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Edited Transcript of ONC.TO earnings conference call or presentation 5-Mar-20 10:00pm GMT

Q4 2019 Oncolytics Biotech Inc Earnings Call

Calgary Mar 27, 2020 (Thomson StreetEvents) -- Edited Transcript of Oncolytics Biotech Inc earnings conference call or presentation Thursday, March 5, 2020 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew R. de Guttadauro

Oncolytics Biotech Inc. - Global Head of Business Development & President of Oncolytics Biotech (U.S.) Inc

* Kirk J. Look

Oncolytics Biotech Inc. - CFO

* Matthew C. Coffey

Oncolytics Biotech Inc. - President, CEO & Director

* Michael Moore

Oncolytics Biotech Inc. - VP of IR & Corporate Communications

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Conference Call Participants

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* John Lawrence Newman

Canaccord Genuity Corp., Research Division - Principal & Senior Healthcare Analyst

* Jonathan Matthew Aschoff

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

* Wangzhi Li

Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology

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Presentation

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Operator [1]

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Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oncolytics Biotech Fourth Quarter and Year-end 2019 Results Conference Call. (Operator Instructions)

I will now turn the call over to your host, Michael Moore, Vice President, Investor Relations and Corporate Communications. Mr. Moore, please go ahead.

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Michael Moore, Oncolytics Biotech Inc. - VP of IR & Corporate Communications [2]

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Thank you, Mike. Good afternoon, ladies and gentlemen, and thank you for joining us on our call today to discuss our fourth quarter and year-end 2019 financial results and corporate update, including an update on our clinical programs as well as our updated catalysts and milestones. With me on the call this afternoon from Oncolytics are Dr. Matt Coffey, President and Chief Executive Officer; and Kirk Look, Chief Financial Officer. On today's call, Dr. Coffey will review our clinical and operational progress since the beginning of 2019. And provide an update on our clinical development plans and strategy, including our significant critical mass of catalysts and milestones. Mr. Look will speak to our operating results and strong financial position; and Mr. Andrew de Guttadauro, Global Head of Business development for Oncolytics, will be available for the Q&A session at the end of the call.

I'd like to point out certain statements made on this call, such as those relating to our clinical development plans and business development plans are forward-looking within the meaning of applicable security laws. Please refer to our fourth quarter press release and most recent MD&A for important assumptions and cautionary statements related to forward-looking information. I will turn the call over to Dr. Matt Coffey. Matt?

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Matthew C. Coffey, Oncolytics Biotech Inc. - President, CEO & Director [3]

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Hello, and welcome to our year-end 2019 and corporate update conference call. 2019 was an incredibly productive year for Oncolytics, and that momentum has carried over to the beginning of 2020. We're very pleased with our execution over this time. It was a year of laying groundwork for multiple studies as well as building on our capital market strategy as we put in tremendous efforts to increase our liquidity and balance sheet.

Cumulatively, this work now sets the stage for an extremely important year ahead. I'd like to use this call to frame the significant progress we have made and how this progress positions us for a catalyst-rich future with the first of these announcements coming before the end of this month.

I'll also outline our ongoing programs, how these programs are evolving and additional indications we may investigate in the future.

Let me start with some highlights that have built the foundation of where we are now. And to be clear, everything has evolved from significant clinical results with pelareorep, particularly the Phase II randomized IND 213 study in metastatic breast cancer, but also recent findings from pancreatic cancer and multiple myeloma studies. The results we have demonstrated in a broad range of both solid and liquid tumors are based on pelareorep's ability to treat systemically through intravenous delivery and create an unprecedented amount of viral replication. We started 2019 with a very strong set of collaborative studies involving Roche's Tecentriq in breast cancer, Merck's KEYTRUDA in pancreatic cancer and Bristol-Myers Squibb AKA BMS's OPDIVO in multiple myeloma. After identifying our biomarker at the beginning of 2019, we entered into a co-development agreement with Pfizer and EMD Serono to study their PD-L1 checkpoint inhibitor, BAVENCIO in the same setting we had the strong results in previously, that is, HR+/HER2- metastatic breast cancer. This tumor type encompasses over 70% of breast cancer and represents a completely underserved patient population and an absolutely massive market opportunity valued conservatively at $2 billion for the drug that can provide the first meaningful overall survival benefits. Remember, the current standard of care for these patients after first-line therapy is simply antiquated paclitaxel, and we demonstrated a doubling of overall survival in our target patient population of HR+/HER2- when combining pelareorep with paclitaxel in IND 213. Exiting 2019, we're now working with some of the largest pharmaceutical companies in the world. Through these collaborations, we've earned the credibility that comes with being vetted by the most respected oncology teams globally, which have allowed us to leverage large pharma's expertise and resources across 4 of our 5 clinical studies. The collaborations and investments by pharma reflect their focus on checkpoint inhibition, a $56 billion market. Our work since the beginning of last year has resulted in the advancement of all trials underway, including the imminent initiation of BRACELET-1. The upcoming data from these trials will be leveraged to firstly, prove out our biomarker for use in the Phase III program; secondly, it confirms that pelareorep is acting as an immunotherapy in primary and metastatic breast cancer; and finally, to verify that pelareorep stimulates an immune response to augment the efficacy of checkpoint inhibitors.

