OncoSec Medical Incorporated
Q4 2015 Earnings Call Transcript

Published: 16 Oct 2015

[Operator:]

Hello and welcome to today's webcast for OncoSec’s Fourth Quarter and Fiscal Year End Financial Results Conference Call and Corporate Update. My name is Carmen and I will be your web event specialist today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded today. An archive of this call and the slides will be available on OncoSec’s website following the meeting. It is now my pleasure to turn the webcast over to Mr. Richard Slansky, Chief Financial Officer at OncoSec. Mr. Slansky, the floor is yours.

[Richard Slansky:]

Thank you, Carmen and good afternoon everyone. Welcome to OncoSec’s first quarterly conference call. Before we begin, I'd like to inform you that today’s call may contain certain forward-looking statements related to our business. Including but not limited to our plans to develop DNA immunotherapies and delivery technologies. Any statements about our goals, expectations, beliefs, plans, designs, objective, assumptions or future events or performance are forward-looking statements. Please keep in mind that actual events or results may differ from the expectations discussed, as a result of different factors, including outcomes of clinical trials and product development programs, evaluation of potential opportunities. The level of cash consumption, the assessment of OncoSec’s Technology by potential corporate partners, capital market conditions, timing of events and other subjects. We believe our statements are based on reasonable assumptions. However, these statements are not guarantees of performance and involve known and unknown risks and uncertainties that may cause the actual results to be materially different from any future results expressed or implied by such statements. Important factors which could cause actual results to differ materially from those in these forward-looking statements are detailed in our filings with the Securities and Exchange Commission. We disclaim any duty to update forward-looking statements. Now I'm pleased to introduce our President and CEO, Punit Dhillon who will lead us through our call today. Punit.

[Punit Dhillon:]

Thanks Richard, good afternoon. Thank you for joining OncoSec’s first quarterly conference call. We’re pleased to announce that moving forward the Company intends to conduct quarterly calls to the investment community regularly updating the company’s - on the company’s plans and progress. I’d like to take a moment to review the agenda for our call today and introduce our senior leadership team. Joining me on the call today are Richard Slansky, our Chief Financial Officer; Dr. Robert Pierce, our Chief Scientific Officer; and Dr. Mai Le, our Chief Medical Officer. After my opening remarks Richard will provide an overview of our financial results for the 2015 fiscal year. Richard will be followed by Dr. Pierce who will discuss the scientific rationale for ImmunoPulse IL-12. After Dr. Pierce’s remarks, Dr. Le will then discuss the data we have generated to-date in melanoma and Merkel cell carcinoma and Dr. Le will also share an update on our ongoing clinical trials and key operational objectives. I will then provide an overview of our unique market opportunity, business strategy goals and upcoming milestones. And afterwards we will open the floor for Q&A session. I like to start the call today with a brief overview of our company and financial history. OncoSec is a biotechnology company pioneering new technologies to harness the body's immune system to fight cancer. Our core immunotherapy platform ImmunoPulse is designed to deliver DNA-based therapeutics directly into tumors and to reverse the immunosuppressive tumor microenvironment. OncoSec’s lead program ImmunoPulse IL-12 employs this intratumoral technology to enhance the local expression of interleukin-12 or IL-12 as is commonly known. To date data shows that ImmunoPulse IL-12 can generate an initial local immune response as well as a systemic effect, laying the groundwork for expansion into combination approaches, new tumor indications and future therapeutic candidates. ImmunoPulse IL-12 is currently in Phase II development for metastatic melanoma, Squamous cell carcinoma of the head and neck, and triple-negative breast cancer. This includes our Phase II combination trial of ImmunoPulse IL-12 and Merck’s anti-PD-1 drug KEYTRUDA in patients with metastatic melanoma. We’ll touch more upon this during the call today, but I’d like to briefly focus on the potential market opportunity we have here at OncoSec. Although the anti-PD-1 agents are emerging as a backbone therapy in a variety of tumor indications the majority of patients in the majority of tumor types will not respond to these agents alone. A conservative estimate places the non-responder population at almost one million patients with solid tumors every year just in the U.S. We believe ImmunoPulse IL-12 has the ability to convert a significant proportion of the non-responder patients into those who will respond to anti-PD-1 agents. This represents a multibillion-dollar market opportunity. The ability of intratumoral electroporation with IL-12 in Phase I to induce a systemic anti-tumor immune response and this unique market opportunity led to the founding of OncoSec. I’d like to take a moment now to review OncoSec’s financial history. OncoSec was established in 2011 during the height of the financial crisis when obtaining institutional financings through an underwritten IPO was nearly impossible for many companies. Over the last four years we have financed the company largely through small institutional and friends and family types surrounds and we completed our first institutional round in June 2015 and raised approximately $13 million with well-known and high quality healthcare investment funds. To date, we have raised approximately $74 million of capital through stock and warrant offerings and our company has also grown in size to over 50 employees to execute on our R&D strategy. As a result of this history, we believe OncoSec is relatively unknown among the institutional investment community as well as the broader sell-side community that covers immuno-oncology companies. Our intention with these calls is to provide our key stakeholders broader clarity and better understanding of OncoSec’s strategy and business development goals. In doing so, we hope to close our valuation gap. We believe that our science and our ability to execute on our development programs will lead to new treatment options for cancer patients and that this will in turn create tremendous value for our shareholders. We will have time for questions later, but for now I’d like to turn the call over to Richard Slansky to provide the financial results for the 2015 fiscal year. Richard?

