Vascular Biogenics Ltd (VBLT) 2017 Q2 法說會逐字稿

Welcome the VBL Therapeutics Q2 2017 Financial Results Conference Call.

For your information, this conference is being recorded.

At this time, I would like to turn the conference over to Mr. Michael Wood of LifeSci Advisors.

Thank you all for participating in today's second quarter 2017 financial results and corporate update conference call for VBL Therapeutics. Leading the call today will be Professor Dror Harats, CEO of VBL Therapeutics, and he's joined by Amos Ron, Chief Financial Officer, and Dr. Corinne Epperly, Chief Operating Officer.

A press release with the Company's second quarter financial results became available at 7 a.m. Eastern time today, and can be found on the Investors' page of the Company's Web site at ir.vblrx.com.

Before we begin, I'd like to remind everyone that various remarks about future expectations, plans and prospects constitute forward-looking statements for the purposes of Safe Harbor provisions 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 the call today speak only as of today's date, Monday, August 14, 2017, and the Company does not 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 on the -- for audio re-broadcast on VBL's Web site. As operator mentioned, all operators - or participants are currently in a listen-only mode and there will be a brief Q&A session following management's prepared remarks. And with that, I'd like to turn the call over now to Professor Dror Harats, CEO of VBL. Dror, please go ahead.

Thank you, Michael, and good morning to everyone joining us on our call. We appreciate the opportunity to review our second quarter 2017 financials and provide you with an update of our progress and accomplishments thus far.

Beyond the financials, we are going to review three key topics with you this morning. The first one is our GLOBE Phase 3 pivotal study in recurrent GBM. The second one is VB-111 efficacy data as accumulated from our clinical trials to-date. And the third one is our preparations toward commercialization of VB-111.

Starting with GLOBE study, we continue our progress in developing our lead candidate, VB-111, an innovated anti-cancer biologic agent for the treatment of solid tumors. We continue to move forward in our Phase 3 GLOBE study, investigating VB-111 in recurrent glioblastoma or GBM.

The study being conducted in centers across the U.S., Canada and Israel completed enrollment in December 16th, five months ahead of schedule. It is proceeding according to plan under a special protocol assessment [start] granted by the FDA with full endorsement by the Canadian Brain Tumor Consortium.

The independent Data Safety Monitoring Committee or DSMC overseeing the GLOBE study, including the un-blinded data met and review the safety data, including, of course, number of tests from this trial twice so far, in December 16th and April 17th, and recommended it continues as planned.

The final DSMC review should take place soon as we are close to reaching the point of at least 105 mortality events and 12 months follow-up on 50% of the patient.

Giving the fast recruitment rate of the GLOBE study and the current proximity to the end of the trial, we have agreed with FDA under the SPA that this interim DSMC review will not require formal futility analysis and we expect the DSMC recommendation in late-September 2017.

Top-line data after the occurrence of 189 events are expected in early 2018 based in interaction with FDA. And given our SPA agreement, the VB-111 GLOBE study should be the only trial we need for BLA and approval.

Now, I would like to discuss some important VB-111 efficacy data from our Phase 1 and Phase 2 trials. As you may know, VBL is still following our patients, who remain alive, for up to seven years after enrolling into VB-111 Phase 1 study, which enrolled late-stage patient with various types of tumors.

At the BIO International Convention in June, we provided an update on long-term survival from our Phase 2 trial of VB-111 in multiple tumor types. Ongoing follow-up on patient survival has shown long-term survival of patient treated with VB-111 with 4 - with 54% median overall survival of recurrent GBM patients at 12 months, 53% median overall survival of platinum-resistant refractory ovarian cancer patient at 15 months, and 53% of radioiodine refractory differentiated thyroid cancer patients at 24 months.

In all three indications, more than 50% of patients have achieved long-term survival following treatment with VB-111 despite the fact that each of these studies enrolled difficult to treat patients for whom prior treatment have failed.

Earlier this year, at the ASCO meeting, we presented promising new data on VB-111 in recurrent GBM that further strengthens the evidence we have on its anti-tumor activity. To get a better understanding how treatment with VB-111 has been helping patients to live longer, we analyzed the tumor growth kinetics in all the GBM patients in our Phase 2 trial.

