Vascular Biogenics Ltd.
Q3 2017 Earnings Call Transcript

Published: 14 Nov 2017

[Operator:]

Good day. And welcome the VBL Therapeutics Third Quarter 2017 Financial Results Call. Today’s conference is being recorded. And at this time, I would like to turn the conference over to Mr. Michael Wood of LifeSci Advisors. Please go ahead.

[Michael Wood:]

Thank you, Operator. Good morning, and thank you all for participating in today’s third quarter 2017 financial results and corporate update call. Leading the call today will be Prof. Dror Harats, CEO of VBL Therapeutics and Amos Ron, VBL’s Chief Financial Officer. A press release with the Company’s third quarter financial results became available earlier this morning, and can be found on the Investors’ page of the Company’s Web site at ir.vblrx.com. Before we begin, I would like to remind everyone that various remarks about future expectations, plans and prospects constitute forward-looking statements for the purposes of 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 today’s conference call speak only as of today’s date, Tuesday, November 14, 2017 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, today’s call is being recorded and will be available for audio rebroadcast on VBL’s Web site. As the operator mentioned, all participants are currently in listen-only mode and there will be a brief Q&A session following the Company’s prepared remarks. And with that, I’d like to turn the call over now to Prof. Dror Harats, CEO of VBL Therapeutics. Dror, please go ahead.

[Dror Harats:]

Thank you, Michael. And good morning to everyone joining us on our call. We appreciate the opportunity to review our third quarter 2017 financials and provide you with an update of our progress and accomplishments during the quarter and in the recent weeks. Beyond the financials, we are going to review two key topics with you this morning. The first one is our ongoing GLOBE Phase 3 pivotal study investigating VB-111 in recurrent GBM and the second one is our preparation toward commercialization of VB-111 and specifically two important developments that have occurred since the end of the quarter. The agreement we have just signed for the commercialization of VB-111 in Japan and the opening of our new manufacturing facility and corporate headquarters in Modiin, Israel. Starting with the GLOBE Study. We continue to execute on our Phase 3 GLOBE study, investigating VB-111 in recurrent glioblastoma. The study, which is progressing according to plan, is being conducted in centers across the U.S., Canada and Israel. We were pleased to announce that the data safety monitoring committee or DSMC overseeing the study met on September 28 to conduct its third and final safety review. The DSMC, as a reminder, is an independent multi-disciplinary group that conduct data reviews of an un-blinded study data, discusses potential safety concerns and provides recommendations regarding trial continuation. The committee overview the GLOBE safety data, including mortality data collected through the Cato state in August and did not identified any safety concern. As a result, they anonymously recommended that the study continuous planned to completion. Top line data after the occurrence of 189 events are expected in the first quarter of 2018. The study has been conducted under a special protocol assessment granted by the FDA with full endorsement by the Canadian Brain Tumor Consortium based on interactions with the FDA and our staff. The VB-111 GLOBE study, if successful, should be the only trial we need for BLA and approval. Now, I would like to discuss our preparation toward commercialization of VB-111. There are three key elements for commercialization of VB-111 and these are, drug supply, commercialization channel and financial resources, which are needed to fuel such efforts. I will elaborate on how we have been working to advance the company on each front. As we make preparation for potential regulatory approval and commercialization of VB-111, establishing the appropriate infrastructure for the drug supply is critical. We were pleased to announce in October the opening of our new gene therapy manufacturing plant in Modiin, Israel which will be the commercial facility for production of VB-111. The Modiin facility is the first commercial scale gene therapy manufacturing facility in Israel, and its 20,000 square feet is currently one of the largest gene therapy designated facilities in the world. We are able to fund the construction of this facility impart through non-dilutive support of the Israel Innovation Authority of the Ministry of Economy. So the impact on our balance sheet was quite modest. Since inception, we received a total of $22 million in non-dilutive grants from the Innovation Authority. As a patient driven company, we view the manufacturing capability as very important, not only for the preparation of the CMC for the filing of our BLA but mostly to be able to produce and supply the drug if approved to patient as soon as possible. Moving to the second point, the commercialization channels. As you know, in June, we established U.S. presence with the appointment of Dr. Corinne Epperly as U.S. Chief Operating Officer. Corinne is an oncology expert with industry background in drug development, strategy, commercialization and operations. She joined VBL after seven years at Bristol-Myers Squibb where she was involved in leading the preparation for the commercial launches of OptiVol or nivolumab in both hepatocellular carcinoma and glioblastoma. Together with Corinne, we are now preparing the ground for commercialization of VB-111 for GBM in the U.S. In this regard, you will have seen our announcement on November 6th that we have signed an agreement with NanoCarrier to develop, commercialize and supply VB-111 in Japan. Under terms of this agreement, VBL has granted NanoCarrier an exclusive license to develop and market VB-111 in Japan for all indications. We will supply VB-111 and NanoCarrier will be responsible for all regulatory and other clinical activities necessary for commercialization in Japan. This is an important achievement for VBL. Japan is potentially a large market opportunity and we wanted to advance VB-111 for this market in collaboration with the high quality oncology oriented local partners, such as NanoCarrier, while VBL is advancing VB-111 toward commercialization in the U.S. market. We see this agreement as providing further external validation of the potential of VB-111 and more than that to VBL as a company. The third point is financial resources. In addition to the expansion of our commercialization preparation to Japan and the validation it gave to the VB-111 program, the agreement with NanoCarrier provided for an upfront payment of $15 million, which we have already received. We are also entitled to more than $100 million in milestones payment, and sealed royalties in the high teens on net sales. VBL cash balance is now sufficient to fund our program into 2020 beyond the contemplated submission of the BLA in recurrent GBM. Finally, before we discuss the financial details, I wanted to mention a presentation we will be having this weekend at the Annual Society for Neuro-Oncology or SNO Meeting that will taking place in San Francisco. On Saturday, we will present new data collected from our prior Phase II trial of VB-111 in recurrent GBM. We have previously shown that VB-111 demonstrated proof of concept for overall survival benefit across three indication to recurrent GBM, ovarian cancer and thyroid cancer. It was also published that VB-111 dual mechanism of action, combined targeting and destroying of angiogenic blood vessels together with activation of the immune system within and against the tumor. At SNO, we intend to show data that strengths the link between each part of the mechanism to overall survival, and will also show biomarkers that are related to the VB-111 mechanism and may provide hints to work clinical responses. This is very interesting analyses that support both the immune and vascular targeting mechanism for VB-111 and we look forward to sharing more details at the SNO Meeting. I would like now to turn the call over to Amos Ron, our CFO to go over the third quarter financials. Amos, please.

