Vascular Biogenics Ltd (VBLT) 2020 Q4 法說會逐字稿

Greetings. Welcome to the VBL Therapeutics Fourth Quarter and Full Year 2020 Earnings Call. (Operator Instructions) Please note, this conference is being recorded.

I will now turn the conference over to the VBL team. You may begin.

Thank you, Shamali. Good morning, everyone. And once again, thank you for joining us for today's VBL Therapeutics Fourth Quarter and Full Year 2020 Financial Results and Corporate Update Conference Call. Leading the call this morning will be Professor Dror Harats, Chief Executive Officer; and Amos Ron, Chief Financial Officer. A press release with the company's financial results for the full year 2020 was issued earlier this morning and is available on the Investor Relations page of our website at vblrx.com.

Before I turn the call over to management, I'd like to remind everyone that during this call, forward-looking statements made by management are intended to fall within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 as amended. As set forth in the press release, forward-looking statements involve risks and uncertainties that may affect the company's business and prospects including those discussed in our filings with the Securities and Exchange Commission, which include among other things, our annual report on Form 20-F. These filings are available via the SEC or on our website.

Any forward-looking statements made on this call speak only as of today's date, March 25, 2021, and the company does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today. As a reminder, this call is being recorded and will be available for audio rebroadcast on the company's website. There will be a Q&A session following management's prepared remarks.

With that said, it's my pleasure to turn the call over to Professor Harats. Dror?

Thank you, Lee, and good morning, everyone. Joining me on today's call is Amos Ron, our Chief Financial Officer; who will discuss the fourth quarter and full year financial results for 2020. I'm pleased to say that it has been another productive quarter and year for VBL with important developments, continued progress and achieved milestones for our lead program, VB-111, our novel gene therapy for solid tumors.

We continue to be encouraged by the ongoing progress with our Phase III OVAL pivotal trial in ovarian cancer, which if successful, has the potential to establish a new standard of care in a challenging disease setting where patients currently have limited options. OVAL is an international placebo-controlled double-blind Phase III registration-enabling study in recurrent platinum-resistant ovarian cancer. To date, we had 3 positive reviews of the study. The first one was an interim analysis, which was conducted when we had 60 available patients. As we reported last March, the analysis showed a CA-125 response rate of 58% or higher for the VB-111.

Later, in August 2020, we reported that the Data Safety Monitoring Committee, or DSMC, after reviewing data on 100 patients, had recommended the continuation of the trial as planned. Most recently in February 2021, during their most recent safety review looking at 200 patients, the DSMC again gave us a green light to proceed after finding no safety issues. We look forward to the next DSMC review in the third quarter of this year.

I'm pleased to say that looking at the blinded information with over 200 patients in the data set, we continued to see a high CA-125 response rate of over 50% in the total available patient population. Enrollment in the OVAL study progressed well despite the ongoing COVID-19 pandemic. And in December, we announced that the first patient had been enrolled in the European arm of the study. We are thrilled to be expanding the study into Europe and soon to Japan as well.

This expansion is expected to further accelerate our recruitment pace, diversify the patient population in the study, and support our dialogue with regulatory authorities as we get closer to potential submission of VB-111 for regulatory approvals. We expect to achieve full enrollment at the end of this year or in early 2022. We hope to continue demonstrating VB-111 potential as a safe and effective therapy for patients with solid tumors as OVAL and other studies advance.

As you know, VB-111 has potential in solid tumor indications beyond ovarian cancer. In our Phase I and Phase II trials, we have seen VB-111 drug activity in patients with thyroid cancer, renal cell carcinoma, neuroendocrine and other solid tumors. And accordingly, VB-111 is currently being studied as a potential treatment for several other tumor types.

To that end, we recently announced that patient dosing has been initiated in the Phase II clinical trial evaluating VB-111 for the treatment of recurrent glioblastoma or recurrent GBM. The study is sponsored by the Dana-Farber Cancer Institute and is being conducted through a collaboration between VBL and several leading neuro-oncology medical centers in the United States. The Phase II study is currently enrolling patients with recurrent GBM who are scheduled to undergo secondary surgery, And VB-111 will be administrated either before and after surgery or after surgery only. Each arm of the study will be compared to a standard of care control arm.

