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Edited Transcript of VBLT earnings conference call or presentation 20-Nov-18 1:30pm GMT

Q3 2018 Vascular Biogenics Ltd Earnings Call

OR YEHUDA Nov 21, 2018 (Thomson StreetEvents) -- Edited Transcript of Vascular Biogenics Ltd earnings conference call or presentation Tuesday, November 20, 2018 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Michael Wood

LifeSci Advisor - Managing Director

* Dror Harats

Vascular Biogenics Ltd. Therapeutics - CEO

* Amos Ron

Vascular Biogenics Ltd. Therapeutics - CFO

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Conference Call Participants

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* Swayampakula Ramakanth

H.C. Wainwright & Co. LLC - Analyst

* Sam Slutsky

LifeSci Capital - Analyst

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Presentation

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Operator [1]

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Good day and welcome to the VBL Therapeutics Third Quarter 2018 Earnings Call. Today's conference is being recorded. (Operator Instructions)

Now, at this time, I would like to turn the conference over to Michael Wood. Please go ahead, sir.

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Michael Wood, LifeSci Advisor - Managing Director [2]

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Thank you, operator. Good morning and thank you all for participating in today's third quarter 2018 results and corporate update call.

Leading the call today will be Dror Harats, CEO of VBL Therapeutics; and Amos Ron, the company's CFO. A press release with the company's financial results became available earlier this morning and can be found on the Investor's page of the company's website 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 the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

VBL cautions that this forward-looking statements are subject to risks and uncertainties and that could cause actual results to differ materially from those indicated. Any forward-looking statements made on this call speak only as of today's date, Tuesday, November 20, 2018 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, the call is being recorded and will be available for audio replay on VBL's website.

As the operator mentioned, all participants are currently in a listen-only mode and there will be a Q&A session following management's prepared remarks.

With that, I like to turn the call over to Professor Dror Harats, CEO of VBL. Dror, please go ahead.

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Dror Harats, Vascular Biogenics Ltd. Therapeutics - CEO [3]

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Thank you, Michael, and good morning to everyone joining us on our call. VBL has pioneered and is actively developing three novel platform technologies. The most advanced one is our anti-cancer gene therapy program in which VB-111 is a lead candidate. VB-111 is currently in a pivotal Phase 3 trial in ovarian cancer and we are considering to develop it for additional oncology indications.

In addition, we have two innovative drug development programs that are based on our novel biological findings related to an exciting new highly specific protein called MOSPD2. Our findings [unraveled] the role of MOSPD2 in controlling directed cell movements of immune and tumor cells. We are developing proprietary monoclonal antibodies targeting MOSPD2 for immune inflammatory diseases with proof of concept data in multiple sclerosis and preliminary data in other indications.

In a second program, we are developing bispecific antibodies that bring together tumor cells via MOSPD2 and T cells via CD3 and thus recruit the immune system to fight tumor cells.

Now, I would like to give you an update on our progress in these drug development programs starting with VB-111. Our most advanced clinical program is a Phase 3 pivotal double-blind placebo control OVAL trial, which is investigating VB-111 in patient with platinum-resistant ovarian cancer.

OVAL is designed to enroll up to 400 adult patients at approximately 70 clinical sites in the United States and Israel. Their primary endpoints are overall survival or progression-free survival. OVAL is evaluating the same regimen that was used in the successful Phase 2 in ovarian cancer. That is VB-111 plus paclitaxel, which is a chemotherapy compared with paclitaxel alone.

Recall that in prior trial, VB-111 achieved high rate durable CA-125 responses along with RECIST-based objective responses and significant increase in overall survival compared to low-dosed VB-111.

The OVAL design now to incorporate an efficacy interim analysis in order to mitigate risk. This will provide us with an early efficacy readout to confirm if a performance of patients on VB-111 is in line with the data generated in the prior Phase 2 study. We expect this readout to occur in the fourth quarter of 2019.

We also have interesting human biopsy data on the immune mechanism of VB-111 in platinum-resistant ovarian cancer, which will be presented in March 2019 at the 50th Annual Meeting of the Society of Gynecology Oncology of the SGO in Hawaii.

We have strong belief in the therapeutic potential of VB-111. We are encouraged by the positive overall survival results from our four Phase 1 and 2 studies of VB-111 treating overall more than 100 patients in multiple tumor types as well as by the objective independent analysis of MRI data from the VB-111 trial in recurrent GBM, which demonstrated clear responses to VB-111 in substantial percentages as was shown just few days ago at the Society for Neuro-Oncology or the SNO Conference by Dr. Tim Cloughesy, Professor of Neurology at the David Geffen School of Medicine and Director of the Neuro-Oncology Program at UCLA and the PI of the GLOBE study.

