Vascular Biogenics Ltd (VBLT) 2016 Q1 法說會逐字稿

Thank you, operator, and thank you all for participating in today's first-quarter 2016 financial results and corporate update call. I am Michael Wood at LifeSci Advisors, and leading the call today will be Professor Dror Harats, CEO of VBL Therapeutics; and Amos Ron, VBL's Chief Financial Officer. A press release with the Company's first-quarter financial results became available 8 o'clock this morning Eastern US Time and can be found on the investor's page of the Company's website.

Before I begin, I would like to remind everyone that various remarks about the future expectations, plans, and prospects constitute forward-looking statements for the purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. VBL cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated. Any forward-looking statements made on this conference call speak only as of today's date, Friday, May 13, 2016, and the Company does not understand intend to update any of these forward-looking statements to reflect events or circumstances that occur after today's date.

As a reminder, the conference call is being recorded and will be available for audio rebroadcast on VBL's website. As the operator mentioned, all participants are currently in listen-only mode, and there will be a brief Q&A session following the Company's prepared remarks. With that, I would like to turn the call over to Professor Dror Harats, CEO of VBL. Dror, please go ahead.

Thank you, Michael, and good morning to everyone joining us on the call. We are pleased to report that the first quarter was a very productive period for VBL, as we continued to advance our lead programs, including the GLOBE study, our ongoing phase 3 trial of VB-111. We are committed to our goal of becoming a leader in the development and commercialization of innovative first-in-class therapies for oncologic indications. And during the quarter, we continued to build on the very substantial progress we made in 2015.

Our most advanced therapeutic candidate is VB-111, a first-in-class gene-therapy-based biologics that we are developing for solid tumor indications. We have an advanced program for recurrent glioblastoma, or recurrent GBM, an aggressive form of brain cancer. It is currently being evaluated in a pivotal phase 3 study for recurrent GBM under an SPA and with full endorsement of the Canadian Brain Tumor Consortium additionally. We have been granted fast-track designation by the FDA, and VB-111 has received orphan drug status in the US and Europe.

Patient recruitment in the GLOBE is proceeding well. We have been enrolling patients in the US since last August, and in February this year we announced the enrollment of our first Israeli patient in Haifa, Israel. During the last quarter, we opened multiple additional centers in the US and Israel, and trial is moving forward according to plan. We expect to recruit approximately 250 patients in total and will perform an interim analysis when 91 mortality events have occurred in the trial, which we expect to happen in the first half of next year.

We are also studying VB-111 in the treatment of recurrent platinum-resistant ovarian cancer, and we have seen positive results and a high response rate in this indication as well. As we have explained, after reporting phase 2 data last June, we have been following patients, gathering tumor responses and survival data. Pending an end of phase 2 meeting with the FDA, we believe that the next step for this program including randomized controlled trial in patients with ovarian cancer.

At the forthcoming ASCO meeting in June, I am pleased to say that we have had two abstracts accepted. One of these will be an update from the ovarian cancer trial. The data are still under embargo, so I can't go into much depth at this point. But the data will include new information on progression-free survival, overall survival, tumor biopsies including immune histochemistry analysis, and analysis of the CA-125 biomarker. The second paper will describe the results of a meta-analysis which was performed by an independent academic center comparing bevacizumab or Avastin data in recurrent GBM to our VB-111 phase 2 data. In addition to ASCO, our team will also presenting data at the Biomed conference in Israel, in several banking conferences during the upcoming weeks, and at the BIO meeting in San Francisco in June.

Across all our trial, VB-111 has already been in more than 170 patients. It is well tolerated and exhibits promising results in three separate oncology indications. There are even some patients from our phase 1 study that have been on the drug now for five years.

The safety aspect is very important, because we want physicians to be able to use our drug, VB-111, in combination with other agents. We have been in communication with the FDA regarding a possible expanded access protocol for VB-111 in GBM patients, including those currently ineligible to participate in our studies. It could provide an opportunity for those who did not qualify for the ongoing phase 3 trial to gain access to VB-111. Such a program could provide additional safety and efficacy data. We are working with the agency to finalize the parameters of this VB-111 access program.

The third indication for VB-111 is thyroid cancer. As you know, we met the primary endpoint of six months progression-free survival in our phase 2 trial. We continue to follow patients and hope to report more data, including overall survival, before year-end.