Another investigator-sponsored study with VB-111 is being conducted by the National Cancer Institute, or NCI, in patients with metastatic colorectal cancer. As we don't have any prior data in this indication, the goal of this Phase II trial is to investigate whether priming with VB-111 followed by the addition of nivolumab may bring the immune system into this cold tumor. Preliminary data from this trial are expected by mid-year. We look forward to sharing more details about VB-111, and the OVAL study in particular, at our upcoming virtual R&D Day on Tuesday, April 6.

We recently dosed the first patient in a randomized controlled Phase II study with VB-201, our proprietary investigational oral immune modulator molecule for the treatment of severe COVID-19. The purpose of this study is to test the safety and efficacy of VB-201 in patients with severe COVID-19, and we look forward to providing additional update as trial is progress.

We also continue to advance our VB-601 monoclonal antibody program through IND-enabling studies. Thus far, preliminary toxicology data look very clean. And we're advancing production of GMP-grade material, which would be needed for our IND submission that is expected in the first half of 2022.

Before I hand the call over to our Chief Financial Officer, Amos Ron, I would like to say that 2020 has been a year of significant progress for VBL. We are encouraged by the significant advancements with our pipeline, and we all look forward to sharing updates on the ongoing program through the rest of 2021. We look forward to speaking with you all again at our virtual R&D Day on Tuesday, April 6.

With that, I will hand off the call to Amos, who will discuss the financial results for the fourth quarter and full year. Amos, please?

Thank you, Dror, and good morning, everyone. As of December 31, 2020, we had cash, cash equivalents, short-term bank deposits and restricted bank deposits totaling $30.8 million and working capital of $24.5 million. We expect that our cash and cash equivalents and short-term bank deposits will be sufficient to fund operation expenses -- operating expenses and capital expenditure requirements into the fourth quarter of 2022. Revenues for the fiscal year 2020 were $922,000 as compared to $562,000 for the comparable period in 2019.

Research and development expenses net was $19.7 million for the fiscal year compared to $14.7 million in the same period in 2019. The increase in R&D expense was mainly due to the development of the VB-601 towards IND. General and administrative expenses was $5.3 million for the fiscal year compared to $5.7 million in the same period in 2019. And finally, comprehensive loss for our full year -- for the full year was $24.2 million or $0.55 per share, compared to $19.4 million or $0.54 per share last year.

With that, I will return the call back to the operator for the question-and-answer portion of this morning's call.

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

This is RK from H.C. Wainwright. A couple of quick ones. On the VB-111 in the OVAL trial, you were talking about the next interim look in the third quarter of this year. So what are the criteria under which the DSMB (sic) [DSMC] will be taking a look into the data? And also, would this interim look have any impact on the statistics -- on the statistical plan of the study itself?

So thank you, RK, for the question. The DSMC is routinely looking at unblinded data every 6 months. That's part of the plan of this big study, which is a registration trial. They don't have any specific rules, because otherwise we would have to pay a statistical price for that. But they are looking at the full data as if we are at the end of the trial.

What do I mean by that? They don't just looking at safety. They get, of course, all the safety in an unblinded fashion to see that the drug is actually safe. But they also get the survival data, including the Kaplan-Meier curves. They're getting the progression-free survival, again, including the Kaplan-Meier curve. They're getting the RECIST response individually for every patient and comparing between the 2 arms and the same for CA-125.

So basically, they do see the whole endpoints of the trial. Both for OS, PFS, response rate by RECIST, response rate by CA-125 and the combined response rate, and of course safety. They don't get the full questionnaires of quality of life because they don't get this information at each point.

We as a company see the full data also, but in a blinded fashion. So we also get an understanding on the response rate posted by CA-125, posted by RECIST. Of course, we know who developed fever, who did not. But we are not allowed to speak about all these data because this is a potentially registration trial. This is a trial to put a BLA for VB-111, and we have to be very careful.

Having said that, that there are no specific rules, of course, DSMC has some obligations which are usually in this type of clinical trial, especially when there is no other good treatment that can prolong life. So if they do see significant improvement in life expectancy or a major response in the test, they should raise a flag. And then you can always request a specific meeting with the agency to make a decision if and when to stop the trial early, but there is no specific rule for that.

