Nykode Therapeutics ASA

OSE:NYKD

Earnings Call Transcript 2023-Q1

[Operator]

Hello, and welcome to the Nykode Therapeutics First Quarter 2023 Earnings Conference Call and webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to your host, CEO, Michael Engsig. Michael, please go ahead.

[Michael Engsig, executive]

Thank you very much, Kevin. And a very warm welcome to everybody on the call this morning in Norway and Scandinavia. We gonna run this one here for our entire audience, including also in international. So we're going to run it in English this morning here.

So just a quick look at our forward-looking statements. And as usual, we assume that you are familiar with these statements, so we'll quickly move on.

Again, as usual, I'm -- for me, I'm joined here today with by Agnete Fredriksen, our Chief Business Officer and Co-Founder; as well as Harald Gurvin, our Chief Financial Officer. I will take you through both a highlighted level of the data that we presented in this quarter here as well as, of course, a deep dive into financial reports that we announced this morning.

For those that are new to Nykode, a quick at a glance introduction. So Nykode Therapeutics is a clinical-stage immunotherapy company entirely focused on exploring our unique proprietary immunotherapy platform, which uniquely targets the antigens to antigen-presenting cells, which in turn generates a strong and broad CD8 killer T cell response, which we have shown to be correlated with clinical responses in solid tumors.

Our technology is modular in its construction, which gives us a high degree of versatility and the ability to easily incorporate new antigens and adapt the molecules to new disease areas. So we have expanded our focus from oncology over in fixed diseases and are taking the first steps into autoimmunity.

We are indicated to invest and rapidly advance our wholly owned lead asset VB10.16, which is an immunotherapy for HPV16 driven cancers. And we reported the final positive data from the VB10.16-C-02- in the past quarter, which again showed unprecedented and long-lasting survival benefit in advanced cervical cancer. In addition, we have announced that we'll be starting off a potential registrational trial in advanced cervical cancer, we'll tell you more about that in a couple of slides. We'll plan to initiate this trial in 2023 in the fourth quarter. And we have announced that we are expanding this program into head and neck and other candid type that are driven by HPV16 virus.

And we'll be doing that in VB-C-03 trial, which is a dose escalation study where we are collaborating with MSD will be supplying KEYTRUDA. Nykode believes in partnerships. We have a number of partnerships, including 2 transformational out-licensing partnerships with Genentech and Regeneron. We are well capitalized, and this morning reported a cash position of USD 186 million at the end of first quarter.

So this quarter, including the data we announced after the end of the quarter has, in essence, been very transformational for.

[Operator]

Please stand by. We're experiencing technical difficulties, please standby while Michael reconnects. Ladies and gentlemen, please do not disconnect. Please standby. We're just waiting for Michael to reconnect. And let me, I'll turn the floor over to Agnete.

[Agnete Fredriksen, executive]

Yes. Since Michael of connection, I can continue from here. So for the highlights of this first quarter, including the subsequent important events. We do have the very important planning of the C-04 trial, which includes a tight collaboration with the gynecologic study group GOG foundation, as we've said before, it's very important for them -- for us to have them on board on this trial, and it's also important for the opportunity of this trial reading out and being performed in the optimal manner.

So we're very, very encouraged by having GOG on board.

We also presented additional immunogenicity data from our fully personalized cancer vaccine program that we can go into in more detail today. These are presented at the AACR earlier this month or last month. And then as Michael mentioned, the extremely important data that we have from the final analysis, then now of VB-C-02 trial, which is a Phase II trial where we tested VB10.16, in combination with PD-L1 inhibitor atezolizumab in advanced cervical cancer. We'll briefly review these important data with you today.

Yes, so I can move on with the new antigen data. So just as background information, just to remind you, that Michael is operating in this space of fully personalized or truly individualized cancer vaccines. And so this is really the program where we are custom designing and manufacturing 1 vaccine per patient based on each patient's cancer specific mutations. In this field, there has been recent positive data by the Moderna/Merck and also recently by BioNTech actually had a paper published yesterday from -- and both of these studies are then in early-stage adjuvant setting, which means when patients have undergone surgery, and then they are treated in order to prolong or prevent recurrence of the disease.

Nykode is importantly 1 of the first companies that entered the clinic with an individualized cancer vaccine. We did that with the trial that we call the VB N-01 trial, where we dosed the first patient in 2018. And we have presented previously positive data from this trial and is running in multiple indications. Importantly, different than what we see with the recent Moderna/Merck and BioNTech data is that this study is in CPI-experienced an advanced metastatic setting.

