Vascular Biogenics Ltd.
Q1 2020 Earnings Call Transcript

Published: 14 May 2020

[Michael Wood:]

Thank you all for participating today's First Quarter 2020 Results and Corporate Update Call for VBL Therapeutics. Leading the call today will be Prof. Dror Harats, CEO; and Amos Ron, the Company’s CFO. A press release with the company’s financial results became available at 7 O’clock Eastern Time today and can be found on the Investors page of the company’s website.Before we begin, I’d like to remind everyone that various remarks about future expectations, plans 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 the date of the call, and that’s Thursday, May 14, 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, the call is being recorded and will be available for audio rebroadcast on the company’s website. As the operator mentioned, all participants are in a listen-only mode, and there will be a brief Q&A session following management’s prepared remarks.So with that, I’d like now to turn the call over to Prof. Harats. Dror, please go ahead.

[Dror Harats:]

Thank you, Michael, and good morning everyone. Joining me on today's call is Amos Ron, our chief financial officer, who will discuss the first quarter of 2020 financial results. The first quarter of 2020 has been very productive for VBL and we have had a number of important developments since the beginning of the year. Most notably, there was successful interim analysis in the ongoing OVAL Phase 3 study in ovarian cancer, showing at least 58% objective response rate to VB-111.We have also made progress and announced new data in our MOSPD2 programs. Based on this positive developments, over the last week we successfully strengthened our balance sheets with $18.1 million in gross proceeds in registered direct offering from new institutional investors and key existing shareholders. Beginning with OVAL interim analysis, OVAL, as a reminder, is an international Phase 3 randomized pivotal registration clinical trial in patients with Platinum resistant ovarian cancer that is comparing combination of VB-111 to placebo, both on top of Paclitaxel, a standard of care. The study’s primary endpoint is overall survival and secondary endpoint includes PFS and objective tumor response according to CA-125 and resist response.The study was designed to enroll approximately 400 patients. OVAL is being conducted in collaboration with the GOG Foundation. In order to mitigate risk, when we were designing this study, we included a pre-planned efficacy interim analysis to be performed by the independent data safety monitoring committee. The goal of this analysis was to see in an early stage of the study if we can replicate the positive signal that we saw in our Phase 2 study. Accordingly, this OVAL interim analysis compared the CA-125 response rate measure according to the strict GCIG criteria in the treatment and control arms, among the first 60 available patients. There was a pre-specified efficacy criterion for continuing the study, which is an absolute percentage advantage of 10% or higher in the CA-125 response in the VB-111 treatment arm versus control arm.In the analysis, the committee confirmed an absolute percentage advantage of 10% or higher in CA-125 response in the VB-111 treatment arm versus control arm. The committee also confirmed that the cumulative CA-125 response rate of all 60 patients in the analysis that is both arm combined, is 53%. Since we also know that there is an absolute advantage of 10% or higher in the VB-111 arm, we can make the deduction that the response in VB-111 treatment arm is 58% or higher.From this analysis, we can see that the interest CA-125 response rate for the VB-111 arm in the OVAL study is at least as good as the response rate that was seen in prior Phase 2 study of VB-111 in Paclitaxel that enrolled similar population of patients with platinum-resistant ovarian cancer. This time the data are coming from a randomized blinded control study, and it's part of the Phase III trials that we are running.Another supportive finding is a response rate associated with fever. Fever information is collected as part of trial safety data. In our previous clinical trial, we have seen that about 40% of patient dosed with VB-111 develop a classic and distinctive fever response, meaning that they developed fever within hours from dozing and the fever usually subside by 24 hours. This is not surprising since VB-111 is a viral based gene therapy. Data showed that in those patients who experience fever, that are most likely are on the VB-111 treatment arm, the response rate was even higher, 69%.Following this positive result of the pre-planned interim analysis, the TSMC recommended continuation of the OVAL trial as planned. The data were discussed in a KOL call that we hosted on March 26, that featured a presentation by Dr. Bradley Monk, who is professor of Gynecologic Oncology at the University of Arizona and the Chairman of the OVAL study steering