Okay. And then on the recurrent GBM study, can you compare and contrast the current design versus the design that you have had during the Phase III trial, the previous Phase III trial? Because you were talking something about before and after surgery, and I'm just trying to make sure I have it straight in my head.

Okay. So we had basically 3 -- that's the third trial we are doing in recurrent GBM. The first Phase II trial in recurrent GBM, we primed, we took patients that actually failed surgery, chemotherapy and radiation. They could have had, actually, already failed one surgery or even more than one survey. Because you know that sometimes when the disease come back, the patient go through a second surgery of debulking.

But anyway, if they failed all of this, then they would go on priming with VB-111 alone. And then of course when they progressed or sort of progressed because the drug is creating a demand, sometimes it's sort of progression, we actually kept them on the VB-111 and allowed them to get other therapies. And many times it was Avastin because Avastin can play as a super-steroid.

In the Phase III trial that was randomized controlled, one group got Avastin. And the other group got Avastin together with VB-111 from Day 1, which was unfortunate as we published in a couple of papers in neuro-oncology because Avastin actually blocked the expression of VB-111. Again, this was in patients that failed chemotherapy, radiotherapy and surgery.

Because we wanted to actually get information about the same population now in this Phase II that we are running, but we also wanted to get tissue so that we can test for the immune cells and see if they are indeed coming into the brain in the same way that they are coming into the lesions in ovarian cancer and to find out if there is a change in the molecular biology of the tumor.

And because we know that many times, when you use an immune-driven drug or immuno-oncology drug, it's important to give it when there is a tissue of tumor. We're actually going for similar population, which is recurring GBM, patients who failed surgery, failed chemotherapy and failed radiation. But now anyway they are going to go with second surgery, as I was saying before, that a lot of them getting a second debulking.

And now they are divided into 3 groups. Before surgery, everything is blinded and randomized. And Group A will get VB-111, Group B and C are going to get placebo. And of course we are going to look blindly to see if the drug has any effect on the tumor biology. After surgery, it's not blinded anymore. Group A that got the new adjuvant therapies, keeping on with adjuvant VB-111. Group B that got placebo before is getting now VB-111. And Group C can go on any standard of care.

So what are we gaining from a study like this? We are comparing VB-111 therapy to any therapy that is standard of care right now in recurring GBM. But we also compare the neoadjuvant to an adjuvant therapy. Because we know that in immuno-oncology, it might be important to actually start a therapy when the tumor is there.

Perfect. So how large of a study is this?

So it's actually not a very big trial. It's a small trial. We have 15 patients in a group, so all together it's 45 patients. But it's randomized blinded control trial. And we know that when you compare 30 patients to 15 in this indication, sometimes you can show even 6 months PFS and overall survival.

So the whole idea is to actually have the surrogate marker as a primary end point. And as a secondary end point, we are having 6 months PFS and OS. And if indeed we will show the positive primary end point and even a strong trend in the secondary end point, there is a chance for early registration for this drug in this, actually, extremely-needed field. There is no new drug in GBM in the last 25 years.

Absolutely. Absolutely. I get that. Then one last question before I step out of the queue. On the COVID-19 trial, I understand you're moving outside of Israel into Japan and Europe. So what is the bigger strategy for that? Is -- and also, there is -- there are so many other therapies which are being looked at for these COVID-19 patients. So how do you differentiate your study versus what other guys are doing?

Okay, maybe I was misunderstood. We are extending the OVAL VB-111 trial to Europe and Japan. And you can understand why we're doing it. That's international trial to put the drug on the market. COVID-19, we are running in Israel only right now. And that's just an early trial to see if indeed the drug is having its effect on the COVID-19.

What's unique about VB-201 is that it's working directly on monocytes migration. And we know that injury to tissues like the pneumonia, the myocarditis and stuff like that is actually a monocyte-driven disease. And we already showed in the past that 201 can actually block monocytes migration even in human being in one of our earlier Phase II trials. So that's why we are testing it.

