Vascular Biogenics Ltd.
Q2 2019 Earnings Call Transcript

Published: 13 Aug 2019

[Michael Wood:]

Thank you, operator. Good morning and thank you all for participating in today’s Second Quarter 2019 Results and Corporate Update Call for VBL Therapeutics. Leading the call today will be Professor Dror Harats, CEO of VBL; and Amos Ron, the company’s CFO.A press release with the company’s financial results became available at 7

[Dror Harats:]

Thank you, Michael and good morning. Today we will discuss our second quarter of 2019 financial results and operating highlights. Joining me on today’s call is Amos Ron, Chief Financial Officer. Our main focus is currently to advance our lead candidate VB-111 a gene-based biologics that we are developing for solid tumor indications towards the market.I’m happy to report continued progress as we execute on our ongoing Phase 3 study in ovarian cancer, which continues as planned. Beyond the clinical path, we continue to advance additional aspects related to production and commercialization of VB-111 and recently we reached an important regulatory milestone. Our pharmaceutical GMP grade, commercial scale manufacturing facility was certified by EU Qualified Person auditor. I will elaborate more on this important issue later on. But first, I would like to update you on the clinical development progress of VB-111.Our Phase 3 OVAL potential registration study is progressing as planned. The study is investigating VB-111 in recurrent platinum resistant ovarian cancer and has been designed to enroll up to 400 adult patients in approximately 75 clinical sites in the United States and Israel. Patients are randomized one-to-one to receive VB-111 or placebo on top of chemotherapy as standard of care. This therapeutic regimen is exactly the regimen that we used in our successful Phase 2 trial. The primary endpoint of this study is overall survival.We are conducting this study on the strengths of the positive outcome achieved in our prior Phase 2 trial of VB-111 in ovarian cancer. Final data from this study were presented at the ASCO Annual Meeting in June by Dr. Richard Penson from Mass General Hospital. The final results showed dose dependent median overall survival benefit in favor of the therapeutic versus low dose of VB-111. 498 days versus 172 days, which is statistically significant with a p-value of 0.03.This outcome is especially meaningful in that it is quite rare to see an all overall survival benefit in ovarian cancer studies. Recent therapies in the market for ovarian cancer, such as PARP inhibitors and anti-VEGF were approved based on progression free survival benefit, but did not show overall survival benefit. Moreover, a survival benefit for the patient treated with VB-111 who met the international GCIG criteria for response was even greater. Median overall survival in this group exceeded 800 days. This is important because CA-125 responses is the efficacy endpoint for our interim analysis of the OVAL study, which we are expecting to have at year end 2019.The second ASCO presentation delivered by Dr. Benjamin Ellingson of UCLA was the analysis conducted by him and Dr. Tim Cloughesy, which compared MRIs radiographic data from our Phase 2 study of VB-111 in recurrent GBM, which met the primary endpoint of overall survival benefit to data from the treatment arm of GLOBE Phase 3 study. We have discussed this data on prior calls, so I won’t go through all the details here.But one of the key conclusions is that the treatment regimen of VB-111 in recurrent GBM appears to be critical in determining outcomes. This analysis provides independent quantitative evidence that priming with VB-111 results in clinically meaningful activity in recurrent GBM, which can be seen by MRIs signature and objective responders to VB-111, both are correlate with statistically significant survival advantage.Based on this reassessment of GBM results there has been renewed interest in the potential of VB-111 among