Vascular Biogenics Ltd.
Q4 2018 Earnings Call Transcript

Published: 28 Mar 2019

[Michael Wood:]

Thank you, Operator. And thank you all for participating in today’s Full Year 2018 Results and Corporate Update Conference Call. Leading the call today will be Dr. Dror Harats, CEO of VBL Therapeutics and Amos Ron, the Company's CFO. Erez Feige, VP of Business Operations is also on the call. A press release with the Company's financial results became available this morning on the Newswire that can be found on the Investor Relations page of the Company's Web site at vblrx.com. Before we begin, I'd like to remind everyone that various remarks about future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. VBL cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated. Any forward-looking statements made on this conference call speak only as of today's date, Thursday, March 28, 2019 and the Company does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today's date. As a reminder, this call is being recorded and will be available for audio replay on the company’s Web site. As the operator mentioned, all participants are currently in a listen-only mode and there will be a Q&A session following the company’s prepared remarks. With that, I’d like to turn the call over to Prof. Dror Harats, CEO of VBL. Dror, please go ahead.

[Dror Harats:]

Thank you, Michael. And good morning to everyone joining us on our call to discuss our full year 2018 financial results and operating highlights. Joining me on today's call is Amos Ron, Chief Financial Officer and Dr. Erez Feige, our VP of Business Operations. In today’s call, I would like to highlight four major points. First, the development of our phase 3 product candidate, VB-111 continues in ovarian cancer toward interim analysis at year-end 2019 and expands through investigator-sponsored trials in recurrent GBM and colon cancer. Second, we signed a strategic agreement for VB-201 for veterinary use; potential payments to VBL under this collaboration may exceed €50 million. Third, in our MOSPD2 program, our Proprietary monoclonal antibodies for inflammation demonstrate a significant potential for multiple sclerosis, rheumatoid arthritis and nonalcoholic steatohepatitis. We’re also developing promising bi-specific antibodies for oncology. We expect to file IND applications for inflammation in oncology in 2020. And fourth, we had $50.5 million in cash and cash equivalents at year-end 2018, which are sufficient to fund our operations through 2021. VB-111, our most advanced clinical program, is currently in a potential registration phase 3 clinical trial in ovarian cancer in which interim analysis is expected at year end 2019. Beyond ovarian cancer, we are seeing renewed interest from the oncology community in the potential of VB-111 in solid tumor indications. And with their help, we are going to have three clinical trials in ovarian cancer, recurrent GBM and colon cancer. Our ongoing phase 3 oval potential registration study is evaluating VB-111 in platinum resistant ovarian cancer patients. The trial is designed to enroll 400 adult patients across 70 sites in the U.S. and Israel with the primary endpoint of overall survival. Very importantly, the OVAL trail is evaluating the same building regimen that was used in our successful phase 2 trial in ovarian cancer that is VB-111 through paclitaxel compared to paclitaxel alone. We are planning on an interim efficacy analysis in year-end 2019, which we have incorporated into the OVAL trail design in order to mitigate risk. This interim efficacy analysis will provide an early readout based on response rate according to the CA-125 blood biomarker to determine, is the performance of patients on VB-111 is similar to the previous data from the phase 2 study. We are looking forward to sharing the outcome later in this year. I would like to draw your attention to new, emerging data on VB-111, which we represented earlier this month at the Annual Meeting of the Society of Gynecologic Oncology, or the SGO meeting, and which has given us a better understanding of its mechanism of action and how best to incorporate it into oncology treatment regimen. As you will note in some solid tumor, there are a new cells within the tumor. These are referred to as immune oncological host tumors, which include for example, myeloma in lung cancer. While the tumor infiltrate immune cells in this cancer are often inactivated or exhausted by tumor cells, this can be potentially overcome using checkpoint inhibitors that reactivate the immune cells to attack the tumor. However, in many solid tumors, including some of the more prevalent solid tumor indications such as colon, breast, ovarian cancer and GBM, there is very limited presence if any of infiltrating the immune cells. These are referred to as cold tumors. In cold tumors, the checkpoint inhibitors don’t have immune cells to activate and accordingly are mostly ineffective. There is a major need for novel cancer therapies, which return the cold tumors into hot tumors by bringing immune cell to the tumor environment. This context brings me back to VB-111. Our clinical data in ovarian cancer shows that VB-111 has the ability to turn immunologically cold tumors hot. In ovarian cancer, we could obtain biopsies from two phase 2 patients after treatment with VB-111 and compare them to untreated controlled specimens. There was also small number of patients enrolled into the early part of the OVAL phase 3 trial before the protocol was modified to be a double blind study, and we were able to collect tumor specimens