Sellas Life Sciences Group Inc (SLS) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Galena Biopharma third quarter 2015 earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will be given at that time. (Operator instructions.) As a reminder, this conference call is being recorded.

I would now like to turn the call over to Remy Bernarda, Senior Vice President, Investor Relations and Corporate Communications. You may begin.

Good afternoon, everyone, and thank you for joining our call today. For those of you listening via telephone, I would encourage you to visit our website and log into our webcast presentation. For our quarterly call, we will again be using slides to enhance our information flow. The slides can be accessed on our website in the investor section under events and presentations. These slides are posted both as a PDF document and will also be available on the webcast. The slides are viewer-controlled, meaning that you, the viewer, will need to advance the slides. Our speakers will alert you to the slide they are addressing.

As listed on slide number two on our presentation, during today's discussion we may make forward-looking statements about our clinical programs. Such statements include but are not limited to statements about our divestiture strategy, commercial and clinical operations and plans, and the development progress of our clinical product candidates, including patient enrollment, trial initiations, and collaborations. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those identified under risk factors in our annual report on Form 10-K, quarterly reports on Form 10-Q, and other documents filed with the SEC and available on our website. Actual results may differ materially from those contemplated by these forward-looking statements.

Please now turn to slide three, as I would like to introduce the members of management presenting on today's call -- Dr. Mark Schwartz, our President and CEO; Ryan Dunlap, our Vice President and Chief Financial Officer; Dr. Bijan Nejadnik, Executive Vice President and Chief Medical Officer; and Dr. Gavin Choy, Senior Vice President, Clinical Sciences and Operations, who will discuss the progress on our clinical programs. Please turn to slide number four, and Dr. Schwartz will begin our discussion.

Thank you, Remy, and welcome, everyone, to our third quarter earnings conference call. For those of you who saw this quarter's earnings press release, you read that we announced a change in strategy to renew our focus on our clinical pipeline and to divest our commercial operations, and I want to start by providing some insight on our rationale behind this decision.

Looking back at the status of our pipeline, shown on slide five, in November of 2012 we were enrolling only one Phase 3 trial, our Phase 3 PRESENT study for NeuVax, and were planning to start our first Phase 2 trial with NeuVax in combination with trastuzumab, and the Phase 1 trial for GALE-301.

If you now turn to slide six, over the last three years we have significantly advanced our clinical pipeline, and we now have four compounds and eight clinical trials in oncology.

Most importantly, our two lead clinical programs are in the field of immunotherapy, the most rapidly advancing area in the oncology field and the most exciting and active area in therapeutic development. The advances in this field have been substantial. And the most recent generation of immunotherapies have recently provided treatments for diseases like melanoma, lung, and prostate cancers that historically were extremely difficult to treat, and patient outcomes were quite poor. Including monoclonal antibodies, checkpoint inhibitors, and cancer vaccines, more than a dozen different immunotherapy agents have been approved targeting more than 10 different cancer types, including several products for the adjuvant setting.

Shortly I will formally introduce our new Chief Medical Officer, Bijan Nejadnik, who will expand on these immunotherapy developments and Galena's participation in this space, and our focus on preventing cancer recurrence. This is an untapped market for many cancer indications, and an area where there is a very high unmet medical need, representing significant high value market opportunities for the Company. As the current treatments under development targeting existing and metastatic tumors become successful, the number of cancer survivors will continue to grow, and Galena's market opportunity will continue to grow with it.

I will now transition into a discussion on our strategic decision to exit the commercial business. When I assumed the position of President and CEO of Galena in August of 2014, I, along with our executive team, began a careful examination of our operations and assets to determine the optimal strategy to enable the greatest opportunity for growth while maximizing shareholder value. We set very specific internal goals for both the commercial and clinical sides of the organization to ensure we could effectively grow the business.