With reference to our biomarker T cell clonality, it's hard to believe it's been just a year since we announced it and began testing. The pancreatic cancer study presented at the American Association of Cancer Research Meeting last year was the first demonstration that the degree of T cell clonality has the potential to serve as both a predictive and prognostic biomarker of response to pelareorep therapy. As we've discussed on a number of times and had a key opinion leader presentation on, this biomarker could provide physicians with a simple blood test to understand which patients are likely to respond to treatment. We're now providing further confirmation of this biomarker in early and late-stage breast cancer. These findings are expected to enhance our patient selection criteria in our Phase III and also have the potential to provide for more robust patient stratification within our registration trial. This information is invaluable and will allow the medical community to target the right treatment to the right patient with the confidence that a treatment effect is occurring. With an incredible amount of groundwork achieved, our clinical programs are beginning to drive data, and data will drive the eventual partnership we've been focused on to provide the funding and additional expertise for our Phase III registration study in metastatic breast cancer.

I'll turn your attention now to our ongoing programs in breast cancer, pancreatic cancer and multiple myeloma, and the studies being run in each indication, beginning with breast cancer.

AWARE-1, as I think everyone is well aware, no pun intended, is investigating pelareorep in combination with Roche's checkpoint inhibitor, Tecentriq, and additionally, in combination with the standard of care in each cohort in the study. The study will provide biochemical data by recording changes in the tumor microenvironment and monitoring inflammation changes in the tumor, confirming that pelareorep is indeed acting as immunotherapy in this indication. Early observations in AWARE-1 are supportive of our biomarker with higher peripheral T cell clonality correlating with beneficial changes in the tumor microenvironment. They demonstrate that pelareorep can prime new T cells where the expanded T cell repertoire has activity directed towards tumor cells after treatment. This is an important finding, speaks to the potential of pelareorep's potential to enhance the efficacy of immune checkpoint inhibitors, which require antitumor T cells to mount an effective response. As the study continues to mature in 2020, the Steering Committee, consisting of many of SOLTI's network of investigators and medical professionals as well as our Oncolytics colleagues, met earlier this week. The meeting was the first step in providing the interim safety data to be announced before the end of March as well as to discuss how the study will proceed in order to be as quick as possible and provide the optimal data required to assist in the design of the Phase III registration program.

The first 2 cohorts of HR+/HER2- patients, 1 cohort being pelareorep plus the standard of care and the other being the same, plus the addition of Tecentriq are moving along well with no material changes expected. The third cohort of triple-negative breast cancer or TNBC patients is proceeding as planned, where the use of pelareorep will focus on its ability to increase PD-L1 expression in these patients as Tecentriq's approval here is based on the positive expression of PD-L1, defined as having a PD-L level of at least 1%. This level, while seeming very low accounts for about 40% of triple-negative breast cancer patients, yet still represents a market opportunity of $500 million to $1 billion. If we can increase the number of TNBC patients expressing PD-L1 above 1%, something we've exceeded dramatically in multiple studies and different tumor settings, this could represent a doubling of Roche's market opportunity and be an additional lucrative market for pelareorep.