Comparing the two cohorts of the trial, which served as treatment re-progression cohorts, which gave longer exposure to VB-111, slow down tumor growth kinetics and led to tumor regression in 61% of the patients as compared to only 16% in short VB-111 exposure in the limited exposure cohort, showing against statistically significant dose response effect of VB-111.

Now that we got the full data analysis of our Phase 2 study in recurrent GBM, not only that we see this slower tumor growth in VB-111 treatment through progression group, we also see a statistically significant effect on progression free survival.

And this goes along with almost doubling of a median overall survival as we reported before. So this new data is important as we draw a straight line from VB-111 unique mechanism of action to its effect on tumor kinetics to progression free survival and favorable overall survival.

We continue to explore additional indications and therapeutic applications for VB-111 and are on track to launch a potential registration Phase 3 study on VB-111 in platinum-resistant ovarian cancer in Q4 2017 and an exploratory clinical study of VB-111 in combination with checkpoint inhibitor in lung cancer in Q1 2018.

Moving on to the third point, which is our preparation toward commercialization of VB-111. VBL is preparing for success and is planning ahead for commercialization of VB-111. I want to mention briefly that VBL has been awarded a grant of 8.75 million in New Israeli Shekel, equivalent to approximately $2.5 million by the Israel Innovation Authority.

The grant will support clinical trials and development activities for the calendar year of 2017 and beyond. The grant is a testament of the confidence the Innovation Authority has in our technology and we are, as always, grateful for their support.

Using this non-dilutive support, we are continuing in building our commercial grade production facility in Modiin, Israel. In addition to this grant, we are looking at the option to do geographic deal for VB-111 as an additional source for long dilutive money.

Finally, during the last quarter, we also made an important senior management hire with the appointment of Dr. Corinne Epperly as our U.S. Chief Operating Officer. Corinne brings strong experience in oncology drug development and commercialization, particularly in glioblastoma.

Her experience include being a physician, equity research at Goldman Sachs, and most recently, seven years at Bristol-Myers where she was involved in leading the commercial launch preparation for the checkpoint inhibitor, OptiVol, in both liver cancer and glioblastoma.

At VBL, Corinne will have key responsibilities in forming our marketing strategy and commercialization plan for VB-111. We are thrilled to have her on board and look forward the contribution she will make. Corinne is with us here on the call today, and therefore, we turn it over -- before we turn it on to Amos to discuss financials, she is going to say a few words. Corrine, please?

Thank you, Dror. I'm very excited to be joining such a strong team at a critical inflection point for the Company.

I've done my due diligence on VBL and the lead asset and believe its novel mechanism, which combines both anti-angiogenesis and immunotherapy concepts into one drug candidate has significant potential.

The Phase 1 and 2 data in recurrent GBM and across multiple tumor type, as Dror mentioned, suggests truly meaningful survival benefits in very advanced cancer patients. I'm familiar with the GBM field, the huge unmet need, and the urgent need to improve the treatment.

And I look forward to working with the team to advance VB-111 to the market and to be able to provide a new promising treatment option to patients and physicians, and now to our CFO, Mr. Amos Ron. Amos, please?

Thank you, Corinne. Earlier this morning, we issued a press release detailing our financial results for the second quarter and six-month period ended June 30, 2017. We will review the financial highlights and also speak for our cash position and our financial guidance.

Research and development expenses for the second quarter ended June 30, 2017 were approximately $3.2 million, compared to approximately $2.2 million in the same period in 2016.

General and administrative expenses for the second quarter ended June 30, 2017 were approximately $1.9 million compared to approximately $1.1 million in the same period of 2016. The bulk of this increase is attributed to one-time, non-cash costs for management, share-based compensation expense.

The Company reported a net loss for the second quarter ended June 30, 2017 of $4.9 million or 18 cents per share compared to a net loss of $3.3 million or 14 cents per share in the second quarter ended June 30, 2016.

Moving on to the six-month results. Research and development expenses were $7.4 million for the six-month period of 2017, compared to $6.2 million for the six-month period of 2016. General and administration expenses for the six-month period of 2017 were $3 million, compared to $1.9 million in the six-month period of 2016.