[Richard Slansky:]

Thanks, Punit, and good afternoon everyone. We issued our financial results via press release yesterday and filed our Form 10-K after market close. For the fourth quarter of fiscal 2015 we reported a net loss of $6.5 million or $0.48 per share. This is compared to a net loss of $3.6 million or $0.30 per share for the same three-month period last year. For the fiscal year ended July 31, 2015 we reported a net loss of $21.2 million or $1.67 per share based on weighted average shares outstanding of $12.7 million. This is compared to a net loss of $12 million or $1.26 per share for the same period last year. The increase in net loss for the year ended July 31, 2015 compared with the same period in 2014 resulted primarily from an increase in headcount as we continue to grow our discovery research and clinical teams, additional outside service costs to support our device development and clinical activities and corporate communications, financing and other administrative investments to expand investor awareness and list OncoSec on the NASDAQ Capital Market. There were no revenues for the fiscal years ended July 31, 2015 or July 31, 2014. Research and development expenses were $3.8 million for the fourth quarter of fiscal 2015, compared to $1.9 million for the same period in 2014. Research and development expenses were $13.1 million for the fiscal year ended July 31, 2015 compared to $5.8 million for the same periods in 2014. The increase in research and development expenses was primarily the result of increased salary related expenses of approximately $2.9 million, increased outside service expenses related to sponsored research, clinical developments and engineering consulting. Increased expenses related to reagent and lab supplies and lab space to support the expansion of R&D operations and increased clinical trial expenses. We expect research and development to continue to account for a significant portion of our total expenses in the future as we continue to expand our operations and focus on designing and developing our therapy. General and administrative expenses were $2.7 million for the fourth quarter of fiscal 2015, compared to $1.7 million for the same period in 2014. General and administrative expenses were $8.1 million for the fiscal year ended July 31, 2015 compared to $6.2 million for the same period in 2014. The increase in general and administrative expenses was primarily the result of salary related expenses due to hiring additional personnel to support the growth in our operations. Now with respect to our cash position at July 31 we have $32 million in cash and cash equivalents as compared to $37.9 million of cash and cash equivalents at July 31, 2014. We expect our burn rate to remain around $2 million per month and anticipate that our funds will be sufficient to allow us to continue to operate our business for at least the next 12 months. As many of you know we implemented a reverse stock split earlier this year and we began trading on the NASDAQ Capital Market under the symbol ONCS. Additional information on this and other topics is included in our Annual Report on Form 10-K that we filed yesterday. Finally, as a note of interest we are planning to move to a new well-equipped facility that will combine all of our clinical discovery research and administrative functions in one building before the [end of the year] [ph]. Our new office school house state-of-the-art equipment to facilitate our immuno-oncology research efforts. We will provide more information on this exciting event as we get closer to our move-in date. Now, I’ll turn the call over to Dr. Robert Pierce, our Chief Scientific Officer to comment on the scientific rationale. Rob?

[Robert Pierce:]