Now while TNBC does not represent the same market size as HR+/HER2- breast cancer, and by no means would it distract us from our focus on this tumor type, it could possibly represent another path to approval. This cohort in AWARE-1 will determine if additional studies are warranted and therefore, deserves our attention. AWARE-1 has been accepted for presentation at the European Society of Medical Oncology breast cancer meeting in Berlin taking place this May where Dr. Aleix Prat, the President of SOLTI and our lead investigator, will present biomarker data from the study. Additional data from the study will be presented throughout the year with final data announcement around the end of the year.

Our second breast cancer study, BRACELET-1, is our Phase II trial investigating pelareorep in combination with Pfizer and EMD Serono's PD-L1 inhibitor, avelumab or BAVENCIO, for second-line HR+/HER2- metastatic breast cancer, the same indication in which we saw the almost doubling of overall survival in a randomized Phase II study. The intent of the study is similar to that of AWARE-1, but importantly, BRACELET is looking at treatment effect for the Phase III study in our intended patient population. PrECOG, a leading cancer research group with a focus on breast cancer, is collaborating with us on the study and has already demonstrated great commitment with site enrollments and investigator education, and we're on track to begin patient enrollment very soon. We expect to have interim data from this Phase II clinical trial during the fourth quarter of 2020 and final data 2021. AWARE-1 data is suggesting that there is a role for pelareorep in early-stage breast cancer and that a checkpoint inhibitor lowers the threshold of response, suggesting the potential role of a checkpoint inhibitor going forward. BRACELET will confirm this in the metastatic breast cancer patients, and the data may recommend if we use a checkpoint inhibitor in our registration Phase III program.

Now before moving on from breast cancer, I'd also like to highlight data presented by our academic collaborators from Cancer Research UK at the International Oncolytic Viral Conference in October.

The preclinical data demonstrated synergistic activity between pelareorep and Pfizer's CDK4/6 inhibitor, IBRANCE, which is currently used as first-line treatment for metastatic HR+/HER2- breast cancer. The preliminary data suggests that pelareorep synergizes with CDK4/6 inhibitors by blocking cellular signaling pathways, releasing more double-stranded RNA into the tumor cell and triggering immunogenic cell death resulting in another effective way to make a cold tumor very, very hot. Between IND 213 and BRACELET, we are currently targeting the second-line metastatic setting, estimated to be approximately $2 billion. The potential to work in combination with CDK4/6 drugs in the first-line metastatic breast cancer can more than double this opportunity. The AWARE-1 data and preclinical data with CDK4/6 drugs also indicates that pelareorep creates significant viral replication in early stage primary breast cancer, suggesting a role for pelareorep in this treatment setting as well.

Of particular interest here is pelareorep's demonstrated memory or vaccination effect raising the hope that these early-stage primary disease patients are less likely to experience disease recurrence.

This suggests that pelareorep has the potential to grow the opportunity for CDK4/6 drugs already on pace to sell well over $6 billion in 2020 in primary disease as well and become an integral component across the breast cancer treatment spectrum. The impact of pelareorep in breast cancer from early to late-stage disease represents a massive multibillion-dollar opportunity. Again, no study has been defined and the CDK4/6 combinations will not distract us from our focus on the Phase III in metastatic breast cancer, but this could represent a significant opportunity for any pharma with a CDK4/6 inhibitor or drug candidates, and an opportunity our team is definitely looking at.

In addition to our lead program in breast cancer, we continue to execute our clinical studies testing pelareorep in pancreatic cancer and multiple myeloma. Our current pancreatic adenocarcinoma study, an investigator-sponsored trial with Merck and Northwestern University is evaluating pelareorep in combination with KEYTRUDA. The trial is progressing well, and we anticipate reporting interim data at the American Society of Clinical Oncology, better known as ASCO, in June this year and final Phase II data in the second half of 2020.

Now to remind you, REO 024, our previous Phase Ib study in pancreatic cancer, combining chemotherapy, pelareorep and KEYTRUDA demonstrated compelling response data and confirmed a favorable safety profile. It's also the study in which we found our biomarker of T cell clonality and have provided the rationale for our current Phase II trial studying pelareorep in combination with KEYTRUDA without chemotherapy. So the purpose of our ongoing Phase II pancreatic trial at Northwestern is to verify our biomarker of T cell clonality we saw in the previous study, but it's also to determine if the cytotoxic stressing agents such as chemotherapy is necessary for pelareorep to enhance the effect of checkpoint inhibition. Now subsequently, NCI-8601, a separate randomized pancreatic cancer clinical trial, brought about our recently announced positive biomarker data in first-line pancreatic cancer. Data presented at the beginning of 2020 demonstrated that low levels of CEACAM6 genes were associated with the near doubling of progression-free survival in pancreatic cancer patients treated with pelareorep.

