Vascular Biogenics Ltd (VBLT) 2020 Q3 法說會逐字稿

Greetings. Welcome to VBL Therapeutics Third Quarter 2020 Earnings Call. (Operator Instructions) Please note, this conference is being recorded. I would now like to turn over conference to your host, Michael Wood with LifeSci Advisors. Thank you. You may begin.

Thank you, operator. Good morning, and thank you all for participating in today's third quarter 2020 results and corporate update for VBL Therapeutics. Leading the call this morning will be Professor Dror Harats, CEO of VBL; and Amos Ron, the company's CFO. A press release with the company's financial results became available earlier this morning and can be found on the Investors page of the company's website at 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 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 only as of today's date, Monday, November 16, 2020, 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 call is being recorded and will be available for audio rebroadcast on the company's website. (Operator Instructions) There will be a brief Q&A session following the company's prepared remarks. With that, I'd like to turn the call over to Professor Harats, CEO of VBL. Please go ahead.

Thank you, Michael, and good morning, everyone. Joining me on today's call is Amos Ron, our Chief Financial Officer, who will discuss the third quarter 2020 financial results.

I am pleased to say that it has been another productive quarter for VBL, with important developments and milestones for our lead program, VB-111, VBS' unique gene therapy for solid tumors. We are particularly 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 potential registration study in recurrent platinum-resistant ovarian cancer. Patients are being randomized to receive either VB-111 or placebo on top of weekly paclitaxel, which is a standard of care chemotherapy for this condition. The study has been designed to enroll up to 400 adult patients, and the primary endpoint is overall survival. Despite the COVID-19 pandemic, recruitment in the OVAL study is proceeding well, and the pace of recruitment has now proceed our initial projection. There are now almost 200 patients enrolled, which is half of the projected study population.

Earlier this year, we announced the outcome of prespecified interim analysis that was conducted by the independent Data Safety Monitoring Committee, or DSMC, on the first 60 patients enrolled, which demonstrated that the response rate in the VB-111 treatment arm was 58% or higher. This response rate is impressively higher than expected for standard-of-care treatments for which response rate is typically between 10% and 20%.

VB-111 is a viral based anti-cancer gene therapy that can induce flu-like symptoms upon dosing. Such symptoms are not expected with chemotherapy. In patient with post-treatment fever, which are likely to be on the VB-111 treatment arm, the response rate was even higher, 69%, which is, of course, encouraging. The results were presented at the American Society of Clinical Oncology Conference in June.

While it is important to note that the study remained blinded, we are pleased by the steady, exceptionally high response rate over 50%, which we continue to see in the total available patient population, with close to 200 patients enrolled today. As you can see, the OVAL trial continued to advance well, and the next periodic DSMC review is scheduled to take place in the first quarter of 2021.

Another recent development on VB-111 was that we announced the initiation of a Phase II study, which is evaluating a combination of VB-111 with nivolumab, an immune checkpoint inhibitor for patients with metastatic colorectal cancer. The study is being conducted under a CRADA agreement between the National Cancer Institute and VBL. Colon cancer is one of the most common cancer worldwide, but so far, immune-based approaches have been mostly unsuccessful.

One possible explanation is that in GI, gastrointestinal cancer, in general, it appears to be less immunogenic. The goal of this Phase II is to investigate where priming with VB-111, followed by the addition of nivolumab, may induce an anti-Cancer immune response. There are also plans to initiate an investigator-sponsored study with VB-111 for recurrent GBM at Dana-Farber Cancer Center and other leading neuro-oncology centers in the U.S.

We are also making excellent progress with our MOSPD2 program. In September, we reached an important milestone when we held a pre-IND meeting with the FDA. We reached alignment on the clinical development plan for VB-601, which will be the first therapeutic monoclonal antibody candidate we plan to take forward for immune inflammatory indications. We are currently advancing VB-601 through IND-enabling studies, aiming to submit an IND application in the second half of 2021.

Finally, in October, we were excited to announce the appointment of Marc Kozin as Vice Chairman of our Board. Mr. Kozin will transition to the role of Chairman during 2021, at which time, Dr. Bennett Shapiro, the current Chairman, will step down but will continue to serve on our Board.

As we advance toward becoming a commercial organization and prepare for success, it is important to have Board members with the appropriate areas of expertise who can help guiding the company to the next stage. Mr. Kozin has 3 decades of industry and consulting experience and has an exceptional track record of helping biotech companies. Many of you will know him through his association with Healthcare Royalty Partners and L.E.K. We are thrilled to have him take on this important role.