Thanks Richard. I would like to take the opportunity today to reiterate the scientific rationale for ImmunoPulse IL-12. In particular I will focus on how ImmunoPulse IL-12 may enhance tumor immunogenicity and convert PD-1 non-responders into responders. The field of immuno-oncology is rapidly evolving driven in large part by the tremendous success of anti-PD-1 therapeutics. A consistent theme worth underscoring is that anti-PD-1s are effective across a broad range of different tumor types because these agents modulate how the patient's immune system interacts with and attacks tumors unlike traditional cancer therapies that are directed towards the cancer cells themselves. In large part the ways that the immune system recognizes and attacks cancer and the mechanisms that tumors deploy to hide from and defeat immune responses are shared across patients and tumor types. Despite this most patients fail to respond to PD-1 monotherapy. PD-1 non-responders constitute a significant unmet medical need and therapeutic opportunity, but why don't these patients respond. For T-cell checkpoint therapies like anti-PD-1 to work. You first need to generate the T-cells that the PD-1 works on. In a nutshell that's what ImmunoPulse IL-12 can provide. Before I joined OncoSec in 2013 I worked on the KEYTRUDA program at Merck, leading a group focused on the question of who responds and who doesn't respond to anti-PD-1 blockade. That were culminated in a collaboration with Paul Tumeh and Antoni Ribas at UCLA and a scientific paper that was published in Nature last year. Let me describe the classic picture of an anti-PD-1 responder and non-responder. For those of you joining via telephone these slides will be available on our website following the call. Responders are those patients whose immune systems can recognize their tumor as foreign and respond by generating CD8+TILs or Tumor Infiltrating Lymphocytes. These PD-1 positive tumor specific T-cells infiltrate the tumor to kill it, but in doing so they up regulate PD-L1. It is this interaction between PD-L1 and PD-1 on the T-cell that essentially turns off the T-cell abrogating the immune attack a process referred to as adaptive immune resistance. These images showing the closed physical interaction of PD-L1 positive cells in the tumor with PD-1 positive CD8 T-cells appear to be catching the tumor in the act of shutting off the T-cells. Anti-PD-1 or anti-PD-L1 antibodies inhibit this interaction and effectively reinvigorate these exhausted T-cells allowing them to go back on the attack. So this is the classic picture of the patient who will respond to anti-PD-1 as a monotherapy. But problem is that most patients across most tumor types lack sufficient numbers of these tumor-specific exhausted CD8 positive T-cells. These T-cell poor or low TIL tumors are the ones that will not respond to PD-1 therapies alone. Vaccine approaches like ImmunoPulse IL-12 that can enhance the immunogenicity of the tumor and convert low TIL or T-cell poor tumors into T-cell inflamed tumors have the potential to increase the number of patients who can benefit from anti-PD-1 blockade. The goal of therapeutic vaccination involves exposing the immune system to tumor-specific antigens to stimulate and educate the immune system to recognize and kill tumor cells harboring these antigens. For this to work you need to write antigen and you need to expose the immune system to those antigens in the right immunostimulatory context, IL-12 is central to this process and kicks off a pro-inflammatory cascade resulting in the conversion of the tumor microenvironment from an immunosuppressive to pro-inflammatory state. Intratumoral IL-12 expression leads to necrotic tumor cell death which exposes the immune system to all of the potential tumor antigens. Including those critical idiosyncratic mutation-derived neoantigens. While simultaneously enhancing antigen presentation and processing. This culminates in the recruitment and expansion of tumor-specific CD8 killer T-cells. Other intratumoral therapies like Amgen’s T-VEC or STING pathway activators like dose and development at [ADORA] also appear to function as in-situ vaccines to drive anti-tumor immune responses. We know from preclinical studies that intratumoral IL-12 functions as an intratumoral or in-situ vaccine in mouse tumor models, but how about in patients. Although clearly it's more challenging to study based on samples from our melanoma and Merkel cell carcinoma trial we do have evidence that ImmunoPulse IL-12 can function similarly leading to enhanced immunogenicity and the generation of systemic anti-tumor responses. Dr. Le will be discussing our clinical data in more detail, but I'd like to take this moment to emphasize a couple of key points from our clinical trials that demonstrates the vaccine effect of ImmunoPulse IL-12. A significant portion of patients in both the melanoma and Merkel cell carcinoma trials had regressions in distant untreated lesions the so-called abscopal effect. This observation is consistent with ImmunoPluse IL-12 induction of immune system education and trafficking. Since IL-12 expression is local not systemic. Also in a subset of patients with matched pre and post-treatment samples we have identified the induction of both the pro-inflammatory gene signature and the generation of increased TILs. This slide illustrates one such patient from the melanoma Phase I study who experienced the complete response. On the left is the pretreatment biopsy demonstrating a T-cell poor or a low-TIL phenotype. On the right is a sample taken approximately 22 days after treatment with ImmunoPulse IL-12. As you can see there is a massive infiltration of CD8 positive TILs closely approximated the PD-L1 positive tumor and myeloid cells indicating the adduction of this adaptive immune resistance signature. What’s more one can appreciate how this effect is enhanced at the invasive margin of the tumor as we described in the too many nature article as being predictive of an anti-PD-1 response. In this patient then ImmunoPulse IL-12 converted the tumor from a low-TIL non-responder to a high-TIL responder phenotype. Recently at the European Cancer Congress in Vienna results from the Phase II Merkel cell study were presented. A marked increase in a tumor-specific CD8 TIL population, which recognized a key viral neoantigen, was observed after ImmunoPulse IL-12 treatment. And importantly this T-cell expansion correlated with a generation of a deep clinical response. Furthermore this increase in this tumor-specific CD8 population was observed both in treated and distant untreated lesions. Taken together these data provide evidence that ImmunoPulse IL-12 is helping the immune system to recognize and attack the tumor. In summary, preclinical data as well as our clinical data for melanoma and Merkel cell carcinoma trials provide evidence that ImmunoPulse IL-12 functions as an in situ vaccine leading to the generation of CD8 positive T-cell directed against tumor-associated antigens including critical neoantigens. These tumor-specific T-cells then disseminate and attack non-treated distant tumors. However, when the CD8 T-cells go on the attack the induced PD-L1 expression activating the PD-1 checkpoint and potentially blunting the systemic response, this is where anti-PD-1 agents come into play. Now that ImmunoPulse IL-12 has primed to the immune system and generated CD8 T-cells that traffic to other tumor lesions, anti-PD-1 agents can then ensure that the T-cells are not shut off by this immune checkpoint and remained licensed to kill the tumor. With that I’ll close and we’ll be available to answer questions later in the call, but now I'd like to introduce Dr. Mai Le who will discuss our clinical programs. Mai?

[Mai Le:]