Regarding our Lexinoxoids program, last month we reported the publication of data from VB-201 and VB-703 for the treatment of nonalcoholic steatohepatitis and liver fibrosis in Digestive Disease and Science Journal. The data indicates that Lexinoxoids can restrict liver inflammation and ameliorate liver fibrosis in an animal model of this disease. If you are interested in the article, it is available on the magazine's website or through a link from the press release on our webpage.

Finally, we had a KOL event for the financial community in New York last week, and it was nice to see some of you in attendance. I have to say we were very encouraged by the high level of interest. Our speaker was Dr. Timothy Cloughesy from the David Geffen School of Medicine at UCLA, who discussed advances in glioblastoma treatment, including VB-111. For those of you who are unable to participate, I encourage you to listen to the replay on our website.

Now, I would like to turn the call over to Amos Ron, our Chief Financial Officer, who will give you more details about our financial results. Amos?

Thank you, Dror. I will review for the financial highlights and also speak to our cash position and our financial guidance. We ended the quarter with $33.2 million in cash and cash equivalents and short-term deposits compared to $37.1 million as of December 31, 2015.

Research and development expenses were $4 million for the three months period ended March 31, 2016, compared to $2 million for the same period in 2015. The increase in R&D expenses of $1.7 million is mainly related to increased costs for the VB-111 subcontractors and consultants involved in the phase 3 pivotal trial of VB-111 in recurrent GBM, which we commenced in August 2015.

The remaining $0.3 million are related to timing difference in the receipt of grant revenue from the Office of the Chief Scientist in Israel. The grant for the year of 2016 was approved by the Office of the Chief Scientist only in May 2016. The approved grant for 2016 is approximately $2 million of non-dilutive money, about 60% increase over previous year.

G&A expenses were $0.9 million for the three months period ended March 31, 2016, compared to $0.8 million for the same period in 2015. Net loss of the quarter was $4.7 million compared to $3 million for the same period in 2015. We expect our cash will be sufficient to fund our operations into mid-2018 and enable completion of the ongoing phase 3 GLOBE trial, the phase 2 clinical trial of VB-111 in thyroid cancer, and the phase 1/2 clinical trial in ovarian cancer.

Now I would like to turn the call over to the operator for any questions and answers.

(Operator Instructions) Charles Duncan, Piper Jaffray.

First of all, congrats on the progress and thanks for taking my question. Dror, you characterized the GLOBE trial as going well. Can you give us any quantitative or even semiquantitative information in terms of the number of sites you've initiated and, even better, the number of patients? And/or if not numbers, how would you characterize the patients in terms of their disease burden going into the trial thus far on a blinded basis?

I can tell you that we have more than 30 centers now open, both in United States and in Israel, most of them in the United States. We just heard that we got the final clearance from the Canadian authorities yesterday, actually, so we are, as I said, planning to open some centers in Canada very soon. And we are recruiting now even a little bit better than the curve that we planned to recruit, and I think that a thing that we are seeing is that the recruitment and the randomization goes very well, which means that the doctors participating in the trial have the right reason to recruit patients to the trial.

It's always -- when you start the trial, you are afraid that in the beginning, the recruitment will be very slow. It started very nicely. And I think it's actually point to the major need in the field of GBM for a drug that extended the life expectancy. And that is what we showed in the phase 2. And we feel confidence in the drug from the doctors that are running the trial.

Regarding that confidence from investigators, have you detected a change or enhanced perspective on that relative to or despite the Celldex failure in the recent past?

I can tell you that the recruitment rate in the phase 3 GLOBE trial is much faster than it was in the phase 2, and that is not surprising, because in the phase 2, it was an unknown and now it's a known -- or at least there are indications that the drug is working, not just at GBM. And I was saying that we were encouraged by the interest in our KOL events because one of the things that worries me is the failure of Celldex would actually bring some disappointment about all field.

But I don't think that that's the case. I think the people now realize the much-needed -- a need for a real drug in recurrent GBM. And that is why we saw interest at the KOL event and we are seeing interest in running the trial. And though I know that there is some competition trials going at the same centers, the recruitment rate is extremely well.

Okay, that's helpful. And then if I could hop over to ovarian cancer, at ASCO I know that the data is still -- you can't really talk much about it, because abstracts are next week. But would you -- in terms of response rates or takeaways that you would like to see out of that data, what would be a good number? And do you anticipate being able to present only biomarker data?