the medical and scientific communities, which has led to the expansion of our VB-111 clinical program with two new investigators sponsored trials, which are planned to start soon.First, a Phase 2 trial that will be conducted in collaboration with the National Cancer Institute in colon cancer in combination with a checkpoint inhibitor, this new study will test if priming with VB-111 can drive immune cells into the tumor and turn the colon cancer from a cold to a hot tumor. The addition of a checkpoint inhibitor on top of VB-111 may father boost the anti-tumor immune response.Second, a randomized control trial in recurrent GBM will be conducted at top U.S. marrow oncology centers. The KOLs, who will be manage this trial, believe that VB-111 should be further developed for the benefit of patient with recurring GBM and we are optimistic that this study will provide additional evidence for VB-111 activity in recurrent GBM. VBL will own both studies results and we be able to use this data in future filing. We will provide further update as these two studies get on the way.As I mentioned before, we're recently reached an important milestones on the way of getting VB-111 to the market. We announced earlier in July that our gene therapy facility in Modiin, Israel, the site where VB-111 is manufactured underwent an audit by a European Union Qualified Person or QP, and as a results is now certified and in compliance with EU Good Manufacturing Practices or GMP. This is an important step in the regulatory process for VB-111.The GMP requirements set by the EU are very rigorous. So this clearance underscores the very high standards to which our facility was constructed and is maintained. As you know, manufacturing is often a gating step in their approval process, particularly for novel therapeutics. So we believe that this successful audit there is the program.The Modiin facility is a first commercial scale gene therapy manufacturing facility in Israel and that 20,000 square feet is currently one of the largest gene therapy design facilities in the world. Construction of the facility was funded partially with the support of meaningful grants from the Israel Innovation Authority of the Ministry of Economy.We continue to advance our pipeline asset as well and particularly, the six – VB-601 our MOSPD2 antibody for inflammation, which has shown preclinical potential for indications such as multiple sclerosis, rheumatoid arthritis, and nonalcoholic steatohepatitis. In this regard, we have signed an agreement with one of the major CMOs to start the manufacturing of VB-601 for the future clinical trial, as we advanced this program towards an IND, which we expect to file in the second half of 2020.We also continue in our work on VB-611 bi-specific antibody for cancer indications. This antibody has a potential to target various solid tumors through bringing the immune system or T cells closer to tumor cells expressing MOSPD2 on their surface.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 in the second quarter ended June 30, 2019 related to VBL's collaboration amounted to $0.1 million. Research and development expenses, net, after government grants for the quarter ended June 30, 2019 were approximately $3.7 million, compared to approximately $2.9 million in the same period in 2018.General and administrative expenses for the quarter ended June 30, 2019 were $1.2 million, as in the same period in 2018. VBL reported a net loss for the quarter ended June 30, 2019 of $4.7 million or $0.13 per share, compared to a net loss of $4.1 million, or $0.13 per share, in the quarter ended June 30, 2018.At June 30, 2019, VBL had cash, cash equivalents and short-term bank deposits totaling $45.1 million and working capital of $39.1 million. We expect that our cash, cash equivalent and short-term bank deposits will enable us to fund operating expenses and capital expenditure requirements for at least two years.We will now open up the call for questions.