Thanks Rob. As Dr. Pierce described the fundamental goal of ImmunoPulse IL-12 treatment is to promote a systemic tumor-specific inflammatory response. In this principal treatment effects that we feel holds the greatest potential for ImmunoPulse IL-12 to provide meaningful clinical benefit to patients and that drives the investment value of OncoSec’s program. By safely promoting tumor immunogenicity ImmunoPulse IL-12 has the potential to broaden the number of tumor indications for which anti-PD-1 agent may be applied and increase the number of patients who may benefit from these therapies. Our clinical development strategy for ImmunoPulse IL-12 is centered on validating this hypothesis. I’d like to take this opportunity to review the positive clinical data that we have generated in both metastatic melanoma and Merkel cell carcinoma that support the systemic tumor-specific pro-inflammatory effects of local ImmunoPulse IL-12 treatment as well as to provide an update for you on our ongoing clinical program. At this time OncoSec and our academic collaborators have generated clinical data in both metastatic melanoma and Merkel cell carcinoma demonstrating that local intratumoral treatment with ImmunoPulse IL-12 successfully induces tumor inflammation and can lead to objective clinical responses. In OMS-I100 which was a multi-center Phase II clinical trial in metastatic melanoma, 31% of patients had an objective response approximately half of which were complete responses. 48% experienced a clinical benefit defined as achieving either a partial or complete response or disease stabilization. Importantly, 50% of the patient had regression in at least one distant untreated lesions and this is a key observation because it supports our hypothesis that local ImmunoPulse IL-12 can have systemic anti-tumor immune effects. Since there is no evidence that the IL-12 protein product actually gets into the bloodstream, we believe that it is the education of the patient's own immune system driven by the local ImmunoPulse IL-12 therapy that leads to the regression of tumor lesion that we’re not directly treated. Because the primary anti-tumor mechanism by which ImmunoPulse IL-12 is thought to be through modulation of the immune system. The effects are expected to be translatable across the variety of tumor types and this is precisely what we are absorbing. On September 27, we presented the results from our Phase II Merkel cell study. Merkel cell carcinoma is a rare and aggressive cancer that biologically is fundamentally different from melanoma. However the effects of ImmunoPulse IL-12 appears to be very similar to what was previously observed in our melanoma trial. In some patients with Merkel cell carcinoma, ImmunoPulse IL-12 led to an increase in tumor-infiltrating lymphocytes as well as an increased expression in genes associated with inflammation. And as Dr. Pierce previously described the effects of this local therapy are tumor-specific and immune system mediated. Importantly tumor-specific CD8 positive T-cells were found in both treated and untreated lesions following ImmunoPulse IL-12 therapy and was correlated with an objective clinical response by resist criteria. I would like to reemphasize here that these key biomarker observation have increased expression of genes associated with inflammation and tumor-specific CD8 positive T-cell expansion support our hypothesis that ImmunoPulse IL-12 promotes both local and systemic anti-tumor inflammation. The fact that 30% of patients had regression of tumor lesions that were not directly treated underscores the importance of the systemic anti-tumor inflammatory response driven by ImmunoPulse IL-12. Beyond achieving this biological proof-of-concept, we also observed objective resist responses and encouraging clinical outcomes. 25% of the Merkel cell patients had a partial response; one patient had a pathologic complete response and continues to be recurrence-free at six months while another patient has been recurrence-free for over three years. Here I would like to take a moment to clarify the purpose of the Merkel cell study in the context of our ImmunoPulse IL-12 development strategy. The specific objectives of the Merkel cell study were to demonstrate that ImmunoPulse IL-12 increases IL-12 protein expression and that this in turn leads to T-cell recruitment to local and distant lesions in a tumor type that is different from melanoma. And as you know tumors have multiple ways of separating the immune system. Following the T-cell recruitment to the tumors and anti-PD-1 agent could prevent the T-cells from being shut off, but as Dr. Pierce described the anti-PD-1 agents require that their T-cells in the local tumor environment to begin with hence the need for treatments like ImmunoPulse IL-12. So you can see how these treatments rather than being direct competitors in the therapeutic marketplace are fundamentally complementary in the mechanisms of action. The result of the Merkel cell study showed that ImmunoPulse IL-12 can successfully recruit T-cells to the tumor and promote the pro-inflammatory microenvironment necessary to train T-cells to recognize the tumor-specific antigen. Further the results of this study showed that the effect of ImmunoPulse IL-12 maybe independent of tumor type and as why we have moved into other tumor types like Squamous cell carcinoma of the head and neck, and triple-negative breast cancer. This mechanism of action combined with a very favorable safety profile is what makes ImmunoPulse IL-12 a rational and ideal choice for combination treatment with anti-PD-1 therapies. OncoSec’s clinical development strategy is based on demonstrating the ability of ImmunoPulse IL-12 to promote tumor immunogenicity across the variety of tumor types and that ImmunoPulse IL-12 can improve on anti-PD-1 by extending the population of patients who can benefit from this strategy. Several of OncoSec’s ongoing trials includes studies focused on obtaining the key biomarker data needed to support the biological mechanism of the ImmunoPulse IL-12 across various indications. These includes an expansion of our original Phase II study in metastatic melanoma as well as Phase II studies in advanced recurrent Squamous cell carcinoma of the head and neck and recurrent triple-negative breast cancer. As a reminder of the significant medical need for treatments focused on promoting tumor immunogenicity over 65% of melanoma patients will not respond to an anti-PD-1 agent alone because the tumor lesion are not inflamed. Response rates to anti-PD-1 monotherapy are even lower for head and neck cancer and triple-negative breast cancer or greater than 80% of patients will not benefit from single agent PD-1. Over the next 12 months to 18 months we will be collecting the key biomarker data from our clinical trials and these indications to demonstrate how ImmunoPulse IL-12 can promote the inflamed tumor in microenvironment needed to improved patient outcomes with anti-PD-1 agents. As of today 20 patients have been enrolled into the extended melanoma trial, three patients have enrolled into the head and neck cancer study and patients are being actively screened for enrollment into the triple negative breast cancer trial. All of these biological proof-of-concept studies are open label and allow for interim data evaluation. We will be assessing the biomarker data on an ongoing basis and plan to present our data at the key scientific conferences. We anticipate that the data from all three of these studies will further support our hypothesis that ImmunoPluse IL-12 promotes tumor immunogenicity and is a rational treatment to combine with anti-PD-1 therapies. As you are all aware the combination of ImmunoPluse IL-12 plus Merck’s anti-PD-1 agent KEYTRUDA is already being evaluated in melanoma patients whose tumors are considered not immunogenic and would not be expected to respond to single agent anti-PD-1. The goal of this study is to demonstrate that ImmunoPluse IL-12 can convert non-inflamed low-TIL tumors, which would not be affected to respond to an anti-PD-1 agent alone into ones that have an inflammatory microenvironment or high-TIL. In doing so the tumors become primed for therapy with KEYTRUDA, patients enrolled into this trial are pre-selected for having tumors that are not inflamed or have low numbers of TIL, a population that represents about 65% of the overall metastatic melanoma population. In August we announced the first patient enrolled into this Phase II combination trial and since then another seven patients have entered the study. As with our other clinical trials this study is also open-label, which allows for the ongoing evaluation of both biomarker and clinical response data. To summarize OncoSec’s clinical development strategy is focused on demonstrating that ImmunoPluse IL-12 is a rational choice for combination therapy with anti-PD-1 agent and that ImmunoPluse IL-12 will increase the number of patients who can benefit from these treatments. Our clinical trials are designed to allow for near-term and ongoing evaluations of both key correlative biomarker and clinical data in support of our hypothesis and it is our intention to keep both the scientific community and our investors updated. I’ll be available to answer questions shortly, but for now I’ll pass it back to Punit.