So as you mentioned, that's what's going to go live on the 18th next week; and even when the abstracts are live next week, it won't have all the information that we are going to present at ASCO, because of course you sent the abstract back to where the end of 2015, and you analyze data a couple of months earlier. But what we hope to see is that a response rate that we have seen that was 60% response rate will stay in a similar number, because when you talk about chemotherapy along the response rate of these type of patients is about 11%.

Now, when they had Avastin at the AURELIA trial, it was about 30%. So having 60% response rate will be super. But more than this, we are going to show the type of patients that we are having in this trial. And I urge you all to look very carefully at the characteristic of the patients, because in most trials doctors avoid taking patients, what we call a primary platinum-refractory patients, which are patients who never responds to platinum or that less than three months after a responding to platinum already had a recurrence.

I don't want to say the number, but you will see it when we will have the data at ASCO. I don't think that we put that at the abstract, but you will see that at ASCO itself, and it's a very high number.

And the other point is that we are going to show that we had a very high number of patients that already failed Avastin. So to have 60% response rate in this type of population is actually a great indication that there is real response that we are seeing here.

Okay, that's helpful. And then last question is: given those observations in the ovarian cancer study, when would you anticipate definitive feedback from the Agency -- FDA -- regarding next steps in that phase 3 timing and sizing?

We already had the whole file ready to submit to the FDA about a month ago. But then, when we analyzed the new data that we are gathering for the ASCO, and we saw how much it's more solid and actually show that the drug is working in a very good way, we elected to delay it a little bit. And we are planning to send this to the FDA in the next couple of weeks. And then you can count about two months to the end of phase 2 meeting. So that tells you when we will know from the FDA if they see it the same way eye-by-eye with us.

Okay, thanks, Dror, for the added color. I will hop back in the queue.

Joe Pantginis, ROTH Capital Partners.

Dror, I was wondering if you can expand a little bit on your goals at least. Obviously, you don't have final guidance or sign-on, but your goals regarding the expanded access program. And then, also, can you give some color as to why patients, you said, that might be ineligible for the phase 3 -- what is making them ineligible? Thanks a lot.

Okay. So I think that when you have a drug that both the Company and the Agency feels that the drug is actually working in a field that there is a major need, then an access program is the right thing to be done, because there will be a delay between the time that we will finish recruiting patients to the study or will be close to recruiting and the time that the drug can go on the market, even with a very successful trial.

And I think that ethically you have to think about: how can you treat patients? So one of the things would be patients, of course, that didn't go in time on the trial, and would be able to go on the trial. And we will let them get the drug on an access program. Another thing will be patients that are a bit sicker, which means that Karnofsky will be lower then we cut for the trial.

It can be patients that had more than two recurrences, because that is the limit that we put here -- because there is always a debate that if patients have more than two recurrences, maybe the prognosis is different, and therefore they are usually excluded from these type of trials. We are still debating if to take patients that failed Avastin, because these patients usually have a very short life expectancy. And you all know that it takes time for VB-111 to actually do the work.

So we are still debating on that with the FDA. But in general, we are going to take sicker patients. We are going to take patients that failed more than twice, and people that did not -- that the disease progressed when we already closed recruiting.

Thank you very much.

Sean Lee, H.C. Wainwright.

Just wondering if you could elaborate a little more on what we can expect next year from the GLOBE trial? Would the DSMB be only looking at safety, or are we going to see the efficacy as well?

Thank you for asking the question. The interim analysis is planned for futility, because the FDA, under an SPA, allow us to do only a single trial at the size of the phase 2, not really a real usual phase 3. And they would like to see both safety and efficacy on the whole trial, which means that they would like to have the patients go all the way through for safety in both arms.

Having saying that, by the time that we will do the interim analysis, that's expected that we will be fully recruited to the trial. So the DSMB is going to look at the whole data. But we are not allowed to make a decision to stop the trial early unless we are to giving up the SPA.

So the idea is that they will look to see that there is no futility, which we we all think that there won't be any indication like that; and then, of course, if the data already shows statistical significance difference between the two arms, they will have to go to the FDA, to the Agency, show them the data; and the Agency should make the decision.

In my mind, by the time they will do all this, we will be about two months from ending the trial, or two to three months from ending the trial. So it is not going to change much.

I see. Thank you for clearing that up. Also, my second question is on the national liver fibrosis programs. What are your plans for the clinic for those?

So we are an oncology company, and we are going to focus on oncology. This is coming from a small molecule that we developed for inflammation. Actually we developed them for atherosclerosis, but it's very difficult to develop it for atherosclerosis for a small company.

