Vascular Biogenics Ltd.
Q4 2020 Earnings Call Transcript

Published: 25 Mar 2021

[Operator:]

Greetings. Welcome to the VBL Therapeutics Fourth Quarter and Full-Year 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I’ll now turn the conference over to the VBL team. You may begin.

[Lee Roth:]

Thank you, Shemali. Good morning, everyone, and once again thank you for joining us for today’s VBL Therapeutics fourth quarter and full-year 2020 financial results and corporate update conference call. Leading the call this morning will be Professor Dror Harats, Chief Executive Officer and Amos Ron, Chief Financial Officer. A press release with the company's financial results for the full-year 2020 was issued earlier this morning and is available on the Investor Relations page of our website at vblrx.com.

[Dror Harats:]

Thank you, Lee, and good morning, everyone. Joining me on today's call is Amos Ron, our Chief Financial Officer, who will discuss the fourth quarter and full-year financial results for 2020. I'm pleased to say that it has been another productive quarter and year for VBL with important developments, continued progress and achieved milestones for our lead program VB-111, our novel gene therapy for solid tumors. We continue to be encouraged by the ongoing progress with our Phase 3 OVAL pivotal trial in ovarian cancer, which if successful, has a 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 3 registration enabling study in recurrent platinum-resistant ovarian cancer. To date, we had three positive reviews of the study. The first one was an interim analysis, which was conducted when we had 60 evaluable patients. As we reported last March, the analysis showed a CA-125 response rate of 58% or higher for the VB-111 arm. Later in August 2020, we reported that the Data Safety Monitoring Committee or DSMC, after reviewing data on 100 patients, had recommended the continuation of the trial as planned. Most recently in February 2021, during their most recent safety review, looking at 200 patients, the DSMC again gave us a green light to proceed after finding no safety issues. We look forward to the next DSMC review in the third quarter of this year.

[Amos Ron:]

Thank you, Dror, and good morning, everyone. As of December 31 2020, we had cash, cash equivalents, short-term bank deposits and restricted bank deposits totaling $30.8 million and working capital of $24.5 million. We expect that our cash and cash equivalents and short-term bank deposits will be sufficient to fund operating expenses and capital expenditure requirements into the fourth quarter of 2022. Revenues for the fiscal year 2020 were $922,000 as compared to $562,000 for the comparable period in 2019. Research and development expenses net was $19.7 million for the fiscal year, compared to $14.7 million in the same period in 2019. The increase in R&D expense was mainly due to the development of the VB-601 towards IND. General and administrative expenses was $5.3 million for the fiscal year, compared to $5.7 million in the same period in 2019. And finally, comprehensive loss for the full-year was $24.2 million, or $0.55 per share compared to $19.4 million, or $0.54 per share last year. With that, I’ll return the call back to the operator for the question-and-answer portion of this morning’s call.

[Operator:]

And at this time, we’ll be conducting a question-and-answer session. Our first question is from Dr. Swayampakula Ramakanth from H.C. Wainwright. Please proceed with your question.

[Swayampakula Ramakanth:]

Thank you. This is RK from H.C. Wainwright. Good afternoon, Dror and Amos, thank you for this call and taking the questions. A couple of quick ones. On the VB-111 in the OVAL trial, you were talking about the next interim look in the third quarter of this year. So what are the criteria under which the DSMB will be taking a look into the data? And also would this interim look have any impact on the statistics - on the statistical plan of the study itself?

[Dror Harats:]

Thank you, RK, for the question. The DSMC is routinely looking at the unblinded data every six months. That's part of the plan of this big study, which is a registration trial. They don't have any specific rules because otherwise we would have to pay a statistical price for that. But they’re looking at the full data as if we are at the end of the trial. What do I mean by that? They don't just looking at safety, they get of course all this safety in an unblinded fashion to see that the drug is actually safe, but they also get the survival data including the Kaplan-Meier curves. They’re getting their progression free survival, again, including the Kaplan-Meier curve. They’re getting the RECIST response individually for every patient and comparing between the two arms and the same for CA-125. So, basically, they do see the whole endpoints of the trial, both for OS, PFS, response rate by RECIST, response rate by CA-125 and the combined response rate and of course the safety. They don't get the full questionnaires of the quality life because they don't get this information at each point. We as a company see the full data also, but in a blinded fashion. So we also get an understanding on the response rate both by CA-125 both by RECIST, of course, we know who developed fever, who did not, but we’re not allowed to speak about all these data because this is potentially registration trial. This is a trial to put a BLA for VB-111 and we have to be very careful. Having said that, that there are no specific roles. Of course, DSMC has some obligations, which are usually in this type of clinical trial, especially when there is no other good treatment that can prolong life. So if they do see a significant improvement in life expectancy, or a major response in test, they should raise a flag and then you can always request a specific meeting with agency to make a decision if and when to stop the trial early. But there is no specific rule for that.

