Oncolytics Biotech Inc (ONCY) 2021 Q1 法說會逐字稿

Good afternoon, and welcome to the Annual Meeting of Shareholders of Oncolytics Biotech Inc. My name is Kirk Look, and I'm the Chief Financial Officer of Oncolytics, and I will be serving as Chair of this meeting. Joining me today is Matt Coffey, President and CEO; as well, we have Wayne Pisano, Deborah Brown, Angela Holtham, Leon Kruimer, Bernd Seizinger and Bill Rice, who, I believe, have joined us online. Other members of management also joining us online are Allison Hagerman, Andrew de Guttadauro and Tom Heineman.

Now for convenience, we have divided today's meeting into 2 parts. (technical difficulty) After we conclude the formal part of the meeting, we will provide a brief corporate update with a general Q&A at the end.

Before we begin with the formal business portion of the meeting, I will provide some comments on voting and questions at today's meeting. Now as with any technology, unexpected glitches may occur and we appreciate your patience. Our service providers for this platform at Lumi and AST are very experienced at running this type of meeting and we will -- and will help us work through any challenges. The virtual platform we are using allows us to ensure the shareholder rights are protected and our meeting offers shareholders the same opportunities to participate as in past in-person meetings.

We will conduct the vote on the matters before us by a poll. On a poll, every registered shareholder and proxy holder who has obtained a control number in advance are entitled to vote on each matter. Voting during this meeting can only be done through our virtual voting platform on the webcast. Once the polls are opened, registered shareholders and proxy holders who have obtained a control number will be able to cast their votes. The log-in information and log-in process as outlined in our press release dated April 30, 2021, which is on our website. And logging into the meeting, if you have a control number, enter it when prompted. If you do not have a control number, please log into the meeting as a guest. The password for everyone is oncy2021, all in lower case.

The polls for all resolutions are now open. You may vote at any time during the meeting until the polls are closed after the last item of business has concluded. Thank you to those of you who have already voted. For those who have not yet voted, we encourage you to vote now.

I welcome all guests who are not registered shareholders or holding proxies of registered shareholders. As a reminder, as with any in-person meeting, only registered shareholders and duly appointed proxy holders are able to vote or ask questions during the formal part of today's call. All participants may submit questions at any time during the meeting. There will be opportunities for shareholders to ask questions specific to each resolution on the webcast. Again, as a reminder, only registered shareholders or proxy holders with a control number are entitled to ask questions on the matter at hand during the formal part of our AGM. Other questions and questions from our guests will be handled at the end of our corporate update.

If you have a question, click on the Ask A Question tab at the top right of the webcast page. Please read the instructions in the text box before submitting your questions. In particular, we ask you identify whether your question relates to a motion being considered as part of the formal business of this meeting or whether it is of a more general nature. We will address questions that directly relate to a particular motion at the appropriate time of the meeting, and we will save general questions for the question-and-answer period following the formal business.

If a question is personal in nature, we will follow up with you individually after the meeting. Once you have finished typing out your question, click the Submit button. The secretary will receive the questions at the appropriate time, we'll read them out in order for everyone to be aware of the question being dealt with.

Now with respect to questions other than proposed amendments or objections, we will endeavor to cover these at the end of our corporate update. If we have a number of questions that are same or very similar on a topic, we will paraphrase and group the questions and mention that we have received similar questions. We will attempt to address all general and appropriate questions from our shareholders, proxy holders and guests at the end of our corporate update. That said, for all questions regarding time lines and expectations of time lines, we refer everyone to our public disclosures that can be found on our website. We have no comment in response to questions concerning time lines and expectation of time lines beyond what has already been disclosed. Finally, please note that due to time constraints, we may not be able to address all questions today.

The Annual Meeting of the Shareholders of Oncolytics Biotech Inc. will now come to order. Prior to the meeting, the Board of Directors of Oncolytics appointed me to be the Chair of this year's Annual General Meeting. With the consent of this meeting, I will ask Matt Coffey to act as secretary of the meeting.

The first item of business will be the appointment of scrutineers. With the consent of the meeting, I will ask (technical difficulty)

Now I have received a declaration prepared by an officer of AST that the notice calling this meeting with accompanying management information circular and form of proxy were mailed on April 7, 2021, to shareholders of record as of March 23, 2021. Accordingly, with the consent of the meeting, the reading of the Notice of Meeting will be dispensed with, and I request the secretary to keep a copy of the Notice of Meeting and proof of service with the minutes of this meeting.

I would ask the secretary of the meeting to summarize the scrutineer's report on attendance.

The scrutineers have advised there is a quorum present, and therefore, I declare this meeting regularly called and properly constituted for the transaction of business.

Based on the scrutineer's report, I declare that the requisite quorum of shareholders is present. I direct that the scrutineers keep -- I direct that the scrutineer's report be kept with the minutes of this meeting.

I now declare that the meeting has been regularly called and is properly constituted for the transaction of business. The formal business of this meeting consists of: one, presenting the financial statements for fiscal 2020; two, fixing the number of directors; three, electing directors; and finally, appointing the auditors of the corporation.

As the first matter of formal business, I table at this meeting the financial statements of Oncolytics Biotech Inc. for the period ended December 31, 2020, together with the report of the auditors thereon. Copies of the financial statements have been mailed to registered shareholders. With the consent of the meeting, the reading of such statements and report will be dispensed with. I do wish to recognize and advise the meeting that the auditors of the corporation, EY LLP are in attendance online being represented by Mr. Rob Mitchell. I do not propose to ask shareholders to approve the financial statements tabled. However, I will be pleased to receive any questions concerning the financial statements after the termination of this meeting.

The next item of business is to set the number of directors at 7. As Chair, I propose the following motion that the number of directors be set at 7.

I will now ask the secretary to please advise if any questions specific to this motion were submitted. As there are no questions, please cast your votes.

(Voting)

We will now proceed with the election of directors. The information circular contains the names of management's proposed nominees to the Board of Directors, which are: Deborah Brown; Matthew Coffey, Angela Holtham, Leon Kruimer, Wayne Pisano, William Rice, Bernd Seizinger. I understand that these nominees have consented to act as directors. Now as Chair, I propose the following motion that the persons nominated for election be individually elected as a director of the corporation to hold office until the next Annual Meeting of Shareholders or until their successors are elected or appointed.

I will now ask the secretary to please advise if any questions specific to this motion were submitted. As there were no questions on the motion, please cast your votes.

(Voting)

We will now proceed with our final item, the appointment of EY LLP as our auditor as outlined in the information circular. As Chair, I propose the following motion: to appoint EY LLP as auditors of the corporation for the ensuing year and authorizing the directors to fix their remuneration.

I will now ask the secretary to please advise if any questions specific to this motion were submitted. As there were no questions, please vote now.

(Voting)

Now before announcing the voting results, is there any other business that anyone present wishes to bring to the attention of the meeting? With no further business, I would now declare the polls to be closed, and we will proceed to present the voting results. I now ask the secretary to provide the preliminary results of the voting.

Thank you, Mr. Chair. I have received confirmation from the scrutineers that each of the 7 directors nominated by the Board has been elected by a majority of the votes cast for the election of directors, and the motion to appoint EY LLP as the auditor of Oncolytics has been approved.