The lack of VB-111 potency in the GLOBE trial was most probably unrelated to the efficacy of VB-111 itself, but to the study regimen in which Avastin blocked the angiogenic target cells of VB-111. Therefore in addition to the ongoing OVAL trial, we are exploring opportunities for investigator-initiated trial of VB-111 in GBM and other oncology indications. We will elaborate on that in due time.

Turning up -- turning now to our MOSPD2 development programs. We are conducting two parallel drug development programs that are exploring the potential of MOSPD2, a protein which we identified as a key regulator of cell motility as a therapeutic target for inflammatory diseases and cancer.

At the recent ECTRIMS meeting, which took place in Berlin in October, we presented the critical role of MOSPD2 in the development of multiple sclerosis and its potential as a novel target for treatment of inflammation in the central nervous system and other organs.

One of the key cell type that cause inflammation in multiple sclerosis is a monocyte. In multiple sclerosis, monocytes that circulate in the peripheral blood infiltrate into the central nervous system into the brain and play a key role in the inflammatory processes particularly through damaging the myelin-coated -- coating, which protects the nerve fibers, therefore, leading to acute neurological symptoms.

Our data show that MOSPD2, which is predominantly expressed on the surface of human monocyte is essential for their migration into the brain. By inhibiting this protein, we seek to block this migration of monocytes to sites of inflammation and accordingly to reduce inflammation and tissue damage.

Using MOSPD2 knockout mice, our data show that MOSPD2 was critically for the development of the disease in experimental autoimmune encephalomyelitis or EAE model for multiple sclerosis as knockout mice essentially do not develop the disease.

Furthermore, we developed proprietary monoclonal antibodies against MOSPD2 that successfully prevented development of EAE and were also effective in treatment of the animals after the neurological symptoms had already appeared. These data suggest that MOSPD2 is a critical path in multiple sclerosis and potentially in other immune inflammatory diseases.

More than 2.3 million people are affected by multiple sclerosis worldwide. In the current therapeutic landscape of multiple sclerosis, which focus on targeting of T and B cells, there is still huge unmet need especially for progressive disease. We believe the targeting of monocytes, macrophages, which are the key immune cells that affect the demyelinization process can provide a novel complementary approach for treatment of this debilitating disease.

In our MOSPD2 Oncology Program, we are developing bispecific antibodies aimed to kill tumor cells based on our MOSPD2 as a target whose expression is induced in multiple tumors.

In July, we published a paper in the International Journal of Cancer demonstrating for the first time that MOSPD2 can play a major role in breast cancer, cell migration and metastases. Histological analysis of human specimen show that MOSPD2 level were correlate with the stage of tumor invasiveness and were profoundly elevated in invasive and metastatic breast cancer. Based on these findings, our approach is to utilize MOSPD2 as a target for attacking the tumor cells in the treatment of late stage breast cancer and other tumor type.

Switching now from the drug development of the company front, we were very pleased to announce the appointment of Dr. Shmuel Ben Zvi to VBL's Board of Directors. Dr. Ben Zvi is very well known in the pharmaceutical industry in Israel. He worked at Teva Pharmaceuticals for 10 years where he held various managerial positions including Vice President of Finance and Vice President of Strategy. We believe he will provide VBL with valuable guidance and we look forward to his contributions.

Finally, I want to mention our balance sheet. VBL is well capitalized with cash, cash equivalent and short-term bank deposits totaling $53.7 million at September 30, 2018. We estimate that based on our current projections, this should be sufficient to fund (technical difficulty) expenses and capital expenditures requirements for more than three years. This includes supporting the Phase 3 OVAL trial for VB-111 for ovarian cancer as well as advancing our pipeline including the VB-600 platform targeting MOSPD2.

I will now turn the call over to Amos Ron, our CFO to review the financial results for the quarter. Amos, please.

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Amos Ron, Vascular Biogenics Ltd. Therapeutics - CFO [4]

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Thank you, Dror. Earlier this morning, we issued the press release detailing our financial results for the third quarter 2018. I'll briefly highlight our financial results for the quarter.

In the third quarter, we recognized $0.1 million in revenue in connection with the existing commercialization agreement.

Research and development expenses for the third quarter were approximately $4.1 million compared to approximately $4.8 million in the comparable period in 2017.

General and administrative expenses in the third quarter ended September 30, 2018 were $1.4 million compared to $1.7 million for the comparable period in 2017.

The company reported comprehensive loss for the third quarter ended September 30, 2018 of $5.4 million or $0.15 per share compared to a net loss of $6.5 million or $0.20 per share in third quarter ended September 30, 2017.

As Dror mentioned at September 30, 2018, we have cash and cash equivalents and short-term bank deposits totaling $53.7 million and working capital of $50.1 million.

Now, I would like to return the microphone to the operator to open the call for questions. Operator?

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Questions and Answers

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Operator [1]

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Thank you, sir. (Operator Instructions) We shall take our first question from Swayampakula Ramakanth from H.C. Wainwright. Please go ahead. Your line is open.

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Swayampakula Ramakanth, H.C. Wainwright & Co. LLC - Analyst [2]

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Good afternoon, Dror and team. Thanks for taking my questions. Let's start with MOSPD2 Program. So you probably commented on this and maybe I got distracted in your initial commentary. Where are you in terms of getting these programs into the clinic? How much work needs to be done? I would think you're more focused on the -- on the oncology indication of MOSPD2 Program, so what is -- is the strategy [itself] to think about collaborating with outside parties for the inflammatory program. Sorry, too many questions on this.

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Dror Harats, Vascular Biogenics Ltd. Therapeutics - CEO [3]

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Okay. Thank you, RK, and I'll try to answer all your questions regarding the MOSPD2.

So we are in the inflammation platform technology. We already have the lead candidate antibody. We were fine-tuning it and I believe that in the next few months or so, we will be ready to go to production and toxicology and of course that will follow an IND and then we will be able to go to the clinic.

I can say that because it's a very unique and interesting mechanism of action where for a long period of time people were trying to work on monocyte migration and trying to use this type of cells actually to treat different inflammatory diseases, but unfortunately there is a major redundancy when someone is working only on one chemoattractant and one -- or one chemoattractant receptor.

The very nice thing about MOSPD2 is actually that this is a protein that actually control the movement of monocyte into the inflammatory tissue no matter which chemoattractant or chemoattractant receptor we used, so all the redundancy I talked about before is actually gone and therefore we get this extremely positive and exciting results in animal model of inflammatory disease.

Because it's such a unique mechanism and because it's very clear that these cells are critical in inflammatory diseases, there is some interest from different strategic partner, but it's too early to talk about it on this call.

Regarding the oncology platform, which is completely different program because there we are using a completely different type of antibodies, the bispecific antibodies as I was saying. There we are going to get a series of potentially lead antibodies again in about two to three months from now. We already had one antibody that we tested, which is quite good, but I prefer or we prefer in the company to actually get a series of antibodies and then pick the best one to go for toxicology or in the clinic.

So we are expecting an IND some time in 2020 for a [post] -- a program. Maybe the inflammatory will be a little bit ahead of the oncology just because it's a more simple type of antibody, but it doesn't mean that we put more emphasis on the inflammatory or the other program.

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Swayampakula Ramakanth, H.C. Wainwright & Co. LLC - Analyst [4]

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Thank you for that. We just came off from the Neuro-Oncology Conference and we learned quite a bit on the VB-111 in GBM. So now based on that lessons which we learned, is there anything that you need to do for the ovarian program at all or you're comfortable with the protocol and with other things that that sort of we make sure we get this program to a place of success?

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Dror Harats, Vascular Biogenics Ltd. Therapeutics - CEO [5]

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So as you all know after getting the results of say VB-111 in the GLOBE trial, we posed by our choice the recruitment for the ovarian trial and we actually modified the protocol in a way that we actually implemented what we learned from the -- a GLOBE trial. So we changed it from an open trial to a double-blind placebo-controlled trial so this way a patient are not leaving the trial early just because they were recruited to the control arm. We also modified the endpoint to be both progression-free survival and overall survival and we power to [trial] for that and we did some other changes.

The most important thing is that we are repeating exactly what we did in the Phase 2 in terms of the protocol, which is very important and that wasn't the case unfortunately in the GLOBE trial, which was basically a decision that wasn't completely in our hand. But right now, we are repeating it exactly and more than these as I was saying before, we are actually looking at the relatively early time in the trial to see if the responses that we get with the biomarker, which is an important biomarker in ovarian cancer, C-125, is actually in the same level that we got it in the Phase 2. This will enable us to know that we should expect the efficacy that we were getting before.