from one of these patients, before and after those in which VB-111 and correlate the histology with the clinical outcome. Our data shows that without VB-111 treatment, there were very few immune cells in the ovarian tumor. However, treatment with VB-111 induced an immunotherapeutic effect with strong staining for immune cells infiltrating the tumors, followed by tumor necrosis. Importantly, these pathologic findings were associated with durable C-125 and release responses. We believe that this anti-tumor directed immune response play a key role in the therapeutic effect of VB-111 and look to further explorer the mechanism by which VB-111 treatment may turn cold tumors hot in our ongoing OVAL study, as well as in other cancer types. Specifically, based on the strengths of these immune response data in ovarian cancer and supported preclinical data, there is another VB-111 clinical trial planned in colon cancer in collaboration with the NCI. Colon cancer is notoriously called solid tumor, which will be an excellent target for VB-111. As you know since the announcement of the top line data of GLOBE study in recurrent GBM in March 2018, we have taken the time to carefully analyze and understand the results. New analysis from GLOBE, as well as MRI data from the phase 2 study were presented for the first time at the Society for Neuro-Oncology conference in November by Dr. Tim Cloughesy, PI of GLOBE study and Director of the Neuro-Oncology Program at UCLA. Dr. Cloughesy presented results from the MRI analysis demonstrating clear radiological responses over time in recurrent GBM patients treated with VB-111 in the phase 2 trial on VB-111 monotheraphy alone. These responses appeared to correlate with overall survival. Further, UCLA analysis show that the MRI signature of activity of VB-111, which was apparent in their phase 2 study was essentially lost in GLOBE study that did not include priming period with VB-111 monotherapy. Dr. Cloughesy has stated that the lack of potency of VB-111 in globe compared to the prior successful phase 2 study can be attributed to the difference in study regimens between the two studies. Accordingly, we believe that driving with VB-111 as monotherapy without Avastin is likely to be critical for the activity of VB-111 in recurrent GBM. Our discussion with KOLs and the larger GBM community indicate that they believe there's a potential of VB-111 for GBM. They understand the importance of treatment regimen and have been encouraged to see the VB-111 MRI response data. In fact, based on the entirety of evidence a group of KOLs from the leading neuro-oncology centers in United States plan to sponsor and run a new randomized controlled trial of VB-111 in recurrent GBM. This trial will investigate the importance of priming with VB-111 and its effects on the tumor microenvironment and can potentially help to provide additional evidence of VB-111 activity in GBM. VBL will own the data from the study and will be able to use it for possible future findings. We look forward to our interim efficacy analysis in oval trial and are very pleased to have the additional investigator sponsor and MCI trial, which are expected to begin in the upcoming months. In addition to advancing our clinical program for VB-111, we are increasingly excited by the preclinical pipeline asset. We currently have two parallel drug development programs targeting MOSPD2, which we have identified as a key regulator of cell mobility with significant potential and therapeutic target for both inflammatory diseases and cancer. We are developing proprietary monoclonal antibodies that target MOSPD2 for immune inflammatory conditions, as well as bi-specific antibodies for oncology. Our MOSPD2 proprietary monoclonal antibody program for inflammation is targeting chronic inflammatory diseases, such as multiple sclerosis. We are committed to rapidly advancing this program building upon our latest data presentation at the Keystone Symposia on Myeloid Cells last month. These data showed MOSPD2 is a key regulator of mono sites migration and is an exciting noble therapeutic target for treatment of inflammatory diseases. We have seen a growth potential across inflammatory diseases in animal models of multiple sclerosis, rheumatoid arthritis and NASH the non-alcoholic steatohepatitis and are highly encouraged by our preliminary data along with the considerable interest that has been expressed in the program from scientists, as well as from business development perspective. We are planning on filing an IND for our lead MOSPD2 asset for inflammatory diseases in 2020. In our MOSPD2 oncology program, we are currently developing bi-specific antibodies that bring together tumor cells via the MOSPD2 and T-cells via CD-3 to recruit the immune system to fight tumor cells. MOSPD2 is an attractive target for oncology as we have now shown in human that it is selectively expressed in multiple tumors and profoundly elevated in invasive and metastatic breast cancer. Of note, MOSPD2 expression levels are also correlated with tumor indebtedness. Our preclinical data, which were published in International Journal of Cancer, demonstrated for the first time that MOSPD2 can play a major role in breast cancer, cell migration and metastases. We are planning on filing an IND for our lead MOSPD2 oncology asset in the second half of 2020. Lastly, switch to our Lecinoxoids platform for inflammation, we are glad to announce a strategic agreement on our lead molecule VB-201. I will turn the call over now to Erez, our VP Business Operations, for additional detail on these deals.