Thank you. I declare each of the resolutions considered at today's meeting in respect to those matters is carried. The exact number of votes cast in respect of each matter will be filed on SEDAR and made available on our website.

Well, thank you, everyone, again, to all our shareholders and proxy holders for your attendance today. I would like to remind everyone that we will provide a corporate update following the formal part of the meeting. As this concludes the formal part and the formal business of the meeting, I declare the meeting terminated. Thank you very much.

Operator?

Thank you. Hello, and welcome to the corporate update portion of Oncolytics Biotech's Annual General Meeting. (Operator Instructions) Please be advised that this call is being recorded at the company's request.

I would now like to turn the call over to Jon Patton, Director of Investor Relations and Communication. Please go ahead.

Thank you, operator. Earlier today, Oncolytics issued a press release providing financial results and corporate updates for the first quarter of 2021. A replay of today's meeting will be available on the Events and Presentations section of the Oncolytic's website approximately 2 hours after its completion.

As Kirk mentioned, during Part 1 of the meeting, we will have a general question-and-answer session after remarks from company management. Institutional investors and analysts can ask questions using the directions, which will be provided by the operator after the prepared remarks. And other guests and shareholders can use the Q&A function available on the webcast platform. As a reminder, various remarks made during this presentation contains certain forward-looking statements as disclosed on this slide.

Now I will turn the call over to Dr. Matt Coffey, President and Chief Executive Officer of on Oncolytics Biotech. Matt?

Thanks, Jon, and thanks to all listening for joining us for this corporate update. With Jon and I on the call today are Dr. Tom Heineman, our Global Head of Clinical Development and Operations; Andrew de Guttadauro, our Global Head of Business Development; and Kirk Look, our Chief Financial Officer. In addition, Allison Hagerman, our Vice President of Product Development, is also on the call and will be available to answer your questions during the Q&A session.

Since our last AGM, we've had one of our strongest and most productive years yet at Oncolytics as we've achieved key milestones that validated our unique Oncolytic virus immunotherapy platform advanced our lead breast cancer program towards the initiation of a registrational study, expanded our clinical pipeline into additionally highly prevalent indications and generated multiple opportunities to expand pelareorep's partnership and business development potential.

Now as you can see on this slide, these milestones include achieving the primary endpoint in the AWARE-1 study with data showing that pela triggers an adaptive T cell response specifically targeting tumors and synergizes with checkpoint blockade therapy. Dosing the first patient and completing the safety run-in of our Phase II BRACELET study in HR+/HER2- breast cancer; expanding our clinical pipeline into triple-negative breast cancer in partnership with Incyte through the addition of Phase II IRENE study; expanding our collaboration with Roche through the Phase I/II GOBLET study in multiple GI cancer indications; generating clinical proof-of-concept in multiple myeloma; and finally, demonstrating that the synergistic benefits of pelareorep can extend to immunotherapeutic agents well beyond checkpoint inhibitors.

The fact that we are able to make such significant progress over the last 12 months despite the unpredictable and industry-wide challenges posed by COVID-19 is a testament to the talent of our employees, partners and investigators as well as the dedication of our patients. I'd like to thank all of them for the important roles they have played in pela's development.

Looking forward, our long-term goal is for pelareorep to be recognized as an enabling technology for a wide range of immunotherapeutic agents across multiple classes. As we work towards this goal, we are committed to preserving our primary focus and resources on the advancement of our lead breast cancer program towards a registrational study. We will also continue to leverage our collaborations with industry leaders in academia to efficiently execute on our stated clinical milestones outside of our lead breast cancer program such as our IRENE and GOBLET trials evaluating pela in combination with checkpoint inhibitors.

Lastly, we plan to selectively leverage partnership opportunities to further the pela's development as an immunotherapy backbone for agents well beyond checkpoint inhibitors such as CAR T cells and bispecific antibodies. This strategy will allow us to achieve an optimal risk-benefit balance as we work to advance pelareorep towards registration HR+/HER2- metastatic breast cancer and expand its markets potentially into a variety of highly prevalent indications.

Now before I hand it off to Tom to go into more detail on our clinical data and strategy, I'd like to take a moment to emphasize some of the key competitive advantages that set pela apart in the oncolytic virus space, which is an area of great interest to large pharma. Almost all other oncolytic viruses in development have at least one and often both of the following 2 characteristics. They require special handling procedures due to a BSL trait, or Biosafety Level 3 classification or they require intratumoral delivery and, therefore, cannot reach metastatic disease. Notably, pela is administered intravenously by nursing staff and requires no special handling procedures, which means that after receiving treatment, patients can return home to their families.

As we'll discuss, we have also seen that pela has synergistic potential with a variety of immunotherapy agents, including both PD-L1 and PD-1 inhibitors as well as CAR T's bispecific antibodies Part 1 and CDK4/6 inhibitors. This is thanks to the ability to make cancer cells visible to the immune system. You can see an example of this in the image to the right, where pela has selectively replicated in tumor cells and labeled them, as noted by this brown die in the image.

Additionally, we have identified potentially predictive and prognostic biomarkers that may accelerate the cycle to get pela into registrational trials by allowing us to identify the patients who are most likely to respond to therapy.

Now to let you hear about the recent progress we made in advancing our lead breast cancer program towards a registrational study as well as other updates on our pipeline, I'll hand the call over to Global Head of Clinical Development Operations, Dr. Tom Heineman. Tom?

Thanks, Matt. As was mentioned a few moments ago, our primary focus continues to be on the advancement of pelareorep towards a registrational study in HR+/HER2- metastatic breast cancer patients. At our last AGM, Matt spoke about how we planned to build on the results of our prior IND 213 study through our AWARE-1 and BRACELET-1 clinical trials. Just to remind you, as can be seen on this slide, the IND 213 study showed a near doubling of overall survival of an HR+/HER2- metastatic breast cancer patients treated with pelareorep in combination with chemotherapy compared to those treated with chemotherapy alone.

Another important observation from this study was that this survival benefit became apparent about 10 or 12 months after beginning treatment, strongly suggested that this benefit was conferred by an immunologic mechanism of action. As those who have been following us for some time may know, these data led to several regulatory achievements to derisk the program, including favorable feedback from an FDA end of Phase II meeting; a favorable EMA final advice letter; Fast Track designation by the FDA; and a special protocol assessment agreement for a metastatic breast cancer program.

From there, we define the 3 key objectives that we aim to accomplish in order to advance pelareorep to a registrational study. These objectives, which were the inspiration for our AWARE-1 and BRACELET-1 studies are: first, to confirm pelareorep's immunotherapeutic mechanism of action and thereby reinforce the promising survival benefit seen in IND 213; and second, to determine if our positive Phase II results from IND 213 can be enhanced by combining pelareorep with a checkpoint inhibitor; and finally, we established the clinical utility of T cell clonality to predict patient responses to pelareorep. I'm pleased to say that we have made significant progress towards achieving these objectives since our last AGM, thanks to the advancements in both the AWARE-1 and BRACELET-1 studies.

The AWARE-1 study continues to read out as expected, and we recently reported very exciting results from the first 2 cohorts, which are fully enrolled. As you can see here on the study design slide, these 2 cohorts examine the effects of pelareorep treatment with or without checkpoint inhibitor therapy in patients with HR+/HER2- breast cancer. Evaluation of these cohorts is the core objective of AWARE-1 as this is the breast cancer subtype we intend to evaluate in a future registrational study.