On our Q2 earnings call, we discussed the current status of our commercial business and undertook a very aggressive and focused review of the commercial business, which consists of two products, Abstral (fentanyl) sublingual tablets, and Zuplenz (ondansetron) oral soluble film. As a result of this analysis and review by our Board of Directors, we have concluded that it is in the best interest of our patients, our shareholders, and the long-term success of our Company to focus our energy and our resources exclusively on our clinical development program. Therefore, as announced, we have hired a financial advisor to provide us with strategic advice and develop a process to divest the commercial business. Providers and patients will have ongoing access to both drugs until we have transitioned out of the business.

Since acquiring the products, we have significantly grown the sales of Abstral and successfully launched Zuplenz, and I believe that each has a strong commercial potential and offers significant benefits to their respective patient populations. However, the foundation of Galena has always been our cancer immunotherapy programs, which are now rapidly advancing toward several key inflection points that Gavin will elaborate on shortly. Therefore, we believe it is important for Galena to renew our focus and our commitment to our core expertise in the successful advancement of our late and mid-stage clinical pipeline.

I very much appreciate the dedication and hard work of our commercial team as we transition out of the commercial business, and I'm extremely grateful for their efforts.

Please turn now to slide seven. In light of the decision to divest, I'm going to turn the call over to Ryan Dunlap, our CFO, to walk you through the financial and accounting implications of this plan and the key metrics to track the future. Ryan�.

Thank you, Mark, and good afternoon, everyone. As a result of the strategic shift that Mark just mentioned, the presentation of our financial results and financial statements this quarter will reflect a distinction between our continuing clinical development, general and administration activities, and the sales and marketing results of our commercial business, which are classified as discontinued operations as of the third quarter.

Please refer to slide eight, where I have shown the comparative quarter as I walk you through the key components of these financial results. All amounts presented are in US dollars.

I'll begin with our continuing operating activities, which includes general and administrative, or G&A, and research and development, or R&D expenses. Operating loss from continuing operations for the third quarter of 2015 was $8.6 million compared to $10.6 million for the third quarter of last year and $26.6 million year-to-date through Q3, compared to $34.2 million for the same period last year.

To break down the key expense component, G&A expense for the third quarter was $2.9 million, down 17% from the $3.5 million reported for the third quarter of last year. Year-to-date through the third quarter, G&A expenses were $7.9 million, down 38% from the $12.7 million reported for the same period last year. The year-over-year decrease in G&A costs is largely a result of the reduction in nonrecurring professional fees incurred last year related to the ongoing civil litigation and SEC-related activities. We continue to vigorously defend the civil litigation while also proactively seeking prompt resolution, which may result in future legal expenses.

R&D expenses were $5.7 million for the third quarter of 2015, down 19% from the $7 million reported for the second quarter of last year. Year-to-date through the third quarter, R&D expenses were $18.7 million, down 13% from the $21.5 million reported for the same period last year. As we communicated during our last earnings call, this year-over-year decrease was anticipated, and is predominantly the result of completing enrollment for our NeuVax Phase 3 PRESENT trial, as the costs during the enrollment period are much higher that the post enrollment maintenance phase.

Aside from the G&A and R&D expenses I just discussed, the other significant expense affecting our overall loss from continuing operations relates to the non-cash charges from changes in the fair value of our warrant liabilities. The change in our warrant liabilities resulted in a gain of $2.1 million for the third quarter of 2015 versus a $6.7 million gain for the same quarter of last year and a loss of $1 million year-to-date through Q3 2015, compared to a gain of $13.2 million for the same period last year. These fluctuations are largely driven by changes in our stock price, which is a key input into the valuation model used to estimate this liability.

Moving now to discontinued operations, or those elements related to our commercial business, our loss from discontinued operations was $11.7 million for the third quarter of 2015, or $0.07 per basic and diluted share, including $8.1 million in impairment charge related to the classification of our commercial asset group as held for sale. This compares to $2.6 million, or $0.02 per share, for the third quarter of last year. Year-to-date through the third quarter, loss from discontinued operations is $16.1 million compared to $6.3 million for the same period last year. The year-over-year decreases result primarily from the aforementioned impairment charge related to the discontinuing of our commercial operations, as well as other revenue recognition related changes in accounting estimates and additional costs associated with the launch of Zuplenz.