[Amos Ron:]

Thank you, Dror. Earlier this morning, we issued a press release detailing our financial results for the third quarter and nine month period ended September 30, 2017. We will review the financial highlights and also speak to our cash position and our financial guidance. Research and development expenses for the third quarter ended September 30 were approximately $4.8 million compared to approximately $2.2 million in the same period of 2016. The bulk of this increase is attributed to the GLOBE study that is now in full volume. General and administrative expenses for the third quarter were approximately $1.7 million compared to approximately $1.1 million in the same period of 2016. The bulk of this increase is attributed to non-cash share based compensation and to the commencement of our preparing towards commercialization, including the establishment of our U.S. presence. The Company reported a net loss for the third quarter ended September 30, 2017 of $6.5 million or $0.24 per share compared to a net loss of $3.2 million or $0.20 per share in the quarter ended September 30, 2016. Moving on to the nine months results. Research and development expenses were $12.1 million for the nine month period of 2017 compared to $8.5 million for the nine month period in 2016. General and administrative expenses for the nine month period of 2017 were $4.8 million compared to $3 million in the same nine month period of 2016. Net loss for the nine month of 2017 was $16.5 million or $0.61 per share compared to a net loss of $12.2 million or $0.46 per share in the first nine months of 2016. At September 30, 2017, we had cash, cash equivalents and short-term bank deposits of $28.2 million and working capital of $24.4 million. This does not include the $50 million in cash we received from nanoCarrier, in connection with the license implemented in Japan. We expect that our cash, cash equivalents and short term bank deposit will enable us to fund our operating expenses and capital expenditure requirements into 2020. Our financial position is expected to be sufficient to enable us to complete our ongoing Phase 3 clinical trial of VB-111 in recurrent GBM to support our planned potential registrations trial in ovarian cancer and an exploratory clinical study of VB-111 in combination with the checkpoint inhibitor in lung cancer, as well as to support the move to our new facility in Modiin, Israel and to prepare for the commercialization of VB-111 for recurrent GBM in the U.S. For additional details or information on our financials, please refer to our Form 6-K filed this morning with SEC. I would now like to open up the call for questions.