By taking paired biopsies from patients, both before and after pelareorep treatment, we aim to answer 2 key questions. First, does pelareorep have an immunotherapeutic effect as evidenced by its ability to induce an adaptive T cell response that trains the patient's immune system to fight cancer? And second, is there synergy between pelareorep and checkpoint inhibitors in breast cancer? In other words, does the addition of the checkpoint inhibitor enhance pelareorep's ability to induce potentially protective immune responses?

To answer these questions, we collected data on T cell infiltration into tumors, tumor expression of PD-L1 and CelTIL score, the study's primary endpoint, which is a measure of tumor cellularity and inflammation and is significantly correlated with event-free and overall survival. As I mentioned, the data we recently reported at AACR from these first 2 cohorts are very promising.

As shown here, Cohort 2, the cohort that includes pelareorep and checkpoint blockade therapy, achieved the study's primary endpoint with 60% of patients showing an increase in CelTIL score greater than 30%. In Cohort 1, which did not include the checkpoint inhibitor, we also saw increased CelTIL scores in 6 of 10 patients following treatment. Now there are 2 important things to note regarding these data. First, CelTIL score is a continuous variable, which means that any increase in CelTIL score is expected to be associated with better treatment outcomes. And second, the fact that we are seeing more robust tumor responses in Cohort 2, as measured by the CelTIL score, is both positive and in line with our hypothesis going into the study. Specifically, this confirms the pelareorep and checkpoint inhibitors act synergistically to provide an enhanced immunotherapeutic effect.

Given that we observed an impressive survival benefit in IND 213 when treating only with pelareorep and chemotherapy, along with the clear indication that, that benefit was conferred through an immune response, the fact that immune responses were further enhanced by adding a checkpoint inhibitor suggests that we will see improved efficacy with pelareorep-checkpoint inhibitor combination therapy, which we are currently evaluating in BRACELET-1 and other clinical studies.

In addition to the impact on CelTIL scores, the data from AWARE-1's first 2 cohorts also showed pelareorep replication in a high proportion of cancer cells; an average 11 fold increase in intratumoral's CD8-positive T cells, the generation of new presumptive antiviral and antitumor T cell clones that may mediate both initial tumor cell killing and long-lasting immune memory directed against the cancer; a correlation between T cell clonality and CelTIL score, which supports the potential use of T cell clonality as a treatment biomarker; a more favorable CD8, the T regulatory cell ratio, indicating a less immunosuppressive tumor microenvironment; and dramatic upregulation of PD-L1 expression in tumor tissue, which resulted in the conversion of some tumors in PD-L1 negative to PD-L1 positive.

I should note again that many of these desirable effects were enhanced by adding checkpoint blockade therapy to pelareorep. Collectively, these results answered the 2 key questions I mentioned a few moments ago, namely, they show that pelareorep remodels the immunosuppressive tumor microenvironment by enabling an influx of CD8-positive and memory T cells into the tumor; and they demonstrate synergy between pelareorep and checkpoint blockade therapy.

Taking a step back to look at the big picture, the AWARE-1 data represent a significant milestone in advancing our lead breast cancer program towards a registrational study. Importantly, they confirm pelareorep's immunologic mechanism of action, thus completing the first key objective we set out to accomplish. Additionally, they show we are well on our way to achieving the second 2 objectives mentioned earlier as they demonstrate the synergies between pelareorep and checkpoint inhibition and they support the clinical utility of T cell clonality as a predictive biomarker.

Finally, these results validate our broader clinical development strategy of evaluating pelareorep in combination with checkpoint inhibitors. Notably, they demonstrate synergy between these immunotherapies and pelareorep's ability to remodel tumor microenvironments thereby making tumors more amenable to checkpoint blockade therapy.

As was mentioned earlier, we are exploring the combination of pelareorep and checkpoint blockade in BRACELET-1, our Phase II trial in HR+/HER2- advanced and metastatic breast cancer patients. And as with AWARE-1, we have made substantial progress in BRACELET-1 during the year since our last AGM. To date, we have activated 19 out of 20 study sites, and we remain on track to achieve full enrollment in the fourth quarter of this year. The trial safety run-in has been completed without safety concerns, and the study is now open for randomized enrollment.

As a reminder, BRACELET-1's design was developed in collaboration with Pfizer and Merck Serono and the trial is being conducted under the auspices of PrECOG's world-renowned research organization. The BRACELET-1 trial was essentially identical to that of our prior IND 213 study with 2 key differences as shown on this slide. First, the study focuses exclusively on HR+/HER2- breast cancer patients, which is a subset of breast cancer patients that we saw the most pronounced overall survival in IND 213. Second, BRACELET-1 includes an additional study arm to evaluate pelareorep in combination with Pfizer and Merck Serono's anti-PD-L1 checkpoint inhibitor, Bavencio. We are particularly excited about this study arm, given the AWARE-1 data, which showed that synergy between pelareorep and PD-L1 therapy resulted in enhanced immunotherapeutic effects.

As mentioned earlier, this study was developed to support the overall clinical benefit of the IND 213 study and facilitate the advancement of pelareorep to a registrational trial by evaluating the efficacy of pelareorep-checkpoint inhibitor combination therapy and by further investing T cell clonality as a clinical biomarker. As we look ahead, I'm confident that my talented colleagues at Oncolytics as well as our study investigators and partners will keep us on track to execute on our stated clinical objectives and allow us to advance pelareorep towards regulatory approval in HR+/HER2- breast cancer, while simultaneously positioning us to take advantage of pelareorep's potential across a broad range of cancer indications.

Shifting gears, I will now discuss how pelareorep's ability to remodel tumor microenvironments and promote an influx of anti-tumor T cells as demonstrated in AWARE-1 gives us the potential to be broadly applicable across multiple indications in combination with checkpoint inhibitors as well as when combined with other cutting-edge immunotherapeutic agents. In a few minutes, I'll let Andrew talk about how we have been leveraging pelareorep's immunotherapeutic effects to drive our business development strategy and the expansion of our clinical pipeline into triple-negative breast cancer and GI cancer indications.

First, however, I'd like to talk briefly about some of the compelling data we have generated over the past 12 months that have fueled our enthusiasm for pelareorep's potential and other indications as well as in combination with other immunotherapeutic agents. At ASCO last year, we reported fascinating proof-of-concept data in multiple myeloma, showing that the benefit of pelareorep can extend to hematologic malignancies. These data show that intravenously-administered pelareorep targets and selectively replicates in malignant cells consistent with what was seen in AWARE-1. When pelareorep was combined with a proteasome inhibitor, carfilzomib, a profound -- excuse me, inflammatory response was activated and was accompanied by a 50% overall response rate and an 83% clinical benefit rate in carfilzomib refractory patients who are notoriously difficult to treat.

These results included the first reported case of cytokine release syndrome associated with clinical response in multiple myeloma. The induction of cytokine release syndrome, which can be effectively managed with well-established therapies, highlights the ability of combined pelareorep-carfilzomib treatment to induce robust immune activation and tumor lysis in multiple myeloma patients.