Net loss for the six months of 2017 was $9.9 million or 37 cents per share, compared to a net loss of $8 million or 35 cents per share in the first six months of 2016. At June 30, 2017, we had cash, cash equivalents and short term bank deposits totaling to $33.8 million and working capital of $31.8 million.

We expect that our cash, cash equivalents and short term bank deposits will enable us to fund our operations, expenses and capital expenditure requirements into 2019.

Our financial position is expected to be sufficient to enable us to complete our ongoing Phase 3 clinical trial of VB-111 in recurrent GBM to support our planned potential registration trial in ovarian cancer and in exploratory clinical study of VB-111 in combination with checkpoint inhibitor in lung cancer, as well as to fund the launch of our new facility in Modiin, Israel.

For additional details or information on our financials, please refer to our Form 6-K filed this morning with SEC. I would now like to open the call up for questions.

(Operator Instructions)

Charles Duncan from Piper Jaffray. Please go ahead, sir.

This is [Sara] on for Charles. So, can you speak in a little bit more detail about the analysis that the DSMC will perform in late September now?

Yes.

Will that be purely look at safety or will there be some efficacy analysis?

The DSMC whenever they meet to get a full non-blinded data for safety, and of course, part of the safety is a number of deaths or mortality, which, of course, they look for safety reasons. But because our primary endpoint is overall survival and the number of deaths actually, so they look at efficacy on each time.

So far they looked at it twice and gave us a green light to go forward. Actually in April -- and that's why we came with a press release at that point, because it's not just safety, they're actually looking at the primary endpoint of this each time that they are looking at the data. They felt that we don't even need the phone call and we suggest now that everything looks great and we should go forward.

And later on when we discuss DSMC meeting that we are -- that they are going to have a -- in the third quarter, in September, actually we have a call to discuss this and they told us that everything looks quite right and we should go forward.

What they're going to do in the meeting in September, they're going to get data which is going to be cut -- the cutting date going to be sometimes in August. But of course, you have to make sure that the data is relatively clean.

And then they look at the data where they get listing and tables that include all the safety issues, but there also includes the survival of the two different -- includes the number of tests of the two different cohorts, the cohorts that's getting VB-111 with of Avastin and the cohort, the control arm of getting just Avastin

So, of course, it's not a formal efficacy look but whenever they look, they look at efficacy. The only difference between formal survival analysis, which actually for utility analysis, which was planned for this time.

But unfortunately or fortunately, because we recruited patients ahead of time, it will actually almost clash with the end of the trial and that when you do a formal futility analysis you have to clean the data the same way that you do when you look at the data at the end of the trial.

And that usually take about 60 to sometimes 90 days and that's going to clash actually with the end of the trial and closing the data. And therefore, in the discussion with the FDA, it was clear that the way to do it is the regular look that the DSMC going to look, but they will have all the information. And of course, the same with seeing any alarming safety or mortality data, we will know about it right away.

Great, thank you. And just one follow-up, I think you touched on this, but can you just explain the driver behind this change? Is it really just about the timing of events based on the pace of enrollment or is there anything else [that runs with that]?

The only driver is that we recruited six months ahead of plan and instead of having the last patients in May or the beginning of June. And then of course, looking at the data at this point will be about 9 to 12 months before the end of the trial.

Because we recruited ahead of time and that's of course a very good sign in the trial like this, we're -- we are blinded but the doctors and the patients are not blinded. And because of that, the last patient seen was actually in December. But that's only a couple of patients. Most patients were actually recruited even before November.

And therefore, with this expedited recruitment, it happened to be that a time for the interim analysis was actually quite late. And because the one that's actually insist on this interim analysis for the company when we were sitting with the FDA or the SPA, it was very clear that this is almost impossible to be done technically.

And therefore, the FDA, of course, in our discussion said that there is no point, and they think that we shouldn't do a formal analysis, just a regular DSMC, because any way we're getting exactly the same information. And the market [will get these for me].

Mike King from JMP Securities.

I just wanted to check in with you to see two things. First is, does DSMC monitoring the progress in the control arm to see that things are progressing as expected.

