Vascular Biogenics Ltd.
Q1 2018 Earnings Call Transcript

Published: 17 May 2018

[Operator:]

Good day, ladies and gentlemen. And welcome to the VBL Therapeutics Q1 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would now like to turn the call over to Michael Wood of LifeSci Advisors. Please go ahead.

[Michael Wood:]

Thank you. Good morning. And thank you all for participating in today’s first quarter 2018 financial results and corporate update call for VBL Therapeutics. Leading the call today will be the Prof. Dror Harats, CEO, and Amos Ron, CFO. A press release with the Company's financial results became available 7

[Dror Harats:]

Thank you, Michael. And good morning to everyone joining us on our call. We continue to have strong faith in our potential of VB-111, our gene based biologics that we are developing for solid tumor indications. With clear business focus, we are also advancing our novel MOSPD2 program for the oncology and inflammatory indications. VBL is well financed with approximately $50 million in cash, which is enabling us to continue the development of our innovative pipeline assets emerging from the three platform technologies developed by VBL. In light of the results of the GLOBE trial, we are in the process of reviewing the entire VB-111 program, performing an in-depths analysis of the GLOBE trial data, as well as of the results from our previous studies with VB-111. Although preliminary, it is quite clear that there are several lines of evidence for the activity of VB-111 in humans and that there is a major effect of the regiment of therapy on the outcome. For that reason, we continue to have strong belief in the potential of VB-111 and we are advancing our Phase III OVAL trial in platinum-resistant ovarian cancer patients. In the OVAL trial, we are repeating exactly the regiment of the successful Phase II which we had in this indication. Nevertheless, to mitigate the risk, we are adding an interim analysis that will enable us to show the efficacy of VB-111 early on in the OVAL randomized controlled trial. We intend to do that by looking for objective efficacy signals in the interim analysis, including response rate, progression free survival and the well accepted CA-125 biomarker. In our Phase II ovarian [ph] trial VB-111 showed 60% CA-125 response rate compared to only 11% on chemotherapy alone based on historical data from the ovarian [ph] trial. The OVAL Phase III pivotal trial in patient with platinum-resistant ovarian cancer is being conducted in collaboration with the GOG Foundation and leading organisation for research excellence in the field of hematologic [ph] malignancies. The trial has been designed to enroll up to 350 adult patient at approximately 70 clinical sites in the United States and Israel. We expect the interim readout from the OVAL trial to occur in the fourth quarter of 2019. An update of the OVAL trial will be presented at the upcoming ASCO meeting taking place in Chicago in the first week of June. Beyond the VB-111 program, we have a deep pipeline at VBL, including our exciting MOSPD2 program for oncology and inflammatory indications. I would like to briefly share with you some of the findings we have so far in MOSPD2 program in which we plan to file an IND in the fourth quarter of 2019. MOSPD2 is a membrane protein whose function was unknown. We have discovered new biology findings in the regulation of cell motility in which MOSPD2 is playing a key role. Our data indicate that the MOSPD2 is required for directional movement or chemotaxis of tumor cells and certain inflammatory cells and is therefore playing a key role in both oncology and inflammation. Previously it was felt that in order for tumor cells to metastasize [ph] or invading tissue or your immune cells to move to a certain inflame tissue, what they need is an attracting molecule or chemoattractant that will bind its receptor and will direct them into this specific tissue. Our data indicates that this pathway is not enough and that certain tumors and inflammatory cells depend also on second abscess [ph] which is controlled by MOSPD2. In the oncology setting MOSPD2 is found histologically in many types of solid tumor and is highly expressed in tumor cells when they start to invade tissue or create metastatic lesion. Furthermore, if we knocked MOSPD2 out in tumor cells using CRISPR technology, we can reduce metastasis by 95% in some preclinical settings. We believe that that targeting of MOSPD2 may have several therapeutic applications, including inhibition of tumor cell metastases and killing of MOSPD2 positive tumor cells. At the recent AACR meeting in Chicago, we had a late-breaking study in which we demonstrated the use of a novel Bi-specific Antibody to bring about T-cell mediated killing of cancer cells via binding to MOSPD2 and the T-cell protein CD3. The poster we presented at AACR can be found on our website. I would encourage you to take a look at it. Our MOSPD2 program has also potential application in chronic inflammatory conditions, knocking out the MOSPD2 gene in mice protect the animals from developing different inflammatory diseases, including NASH. Moreover the antibodies we develop so far can bind to MOSPD2 on monocyte and inhibit their migration in vitro and in vivo in a manner that shows major efficacy in a model of multiple sclerosis. We will have further update from this program at the BIO International meeting taking place in Boston in June. Briefly on other news in this quarter. In April, the Israeli Innovation Authority, IIA approved our application to continue to support our VB-111 development program in 2018 and they are awarding us a grant of 8.9 million New Israeli Shekels approximately US$2.5 million. This latest grant brings the total gross amount of grants awarded to us from the IIA to about $25 million. I will now turn the call over to Amos Ron to review our financials for the first quarter of 2018.