Moving to cash flow on slide nine, we had $34.8 million in cash at the end of the third quarter compared to $23.7 million at the end of 2014. The roughly $11.1 million increase in cash during the first three quarters of the year represents the $47.4 million raised in follow on equity financing, offset by $27.9 million in cash used in continuing operations, $5 million used in discontinued operations, $2.9 million in principal payments on long term debt, and $500,000 related to investing activities.

As Gavin will discuss, we expect to initiate a new Phase 2 NeuVax trial next year, and, over time, we expect to expand our overall pipeline through additional trials. Based on our current and planned programs, we anticipate our quarterly burn rate to be between $9 million and $11 million for the next two quarters, which includes expenses of $1 million to $2 million related to the transition out of our commercial business. This does not include any proceeds we may receive from the divesture.

Moving to slide 10, I'll now turn the call back over to Mark.

Thank you, Ryan. It is now my great pleasure to formally introduce our new Chief Medical Officer, Dr. Bijan Nejadnik. Bijan joins us from more than 22 years of experience as both an academic and pharmaceutical industry professional.

He spent 13 years in teaching, research, and caring for patients at world-renowned academic institutions and 12 years in industry. On the corporate side, he has managed numerous clinical development teams and programs with a therapeutic focus in hematology, oncology, immunology, and central nervous system diseases. He has successfully developed numerous biologics and small molecules, advancing these agents towards biological license and new drug applications submissions.

Since Bijan has only been with us for a little over a week, I have asked him to provide his views on the clinical landscape for immunotherapy and where our programs fit in. Then, Gavin Choy, our head of Clinical Operations, will review the status of our clinical development program.

Thank you, Mark. I'm excited to be a part of Galena's team, and feel privileged to have the opportunity to address our analysts and shareholders today.

I have recently joined Galena. And, as expected, before joining I spent some time contemplating the opportunity. I've been fascinated by immunology and oncology since I was a medical student. As these two disciplines have been joining forces, I believe we are living in one of the extraordinary inflection moments in the history of medicine.

Some major progress made in the field of cancer immunotherapy includes the use of monoclonal antibodies, advances in cell therapy such as CAR-T cells, the advent of checkpoint inhibitors, and finally the innovations in cancer vaccines. Although all of these major paths are offering great impact in the lives of patients, and have solid perspective and viability, cancer vaccines offer the unique chance of preventing a deadly disease. And as we know, there is no better treatment for a fatal disease than preventing it.

Of course, developing a vaccine takes more time and involves patients who do not have detectable disease. This requires patience and commitment to the field and to the patients. For this reason, I am inspired by the courage Galena has shown.

As you can see on slide 11, it was estimated there were 14.5 million cancer survivors in the United States in 2014. And by 2024, it is projected that there will be approximately 19 million cancer survivors. This provides a tremendous opportunity for Galena, as we are uniquely positioned to potentially treat patients with different kinds of malignancies.

As available cancer treatments continue to prove successful, which I believe they will, either independently or in combination with one another, the number of cancer survivors will continue to grow. However, the question remains in the mind of every treating physician and every cancer survivor as to how to prevent the next recurrence. This will provide significant opportunities for us to develop vaccines that can give patients every chance to maintain their survivor status.

As a former practicing physician, I have to say, helping a patient with reducing the burden of an advanced disease is tremendously satisfying, very visible, and provides immediate gratification. Preventing a disease, in the other hand, has no visibility, as the disease does not occur or, in the case of cancer survivors, does not reoccur. However, this is a tremendous service to those patients, and fortunately is getting more and more attention from the public, the regulators, and the payers.

I'm very optimistic regarding the development in the field of immuno-oncology and how our clinical assets might complement the treatment armamentarium across a range of cancers.

Please now turn to slide 12, and I will hand the call over to Dr. Gavin Choy to review our operational progress. I look forward to further dialogue in the future.

Thank you. Indeed, we are thrilled to have Bijan lead our clinical development team, and we look forward to his leadership, insights, and expertise as we advance our clinical development pipeline.

Today I will focus on the advancements we have made on our vaccine immunotherapy clinical programs over the last quarter.

