Vascular Biogenics Ltd (VBLT) 2019 Q4 法說會逐字稿

Greetings and welcome to the VBL Therapeutics Fourth Quarter and Full Year 2019 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Michael Wood with LifeSci Advisors. Thank you. You may begin.

Thank you, operator. Good morning and thank you all for participating in today's year-end 2019 results and corporate update call for VBL Therapeutics. Leading the call this morning will be Professor Dror Harats, CEO of the company; and Amos Ron, the company's CFO. Our press release with the financial results became available at 10:00 Eastern time today and can be found on the Investors page of the company's website.

Before we begin, I'd like to remind everyone that various remarks about future expectations, plans, prospects constitute forward-looking statements 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 the subject of risks and uncertainties that could cause actual results to differ materially from those indicated. Any forward-looking statements made on today's conference call speak as only of today's date, Thursday, March 19, 2020. 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 being recorded and will be available for audio rebroadcast on the company's website. (Operator Instruction] So with that, I'd like to turn the call over to our CEO, Professor Dror Harats. Please go ahead, Dror.

Thank you, Michael, and good morning, everyone. Today, we will discuss our operating highlights and lay out our plans for 2020. Joining me on today's call is Amos Ron, our Chief Financial Officer, who will discuss our year-end 2019 financial results. VBL made significant progress throughout 2019, and we hope to continue this momentum in the year ahead. This year, we will have 3 parallel clinical trials for our lead candidate, VB-111, and we expect to generate a lot of new data from both the VB-111 and our MOSPD2 programs, which are advancing well. So we look to 2020 as a potential turnaround year for the company.

Let me begin with an update on our Phase III OVAL potential registration study that is investigating VB-111 in recurrent platinum-resistant ovarian cancer. We announced in December the completion of patient enrollment for the first interim analysis cohort, and the readout for this analysis is expected before the end of the first quarter. This analysis will focus on CA-125 response rate, which will be analyzed according to GCIG strict criteria in 60 evaluable patients. The data will help us to know whether the positive outcome seen with VB-111 in the Phase II study in ovarian cancer is being replicated in OVAL which is a Phase III double-blind randomized controlled pivotal trial.

As a reminder, we saw 58% rate -- response rate in CA-125 in Phase II. That is what we are looking to replicate here. We look forward to providing an update very soon once the DSMB has a result of the analysis.

In February 2020, we announced the launch of a Phase II clinical trial of VB-111 in combination with nivolumab, an anti-PD-1 immune checkpoint inhibitor in treatment of metastatic colorectal cancer. This study is being sponsored by the U.S. National Cancer Institute under the Cooperative Research and Development Agreement, or CRADA.

The IND application has been approved by the FDA. The study, which is an open-label study, will be investigate if priming with VB-111 can drive immune cells into the tumor and turn the colorectal tumors from being immunologically cold to hot. In addition to safety and tolerability, this study will evaluate efficacy endpoint, including best overall response as well as immunological and histological readouts from tumor biopsies.

We expect to have preliminary results by the end of 2020 or the beginning of 2021. The second new study planned for VB-111 in 2020 is an investigator sponsor study of VB-111 in recurrent GBM patients. This randomized control study is sponsored by Dana-Farber Cancer Institute in collaboration with a group of top neuro-oncology U.S. medical centers, including Massachusetts General Hospital, UCLA, UCSF, University of Utah, Memorial Sloan Kettering and University of Texas. This study will investigate neo-adjuvant and adjuvant treatment with VB-111 in recurrent GBM patients undergoing a second surgery.

This study being conducted, following new analysis that were concluded in 2019, which attributed the contradictory outcomes between the Phase II and phase III trials in GBM to the lack of VB-111 monotherapy priming in the GLOBE study. An IND application for this study has gone into affected with the FDA, and we expect that this study will launch in the second quarter of 2020. Details on this study were unveiled at the Society for Neuro-Oncology Annual Meeting in November by Dr. Timothy Cloughesy, Director and Professor at the UCLA Neuro-Oncology program. If successful, we hope that this study will generate results that can potentially be part of filing with the regulatory authorities.

Data from the Phase II and Phase III studies of VB-111 were published in the December 2019 issue of the peer reviewed Journal of Neuro-Oncology. I would encourage you to read these manuscripts, which are available online. You may also be interested in an article published earlier this month in Times Oncology by doctors, Wen and Cloughesy, discussing the lessons learned from these trials and the path forward for VB-111 in recurrent GBM. It is available online as well.