Also in multiple myeloma, we saw a profound increase in PD-L1 expression following pelareorep treatment. This is an example of the immunotherapeutic effects we saw in AWARE-1 extending into a different indication.

Finally, before handing off the call to Andrew, I'd like to talk about some very interesting preclinical data we've seen over the past year that highlight pelareorep's potential as a platform therapy, capable of enabling the success of a broad array of immunotherapeutic agents beyond just checkpoint inhibitors. Again, this potential stems from pelareorep's ability to remodel tumor microenvironments and promote the infiltration of anticancer immune cells.

The first of these data came from preclinical studies that evaluated pelareorep in combination with CAR T cell therapy. Now despite their success in hematologic cancers, CAR T cell therapies historically have been unsuccessful against solid tumors. As you can see on the left side of this slide, this is due to several factors, including T cell exhaustion, impaired T cell trafficking to the tumor and immunosuppressive tumor microenvironments. On the right side of the slide, you can see the characteristics of pelareorep that allow us to overcome these challenges, several of which were demonstrated in the AWARE-1 study.

Now given that these data were the subject of our KOL event a few weeks ago, I'll just give a high-level summary here. So these data excitingly showed the CAR T cells with pelareorep vastly improved their persistence and efficacy in solid tumors in mice. And that the efficacy of pelareorep-loaded CAR T cells was further enhanced by boosting the mice 8 days later with intravenous pelareorep. This boosting with pelareorep led to the generation of highly persistent CAR T cells, the inhibition of recurrent tumor growth and ultimately tumor cures. Notably, these synergistic effects appear to be specific to pelareorep as they were not observed with other oncolytic viruses.

While we are very intrigued by these data, we would like to emphasize that the successful advancement of our current clinical programs, particularly in breast cancer, remains our primary focus. Nonetheless, the data are clearly compelling, and we are now pursuing a partnership strategy to further the development of pelareorep as an enabling technology for CAR T cell therapy as well as for other immunotherapies that may benefit from pelareorep's ability to remodel the tumor microenvironment.

As you can see here, some of these additional immunotherapies include bispecific antibodies and PARP-1 and CDK4/6 inhibitors. Regarding CD3 bispecific antibodies, which work by simultaneously binding both T cells and tumor antigens to facilitate immune-mediated killing of cancer cells, preclinical data have shown the combination with pelareorep results in cancer regression and prolonged survival in solid tumor models. This is likely due to pelareorep's ability to promote T cell infiltration into these tumors.

Given this strong rationale, we are now collaborating with researchers at Leiden University Medical Center and Oncode Institute in the Netherlands who generated these data to conduct additional preclinical studies that aim to further assess the therapeutic potential of pelareorep bispecific antibody combinations in breast and pancreatic tumor models.

In addition to the promising preclinical data with bispecific antibodies, we also recently reported compelling preclinical findings related to the combination of pelareorep with PARP-1 and CDK4/6 inhibitors in separate posters presented at AACR last month. As noted on the bottom 2 sections of this slide, the combination of pelareorep with each of these agents resulted in synergistic interactions that led to an increase in immune-mediated cancer cell death.

To summarize, the preclinical data we have seen with therapies such as CAR T cells and bispecific antibodies indicate that pelareorep has the potential to be a foundational technology that enables the success not only of checkpoint inhibitors, but also of a wide array of immunotherapeutic agents. This is due to pelareorep's ability to recruit high concentrations of T cells to solid tumor and to reverse immunosuppressive tumor microenvironment, 2 characteristics that were clinically demonstrated in the AWARE-1 study.

With that, I'll now hand it over to Andrew, who will talk about how these immunotherapeutic effects of pelareorep have, since our last AGM, fueled our business development efforts and the expansion of our clinical pipeline into triple-negative breast cancer and additional GI indications. Andrew?

Thanks, Tom. Now as many of you may know, there's a growing interest from large pharma and biotech companies in improving the efficacy of checkpoint inhibitors by pairing them with oncolytic viruses. This interest is driven by a large commercial opportunity. The immune checkpoint inhibitor market is expected to reach $55 billion by 2025, yet less than 1 in 5 patients respond to these therapies.

Now as you can see on this slide, this low response rate is due to several different resistance mechanisms, each of which can be addressed by the immunotherapeutic effects of pelareorep demonstrated in AWARE-1. Pelareorep's benefits leave us well positioned to execute on our goal of securing a global clinical and commercialization partnership. In pursuit of this goal, we are taking a proven approach, which is to engage in multiple research collaborations designed to evaluate the feasibility of potential combinations between pelareorep and PD-L1 inhibitors. The first example of this approach was our BRACELET-1 study, which, as Tom mentioned earlier, is being performed in collaboration with Pfizer and Merck Serono. Since our last AGM, we have extended this strategy to foster new collaborations and expand our clinical pipeline into triple-negative breast cancer as well as additional GI indications.

With regards to triple-negative breast cancer, you can see from this slide that there is a substantial market opportunity in this indication as there are over 540,000 patients in the United States living with triple-negative breast cancer. Importantly, while checkpoint inhibitor therapy is approved for the treatment of triple-negative breast cancer, it has significant limitations. Only around 40% of triple-negative breast cancer patients have the 1% PD-L1 expression levels needed to become eligible for checkpoint therapy at this time. Of those patients, half do not respond to therapy. This presents a very interesting opportunity for pelareorep, which is highlighted by that AWARE-1 data mentioned earlier demonstrating pelareorep's ability to increase tumor PD-L1 expression and to convert tumors to PD-L1 positive classification.

The potential of pelareorep to increase the proportion of patients responding checkpoint inhibitors was the driving force behind our IRENE triple-negative breast cancer study, which is a collaboration with Incyte. Shown on this slide is the study design for IRENE, which is a Phase II investigator-sponsored clinical trial designed to evaluate pelareorep in combination with Incyte's anti-PD-1 checkpoint inhibitor, retifanlimab. We treated the first patient in IRENE in August and remain on track for a safety update for the trial in the fourth quarter.

Next, I'd like to talk briefly about GI cancer, which is another segment where we saw great progress on the clinical and business development fronts since our last AGM. This progress is due to pelareorep's demonstrated ability to remodel the tumor microenvironment and increased tumor PD-L1 expression, thereby setting pelareorep to address a critical unmet need in the GI cancer space. GI cancers account for over 1/4 of global cancer incidents and though checkpoint inhibitors are approved for certain GI cancers, less than half of patients respond to checkpoint inhibitor monotherapy, often due to immunosuppressive tumor microenvironments.

To address this unmet need, we've begun collaborating with Roche and our study partners, AIO, on the Phase I/II GOBLET trial. This trial was designed to evaluate pelareorep in combination with Roche's anti-PD-L1 checkpoint inhibitor, Tecentriq, in patients with metastatic pancreatic, metastatic colorectal and advanced anal cancers. In addition to evaluating safety and overall response rate, the trial will also measure T cell clonality in CEACAM6, both of which were previously identified as potential biomarkers in GI cancers. These biomarkers will be critical as we move towards later-stage trials as the ability to select and stratify patients who are likely to respond to treatment improves or are at chances of success, thereby enabling us to be more cost-efficient and enroll trials faster. By doing so, we expect to reach potential value inflection point sooner and with greater financial flexibility.