On slide 13 is a detailed summary of our NeuVax programs in breast cancer, where we currently have four trials; a registrational single agent trial, two trials in combination with trastuzumab � all targeting secondary prevention and, importantly, a proof of principle Phase 2 trial in primary prevention in patients with DCIS. We have leveraged our resources and garnered funding from partners and government agencies to expand the patient population and the potential utility of NeuVax. NeuVax is a peptide derived from the HER2 protein that binds to the human leukocyte antigen, or HLA, and is combined with the immune adjuvant GM-CSF.

Our lead clinical trial is PRESENT, the acronym for the Prevention of Recurrence in Early-Stage, Node Positive Breast Cancer with Low to Intermediate HER2 Expression with NeuVax Treatment. This is our pivotal, Phase 3, single agent registration study targeting node positive HER2 IHC 1+ 2+ patients, and is under an FDA-approved Special Protocol Assessment.

We had an important advancement in this trial this quarter. Based on cardiac monitoring data from the ECHO or MUGA scans, the IDMC recommended reduced cardiac toxicity monitoring consistent with pre-specified toxicity monitoring stopping rules defined in the study protocol. This is a positive trend for the trial that signals, to date, we have not observed severe cardiac issues with the patients commonly associated with HER2 targeted therapies.

Our next major clinical milestone for this trial will be achieving a positive readout on our event-driven interim analysis, which will occur when we reach 70 events, defined as recurrence or death from any cause. Based on our current event rate, as we have indicated in the past, we expect to reach this milestone in the first quarter of next year. Once we reach the 70th event, we will prepare the data for review and schedule the IDMC meeting, leading to the safety and futility analysis that will likely be reported in the second quarter of 2016. We believe this will be a significant de-risking event for the trial.

In addition to PRESENT, we also have two mid-stage trials in combination with trastuzumab currently active across multiple sites in the United States. The first is a Phase 2b study in node positive and triple negative HER2 IHC 1+ and 2+ patients. Our second combination trial expands our breast cancer presence to the HER2 IHC 3+ patients. This trial is treating women who are high risk with node positive or node negative disease.

During the quarter, we also announced our collaboration with the National Cancer Institute, or NCI, on a new, proof-of-concept Phase 2 clinical trial in women with ductal carcinoma in-situ, or DCIS. The trial will be called VADIS, Phase 2 trial of the Nelipepimut-S Peptide Vaccine in Women with DCIS Breast Cancer, and advances NeuVax earlier in the treatment paradigm towards breast cancer primary prevention. The primary endpoint of the trial is immunologic, evaluating for the NeuVax specific cytotoxic T lymphocyte response in vaccinated patients compared to patients receiving GM-CSF alone. The University of Texas M.D. Anderson Center Chemoprevention Consortium is the lead institution for this multicenter trial. The study will determine whether long lasting immunity is induced and whether the induced immune response suppresses the growth of DCIS cells. The results from this study will enable us to design a Phase 3 clinical trial to test whether this vaccine prevents the development of invasive breast cancer in women with DCIS, potentially negating the need for surgery. We expect to initiate the VADIS Phase 2 trial in the first quarter of next year.

Moving now to slide 14 and our second immunotherapy program, that now has two assets, GALE-301 and GALE-302. Both GALE-301, or E39, and GALE-302, or E39 prime (previously known as J65), are peptide vaccines derived from folate-binding protein and are targeting the prevention of recurrence in ovarian, breast, and endometrial cancers, diseases where the recurrences are high and the outcomes are often quite poor. Both assets are also combined with GM-CSF, and are evaluating women who have no evidence of disease after undergoing their standard of care therapy and rendered disease free.

GALE-301 is in the Phase 2a portion of its Phase 1/2 trial, with the optimal dose carried forward from the Phase 1, as depicted in the study schema on slide 15. In September, we presented positive data at the European Cancer Congress, or ECC, on the Phase 2a portion of the trial. The poster at ECC provided updated data for all patients who had received at least 12 months of treatment, and the results can be seen on slide 16. As presented, in the 1,000 microgram group, or optimal dose vaccine group, the two year disease free survival estimate is 85.7% versus 33.6% in the control group, with a p-value of 0.02. We are continuing to collect safety, immunologic, and clinical recurrence data, and expect to present an update in the first half of 2016.