Turning now to our MOSPD2 programs. We have 2 separate programs. One, investigating bi-specific monoclonal antibodies for cancer and the second, developing classical antibody for immune inflammatory indications. The bi-specific antibodies are being designed to kill tumor cells based on MOSPD2 as a target, whose expression is induced specifically in multiple tumors.

We previously presented preclinical proof-of-concept for the approach using a BiTE antibody and are currently advancing our lead bi-specific candidates toward an IND filing. New data from the program were accepted for the procedures, a late-breaking news session at a 2020 American Association of Cancer Research, or AACR, annual meeting, which was originally scheduled for April this year, but due to the COVID-19 situation, will probably take place only later this year.

In the inflammatory program, we continue to advance the development of our lead MOSPD2 antibody for immune inflammatory indications with potential for MS, RA and NASH. We have signed a service agreement with Thermo Fisher Scientific, one of the leading vendors in the antibody field for production of our lead candidate, VB-6100 (sic) [VB-601] for toxicology and clinical development. Pre-IND submission for VB-6100 (sic) VB-601 is expected in the second quarter of 2020.

We were accepted to present new data on MOSPD2 as a target for NASH and Crohn disease, both at the European Association for Study of the Liver, or EASL, annual International Liver Congress as well as at Digestive Disease Week, or DDW, conference. Actually, our abstract for the DDW was rated in the top 10% of all studies in this category and was selected as a Poster of Distinction. We look forward to presenting our data when these conferences will take place later on this year.

In summary, we are proud of the progress being made across our clinical and R&D pipeline as we continue to execute on all our programs. We expect to have meaningful catalysts throughout 2020, beginning with interim readout in ovarian cancer in the next couple of weeks and announcement of our MOSPD2 programs in inflammation and oncology.

We are well financed with approximately $37 million in the bank at year-end, which should take us into the third quarter of 2021.

I want to say a quick word about COVID-19 relative to our business. As of today, our operations have not been affected by the outbreak, and our ongoing OVAL trial continues to enroll late-stage ovarian cancer patients in good pace, obviously, with the necessary precautions required in this situation. Since we have our own in-house GMP manufacturing facility for VB-111, VBL has the ability to continue the production of this drug with relative small effect by the COVID-19 situation.

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

Thank you, Dror. We reported revenues for the year ended December 31, 2019 related to VBL's collaboration of $0.6 million.

Research and development expenses net after government grants for the year ended December 31, 2019 were approximately $15.5 million compared to approximately $15.9 million in the same period in '19 -- in 2018.

General, administrative and marketing expenses for the year ended December 31, 2019, were $4.9 million compared to $5.6 million for the same period in 2018.

We reported net loss for the year ended December 31, 2019, of $19.5 million or $0.54 per share compared to a net loss of $20.4 million or $0.62 per share in the year ended December 31, 2018.

At December 31, 2019, VBL had cash, cash equivalents, short-term bank deposits and restricted bank deposits of $37 million, and we expect that our cash, cash equivalents and short-term bank deposits will be sufficient to develop VB-111 and our other product candidates and fund operating expenses and capital expenditure requirements into the third quarter of 2021. For further details on our financials, please refer to Form 20-F filed with the SEC this morning.

We will now open the call for questions. Thank you.

(Operator Instructions) Our first question comes from the line of Kevin DeGeeter with Oppenheimer.

First off, Dror, with regard to the ovarian cancer interim analysis, can you remind us, is there an option to evaluate potential resizing of that study as part of the assessment?

I don't think that there will be a resizing of the trial due to the interim analysis because interim analysis is looking at the response rate to CA-125. And as you all remember, the primary endpoint is overall survival, and we are not looking at overall survival at this point. I can tell you that if what we hope and expect to see is that we are repeating the very high response rate that we saw in the Phase II. And we know that this response rate was correlated with survival. So later on, in other interim analysis, your question might become much more important. And it might be that there will be a change later on, but not at this point.

And with regard to potential time line for completion of enrollment for the ovarian cancer study, against the kind of current trends of enrollment and COVID-19 is definitely in the background of this question, how do you think about providing guidance for time line for completion of enrollment? Do you think your prior guidance is still appropriate in light of the number of unknowns that are currently in the market?

So we looked at what happened in the last couple of weeks or even the last 3 weeks. And surprisingly enough, and maybe that because there is not much choice for these late-stage patients, the recruitment rate is going in a very good pace right now. We are in line or even a bit ahead of line of what we wanted. Of course, nobody know, and we should be all very careful with COVID-19 right now. But in the United States and in Israel, the recruitment is going very well.