[Operator:]

Thank you [Operator Instructions]. And now we’ll take our first question from the queue, Gbola Amusa from Chardan. Please go ahead, your line is now open.

[Gbola Amusa:]

Your Japan deal with NanoCarrier is pretty intriguing. So I have two questions on that. First, would you comment on whether partnering other non-U.S. rights for VB-111 as a priority and second. If so, are such partnerships more likely to merge before or after the GLOBE data?

[Dror Harats:]

So thank you very much for asking the question. We are now not pursuing actively any out of the U.S. deal at this point, and we are not pursuing any global deal at this point. We are expecting to wait for the data before we do any more deals. We were saying before that we were negotiating on some geographic deals. And as a result, you could see the Japan deal. There was and there are going some negotiations on other geographic area, but I don’t anticipate that we will have a deal in any of other areas before the data. If anything else will change, we’ll let of course everybody know.

[Gbola Amusa:]

Dror, just a quick follow-up, you mentioned NanoCarrier as the high quality partner. Could you comment a bit more on what aspects of your due diligence led to that conclusion?

[Dror Harats:]

So NanoCarrier is actually a company that is constrained on oncology only at this point. And we think that in the future, we might have reason to collaborate on some of the products that we and they are developing. Beside of that, the management of NanoCarrier is all people that had a lot of experience in selling drugs in Japan, working in the big pharma in Japan and selling many different drugs usually or most of them in the oncology area.

[Operator:]

Thank you [Operator instructions]. And we’ll take our next question from the queue Swayampakula Ramakanth from HC Wainwright. Please go ahead, your line is now open.

[Swayampakula Ramakanth:]

I have three questions. Regarding -- starting with trial with the GLOBE study, I’m just trying to understand how and in what format are you going to be releasing the data in the first quarter ’18. And will it be just top line [trial] studies followed by the presentation and when will we see the final data analysis of the data?

[Dror Harats:]

So we assume at this point that we will release only top line data in the beginning, and the full data should follow around an important scientific meeting where there will be hopefully a presentation and a paper that -- scientific paper that will come out. In the top line data, we expect to talk about the primary endpoints and some other endpoints in the trial.

[Swayampakula Ramakanth:]

And talking about VB-111 and certainly on how you’re working through [indiscernible] manufacturing facilities which will to be open, and would that facility be functional and be able to produce commercial lots by the time the BLA gets [attribute] and the full say in the first half of 2019, calendar first 2019?

[Dror Harats:]

So the facility that we actually build here in Israel is the facility that we are going to launch the drug platform. And we are expecting to work according to our timeline where we expect to start manufacturing in the facility in the beginning of 2018. And as we mentioned more than once, we expect to submit the BLA in the second half of 2019. And that will include, of course, results of the Phase III trial and the full CMC. So that’s basically the timeline and we think that we will be able to meet this timeline.

[Swayampakula Ramakanth:]

So we’ve also being hearing that GBM is just the start to commercialize VB-111 -- and we’re seeing VB-111 as more of a wider scale therapy. Can you help us understand some of the aspects, which makes you believe that it didn’t just [indiscernible]?