Looking ahead, we are eager to continue advancing the GOBLET study, and we expect to begin dosing patients in the middle of the year. GOBLET and IRENE represent just the latest 2 examples of pelareorep's robust clinical data set, driving exciting business development opportunities across our pipeline. As you can see here, these opportunities are also highlighted by BRACELET-1, AWARE-1 and our ongoing study with BMS evaluating pelareorep-OPDIVO combination therapy in multiple myeloma patients.

Since the last AGM, we are also exploring additional business development and partnership opportunities based on preclinical work at CAR T cells and bispecific antibodies. While these opportunities are exciting, I should once again emphasize that our primary focus remains on our lead breast cancer program and the execution of our stated clinical objectives. With regard to pelareorep's development as an enabling technology for additional immunotherapeutic agents, we aim to identify high-quality partners that will take the lead on this development pathway and assume the research responsibilities and costs associated with it.

With that, I'll turn the call over to Kirk Look, our CFO, to discuss our financial results for the first quarter. Kirk?

Thank you, Andrew. Now I'm delighted to report that Oncolytics remains in a strong financial position as we advance pelareorep towards registration, while at the same time, exploring new data-driven opportunities. Today, we reported our cash and cash equivalents were over $50 million compared to $31.2 million at the end of 2020. This includes proceeds from financing activities of $25 million, mainly from our at-the-market facility, and I'm pleased to report our financial runway, a key consideration for institutional investment towards the end of 2022.

Our operating expenses for 2021's first quarter of $3.1 million remained relatively consistent with 2020's first quarter expenses of $3 million. We continue to find ourselves operating in a challenging directors and officers insurance environment, resulting in an increase in insurance premiums. We've been able to minimize the impact of premium increases through lower investor relations and consulting activities and a general reduction of travel expenses due to the impact of the COVID pandemic.

Now research and development expenses for the first quarter of 2021 were $2.8 million compared to $2.5 million for the same period last year. In the current quarter, in addition to progressing our BRACELET-1 study, we also continued performing analysis of our AWARE-1 patient samples to assess immunological functions. As related to our GOBLET study, we continued with initial regulatory activities, seeking approval from the German regulator along with start-up activities.

Finally, the net loss for the first quarter of 2021 was $6.4 million compared to net income of $400,000 in the first quarter of 2020. On a consolidated basis, this equates to a basic and diluted net loss of $0.13 per share for the 2021 period and a basic earnings of $0.01 per share and a diluted net loss of $0.04 per share for the 2020 period.

With that, I'll hand it back to Matt. Matt?

Thank you, Kirk. Now before starting the Q&A, I just want to note, once again, how proud we are of our employees and partners for what they have allowed us to achieve over the last year amid the pandemic. This -- thanks of their hard work, we've clinically demonstrated the immunotherapeutic effects of pela, which leave it poised to have wide-ranging clinical benefits.

Moving forward, we expect to build on this momentum in a data-driven manner, prioritizing the execution of our stated clinical milestones, particularly in breast cancer, while selectively engaging partners to generate value where additional opportunities arrive. As you can see in the table here, we expect to continue achieving a steady cadence of value-creating milestones throughout 2021. We will be sure to keep everyone updated on our progress as we work to generate value for our shareholders and, most importantly, improving the lives of our patients.

With that, I'd now like to open the lines to take some questions. Operator?

(Operator Instructions) And you have a question from the line of Patrick Trucchio with H.C. Wainwright.

Congrats on all the progress. Can you discuss the preclinical research evaluating pela plus bispecific antibodies? Specifically, what targets in breast cancer and pancreatic cancer do you do as most appropriate with bispecifics to combine with pela?

Secondly, can you discuss whether there's particular construct of bispecific antibody that you believe would be ideal to combine with pela in the solid tumor setting? And finally, do you believe there would need to be a sequencing to a combo of bispecific, such as treating with pela systemically prior to treating with bispecific to demonstrate a synergy?

Patrick, that's a multipronged question. Yes, we're really excited about this. I think the AWARE-1 study, I think, really opened the doors for us to say that this is a general priming mechanism for almost any immunotherapy that relies on immune activation. And the reason I say that is I think we are -- the first 2 cohorts of AWARE, which is really -- well, I want to be honest here. I think that was the whole thrust of the program really, like Cohort 1 and 2 was to look whether we needed to add a checkpoint inhibitor to HR+/HER2- disease.

And I think we demonstrated that the virus is really good at resetting the immune system in these patients. And this is something I think people may miss. When you consider these patients, they've been given chemotherapy, they've had their immune system decimated, they've had their bone marrows impacted by these therapies. Priming with rare virus, to your point, basically resets the immune system. We see a 75% turnover in the adaptive immune system. And these T cells that are turning over are recognizing specifically virally-infected cells, which, by definition, have to be cancer cells or cancer cells themselves.

So we've basically taken someone who's not had an immunological challenge, and we've reinvigorated the immune system. And I don't know if you've read this. There's a recent paper by Xing Zhao demonstrating that not only do we activate T cells, we're actively activating the need system through activation of the NK cell system. So those first 2 cohorts, I think, brilliantly proved that the immune system can be renewed, regenerated, reset by -- and specifically to the tumor by a treatment with the virus.

The other cohorts, 3, that's triple-negative, and we're doing that collaboration with Incyte, but Cohorts 4 and 5 are really looking at Herceptin in addition to the virus. And the collaboration we started with Leiden, their publication was specifically looking at a bispecific antibody targeting HER2.

So I think it's -- in terms of what we're going to generate with the AWARE study, really, what we're doing now, the Cohorts 3, 4 and 5 only enroll actually half the patients in Cohort 1 and 2, and those are basically to validate the target. But the bispecific antibodies basically, we'll take the learnings from Cohorts 4 and 5 looking at Herceptin to say whether we actually do target that subset of disease effectively. And I think depending on what AWARE-1 says and depending on the collaboration with the group at Leiden, I think it opens up an exploration of the virus targeting HER2 disease in the context of bispecific antibodies directed against that.

Tom, did you want to add anything clinically to my response?

No. Thanks, Matt. No, I think that there's a very broad potential with bispecific antibodies. And as many of you know, they can be directed in many different directions. They're very flexible technology. And in addition to HER2, I think we're going to go where the data leads us and not necessarily limit ourselves to any particular direction. But there are targets that are -- that have emerged as being particularly promising, and we will obviously look at those very carefully. But I think at this point, it's a little too early to say that we're going to focus on one or just a couple bispecific targets.

Andrew, from a commercial perspective, is there anything you want to add?

No. I mean, obviously, as you mentioned, the HER2 is probably the more intuitive opportunity right now, but I wouldn't say that it's limited to that. Obviously, we're going to reach out to a broad range of bispecific developers to see who might be interested in testing with our product and see where the results take us, as Tom said, to ultimately develop potential partnerships.

Thanks, Andrew. I think the AWARE-1 data, though, in terms of demonstrating where we can move really speaks to how important this agent is and how excited we are about it. I mean we completely renew the immunological response in these patients. We provide a challenge that isn't life-threatening or even -- well, not life-threatening, but barely a nuanced type of approach. They develop a fever, they develop a malaise. But we generate a brand-new subset of T cells. Like as I said, 75% of the T cell response is turned over.