And we'll evaluate this biomarker in future studies.

Based on these announcements, we received significant interest from large globally recognized clinical centers that want to work with pelareorep in combination with checkpoint inhibitors, in pancreatic cancer and additional gastrointestinal or GI cancers. And no studies have been defined at this time, but the concept of a basket study, including pancreatic cancer, colon cancer and anal cancer has been discussed. Given some of the positive results we've had in GI, including significant progression-free survival and overall survival readouts in pancreatic cancer, this basket study concept is of interest to us, but we're still in the investigational stage with these concepts. We'll provide an update on the potential for a GI study later this year.

Turning to multiple myeloma, we are presently advancing 2 studies. A National Cancer Institute called 9603 in combination with carfilzomib and a BMS investigator-sponsored trial in combination with carfilzomib and OPDIVO. At the American Society of Hematology or ASH Conference in December, investigators presented encouraging data from 9603 that demonstrated synergistic activity between pelareorep and proteasome inhibitor, KYPROLIS, in a very heavily pretreated patient population. This study, the feature of a recent key opinion leader call conducted by one of our covering analysts, is enrolling patients who have recently failed proteasome inhibitors. What it's demonstrating is that the addition of pelareorep recovers the activity of the proteasome inhibitor with dramatic tumor responses.

These responses can be so rapid, in fact that they are on the spectrum of cytokine release syndrome, a manageable response and an extremely positive signal for the activity of pelareorep in combination with proteasome inhibitors. The data presented at ASH in December last year demonstrated that the combination promotes the expansion of CD8 killer T cells and confirm the selectivity of pelareorep, which infected multiple myeloma cells while leaving normal bone marrow cells alone. This positive signal is what garnered the interest of pharma and provided the scientific rationale for our ongoing Phase I trial studying pelareorep in combination with KYPROLIS' and BMS' checkpoint inhibitor, OPDIVO. Given the viral infection that was associated with significant increase in PD-L1 tumor expression in 9603, we want to determine if this combination, including a checkpoint inhibitor, will enhance the duration of effect or even to potentially increase the quality and duration of these responses. Based on feedback from our investigators, we expect to announce interim data from 9603 at ASCO in June and interim data from the combination with OPDIVO at the ASH conference towards the end of 2020.

Finally, I'd like to highlight a very important addition to our Board of Directors towards the end of 2019. In October, we welcomed Leon Kruimer to our Board of Directors. Mr. Kruimer has more than 30 years of experience in corporate finance, planning and strategy, most notably serving as CFO and Executive Committee member of acting company Crucell, where he played a pivotal role in the sale of Crucell to Johnson & Johnson for $2.3 billion.

His experience will be extremely valuable as we advance our business development efforts and focus on partnering to move into a registration Phase III program, and we'll definitely leverage his experience and expertise in these developments.

With that, I will turn the call over to Kirk Look for a review of the financials.

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Kirk J. Look, Oncolytics Biotech Inc. - CFO [4]

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Thank you, Matt, and hello, everyone. Before I touch on our financial results, I want to start by saying how encouraged we are with the value creation we are seeing in the biotech market through business development today. Just on Monday, Gilead announced their acquisition of Forty Seven for $4.9 billion. This was a $2.5 billion increase from their market cap on Friday. We have seen Trillium, another immuno-oncology company, successfully improve their valuation to almost $400 million this week from under $50 million late last year. And only a few months ago, Takeda stepped into the viral space and licensed Turnstone with $1 billion licensing deal that included an upfront payment of $120 million. We believe now more than ever that with our promising clinical development plans and strong industry relationships that we too are poised to create tremendous value for our own shareholders as we continue to execute our plan. Now let me run through our financial results reported in Canadian dollars. And as Matt alluded to, I'll take a few moments at the end to highlight the strength of our balance sheet and our cash runway as a result of our current activities in 2020.