[Punit Dhillon:]

Thanks Mai. You’ve heard today how ImmunoPluse IL-12 can play a significant role in the immunotherapy landscape. We believe that our technology can enhance patient response to anti-PD-1 another immune checkpoint by driving TILs into the tumor microenvironment. Checkpoint therapy like anti-PD-1 treatments are projected to become a standard-of-care for a wide variety of diseases with the market opportunity of over $20 billion according to the recent analysis. Our R&D activities and data are aligned to capitalize on a combination approach with PD-1 agents. Almost every mid-size and large Pharma is developing their own proprietary anti-PD-1 drug. This presents an enormous partnering opportunity. 12 months ago we only had interim data from our Phase II melanoma trial. Since then we've generated key clinical and biomarker data across two tumor types supporting our fundamental hypothesis about ImmunoPluse IL-12. In the upcoming months we expect to generate new data demonstrating the potential synergy with anti-PD-1 further validating our hypothesis and catalyzing an opportunity for a strategic partnership. Now before moving into Q&A, I'd like to bring your attention to our upcoming milestones. Before the end of the year we plan to enroll the first patient into our Phase II triple negative breast cancer study, enrolled at least 10 patients into the Phase II metastatic melanoma IST combination trial and consolidate all of our research and administrative activities under one roof in our new facility. In the next six months we plan to announce a lead candidate for our ImmunoPluse platform as well as announce a new key academic or industry collaboration. In the next 12 months we plan to have preliminary clinical and biomarker data from the Phase II metastatic melanoma IST combination, Squamous cell carcinoma, head and neck cancer and triple negative breast cancer trials. These data will be presented at key scientific conferences. We also expect to provide updates on our preclinical programs including studies with our existing industry collaborators as well as the continued expansion of our R&D pipeline. The bottom line is by continuing to validate our technology with both clinical and preclinical data, we expect to be in a position to attract a strategic partner and generate even more value for our shareholders. Thank you for your attention. At this time we are happy to address some of the questions from our listeners, attendees or webcast participants.

[Operator:]

Thank you. At this time, we would like to take any questions you might have for us today. [Operator Instructions] And our first question is from the line of Jason Kolbert from Maxim. Your line is now open.

[Jason McCarthy:]

Hi guys, it’s Jason McCarthy I’m also here with Jason Kolbert. Just a question on the melanoma trial, can you or are you prescreening patients through biopsies for their rates of mutation per megabase of DNA because for TIL therapy especially in melanoma it's been shown that if you get up to a 100 mutations per megabase the TIL approach is much more effective and if you are going to use IL-12 I am wondering if you could prescreen your patients and almost kind of sweeten the pot for a higher objective response in your trials going forward?

[Robert Pierce:]

Hi, that’s a great question. This is Dr. Pierce and it actually gets into some bit of the weeds, but if you allow me, the concept is evolving that the mutational load does affect how patients respond to pembrolizumab and maybe other T-cell checkpoint inhibitors. I think that although that makes a tremendous amount of sense we still need to see more data on that. We would expect that what IL-12 though is doing is unmasking potential neoantigens and making them into real effective antigens. And by that I mean when you have mutations in order for the immune system to see those mutations to make them actionable to the immune system, those mutations have to be in express proteins that then get processed and presented to the immune system. That's where there's this huge decremental loss if you look at especially the animal literature in that transition from mutations to effective neoantigens and that's where we really think IL-12 is playing a great mechanistic role. So what we would really expect to have the most value in are those patients that have mutations, but they're not being translated into effective neoantigens. And in terms of screening, just to answer the screening question, right now being able to actually do that kind of whole exome screening in a manner that would be consistent with enrolling patients I think would be harder to do then what we are currently doing, which is just assessing the TIL status.

[Jason McCarthy:]

Okay. And part of…

[Mai Le:]

Just to add on to that.

[Jason McCarthy:]

Follow-up to that.

[Mai Le:]

Go ahead.

[Jason McCarthy:]

I’m sorry. The reason I was getting other than kind of sweetening your patient population I was wondering if the patients where you saw distal tumors regressing was because those patients might have had very high mutational load and that the IL-12 is unmasking a CD8 T-cell response that was already there that’s actually helping them as distal tumors and its mutation base. They have a high rate of mutation, that maybe you might be unaware of.

[Robert Pierce:]

I think that’s a likely possibility and we’re planning to include that sort of mutational load analysis on the currently bank specimens and on specimens going forward. I think Dr. Le had something else to add.

[Mai Le:]

It was just merely about the frankly the logistics of executing on a clinical trial, to do that kind of whole exome sequencing as Rob mentioned it. Actually, the amount of time that that would take to get a result for a given patient isn’t commensurate to getting a patient on treatment within a reasonable period of time, at least not right now. It wouldn't surprise me though that a couple of years from now there is a lab that can do that in a relatively short period of time and by short period of time I mean in a couple of days to get the answer for that patients so that patient can go onto the trial because don't forget that these patients they are being screened they want to know if they can be in a trial and get a therapy and you don't want to be in a situation where a patient has to wait more than a couple of days or a week to know if they can get therapy on the trial or not. So those are real consideration that we think about when we design the studies as well.