committee. If you did not get a chance to listen to this, the replay is still on our website.There is a second interim analysis built into the OVAL study, which will assess overall survival in the two treatment arm for futility. This analysis will take place after 100 patient are followed up for at least three months. As we already successfully enrolled those 100 patient, this analysis is expected in the third quarter of this year.There are two other trials with VB-111, in metastatic colorectal cancer and in recurrent GBM. In February, we announced the launch of the Phase 2 clinical trial of VB-111 in combination with nivolumab and anti-PD-1 immune checkpoint inhibitor in treatment of metastatic colorectal cancer. This study is being sponsored by the National Cancer Institute, or NCI, under a CRADA agreement. And the IND application has been approved by the FDA. The initial target enrollment is 27 patients. And if we see activity in these patients, we will explore testing the combination in other GI tumors. This is an open-label trial. We expect to have first result after recruiting seven to eight to ten patients.The study in recurrent GBM is an investigator led study sponsored by Dana-Farber Cancer Institute in collaboration with a group of top neuro-oncologist in the U.S. and major medical centers. It will investigate neo-adjuvant and adjuvant treatment with VB-111 in recurrent GBM patients undergoing a second surgery. An IND application for this study has gone into effect with FDA, and if successful, we hope that this study will generate results that can potentially be part of future filing with the regulatory authorities.This support by the National Cancer Institute and the neuro-oncologist consortium clearly shows that there continue to be a lot of interest in VB-111 in the oncology community. We expect to start patient recruitment as soon as COVID-19 situation allows.Also, regarding to VB-111, we announced in April that following the positive interim data NanoCarrier, which is a Japanese licensee for the product intends to extend their ongoing Phase 3 OVAL study to enroll patient in Japan. They will be responsible for their required operations and expenses related to the study in Japan. Recall that in 2017, we signed an exclusive license agreement with NanoCarrier for the development, commercialization and supply of VB-111 in Japan.We are pleased with the decision to extend OVAL, as it will open up another avenue of patient recruitment and will accelerate commercialization of VB-111 in this important market. According to the term of our agreement, VBL can potentially receive more than $100 million in development and commercial milestones payment from NanoCarrier, as well as the high-teens royalties, or net sales if the product is approved.Turning now to our MOSPD2 program. Earlier in May, at the DDW Conference, we presented data showing the potential of our MOSPD2 antibodies in models of NASH and Colitis. We have shown that MOSPD2 plays a role in the pathogenesis of these diseases, and they're targeting MOSPD2, using our proprietary specific monoclonal antibody VB-601 can offer a means of therapeutic intervention. A potential advantage and differentiating point for this approach in NASH, is that it opens the possibility for treatment of patients with established disease, whose liver has advanced stages of inflammation and fibrosis.Similarly, treatment with anti-MOSPD2 proprietary antibodies was shown to reduce disease activity in an inflammatory bowel disease. Our proprietary antibodies can block monocytes migration and thereby affect the chronic inflammatory process. VBL innovative study was rated in the top 10% of all abstract and was selected as a Poster of Distinction.We also recently published a paper -- we also recently published a peer-reviewed manuscript on the potential of targeting MOSPD2 as a treatment for MS in the Journal of Clinical & Experimental Immunology. This data showed that knockout of the MOSPD2 gene in mice protected the animal from developing CNS disease in EAE, which is a well established experimental model for MS.Furthermore, VBL proprietary, anti-MOSPD2 antibodies that block monocytes migration, were similarly shown to reduce inflammation and tissue damage. These open up opportunities for potential treatments of relapsing as well as progressive forms of MS disease.Our lead candidate antibody VB-601, which as you can see, has potential for multiple chronic inflammatory diseases, is advancing towards first-in-man study, which is expected to begin in 2021. We also made important progress in our cutting edge technology MOSPD2 bi-specific antibody program for solid tumors. We expect to present new data including a late-breaking e-poster at the upcoming AACR Virtual Annual Meeting in June. Further information on our bi-specific antibody program will follow in the next few weeks.I will now turn the call over to Amos Ron, our CFO to review the financial results for the quarter. Amos?