[Dror Harats:]

I think that from the way the drug is actually working, VB-111 and the mechanism of action where it’s actually work on the [vascular] tier of the tumor and induce immune system within the tumor to fight the tumor. This is a generalized mechanism. It’s not specific for GBM and we don’t think that VB-111 will be just a GBM drug. And we already, as I mentioned, had three different Phase II trials and we showed similar or maybe even better data in ovarian and thyroid, which are less difficult indications. GBM is the most difficult indication that we are approaching. So we believe that with the positive result in GBM one can extrapolate that it won’t be just GBM. And especially that if it translates from a Phase II to Phase III in such a devastating tumor in such a difficult indication then one can extrapolate it, if there’s is a very good chance to do the same thing in other indications. And therefore, we are starting our Phase III pivotal trial in ovarian very soon and we plan to do a trial in lung cancer combining it with checkpoint inhibitor, because we hope and believe that VB-111 can be a cornerstone in the treatment of many different solid tumors. Of course, there are some solid tumors that are not angiogenic. And in that case, it might be that VB-111 won't be the drug of choice. But so far from the Phase I, we learned that or we got a hint that it’s working in neuroendocrine and renal in lung. We know from the Phase II that it work in ovarian that it works in GBM and thyroid. So there is a good reason to believe that it won’t be just a GBM drug.

[Swayampakula Ramakanth:]

One last question from me regarding commercialization of VB-111, so with the manufacturing facility being set up, [indiscernible] unit, also is there any discipline with the chlorine being taking or [indiscernible]. So I was just trying to get a feel for sort of data points you are comfortable as you are [indiscernible] more and more confident about VB-111 and potentially the commercialization of [indiscernible]?

[Dror Harats:]

I am not sure that I could hear you well. But if I understand if you are asking us what make us go forward to build that production facility.

[Swayampakula Ramakanth:]

Production facility and commercial facility if [indiscernible] confidence in not only the GLOBE study but also in the commercialization of VB-111 for GBM?

[Dror Harats:]

VB-111 is an orphan indication and I believe that we will be able to actually commercialize it ourselves in the U.S. But for the potential for VB-111 is a big potential in many different indications. So we are going to be opportunistic about the two options to commercialize it ourselves or to have a strategic partner and actually split it maybe in geographic way.

[Operator:]

Thank you. And now we’ll take our next question from the queue, Charles Duncan from Piper Jaffrey. Please go ahead, your line is now open.

[Charles Duncan:]

I have entered the call little bit late, so I apologize if some of these have been addressed already. But the first question I had was relative to the timing of BLA, assuming that you get interpretable and positive GBM results. How quickly do you turn these around to submit a BLA? Are there any other rate limiting steps for you to submit a BLA post these results?

[Dror Harats:]

So I think that for the clinical part of the BLA, we plan to be ready towards the end of 2018. But as you all know in the BLA, there is the CMC part and that’s why we were building the facility here in Israel. Of course, we have to make a decision as a small company when is the right time to pull the trigger for this facility. And we didn’t want to do it after getting the results, because that would have delayed the BLA dramatically. But a limited factor is actually the CMC part, which is going to be ready six months later in mid-2019. Now, it all depends on the results that we are going to get in the clinical trial, because we are going to take advantage of the ability to submit the BLA in part to the FDA. So we are going to submit the clinical part first and then the CMC. And of course, it’s a deadly disease. There is no other drug that pro-long the life in recurrent GBM. And it all depends on how strong are the results and then we can negotiate with the FDA what will be needed for the filing of the BLA and also CMC. And even if we have to fulfill all the requirement it's going to be ready in mid-2019 so we were always saying that the submission of the BLA will be in the second half of ’19.

[Charles Duncan:]

So it does sound like you are of course planning to pursue a roll-in submission, which is what I was wondering about. And then relative to your new partner, the deal that you’ve recently signed with NanoCarrier, nice to see in terms of the upfront payment. But I’m wondering about the external validation that comes with that partnership. Could you help us understand the level of diligence that particular partner conducted? And was it competitive partnering program?