In any way, we are not open yet in Europe, so we don't have a major effect on the recruitment right now. And as I was saying, we see the opposite, but I don't want to say anything because we don't know what will happen in the next couple of weeks. But right now, it looks that the patients are getting the therapy, getting recruited, and even today, we had another randomization. So I believe that -- and as you all know, I have -- I'm also heading a big IRB committee here in Israel, and we look at the different trials. I believe that the effect will be on every trial somewhat but much less in oncology trials where you need to treat the patients.

That's terrific. One more for me, maybe then I'll get back in the queue. With regard to acceptance of the late-breaking abstract for AACR, first, congratulations for that. It's terrific to see validation of the science. AACR, at least in the context of clinical data, has suggested to sponsors that they may not penalize for future presentation at their conference if the sponsor moves ahead with publishing the data prior to the reschedule date. Any thoughts as to whether for your data, there may be options to communicate some of the findings prior to whenever that meeting ends up being rescheduled to?

We're definitely considering it, and we'll come back to the market with it. I don't think that we would like to delay this very important information that we are holding. And you can guess that if we were accepted to the late-breaking news, it is important information, but we will have to see what is the right timing for that.

Our next question comes from the line of Sam Slutsky with LifeSci Capital.

Just Dror real quick. Could you just remind us of the contribution from a financial standpoint to the NCI and investigator-sponsored GBM studies as well as the anticipated size of each?

Okay. So definitely, it's a major contribution because for the NCI study, we are paying a very small amount of money for administrative. And the only thing that we do is we support them with our drug and all the rest is actually taken care by the U.S. government and NCI. And with the investigator-sponsored trial in GBM, we are giving them an education grant that is to support mainly the monitoring of the trust, so that the data will be in line of data that you can actually submit to the agency. And in the agreement that we have with these centers is that the data belong to VBL and that we will be allowed and actually doing it together with them submit it to the agency. There is such a major need in recurrent GBM. And if indeed, we get a positive results in this randomized trial, that would be a very important issue for the patients.

Got it. And then in terms of enrollment size of each, how are you thinking about that?

The enrollment for the NCI study is actually planned to be an open single-arm trial just to see, if indeed, in colon cancer, we are making the tumor hot. And of course, if that would be the case, then the idea is to extend it to other indications in GI oncology. And so that's the plan, and we are planning to actually recruit about 27 to 30 patients for colon cancer. But as I was saying, we will be flexible here because it might be that very early, we will see that the combination is actually working. And that's why I was saying that we are going to see data already towards the end of this year. We are doing biopsies on all the patients, and very soon, we will know after 7 or 8 patients, if indeed, we are making this tumor hot. And if we do so, then of course, we want to extend it.

In terms of the GBM trial, it's actually planned as a blinded randomized controlled trial. So I believe that the data will come in 2021, maybe the second half of 2021 when the full study is actually already recruited. I can tell you that doctors will see their MRIs, because from the operation on, it's not a blinded trial because we have one group, which is getting standard of care and the other 2 arms getting VB-111. And if they will see meaningful things and they will come back to us, we will know about it. But the plan is that we will have the results by the end of the trial.

Our next question comes from the line of Ram Swayampakula with H.C. Wainwright.

A couple of quick questions. The first one on the interim analysis expected before the end of this quarter. So outside of the CA-125 data that we would be -- expect to see, what other data would be presented from these 60 patients, so that we get a better feel for what to look out for in the total trial later?

Okay. So thank you, RK, for the question. In the interim analysis, we will be able to disclose the data on the blended population, the response rate that we do see with CA-125 on the total population, maybe talk about what percentage of response we do see in the one that develop a fever, which we know that they are basically on VB-111. But the most important thing is that interim was designed in a way that it will be -- enable us to tell the market if we are at least as good as what we've seen in the Phase II.

So the go/no-go is not if we are not worse or if we are the same as chemotherapy. It's if we are much better than the chemotherapy. And that's how it's all designed. We won't be able to disclose the exact number in each group. This is a blinded trial. Although, this is not the primary endpoint. I can tell you that in this interim, the DSMB is going to have more information about resist response, but we are not going to disclose this. But as I was mentioning before, this all go together in a very aligned way. The patients that have a response to CA-125 usually ever responds to -- by resist and vice versa. And at least in our Phase II, we saw a very good correlation between response to CA-125 and survival later on. In the next interim analysis, which should take place when we have 100 patients recruited, randomized to the trial and follow-up for at least 100 days, we are already going to look at PFS and survival. This was planned according to assumptions of number of mortalities that we expected the basepoint.