Now the condition in Israel right now is very good. You know that a big proportion of the population weren't immunized. So now we have to actually, to our thinking if we want to extend the trial beyond Israel or not. Right now, we don't have many new patients with COVID-19 in Israel.

Our next question is from Kevin DeGeeter with Oppenheimer.

This is Susan calling in for Kevin DeGeeter. So I actually just wanted to follow up, first, on VB-111 OVAL study enrollment sites. Can you provide an update on the number of sites currently open? And then as a follow up, what's your time line for initiating sites in Europe and Japan? You guys first mentioned it in August, so it's been quite a few months.

Okay. So thank you, Susan. For the first question, actually, we have more than 70 centers now open internationally. And I believe that it's changing every day, but I think that only 3 or 4 centers are not recruiting due to the COVID-19 right now.

So we actually have almost all the centers open. And we have them open in U.S., Israel. In Europe, it's right now in Spain. And in Poland, actually, it's 78 centers that are open right now. And in Europe, it's in Spain, it's in Poland. And we intend to open centers in the U.K. very soon. In terms of Japan, we will announce first patient dosing very soon. It's going very well there as well.

And then just a couple of questions on some other programs. Can you provide more color on the tox studies for the MOSPD2 program, and when an appropriate -- or what the appropriate venue to see this data might be?

And then my second question is on the metastatic colorectal cancer study. I want to know what the status of enrollment was. I think the last time, you said there was 3 patients. And what sort of preliminary data should we expect to see?

So for the MOSPD2 toxicology study, it's a formal toxicology study. We did dose ranging, both in rodents and in monkeys. And it came completely clear, so we could go to the -- in the high dose for a 4 weeks study. And we already ended this trial as well. And the results so far looks very clean, including the growth pathology. But we are waiting for the histology and for the final report before we can report on this.

But you can imagine that if we decided to pull the trigger and make the GMP batch which is, as you all know, quite costly, it was after we've been reassured that basically there is no, I would say, anything that we can detect in the toxicology study so far.

Regarding the CRC trial, so I'm glad you asked this question because I want to clarify it to the audience and to the public. Colorectal cancer is the biggest solid tumor oncology market. And 90% of the patients there have what we call a cold tumor, which means that there is no real immune system there. And therefore, they are not enjoying at all from the new checkpoint inhibitors. And that's basically a major problem, both for male and female. It's a high prevalent disease, and it's not just colorectal. It's the whole GI tract oncology, which is mainly cold tumor that don't response to checkpoint inhibitors.

Now we don't have preliminary results in this field. So one can ask us, why did you start a trial here and you didn't go forward with the thyroid cancer that we had very good preliminary results with renal or stuff like that? But the reason is that there is such a major need here. And the NCI people came to us an offer to do this trial, especially after they saw that we can bring the immune system into ovarian cancer to more a metastatic lesion.

So I would say that this is a relatively early trial. I have no more knowledge on what we are going to see than anybody else on this call or the doctors or anybody else. But we actually gave it a chance, and this is a small trial. It's actually mainly funded by the National Cancer Institute. So there was a point to do it and see if indeed we can turn the colorectal cancer from a cold tumor to a hot tumor.

I wouldn't expect to see meaningful clinical results because we are taking a very late-stage patient, and it's a small trial. We already recruited 11 patients to this trial, so you can imagine that it's progressing well. But I don't know if indeed we are bringing the immune system into the colon cancer. We know that the biology in the GI for the immune system is completely different than in other organs. So it remains to be seen.

(Operator Instructions) Our next question is from Jonathan Aschoff with ROTH Capital Partners.

Dror, does the recent rucaparib plus chemo Phase III results alter in any way your thinking about refractory ovarian cancer treatment?

Can you repeat on the trial that you're referring to?

Yes, the recent rucaparib Phase III, it's rucaparib plus and minus -- does that alter your thinking about the space in any way?

Not really. I'll tell you why. PARP inhibitors are important in ovarian cancer, especially in the BRCA-positive, B-R-C-A positive patients, which in Israel, it's quite prevalent because it's a prevalent gene in the Ashkenazi Jews. But in the world, it's about 15%. And we know that PARP inhibitors work, and they work in early and they work in later stage, so I'm not surprised at all. But when you think about PARP inhibitors and you ask yourself why a lot of patients cannot continue taking the PARP inhibitors even when they have the BRCA-positive, it's because of a lot of side effects with the PARP inhibitors.