[Erez Feige:]

Thank you, Dror. We are glad to announce that VBL signed a strategic exclusive license agreement with one of the world leading European animal health companies for the development of our proprietary anti-inflammatory molecule VB-201 for veterinary use. Under this agreement, we granted an exclusive option license for VB-201 for animal health indication, but we retain the worldwide rights for the use of VB-201 for treatment of human. In exchange, VBL is receiving an undisclosed upfront payment and upon exercising the option to license, VBL will receive additional milestones and royalties, which may exceed €50 million. We see this is as a great opportunity to leverage our deep pipeline to generate revenue outside of our core activities, while we remain focused on the advancements of our innovative drug candidates for oncology and inflammation in humans. I will now turn the call over to Amos Ron, our CFO, to review the financial results for the period.

[Amos Ron:]

Thank you, Erez. Revenues related to VBL collaboration in Japan amounted to $0.6 million in the year ended December 31, 2018. Research and development expenses net after government grants for the year ended December 31, 2018 were approximately $15.9 million compared to approximately $17.8 million in the same period in 2017. General and administrative expenses for the year ended December 31, 2018 were $5.2 million compared to $5.8 million for the same period in 2017. The company reported a comprehensive loss for the year ended December 31, 2018 of $20.4 million or $0.62 per share compared to a net loss of $10.2 million or $0.37 per share in the year ended December 31, 2017. At December 31, 2018, we had cash, cash equivalents and short term bank deposits of $50.5 million and working capital of $47 million. We currently expect that our cash, cash equivalent and short-term bank deposits will enable us to fund our operating expenses and capital expenditure requirements through 2021. For further details on the VBL financial, please refer to Form-20F filed with effect SEC this morning. I would now like to open up the call for questions. Operator?

[Operator:]

Thank you. We will now begin conducting a question-and-answer session [Operator Instructions]. Our first question comes from the line of Swayampakula Ramakanth with H.C. Wainwright. Please proceed with your question.

[Swayampakula Ramakanth:]

This is RK from H.C. Wainwright. Good morning Dror and Amos. It is certainly interesting that you received a validation for the 201 program through this vet deal. I know because of your obligations with department, you’re unable to give us lot of details. But in general, could you give us some color as to what could be the potential timeline for this product in terms of development and in terms of getting to the market.

[Dror Harats:]

So because we are talking about vet deal and they are having relatively short plan that they need before they put drug on the market for this, quite big I must say vet market. We expect that within 2.5 to 3 years this product can be on the market for vet indications.

[Swayampakula Ramakanth:]

And then assuming that during that 2.5 to 3 year period, we would start seeing some oust on payments on the way, if not to that total amount which you talked about which is over €50 million, correct?

[Dror Harats:]

Of course, we would see some milestone payment and then of course development milestones and royalties, it is a typical licensing deal.

[Swayampakula Ramakanth:]

And then moving on to the MOSPD2 program. Could you give us some color as to what data we could see at AACR? And also in the press release you are talking about how you want to develop the bio-specific in certain solid tumors. Is there any possibility for you to tell us a little bit about what solid tumors we are thinking of or we should be thinking of when we consider the MOSPD2 program?

[Dror Harats:]

So in the MOSPD2 oncology program, we have a set of bi-specific antibodies that we already made and we are testing them right now in-vitro on different human tumor cells that express MOSPD2 under membrane, which as you know and we mentioned it before, it's a mOS solid tumor express MOSPD2. And we could show very nice efficacy of number of antibodies that we have made in different shapes. And of course the next milestone is to show efficacy in vivo in preclinical models, which we are planning to do in the next few months. And as I discussed before, one of the most important things or milestones in this program is to look when we do in-vivo testing and it might even be in non-human primates very soon to show the selectivity of the MOSPD2 expression and the effect of the bi-specific antibodies. We believe that because we've seen in human beings the high specifically expression of MOSPD2 only on tumor cells, and not on normal cells that we should expect that this will be a safe therapy as indeed we are seeing an effect on tumor cells or tumor in-vivo without the toxicity, which is what we expect from the studies that we are doing so far. Then the next step of course will be to pick-up the best antibody and go for toxicology and IND.