[Amos Ron:]

Thank you, Dror. Revenues for the quarter ended March 31, 2020 were $366,000 compared to $219,000 for the first quarter of 2019. Cost of revenues for the quarter ended March 31, 2020 were $53,000 compared to $38,000 for the first quarter of 2019Research and development expenses, net, were approximately $4.8 million for the quarter ended March 31, 2020, compared to approximately $3.3 million in the first quarter of 2019. The increase in R&D expenses, net, was mainly related to the increase in OVAL study activity and MOSPD2 activity for approximately $1.2 million, partially offset by the decrease in IIA grant. R&D expenses are shown net by IIA grant.General and administrative expenses for the first quarter of 2020 were $1.2 million, compared to $1.3 million for the first quarter 2019. Financial income, net for the first quarter of 2020 was approximately $253,000, compared to approximately $ 201,000 for the first quarter 2019.For the first quarter ended March 31st, 2020, VBL reported a net loss of $5.4 million or $0.15 per share compared with $4.2 million or $0.12. At March 31st, 2020, VBL had cash, cash equivalents, short-term bank deposits, and restricted deposits totaling $31.6 million and working capital of $24.6 million. There were a couple of post period events that affected our balance sheet.First in April, we were awarded a non-dilutive grant to little more than $3 million -- ILS3 million sorry or approximately $0.9 million by the Israeli Innovation.And finally, as Dror mentioned, on May 7th, we entered into an agreement with several U.S. institutional investors for the purchase and sale of approximately 6.35 million ordinary shares at the price of $1.575 per share in a registered direct offering that was priced at the market under NASDAQ rules.In a concurrent private placement, we also issued to the investor registered -- unregistered short-term warrant to purchase up to the same number of ordinary shares, subsequent to this offering, earlier this week, some of our key existing shareholders invested in the second offering under the same terms in vote of confidence in the company and its potential. The gross proceeds from these offerings are approximately $18.1 million before deducting replacement agent fees and other estimated offering expenses.With the uncertainty around the COVID-19 pandemic, we believe that this fundraising was an important and necessary step to secure our operations and the continuation of the OVAL trial.Under the current operation -- operating plan, we expect that our cash and cash equivalents and short-term bank deposits will be sufficient to develop VB-111 and other product candidates and fund operating expenses and capital expenditure requirements into the third quarter of 2022. For further details on our financial, please refer to Form 6-K filed with the SEC this morning.We will now open the call to questions.

[Operator:]

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Your first question comes from Jonathan Aschoff from ROTH Capital Partners. Please go ahead.

[Jonathan Aschoff:]

Thank you, and good morning, guys. I was wondering, given the recent paper in oral presentation related to MOSPD2, to what extent can you describe the status of partnership discussions in anti-inflammatory diseases?

[Dror Harats:]

I think I want to talk about potential strategic agreement only when they do happen. And of course, there is an interest around this very novel technology, especially when we present data. But I prefer to actually talk about it if things will mature.

[Jonathan Aschoff:]

Okay. And how about -- can you say anything about initial cancer indications that might bias VB-602 tours or is that way too early?

[Dror Harats:]

So, I think it's a bit early, but I can tell you that when we are testing animal models and I just say, I want to make it clear, 601 and 602 are actually monoclonal antibodies for inflammation. 601 is our lead compound and 602 is our backup compound.6111 is our bi-specific candidate, so it will be easier when we are having a 6-0, it will be for information when we'll start with 6-1, it will be in the bi-specific. So, the 611 is actually was tested already in vivo, in two different cancer type.We are going to elaborate more at the AACR, but I can say now that it was in triple negative breast cancer and in cervical cancer. We believe it will work in many different solid tumours and it's early to say which indication we're going to assess first.But I think that we should all look forward for the data and presentations that we are going to actually present at the AACR. I know that tomorrow morning they are going to publish the up-start. It's going to be in the public domain. And I believe that we will have a press release to follow in the beginning of next week.