So the problem with checkpoint inhibitors is they're trying to target the exhausted, androgenic T cells that really have just sort of given up on life. So it's taking those T cells and trying to make them active again. What reovirus or pelareorep can do is basically create an entirely new adaptive response that's engaged, that's fresh, that's able to better target disease. And the big thing is, so it changes your immune system. It's also changing the tumor.

We've completely remodeled the tumor in the sense that all of a sudden now, a lesion now, which would never give a signal that there was any problem that it wanted inflammation, now it's actively recruiting these T cells. So I think the opportunity for not only bispecifics that require T cells to work in the solid tumor lesion, I think it demonstrates a why the CAR T program works a while because not only are we recruiting CAR Ts to the solid tumor, we're getting bi-standard effect because we're actually getting recruitment of these newly created T cell clones into the tumor.

So I think our first looks will likely follow the lead of what was provided to us by the group in Leiden. But I think generally, any solid lesion that has a good specific CAR T response -- or pardon me, bispecific response can be enhanced by the addition of the virus. And I think that's what we're so excited about. We're just remodeling the immune system and remodeling the tumor in a way that really allows these other immunological interventions to work better through the remodeling of the tumor and the immune system. So I think our starting point will be HER2, but I think the doors are wide open to expand into other areas.

Yes. That's helpful. And then just a follow-up on BRACELET-1. So the enrollment in metastatic breast cancer expected to complete in the fourth quarter. I'm wondering when you would anticipate the initial data and what your Pfizer Merck Serono will be looking for in the data to give confidence to move ahead with a pivotal program? And can you just remind us if Pfizer or Merck Serono had sold rights to advance the program? Or could you potentially partner with another company if one express interest in the program?

Bill, that's a great question. So we anticipate enrollment to finish this year. Just to remind everyone, BRACELET is a co-development agreement with Pfizer. So they have no rights to the virus itself. But what they do have rights to is exclusivity of data so that they can review the data before other potential competitors.

What we'd like to see, and Pfizer seems amenable, is a safety review with maybe some early evidence of efficacy at the San Antonio Breast Conference. But if we're enrolling -- or primarily, we will finish enrollment towards the end of this year, the full data in terms of overall survival and stuff won't be available until next year. So we'll update patients to safety, but again, the better the data looks, the less likely our partners might be willing to share it.

So the absence of us saying anything, I wouldn't interpret as a negative. If anything, I think it's they're getting their heads around the results that they're seeing in the clinic. But we're working with academic groups like PrECOG, so they are very interested in getting this data into the public domain.

Now for us, what I fully expect is paclitaxel is arm 1, the control arm, really isn't or shouldn't generate new T cell clones, shouldn't remodel the immune system. Cohort 2, where we're adding the virus from everything we've seen from multiple myeloma to colorectal to breast cancer, we are getting these pro-inflammatory cells. We are getting recruitment to the tumors. These patients are eligible for biopsies, so we can basically demonstrate what happened in AWARE-1 is happening in the paclitaxel. And my full expectation based on the AWARE-1 is that checkpoint inhibitors, which are known, not to prime the immune system but to create a sort of a pro-inflammatory event, I'm expecting full well that we'll see an increase in that synergy that we will get very high levels of T cell accumulation in the tumor.

And as where one demonstrated, the checkpoint inhibitor will eliminate or reduce the anti-inflammatory effects of Tregs by segregating them out of the tumor. So I fully expect that the Pfizer co-development study will completely direct what the Phase III looks like. And my expectation now is at this point is I believe pelareorep will expand HR+/HER2- into an indication where checkpoint inhibitors won't only have a benefit, but will have a very meaningful benefit.

And I think with the discussion we have with partners, the body of evidence that we're seeing across multiple indications is that reovirus really resets the immune system to be working in conjunction with anything that relies upon either an innate or an adaptive response. So I fully believe that, that Phase III program is going to incorporate a checkpoint inhibitor. Now as I said, Pfizer doesn't have any specific rights. So when that data becomes available, they're welcome to bid for a partnership as is any other partner that sees us as an opportunity to expand into the largest segment of breast cancer on the market.

Got it. That's helpful.

Andrew, this is a commercial question. Is there anything you want to add or did I misspeak?

No. That was -- that covered it.

It's rare, thank you for that.

Your next question comes from the line of Wangzhi Li with Ladenburg.

Just a follow-up on the press release. Can you put a little color on what kind of results are you looking for? What kind of threshold of the results that will drive your decision for the next step or the partner's decision for the next step?

Wangzhi, great question. Thanks very much. So just a bit of historical for everyone. IND 213, at the time that the NCIC wrote that program, we were still very much thinking that the virus was a lytic agent, that it was killing predominantly through lysis. So we really didn't capture any immunological data. So when we saw what we saw, just to remind everyone, 213 demonstrated a near doubling of overall survival in the intention to Treg group, but what was predominantly driving the benefit was patients with HR+/HER2- disease.

When various parties reviewed the data, they said, and quite frankly, no one's had an impact on this patient population in terms of survival. All approved therapies right at this point were approved based on PFS benefit rather than OS benefit. So to see a 10-, 11-month improvement was really quite striking.

The problem we had is in the 5 years that have intervened, we've really learned that reovirus is killing through labeling rather than through lysis. So what we're doing is we're having the tumor, metastatic or primary, sends an inflammatory signal to the immune system that the tumor is different, that it's malignant, that it needs to be eliminated by the immune system.

So our fundamental understanding went from its lysing to its labeling. So in the due diligent sessions with Pfizer and various parties, we didn't have any data to demonstrate that it was the immune system that was killing these lesions. And this is fundamentally important because if the immune system is what's doing the killing, reovirus can be used across multiple indications that it can be more broadly used, that it is well beyond breast cancer, if you're using it with the right technology. So basically, reovirus is enabling that.

So when Pfizer came in, they started a due diligence session with us, but we couldn't answer the questions they were asking because the data wasn't captured. So very much like AWARE, the BRACELET study, its primary endpoints are to demonstrate that once we add reovirus to the mix, so when we added to paclitaxel, we're looking for is pro-inflammatory signals. So we're measuring things like accumulations like of cytokines and chemokines like CXCL 9, 10 and 11. And those are the signals that tell the T cells to come into the tumor.

We're looking for pro-inflammatory signals like interferon Type 1 and Type 2, that paclitaxel shouldn't release or cause. And those are the signals that activate things like an NK response and a T cell response. And importantly, in Cohort 3, where we add the checkpoint inhibitor, what we're looking for is the elimination of the negative or the Treg MDSC response, which reovirus we know can activate and the checkpoint inhibitor can eliminate. So what we're looking for in Cohort 3 is that pro-inflammatory, anti-inflammatory signal. And the AWARE-1 gives us extreme confidence that this is the type of signal that the AWARE-1 study is going to read out.

Now I'll point out the BRACELET study is a very small study. I think it only has basically 15 patients per cohort. So we're not looking for big changes in terms of tumor response or PFS or OS, even though we think we'll capture that. Where we do expect to have the big statistically significant improvements are around these pro-inflammatory signals, which we are measuring at the genetic level through basically NanoString technologies at the cellular level through the accumulation of these pro-inflammatory cytokines and chemokines. And then ultimately, at the sort of biology level where we do expect to see changes in the biopsies and the changes in the response to the patients. But this study really is to take the learnings of AWARE and extend it into the patient population that we believe will drive the most benefit in the Phase III setting, which is the metastatic sense. Tom, is there anything you wanted to add?

