Vascular Biogenics Ltd (VBLT) 2018 Q2 法說會逐字稿

And good morning and thank you all for participating in today's Second Quarter 2018 Results and Corporate Update Conference Call. Leading the call today will be Professor Dror Harats, CEO of VBL Therapeutics; and Amos Ron, the company's CFO. A press release with the company's financial results became available at 7:00 a.m. Eastern Time today and can be found on the Investor's page of the company's website, ir.vblrx.com.

Before we begin, I'd like to remind everyone that various remarks about future expectations, plans, prospects constitute forward-looking statement for the purposes of the 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 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, that's Thursday, August 16, 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, this conference call is being recorded and will be available for audio rebroadcast on the company'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'd now 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 our call. Before we dive in, I would like to highlight a few points.

First, VBL is well capitalized with cash sufficient for more than three years beyond some key inflection points. Second, we continue the development of VB-111 for ovarian cancer with the OVAL Phase 3 trial ongoing, and we intend to explore VB-111 activity in additional tumor types. And third, our MOSPD2 programs for oncology and inflammation are also in progress. VBL aims for the first IND in the MOSPD2 platform technology by year-end 2019.

In my prepared remarks this morning, I will provide an update on our lead candidate, VB-111, our gene-based biologic that we are developing for solid tumor indications, and discuss recent positive developments in our MOSPD2 program targeting cancer and inflammation. VBL is well capitalized with more than $58 million in cash, which will enable us to continue the development of VB-111 in ovarian cancer and other solid tumors indications and to advance our pipeline for more than the next three years. Our most advanced clinical program is a Phase 3 pivotal double-blind placebo-controlled OVAL trial, which is investigating VB-111 in patient with platinum-resistant ovarian cancer. The OVAL trial is designed to enroll up to 400 adult patients at approximately 70 clinical sites in the United States and Israel. The primary endpoints are overall survival or progression-free survival.

OVAL is repeating the same regimen that was used in the successful Phase 2 in ovarian cancer. Recall that in that trial, VB-111 achieved high rate durable CA-125 response along with significant increase in overall survival compared to low dose VB-111. As we have stated previously, we have also added an efficacy interim analysis to the study in order to mitigate risk. This will provide an early efficacy readout to confirm if the performance of patients on VB-111 is in line with the data generated in the prior Phase 2 study. We expect this readout to occur in the fourth quarter of 2019.

We've been conducting analysis of the GLOBE study to better understand the outcome and potential activity of VB-111 in recurrent GBM. We are particularly investigating the possibility that the regimen in the GLOBE trial, which was performed under a pre-agreed SPA, may have impaired the activity of VB-111.

As you recall, in our Phase 2 trial, patients were treated initially with VB-111 monotherapy, followed upon progression with VB-111 in combination with Avastin. That is they were primed with VB-111. However, in the GLOBE, patient in the active treatment arm were administrated VB-111 and Avastin concurrently from the beginning without any exposure to VB-111 alone, which mean there was no priming with VB-111. Although VB-111 and Avastin are both anti-angiogenic agents, their mechanism of action differ and possibly affect each other. We believe that administration of Avastin from day one may have caused changes in the brain vasculature of treated patient in the manner that presented VB-111 for performing its activity in the brain, and we are looking deeper into that possibility.

Other than the trial regimen, our analysis did not find any other risk factor that can explain the difference between our successful Phase 2 in recurrent GBM and the unsuccessful outcome of the GLOBE trial, which was performed under pre-agreed SPA. We will be submitted additional data from GLOBE for presentation at the Society of Neuro-Oncology, the SNO meeting in November, and plan to have more details at that time.

Turning to our pipeline. We continue to be very excited about our MOSPD2 program and had opportunity to report new data at several conferences during the second quarter. MOSPD2 is a membrane protein whose biologic function was discovered by VBL. MOSPD2 seems to be critical player in directed cell movement both in inflammation and cancer. In inflammation, it enables the inflammatory cells and monocytes to get to the inflamed tissue and affect the disease development and progression. In oncology setting, MOSPD2 is found histologically in many types of solid tumors and is highly expressed in tumor cells when they start to invade tissue or create metastatic lesions. We believe the targeting of MOSPD2 may have several therapeutic applications, including the induction of an immune attack on tumor cells using bispecific antibodies for cancer therapy along with additional potential application in chronic inflammatory conditions, such as multiple sclerosis, where there is still an unmet need.