[Jonathan Aschoff:]

Thanks for that. And lastly, what is a clinically meaningful difference at three months with those 100 patients? And do you have a better sense of the PFS expectation, then you had when asked back on March 26th, when the interim -- the first interim came out?

[Dror Harats:]

So, as you all know, it was a very unique interim analysis that we did in March. Because at that time, we basically planned an efficacy, a meaningful difference that we have to see in CA-125 to go forward because that was basically go no go decision, on how positive or what are the chances that it will be a positive trial and indeed with this very good results that we got in this interim analysis, it's quite clear that we derisk the study quite significantly.Nevertheless, CA-125 is not the primary endpoint. It's a secondary endpoint. So -- but it was too early to look for survival. So, the first time that the DSMC is going to look at survival. But there -- the only one that's going to be un-blinded and they of course going to tell us go, no go. And they're going to look at an overall survival for the first time and do it quite early.But the DSMC is meeting every six months and each time they're getting a very important table, where they're seeing PFS in those groups and they are of course, un-blinded and always in first group. And they are seeing the median and they're seeing if these statistically significant.What I will be a just very careful in saying that this trial is blinded and because it's blinded, we cannot give any information on how the data is divided between the two groups because we don't know.But on the other hand, we already know from the CA-125, essentially the response rate is going very well in the right direction, which means that the patient from VB-111 are responding in a much better way than of course the control arm. So if we do see a high response rate, it's very encouraging. If we do see that the PFS is much longer than was expected with chemotherapy according to all the historical control studies and the same for OS it make all of us really encouraged.Another thing that we always do and of course, we are not going to put it in the public domain, we can look and see how the patients have developed fever which we know that they are on the drugs are responding in terms of PFS and OS. So we all have to be patient for the mid-summer, where we will have this interim analysis in the third quarter it will be.And later on, I believe that even the most important timing will be the next meeting of the DSMC in the beginning with 2021 because that would be already a time that it would be really meaningful to see what we are seeing in PFS and OS.Now you all have to remember that this study is 400 patients, it's a big studied. But already, we recruited more than 100 patients. So what you do see in the first 100 patient as Dr. Monk was saying is, usually what you will see in the following part of the study because it's not looking at the small group. So in the summer, it will be about 100 patients. I believe that in the beginning of 2021, they're going to have data of about half of the patient in the time and that would be a really meaningful.

[Jonathan Aschoff:]

Thank you, Dror. Just kind of prompting one last question, I have has COVID-19 sort of temporary enrollment in the last couple of months for OVAL?

[Dror Harats:]

Okay, so for the OVAL, we were quite surprised because one would assume that almost no patient will be recruited in a trial at a situation like COVID-19. We are recruiting patients. We are randomizing patients. We are a bit slower again as planned, but not in a major way in any way. And we are randomizing patients every week. And we are randomizing almost in the face that we were planning to randomize patients and it's happening both in Asia and in the United States.I believe that one of the reason for that is we're talking about a deadly disease where there is no much to offer to patients and the doctors that stopped recruiting patients in their centers. And so, response rates in the ones that develop fever and so the CA-125 interim analysis are really encouraged. So just as an example, we offer a patient to get a Paclitaxel at the local doctor clinic, none of them took this new approach and all of them came to the centers to get the drug. So we are actually getting affected a bit, but not in a significant way.

[Jonathan Aschoff:]

Thank you, Dror.

[Dror Harats:]

Thank you very much, Jonathan.

[Operator:]

Thank you. Your next question comes from Ram Swayampakula with H.C. Wainwright. Please go ahead.

[Ram Swayampakula:]

Thank you. Thank you. Good afternoon, Dror. Hope you're doing fine and staying healthy. Couple of quick questions, I know you're answered a lot of the questions that I actually had. For the OVAL, I just want to make sure, did you say the second interim analysis will be sometime in the third quarter or did you said 2021?