Regarding the IST study in GBM, you said that could be used as -- it could go as a part of FDA filing. So can you elaborate on that? Do you still -- or should we still expect you to take that data and the GLOBE to the FDA? Or is there something else in addition to these studies that you will need to do before you take to the FDA for a potential approval?

So of course, all depends on the results of this trial, which is a randomized control trial that have a standard of care arm and neo-adjuvant and adjuvant arm for VB-111. If indeed, we do repeat what we have seen in our Phase II when we primed with VB-111, and that's exactly what we are doing here, then, of course, that will be a major thing in recurrent GBM when there weren't so far a randomized controlled trial that came positive. So together with the data that we have in the Phase II, and where everybody understands that what happened in the GLOBE trial was actually the result of the Avastin added to the drug where Avastin is actually blocking the expression of VB-111 and taking out the target for the drug. So I believe that together with all these data, we will be able to file to the agency. But of course, it all depends on a positive trial of this new trial that we are running.

One last question. On MOSPD2 in cancer, I know you may not be able to talk too much about the preclinical data that you exhibited, which got accepted at the AACR. But based on the data that you have so far, could you share with us a little bit on the plans for the clinical development program and provide us some color such as like what kind of indications could we be thinking about and potential time lines for the start of a clinical program?

So I'm thinking because I'm trying to think what I want to say and what I can say. So I can tell you that we basically already selected the lead compound based on the data that we have so far, and there are 2 very good candidates that we can go forward with. And of course, we are testing it now in different indications preclinically, and it's working in more than one indication. And then we will have to choose which indication we want to go forward.

The results are quite compelling. And -- but of course, we will have to go and produce it in GMP and do toxicology and everything needed. We are having a plan where we basically do right now some of this, looking at safety of this compound. There is always an issue with bi-specific antibody when you use CD3 as one of the arms to -- if it causes systemic side effects. We didn't see any of that so far, but we are testing much more deeply to be sure that there is not there. We are also considering doing some more species there. But I will definitely elaborate or provide much more information later on this year, hopefully, very soon.

Our next question comes from the line of Soumit Roy with JonesTrading.

Just could you give us a little -- some ballpark of when the -- for this interim data, coming up this month? When is the data cut off? Is it like earlier March or more in February? And could you remind us when do you think the enrollment completion will be for the OVAL Phase III trial? And I have one question -- one more question.

Okay. So thank you, Soumit. For the interim analysis, if you are familiar with the GCIG criteria, what you have to do is actually follow the patient and see if there is at least 50% reduction in CA-125 to call it a response. And then you have to have a confirmation, which has to be at least 28 days apart from each testing. We were trying to have most of the 60 patients that we have for the interim analysis in a way that we will have a definite result either that they are responders or nonresponders. So we finished recruiting the whole cohort in the first or second week of January, I believe. And then, of course, we had to keep on some follow-up.

So the cutting date for the information is actually just from sometime in the last week. And that's why, as you can imagine, there are only not that many days towards the end of the quarter, but we will have the DSMB meeting, and we will have the information. We'll be able to come with this information before the end of this month.

Regarding the results or the full results of this trial, we believe that we are going to have a full recruitment by -- or toward the end of 2021. And then, of course, it all depends on the mortality that we will see in the trial. If it will be according to our calculations, it can be about 12 months from the last patient in, but it all depends. And we have a maximum of 18 months from the last patient in even if we don't get to the full number of events.

Got it. That's really helpful. And on the CRC trial, I noticed that you have an inclusion criteria of liver mets. Is that a very common occurrence? And is that where you see the (inaudible) vector more and you expect VB-111 to express there more? Could you -- can you just give us any color on that?

Definitely. You know that most patients with colon cancer have liver mets. That's basically is the usual thing. And usually, they have quite a big liver mets, and that's one of the big problems. If it's too big, you cannot do, what we call, the Swiss cheese surgery that should take off these metastatic lesions.

And when we are talking about patients in the stage if they are not responsive to chemotherapy anymore, almost all of them, if not all of them, will have liver metastasis. And the reason to go for liver metastasis is, first it's much more -- or it's much easier to do the biopsy. So -- and we depend on the biopsy here because every patient will have a biopsy to start with, so that we will prove that this is an immune cold tumor. And then each patient will have another biopsy after VB-111 priming and then after the combination with nivolumab. So the colon cancer liver metastasis is very important. There is also a benefit here because adenovirus actually go to the liver, about 90% of what we are injecting systemically will go to the liver. And the liver metastasis are having a lot of neo-vasculatures. So it's a very good target for us. And indeed, if we do see positive results that we are making it hot in the same way that we did for -- in ovarian, then one of the next indication might be hepatocellular carcinoma.