[Operator:]

Thank you. At this time, we will conduct a question-answer session. [Operator Instructions] Our first question comes from Kevin DeGeeter with Oppenheimer. Please proceed with your question.

[Kevin DeGeeter:]

Good morning, guys and congratulations on the progress, specifically with regard to GMP kind of this for the manufacturing facility. I had two questions this morning that may be a housekeeping item as well. With regard to the NCI sponsored colon cancer study in combination with a PD-1. Can you just walk us through your sort of expectations for when that maybe begin to enroll patients and just a general discussion of what would be the primary endpoint for that study? Second, just sort of an update on potential timeline to interim analysis for the ovarian study, and then the housekeeping item with – can you just providing an update on the fully diluted share count? Thanks so much.

[Dror Harats:]

Okay. So – thank you very much. Regarding the NCI clinical trial and of course, the other investigator-initiated trial. As you all know, timing is always depends on these centers more than on the company, but things are progressing lately quite fast. And when we'll have more news on the IND submission and stuff like that, we will come back to the market regarding it. I believe that both studies will start before year-end and maybe even to where the end of the third quarter or just the beginning of fourth quarter. But I can assure you that post trials, both of the NCI trial in colon and the GBM trial, which is an investigator-initiate are really progressing, again, are getting on track.Regarding the NCI trial, we are looking at colon cancer and for the first time, we will have an IND, not just for VB-111, but VB-111 in combination with the checkpoint inhibitor, which is a major issue. And the whole idea is that because the checkpoint inhibitors don't bring the immune system into the tumors. So they cannot turn cold tumors to become hot tumor that the immune system recognizes them. And on the other hand, VB-111 can do this and we show the many times in animal models, but we also showed it just recently in human being in patients with ovarian cancer.So the idea is to bring the immune system into the colon cancer, which is the biggest market with solid tumor, which is completely cold and does not have the immune system there. And then of course, after priming and bringing the immune system to add on checkpoint inhibitor, which will activate the immune system. So the primary endpoint is, basically, to see if we can turn colon cancer from a cold to a hot tumor. This will be a major step forward because in this major market it will enable all the new development, the new drugs that can activate the immune system to actually start working in colon cancer. Of course, we are also going to look at progression free survival and overall survival.This is an open single arm trial. So basically, after few patients maybe four or five, we will already know if we are doing the job, if VB-111 is doing the job and turning the tumors into hot tumors, of course, we will have more patients to look for PFS and survival. So I would expect that we will know some results during the 2020 year maybe even if – even on the first half. The GBM study is a blinded control randomized trial and there we are expecting the results about 18 months from the time that we will start to study.As for the ovarian interim analysis, things are progressing so far as expected and we are expecting the results to where the end of the year or maybe just the beginning of next year, but as we said all the times that we are expecting at the year-end. It will be at year-end, either, a little bit before or a little bit after a year-end 2019. And of course, I was just mentioning how important is the endpoint which is the CA-125 and we picked it up because that's the earliest efficacy endpoints at one can see in study and we learned from the Phase 2 that we should see a high percentage of responders and that's let us know that we are repeating the Phase 2 and we already showed that the checklist with VB-111 its related to survival.So that's basically to answer your question and I’ll let Amos answer the other question with this number of the undiluted shares in the company.

[Operator:]

Our next question comes from Geulah Livshits with Chardan. Please proceed with your question.

[Geulah Livshits:]

Did you want to answer the share count for the other one first?

[Dror Harats:]

We will come with a number in a second, but we can go on with the question.

[Geulah Livshits:]

Okay, no problem. Thanks for taking my question. Just a quick one on the manufacturing facility, so in terms of the scalability, how much of the capacity do you expect to use in the near term for the clinical programs and then is there flexibility in terms of potentially leasing out the extra capacity? Thanks.

[Dror Harats:]

So thank you Geulah for the question. I think it's an important question. We are very careful not to say exact numbers, but the facility is built in a way that it can support the first indication globally. So we are talking about ovarian cancer or recurrent GBM depends which one would be first. We can definitely support this – from this facility globally. We have the capacity for that. We also have ability to extend the facility in the same place very quickly. So we can do that the moment that we get positive results in our clinical trial. And the idea that we have at VBL is, with the positive results, we will extend our facility and start building, I would say, a twin facility somewhere else globally, most probably in North America. But if we have great results or good results and we can go to the market, this facility is ready to support the first indication globally.

[Geulah Livshits:]

Thank you.

[Dror Harats:]

Amos, you have an answer.

[Amos Ron:]

The fully diluted cost is $48,092,804.

[Operator:]

Our next question comes from Sean Lee with H.C. Wainright. Please proceed with your question.

[Sean Lee:]

Good morning, guys, and thanks for taking my question. My question is on the MOSPD2 program. Have you identified the specific products candidates that you bring into IND-enabling studies? And how many of them do you think you'll be bringing into the clinic either say, late next year or being 2021?

[Dror Harats:]

So we did identify – thank you, Sean for the question. We did identify the specific product for the inflammation, which is 600 – 601 and we are actually start developing it in a high scale now for the toxicology and for the clinical trials. So yes, indeed we identified our lead compound. We have a backup compounds, but this is the lead compound that we are going now to the clinic. I can assure you that this product, when we tested, essentially blocking now close or almost 100% of the ability of monocytes migration. So it’s quite potent antibody and it’s working basically in a very low molecular weight in nanomolars.So we have a good candidate now for the MOSPD2, a lead candidate. For the cancer program, the VB-611 is actually we have – we didn’t identify the exact lead compound. We had the exact sequencing for the lead compound, but we are testing now about 10 different antibodies to actually come to a conclusion, which hopefully will be done before year end for the lead candidate and then we will start producing this candidate also for an IND and clinical program.

[Sean Lee:]

I see. Thank you for the additional color. That’s all I have.

[Dror Harats:]

Thank you.

[Operator:]

Our next question comes from Sam Slutsky with LifeSci Capital. Please proceed with your question.