Most importantly, at December 31, 2019, we reported better-than-expected cash and cash equivalents of $14.1 million, which will fund our continued operations. Now before going into our expenditures for the year, I'd like to touch on a reported net loss of $33 million, which includes a $12.6 million noncash charge. With the close of our unit offering back in August, the warrants for financial statement purposes are to be treated as a financial instrument and reported as a liability, using an estimate of fair value. So with any change in the fair value, we are required to record a noncash gain or loss. And with the run-up in our stock price at the end of the year, the value of the warrant liability increased substantially, resulting in a noncash charge of $12.6 million, increasing our loss to $33 million or $1.50 per share in 2019 compared to $16.7 million or $1.06 per share in 2018. Again, I'd like to reiterate, this charge is a noncash expense and a result of the improvement we have experienced in our stock price.

Now looking at our expenditures for 2019, let me first touch on our research and development costs. For 2019, we planned for additional activities and an increase in R&D costs. We anticipated more manufacturing activities as we commenced a product supply program at the beginning of the year, which included refreshing our production process and securing fill and finish to make sure we have sufficient clinical supply of pelareorep. As well, we grew our clinical development program, which now includes BRACELET, which is expected to start enrollment in this month. But consequently, our R&D expenses increased to $2.8 million in the fourth quarter of 2019 compared to $2.5 million in 2018, with our full year R&D expenses increasing to $11 million versus $9.4 million in 2018.

Touching on our 2019 operating activities; we intentionally focused our increase -- on increasing our investor relations activities, believing our business development success with Pfizer and our anticipated clinical and biomarker results would be positive. Our fourth quarter IR strategy intended to leverage these successes, culminating in activities that included an active road show schedule, brand awareness and conference attendance. With this focus, our operating costs increased in the fourth quarter to $4.1 million from $2.4 million in 2018, with full year operating costs of $9.6 million versus $7.2 million in 2018.

Now turning to our balance sheet. We've been able to capitalize on the market's building appreciation of our execution on all fronts, clinical development, business development and investor relations activities, which can be seen by our stock's increased daily trading volume and a rise in our share price. The financial impact for us has been significant as we've raised over $16 million through the continued exercise of our warrants and the prudent and effective use of our ATM facility in 2020. And with that, I'm happy to report that we currently have cash and cash equivalents of almost $30 million, extending our financial runway out to the middle of 2021 and the multiple data catalysts through that time.

Now before turning it back to Matt, I'd like to summarize. Overall, our plan and strategy is starting to work. We're currently on track to deliver on our list of catalysts and now we're funded to the second half of 2021.

With that, I'll turn it back to Matt.

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Matthew C. Coffey, Oncolytics Biotech Inc. - President, CEO & Director [5]

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Thank you, Kirk. The oncolytic virus space has made great progress in the last several years and has garnered increased and sustained interest among larger biopharma players. As we've discussed before, deals that have transpired have largely been predicated on previous collaborative studies that led to partnerships or M&A, and we're now working on collaborative studies with Pfizer, EMD Serono, Merck, Roche and BMS. With additional indications potentially in the future, we look to either expand with additional pharma relationships or strengthen the ones already in place, possibly both. We know that pelareorep's distinct competitive advantage relative to intratumoral and/or modified oncolytic virus makes us very attractive to large pharma and we've built an impressive database demonstrating pelareorep's safety, clinical activity and efficacy across multiple studies and in various indications to support our position. Our clinical strategy remains focused on advancing the breast cancer program into a Phase III registrational study in metastatic breast cancer, but we recognize additional opportunities are right in front of us. We have seen increased interest in GI indications where we have seen positive results with pelareorep. And importantly, these are indications where checkpoint inhibitors are already approved, providing a much cleaner development path that creates additional interest for pharma. We will have data from our pancreatic cancer study this year as well as our multiple myeloma studies, and we'll provide updates on those programs when final data is announced. Until then, we remain focused, but we will continue to explore additional opportunities where there's an unmet need and strong clinical rationale for combining pelareorep with immunotherapy and targeted oncology treatments. We now have an unmatched set of catalysts, more than any other oncolytic virus company, and they begin before the end of this month. And importantly, as Kirk mentioned, with close to CAD 30 million in the bank, we no longer have a financial overhang, putting us in a very strong position to capture the value of each and every one of these catalysts as we execute on these programs.

I'd now like to open the lines to take some of your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Wangzhi Li from Ladenburg.