As you saw this morning, we presented data over the weekend at the Society for the Immunotherapy of Cancer conference and introduced GALE-302. GALE-302 is an attenuated, or weaker, version of the E39 peptide. Folate-binding protein is a highly expressed tumor associated antigen in many cancers, making it a very logical treatment target for active immunotherapy. It also results in immunogenic peptides that have led to the development of a potentially very potent vaccine. It is theorized that this potency could lead to T-cell exhaustion in patients over time, leading to cancer immune evasion, so we are assessing whether incorporating an attenuated version of the vaccine into the treatment regimen will provide an improved immune response.

Please turn to slide 17 for the study schema. The poster presented data on our Phase 1b randomized trial comparing three sequences of GALE-301 and GALE-302 comprising the primary vaccine series, or PVS, in breast and ovarian cancer patients. The objective of this trial is to optimize the ex-vivo immune responses and the local and delayed-type hypersensitivity, or DTH, reactions. HLA A2+ breast or ovarian cancer patients were enrolled after completion of standard of care. Thirty-nine patients were randomized into three arms with 30 patients completing the PVS.

This preliminary analysis revealed both vaccines are immunogenic and well tolerated with no major safety differences between PVS sequences. The results of the DTH reactions among three sequences is shown on slide 18. The data derived from DTH reactions indicate that treating patients first with the strong vaccine, GALE-301, followed by a weaker version, GALE-302, produced the most prominent and statistically significant local and DTH responses.

We have made significant progress with all of our immunotherapy programs this year, and we are especially excited to expand the utility of NeuVax in DCIS and advance our programs targeting FBP. We are in a strong position to make further advancements in 2016.

I would now like to hand the call over to Mark for closing comments. Please turn to slide 19.

Thank you, Gavin. Turning now to slide 20, over the past year we have met several key development milestones. Most importantly, we completed over-enrollment into our PRESENT trial, and look forward to reaching our 70th event in Q1 and reporting the results of the interim analysis shortly thereafter.

We also had several positive data readouts on our FBP targeted program with GALE-301 and GALE-302. We are pleased with the outcomes we saw in these trials as we look at ways to optimize the immune response. As the data continues to mature, we will consider the outcomes as we plan the next stages of our FBP-directed program, and expect to announce progress on that next year.

And finally, we will be reporting final data on our GALE-401 Phase 2 program at ASH, and are evaluating next steps for that asset as well.

I'd like to end this call with what may be our most important slide, so please turn to slide 21. This is the first patient in our PRESENT trial, and I try to end all of my presentations with this image because it reminds me of why we are here. Bijan talked about the courage of our small company to embark in these potentially groundbreaking clinical studies. With the steps we have taken today and the focus on our immunotherapy pipeline, we are committed to our investigators, their staff, the nurses, and our patients to provide treatments in unmet medical needs and enhance shareholder value.

We will now open the call for questions.

Thank you. (Operator instructions.)

Hey, guys. Good afternoon. Thanks for taking the question. Mark, maybe just first, I want to get a sense about the divestiture of the assets from a personnel standpoint. What was the size of the personnel decrease? And then, as you're looking now to refocus on immunotherapy, basically going back to your roots, what do you see as the potential needs for hiring for the immunotherapy franchise?

Thanks, Joe. We are in the process of divesting the full commercial organization, and we do anticipate spinning off the full organization. As a fully staffed commercial organization, it was about 47 people.

So, as we go forward, based on the clinical trials that we bring on, the additional trials that we start, we'll scale the organization accordingly. So, I think the hiring in the short term, the next three to six months, on the clinical side will be modest as we look to fill key skill sets that we need to do.

We need to start thinking about the BLA filing and building the basis for that infrastructure. Our other trials are moving forward, so they'll soon be moving, hopefully, through the Phase 2 process and potentially into Phase 3. And so, I think we'll scale the development as we make progress on those areas and the number of trials we get started increases.

