Vascular Biogenics Ltd (VBLT) 2018 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the VBL Therapeutics Q1 2018 Financial Results Conference Call. (Operator Instructions) I would now like to turn the call over to Michael Wood of LifeSci Advisors, please go ahead.

Thank you. Good morning, and thank you all for participating in today's first quarter 2018 financial results and corporate update call for VBL Therapeutics. Leading the call today will be Professor Dror Harats, CEO; and Amos Ron, CFO. A press release with the company's financial results became available at 7 a.m. Eastern Time today and can be found on the investor page of the company's website 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 (inaudible) under the Private Securities Litigation Reform Acts of 1995. VBL cautions that these forward-looking statements are subject to risks and uncertainties, and 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, Thursday May 17th, 2018. 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 call is recorded and will be available for audio rebroadcast on VBL's website. As the operator mentioned, all participants are currently in a listen-only mode, and there will be a brief Q&A session following management team's prepared remarks.

With that, I'd like to turn the call now over to the CEO of VBL, Professor Dror Harats. Dror, please go ahead.

Thank you, Michael, and good morning to everyone joining us on our call. We continue to have a strong faith in our potential of VB-111, our gene-based biologics, that we are developing for solid tumor indications. With clear business focus, we are also advancing our novel MOSPD2 program for the oncology and inflammatory indications.

VBL is well financed with approximately $50 million in cash, which is enabling us to continue the development of our innovative pipeline assets emerging from the three platform technologies developed by VBL. In light of the results of the GLOBE trial, we are in the process of reviewing the entire VB-111 program performing an in-depth analysis of the GLOBE trial data as well as of the results from our previous studies with VB-111. Although preliminary, it this quite clear that there are several lines of evidence for the activity of VB-111 in humans, and that there is a major effect of the regimen of therapy on the outcome. For that reason, we continue to have strong belief in the potential of VB-111, and we are advancing our Phase 3 OVAL trial in platinum-resistant ovarian cancer patients.

In the OVAL trial, we are repeating exactly the regimen of the successful Phase 2, which we have in this indication. Nevertheless, to medicate the risk, we are adding an interim analysis that will enable us to show the efficacy of VB-111 early on in the OVAL randomized controlled trial. We intend to do that by looking for objective efficacy signals in the interim analysis, including response rate, progression-free survival, and the well accepted CA-125 biomarker.

In our Phase 2 ovarian trial, VB-111 showed 60% CA-125 response rate compared to only 11% on chemotherapy alone based on historical data from the AURELIA trial. The OVAL Phase 3 pivotal trial in patient with platinum-resistant ovarian cancer is being conducted in collaboration with a GOG Foundation, a leading organization for research excellence in the field of gynecologic malignancies. The trial has been designed to enroll up to 360 adult patients at approximately 70 clinical sites in the United States and Israel. We expect the interim readout from the OVAL trial to occur in the fourth quarter of 2019. An update of the OVAL trial will be presented at the upcoming ASCO Meeting taking place in Chicago in the first week of June.

Beyond the VB-111 program, we have a deep pipeline at VBL, including our exciting MOSPD2 program for oncology and inflammatory indications. I would like to briefly share with you some of the findings we have so far in MOSPD2 program, in which we plan to file an IND in the fourth quarter of 2019.

MOSPD2 is a membrane protein whose function was unknown. We have discovered new biology findings in the regulation of cell motility in which MOSPD2 is playing a key role. Our data indicates that MOSPD2 is required for directional movement or chemotaxis of tumor cells and certain inflammatory cells, and is therefore playing a key role in both oncology and inflammation.

Previously, it was thought that in order for tumor cells to metastasize or invade in tissue or for immune cells to move to a certain inflamed tissue, what they need is an attracting molecule or chemoattractant that will bind its receptor and will direct them into the specific tissue. Our data indicates that this pathway is not enough and that certain tumors and inflammatory cells depend also on a second [axis], which is controlled by MOSPD2.

In the oncology setting, MOSPD2 is found histologically in many types of solid tumor and is highly expressed in tumor cells when they start to invade tissue or creating metastatic lesion. Furthermore, if we knock MOSPD2 out in tumor cells using CRISPR technology, we can reduce metastases by 95% in some preclinical settings.