[Sam Slutsky:]

Hey, everyone. Thanks for the questions. Just on the GBM study, if the results were to come back positive from that, just curious on your thoughts on what that potential regulatory paths look like there. Thanks.

[Dror Harats:]

Yes, thank you, Sam. Although it’s not a big trial, it’s actually a randomized controlled trial. And it was built in a way that we have enough patients in this trial, so that we can repeat the Phase 2 trial that we showed statistically significant overall survival. And indeed if we met the statistically overall survival, we planned it in a way that this together with the Phase 2 data that we have might be enough for registration. And of course it always might be a condition registration and we’ll need to do a bigger trial, but that will be after the drug is on the market. So by purpose the primary endpoint is not overall survival but the immune response that we are expecting in the tumor. But we’re planned it in a way that we can show overall survival as well, even though it’s not going to be a huge trial.

[Sam Slutsky:]

Got it. Okay. Thanks.

[Operator:]

Our next question comes from Soumit Roy with Jones Trading. Please proceed with your question.

[Soumit Roy:]

Hi. Thanks for taking the question and congrats on all the recent progress. I was curious if you could give us a little color on from your prior experience in ovarian cancer from the Phase 1/2 study. What’s the average time from prior progression – progression on the prior therapy when you get the patients enrolled? Essentially trying to understand what’s the minimal baseline CA-125 levels are? And should we expect similar time for prior progression in the Phase 3 study or are you getting a little earlier patients?

[Dror Harats:]

So we are not getting a little earlier patient, Soumit. What we are getting is patient with a platinum-resistance and platinum refractory, which mean that they stopped responding to chemotherapy, less than six months from ending the treatment. That the way ovarian cancer patients are treated is when they get diagnosed, usually they get debulking of the tumor by operation either right away or after a new regimen therapy of three courses of platinum-based chemotherapy. And more than 80%, actually close to 87% of the patients will respond to the chemotherapy of platinum-based chemotherapy, because the tumor is quite responsive to chemotherapy.But unfortunately almost all patients will have recurrent and when they recurrent they are getting again chemotherapy and this time it’s actually the time for progression is getting shorter and then in the third course it’s getting shorter. So some patients get just one course and if they progress in less than six months, you call them refractory – before three months, you call them refractory, if it’s before six months, you call them resistant. And nowadays that every patient basically getting PARP inhibitor, you say, where responsive to chemotherapy, we expect that the most patients will be already patients that got PARP inhibitors and that what we do see in our clinical trials.Moreover from the patient, the blinded data that we see now in the Phase 3, I can tell you that we are getting what we’ve seen in the Phase 2, that’s about 50% and that’s a number that we have so far off the patient who are actually already patient that failed anti-angiogenic drugs like Avastin. So we basically have the same population that we have in the Phase 2, which is patient, we say, recurrent, a platinum, a ovarian cancer, which we call platinum-resistant ovarian cancer.

[Soumit Roy:]

Got it. And like we have seen in that ASCO great correlation between fever and response rate, are we going to see fever data at the year end present interim readout?

[Dror Harats:]

You know, that this is a blinded trial, so it’s very delicate to what we can give an interim analysis like this. We will try to mention what we are seeing, I can tell you that in a blinded fashion and we can always talk about a blinded fashion, we do see many more responders with fever.

[Soumit Roy:]

Got it. And as a final question, any plans to have a new trial targeting platinum sensitive patients or within a combination setting with PARP inhibitor or something in the near future?

[Dror Harats:]

That’s the next step. I won’t say in the near future, but after the interim analysis when we will know how positive all the data and do they really repeat what we’ve seen in the Phase 2, which I want to remind you that the response rate to CA-125 was close to 60%, which is much more than anything else that has been shown in the field. And if we will see that we’re getting similar results, we’ll have to consider maybe starting another trial as you suggested with PARP inhibitors together.

[Soumit Roy:]

Great. Thank you so much for all the progress. Thank you.

[Dror Harats:]

Thank you very much.

[Operator:]

[Operator Instructions] There are no further questions in queue. I would like to turn the call back over to management for closing comment.

[Dror Harats:]

So thank you all for joining our call and we look forward for the next six months and for the interim analysis of the OVAL trial. Thank you very much.