[Swayampakula Ramakanth:]

Okay, thank you for that. And then on the recurrent GBM study, can you compare and contrast the current design versus the design that you have had during the Phase 3 trial, the previous Phase 3 trial, because you’re talking something about before and after surgery, and I'm just trying to make sure I have it straight in my head.

[Dror Harats:]

Okay. So we had basically three - that's the third trial we’re doing in recurrent GBM. The first Phase 2 trial in recurrent GBM, we primed, we took patients that actually failed a surgery, chemotherapy, and radiation. They could have had actually already failed one surgery or even more than one surgery, because you know, that sometime when the disease come back, the patient goes through a second surgery of debulking.

[Swayampakula Ramakanth:]

Perfect. How large of a study is this?

[Dror Harats:]

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

[Swayampakula Ramakanth:]

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

[Dror Harats:]

RK, maybe I was misunderstood, we’re extending the OVAL VB-111 trial to Europe and Japan. And you can understand while doing it, that international trial to put the drug on the market. COVID-19, we’re running in Israel only right now. And that's just an early trial to see if indeed the drug is having its effect on the COVID-19. What's unique about VB-201 is that it's working directly on monocytes migration. And we know that the injury to tissues like the pneumonia, myocarditis and stuff like that is actually a monocyte driven disease and we already showed in the past 201 can actually block monocytes migration, even in human being in one of our earlier Phase 2 trials. So that's why we are testing it. Now the condition in Israel right now is very good. You know that big proportion of the population were immunized. So now we have to actually to our thinking, if we want to extend the trial beyond Israel or not. Right now, we don't have many new patients with COVID-19 in Israel.

[Swayampakula Ramakanth:]

Thank you. Thank you for taking all my questions.

[Dror Harats:]

Thank you.

[Operator:]

Our next question is from Kevin DeGeeter with Oppenheimer. Please proceed with your question.

[Unidentified Analyst:]

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

[Dror Harats:]

Okay, so thank you, Susan. For the first question, actually we have more than 70 centers now open internationally. And I believe that it's changing every day. But I think that only three or four centers are not recruiting due to the COVID-19 right now. So we actually have almost all the centers open. And we have them opened in U.S., Israel, in Europe, it's right now in Spain and in Poland. Actually, it's 78 centers that are open right now. And in Europe, it’s in Spain, it's in Poland, and we intend to open centers in the U.K. very soon. In terms of Japan, we’ll announce first patient dosing very soon. It's going very well there as well.

[Unidentified Analyst:]

And then just a couple of questions on some other programs. Can you provide more color on the tox studies for the MOSPD2 program and when appropriate, or what the appropriate venue to see this data might be? And then my second question is on the metastatic colorectal cancer study. I want to know what the status enrollment was. I think the last time you said there's three patients and what sort of preliminary data should we expect to see?

[Dror Harats:]