[Dror Harats:]

No, no, third quarter. The interim analysis that is the 100, that is the next interim analysis is going to be in the third quarter of 2020. And this interim analysis is what I was saying that, for the first time they are looking at overall survival and that's when we have 100 patients that followed for at least three months. That's going to be in the third quarter of 2020.I was adding that from then on every six months DSMC is going to look at all of course safety, but all that primary and secondary endpoint and of course the reason is that this study primary endpoint is overall survival. All the drugs on the market is platinum resistant ovarian cancer, none of them has been proved -- approved on overall survival. And if a drug is actually prolonging life, one has to be very careful if you are allowed to keep on giving placebo or not.

[Ram Swayampakula:]

Okay. And for the study itself, I know you kind of gave some qualitative information regarding how it's getting enrolled. So, is it possible for you to tell us how many of the patients have been enrolled at this point of the forum decision if any?

[Dror Harats:]

Yeah, we’re always very careful in talking about a number of patients because you know, it convert from one month to the other. As you know, we were mentioning that we recruited 100 patients. And that was actually at the end of March. We're going in the right pace that we were planning. I believe there would be a bit delay in opening Europe. It’s all because of the COVID-19, but now that we have Japan to join us, we all believe that we will meet a timeline that we were saying for the VB-111 OVAL trial.

[Ram Swayampakula:]

Okay. Talking about Japan, it good that Medicare decided to extend and get involved in the OVAL trial. So what is their next step? Is it – and then trying to give you – trying to get some patients on to the trial or is there something else that needs to be done in Japan before they can get on the trial, some paperwork and stuff that needs to be get done and how quickly can that be done?

[Dror Harats:]

So the plan, first, none of the carriers talking to the PMDA for quite significant time and they were getting all the guidance and everything. And right now, they – and they are going to use all the vendors that we are using into trial is one big trial. We are controlling the trial, but they are just taking care of the part in Japan. So it's going to be a real one trial.They are going to have a local CRO that they are recruiting right now. And the plan is that, if everything will go well and now when we have a COVID-19, everybody should be very careful in talking about future. But the idea is that already in 2020, most probably in the fourth quarter, we will start recruiting patients in Japan.I want to emphasize on why Japan is so important. First, they're going to take part of the burden of these trials actually off the shoulders of VBL, because they’re going to fund all the patients have done in Japan. And of course, we are going to have 400 patients total regardless of where they are recruited.Second thing is that it will expedite the time that we will get to the last patient, and of course, in this trial, but it also will expedite the time that they will be able to register the drug in Japan and in Southeast Asia, if as we hope the trial will be positive.Because as you all know that, you need to have patient from Japan or South East Asian, a Pacific patient to actually register drug both in Japan and in China. So for us, it's a very big advantage that they are joining the trial.

[Ram Swayampakula:]

Thank you, Dror. One last question for me, on the ASCO virtual conference, outside of the CA125 response data, is there anything additional that we could see in that presentation?

[Dror Harats:]

Unfortunately not, and I was saying in a very careful way. Although, we look at the blinded data and we're really encouraged. It's blinded data, and we're not going to say any numbers or anything that we do see following the trial. If DSMC will come and say something coming forward, of course, we will say. But that won't be in this ASCO meeting. We should be patient about it.

[Ram Swayampakula:]

Thank you very much, Dror and good luck with everything and talk to you soon.

[Dror Harats:]

Thank you.

[Operator:]

Thank you. Your next question comes from Sam Slutsky with LifSci Capital. Please go ahead.

[Sam Slutsky:]

Hey. Good morning, everyone. Thanks for the questions. Just had one real quick. Regarding a fever biomarker, that will be great if you take on potential for this you used in the future as a prognostic marker. And then based on the data you've seen throughout studies with VB-111 to date. Is there any clear differences, you've seen in that baseline between those who do and don't get a fever? I know that some of the data is blinded, though. Thanks.