Our next question comes from the line of Jonathan Kreizman with Valore Research.

So we're beginning to see some of the coronavirus dynamics impacting the CRO landscape and potentially slowing down recruitment and maybe even pushing off an initiation of certain trials. So how much of these dynamics are you seeing or expecting to see as the situation evolves in the coming weeks, coming months for the GBM study? And then what are the factors you expect could impact the initiation of the trial going forward?

So thank you, Jonathan. I will separate it into the different trials. In the GBM trial and maybe in the trial that's a -- at NCI, it might have some effects because as you were saying, some trials are not -- people are more reluctant to start the study unless there is a major need. And in GBM, there is a major need. So as far as of today, there is no effect on the company with this COVID-19 story. And that's surprising already.

In terms of the ovarian trial, we do see recruitment as planned so far. And even if we'll have a little delay, you all know that disease -- unfortunately, the cancer is keep on, and I believe that we will be able to catch up very quickly later on.

But we all in somewhat an unknown area. I can tell you what I know for sure from a letter we got from the agency, it's a letter that every company, every sponsor got. And I can tell you the same thing we got from the Ministry of Health here in Israel. Actually, they are much more flexible right now with a lot of the rules that they have in how to run the trial. So if there is a delay in monitoring, it's okay. If there is a delay in imaging, it's okay. The major thing is to try and get the patient to get the drug and look for safety, and you can do monitoring, virtual monitoring, as we call it or distant monitoring. So I believe that everybody is working to make sure that the studies are going on. And I'm in touch with the big pharma, I won't mention names, but I'm in touch with them also, and we're all working together on how you can keep on running the trials for the benefit of patients. We don't want patients to die from their primary disease just because we have restriction now because of the virus.

Okay. I have another follow-up. So we've seen 2 competitor trials failed during this quarter in ovarian cancer, one testing a PARP combination and the other with a PD-1 agent. So as these studies further accumulate, what are your thoughts in terms of a possible combination study with VBL-111 ovarian with either one of these? And what is the medical community learning on the benefit of a potential combination therapy as a real-life PARP data is progressing since being introduced last year as a first-line therapy?

So I think it all depends on the biology of the tumor and the mechanism of action of the drug that you are testing. Unfortunately, PD-1 inhibitors don't work in cold tumors because they don't have the cells to work on. And in ovarian cancer, there is a repeated failure using checkpoint inhibitors. And it's in a way a little bit of a pity that you keep on -- or that some people keep on doing these trials and actually using patient time and patient's -- and doctors time to repeat again and again this type of trial.

Having saying that because we are bringing the immune cells into the tumor, so combining our drug with a checkpoint inhibitor might be a very good idea. Actually, I believe that one of the reasons why some patients after a long period of time that they are responding to our drug might actually stop responding. It's because you have the immune cells there, but now they are shut off by the tumor. And then, of course, adding checkpoint inhibitor will be a major thing.

We are going to learn much more about it in the trial that we are running in the colon cancer because that's exactly what we are going to do there. And from at least animal models, we know that this combination worked very well. In terms of combining it with drugs like PARP inhibitors, I believe that that's a -- it makes sense. But I will say even more that combining VB-111 because of the mechanism of action and because it's working completely different way from others, it might be a good idea in a different kind of regimen. We will have to think very carefully with the positive results in our OVAL trial what should be the next step? Should we add it to PARP inhibitor at the time that the patient is basically in remission. I'm not sure at all because we need some tumor to work on or should we add it right when you have the first sign that the tumor is recurring or maybe even at the first line. But all this is a -- all this will be considered and done later on.

We all have to remember that in the OVAL trial, most of the patient coming to this trial already failed Avastin and already failed the PARP inhibitors. And nevertheless, if we will come in the next couple of weeks and say that we are repeating the Phase II, where we have -- where we -- basically in the Phase II got almost 60% response rate. So if we are repeating it, even in patients that already failed PARP inhibitors and failed Avastin, that will be a major derisking for this trend and this program.

There are no further questions at this time. I'd like to turn the call back over to management for any closing remarks.

So thank you all for joining us on this call, and stay safe. Thank you very much. Have a good day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.