[Amos Ron:]

Thank you, Dror. Earlier this morning we issued a press release detailing our financial results for the first quarter of 2018. We will review the financial highlights and also speak to our cash position and our financial guidance. On March 31, 2018, we had cash, cash equivalents and short-term bank deposits totaling $49.9 million compared with $54.7 million at December 31 2017. Working capital on March 31 was $44.2 [ph] million, subsequent to the end of the quarter and grant of approximately $2.5 million was awarded to us by the IIA. As Dror stated, we expect that our cash, cash equivalents and short-term bank deposits will enable us to fund our operating expenses and capital expenditure requirements through 2020. Under the license agreement from – for Japan which was executed in November 2017, VBL received an upfront and milestone payments of $17 million in aggregate, of this total $0.2 million was recognized in the period ended of March 31 2018. Research and development expenses in the quarter ending March 31, 2018, which are shown in the financial statement, net of grant from the IIA were approximately $5.8 million, this compares to approximately $4.1 million in the comparable period in 2017. The increase in R&D net expenses year-over-year was mainly due to increased expenses for the OVAL study, the Phase III in ovarian cancer and for materials for the preparation for large scale production in addition to increases in rent and depreciation associated with the operations of our new Modiin facility. This is partially offset by an increase in IIA grant in this quarter. General and administrative expenses for the quarter ending March 31, 2018 were $1.4 million, compared to $1.1 million for the comparable period in 2017. The company reported a comprehensive loss for first quarter ended December 31, 2018 of $7.2 million, or $0.24 per share, compared to a net loss of $5 million, or $0.19 per share in the comparable period. Now I would like to open the call for questions. Operator? Operator?

[Operator:]

Thank you. [Operator Instructions] Our first question is from Swayampakula with H.C. Wainwright. Your line is now open. If your line is on mute, please un-mute it.

[Swayampakula Ramakanth:]

Good morning, Dror and Amos. Thank you for taking my questions. I have a few questions here. To start off, now that you have some amount of time since the release of the topline data on the GLOBE trial and what sort of information can you help us understand on the GLOBE trial itself, and how are you utilizing some of the learning’s and not only for the OVAL trial, but you know, if you want to think about any other additional indications that this molecule may be one [ph].

[Dror Harats:]

So, thank you RK for asking these questions. We are still analyzing the data from the GLOBE trial. As I was stating before, we didn't meet the primary or a secondary endpoint, but we are analyzing to see if there was any effect in any subgroups. And I believe that later on in this summer in about a few months we will be much more specific on that. One thing is quite clear when we look at the GLOBE trial and when we look at the other studies that we were done, and that there are many cases of objective response that are very clear even on VB-111 as a standalone therapy. So we have no doubts that one of the most important thing is the regiment of the trial. As I was stating before several times, we were priming with VB-111 in all the clinical trials that we were doing, previously those in the Phase I, in the Phase II GLOBE trial and in the thyroid [ph] trial that we were doing. And so we were treating [ph] with VB-111alone except for the ovarian [ph] trial where we were combining it from the beginning with chemotherapy. We believe that the issue of regiment is a critical point for the difference between the Phase II and the Phase III in GBM, but I will ask you all to be a little bit more patient and we will come with a much more definitive answer later on in the summer. And we are planning to present the whole thing later on this year in the conference and in paper.

[Swayampakula Ramakanth:]

Thank you. Thank you for that. Then in terms of all those studies, so you know, now it looks like all the regulatory authorities have accepted your interim endpoint inclusion. So now that you have - I'm guessing now that you have you know, most of the things in place for the study. So could help us with what should be our expectations in terms of timing, you know, for enrolment interim data and final data?