[Swayampakula Ramakanth:]

And my last question is on VBL-111. You've stated that colon cancer as an indication to go for. It was just quite an interesting proposition. Could you provide some color as to how you can avoid this decision? And is there any data in this indication with VB-111, either preclinical or some initial data if you have done some basket case kind of study?

[Dror Harats:]

So it's actually, we came to this indication but it's not we it's also the people like the National Cancer Institute, because whoever treats a colon cancer patient or know a little bit about the field, the majority of colon cancer patients don't responds to checkpoint inhibitors, because actually there are not that many mutations in this tumor type and this is a major tumor, a field that need better therapies. So the checkpoint inhibitors actually don't work in most patient with colon cancer. And the whole idea is that if anybody can bring immune cells into colon cancer then of course combination with this therapy and later on with checkpoint inhibitor should work in colon cancer. We did some preclinical work combining VB-111 with check point inhibitor, and we saw a very nice effect. While the VB-111 treatment as expect develop the immune cells, the checkpoint inhibitors does not bring immune cells into the tumor. But when we combine them, the effect was much more dramatic, because basically VB-111 brought the cells and the checkpoint inhibitors make sure that they are not exhausted. So we have this preclinical data and we have the data that we just presented from the ovarian cancer, which is quite similar in these terms to colon cancer, because it’s a cold cancer where checkpoint inhibitors don’t work because of that, because they don't have enough immune cells to work on. And we saw there, I would say quite striking inflammation or inflammatory cells that coming into this cold tumor. So if indeed that's what will happen in colon cancer that would be a major breakthrough. So the idea is to prime with VB-111 and of course then you can combine later on. But when we will have the final protocol we will say much more about what we are planning to do there.

[Operator:]

Thank you. Our next question comes from the line of Geulah Livshits with Chardan. Please proceed with your question.

[Geulah Livshits:]

Following up on the prior question in the colon cancer study. Is there anything else you can share with us about the kinds of patients that you will be recruiting and what kind of data readouts is planned, and when we might see data from the study? Thanks.

[Dror Harats:]

So we are planning to recruit patients, especially in NCI study. So they will recruit the patients at NCI but the plan is to recruit patients at sales at least one or two lines of therapies, they can be patients that already failed checkpoint inhibitors also, because some patients as I was saying most patients with colon don't responds but some patients get it anyway. And the idea is that we are going to have biopsies before and after treatment with VB-111 and after treatment with the combination of VB-111 and the checkpoint inhibitors. So we will have evidence of the point if we are indeed bringing the same immune cells to the colon cancer as we do in ovarian, and of course to see if they are exhausted or not with and without the checkpoint inhibitors. Besides this, of course we are collecting data of response rate and we are collecting data on progression free survival and survival, so we are going to have all this data. This is a single arm open trial study. So I assume that at least data on the point of bringing inflammatory cells into the tumor will be known to us and to the investor quite soon. And there will be interesting results of course we are going to talk about it. We are expecting to have the first data, because it's an open trial during 2020.

[Geulah Livshits:]

And then just in terms of funding, can you tell us a bit more about two upcoming trials that you funded and your contributions versus of the partners?

[Dror Harats:]

Of course, and that is a very important point, because we are funding of course their ovarian trial. But in terms of the investigator initiated trial that's going to be done by consortium of centers here in United States, we are giving them modest grant I would say that of course does not cover for the whole trial, but the idea is that we are giving the grant and therefore, we are actually owning the data and we can use it [Technical Difficult] if we need to use before filing. So that's very important. Of course, the NCI trial is funded by the NCI. We are just supporting them with giving the drug.

[Operator:]

Thank you. Our next question comes from the line of Soumit Roy with Jones Trading. Please proceed with your question.

[Soumit Roy:]

I just wanted to touch on the OVAL study. Just to get -- I know the first interim readout you are looking at the CA-125 response rate. But overall when you look at the median OS, what should we think as a bar to beat for VB-111 combination. Is it more like six months you have seen in your phase 2 study, or is it more like AURELIA study 13-month-ish? So what was the reason behind that…

[Dror Harats:]

Soumit can you repeat your question please?