No, I think that captures it. We will, of course, be looking at clinical responses. But as Matt said, it's largely the translation of immunologic responses that will provide some of the most critical data from this study.

Okay. Got it. Last question is for the bispecific combo. Any color on the time line for -- I know it's a preclinical study for potential data report or...

That's a great question. Thank you, Wangzhi. The group in Leiden who did this work, I think, very compellingly demonstrated that reovirus and maybe to better answer Patrick's question earlier, reovirus is a priming agent. Basically, you treat first with the virus to make those immunological changes and tumor changes. And really, this is -- I really don't even think of the virus how much as an oncolytic virus anymore because its primary function isn't through lysis, but through remodeling of the tumor microenvironment by getting rid of those barriers that prevent T cells from entering the tumor.

So we remodeled the tumor. But importantly, we've remodeled the innate and adaptive immune response. So you've taken someone who's been very heavily pretreated with chemotherapies, with radiotherapies, with all these interventions and basically renewed their immune system. We've provided a challenge that's not a threatening challenge, but it's caused a significant turnover and that turnover is directed towards the tumor.

In terms of bispecific antibodies, we'll be using this as a priming effect. And we've now entered into a collaboration with the University of Leiden to really explore this. The goal -- the stated goal of this collaboration is to enable us to start a clinical program, which I would hope would begin next year. And so we're examining targets, but we're really examining basically how the virus resets the immune system so that it can better respond or better enhance the effects of these bispecific antibodies.

I'm showing no further telephone questions at this time. I will now turn the call over to Kirk to answer some questions submitted by our shareholders.

Thanks, operator. We don't have a lot of time left in our -- for our AGM here, but we do have a number of questions. And so I'll paraphrase a few of them, and then we'll bring things to a close.

So first, Matt, maybe you can touch on and provide everyone why has there not been partnership given the AWARE-1 data? And is there any update that you can provide on the AWARE study?

Well, I'll talk very quickly to the AWARE-1 study. So the AWARE-1 study has met its primary endpoints. I think now, very comfortably, we can tell parties how the product is working. This is an agent that renews the immune system and remodels the tumor and specifically is synergizing definitively with checkpoint blockade. I think the AWARE-1 very definitively demonstrated that the virus causes a pro-inflammatory signal that is positive for the patients.

And the reason I say this, CelTIL, which was the primary endpoint -- and a lot of people aren't familiar with CelTIL. But basically, people are familiar with neoadjuvant studies where they talk about pathologic response or pathologic complete response or what have you. We demonstrated in the AWARE-1 study that the virus with letrozole and the virus with letrozole-Tecentriq eliminates tumor cells, and that results in a positive CelTIL score, but it also results in a pro-inflammatory signal. And that's important because any recruitment of immune cells to a tumor is correlated with an improvement in patient outcomes.

So anything we can do for these patients that mobilizes the immune system to the tumor is going to be a positive for them. They are going to derive a benefit. And that benefit is not only progression-free survival, so overall survival. So whereas the virus would create this pro-inflammatory events and cause patients benefit, adding checkpoint inhibitor increase that benefit. So I think that's very significant.

As we were doing the study, new technologies have been made available to better look at these pro-inflammatory. And these things -- these include improvements around NanoString technologies, which is looking at the genetic changes, but also in multiplexing, which looks -- allows us to look at cell-to-cell interactions. Like really, what we want to see is the infected cells are recruiting cytotoxic T cells and NK cells.

We are actually looking now at modifying the AWARE study so that we can better capture these data and bring some of these new technologies into it. What I don't think shareholders appreciate is we are continuously learning about this product. We are seeing results in multiple myeloma, we're seeing results in colorectal cancer and we're learning from our partners. The collaborations with Roche and with Pfizer are bringing new technologies or better ways to measure our benefit. So we actually paused on the AWARE so that we can incorporate some of these learnings so that we could better incorporate whether we're seeing a signal in HR+ -- or pardon me, in HER2+ disease as well as triple-negative and how we can use some of these technologies like VENTANA.

Just to remind people, we demonstrated on Cohort 1 and 2 that we could convert in Cohort 1, which is without Tecentriq, 20% of the patients into a PD-L1-positive state. In Cohort 2, we converted 40% of the patients into a PD-L1-positive state. We have previously not used this VENTANA system before. So the importance for Cohort 3, which is triple-negative, is we could presumably make significant increases in the patients who are eligible for checkpoint blockade.

And then looking at Cohort 3 and 4, which is HER2, this is an area we really haven't explored. It's a subset or a small subset of breast cancer, but commercially, a very valuable one. So we wanted to make sure that we're capturing the data to be as compelling in a small number of patients as we can be so that when we make a decision that we want to go into a bispecific directed against HER2, that it's data-driven, that it's based on something significant rather than a gut feeling.

So we are making modifications to AWARE-1 so we can better capture that data while preserving the safety of the patients. I mean we have to keep in mind, these women have very early-stage disease, and they're all being treated for a cure so we do want to make sure that they're treated basically as gently and as effectively as possible. But I think we very compellingly have demonstrated that these women have less likelihood of recurrence of disease through activation of innate and adaptive responses. So I believe we're providing long-term benefit, but we do want to make sure that these women are provided the best standard of care that is possible while we're able to capture the data we're looking for.

Andrew, I'm going to push you onto the bus entirely for the partnership and why we haven't signed a deal within days of the AWARE-1 study being made public.

Sure. Yes. I think the AWARE-1 study, above and beyond everything you mentioned, Matt, it's designed to add additional credence to the 213 data set that, as Tom already pointed out, showed really the curve -- the Kaplan-Meier curve is diverging at about the 10-month point, which is indicative, we believe, of an immunologic response. And here again, you see now the remodeling is tumor microenvironment. And so we think the 2 are additive to paint the portrait of why the 213 data set is credible and attributable to pelareorep.

So why is that not enough? Well, it's certainly a huge part of it, and we are making the most of that as we can with the number of companies that have an interest in potentially licensing this product, and that list does go. Beyond Roche and Pfizer, though, obviously, they're closer to our product and our data than the others. But there are others that certainly have us on the radar.

Having said that, the question that always comes up is what size is your Phase III? And will you add a checkpoint or not? And those are questions that the BRACELET trial is designed to address. And so will these companies jump in before those answers are addressed from the BRACELET data? I think that's a tall order. It's not an impossible order. But right now, I would not want to oversell that, that could happen prior to the BRACELET data being available to these other companies. As for Pfizer and EMD Serono, obviously, we know what they're waiting on to make their decision.

Andrew, if I could ask of you, I mean, obviously, this is something we discuss all the time, but I don't think it's something we generally share with our shareholders. In terms of partnering this around the bispecifics of the CAR T versus the Phase III, could you talk to the financial commitments, enhance the due diligence that's required between partnering and early-stage technology, if we wanted to partner on the bispecific side versus partnering on the Phase III, like what is the financial commitment that our partners are looking at in each one of these developments?