Historically, we've originally had an immunotherapy company. You have a trial that didn't read out positively because the control arm had a survival than -- the PFS, it was much longer than expected. So, that's the first question, and then I have a follow-up to that so --

Okay, so let me tell you a little bit about the different trials we've done in recurrent GBM, and I think we should all pay attention to some of the details. And of course, I don't expect anybody on the market to have these details, but we fortunately have them.

So the trial that was actually failing for a big pharma company in an immune-oncology drug, the inclusion criteria were to take only tumors that were smaller than 5 millimeters, which means small tumors.

And when you get small tumors, of course, you cannot really count on historical control of all the patients getting Avastin. And many other studies, by the way, make this excluding criteria because they don't want you to take too big tumors because then, of course, some of the patients won't have a chance to response.

In our Phase 2 data, the treatment for progression group had significant number of patients that had very big tumors, much bigger than 5 ml, and we knew it all the time.

And we know that this is the type of patients that we recruited for Phase 3 because we didn't select it for the small tumors. And of course, it actually give us a much better chance to actually meet what we know as the historical control it will be better than if the drug is working as we expected.

So, we are not expecting it anyway that the control arm will be in anyway ever than what we know from the historical control because we are actually imitating real life patients, where about 25% to 30% of them having big tumors.

Other thing, we are taking patient with multiple primary tumors. We did that in the Phase 2 and we're doing it even now, other excluded. So I wouldn't worry about this that their control arm will be too better than historical control.

Okay. Thanks for that. And then a follow up to that is if you have information about whether in fact patients are being treated through progression or not on an unblended basis?

Yes. So, of course, we are blinded, but the DSMC is not blinded. And when we had the discussion with the chairman of the DSMC, of course, it was done in the right way with all the controls and the bio-specification on the call and the minutes and everything, but he was saying that things going according to plan, and actually, he's very pleased with the way that the trial has progressed.

I could read in between the lines that if he had any issues with treatment through progression or with the point that the arms are not behaving the way you would expect from the historical control or anything, we would get this alarm signal from him.

Right.

But we, as a company -- we as a company are not allowed to look at data. The only thing that we do see is that some patients are getting treatment for a very long period of time. We assume that a lot of them are on VB-111.

Swayampakula Ramakanth from H.C. Wainright.

Thank you. And just staying on VB-111 but trying to understand some of the learnings regarding development of this drug - sorry, development of OPDIVO in GBM. So, I'm trying to see if Dr. Epperly can give us a little bit of what she has learned from development of OPDIVO in GBM, and how we can utilize that information for VB-111?

Hi. Good morning. So, good question. And as actually Dror was outlining in our trial design, we did not select for specific patients. We did not limit comers for the recurrent GBM trial. So as a result, the historical controls and what you've seen with Avastin or what physicians have seen with Avastin in real world data is what we anticipate to see in this trial as well.

Okay, thank you. And Dror, regarding the ex-U.S. licensing, which is kind of outlined as a way to bring in non-dilutive money, as a management, what are you looking optimally in these relationships? Are you looking for partnerships for individual indications or would you license the drug out for all three indications?

Actually, as you all know, it's quite difficult to do deals on certain indication and then split it and get someone else to actually sell the drug for another indication. It's very difficult in the U.S. It's difficult in most places around the globe.

So, we are looking for relatively small or very [secluded] territories where we are going to license the drug for the different indication. Of course, in the deal, one can put economy that will actually give us benefits from the different indications, and that's what we are working on. But the whole idea is that this type of deals shouldn't harm it any way the global potential deal that we can have.

And again, it can be something that we'll split geographically between us and the strategic partner with the successful results in 2018. But these geographic deals that we're talking about are actually not going to jeopardize any of these big global deals, but it's going to include all indications.

And actually, we are even planning, if it will go forward, to take advantage of one of the territories, which has a significant number of patients with lung cancer. And then, of course, that could be a good place to do some of the trials as part of global trials.

Yes. Thank you. Couple more questions, one on the Phase 3 ovarian study. So what else needs to get done before you can get the study started by end of 2017, as you said?