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Wangzhi Li, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology [2]

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Just 2 quick clarify question. One is when you get the final data for AWARE-1 mid of this year, when do you make the decision on the Phase III? Or you want to wait further for the BRACELET data?

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Matthew C. Coffey, Oncolytics Biotech Inc. - President, CEO & Director [3]

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The AWARE-1 actually really allows us to start making a case for, I think, the addition of a biomarker. We are seeing that the addition of the checkpoint inhibitor seems to lower the threshold for response. So in the primary setting, it's doing what it's supposed to be doing and demonstrating the activity. We'll take some of that to an end-of-Phase II meeting with the agency to discuss the biomarker, how we'd include it in the Phase III. But BRACELET is still a very important study to us because it's actually in the intended patient population for the Phase III. So it allows us to validate the biomarker in the correct setting and basically becomes the run in to a Phase III. So AWARE-1 allows us to start the process with the FDA, but BRACELET certainly confirms it.

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Wangzhi Li, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology [4]

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Got it. Okay. That's helpful. And then another clarify question on the financial part. So the operating expense in the first quarter seems higher. Is that -- you mentioned that -- Kirk, you mentioned that. Is that -- how do we think about going forward? Is this just a onetime kind of phenomena or we have maintained this level of G&A costs going forward?

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Kirk J. Look, Oncolytics Biotech Inc. - CFO [5]

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Yes, Wangzhi, it's Kirk. So we will -- we do expect an overall increase in our development costs and our operating costs. So we are forecasting a $20 million to $22 million expenditure next year. So things will level off, and we do see a slight increase, though.

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Operator [6]

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Your next question comes from John Newman from Canaccord.

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John Lawrence Newman, Canaccord Genuity Corp., Research Division - Principal & Senior Healthcare Analyst [7]

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Just wondering if you could talk a little bit more about the interim biomarker data that we could see this year for AWARE-1. Just curious if that data will include information on T cell clonality or if there will be other things that you'll be looking for there?

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Matthew C. Coffey, Oncolytics Biotech Inc. - President, CEO & Director [8]

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Yes, we've been playing it a little bit closer to the chest, John, just so that these guys have the ability to present the data. They've already submitted an abstract for ESMO breast cancer in Berlin. So hopefully, we'll see you there. But what they'll be presenting, there does seem to be a correlation between T cell clonality and the amount of cell till or inflammation in the tumor. We've done a great deal of work with multiplexing to define which T cell populations are in the tumor, some concept of the temporal aspect of when those T cells are brought in, in the NK cells, but it also -- there will be an overview of the cytokine response being elicited within the tumor mass. And additional information as to what these T cells are directed against viral or tumor epitopes. So it's a much more complete analysis than we've given. And again, we're just seeing some of this data coming in now. It will all be presented in May. But it will also allow us to start presenting the case on why we think a checkpoint inhibitor, especially in the HR+/HER2- group, is so attractive to the company. So it will be quite a fulsome presentation, certainly on the first 2 cohorts of our intended patient population for the Phase III, the HR+/HER2- group.

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John Lawrence Newman, Canaccord Genuity Corp., Research Division - Principal & Senior Healthcare Analyst [9]

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Okay. Great. And then if I could ask just 1 additional question for the NCI-9603 study in multiple myeloma, you referenced potential interim data at ASCO, just curious as to, generally speaking, what you might look to focus on there. If there will also be significant emphasis on biomarkers or if it will be just sort of the typical efficacy readouts that we can expect there?

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Matthew C. Coffey, Oncolytics Biotech Inc. - President, CEO & Director [10]

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It will actually be both biomarker and efficacy. What's interesting about this, Dr. Hofmeister from Emory, was involved in a KOL earlier this year, January, and what he alluded to is patients on that study, 9603, have failed proteasome inhibitor in the last treatment round, and they're then put on the virus plus the proteasome inhibitor they found, and they're seeing some very, very dramatic responses very, very quickly. Some of them even on the spectrum of the cytokine release syndrome that you would see with CAR Ts. It's manageable, but it's the first time we've really seen that rapid of a response within the tumor.