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

Thank you, Dror. Revenues for the third quarter 2020 were $193,000 compared to $79,000 for the comparable period in 2019, an increase of 144%. Research and development expenses net were approximately $4.8 million for the third quarter compared to approximately $3.8 million in comparable period of 2019. General and administrative expenses for the third quarter were $1.1 million compared to $1.2 million for the third quarter 2019.

Comprehensive loss for the third quarter was $5.8 million or $0.13 per share compared with $4.9 million or $0.14 per share for the third quarter of 2019. As of September 30, 2020, we had cash, cash equivalents, short-term bank deposits and restricted bank deposits of $37.3 million and working capital of $30.7 million. We expect that our cash and cash equivalents and bank deposits will be sufficient to fund operating expenses and capital expenditure requirements into the third quarter of 2022. For further details on our financials, please refer to the Form 6-K filed with the SEC.

With that, I return things back to the operator for the Q&A portion of this afternoon's call.

(Operator Instructions)

Our first question is from Kevin DeGeeter with Oppenheimer.

Congratulations on all the progress with regard to enrollment for OVAL. I guess really maybe 2 questions from us today. Dror, I believe you -- in your prepared comments, cited a pulled response rate of about 50% in OVAL from the first 200 patients. Can you provide a point estimate or exact figure for that response rate and the number of patients that's based on?

Yes. Of course. Thank you, Kevin. When we talk about the valuable patient, we -- as you all know, we talk about patients that have CA-125 of at least twice the normal level, which is above 70%. It's exactly what we did in the interim analysis. And that's about 80% to 85% of the patients recruited for the trial. And of course, we are talking of patients that we have at least 2 months follow-up so that we can actually know if this is a rate of response or not a rate of response.

So that's actually not far from the EUR 200 million I was talking about, but one can estimate, I don't want to give an exact number, but it's above 150 patients already. And I can tell you that the number right now is around 55% response rate for this total population, which is even a bit higher of what we've seen in the first 60 patients. So it's a very steady, very high response rate that we do see in this trial.

And now that we are basically halfway recruiting for these trials, so we can actually conclude that this trial, we are going to have a higher response rate. Now this is, of course, a blinded trial. So what I can talk about is what we do see in the total blinded population, but we already know from the interim analysis that it went quite nicely to the favor of VB-111. And why would that change now that we moved from 60 patients to 150, if still, we have the same very high response rate? So this is really encouraging.

Great. And then I think our second question, just with regard to the DSMB update in the first quarter, maybe 2 parts to the question. First, was that shading towards earlier in the quarter, closer to the January time frame or perhaps later closer to March? And then just remind us as to what the either expected learning or the depth of communication you anticipate being able to provide to investors following that update.

So of course, the DSMC meeting is actually as planned. It's every 6 months, and it's going to be in the middle of the first quarter, actually, quite exactly in the middle. So you can estimate exactly when it's going to be. I don't want to say the specific date for the -- I mean because DSMC never like to actually have it publicly disclose the date of their meeting.

I was telling you before that what they are looking at, of course, is both safety, but not just safety, they're looking at efficacy as well because this is a survival trial. And all of us know that if a drug shows survival benefit, it's quite difficult to keep on a trial. Although there are no rules to stop this trial early for efficacy, the DSMC insist to see all the data. So what they are going to see is a very thorough data on safety, which they are getting every time, including all the FAEs, AEs, everything. And of course, they should come back to us, hopefully, and say, "As we always got it, this is quite a safe drug."

But also, they are going to see the full data on the primary endpoint, which is overall survival; and secondary endpoint, which is PFS. On the second secondary, which is a response rate post its RECIST and with CA-125, basically, they're going to see data on all the patients recruited to that time, which is -- we expect to be, of course, over 200 patients. And they're going to see the data in a very similar way that they're going to see the data at the end of the trial.

What they are going to disclose, not that much, actually, because they -- we have to be blinded, and we keep very careful to be blinded. This is a pivotal trial. So far, it's really a promising trial because it's a very high response rate, and nobody wants to hurt this trial in any way with the agency. And therefore, most probably what we will be able to say that they looked at the data, and they gave us a green light to go on. It's unlikely at that point that they will have enough data even if the drug is working in a very well way to stop the trial early.

Our next question is from RK with H.C. Wainright.

Since you already answered my questions on OVAL, regarding the colorectal cancer study, could you give us some additional color regarding the design and also when we could potentially see -- get that first look at the data in the sense if there is an interim analysis?