So I always believe that there is not going to be just one drug that will solve the problem in such difficult indication. And I'm very happy for the patient for this trial, but I don't think that it's really changed the landscape. Because if you look at what we have in our Phase III OVAL trial, 70% of the patients that we recruit -- and now you know, it's not the final results, but that's what we see so far, are actually failer of Avastin.

And 50% are already failer of -- failed on PARP inhibitors. So we are taking a very sick population that already failed almost everything. And that's fine and I would expect that any trial with PARP inhibitor will show some evidence of efficacy in this indication. What disappointed me a little bit was when -- not for VBL but for the patients in general in this ovarian field, is that some of the therapies when you look at survival, when you combine them with chemotherapy, not just that they don't do better on survival, sometimes they do even a bit worse.

So I can tell you that the agency now will want to see, in any case, before approval, that your drug is not actually hurting survival. And I believe that VB-111 will do the opposite.

I was wondering, is there anything you can say about fever and the CA-125 response rate, beyond what you said at the first interim, in which I believe were 16 patients with fever?

Yes. So then it was 69% response rate. And since then, because this is a registration trial and because I can tell you that the interaction with agency is in a very serious way. They look at it as how ready we are for the BLA in all terms, in CMC and everything. We have to be very careful. The issue of fever is actually unblind some of the trial. Because 40% of the patient on 111 will develop fever. And then the doctors and patients and everybody know that they are on the drug.

So we have been asked not to emphasize too much about what happened with the fever, and that's why we are not saying anything. Although as you can imagine, we do see it because we do see the data. And we do see the RECIST response because we do see the data. And we do see the PFS in the total population and everything, but we've been asked not to say a word about it.

Okay. Finally, Amos, how should we think about the SG&A line over this year, given that quarter-over-quarter doubling that we saw for the fourth quarter of '20?

Please repeat the question, because we don't see doubling of SG&A in the quarter.

To get to your annual numbers, the SG&A in the fourth quarter was like $2 million versus roughly $1.1 million a quarter for the last 3 quarters.

So this is just a time shift between expenses. All in all, the G&A expenses for the year are very similar to those that were in 2019.

And our next question is from Jonathan Kreizman with Valore Research.

So Dror, you mentioned earlier that VBL-111 could be studied in additional modalities. So if you were to initiate an additional trial for VBL-111 besides the ones already running, what will be the first indication that you would approach, considering the scientific data gathered to date?

Okay. So I think first one have to be focused on the indication, which is a lead indication. And the lead indication for VB-111 is ovarian, ovarian, ovarian and ovarian. And I think that there, we have preliminary, very good data. We have a lot of data in biopsies. We know where we are. We have interim results in the Phase III, and that's where we are concentrated in doing the trial.

The reason we are doing 2 more trials is, actually, I believe the way we view the need that patient has and the way that doctors actually approaching us and trying to convince us to do the right thing for the community and patients. And that's why we agreed to do a GBM, a new trial, which is actually run by the major centers in United States. But there, again, we had preliminary data, and it was making a lot of sense to do the trial because we knew what happened in Phase III.

In the colon cancer, I told you why we are doing it. It's just, I would say, even more biologic questions than anything, if the VB-111 can actually work also in the immune system in the gut. Because if it does, then it's opened a major way to treat patients in GI tract oncology. But I'm not sure that it will.

The other indications that we should go for definitely is lung. We had instance it's working in the lung. We know that immuno-oncology is actually very important in the lung. So that will be one thing. Liver and specialty liver metastasis, we know that the drug is working in the liver. We know that the adeno vector is actually go in a very good quantities to the liver. We know that it should work in brain metastasis. We saw it in the Phase I, and that's quite clear that it's working in brain metastasis.

And also there is a good reason to believe in renal. Renal is quite crowded, so I don't think we will go right there, there. There are also some small indications like thyroid where I believe it should be an investigator-initiated type of trials when the drug is on the market.

