receptors is important mechanism of action for the drug, or do you think it's peripheral? Just to help us to distinguish between the other agents in development.

I can go backwards. We had preclinical evidence that the Fc domain was important, which is why we take it in. At the time, the hypothesis had to do with depletion of T regulatory cells. I don't know if that's true. Subsequently, there is some data in-house and elsewhere that since TIGIT is also expressed in myeloid cells, there may be some level of myeloid cell reprogramming and skewing that accompanies the use of TIGIT, but I think that will emerge from biomarker studies. With respect to your second question, Phase I data with chemo, we don't have a great deal of data with that as yet. But I think based on the overlapping mechanism of action associated between TIGIT and Tecentriq, and since Tecentriq combines with chemo quite well, this is a sensible thing to do, both from a development point of view as well as from a mechanistic point of view. In the case of MSS colorectal cancer, there -- yes, I think that these 2 agents together will create more T cells. But I call your attention back to the slide I showed you, showing that most patients with colorectal cancer who have MSS genotypes have tumors that are strongly invested by a highly immunosuppressive stroma. And our belief is that although it's certainly worth trying at an early stage, our belief is that we are going to have to do something to address the stromal architecture as well as immunosuppressive aspects in order to have anything work in a dramatic fashion for colorectal patients.

Myeloma?

We're interested in myeloma since the expression of TIGIT on those cells and on T cells that are present in myeloma patients.

Yes, I would say we have a heme malignancy-based Phase Ib study that includes multiple myeloma, TIGIT as a single agent, and also in combination with daratumumab, and an NHL component, again, TIGIT is a single agent and in combination with rituximab. So we hope to be able to develop TIGIT in the hematological malignancy space. We do think the target may be functioning somewhat differently in heme malignancies. Obviously, PD-1, PD-L1 inhibitors have not demonstrated the level of activity in heme malignancies that they have in solid tumors, and we think TIGIT may be an important negative regulatory protein there. But obviously, the clinical experiments will have to demonstrate that.

The next question comes from Sam Fazeli from Bloomberg.

Three pretty much unrelated questions. First one on TIGIT. We've obviously lived through CTLA4 plus PD-1, and it's -- where the problem is not necessarily efficacy in many instances, but it's side effect profile. So can you give us some comfort on whether this is what -- I mean, obviously, we have to wait for the data. But if there's any indications as to whether this is going to be a more tolerable combination. And on that, why start a small cell lung trial when -- rather than a non-small cell lung trial? I don't know if you just answered that. A separate question on anti-tau. Obviously, the PSP trials have failed where it's a tauopathy and one wonders whether these antibodies are sufficiently getting to the brain to do the job they need to do. Can you just reflect on then why you think this might be a different setup in Alzheimer's and whether 16 grams per patient is something that's going to be -- something that would solve the problem? Just to understand how these 2 different diseases potentially might reflect on each other. And then on the third, obviously, every company has got a SERD says that they've got the best-in-class. When these data come out, or as we assess these drugs, you alluded to some of those issues, but where would you put the key product profile that is the winning product profile when it comes down to the final competing scene when these molecules get to market?

Andy, why don't you start?

Sure. So with respect to anti-tau, it's very unfortunate for the FTD and the PSP patients that the anti-taus have failed to date. Firstly, it's a different disease. Second is that the stage of the disease likely is extremely important. And hence, our 2-pronged attack on both the range and the spectrum of disease symptomatology in AD. And then finally, I think we don't know the answer yet, but the importance of the imaging agents is extremely inflective for us here. So we want to be able to ensure that we can inhibit the degree of tau deposition in the brain, and having that GTP1 probe will be extremely important. So we remain optimistic, but I believe we have all the tools to be able to interrogate the question in AD with the highest degree of scientific rigor.

I'll take the third question next. We're aware a number of companies are moving forward with the oral SERDs. I do think at the end of the day, the safety and tolerability of these drugs will be very, very important. And what goes along with that is picking the right dose to bring into studies, both in the metastatic as well as the adjuvant setting. And I will point out that we've conducted a window of opportunity study to really look at different doses of GDC-9545 to really understand the pharmacodynamic effects and ensure that we are picking the right dose. So we do feel very confident in the molecule that we've designed, and we also feel very confident that we've done the necessary clinical experimentation to give the drug the best chance of success.

And can I just add to that? I guess one of the characteristics that I see is potency in terms of dose potency of the drug. And if you look at many of the other SERDs, they are significantly higher doses that they had to use to reach efficacious exposure levels. And as Stuart mentioned earlier, the dose that we have picked, first of all, is significantly, in many instances, 10x lower than the doses that the competitor molecules have. And then on an extended dosing basis, remember, these drugs are going to be taken for years at a time, and even small, little safety issues can grow into big safety issues, over time. And very often, that is related directly to the amount of material that you are taking every day. And so lower dose matters, particularly on a long-term safety perspective.

With respect to the TIGIT combination, our experience, thus far, is that it is a well-tolerated combination, quite distinct from IPI-NIVO in that respect. And as a result, I think unlike that combination, we'll be able to give prolonged therapeutically active doses to patients.

Yes. And I note there was a question about -- follow-up on the Phase II trial that we conducted with TIGIT and Tecentriq. Obviously, we're awaiting health authority approval of Tecentriq in frontline based on the IMpower110 study. And so obviously, these 2 are linked in terms of the design of a Phase III study. So obviously, we hope to be able to follow up on the Phase II results with a Phase III trial and be able to disclose that in the near future.

The next question comes from Ronny Gal from Bernstein.

Three ones, if I may. First, you seem to have an opportunity to submit the CD3, CD20 in late-line and CAR T failures based on the data we already saw in ASH. Can you comment about plans to submit this? Or are we looking for a full Phase III before trying to post this molecule to the market? Secondly, you kind of highlighted the Skyhawk competition, that's a really interesting mechanism of targeting cancer and other indications. Can you just tell us what field you are pursuing in combination with Skyhawk and why should we expect to see something coming out of that? And last, you mentioned the tau experiments, but you were very silent on gantenerumab. And I was wondering if you can just let us know if after you saw the DIAN 2 data, is kind of like the expectation for success of the amyloid data mechanism coming down in your minds, or simply, there was nothing to say, so you've not mentioned it this time?

Are you sure you don't have a TIGIT question too?