[Dror Harats:]

So I believe that the most important thing will be the interim analysis that we are expecting to see in the fourth quarter of 2019. At that point we will have a data on at least 60 patients that were treated in a blinded fashion. So we will have a controlled trial of phase [ph] therapy versus therapy patient with a follow-up of at least one or two months. And that will be enough to look at the biomarkers and see basically if we are repeating the response rate that we've seen in Phase II. We expect to see the same thing because we are taking the same type of patients using exactly the same regiment. And it's quite clear that the chemotherapy alone have about 11% to maximal 15% [ph] response rate and we were seeing a response rate that was actually 16% [ph]. So if we are seeing the same thing I think that will mitigate the whole study in a dramatic way. We expect that the full study will take about two and a half years before we can close the trial and look for data.

[Swayampakula Ramakanth:]

And that’s very helpful. And then the last question from me is the other molecule in the pipeline, so regarding the MOSPD2 IND that you stated would be in the fourth quarter. In general, you know, where do you think this molecule will be effective, when I say where, in what sort of tumors in your extensive preclinical studies that your team has done, seems the best bet?

[Dror Harats:]

Okay. So we are gathering a lot of data on this molecules and I'm saying molecules because we have at least two family of antibodies, some that were in inflammation and binds [ph] that prevents the motility of monocytes and this antibodies can be very important in diseases like multiple sclerosis and I believe that one of the first indications that we will be able to go and treat exactly patients with multiple sclerosis. From the data that we have so far also some of it preliminary, the drug is working at least as good as a major drugs that are on the market. But it seems to be a much safer drug and work for much longer period of time. So that can be a very good indication to start and develop this in inflammation. But I believe that you are even more interested to see where we are going in oncology. So we have to wait to guide ourselves to where to go first. There is one indication in haematology [ph] oncology that is very appealing, although its difficult indication, acute myeloid leukaemia, but we know that a blast [ph] a myeloid blast [ph] in acute myeloid leukaemia expressed MOSPD2 and we are advancing it right now to be sure that we can actually kill the black cells not just in the blood, but also in the bone marrow. If that's the case this can very nice study because we will be able to show that actually we can bring patient to remission either patients that had chemotherapy or even in the first line, and that could be a relatively short way to commercialize an antibody like that. When we talk about solid tumor, the way that we are going to select tumors is tumours at a high percentage off the patient expressed the MOSPD2 and that the MOSPD2 is expressed abundantly on the cell, so that basically we will be able to use it to kill most of the tumor cells, if not all of them and be part of the therapy, so that we will have a high percentage of response rate. We have some ideas about tumor to go, but I think it's too early to say it now, but if you look at our presentations you can see some hints from where we do see what type of patients like, [indiscernible] breast or about the cellular were expressed in quite dramatic way.

[Swayampakula Ramakanth:]

Fantastic. Thank you very much for that detailed answer, really appreciate all the explanations. And good luck and for T-cell.

[Dror Harats:]

Thank you very much.

[Operator:]

Our next question is from Sam Slutsky with LifeSci Capital. Your line is now open.

[Sam Slutsky:]

Hey, Dror. Thanks for taking the question. Just real quick regarding MOSPD2, does the ultimate plan of development as a single agent or if you go combo. I guess what's the most likely combination regiments at this time?

[Dror Harats:]

We will stop in a single agent because normally you want to show the efficacy of the drug as a working alone especially that this is such a complete novel technology, but we already have in our mind that that can be combined very nicely [Technical Difficulty] with a checkpoint inhibitors for example because both drugs will work on the immune system and actually that can be very helpful in cases when you don't have a lot of mutations and where checkpoint inhibitors don't work very well because we are going to bring the T-cells to the tumor by using these Bi-specific Antibody. So definitely that is something that we will consider very early in the program.

[Sam Slutsky:]

Got it. All right. Thanks.

[Operator:]

And I'm showing no further questions. I would now like to turn the call back to management for any closing comments.

[Dror Harats:]

So thank you all for participation in our call and look forward in the next ASCO meeting and the BIO meeting for more details on our program. Thank you very much.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. You may now disconnect. Everyone have a great day.