Yes. And first, I'll talk about the process because I think the process is different. And then I'll get to why through that process, what the financial commitment looks like. Obviously, what we have is exciting preclinical data with both the bispecifics and the CAR Ts, and we are doing outreach to the companies that are developing these therapies or in some cases, like the CAR Ts where there's 5 or 6 now approved, speaking also companies that are commercially viable in that space.

Having said that, what we -- the ask is much simpler in these cases. And it's really to first of all, test our product with whichever constructs they think would be most amenable to benefiting from that tumor remodeling. And so that's the first step, really, to sign a material transfer agreement, shift the company over our product, the pelareorep, and then initiate that preclinical testing. That preclinical testing then would trigger payments before they could go into Phase I and beyond.

What those payments look like? Obviously, you're entering in a Phase I setting, it's -- are much less than in a phase -- when you have a Phase III-ready asset. The risk is higher. The development time is longer and the costs associated with development are higher. Therefore, the upfront is smaller. So in terms of what the upfronts could look like, I would say that it's somewhere in the 20% range of what an upfront might look like for a Phase III-ready asset. And obviously, those are pretty much all over the place if you look at any of the reports that are put out by companies that track deals.

So I'm hesitant to say it could be this in Phase III and, therefore, 20% of that in Phase I is this. But it is probably around the 1/5 of what we could expect to see for an upfront going into a Phase III breast cancer trial.

Thanks, Andrew.

Okay. We had another couple of questions on this matter. Are your manufacturing capabilities insulated from the impact of COVID?

I'm going to push this to Allison entirely because that's her Baileywick. So Allison, what do you think?

Thanks, Matt. With substantial stability data, we're able to produce and store pelareorep for extended periods, which simplifies the logistics considerably. In addition, production activities are planned to accommodate a range of contingencies, including potential impact from COVID-19. We are proactive in tracking material lead times and analytical testing turnaround times and have experienced no direct issues with production capacity.

So we're good?

We're good.

We're good.

So we've touched on a lot of new opportunities. I think we have communicated our focus on the breast cancer program in the breast cancer signal. But we have a few questions around the new opportunities. So which of your new opportunities are you most excited about?

I think -- and again, I don't think people fully appreciate the importance of the AWARE-1 study. It fundamentally changes how we look at our agents. Like we went into this thinking at lysed tumor cells. And that was exciting. I mean, basically, we made -- we understood it as a cytotoxic. What we're understanding now and the growing body of evidence because of new tools made available to us, is the virus does so much more than that. It does lyse cells? Absolutely, it does. This is why we see near-complete pathologic response or complete pathologic response in some of our samples with the AWARE study. But that's really not the entirety of the picture.

I think the bigger side of the picture is this remodeling and renewing of the immune system in patients who are capable of it. Like I have to say, looking at the data we have now, the AWARE-1 patients, every single patient had a renewal of the immune system. They had 75% turnover in their immune system, and they had a complete remodeling of the tumor in a way that allowed immunotherapies to work better. It works with small molecules because it stresses the cell. But with immunotherapies, it sets the immune system up to actually respond and it changes the tumor in a way that the immune system can.

And I think this -- it has broadened our view of this agent significantly, like 213, it was wonderful to see a doubling the survival, but we didn't understand how it was doing it because lysis is only such a small part of the picture. I think now that we know that we can renew an immune system and now actually -- and again, with the biomarker, we can predict who has the ability to respond. And this sounds odd, but some cancer patients just can't mount an immune response. They've been so heavily pretreated that they're not eligible to. And it's sad, it's horrible. But I mean they've been so heavily pretreated with chemotherapy and radiotherapy that their immune system just can't respond to threats.

So I think with our new understanding, the doors are really open. Like we know it can work with small molecules. I mean the virus itself goes in and modifies how the cell is functioning. And the cell knows it's under stress. So if you add another stress, it's like anybody. When you run down and tired and exhausted, you're going to get sick, you're going to get the flu. Our virus causes that specifically in cancer cells. It makes it more susceptible to the effects of small molecules.

Now the issue is, historically, we've run the virus with very standard, very powerful chemotherapeutic agents that suppress the immune system. With our new understanding, we could be more nuanced. We can combine it with agents that have less suppressive capabilities and more immunotherapy -- or more immunotherapeutic. But I think in the near term, we have a much broader vision beyond the checkpoint inhibitors. I think we can definitively now allow checkpoint inhibitors to work in areas that they've historically not worked in. As an example, HR+/HER2- disease, possibly multiple myelomas and GI malignancies. And it can do this by creating a pro-inflammatory signal by making T cells able to enter the tumor compartment. It removes those restrictions (technical difficulty).

Beyond that though, immunotherapies, if you look at the challenges, for things like CAR T, like things like bispecifics that completely rely upon T cells for their activity, they don't work in solid tumors. They can't. Like a solid tumor won't ever admit inflammatory cells into it. They're not supposed to. They're trying to hide from the immune system. So the virus very specifically sends a signal from the solid tumor that says, "I'm open for inflammation now." Like all of a sudden, I look different to the immune system, it changes the permeability. It changes how these cells can engage, how it can interact.

So I think in the near term, CAR T and bispecific are very exciting opportunities for us. But in behind that, you look at the work that Professor Kevin Harrington had just presented. It can work with small molecules like CDK4/6, which kills immunogenically. So again, we're remodeling the tumor so that it becomes more immunogenically available as well as PARP inhibitors.

So I think checkpoint inhibitors, which is, by the way, a $55 billion franchise by 2025, then only works in 20% of the patients. I think realistically, the virus has the opportunity to double or triple that availability, which should be exciting to people with that franchise by opening up new white spaces, new opportunities. But in behind that, I think CAR Ts, which have historically been stymied in the area of solid tumors, the work coming out of the Mayo Clinic's, specifically Professor Vile, who's just recently joined our SAB. He's demonstrated very convincingly you can get solid tumor cures by treating concomitantly with the virus and then priming.

I think we need to stop thinking about the virus as a cytolytic and thinking about it as a pro-inflammatory signal. I think what we really have to understand is that we might be ironically named. This could be something that is an immune-priming agent that remodels our immune system and changes the solid tumor permeability and accessibility to inflammatory cells.

And if we think about it in that context, if we can get our head around that, it opens up a whole world of opportunities. Like this could be an agent that could really be a backbone for a lot of immunotherapies. Like I think we've demonstrated very effectively, it enhances the activity of small molecules by weakening the cells. So any further stress will add to that. But more globally, if we can change the patient's immune system and their tumors to respond better, I think it's one of the most exciting opportunities in oncology today.

Okay. We have time for one more question before we have to come -- bring us to an end. So you spoke about the CAR T. We've talked about it quite a bit. Just maybe can you tell us when we can expect to see more developments with respect to CAR T?

We're -- I know the Mayo Center is actually working on a publication. So we've a bit of a teaser with the poster. There's a much more full accounting. We've actually had a lot of interest from third parties, large pharma and biotech around the ability of the virus to enhance the activity of CAR T. So we've been able to engage on a lot of collaboration in this area. I think looking towards the end of the year, you can expect more publications and certainly next year. I think as this data becomes available, people can really begin to become really quite excited about the opportunities.

Okay. Thanks, Matt. Operator, we'll bring it to a close now, please.

Okay. Thank you. Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation.