Q2 2020 Targovax ASA Earnings Call
OSLO Aug 26, 2020 (Thomson StreetEvents) -- Edited Transcript of Targovax ASA earnings conference call or presentation Thursday, August 20, 2020 at 8:00:00am GMT
TEXT version of Transcript
* Erik Digman Wiklund
Targovax ASA - Chief Business Officer
* Øystein Soug
Targovax ASA - CEO
Øystein Soug, Targovax ASA - CEO 
Ladies and gentlemen, welcome to the quarterly presentation of Targovax. My name is Øystein Soug, I'm the CEO. And today, with me, I have Erik Digman Wiklund, who is the CBO or the Chief Business Officer, in charge of Business Development. Also in the room today is Torbjørn Furuseth, he's the CFO, and he will be available to answer questions about the finances after the presentation.
Today, of course, we're going through the quarter. But we will have a deep dive into the collaborations that we have signed over the last quarter, and we'll also go through the latest data that we have produced in the company. But before we do so, let me just remind you shortly about who we are and what we do in Targovax. So we are in the field of immune activation. And ONCOS-102 is a leader in this field. It's one of the most developed oncolytic viruses with more than 200 patients treated. And we have data not only in mono, but also in combination with chemotherapy and in combination with checkpoint inhibitors. In addition to that, we also have an exciting early pipeline, and Erik is going to say more about that pipeline later.
All of this is producing a strong news flow, which is going to create lots of news over the next 6 to 12 months. Good. So this is our pipeline slide. And the 3 most important programs are the ones on top here, mesothelioma, melanoma and ovarian and colorectal. Now they are most important because these are the indications where we pursue combination with checkpoint inhibitors.
In mesothelioma, we're just finishing a trial in combination with chemotherapy. And we are planning a follow-up trial in that indication, where we add on KEYTRUDA, which is Merck's PD-1 inhibitor. So we're having, also in this quarter, a collaboration with Merck signed, which we're going to talk more about later.
Checkpoint inhibitor, melanoma, also an important indication for us. We have data coming up before Christmas. Obviously, we are combining there with KEYTRUDA as well. And there's a trial, which is run by CRI and the Ludwig Cancer Research. We also combined with the checkpoint inhibitor, Imfinzi or durvalumab, which is AstraZeneca's PD-L1 inhibitor. So these are the 3 core trials that we are running or the 3 core indications that we're pursuing. In addition to that, there is a small trial with a Czech company called SOTIO, and they're doing a combination trial and we deliver the virus.
On the bottom, you will see the earlier pipeline, the ONCOS-200 Series and our mutRAS concept. As you can see, there are some new logos here, and Erik will go through those in detail later.
Now the highlights of the quarter. Clearly, the most important thing that happened was data in mesothelioma. We produced encouraging efficacy data in mesothelioma. And we produced immune activation that far exceeds anything that has been seen in -- with chemo alone. So we're very enthusiastic about the mesothelioma data, Erik will show you some of the details later.
Our principal investigator in the ovarian and colorectal trial from Sloan Kettering, he produced some very early data. It's interim Phase I data at ASCO, and we'll also present you that as we go along today. We also produced some ONCOS-102 -- ONCOS-200 Series data at AACR.
On the HR side, the shareholders elected Damian Marron as Chairman of the Board. And we hired Victor Levitsky as Chief Scientific Officer in -- both in April. And I'm quite convinced that both of these gentlemen, they will play an instrumental role in taking the company to the next level.
Now as you can see, the quarter was very active and not least on the business development side. On top here is Merck, as I already mentioned, we secured Merck as a partner for the next mesothelioma trial, not just to supply KEYTRUDA, but also to supply scientific advice and be a general collaborator on that trial, and we're very enthusiastic about that. You also see 3 collaborations further down with Leidos, Valo and Oblique. These are earlier trials or earlier collaborations. But they're still important because they represent an opening of the horizon for Targovax, creating more possibilities.
Now first of all, technologically, but down the line also, hopefully, commercially. They also reflect an increased interest in Targovax in the outside world. And that is not just a testament to the ONCOS-102 data, which has been strong. But it's also a testament to an increased interest in using the ONCOS backbone as a vector for other payloads. And we also see an increased interest in RAS generally. So over the last 12 to 18 months, there is more happening on the RAS side, which, of course, also reflects on us. It makes it possible for us to do these collaborations. But not only the last quarter was active, say, the last year to 18 months have been quite active in Targovax. As you see here on ONCOS-102, we have delivered data on the 3 most important trials, we secured Merck as collaborator for the next trial in mesothelioma.
On the next-generation ONCOS strategy, we have started to produce the first proprietary new viruses for our own portfolio, but we're also teamed up with Leidos to create further forceful oncolytic viruses. And then on the bottom, there's the box here of mutant RAS. In Targovax, we continue to strongly believe in mutant RAS as an important and relevant target. And we pursue mutant RAS in 2 ways: one is with TG vaccination. And with TG, we are seeking cost-efficient collaboration. IOVaxis is the prime example of that. They have taken a license for Greater China or they've taken an option for a license of Greater China and that option is still in force. The second avenue is to develop innovative mutant RAS constructs. And that's something that we really just started this quarter with Oblique and Valo. As I said already, Erik will tell you all about it.
There is future news flow coming out of these programs. I think most importantly to mention here and now is overall survival data mesothelioma coming up before Christmas. And also follow-up data from the melanoma trial will be released before Christmas. So that's going to be exciting.
Taking a look at the financial snapshot, you will see that we had about NOK 100 million in the bank at the end of the quarter. We had a net cash flow, approximately 1/3 of that. And we have a market cap that hovers around NOK 0.5 billion.
Share liquidity was up, not in this quarter, but in the first quarter. It is now very good, I think, 135% over the last 6 months, representing approximately NOK 6 million. I think it's pretty good for a small biotech company. Looking at the P&L, you will also see that cost control is still good. About a year ago, we trimmed the payroll. So we're now down to a lower level than we were on payroll expenses. And also other operating expenses are under control, yielding a result that we are down from a sort of a normal OpEx run rate of NOK 40 million per quarter to down to approximately NOK 30 million. So we're also very happy with that.
And with that, I'll leave the word to Erik.
Erik Digman Wiklund, Targovax ASA - Chief Business Officer 
Thank you, Øystein. So first of all, let me remind you why we are here. So in Targovax, what we're trying to achieve is immune activate patients. And this is important because immune therapy has really revolutionized cancer treatment in the last decade, driven by checkpoint inhibitors. Immune therapy has grown from essentially a 0 market to a $20 billion-plus market.
However, checkpoint inhibitors only work in a subset of patients. Depending on the tumor type, somewhere between 10% and 40% of patients have a benefit from checkpoint inhibitors. In order for more patients to benefit from checkpoint inhibitor treatment, you need to pre-activate the immune system. And that's what we're doing with our treatment modalities. With ONCOS-102, we're achieving this by first, injecting the virus, the oncolytic virus, ONCOS-102 directly into the tumor of patients. When the virus is in the tumor, it will infect cancer cells, lyse them and kill them, which releases tumor antigens and also recruits the immune system to process those antigens. Now what happens after that is that an immune response is primed against the tumor, you get T-cells formed that will recognize and destroy the cancer cells. And these T-cells will then circulate the body and can recognize and destroy tumor cells. And this is the prerequisite for a checkpoint inhibitor to work.
We formed several important partnerships in the first part of the year based around this ability to immune activate patients. First and foremost, I'd like to highlight the Merck collaboration. So we have entered into an agreement with Merck, where we're going to collaborate on a clinical trial in mesothelioma where we will test the efficacy of combining ONCOS-102 with the market-leading checkpoint inhibitor, KEYTRUDA.
Under this agreement, Merck will provide the KEYTRUDA supply free of charge to Targovax as well as collaborate on the trial and provide important clinical and scientific support. We have written the product all together, and we currently have submitted the protocol for comments by regulatory authorities. The second clinical stage collaboration we formed is with the company, if IOVaxis in China. IOVaxis is a Chinese biotech company focused on development of vaccines. And they have taken a regional license or an option to license TG01 and TG02 vaccines for Greater China and Singapore. And the idea is that they will run clinical development locally and eventually take it to the market there.
Now this option is pending an approval to start the clinical trial in China. That work is underway. Documentation is being filed with the Chinese authorities and pending an approval to go ahead. We anticipate that IOVaxis will exercise this option. Now due to the corona, COVID-19 situation, the lead times for regulatory feedback in China is and I think everywhere in the world is somewhat delayed, and that's also what's happened here, but things are progressing, and we expect a decision in the next months.
The next collaborations on this list are earlier-stage partnerships, R&D partnerships to expand on our early-stage pipeline. The first one here on the list is with Leidos, a large U.S. corporation, which have developed a novel class of peptides that act as immune checkpoint inhibitors. And what we plan to do is insert these into ONCOS and use ONCOS as a delivery tool to get these checkpoint peptides into tumors. I will get into a little bit more detail on this collaboration later.
The second collaboration here is with Valo, a company in Finland. The idea here is that we will take -- we'll merge our mutant RAS and ONCOS platforms, by coating ONCOS with mutant RAS peptides. By doing that, we will get a molecule that both access an oncolytic virus and mutant RAS vaccine, which would really take the program to a next step if it works. And we're currently performing in vivo experiments to test whether the concept functions in a mouse model.
We also entered into a collaboration with Oblique Therapeutics of Sweden. Oblique has a very interesting technology platform that enables them to develop antibodies against really hard to reach targets, such as, for instance, mutant RAS. And they have an early portfolio of mutant RAS antibodies. And what we're intending to do here is, again, use ONCOS as a delivery tool to get these antibodies into tumor cells and directly kill the mutant RAS cancer cells. And again, we believe this will be a highly innovative approach if we can prove it works. We've started on that work now.
So let me tell you a little bit more about Leidos. Leidos is a large U.S. corporation, operating in various technological fields. They're mainly a defense and government contractor in the U.S.A., operating within aviation, IT, as well as biomedical research. And we have formed our collaboration with a subdivision in Leidos called ExGloH, Explorations in Global Health. And this division is entirely dedicated to investigate how to use immunotherapy in cancer and infectious disease.
What ExGloH has achieved is through extensive analysis of the microbiome they have found a set of molecules, peptides that act as checkpoint inhibitors. And what we intend to do is take these checkpoint peptides, what they call Microtide, put them into genetic elements that we insert into ONCOS and then deliver them directly into tumors. Now the idea is that by doing this, we could turn or build the checkpoint functionality directly into the ONCOS viruses for the future. Thus, potentially omitting the need to combine with the checkpoint inhibitors during treatment. This is relatively far into the future. So just to be clear, this in no way impacts our plans to do checkpoint inhibitor combination trials with ONCOS-102, but it enables the opportunity in the future to have that functionality directly in the molecule and only then have the need for using one product.
Under the arrangement with Leidos, we are sort of a 50-50 collaboration where we share the workload, we share the cost and we share the ownership of what comes out. We are currently designing these novel viruses, and the next step will be to test them in cell experiments and in vivo models.
Now let me move on to mesothelioma, which is probably the most important event of the last quarter. We reported data from the 12-month follow-up in our mesothelioma trial, combining ONCOS-102 with the standard of care chemotherapy. Now to put this a little bit in context first, mesothelioma is a very challenging disease to treat. Due to the location of the lesions right behind the ribs and sort of a diffuse, thin form and shape of the tumor, surgery and radiotherapy is rarely effective in these patients. So you're really down to chemical treatments such as chemotherapy. And the only approved treatment regime in mesothelioma is a doublet chemotherapy of pemetrexed/cisplatin and that's what being used in the vast majority of patients.
Immunotherapy is starting to make some inroads. We're seeing some impact of checkpoint inhibitors, but it really looks like to boost the checkpoint inhibitor responses, you may need an immune activator. And therefore, we're testing ONCOS-102 in this indication. In our trial, we see very encouraging early signals of efficacy. On this plot, we've scored progression-free survival and response rates on the y-axis, and compare it to relevant control trials of chemotherapy alone. And as you can see, the dark blue dot, which is the ONCOS-102 treated patients in our arm is separating out suggesting there is a clinical benefit to these patients, and we are very encouraged by these data.
However, most importantly, and what we're most excited about is the immune activation, and this is really important because it shows that ONCOS-102 does what we wanted to do. And here on the spider plot, we're showing across various dimensions how the ONCOS-treated patients are performing compared to the other -- to the chemotherapy. We're looking at CD8+ T-cell infiltration. We're looking at activation of these T-cells. We're looking at the composition of other immune cells in the tumor. And across every parameter we look, there is a robust increase in the ONCOS-102 treated patients, far superior to what you achieve with chemotherapy alone.
This is also the reason why we have a control arm in this trial because we want to investigate the impact on immune activation of using ONCOS-102 versus the chemotherapy. And clearly, we're getting a much, much more profound and robust immune activation with the --in the ONCOS-102 treated patients. Particularly, you see in the blue line in those patients that were still alive at 12 months. Comparing those patients to the red line, which are control patients that were deceased at 12 months, you see there is a dramatic shift.
So one, this is important because it shows that ONCOS-102 does what it's supposed to do. And as far as we know, no one else has shown this with an oncolytic virus to this extent in a clinical trial before. Therefore, we think we have a very powerful data here. Moreover, this immune activation suggests that these patients may now be sensitized the treatment with a checkpoint inhibitor. And that's exactly what we now plan to. We're very glad that Merck share our enthusiasm for these data and have agreed to collaborate with us and testing the hypothesis that ONCOS-102 can boost the checkpoint response rates and we're now working on the setup of this randomized Phase-II trial, which will be a combination of ONCOS-102, KEYTRUDA and chemotherapy tested versus KEYTRUDA and chemotherapy alone. This trial is under preparation. We're expecting regulatory feedback in the next months, and we hope to start enrolling patients sometime in the first half of next year. Plan is to enroll roughly 100 patients in the one-to-one fashion.
During the quarter, we also provided an update on the ovarian and colorectal trial. So this is ovarian and colorectal cancer that has spread to the peritoneal, and we had a poster presentation at ASCO. To remind you, this trial is a collaboration between Targovax, Cancer Research Institute, Ludvig Cancer Research and AstraZeneca. And the combination we're testing here is ONCOS-102 with durvalumab, the anti PDL-1 checkpoint inhibitor of AstraZeneca.
The trial is designed in 3 phases. The first phase is a safety lead-in with the dose escalation. So we're testing a lower and medium and a higher dose of ONCOS-102 and durvalumab. And this part is completed, and this is what we reported data from at ASCO in June.
Now the second -- or the first part of the trial, the middle blue boxes you see on the slide, is currently recruiting patients. 5 sites are opened in the U.S., and this part is progressing very well. Depending on how that goes, there are predefined prerequisites or thresholds for response rate or disease control. That will decide whether or not we move into the far right part of this trial, which is an expansion phase where we enroll more patients.
So for instance, in colorectal cancer, we're looking for just 1 patient out of 13, which has a stabilized disease or a tumor response to move on, and in ovarian, we're looking for 5 responders.
The first data are, again, looking promising. On the left-hand side here, you're looking at tumor responses in the dose escalation part for colorectal cancer. And in the -- on the right-hand side, ovarian cancer. The grey bars are the low dose, the blue or the light blue are the medium dose, and the dark blue is the high dose cohort. And as you can see in the colorectal cancer, the high dose cohort, the high dose patients, those 3 you're seeing inside the box seem to have stabilizing or some responses in the tumor, which is very, very encouraging because this patient population in colorectal cancer is extremely difficult to treat and really have no treatment options available.
So we're quite encouraged by particularly here the colorectal part. Also in ovarian, we're seeing encouraging responses in several patients in the dose escalation cohort, having stabilizing or responding lesions. And also worth noting is that this is more pronounced in the high dose cohort, suggesting that the treatment is meaningful. And the more drug you give, the better the effect. So we're eagerly anticipating the data from Part 1 of this trial and look forward to see those as they mature.
So with that, I conclude the presentation of the quarterly results and BD update. And I think we open up for questions.
Øystein Soug, Targovax ASA - CEO 
Yes. So we'll give the audience 30 seconds to come up with questions. So far there are none. So it seems like we have answered all the questions already. So that concludes our presentation. Thank you very much.