We believe the targeting of MOSPD2 may have several therapeutic applications, including inhibition of tumor cell metastases and [keying] of MOSPD2 positive tumor cells. At the recent AACR meeting in Chicago, we had a late-breaking study in which we demonstrated the use of a novel bispecific antibody to bring about T cell-mediated killing of cancer cells via binding to MOSPD2 and T cell protein, CD3. The poster we presented at AACR can be found on our website. I would encourage you to take a look at it.

Our MOSPD2 program has also potential application in chronic inflammatory conditions. Knocking out the MOSPD2 gene in mice protect the animals from developing different inflammatory diseases including NASH. Moreover, the antibodies we developed so far can bind to MOSPD2 [alongside] and inhibit their migration in vitro and in vivo in a manner that shows major efficacy in a model of multiple sclerosis. We will have further update from this program at the BIO International Meeting taking place in Boston in June.

Briefly, on other news in this quarter, in April, the Israeli Innovation Authority, IIA, approved our application to continue to support our VB-111 development program in 2018 and awarding us a grant of ILS8.9 million, approximating $2.5 million. This latest grant brings a total gross amount of grants awarded to us from the IIA to about $25 million.

I will now turn the call over to Amos Ron to review our financials for the first quarter of 2018.

Thank you, Dror. Earlier this morning, we issued a press release detailing our financial results for the first quarter of 2018. We will review the financial highlights and also speak to our cash position and our financial guidance.

On March 31, 2018, we had cash, cash equivalents and short-term bank deposits totaling $49.9 million, compared with $54.7 million at December 31, 2017. Working capital on March 31 was $44.3 million. Subsequent to the end of the quarter, a grant of approximately $2.5 million was provided to us by the IIA.

As [Dror stated], we expect that our cash, cash equivalents, and short-term bank deposits will enable us to fund our operating expenses and capital expenditure requirements through 2020. Under the license agreement for Japan, which was executed in November 2017, VBL received an upfront and milestone payments of $17 million in aggregate. Of this total, $4.2 million was recognized in the period ended on March 31, 2018.

Research and development expenses in the quarter ending March 31, 2018, which are shown in the financial statement, net of grant from the IIA were approximately $5.8 million. This compares to approximately $4.1 million in the comparable period in 2017. The increase in R&D net expenses year-over-year was mainly used to increased expenses for the OVAL study, the Phase 3 in ovarian cancer, and for materials for the preparation for large scale production, in addition to increases in rent and depreciation associated with the operation of our new Modiin facility. This is partially offset by an increase in IIA grant in this quarter.

General and administrative expenses for the quarter ending March 31, 2018, were $1.4 million compared to $1.1 million for the comparable period in 2017. The company reported a comprehensive loss for the quarter ended December 31, 2018, of $7.2 million or $0.24 cents per share compared to a net loss of $5 million or $0.19 per share in the comparable period.

Now, I would like to open the call for questions. Operator?

(Operator Instructions) Our first question is from Swayampakula with H.C. Wainwright.

I have a few questions here. To start off, now that you have had some amount of time since the release of the top line data on the GLOBE trial, what sort of information can you help us understand on the GLOBE trial itself? And how are you utilizing some of the learnings not only for the OVAL trial but if you want to think about any other additional indications with this molecule (inaudible)?

So, thank you, [R.K.], for asking this question. We are still analyzing the data from the GLOBE trial. As I was stating before, we didn't meet the primary or secondary endpoint, but we're analyzing to see if there was any effect in any subgroups. And I believe that later on in summer, in about a few months, we will be much more specific on that.

One thing is quite clear when we look at the GLOBE trial and when we look at other studies that we were done, and that there are many cases of objective response that are very clear, even on a VB-111 as a standalone therapy. So we have no doubt one of the most important thing is the regimens of the trial.

As I was stating before several times, we were priming with VB-111 in all the clinical trials that we were doing previously both in the Phase 1, in the Phase 2 GLOBE trial, and in the thyroid trial that we were doing. And so, we were treating with VB-111 alone, except for the ovarian trial where we were combining it from the beginning with chemotherapy.