So actually, the trial protocol and everything is already done and actually the first IRB already approved the protocol. And it's getting back and forth with the authorities here in Israel, but it's going to be approved in the next couple of months or even earlier.

So we're quite sure that we're going to start the study in time as planned. We also are working with certain not-for-profit groups that actually lead many of the studies in gynecological cancer, but I don't want to say anything before it's completely done.

When it will be done, I will let public know that we are actually going to do the trial together with them, that's basically the plan. And that will be [non-consolidation] of the technology that we have, but that is going to save us, eventually, time and money and help us when we'll get the results to get it through the agency.

I can tell you that we already agreed with the agency on the whole study. They got the protocol. If I recall right, they still have of a couple of days to respond. And if they don't respond, that's an approval of the protocol, and we expect them to approve the protocol because we basically agreed on everything.

Great. So, one last question from me, this is on MOSPD2 . Would you please give us an update as to where the development is for that drug?

Okay. So, MOSPD2, as you know, is our novel target that we disposed in April this year. And actually, this novel target exists on monocytes macrophages and on tumor cells. It's most probably have -- it's actually playing a major role in the invasiveness of tumors and creating metastatic lesions.

It's also involved or plays a major role in some inflammatory diseases. We already have antibodies that we are testing right now. We got some interesting -- very interesting data on animal studies, but I prefer to share this data with you when we have a more data on this. But it's going really on drug in developing in this new compound.

(Operator Instructions)

Gbola Amusa from Chardan. Please go ahead.

Hi. It's Gbola Amusa from Chardan. Thanks for taking my call. Just had a question on manufacturing just given the new facility that's upcoming. Can you update us broadly on your strategy whether it's going to be internal manufacturing versus internal with some partnering with CMOs?

And second follow-on to that is, to what extent are you confident you'll have manufacturing in place for a launch given potential timings of your Phase -- if your Phase 3 reached on first quarter of '18? How confident are you the things that are in place?

Okay. So, manufacturing of biologics is always an important issue. And Gbola, thank you for asking for the question and especially for gene therapy. As far as we know, there is no facility exists right now, definitely not outside of the pharmaceutical companies and we don't think that's even there for high scale adenovirus production.

There are some coming facilities maybe for adeno-associated. But although both of them named adeno, it's completely story and different compound. So, we knew that we have actually to lead the production of our compound.

It doesn't mean that we are not going to collaborate with CMOs. And actually, we are already collaborating on the scale up with Lonza and we plan to keep on this collaboration in the future.

But we knew that we have to hold our destiny, let's say, and actually control it. And that's why with the support from the Israeli government, which actually give us opportunity to build this facility without real expenses or big expenses coming from the company.

So, the facility is on track and we are going to have a facility in time ready for making the compound in the high scale and scale up that we make. We already made over 30 batches in medium scale here in Israel, so we're quite confident that we can actually [master it].

We already know -- and that was a plan from the beginning -- because we are relatively small by the company and we cannot get ready many years ahead of time on CMC, and we couldn't get ready before we got into our Phase 3 trial. So we knew that the timeline for the BLA will be dictated in some way by the CMC, and that's actually the plan right now.

But with the data that's coming in 2018, definitely, we all understand that in the deadly disease, whether it's nothing else, let's say, increase survival with the positive data, we will actually submit the clinical part of it even if it will be ready ahead of the CMC and we'll start a discussion with FDA. And of course, a clinical grade facility is going to be running and we are going to have enough product or we should have enough product at that time.

We plan to use this product that we will have for the Access program that we will have to do because if we -- having a drug that for long survival in GBM, we couldn't actually resist getting into patients as a compassionate even before the drug is on the market.

So, the idea is to have the results, get enough compounds to actually open the Access program to as many patients as possible to start maybe a new trial in newly diagnosed GBM at that time, and get ready with the full BLA file and discuss with the FDA what's really -- what would be the minimum needed to actually start putting the drug on the market.

As there are no further questions at this time, I would now like to turn the call back to management for any additional or closing remarks.

Thank you, everybody, for joining our call today and thank you for the very good and interesting questions and the discussion. Thank you very much.

Ladies and gentlemen, this will conclude today's conference call. Thank you all for your participation today. You may now disconnect.