So thank you, RK. As you know, this trial is done together with the National Cancer Institute. And we are actually recruiting patients with colon cancer, metastatic colon cancer, which are beyond the standards of care therapy. So most of them failed chemotherapy. A lot of them already failed checkpoint inhibitors, although you know the checkpoint inhibitors don't work usually in colon cancer.

And what they are getting through, it's actually a single-arm, open trial where we are recruiting these patients. They're getting their first biopsy usually from a metastatic lesion in the liver to show that, indeed, the tumor is what we called a cold tumor, that there is no immune system involved in the tumor, and we expect that to be in basically everybody that recruit on this trial. And then they will get, on that same day, the first dose of VB-111, [10 to the 13] viral particles.

2 weeks later, before getting the next dose of nivolumab, they will have -- half of them will have a second biopsy just to show what VB-111 alone is doing to the immune system. And we know from biopsies we did in ovarian cancer that we should expect to see the immune system there. It's a bit early, but it's okay because we are going to have a third biopsy.

In the second week, they're going to get nivolumab, and they're going to get nivolumab every 2 weeks, while every 6 weeks, they will get a combination of both VB-111 and nivolumab. So this way, we are priming to bring the immune system into the tumor. And then, of course, we hope that the checkpoint inhibitor will activate it.

The second half of patients that didn't get a biopsy after the -- just VB-111 will get a biopsy just before the second dose of VB-111, to see what the immune system reaction is to the combination of VB-111 plus nivolumab. So we are going to actually look at these biopsies quite soon. We estimated by mid-2021 or sometime in the second quarter, we will have the first results that will tell us if indeed we are turning colon cancer to become a hot tumor.

Okay. So at the time you do the biopsy, will you also be doing any biomarkers? Will you be looking at any biomarkers in addition to the tissue?

Of course. There going to be a thorough investigation of the tumor, including the genetic, genomic, [protonic], everything.

Perfect. And then on MOSPD2, what additional work needs to be done before you get to file the IND for inflammatory indications in the second half of next year?

So actually, for the IND, we need to complete the toxicology testing. We are doing it right now. We already got preliminary results, which I'm not going to disclose, but everything goes forward quite well. And of course, we are making the bet for the clinical trial. So we expect to submit IND sometimes in the second half of 2021. And hopefully, toward the end of the year, we will be able to start the study.

Our next question is from Soumit Roy with Jones Trading.

Congratulations on all the progress. A quick question on the OVAL trial. Are you seeing -- given the very promising data from the second interim and the first interim, are you seeing any uptick in the rate of enrollment or expansion in the number of sites that's enrolling. And if you can give us how many sites currently enrolling for the trial?

And the second is, are you collecting data for -- on the ongoing COVID-19, if any of your patients are being tested? And will that be presented separately? How is that being presented to DSMB?

Sure. So first, to answer your first question, we have now 73 centers, most of them in United States, some of them in Israel. And lately, we opened some centers in Europe, and we are planning to open centers in Japan quite soon. So actually, it's going very well, not just in recruiting and not just in recruiting in centers that are already recruiting but also in opening new centers.

And actually, the vibe that we are getting from -- in the United States, all the centers are part of GOG organizations. So we hear from the Steering Committee, which is mainly members of GOG that things go very well, and doctors are quite pleased with what they do see. Of course, patients are tested for COVID-19. There were only, if I recall right, 2 or 3 patients that actually get -- got infected with COVID-19.

And I think that all of them stayed on the trial, but I'm not 100% sure about this information because we try not to get too much information from this (inaudible) trial unless we have some issues. So I don't think that we will need to do a different analysis for patients that were infected with COVID-19. It's only very minimal number of patients right now.

Our next question is from Jonathan Aschoff with ROTH Capital Partners.

Dror, for the colorectal trial with nivolumab, what result will you guys deem as successful enough to proceed with further trials? What's the bogey that you're looking for?

So of course, everybody wants to see some signals of a response in terms of RECIST. I won't say in term of PFS or OS, when you talk about the small number of patients. But I think that the major endpoint that we are looking for is actually giving a simple systemic IV infusion and change tumor from a cold tumor to a hot tumor. I'm sure that you're all familiar with numerous studies done now with very complicated procedures, injecting into the lesion, taking cells and educate them, ex-vivo and put them back into the tumors.

All of this is really quite complicated with a lot of complication. I think that even if we just show that we can turn colon cancer to a hot tumor and bringing a lot of immune cell there, that will be good enough to actually make a decision to do a relatively small randomized controlled trial on the combination in this indication. If indeed, we see more than this and some signals, then maybe the right thing would be to do a bigger trial right away.