[Dror Harats:]

So NanoCarrier is actually or the management of NanoCarrier and the top level people that work at NanoCarrier all of them has a lot of experience in working in big pharmaceutical companies, usually both in the U.S. and Japan. So they are quite familiar with a pharma market in both sides of the Pacific Ocean and they do the due diligence, which I might call it both U.S. type and the Japanese type. They went over every piece of paper, every data on every patient. And they looked at all the patents very carefully. They did calls with our patent lawyers’ lawyers, key opinion leaders, key opinion leaders that we know other that we don’t know in the U.S., outside of the U.S. They did quite a thorough due diligence before they made the decision to sign the deal. If you ask me about technologies that we felt it might be down the line maybe a good for collaboration between NanoCarrier and the VBL. They have a nano technology for drug delivering, especially for different oncology drugs. It won't be for VB-111 but it might be applicable for one of the technologies that we are developing, especially in antibodies that we are developing for MOSPD2. But that of course wasn’t the main reason for doing the deal. The deal was done because we think that NanoCarrier can actually take care of the Japanese market and help us marketing in this very important market.

[Charles Duncan:]

And then this probably falls in the category of something you’ve already discussed. But in terms of your pre-commercial prep activities right now very likely mostly focused on manufacturing, but in terms of commercialization of the drug, I think you started to address this. But what is your current perspective in terms of launching this product on your own versus partnering?

[Dror Harats:]

So I was saying that we will be a bit opportunistic here because on one hand this is an orphan indication and definitely we can handle it ourself for GBM in the U.S. And Corinne Epperly is experienced in this field, and she is building the right infrastructure and team in the U.S. But having saying that the potential of VB-111 is successful and GBM is much beyond GBM. And of course, if we will get the right relationship and partnership with the strategic partner that will enable us to develop the drug to many more major indications in oncology around the world then of course we are open to all kinds of agreements. And then they will want to take rest of the world and we keep only U.S. or anything else, we will be opportunistic and open to it. And I think that one of the important things to be said here is that we are really patient oriented beside of the business orientation that we have here. And for the patient if we have a drug that can work in many different indications, one can think about Keytruda as an example, maybe Avastin in some ways in many indications. You need a very strong infrastructure to develop it full scale to many different indications. And therefore I was saying that although we will be able to market it ourself for GBM, there is an opportunity that we will want and we’ll have a deal or a partnership with one of the big strategic partners to actually give the drug all the benefits that it can have in the drug development.

[Charles Duncan:]

Just two quick ones in terms of beyond its initial indication for VB-111 in ovarian cancer. Dror, have you made progress towards starting that trial? And could you help us understand that progress?

[Dror Harats:]

Yes, we did actually make progress. And we are going to start the trial, as we said, before the end of this year, unless something which is unexpected, happening. We already got to an agreement with CRO, which is mainly a public CRO, that dealing with ovarian and it's actually an expert type of CRO. And we will announce it when it's ready. And we felt that the right announcement should come when we have the first patient in but that’s going to happen soon. All the rest is basically already agreed with FDA with some of the regulatory authorities we already got a green light. We are actually had a kick-off meeting for the trial, we are getting done.

[Charles Duncan:]

So we’ll look forward to that perhaps very soon. And finally, beyond VB-111, have you identified a preclinical candidate that could be next to enter the clinic, which one and why? And what timelines would you anticipate?

[Dror Harats:]

So we keep on working on the MOSPD2, as you all know which is a novel protein that we discovered that is a membrane protein that its role in biology is actually to control a chemotaxis dose for cancer cells and monocyte and it’s an indication in drug development both for inflammation and for cancer. We already have antibodies and we have antibodies that work for inflammation and we have antibodies that [indiscernible] for cancer. We’re a bit more advanced in the inflammatory field. As of now, we have data from knockout mice. We have data from different models using this antibodies in inflammation. The data, which we did not release yet, is quite compelling. And we believe that relatively soon we will make the decision which antibody we’re picking up. And then, of course, it will go to toxicology and then to the clinic. I assume that it’s about a year and half now from submitting an IND. But we decided to take it in the right space in a way that we will first pick up the right antibody with enough evidence before we go forward.

[Operator:]

Thank you. And as there are no further questions over the phone, at this time, I would like to hand the call back over to management for any additional or closing remarks.

[Dror Harats:]

So I just would say thank you to everybody for being on this call and supporting the company. Thank you very much.

[Operator:]

Thank you. Ladies and gentlemen, that will conclude today’s VBL Therapeutics third quarter 2017 financial results call. Thank you for your participation. You may now disconnect.