So, for the MOSPD2 toxicology study to formal toxicology study, we did dose ranging both in rodents and in monkeys, and each came completely clear. So we could go in the high dose for four weeks study, and we already ended this trial as well. And the results so far looks very clean, including the gross pathology. But we’re waiting for the histology and for the final report, before we can report on this. But you can imagine that if we decided to pull the trigger and make the GMP batch, which is as you all know, quite costly. It was after we've been reassured that basically, there is no I would say anything that we can detect in the toxicology studies so far. Regarding the CRC trial, so I'm glad you asked this question because I want to clarify it to the audience and to the public. Colorectal cancer is the biggest solid tumor oncology market, a 90% of the patient there have what we call a cold tumor, which means that there is no real immune system there. And therefore, they’re not enjoying it all from the new checkpoint inhibitors. And that's basically a major problem both for male and female. It's a high prevalent disease. And it's not just the colorectal, it's whole GI tract oncology, which mainly calls tumor that don't response to checkpoint inhibitors. Now, we don't have preliminary results in this field. So one can ask us why did you start a trial here and you didn't go forward with the thyroid cancer that we had very good preliminary results with renal or stuff like that. But the reason is that there is such a major need here and the NCI people came to us and offered to do this trial, especially after this so that we can bring the immune system into ovarian cancer, tumor and metastatic lesion. So I would say that this is relatively early trial. I have no more knowledge on what we’re going to see than anybody else on this call or the doctors or anybody else. But we actually gave it a chance. And this is a small trial is actually mainly funded by the National Cancer Institute. So there was a point to do it and see if indeed, we can turn the colorectal cancer from a cold tumor to tumor. I wouldn't expect to see meaningful clinical results because we’re taking a very late stage patient. And it's a small trial, we already recruited 11 patients to this trial. So you can imagine that it's progressing well. But I don't know if indeed we’re bringing the immune system into the colon cancer, we know that the biology in the GI for the immune system is completely different than in other organs. So it remains to be seen.

[Unidentified Analyst:]

Great, thank you for answering my question. That's all I had.

[Operator:]

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

[Jonathan Aschoff:]

Thank you. Dror, does the recent Rucaparib plus Chemo Phase 3 results alter in any way your thinking about refractory ovarian cancer treatment?

[Dror Harats:]

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

[Jonathan Aschoff:]

The recent Rucaparib Phase 3, it's Rucaparib plus or minus? Does that altering your thinking about the space in any way?

[Dror Harats:]

Not really. I'll tell you why. PARP inhibitors are important in ovarian cancer, especially in the BRCA positive, BRCA positive patients, which is Israel it’s quite prevalent because it's a prevalent gene in the Ashkenazi Jews, but in the world, it's about 15%. And we know that PARP inhibitors work and they work in early and they work in later stage. So I'm not surprised at all. But when you think about PARP inhibitors and you ask yourself why a lot of patients cannot continue taking the PARP inhibitors even when they have the BRCA positive, it's because of a lot of side effects with the PARP inhibitors. So I always believed that there is not going to be just one drug that will solve the problem in such difficult indication. And I'm very happy for the patient for this trial. But I don't think that it's really changed the landscape because if you look at what we have in our Phase 3 OVAL trial, 70% of the patients that we recruit and now you know, it's not the final results, but that's what we see so far are actually failure of Avastin and 50% are already failure, failed on PARP inhibitors. So we're taking a very sick population that already failed almost everything. And that's fine. And I would expect that any trial with PARP inhibitor will show some evidence of efficacy in this indication. What disappoint me a little bit was when not for VBL but for the patients generally in this ovarian field is at some of the therapies, when you look at survival, when you combine them with chemotherapy, not just that they don't do better on survival, sometimes they do even a bit worse. So I can tell you that the agency now will want to see in any case before approval, that your drug is not actually hurting survival. And I believe that VB-111 will do the opposite.

[Jonathan Aschoff:]

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

[Dror Harats:]

Yes, so then it was 69% response rate and since then, because this is a registration trial. And because I can tell you that the interaction with agency is in a very serious way, they look at it as how ready we are for the BLA in all terms, in CMC and everything, we have to be very careful. They issue a fever actually unblind some of the trials because 40% of the patients on 111 will develop fever. And then the doctors and patients and everybody know that they’re on the drug. So we have been asked not to emphasize too much about what happened with the fever. And that's why we’re not saying anything. As always, you can imagine, we do see it because we do see the data. And we do see the resist response because we do see the data. And we do see a PFS in the total population and everything. But we've been asked not to say a word about it.

[Jonathan Aschoff:]

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

[Amos Ron:]

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

[Jonathan Aschoff:]

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

[Amos Ron:]

So this is just timesheets between expenses in all-in-all the G&A expenses for the year are very similar to those that were in 2019.

[Jonathan Aschoff:]

Okay, thank you guys.

[Dror Harats:]

Thank you.

[Operator:]

Our next question is from Jonathan Kreizman with Valore Research. Please proceed with your question.