I believe that after having a positive trial that will show that VBL-111 can actually make a big change in solid tumor, we will find a way to actually do trials in parallel in different indications, either alone or with a strategic partner. Because that will be like, I would say, as big step forward from what we know already on immuno-oncology. Because the checkpoint inhibitors work only in about 17% of patients because most tumors are cold tumor. And I think the fame of VB-111 is actually that we can turn these tumors into hot tumor where the immune system is there. And then you can combine it with different other immuno-oncology modalities.

And I'm saying it for -- you heard me saying a list of solid tumor that we already saw some indications that the drug is working there. But there is a difference between different organs, especially the GI tract is a completely different immune system. So it's different.

Great, and then following up on some comments you made today on potential effectiveness on colorectal cancer. So you mentioned that it's a matter of the biology and the mechanism of action of the drug to actually be able to turn the immune system to work in the colon. Like realistically, what would be the threshold or the result you would be happy about in this particular one?

So anything that will show that we can bring the immune system to the tumor and recognize the tumor, that would be a major achievement. You know that in the GI, we have a big tolerance because we're having all these new antigens coming from food. So it's not surprising that this is one of the coldest type of tumors. And the question is if indeed by the mechanism, we can bring the immune system there.

So I'm not really looking for PFS or OS in this small very sick patients. We just want to see how the biopsies actually looks. Is it similar to what we are seeing in the ovarian or not? And that will tell us if we need to actually invest much more in other trials in the GI tract, or that this is not the right organ to actually treat with VB-111.

Okay. Then on VB-201 in COVID-19, so I guess the molecule has been there for a pretty long time. And I noticed you decided, basically, to initiate the clinical trial just recently, whereas the pandemic has struck more than 12 months ago. So I was curious to hear the thoughts behind the timing of initiating the trial in this particular period?

Well, it's going a bit about history. The drug was developed in the beginning for atherosclerosis. And indeed in a Phase II trial in human being, we could show that we can actually block the monocytes from getting into atherosclerotic lesion, which was the primary end point of this trial.

But it's not really practical to develop an anti-inflammatory drug for atherosclerosis that will actually you will need a very big trial. We tried it in other indications where it's more a T cell type of inflammation. And we saw some positive data, but it wasn't strong enough to compete with the biologics, and that's why we decided not to keep on developing it at that point.

So when the COVID-19 start, and after 2 or 3 months it was quite clear that we have another monocytes-driven disease and this is an acute disease, and here we can show it relatively early, the decision was that we will try to do a trial. But for that, we needed to go back and make the capsules and make the API and everything again, and we invested in doing this. And at the moment that we had enough patients in Israel, we actually started the trial.

Now I think that this is a unique drug because of the mechanism of action, and it can work in viral indication. And I can assure you that even with solving the COVID-19 story, we will find the right target in viral infection. Because it's quite clear now that the chronic infection in virus or in viral diseases is actually a monocytes-driven injury to tissues. It's not just COVID-19.

For example, patients are now not dying from the HIV itself, but they have a much shorter life expectancy because of chronic inflammation in arteries, in the vascular in general, in the heart and other organs. And it happened to be, again, the monocyte story.

Okay. And then, lastly, on the cash position, so you mentioned the cash position now gives the company a runway into Q4 '22. If you could maybe share some -- a bit more detail into this guidance. So basically the prior one, if I recall, was for third quarter '20. I'm just trying to figure out the range of cash that has been injected to the company in the last quarter.

Sure. So during the first quarter of '21, we had injection of $12.5 million from the exercise of warrants from ATM sales and from purchases by Aspire Capital LLC. So this cash increased our balance, and therefore we now have cash enough to take us into the fourth quarter of '22. Does that address your question?

Yes. And then if you could maybe just touch on how -- what percentage of the warrants issued back in May 2020 are still outstanding, or if they have already been exhausted.

So about a little less than half of the warrants was exercised in January and February. And we have yet outstanding about 6 million.

And we have reached the end of the question-and-answer session. I'll now turn the call over to the VBL team for closing remarks.

So thank you all for joining us on our call today, and have a wonderful day.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.