That's helpful. Thank you. And then, going back to NeuVax, obviously focus should move back to this product with PRESENT maturing. Can you go back to a recurring theme that I know you've gotten a lot, we've gotten a lot, with regard to NeuVax as a monotherapy? It's an issue/question/pushback regarding the mechanism of targeting just HER2 1+ and 2+ and the views on not hitting 3+ as a single agent.

So, Joe, is your question regarding it being a single agent or our targeting the HER2 1+, 2+?

Well, the basic question that we used to get, I don't know, you've gotten as well, is why do you feel it might not work in targeting 3+ as well, or what is the mechanism around that?

Sure. So, yes, we've gotten the question. And the answer to that is as follows.

We did generate some data in the Phase 2 trial regarding 3+ patients, but it really wasn't enough to draw a fundamental conclusion. I think the fact that the Phase 2 data generated -- the Phase 2 trial generated data of efficacy in the 1+, 2+ patients is very straightforward.

And I think that our decision to go into the 1/2 is based more on the unmet medical need and the practicality of going into that patient population. There are no drugs for those patients targeting 1+, 2+ patients, either in the metastatic or the adjuvant setting. And we were very highly supported by the FDA in moving down that path.

There also is clinical data to support why any vaccine might work better in the 1+, 2+ patient population, such as the decreased expression of HLA in 3+ patients, for example. But really, we are driven by the data that we have and ultimately the unmet medical need that we believe exists.

We're certainly not interested in running a clinical trial against Herceptin. In fact, we have two clinical trials in combination with Herceptin, and I think there's a lot more value in being synergistic with them than trying to move into a -- the HER2 positive space, which is already quite crowded.

That's very helpful, Mark. And thanks for the reminder as well.

Cantor Fitzgerald.

This is Mara Goldstein with Cantor Fitzgerald. Thanks for taking the question. So, if I go back to four years ago when the company divested other assets and ended up dividending those off the shareholders, is that an option that's on the table?

We are looking to divest the commercial assets. And at this point, Mara, we're not at liberty to say exactly what any structure or transaction might be.

Okay. And the $8 million impairment charge, how much of that was cash?

Hi, Mara. This is Ryan.

Hi, Ryan.

Thanks for the question. I'll field that. How you doing? The impairment charge is essentially a non-cash charge in our financial statements which resulted from us applying the accounting guidance to value our commercial assets to the lower of cost less cost to sell, based on judgmental estimate on fair value. So, that's a non-cash charge in our financial statement.

Okay. So, then the operating burn of $27.8 million, is that -- should we consider that a reasonable go forward base?

I'd say moving forward, as mentioned, $9 million to $11 million per quarter for the next couple quarters is reasonable. We will give you additional guidance post divestiture when we get that settled. But, I think $9 million to $11 million, Mara, is probably a good model to get you through 2016 at this point.

Okay. And then, I had a clinical question just on folate receptor program and, again, sort of the idea around expression levels and what data you've been able to look at thus far that would suggest treating patients with different levels will yield you different outcomes. And what can we expect going forward?

This is Bijan here. Thank you for the question, Mara.

Hi, Bijan.

So, the way I understand your question is why do we think that different schemes in folate-binding protein vaccination provides better results. Or, what is the exact nature of your question?

Well, that's essentially what I mean. You have like the -- you have different -- right, you have different levels across the spectrum of women with disease. And so, I'm just curious as to sort of what the underlying rationale is for how you treat according to those levels.

Well, yes. The FBP is over expressed in those cancers, especially in ovarian and breast and gynecological cancers. This is a known fact.

And based on that, we felt that there would be a great opportunity to kind of have a vaccination against that specific antigen. So, there is -- when you look at patients all across, the up regulation of FBP is pretty high and acute in those patients.

Of course, you will have some ups and downs even within the same patient over time. But, the overall target seems to be very viable, and obviously the results speak for themselves.

Okay. And if I could just ask a question on, Mark, the statement you made on 401 about making a decision about what to do, do you mean including that as a potential candidate for divestment or do you mean continuing into a registration study?