We believe that the issue of regimen is a critical point for the difference between the Phase 2 and the Phase 3 in GBM, but I will ask you all to be a little bit more patient, and we will come with a much more definite answer later on in the summer. And we are planning to present the whole thing later on this year in the conference and in a paper.

And in terms of all those study results, now it looks like all the regulatory authorities have accepted your interim endpoint inclusion. So, now that we have -- I'm getting now that you have most other things in place for the study, so could you help us with what should be our expectations in terms of timing for enrollment, interim data, and final data?

So I believe that the most important thing will be the interim analysis that we are expecting to see in the fourth quarter of 2019. At that point, we will have data on at least 60 patients that were treated in a blinded fashion; so we will have a controlled trial of 30 versus 30 patients with a follow-up of at least one or two months. And that would be enough to look at the biomarkers and see basically if we are repeating the response rate that we have seen in Phase 2.

We expect to see the same thing because we are taking the same type of patients using exactly the same regimen. And it's quite clear that chemotherapy alone has about 11 to maximum 15% response rate, and we were seeing a response rate that was actually 60%. So, if we are seeing the same thing, I think that will mitigate the whole study in a dramatic way. We expect that the full study will take about two and half years before we can close the trial and look for data.

Swayampakula Ramakanth: Fantastic. That's very helpful. And then the last question from me is the other molecule in the pipeline. So regarding the MOSPD2 IND, which you stated would be in the fourth quarter, in general, where do you think this molecule will be effective? And I say where, in what sort of tumors in your extensive preclinical studies that your team have done seems the best bet?

Okay, so we are gathering a lot of data on this molecules. And I'm saying molecules because we have at least two family of antibodies; some that work in inflammation, and binds and prevents motility of a monocyte. And these antibodies can be very potent in diseases like multiple sclerosis. And I believe that one of the first indications that we will be able to go and treat is actually patient with multiple sclerosis. From the data that we have so far, although some of it preliminary, the drug is working at least as good as major drugs that are on the market, but it seems to be a much safer drug and work for a much longer period of time. So, that can be a very good indication to start and develop this in inflammation. But I believe that you're even more interested to see where we are going in oncology.

So, we have two-way to guide ourselves to where to go first. There is one indication in hemato-oncology that is very appealing. I'll go into [difficult] indication, acute myeloid leukemia, but we know that a myeloid blast in acute myeloid leukemia expressed MOSPD2. And we are advancing it right now to be sure that we can actually kill the blast cells not just in the blood but also in the bone marrow. If that's the case, these can be a very nice study because we will be able to show that actually we can bring patient to remission, either patients that failed chemo therapy or even as the first line. And that can be a relatively short way to commercialize an antibody like that.

When we talk about solid tumor, the way that we are going to select tumors is tumor that a high percentage of the patient express the MOSPD2 and that the MOSPD2 is expressed abundantly on the cell so that basically we will be able to use it to kill most of the tumor cells, if not all of them, and be part of the therapy, so that we will have a high percentage of response rate. We have some APLs and blood tumor to go, but I think it's too early to say now. But if you look at our presentations, you can see some hints from where we do see what type of tissues like in triple-negative breast or hepatocellular where it's expressed in quite dramatic way.

Our next question is from Sam Slutsky with LifeSci Capital.

Just real quick. Regarding MOSPD2, the ultimate plan of development as a single agent or [as you go] combo, I guess what's the most likely combination regimen at this time?

We will start as a single agent because normally you want to show the efficacy of the drug as working alone especially that this is such a complete novel technology. But we already have in our mind that it can be combined very [nice] with a checkpoint inhibitors, for example, because those drugs will work on the immune system. And actually that can be very helpful in cases where you don't have a lot of mutations and where checkpoint inhibitors don't wear it very well because we are going to bring the T cells to the tumor by using these five specific antibody. So, definitely, that's something that we will consider very early in the program.

And I'm showing no further questions. I would now like to turn the call back to management for any closing comments.

So thank you all for your participation in our call. And you should look forward in the next ASCO Meeting and the BIO Meeting for more details on our program. Thank you very much.

Operator: Ladies and gentlemen, thank you for participating in today's conference. You may now disconnect. Everyone, have a great day.