Another very important thing that we are implemented in this trial is that biopsies are mandatory whenever we can take biopsies, which mean that in many patients, we will have a biopsy of the tissue before treating with VB-111 and then one month after the first dose and then one month after the third dose. This is critical because then we can learn about the level of expression of the drug and we can learn a lot about how the immune system is actually working when patients are treated with VB-111.

We presented some preliminary results on biopsies of our Phase 2 before in ovarian, but as I was saying we are expecting to show a much more important data both from the Phase 2 and some patients in the Phase 3 in March next year in a conference. So I think that that's looking at this way, we are actually implementing what we learn.

I think that what we learned at the SNO Conference was two very important things. First is that researcher that were involved in the Phase 2 and the Phase 3 took the data back to themselves including all the MRIs and data analysis and again came with a very clear understanding that VB-111 in the Phase 2 was working actually quite well and that's an objective responses in the MRI, so there is no way that you can influence it and that's why they were actually it the way that they did.

And the second thing is that it's very important to actually get tissues when you treat with novel drugs that work on the immune system and I think that we are already implementing it in ovarian and in other indication we plan to implement it and maybe we'll do the same thing in GBM.

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Swayampakula Ramakanth, H.C. Wainwright & Co. LLC - Analyst [6]

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One last question from me. Sitting in the audience, it was -- it was really nice to see the excitement and enthusiasm for VB-111 from Dr. Tim Cloughesy who ran the trial, who was a PI on this trial. So is there possibility for you to collaborate either with Tim directly or would you be willing or would you be -- would the management and the Board be willing to take another look at this indication if things warrant that to be done?

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Dror Harats, Vascular Biogenics Ltd. Therapeutics - CEO [7]

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I think that you are right about your impression for what Tim was saying and what's the discussion afterwards was about the unfortunate point that Avastin actually blocked the target for this indication or for VB-111 and therefore it's very difficult to say anything about the Phase 3. And because there is no much opportunities or options to treat patient with GBM, it's of course obvious that it is critical that when you have a major signal of a drug in a GBM or a good signal of a drug in GBM, you shouldn't leave it alone.

Having saying that, I think that it's too early to say, but there are a discussion not just between Dr. Cloughesy and us, but also between the whole team of the [IV Consortium] that's running investigator-initiated trials in GBM and they are actually saying it's quite clear that they would like to have a trial that will be looking at VB-111 in GBM as an investigator-initiated trial.

Of course, a trial like this will actually -- we will have or we will be willing to supply the drug and give a grant to help them to do this, but we are not going to finance this trial. And I think it's actually very interesting that they are the one that's actually pushing now to do this trial in recurrent GBM as an investigator-initiated trials, trial in the major centers in United States.

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Operator [8]

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(Operator Instructions) We shall now take our next question from Sam Slutsky of LifeSci Capital. Please go ahead.

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Sam Slutsky, LifeSci Capital - Analyst [9]

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Thanks for taking the questions. A couple for you. I guess firstly in terms of the recent data showing that Avastin blocks the activity of VB-111, could you just describe mechanistically why this occurs?

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Dror Harats, Vascular Biogenics Ltd. Therapeutics - CEO [10]

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Yes. So there are two things. First, it's quite known that what Avastin do is actually thinning the abnormal blood vessels in tumors and actually make them much more normal and as you all know, VB-111 is targeting only the angiogenic endothelial cells. So if Avastin before VB-111 have a chance to actually express itself on these angiogenic endothelial cells, they're already becoming like normal endothelial cells. It won't be expressed there.

And the other very important thing is one of the inducer of VB-111 expression is actually VEGF and if you block VEGF then eventually that should be an issue.

We discussed this with the agency when we discussed the protocol for the GLOBE trial and unfortunately of course now it's in a retrospective, we all understand that this wasn't just a little effect, but it was a major effect.

To further test it, we're doing two things. First, what we did, we did an animal where we were looking at a tumor-bearing mice and we could see that when we treated them with a VB-111, we got a very nice dose response in reducing the tumor burden and that was in a Lewis lung carcinoma model. But when we gave it together with Avastin basically, we couldn't see any effect of VB-111. So from a point of almost debulking completely the tumor in the lung, we got no results, just a small effect that you do see with Avastin in this model.

So we are exploring more of it in preclinical data, but it is a -- quite clear that there is an issue with Avastin and VB-111. I think that it's not just in GBM, it's actually I wouldn't add Avastin to any regimen right now with VB-111.