No, Mara, as we get the data, the analysis of the data of how to carry it forward in development.

All right. Thanks a lot. I appreciate it.

Thank you.

Ren Benjamin, Raymond James.

Hey, good afternoon, guys. Thanks for taking the questions. Maybe just starting off, the two trastuzumab studies, can you give us an enrollment update? How are those trials enrolling? And when -- just remind us when we might see data from either of those studies.

Hey, Ren. Thanks for the question. We are not -- we have not and we are not giving enrollment updates in those trials at this time. We have indicated that we -- our current expectations -- and both those trials as well also do have recurrence rates that we need to monitor.

But, in the HER2 1+, 2+ NeuVax Herceptin combination trial, we anticipate that there would be an interim data analysis probably some time in 2017. That's all that we've indicated at this point in time.

Got it, okay. A second question just regarding GALE-301 and 302. I guess I'm looking for an explanation as to, instead of combining with an attenuated peptide, why not move forward in this day and age looking with -- working with other either, well, put it in adjuvants or, even better, checkpoint inhibitors?

So, your question is the adjuvant specifically, or why choose the E39 and E39 prime?

Yes. Well, so the E39 you already have, right? So, that's 301. I guess the E39 prime, it seems to me that, just given all that we know about immuno-oncology, the funds would be best spent maybe combining with -- combining 301 with a checkpoint inhibitor, let's say. And so, I'm kind of curious as to what is leading you guys down this particular path.

So, Ren, your comment that 301 that we have, I mean, 302 we also have. So, it's something that we can easily test and move forward with.

I think much like NeuVax, once we develop a firm understanding of where we are, the capabilities of the compound, its most appropriate setting, looking for additional combination strategies and trials is something that we will definitely be doing, much like we are doing with NeuVax.

We've added a DCIS trial here recently. We continue to look and make a high priority for additional trials in NeuVax. We will do the same with FBP. I think partly as we generate a bit more data on it, we'll be in a better position to define how best to use it and what the best type of combination might be.

Okay. And just one final question from me. I'm just back from SITC and AACR, so I'm feeling especially science geeky.

And one of the things that really resonated at SITC was this talk on the hallmarks of what makes a good cancer vaccine. They listed several things, right, a highly mutational antigen, a very potent adjuvant, something that they defined as a long peptide, and then the potential of a checkpoint inhibitor or something to enhance that T-cell -- the CD8 T-cell response or even CD4 T-cell response. So, can you maybe just comment on NeuVax and how it kind of fits into these kind of four points that were brought up?

Yes, Ren. This is Bijan here, and I attended the same conference and I feel the same amount of geekiness that you do. And I had an opportunity to discuss with a couple of people as well myself.

And my understand is, although the longer the peptide, the more possibility of having an epitope provoking the intense immunological reaction. However -- and by the same token, the reaction may be less targeted towards the specific antigen on the target cancer cells.

And the best indicator at the end of the day is the stability of the antigen and the robustness of the immunologic reaction, the specific immunological reaction and the result obtained from the studies.

Now, when you look at the NeuVax, E75 is obviously very specific and it stimulates the CTLs against this epitope and generates memory T-cells that will confirm long lived and antigen specific protection against the repeat challenges with the E75 epitope. And also, the nonclinical data indicated that the E75 is highly binding and recognizes the majority of the breast cancer CTLs.

And in this situation, the E75 is picked up by the dendritic cells and doesn't have to go through the intercellular modifications. And therefore, the results are pretty -- as specific as expected.

Okay. And just one final one on checkpoint combinations. Have you guys done any preclinical work evaluating NeuVax in combination with any of the checkpoint inhibitors?

We are actually undertaking that work now. And it is an area that is a very high priority and a very high focus for us, both preclinical as well as clinical opportunities.

Great. Thanks, guys, and good luck.

Thank you.

Jason Kolbert, Maxim Group.