Okay. And I can't see where I've written down the size of this trial. How many patients were enrolled?

Okay. The size of this trial is planned to be up to about 40 patients. It doesn't mean that we are going to go all the way to 40 patients. The idea is that after about 8 to 10 patients, they're going to look at NCI on the biopsies and actually get the first results on if the tumor is becoming a hot tumor.

So that's the first result that we are expecting in the mid-2021. So right now, the protocol talk about 27 patient, but we can increase it, if needed. And actually -- we can actually also increase into other indications in GI. If indeed, we do see in colon cancer that we turn cold tumor hot, the plan at NCI is to extend it to other indication in GI. So the whole idea of this tumor -- of this study, you can call it a teasing study, to see if indeed we are repeating what we have seen in ovarian cancer because in ovarian cancer, it's quite clear in every biopsies that we are taking, including biopsies from Phase III where we are blinded, but we look at the biopsies just to see that they are done right. A lot of inflammatory cells. And we know that, that's not coming from patients with chemotherapy. So we do -- VB-111 does change cold tumors hot.

And the 55% that you answered for response rates to the first question was simply taking the 50% blinded response rate and going up 5 for VBL-111 and down 5 for control, right? Because you had have a minimum of 10?

No. No. I want to make it clear. We were talking about over 50% in the total blinded population. And then he asked me if I can be more specific, "How much over 50%?"

I was saying that, at this moment, it's 55% for the total population, but we all know that chemotherapy give a very relatively low response rate. And we already know from the interim that we had at least 58% response rate in the treatment arm and 69% in the one that we know that are on VB-111. So we expect it to be much more than 55% in the treatment arm.

Okay. That 55% is based on 150 patients you were saying, roughly?

That's right.

(Operator Instructions)

Our next question is from Jonathan Kreizman with Valore Research.

Dror or Amos, can you hear me?

Yes. Of course, we can hear you.

Okay. So we're beginning to see some encouraging testimonies on patient forums from women who shared some positive outcomes from their enrollment in the OVAL trial. So while I acknowledge these are sporadic testimonies, if you will, and the company is, of course, blinded to the results.

If these results do eventually turn out to indicate the higher OS and PFS outcome, either in the upcoming or next interim analysis, what kind of OS and PFS threshold do you think would be required for the DBMC (sic) [DSMC] to evaluate stopping the trial and recommend the company to initiate the filing process?

So this question should be asked to the DSMC. I don't -- I totally not pre-specified in any way. But I guess that what they would look for to see is a statistically significant different between the 2 arms because they're getting a Kaplan-Meier curves so they will know, indeed, if the 2 curves are separated enough, to show statistically significant, which is, for now, for overall survival, it's 0.05. And for the PFS as a secondary, it's again 0.05 PF, less than 0.05.

And the other ratios that were actually calculated for something like that, it's about 0.65%. So it's quite a good hazard ratio. So I'm not sure if it will be exactly on 0.05. They will make this decision. But you know they will never take a decision like that alone. Usually, there is a special meeting with the agency when something like that happened because this is a pivotal trial to put a drug on the market in a very difficult indication.

But I can assure you that beside of the DSMC, we have a very strong Steering Committee, chaired by Dr. Bradley Monk, which is one of the leader of GOG, and they are monitoring the study in a very careful way. We are not reading by purpose all these testimonies from patients. We are not allowed to do it as a company. But the vibes that we get from the Steering Committee, which has been taking care of a lot of the patients, as you can guess because GOG -- is most of the centers, they are quite optimistic.

Okay. Great. Then second question on MOSPD2. So maybe if you could share some thoughts on how you're planning to approach the clinical trials in 2021. And whether you expect at this point to initiate the trials standalone or partner with a sponsor. And what is the financing planning and budgeting ahead of the clinical phase?

So we are -- actually in our budgeting, we are calculating all the expenses, including all the way to the end of Phase Ia, which is not going to be a big trial. And of course, you know that when you have such a novel play technology and novel indication, one has to be very careful and go from a low dose to a higher dose, and that's a plan in the Phase Ia.

And if indeed, the results will be as expected, and because it's such a novel type of therapy for immuno-inflammatory diseases, and because we already have very strong data in the preclinical work, we assume that, at a certain point, we won't develop it alone. But right now, we're geared to develop it all the way until the end of the Phase Ia study.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

So thank you all for joining us today on this call, and we all hope be able to tell more good news in the future. Thank you very much.

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.