[Dror Harats:]

So, that's an excellent question. Because we always ask ourselves Sam if the fever is just a signal patients are doing better. So, actually, there is no different in Karnofsky between the treatment and the untreated group. So we -- one cannot say that because they are in a better well being, they're doing it. And we don't see a better Karnofsky when we compare the one that develop fever or don’t develop fever.And actually, previously, we already published that there is a very unique, a cytokine elevation or a map of cytokines that increase with this fever. And by the way, it's not an IL-6 increase with fever, but that's not a biomarker we're talking about.So looking at all the data from a -- the many different trials, we already ran with VB-111, it looks like that the fever is a real biomarker here in the trial, potentially a first, it's a signal that to us as the patient is on the drug. But second one the develop fever, although they're not in a better Karnofsky scale or anything like that, they are – they usually have a higher response.I'm not sure about the OVAL trial, because as we mentioned, 69% of patients with fever had a response and VB-111 total group, it has to be more than 58 or actually if you calculate you rightly see more than 60. So it's very close to each other.So it all depends referenced CA-125 because one, it's meant to be seen what this effect it will have on PFS an OS. But as we were saying before, there is a very good correlation on patients created with VB-111 between the CA-125 response, resist response, PFS and OS.And we saw it in the Phase 2 and when we had a chance because in the first interim analysis, we got more information than usual, we could see that that's exactly a – what's happening in this group of patients. So we keep on seeing that the ones that have CA-125 response, they have a better PFS, they have a better OS.And as you all know with chemotherapy, that's not the case because with chemotherapy they couldn't find any correlation between a CA-125 and the PFS and OS. And I believe that the reason is that with chemotherapy even when you have a response, it's very short response. We see with a VB-111, the responses that we're seeing are very long responses.

[Sam Slutsky:]

Great. Appreciate that. Thanks.

[Dror Harats:]

Thank you very much.

[Operator:]

Thank you. Your next question is from Jonathan Kreizman from Valore Research. Please go ahead.

[Jonathan Kreizman:]

Hi. Good afternoon. So again, most of the questions have been answered. Maybe one on the Japanese studies. So we know there are – and genetic differences between the populations, for instance, in terms of BRCA percents of patients. So are there any additional clinical factors you need to account for versus your original study with the Japanese patients eventually placing the European patients?

[Dror Harats:]

So I think that's one of the reason Jonathan's that they'll start easing, Japan and China wants to have these patient, because we know that ethnic group behave a bit differently. And by the way, the groups that behave a bit differently in terms of CA-125 is African Americans, they have less fear CA-125 as a biomarker in ovarian cancer. But that's not the case in the Japanese patient, actually they are behaving in a very similar way to Caucasian, so we didn't need to change anything in the trial.

[Jonathan Kreizman:]

Okay. And then maybe you could provide more color on when you expect the GBM study to kick-in? So you mentioned that you're waiting for the COVID situation to improve. Nevertheless, GBM is obviously, deadly or as deadly as ovarian maybe even more severe. So, maybe if you could provide more color on when realistically you expect the study to kick-in?

[Dror Harats:]

So I must say that, even during the COVID-19 pandemic, IRB at the Dana-Farber basically approved the trial. It's was conditionally approved. They needed to get some answers. But it basically was approved even during this pandemic. But I'm a little bit reluctant to open centers in the middle of the pandemic. So we're waiting a little bit now, we're looking to see where the centers are that we're planning to actually, it’s good some of them are in California, it's not an issue, one of them is in New York, I wouldn't open the center right now.So when we will have a more clear picture, we will come back to the market and say something. Right now, we prefer to be silent on that until we know that we are really opening centers. And when the centers will be open then, of course, it's much easier.Most medical centers are a little bit reluctant to open centers right now. If they are open for trials, then of course they are trying to recruit, if they're recruited already patients, they are trying to keep on the patient. But a -- to open new studies in places like in New York, it's very difficult, in California, now I believe it won't be difficult anymore, and we will try to work on it.

[Jonathan Kreizman:]

Okay, great. Thanks for the details.

[Operator:]

Thank you, ladies and gentlemen, we have reached the end of the question-and-answer session. I would now like to turn the call back to management for closing remark.

[Dror Harats:]

So, thank you, everybody for joining the call. Have a wonderful day and keep safe.