Hi. This is actually [Diane] calling for Jason. Thank you for taking the question. And my question is that, given the early efficacy of the GALE-301 and the GALE-302 in the Phase 1b study in breast cancer, are there any thoughts on the potential use to use the FBP vaccines in combination with NeuVax for breast cancer? Because there seems to be a potential for synergy.

Yes, absolutely. We have had those discussions in-house. And like the whole range of opportunities that I think our platform presents to us, it's really a matter of sequencing them in to our clinical -- our long term clinical goals.

So, the short answer is yes. And I think you touched on a point that's been a very exciting topic of conversation in-house. And we now looking at ways as to how to carry that forward in light of the additional and other priorities that we have.

Okay. Thank you. And also, breast, endometrial, and ovarian cancer and a handful of other cancers have been shown to be highly immunogenic to unlocking more cancer killing power of T-cells, but cytokines like IL-12 could have a role especially for vaccines against these tumor types. Is bringing an IL-12 or checkpoint something Galena is considering?

So, remember that right now we are working in the adjuvant setting. So, I think working with IL-12 in the adjuvant setting -- IL-12, as I understand, has a fair amount of toxicities.

As we move forward, I guess downstream, into potential the metastatic setting, I think there's a number of different agents that we could do combination studies with, including IL-12, including checkpoint inhibitors, or any of the other immune agents that are out there that essentially allow the efficacy of the T-cell to improve in the otherwise tumor sequestered environment.

So, we are looking at a number of different options at the moment, and so that's one of them. But I think, to be honest, some of the other more recent drugs that I think are a bit more targeted and focused are probably higher on our list.

Okay. Thank you.

Rahul Jasuja, Noble Life Science Partners.

Hey, guys. Thanks for taking the question. So, just one or two remaining questions that I have from the list. So, Mark, you did mention just in the last discussion that this is in the adjuvant setting. And clearly, most of the advances that have been made in the brave new world of cancer immunotherapy have been in the metastatic setting. So, in the current stage where you guys are, whether it be with NeuVax or the FBP peptide, you're in the minimal residual disease setting in the prevention of cancer reoccurrence. So, there really isn't an opportunity with checkpoint inhibitors in this setting, correct?

In the adjuvant setting, you're talking about?

Right.

I think in general you're pointing in the right direction, but I believe IPI was just given approval for melanoma in the adjuvant setting. So, I think to some degree it'll probably be determined by the specific cancer.

I think in general, though, the opportunity is going to be much bigger in a -- for a combination of NeuVax with a checkpoint inhibitor in an existing tumor setting or in a metastatic setting. I wouldn't eliminate the adjuvant settings. I think it's just going to be a much more narrower selection and they're going to have to be more carefully thought through.

Okay, got it. And then, a question on the E39 prime. So, sort of a burning question that I have here is what is the attenuation? Is it an attenuation that makes the binding of the peptide in the HLA pocket different such that you get more clonal expansion of CTLs? What is the mechanism there? Is that understood?

Yes, the mechanism of attenuation here is basically that the overall -- when you have groove of the HLA and you have the connection of your peptide, that affinity could be different and the stimulation level or stimulation could be different.

Clearly, the E39 prime has less of that stimulation because of the change in amino acids in the sequence than the E39. The major issue with strong antigens is that over time you may have the T-cell exhaustions. And that's called commonly T-cell burnout.

And alternating the strong with the weak one in some cases, and this is more specific in this specific case, can offer a better immunological reaction and therefore has a better chance to give you a clinical response as well.

Okay, great. And just I have to ask this even though it's a little sort of in the weeds here. So, you actually can show, with an attenuated peptide, you can get better CTL effector function in vitro as well?

Yes, that has been -- yes. And also, in the Phase 2 immunologic response reaction, clearly the regimen of three injections, inoculations, of the E39 and then followed by three E39 prime showed that the reactions from the number of patients you could get was more robust.

Okay, very good. And I'm happy to see the change in direction. Thanks. That's all I had.

Thanks, Rahul.

Thank you. And at this time, I'd like to turn the call back over to Mark Schwartz for closing remarks.

I'd like to thank everybody for their time late in the day here. I appreciate it, and look forward to talking with everybody in the future.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.