And it's really quite dramatic. We don't see it in solid tumors. We think that the virus is much more able to synchronously infect a much larger number of cells, just because it doesn't have to basically negotiate all of the pressure that you would have in a solid tumor or the connective tissues or the natural barriers that exist in solid tumors, but it's certainly going to be taking a look at immunogenically what cells are brought to the site of the disease, the timing of that, the activity of that as well as some -- multiplex it again to really look which support cells, which professional antigen-presenting cells are there as well as some gene marker profiling. And again, we should have some TCR sequencing data available for ASCO in June.

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Operator [11]

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(Operator Instructions) Your next question comes from Jonathan Aschoff from Roth Capital Partners.

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Jonathan Matthew Aschoff, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [12]

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I was wondering what percentage of patients kind of overall, do you think are going to show an expanded T cell clonality and, therefore, what percentage of them are perhaps better candidates for pelareorep? And kind of that same question for low CEACAM6 expression.

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Matthew C. Coffey, Oncolytics Biotech Inc. - President, CEO & Director [13]

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Yes. I'll take the TCR sequence first. With BRACELET's, what we're seeing or what we expect to see is because it's second line as opposed to where we looked at second, third, fourth and fifth line on IND 213, we're anticipating that about 80% of the patients will have adequate immunological reserve to be eligible for the Phase III. And I'm anticipating in that setting, 70% to 80% of the cells showing a strong vaccination effect, which we can see with increased clonality. So the goal here is to use it for the eligibility criteria, but to stratify after cycle 1. So we're working with Pfizer on some algorithms that would suggest what the cutoff for response would be, and we'll apply that from lessons learned in the BRACELET study to the Phase III program. So we're thinking 80% of the patients should be eligible at baseline, and we anticipate 70% to 80% of them having a strong vaccination effect.

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Jonathan Matthew Aschoff, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [14]

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And then on the CEACAM6?

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Matthew C. Coffey, Oncolytics Biotech Inc. - President, CEO & Director [15]

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CEACAM6, that one is actually used a fair bit or looked at a fair bit within the context of GI malignancy, low expression, which we're looking for, occurs at about 60% of pancreatic cancer. Similar numbers for colorectal and anal. In terms of breadth, there is some work done in CEACAM6 expression in breast cancer, but it looks very preliminary. And what we are exploring now on the AWARE study, and we will with BRACELET as well, see if there's any correlation between improved PFS and OS in patients expressing low CEACAM6 in breast cancer. But the focus really in that study is the immunological response using TCR sequencing.

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Jonathan Matthew Aschoff, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [16]

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You certainly have enough interest already. But I was curious, what other interests are you seeing out there from companies that are considering working with you in combination trials, can you say anything broad, maybe nonspecific about that?

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Matthew C. Coffey, Oncolytics Biotech Inc. - President, CEO & Director [17]

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Yes, it's an awesome question because I almost feel like we're a Swiss Army knife, our BD guy likes to say, and I'll get Andrew to jump in here afterwards. But it really depends what you want to use it as. We've had outreach from CAR T companies in the solid tumor space that want to see whether we can -- or they can use the virus to locate those CAR Ts to the solid tumor because the virus does cause such a migration of inflammatory cells into the tumor. And that's really stymied a lot of CAR Ts in solid tumors as you can get the CAR Ts there, but they're just not located to where you need them. The one that we made allusion to because the virus in infected cells releases so much interferon, what we end up getting is very high-level expression of PD-L1. And that's just simply a factor of if you bathe the cell in interferon, it's going to express PD-L1. We can use that to prime patients to becoming eligible in indications like triple-negative breast cancer where a threshold level of PD-L1 is required. So we've actually had outreach from a number of parties to look at priming patients prior to treatment in TNBC so again, using the virus more as a primer; in CAR T, it's to locate the T cells there. And then a lot of the interest really is in generating these T cell populations that are auto reactor to the tumor, which are required for checkpoint blockade, which unfortunately, checkpoint blockade really doesn't prime tumors very well or the immune system very well. I mean what people have to keep in mind is checkpoint blockade doesn't target the disease, it targets the immune system. So if you want to have the effective therapy, you have to have pre-existing T cell populations that are auto reactive to the tumor. And unfortunately, checkpoint blockade doesn't provide that, whereas we do. So I think you have to really look at the clinical program or the clinical problem we want to solve and apply the virus with the correct strategy. But we have patients -- we have groups looking at us with CDK4/6, CAR T groups, some specific form of antibodies, bidirectional antibodies as well as a lot of interest with checkpoint blockade. Andrew, are you on the line? Did you want to jump in there and provide a little more color?