[Jonathan Kreizman:]

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

[Dror Harats:]

Okay, so I think first one has to be focused on the indication which is the lead indication and the lead indication for VB-111 is ovarian, ovarian, ovarian and ovarian. And I think that there we have preliminary very good data. We have a lot of data in biopsies. We know where we are, we have interim results in the Phase 3 and that's where we’re concentrated and doing the trial. The reason we’re doing two more trials is actually I believe the way we view the need that patient has and the way that doctors actually approaching us and trying to convince us to do the right thing for the community and patient. And that's why we agreed to do the GBM, a new trial, which is actually run by the major centers in United States. But there again, we had preliminary data and it was making a lot of sense to do the trial because we knew what happened in Phase 3. In the Colon cancer, I told you why we are doing it, just I would say even more biologic questions and anything if VB-111 can actually work also in the immune system in the gut, because if it does, then it's open major way to treat patient in the GI tract oncology. But I'm not sure that it will. The other indications that we should go for definitely is lung, we had the insert, it's working in the lung, we know that immune oncology is actually very important in the lung. So that will be one thing, liver and especially liver metastases, we know that the drug is working in the liver, we know that adenovector actually go in a very good quantities to deliver, we know that it should work in brain metastasis, we saw it in the Phase 1 and that's quite clear that it's working in brain metastases. And also there is a good reason to believe in renal, renal is quite crowded. So I don't think we will go right there. There are also some small indications like thyroid, where I believe it should be an investigator initiated type of trials, when the drug is on the market. I believe that after having a positive trial, that will show that VB-111 can actually make a big change in solid tumor, we’ll find a way to actually do trials in parallel in different indications either alone or with a strategic partner because that will be like I would say as a big step forward from what we know already on immune oncology, because Checkpoint inhibitors work only in about 17% of patients, because most tumors are cold tumor. And I think that fame of VB-111 is actually that we can turn these tumors into hot tumor where the immune system is there, and then you can combine it with different other immune oncology modalities. And I'm saying it for you heard me saying a list of solid tumor that we already saw some indications that the drug is working there. But you know, there is a difference between different organs, especially the GI tract is a completely different immune system. So it's different.

[Jonathan Kreizman:]

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

[Dror Harats:]

So anything that will show that we can bring the immune system to the tumor and recognize the tumor that would be a major achievement. You know that in the GI, we have a big tolerance because we’re having all these new antigens coming from food. So it's not surprising that this is one of the coldest type of tumors. And the question is if indeed by the mechanism, we can bring the immune system there. So I'm not really looking for PFS or OS in this small, very sick patients, we just want to see how the biopsies actually looks, is it similar to what we’re seeing in the ovarian or not? And that will tell us if we need to actually invest much more in other trials in the GI Tract or that this is not the right organ to actually treat with VB-111.

[Jonathan Kreizman:]

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

[Dror Harats:]

Well, it's going to be about history, the drug was developed in the beginning for atherosclerosis. And indeed, in a Phase 2 trial in human being, we could show that we can actually block the monocytes from getting into atherosclerotic lesion, which was a primary endpoint of this trial. But it's not really practical to develop an anti-inflammatory drug for atherosclerosis, that will actually you will need a very big trial, we tried it in other indication where it's more a T-cell type of inflammation. And we saw some positive data, but it wasn't strong enough to compete with biologics. And that's why we decided not to keep on developing at that point. So when the COVID-19 start, and after two or three months, it was quite clear that we have another monocytes reeving disease and this is an acute disease. And here we can show it relatively early, the decision was that we will try to do a trial. But for that, we needed to go back and make the capsules and make the API and everything again and we invested in doing this. And the moment that we had enough patients in Israel, we actually started the trial. Now, I think that this is an unique drug because of the mechanism of action, and it can work in viral indication. And I can assure you that even with solving the COVID-19 story, we’ll find the right target in viral infection, because it's quite clear now that the chronic infection in virus, or in viral diseases is actually monocytes driven injury to tissues. It's not just COVID-19.

[Jonathan Kreizman:]

Go ahead.

[Dror Harats:]

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

[Jonathan Kreizman:]

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

[Amos Ron:]

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

[Jonathan Kreizman:]

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

[Amos Ron:]

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

[Jonathan Kreizman:]

Okay, great. Thanks for the detail.

[Operator:]

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

[Dror Harats:]

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

[Operator:]

Thank you. And this concludes today’s conference and you may disconnect your lines at this time. Thank you for your participation.