A patient can be on Avastin before they go on our drug because if they progress after Avastin now, there is angiogenesis or get Avastin after stopping our drug, if the patient progress. But I wouldn't combine it together and I can tell you that in any investigator-initiated trial, the feeling is that we shouldn't combine the two together unless we are using Avastin just to be like a super steroid in some cases.

By the way, half of the patient in the Phase 2 ovarian trial were already failure of Avastin or other anti-angiogenic drugs, but then as I say the target is coming again.

Another way that we are looking at it to be sure that that's what's happening is it's a very known thing that anti-angiogenic drugs or anti-inflammatory drugs have a unique pattern in the MRI in the brain when you treat patient with a GBM. And Avastin has a very unique pattern where all the flare is disappearing and the edema is disappearing because as I said before, Avastin is actually normalized or thinning the blood vessels.

VB-111 work in the opposite direction. We are breaking the blood vessels and creating more edema. So when the group at UCLA, which got all our MRIs from Phase 1, 2, and 3 looked at the Phase 2 data, beside of seeing the objective responses, which I talked about before, they noticed that there is a very unique pattern for the VB-111. And of course what they are doing right now, which we don't have the results yet is they are looking at the Phase 3 data when we gave VB-111 together with Avastin and we didn't see an effect to see if this MRI signature basically didn't happen because VB-111 didn't have the target cells to work on.

So I think all of this together is what brought the PI in these trials and there and other KOLs in the field of GBM to think that what happened in a Phase 3 is unfortunate, but it might not be related to VB-111 itself and that's exploring this drug in GBM is an important thing for the patients.

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Sam Slutsky, LifeSci Capital - Analyst [11]

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Got it. That's helpful. Thanks. And in terms of the investigator-sponsored study with VB-111, would that be a randomized study or is that still being planned in terms of design?

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Dror Harats, Vascular Biogenics Ltd. Therapeutics - CEO [12]

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It will be a randomized study and by the way, a lot of the discussion at the SNO Conference was that even in small studies, even in early studies, nobody can really relate very well on historical control because there are such a difference between different patients in GBM. So it's still preliminary, but the plan is to do a randomized controlled trial.

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Sam Slutsky, LifeSci Capital - Analyst [13]

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Got it. And then lastly, as you mentioned MOSPD2 has a potential role in breast cancer metastasis, so curious overall what the effect was when you studied the target in other [cancers].

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Dror Harats, Vascular Biogenics Ltd. Therapeutics - CEO [14]

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So if I did understand what you are asking me is basically when you look at a normal tissue, the only place you can find MOSPD2 is on monocytes. You don't find it in normal tissues. And you don't find it in normal breast. You don't find it in -- even in in situ tumor, but the moment that the cells need to move, they need MOSPD2. So we do find it whenever the tumor becoming invasive or whenever the tumor is creating metastatic lesion. So this is an excellent target for a late stage disease both in breast and in other indication.

So although mechanistically we could use it to prevent invasiveness and to prevent metastatic lesion, you know that this type of trial to show that you reduced the metastatic burden is very long studies and I think that the way we should develop it is actually to kill tumor cells or to bring the immune system to recognize tumor cells.

One of the major things right now is that a lot of tumors or solid tumors are actually quite cold tumors and they don't have a lot of inflammatory cells in them and therefore, the immune system cannot really work well there even if you come with the checkpoint inhibitors. And if you can actually bring the immune cells by using MOSPD2, that can be a great thing and because it's expressed so abundantly almost in every cell at this stage, then if you bind the cells to T cells basically you get a major debulking of cells or tumor cells with this technology and I believe that it actually will educate the immune system to fight the tumor.

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Sam Slutsky, LifeSci Capital - Analyst [15]

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Got it. That's helpful.

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Dror Harats, Vascular Biogenics Ltd. Therapeutics - CEO [16]

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And by the way in animal models, when we took a triple negative breast cancers and you inject it either systemically or you inject it to the breast, if you inject it to the breast, you get metastatic lesion in the lymph glands. If you inject it systemically, you get spread in the lung. And when we just killed MOSPD2 by using a CRISPR technology, which means that the cells were exactly the same cells except they didn't have MOSPD2, we had a reduction of more than 95% of the tumor that developed both in the lung and in the lymph gland, so this has a great potential here.

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Operator [17]

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It appears there are no further questions at this time. Therefore, I would like to hand the conference back to the management team for any additional or closing remarks.

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Dror Harats, Vascular Biogenics Ltd. Therapeutics - CEO [18]

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So thank you all for attending our meeting this morning and have a wonderful day. Thank you very much.

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Operator [19]

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