[Jason McCarthy:]

Okay. Great, thanks that was very helpful. Thank you.

[Jason Kolbert:]

Thanks guy’s, really great update, we appreciate it.

[Richard Slansky:]

Thank you.

[Operator:]

And our next question is from the line of Mark Breidenbach from H.C. Wainwright. Your line is now open.

[Mark Breidenbach:]

Hey guys, can you hear me okay. I apologize for any background noise.

[Mai Le:]

Yes, we can hear you.

[Mark Breidenbach:]

Okay, great. Congrats on all the progress and thanks for taking the questions. With respect to the head and neck program, First, I remember thinking back to ASCO there was some date from one of their keynote studies suggesting pembrolizumab responses were in the range of about 25%. Of course that’s not all that different from what we have seen in melanoma and of course there is a similar opportunities for intratumoral IL-12 to improve that response. Given the current trial that's going in head and neck, can you comment on how you are positioning yourself for the next step in terms of potential combination trial with pembrolizumab assuming it’s approved in that indication?

[Mai Le:]

So you bring actually up a really critical time with the anti-PD-1s in head and neck cancer, not only was the response rate described but also the characteristics of head and neck cancers that will and won't respond. I don't know if you saw the poster that was presented that described a gene signature, a interferon-gamma gene signature that was associated with responders and non-responders similar to the images of TILs, but looking at that the gene expression, and in head and neck the patients who are more likely to respond to an anti-PD-1 have this interferon-gamma gene signature and the ones who don't respond don't have this gene signature. So again this is the inflamed versus non-inflamed story. And so for our clinical trial one of the key things of course that we are looking at is the biomarker data in these tumors, these patients with Squamous cell carcinoma of the head and neck, are we moving the tumor microenvironment from something that is less immunogenic to something that is more immunogenic because as it moves into the realm of more immunogenic that’s going to make that patient a real candidate for an anti-PD-1 therapy so it’s really again the same story in that combination.

[Robert Pierce:]

And I’d just like to add to that, it was actually that initial presentation from the early Merck keynote study that Tanguy Seiwert was the lead in ASCO 2014. And he actually approached us at that meeting because he had already seen it, this picture evolving, of the patients who had TILs or had that interferon-gamma signature were the patients who are going to respond, but it was really south of 21%, it was - because in that first study they were selected patient population based on PDL1 status. So and this is again to emphasize this is the story across really every tumor type we've looked at that it segregates into these T-cell inflamed or T-cell poor tumors largely predicts response to pembrolizumab and as we heard earlier also correlates with mutational burden.

[Mai Le:]

And Dr. Seiwert is in fact one of our PIs on our head and neck study.

[Mark Breidenbach:]

Okay. Great, fantastic. One other thing I wanted to ask about is really we appreciate the fact that the ImmunoPulse platform is capable of intratumoral injection of or intratumoral delivery of more than just IL-12. And I was wondering if you can give us any hints about what classes of other immune-modulators we might see studied at least clinically and in the not so distant future I guess we’re seeing a little bit of it right now which are collaboration with Heat Biologics and just wondering if you can comment on what we might see going forward?

[Robert Pierce:]

Well, as Punit mentioned we plan in the next six months to announce a new lead candidate so non-IL-12 candidate for the ImmunoPulse platform. We haven't gone public with that yet, but you can imagine that the classes - we have discussed the classes. And I think if you're at all familiar with the Immuno-oncology space you would think about hitting T-regs or hitting myeloid-derived suppressor cells as molecules that - are target cells that you'd like to modulate. So stay tuned we’ll have – we’ll be making that announcement in the upcoming months.

[Punit Dhillon:]

Yes, Mark, if I could just add one of the key things for us and kind of the purpose behind this call is to really drive home the message of what ImmunoPluse IL-12 is capable of and what – how strategically aligned our pipeline is to address that huge opportunity that exists in that particular market of non-responders to PD-1. So we really want to capture that value before going forward and talking about all the other exciting things that are capable under our ImmunoPluse platform.

[Mark Breidenbach:]

Okay. That’s perfectly well understood. Thank you.

[Operator:]

And our next question is from the line of Rahul Jasuja from Noble Life Science Partners. Your line is now open.

[Rahul Jasuja:]

Hi, guys thanks for taking my question. So just few questions I have let me start with sort of a broader picture question on looking at tumors that are not responding to PD-1 blockade. So currently and this is actually a question that I need some understanding. Currently or any strategy is being done I guess either immunohistochemistry or otherwise to see if tumors you know are expressing PD-L1, PD-1 or other PD-L1 and is that being a rational for PD-1 blockade, because it seemed like there are tumors and this is of my last reading the tumors that show low on PD-L1 still may respond to PD-1 blockade. Is that correct to say?

[Robert Pierce:]

Definitely excuse me this is Rob. It’s definitely correct to say, but it is an unusual phenotype. And so those tumors that are really devoid of that to all immunologic conversation, no matter how you look at it, if you look at it through a NanoString approach, you look at it through a flow cytometric based approach or IFC. If you really have a tumor that has no infiltrate, the likelihood that patient is going to respond to either PD-1 or PD-L1 therapeutic as a monotherapy is extremely low. There are rare examples of it but I think they are too rare to focus on except if you want to just you know use those rare instances as a kind of thought experiment to get at potential other mechanisms, which of course we're doing and other people are doing. But it’s not the major motive of non-response to PD-1 agents.