At the AACR annual meeting in April, we presented proof-of-concept data on the use of a novel bispecific antibody to bring about T-cell-mediated killing of cancer cells via binding to MOSPD2 and the T-cell protein, CD3. Then at the BIO International Convention in June, we presented data demonstrating that knockout of MOSPD2 gene in tumor cells can reduce metastasis by up to 95%.

In July, we published a paper in the International Journal of Cancer, demonstrating for the first time that MOSPD2 can play a major role in breast cancer, cell migration, and metastasis. Histological analysis of specimen showed that MOSPD2 levels were correlated with the stage of tumor invasiveness and were profoundly elevated in invasive and metastatic breast cancer. Based on these findings, we believe it could be an attractive target for treatment of breast cancer and other tumor types. We have also shown that knockout of MOSPD2 gene in mice can protect the animal from developing some inflammatory disease, such as MS or multiple sclerosis and NASH, the nonalcoholic steatohepatitis.

We have generated antibodies that block immune cell migration, and these have shown efficacy in an animal model of multiple sclerosis on which we will present more data at the European Committee for Treatment and Research in Multiple Sclerosis Conference on October 11, in Berlin. We are developing the VB-600 platform of biologic drug candidates to target MOSPD2 in oncology and inflammatory indications. Our goal is to file an IND in this program by year-end 2019.

I will now turn the call over to Amos Ron, our CFO, to review the financial results for the quarter.

Thank you, Dror. Earlier this morning, we issued the press release detailing our financial results for the second quarter 2018. We'll then review the financial highlights and also speak to our cash position and our financial guidance.

At June 30, 2018, we had cash, cash equivalents, and short-term bank deposits totaling $58.5 million compared with $54.7 million at December 31, 2017. Working capital at June 30 was $54.7 million. On June 27, we closed the registered direct offering in which we sold approximately 5.9 million ordinary shares and accompanying short-term warrants to purchase up to approximately 3 million ordinary shares and long-term warrant to purchase up to further 3 million ordinary shares. Aggregate net proceeds from the offering after deducting expenses were approximately $13.8 million.

As Dror stated, we estimate that our current cash, cash equivalents, and short-term bank deposits will be sufficient to fund operating expenses and capital expenditure requirements for more than three years. VBL received an upfront and a milestone payment of $17 million in aggregate, and there are collaboration in Japan. Of this total, $0.3 million were recognized in the first half of the year.

Research and development expenses in the quarter ending June 30, 2018, which are shown in the financial statement, net of grants from the Israel Innovation Authority, were approximately $2.9 million. This compares to approximately $3.2 million in the comparable period in 2017. The variance in net R&D expenses year-over-year was mainly due to the winding down of the GLOBE study in current GBM, partially set off by the gearing up of the OVAL Phase 3 study in ovarian cancer.

General and administrative expenses for the quarter ending June 30, 2018, were $1.2 million, compared to $1.9 million for the comparable period in 2017. The company reported a comprehensive loss for the quarter ended June 30, 2018, of $4.1 million or $0.13 per share compared to a net loss of $4.8 million or $0.18 per share in the comparable period in 2017. We would emphasize that out of the operating loss for the first six months of this year, of about $11.4 million, about $3.2 million are due to noncash expenses, such as equity-based compensation and depreciation of the site in Modi'in that recently started operating.

Now I would like to return the microphone to Dror for concluding remarks.

Thank you, Amos. To summarize, VBL is well financed with a real pipeline of innovative drug candidates, including our Phase 3 program with VB-111 and our exciting MOSPD2 program for oncology and inflammation. We have strong confidence in the potential of both. We continue our development of VB-111 for ovarian cancer with efficacy interim data expected in Q4 2019 and plan to explore the activity of VB-111 in additional solid tumors. With our VB-600 program targeting MOSPD2, we continue to advance our research for both oncology and inflammation aiming to file an IND by year-end 2019. Therefore, I believe that there are some key catalysts in the next 12 months and beyond.