At that time, we did the studies because we knew that from the mechanism of action it should work in liver fibrosis. Actually it should work in other fibrotic disease, and we will come with some more preclinical data later on this year. But a nice thing about it for a liver fibrosis or fatty liver is that you all know that many more patients have fatty liver than the one that will eventually go into inflammation and fibrosis.

The drug that we developed does not do anything to [defend] the liver, and we don't want to treat millions of people for a disease that occurs only in the smaller number of patients. So the way the drug is working -- actually, it's blocking the inflammation itself and not enabling to go from the fatty liver to the inflammatory disease and then to fibrosis. And it works directly on fibrosis. We knew it from the mechanism of action which works on toll-like receptor 4 and 2, which take place in the fibrosis on the inflammation from the monocytes migration story.

Now, the way I view it -- and, of course, we're not going to develop it ourselves. We are going to see if we can have a deal with one of the companies that moving forward programs in liver -- fatty liver and NASH. And the whole idea is that you can follow patients nowadays with a different type of scans and ultrasounds, the fiber scan, and actually notice when they are going from stage zero to a grade 0 to grade 1, or from a grade 1 to grade 2, and then make the decision to intervene, actually, because we are not working on the fatty liver. We are working on the second stage of the disease when it has moved to inflammation.

Because the 201 is a phase-2-ready drug, we believe that the the data that we show in preclinical is as good as many of the compounds that went into a phase 2, and there will be someone that will want to develop it. But I want to make it very clear that we are focused on oncology. We have a lot on the plate, and we are not going to do this trial by ourselves.

I see. It just seemed like very interesting molecules. But thanks for clearing that up. And that is all I have. Thank you for taking my questions.

(Operator Instructions) Ram Swayampakula, H.C. Wainwright.

We know that the Company is looking at VB-111 in terms of developing a drug for recurrent GBM. What is the management's thoughts regarding newly diagnosed GBM? And what efforts are you making in that -- for that indication?

That is an excellent question, and thank you for asking it. I believe that eventually, at the end of the day, the drug should be given to newly diagnosed GBM, I believe, together with irradiation at this stage and the chemotherapy. But of course this is a much bigger trial, and we cannot do or run the two trials together. So it all depends on the financial situation of the Company and how much money we can raise.

But that's really coming in plan, and just a hint that show that this what we should do: you know that we have at least one patient with a complete response right now for more than two years. And this patient had the disease diagnosed. He had the surgery, radiotherapy, and Temodar. And then the disease came back.

This patient went through a second operation. And a month later, the tumor came back. And the tumor came back a month later -- it tells you that this is an aggressive disease. But nevertheless, the tumor was relatively small a month later.

That's when we came with VB-111. The patient is on VB-111 alone, not even in combination with Avastin, now for more than 24 months without evidence of disease. So it's one patient, but I don't think that before this one patient, we did not have this guess that what we should do is coming when there is a major debulking of the disease. Because the way VB-111 working is actually not melting the tumor; it is not enabling the tumor to keep growing.

So if it coming when there is no mass or very small mass, we have a much better chance to show results. So, definitely newly diagnosed GBM will be next stage. We were debating if we want to put it in the access program, but I think that we should do a proper study.

Okay, that's fantastic. And then staying with oncology, staying with VB-111, so beyond GBM and ovarian cancer, are there other potential indications that you are thinking of in terms of developing this drug?

So you know that we showed the data in thyroid, and I think that the thyroid, if you're aware, both in the well differentiated thyroid cancer that failed everything and with medullary thyroid cancer, where we had an objective response with reduction of [acalcetaline] from 14,000 to 6,000, and this patient is still stable. So that's one indication, but that's a very small indication.

From the phase 1, we learned that it works in renal. We did not elect to go to renal, because it was quite crowded. We know that it's actually working quite well in neuroendocrine. We still have patients on the drug with neuroendocrine patients that have a horrible disease.

And we have a hint that it's working in lung cancer. That is the hint that we got from the phase 1. We never tested it in breast or other, bigger indications. But I think that we have a very good guidance, because from the phase 1 we learned that where -- [osteogenic] drugs show signs of response. Even if not great response, VB-111 will be much better. So we know what indications we should follow.

Okay. Great. Thank you very much, Dror.

It appears there are no further questions at this time. I would like to turn the conference back to management for any additional or closing remarks.

Thank you, everybody, and I would like to thank you all for attending this call. Have a good day.