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Andrew R. de Guttadauro, Oncolytics Biotech Inc. - Global Head of Business Development & President of Oncolytics Biotech (U.S.) Inc [18]

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You mean about the checkpoint blockade opportunity?

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Matthew C. Coffey, Oncolytics Biotech Inc. - President, CEO & Director [19]

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Or just what other groups are interested in looking at with this combination outside of breast cancer.

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Andrew R. de Guttadauro, Oncolytics Biotech Inc. - Global Head of Business Development & President of Oncolytics Biotech (U.S.) Inc [20]

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Yes. I mean, I think, obviously, the most obvious group, the most immediate opportunity that we've been targeting are companies with approved checkpoint PD-1, PD-L1 products just because that's the most immediate opportunity. Having said that, we do see a second ring of opportunity within the -- that's just the PD-1, PD-L1 space. I'll get to the CAR Ts, other potential I/Os in a minute. But the other major group within that, that PD-1, PD-L 1 milieu is all the companies that are in oncology, and may not care what checkpoint with -- our product is used with. They see it more as a backbone play where they say, look, dealers' choice by the prescribing oncologists, which PD-1, PD-L1 works. If the data comes in showing that we are agnostic to the checkpoint, which I think is likely, given the studies we're working on, if we're going to work with one, we're probably going to work with all in that particular tumor target. If we can show we work on a couple of tumor targets, breast obviously being the lead, but as Matt mentioned, there's others we're examining and with different checkpoints, then all of a sudden, the checkpoint backbone opportunity grows because all of a sudden, you're talking about what's now a $16 billion and growing checkpoint market. And if you can show that we can do -- improve opportunities there, be it raising PD-L1 levels so that more patients are eligible for the checkpoints or working in particular areas where the checkpoint on its own wouldn't work. HR+/HER2- is an example of that. Then, obviously, for a lot of these companies, if they see this as a high-priced specialty product that is added and -- in considerable -- even in 10% of patients within this class of drugs, it's a huge multibillion-dollar opportunity. Beyond that, as Matt already alluded to, CAR Ts are potential opportunity based on our mechanism of action. Potentially other I/Os as well, just that we haven't -- that we've looked at, CDK4/6 is probably the one; and PARP inhibitors, where we have promising preclinical data. So you can see it's really a chance to be a bit of that Swiss Army knife, if some of this data matures in the way we're hoping.

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Jonathan Matthew Aschoff, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [21]

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Two little nitpicking question was that -- how many more shares are left on the ATM?

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Kirk J. Look, Oncolytics Biotech Inc. - CFO [22]

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Our facility is -- it's a $30 million facility, and we just have over $10 million left.

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Jonathan Matthew Aschoff, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [23]

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Okay. Dollars. And I'm assuming that half of your SG&A in the fourth quarter was noncash. Is that about right?

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Kirk J. Look, Oncolytics Biotech Inc. - CFO [24]

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$12.5 million is noncash.

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Jonathan Matthew Aschoff, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [25]

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No, no, no, of the SG&A, the 4-point whatever million, half of that is noncash, correct?

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Kirk J. Look, Oncolytics Biotech Inc. - CFO [26]

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There'd be an element of -- I don't think it's that high.

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Jonathan Matthew Aschoff, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [27]

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Okay. But it's somewhere in that ballpark, right? Your SG&A is like $1.8 million, $1.8 million, $1.8 million, and then $4.133 million. So is it half about the ballpark for noncash for the fourth quarter for SG&A?

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Kirk J. Look, Oncolytics Biotech Inc. - CFO [28]

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Well, the -- no, we did see an increase in SG&A costs in the fourth quarter.

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Operator [29]

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That was our last question at this time. I will turn the call back over to the presenters.

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Matthew C. Coffey, Oncolytics Biotech Inc. - President, CEO & Director [30]

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Just a quick thank you to everyone who participated, who listened to this, and we very much appreciate your time, especially in such a tumultuous week with the markets being what they are. So again, everyone, thank you for your time. Thank you for your interest, and we look forward to updating you on our progress here in the very near future.

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Operator [31]

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Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.