At this point, I would like to return the call to the operator to open the call for question. Operator?

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

This is RK from H.C. Wainwright. I have a few questions. To start off on the OVAL trial for the ovarian cancer with VB-111, when you conduct the interim analysis in late 2019, what sort of outside hit you would have to face? And in addition to that, is this an event-based interim analysis? If so, what sort of events need to occur?

Okay. Thank you, RK, for asking this question. It is actually a -- not really an event driven. It's time-driven according to having more than 60 patients recruited in a double-blind controlled way, where half of them will be on VB-111 plus paclitaxel and half of them would be on paclitaxel alone, and 60 patients were followed up for at least two months. And we are going to get at this point information about the CA-125. And we will get information that, in general, there was a significant or a certain difference, which we consider a significant difference between the two arms. Because it's going to be run blindly to us as a company but we will get results saying that it was higher than difference of at least 15 points, then we didn't have to pay an alpha for this interim. We will increase the number of patients in the trial so that we will have enough strengths for the trial to show both the progression-free survival and overall survival as a separate endpoints to the trial.

Okay. So just so that I am clear, we will only see the CA-125 data at that point? We won't see anything else, correct?

Yes, we won't see anything else. There are a more interim data look by the DSMB, where they will look both at the CA-125 and progression-free survival and overall survival. And there in their charter, they have the ability to stop the study early if we meet the primary endpoint, any of the endpoint.

Okay. So going on to the MOSPD2 program, so what sort of work needs to get done between now and the time that you anticipate to file the IND, which I believe you're expecting to do that at year-end of 2019.

So we are optimizing the antibodies that we already have. We are creating some new antibodies in the next few months or so. And we are planning to do the toxicology. And that's a major thing that needs to be done before submitting the IND.

Okay. And then it's interesting to hear that MOSPD2 can be -- has potential in multiple indications just not oncology but also in a much needed indication such as MS. Given that VBL has squarely focused on oncology for many, many years, so how do you plan to work on both these indications? Or would you be looking out for partners especially for indications such as MS?

So MOSPD2 is an exciting program because this is basically a new biology that we discovered, and it has a major role, as it says, both in oncology and in inflammatory diseases. So we are progressing the two programs right now, full steam, but definitely we will be opportunistic regarding any strategic deal. And we don't want to go beyond our expertise right now.

In oncology, although we have expertise in clinical trials and inflammation, you're right that we will be opportunistic and see if we can develop it together with some strategic partner because it's not going to be just MS. We already know that it has a very nice potential in NASH, and we believe that it might have in other inflammatory indications. So most probably we'll concentrate on the oncology and be opportunistic about the other part, the inflammation.

Okay. And then the last question from me is on the GLOBAL trial data. You stated that we should be seeing some additional data at the SNO conference this year. Do you think at that point, you will also be able to show us some evidence of the issues that you noted in the pre-agreed SPA? Would you have that data at that point? Or we would just see some additional complete analysis of the GLOBAL trial?

I hope and believe that we have a good chance to have some more data that will shed some light on what I was just saying today about the regimen. It's actually things that we are doing right now with some collaborators, with our key opinion leaders and the PIs of the study. And we hope to have this result before the SNO Conference so that we can discuss it in the SNO Conference and discuss it in papers that we are planning to publish on this drug.

Just to mention very interesting papers that just came in at the Lancet on August 13, where they were actually studying the two arms in treating a brain cancer, it wasn't GBM, it was a glioma at lower grade, grade 1 and 2. But they were using Temodar, which is a standard of care. In arm and in the other arm, they added Avastin to Temodar. And not surprisingly, they couldn't show more efficacy when they added Avastin, maybe even a little bit less efficacy and much more safety issues. So the issue of Avastin and what it does to other therapies, including existing therapies already on the market in brain tumors and its effect on the blood brain barrier and brain vasculature, is not just something that happened with VB-111. So we at VBL weren't that surprised when we read this paper the other day.

(Operator Instructions) I'm showing no further questions at this time. I'd like to turn the call back to management for any closing remarks.

So thank you all for participating in this call, and have a wonderful day. Thank you very much.