[Soumit Roy:]

So, I am trying to understand what should be, in terms of median survival for the control. What should we think? Is it more like a six month for the [indiscernible] that's still on to be -- to show median OS, or should we expect to be more like 30 month like AURELIA study we have seen for the control arm performance?

[Dror Harats:]

Thank you and good morning. And this is an excellent question because in the phase 2 trial a patient where one can expect in a gene therapy phase 1/2 trial extremely severe cases. Half of the patients were refractory to platinum and half of the patients were already failure of Avastin and the other angiogenesis drugs and the type of histologic diagnosis was also worst cases. And therefore, it was not surprising that when they didn't get and the right dose of VB-111 actually the median survival was six months. In the AURELIA trial, it was about 13 months. But of course since then patients are getting more line of therapies and we are going to come now in a later line. So I would expect that it will be something in between the six months and the twisting in the phase 2 in the 13 months that has been seen in the AURELIA. But even if it will [Technical Difficulty] 13 months that have been seen in the AURELIA, we expect from the phase 2 data and I'm saying again it was as extremely patient, that median overall survival of the VB-111 arm would be much longer.

[Soumit Roy:]

I think back on colon cancer, I am not pretty familiar with the cancer types. So could you give us a little color on how does it compare with ovarian cancer in terms of the amount of angiogenesis going on there, the amount of the lesion size that kind of little finer detail where you actually see translation of ovarian efficacy, what you have seen in ovarian cancer, will get translated into color cancer?

[Dror Harats:]

So of course if tumor don't have angiogenesis then VB-111 is not going to be very efficient. And when you look at other angiogenic drugs, they usually work in colon cancer but in combination with chemo therapy or other therapies. So colon cancer it's not the most angiogenic tumor, but it is an angiogenic tumor. The major thing is that when you talk about colon cancer at the stage that we are talking, you don't have the primary colon lesion usually. What you have is an metastatic lesion and mainly in the liver. And VB-111 is going preferably into the liver, and that’s a very good target for as a drug. So we believe that the point that you can bring the immune cells there will be enough. But every tumor of course it's a little bit difficult tumor, and that’s why you have [indiscernible] in each tumor. But this is a relatively short single arm trial that will let us know very quickly if this is a great target.

[Operator:]

[Operator Instructions] Our next question comes from the line of Sam Slutsky with LifeSci Capital. Please proceed with your questions.

[Sam Slutsky:]

In terms of the GBM study, I guess after studies and create the similar, the results of it. What would be the path forward, would you have to run another phase 3 or could you use this maybe as smaller study on top of it to potentially go through registration? Thanks.

[Dror Harats:]

This is a very important point in the GBM. GBM is a deadly disease and there is no new drug in the last 25 years. Therefore, the Society of Neuro-Oncology together with agency are having a plan to try and put new drug on the market for GBM. And they're having the adult program, which Tim Cloughesy is actually running this program and they're looking to find a way to put a new drug on the market for GBM. In the last meeting of Society of Neuro-Oncology last November, there was a session on specifically on this issue between the agency and the society to discuss what would be the right way to put new drugs on the market. And it was quite clear that if we will always wait for the overall survival data and the full proof, the chance to put a drug on this rarely disease is almost impossible. So therefore, they all agreed that the way to go is to have smaller studies where you have a surrogate marker, because if you have a surrogate marker, as you all know, you can get an early registrational conditioned registration. And therefore, the GBM trial that was planned by investigators together with us is having a primary endpoint, which is surrogate marker it's immune changes in the tumor and the overall survival in six months based are actually a secondary endpoint. Therefore, if we will meet the primary endpoint and we will show data on overall survival and progression free survival together with the positive data that we have in the phase 2, there is a possibility that we will be able to go to the agency and ask for an early registration and then run the very big controlled trial later on. So that's why this trial was planned this way. And as you can imagine, these medical centers are not doing this trial for the benefit of VBL. They are doing this drive for the benefit of the patients, because they're trying to find a way to put the drug on the market. And because they think and we believe that they are right, because we sell the same data that the points that there is a strong signal of efficacy of VB-111 in the phase 2. And it's an objective signals that you could see on the MRI, which is not just a survival, there is a major need to take it forward.

[Operator:]

Thank you. There are no further questions at this time. I would like to turn the call back over to management for any closing remarks.

[Dror Harats:]

So thank you all for joining our call today and have a wonderful day. Thank you.