[Rahul Jasuja:]

Okay Rob that’s good. So in your experimentation and also you finally published on that as well. In all practicality just measuring CD8 in a patient’s tumor microenvironment would be the biomarker that would be the patient selective biomarker that would predict response to IL-12. Is that statement correct?

[Punit Dhillon:]

IL-12 certainly you know what we published in Nature, if you do a slightly more sophisticated analysis of the CD8 density at the invasive front that will predict response to PD-1. Now in terms of IL-12, I think what we know what our opportunity is and that’s to convert those T-cell poor tumors and the T-cell inflamed tumors. But I wouldn't say right now we have a positive biomarker for response to IL-12.

[Rahul Jasuja:]

Okay, great that clarifies. So low-TIL tumors though that have low CD8 in the tumor microenvironment are most likely PD-1 non-responders. But they would be likely responders or a very good [chance] to be responders to ImmunoPulse. That’s a good – that’s a right way to think about it?

[Punit Dhillon:]

That is the way that we’re thinking about it.

[Rahul Jasuja:]

Okay that’s fair. So the other question that I have is IL-12 is relevant not just for, this is according to your Nature paper that inhibits adaptive immune resistance. But there's a whole innate aspect of IL-12. Are you seeing, you make actively for example tumors associated macrophages or MDSC’s decrease in those in either your early clinical assessment or even preclinical studies?

[Punit Dhillon:]

So that's a really good question and I would say the strongest in a signature of responding to IL-12 is NK cell activation and increase cell numbers and we’ve reported that in the past and or even seeing in some patients increased percentage of activated NK cells in the blood falling ImmunoPulse IL-12.

[Mai Le:]

I just wanted to add that in the Merkel cell study we had about 70% of our patients where we had pre and post-treatment biopsies. They had a gene expression signature that showed increase in NK-cell associated activations gene.

[Punit Dhillon:]

The MDSC question is a little more challenging to get at, because just at the plasticity of that lineage and knowing from a gene transcriptional perspective what you’re looking at, but we do see signals that we are converting myeloid-derived suppressor cell like phenotypes in the immunostimulatory phenotypes and certainly in the literature that conversion as well described.

[Rahul Jasuja:]

Okay, that’s great. And then sort of a more broader question - what the strategy is and could be for ImmunoPulse. So obviously you’ve got the combination with the checkpoint inhibitor and that’s because it’s going to be the backbone of cancer therapy. Now you’ve also got the potential in combination with heat-shock protein where you’ve got sort of an antigen presentation sort of vaccine approach let’s say representing antigen in combination with IL-12. And then IL-12 itself is a stimulator in a sense and we saw today the Bristol-Myers CSF-1 receptor collaboration and you’ve got one on going there as well. So in combination with IL-12 you also have the vaccine approach, you’ve got the checkpoint approach and then you got the potential to sort of tickle the tumor-associated macrophages or CSF-1 receptor. Can you just talk about those approaches and as they evolve in your strategy going forward?

[Robert Pierce:]

Well, that’s a big thing to bite off, but let me tackle it in pieces. Obviously, we think that the CSF-1R inhibitor is a very interesting play in terms of combination with IL-12 intratumoral mainly because certainly in the context of melanoma and other tumor types, it’s really the myeloid cells that are the cell that is expressing PD-L1, indoleamine dioxygenase, prostaglandin other Arginase things that are really sort of bundling together a lot of the molecules that are those effective T-cell molecules of interest. So taking out the cell type or inhibiting it maybe a way to get at the same result, but more effectively than just taking out one molecule. Dr. Le you have something to add there?

[Punit Dhillon:]

One important comment regarding the business strategy component of this rule is that the IL-12 represents kind of multiple areas where we can have value creation for the company and in terms of the broader immuno-oncology landscape. So we’re looking at these different approaches not only from a biologic standpoint, but also the small molecule approaches that as you know from the genesis of the company in terms of looking specifically at IL-12 as a monotherapy approach and how we’ve evolved into the combination rationale and looking at how this can convert the non-responder to responder and how that correlates with anti-PD-1. It is beyond that in terms of how we continue to create value for the IL-12 ImmunoPulse program and looking at all of these different opportunities that exist in immuno-oncology. So that’s really kind of a line with our business development and strategic alignment in terms of – we have multiple opportunities of licensing these different approaches for ImmunoPulse IL-12 and we continue to try to capture that value with the strategic partnerships that are aligned with our development interest.

[Robert Pierce:]

And if I may add one more thing with the collaboration with Heat is very interesting from its scientific rationale and maybe completely orthogonal to ImmunoPulse IL-12 it remains to be seen if gp-96 combines well with intratumoral IL-12 or if it’s sort of that standalone play by virtue of getting gp-96 into the tumor cell itself and allowing it to export antigens including those critical mutation to drive new antigens. So that’s were that combination holds a lot of sort of intellectual way for us, but how we’re going to put that together and move forward remains to be seen as our collaboration with Heat moves forward.

[Rahul Jasuja:]

Great, that’s all I had and looking forward to more progress by the way you guys presenting I should see any data or is that not happening?

[Punit Dhillon:]

No, we won’t be presenting any data, but I’ll be there.

[Rahul Jasuja:]

Okay, thanks.

[Operator:]

And our next question is from the line of George Zavoico from JonesTrading. Your line is now open.

[George Zavoico:]

Thank you. Hi everyone and thank you for the update, the tremendous update. A couple of questions some of our logistically regarding the devise in the dosing regimen. The devise itself has gone through certain permutations and the dosing regimen in terms of delivering the plasma. Are you pretty satisfied now with being able to reach the tumor officially and get producible transcription efficiency and how are you tracking that that all by measuring IL-12 in the [term] or at all?

[Mai Le:]

So in terms of measuring IL-12 we do – in terms of the biopsies samples that we are able to obtain from our patients that’s one of the evaluations that we do as we look at IL-12 expression, we do not measure IL-12 expression anymore, we don’t try to measuring them anymore in the theorem because it does not get systemic. So we wouldn’t expect to be measurable. We look for it in the Phase I and it’s a good thing that it doesn’t get systemic that we can't measure in the blood because then it would be much more toxic therapy. In terms of reaching the tumors that we want to be able to reach. I guess the answer to that is yes or no. We are able to reach lesions that are cutaneous and some that are subcutaneous so can we reach a good proportion of the patients that we are targeting, yes are there patients with lesion we would like to be able to reach with a different type of device that can go either deeper or down catheter, yes. So sorry of that that is straight forward.

[George Zavoico:]

That makes sense so even in these trials with melanoma is there criteria is that how far under the skin some of these tumors are is it proportion of patients that are not treated because of their tumors are too larger to deal or always pretty much subcutaneous and easily accessible?

[Mai Le:]

Well, okay so I just want to separate out two things in the patients particularly on the IFP they will have lesions that we cannot reach with our device. They have advanced disease, but they’re getting a combination treatment so for sure we will not be reaching all of their lesions and it’s not in fact a requirement.

[George Zavoico:]

Right.

[Mai Le:]

But in order for a patient to be eligible for any of our studies they have to have at least one of their lesions reachable by the device and that's really a clinical call because different patients have kind of different gives in their skin. So we don’t have a certain distance per say it really comes down to when the investigator is able to physically evaluate the patients they're actually able to determine if the device can reach it can actually reach the lesions, but in some patients it will be deeper than others.

[George Zavoico:]

Sorry, I just can say that’s the beauty of your approach which is that you only have to hit one lesion because when you educate the immune system in the T-cells go and hit the distant lesion and/or the deeper lesions?

[Punit Dhillon:]

Exactly.

[Robert Pierce:]

George and just to your earlier question about hitting those other deeper tumors. We are strategically aligned in terms of having – putting significant amount of resources towards, trying to access those deeper tumor. So that is unique in terms of our development efforts and trying to come up with the next set of devices that are going to be addressing that other population that we’re not reaching at the moment with our current devices.

[George Zavoico:]

And just lastly with the dosing regimen, you go into the same tumor multiple times in each patient, is that correct? And is that optimized in terms of how many times you have to repeat the procedure?

[Mai Le:]

It is correct that we do go in multiple times. The regimen that we had settled on with our current device and our plasmid for IL-12 is day-one, five and eight every six weeks. And we are satisfied with the schedule from the biological standpoint and as we continue to gather data we’ll really understand the – we’ll get more information on the efficacy of this regimen.

[Punit Dhillon:]

I just like to add to that that schedule was of course built out from the efforts of using IL-12 ImmunoPulse as a monotherapy as we’re now moving forward in combination with an anti-PD-1, we’re not sure, we may not need to treat quite as often because those T-cells are being liberated.

[George Zavoico:]

Yes, I mean quite frankly I think that the monotherapy results are very interesting because you're not really – it’s not a combination therapy [indiscernible] you are basically waking up with what’s there already which was pretty impressive based on the response rate that you are getting. There is no question there and just a comment. Thank you very much.

[Punit Dhillon:]

Thank you.

[Robert Pierce:]

Thank you.

[Operator:]

And we have a question from the line of [indiscernible]. Your line is now open.

[Unidentified Analyst:]

Thank you. Good afternoon and thank you for taking my question. As an investor in OncoSec Medical I would like to ask if there are any other possibilities of financing the R&D and the other expenses in lieu of consistently either a reverse split or the lesion of spark and we’ve been an investor and I’m happy with the company, but for the past almost going on three years my investment even since the 2014 reverse split has decreased. And in the future when you do need financing with the beginning of the ways such as bank loans or even a partnership arrangement where you could obtain some of the funds that way? Thank you.

[Punit Dhillon:]

This is Punit here. I really appreciate your continuous support and thanks for being a long-term shareholder. Absolutely it’s all of the above existed opportunities for us to look at funding opportunity. So the company consistently looking at non-equity based financing opportunities as well as equity-based financing opportunities. So it’s our power mandate here is to continue to drive value for our shareholders and drive value through the current programs that’s we are developing and most purpose around this call is one to help articulate to the investment community what we believe is what those in critical value inflection points are going to be for the company and get kind of recognition from Wall Street and other investors that are already have been a long-time supporters as well as continue to attract new investors that help to build that value. In addition to that we are pursuing grants and other strategic partnerships with academic collaborators or industry collaborators that make a lot of sense to help fund some of those development efforts so that is definitely a key part of our strategy.

[Unidentified Analyst:]

Okay. End of Q&A

[Operator:]

And ladies and gentlemen that's all the questions we have for today. We will turn the call back to Mr. Dhillon for his closing comments. Mr. Dhillon?

[Punit Dhillon:]

Thank you again for participating in our first quarterly conference call. On behalf of our Board of Directors and dedicated team we truly appreciate your ongoing support and confidence in OncoSec as we continue to advance our immuno-oncology pipeline. If you have any further inquiries or need clarification on topics that we discussed today, please don't hesitate to contact us at [e-mail]. We look forward to providing additional updates on a quarterly basis through our conference calls moving forward. And we also look forward to continuing to meet with you one-on-one while on the road and during upcoming financial conferences throughout the year. Thank you for your time and attention this afternoon.

[Operator:]

This concludes our webcast. You may now disconnect. Have a wonderful day.