So also looking a bit on the technology for VB10.NEO before we move into the data. VB10.NEO is a trial that requires also bioinformatic competencies because this is a trial where we take a biopsy sample and then sequence the biopsy from the tumor and compare that with healthy cells from the same patient other link to that particular patient's HLA molecules, which are important molecules that present these mutations that are tumor specific to the immune system.

In order to succeed in this field, you need to have strong in-house bioinformatic competencies that can select the optimal neoantigens that could induce an immune response in each patient. And Nykode has used quite a lot of resources in order to enhance our bioinformatic competencies from before we started this trial, and we have trained our bioinformatic pipeline on our own data and also linked to our proprietary vaccine technology platform that induces a uniquely broad and CD8 dominated immune response that you heard before.

And we train our algorithm in order to make sure that we capture these particular neoepitopes that gives us the particular and interesting immune response profile. But importantly, we are also focused on not just selecting the most immunogenic neoepitopes in the patient, but it's very important for us that these are clonal and clinically relevant, meaning that we try to select neoepitopes that are relevant for the patients.

So if we are able to induce an immune response to this that they will actually be able to translate into clinical responses. We have presented before that we have a very nice correlation between what we call high-quality immunogenic neoepitopes that really take this factors into account, and I correlate with clinical responses. We had the data that we have, and importantly, for the immunogenicity, but also early -- earlier clinical efficacy in the first patients, they are importantly in patients with 1 to 4 prior lines of systemic treatment.

So this is a different patient population than the adjuvant setting. So these patients have then normally failed surgery, they have then recurred from that first treatment and undergone then at least 1 line of systemic treatment before entering the trial, and they were all experienced some checkpoint inhibitor experience when entering into the trial.

I think it's important these days also for making manufacturing 1 vaccine for patient that Nykode do have the IP for making vaccines in different formats and formulations. We have so far focused on the DNA plasmid format, and that is a very generalized manufacturing process which is an intermediate in the mRNA and the viral vector production, and just by knowing that fact, it should be more rapid, cost effective and robust, which is important when you want to manufacture 1 vaccine for patients.

And so far, that's also led to 100% manufacturing success rate to date. When we have identified sufficient number of neoepitopes. Also with the DNA platform across all trials, we see that it's safe and well tolerated. So for our program, we have 2 studies for the neoantigen vaccine, that we call VB10.NEO.

N-01 is the trial that we initiated before entering [indiscernible] Roche Genentech in 2020. So this is where we dosed the first patient in 2018 and is in combination with different sets of checkpoint inhibitors. 5 different indications, recruitment is finalized and we have announced positive interim data at different time points. We can go through the data a bit more in detail.

N-02 is the trial that we initiated after signing the deal with Roche Genentech. This is where we do dose escalation, also based on the safety profile that we've seen with the treatment here. Those we are increasing the dose up to 9mg in the study and then it's a controlled combination with atezolizumab and this is then in more than 10 indications and this study is ongoing.

Just a brief recap on the data that we have released earlier from this trial. I think it's important also in light of the recent data from other players in the field. We actually do see a response in all patients, 100% of patients across all 5 different indications did show a response to at least 3 of the neoepitopes on average, 53% of neoepitopes or immunogenic and that range from 3 and all up to 20 neoepitopes in some patients.

So we feel that this really supports the broad immune responses that we also see when we compare preclinical trials. We've also shown this before. We see that there are multiple vaccinations over time, we can just continue to increase the breadth and also the magnitude of the response is also important that when we can continue to dose the patients over time, we don't see that, that is a detrimental effect on immune responses, rather the opposite which is important for us when we move into the future, I think is also relevant when you're looking to the C-O2 trial data has seen that Michael will go through.

This data that you see here with the tumor mutational burden, that's new data that were presented at AACR, and we believe these are important not just for this trial, but looking into patients as to the number of mutations that you find present in their cancer cells, which reads into this tumor mutational burden parameter is important because we know that checkpoint inhibitors by themselves do have a higher likelihood of providing clinical benefit in patients with high tumor mutational burden.

But in -- when we use a vaccine, we identify then up to 20 neoepitopes in these patients and select this. And these data indicate that we see very strong immune responses also in patients that have very low tumor mutational burden, meaning that we are able to select neoepitopes or immunogenic also in these patients and make sure that we can increase that immune responses to these fewer number of neoepitopes. And that is important in order to evaluate the likelihood of VB10.NEO being applicable in patients across the entire range of tumor mutational burner, maybe think that this data supports that VB10.NEO can have applicability in different cancer types.

In this slide, we also present some new data as of so far, the immune response that you've seen for VB10.NEO has been focused on the immune responses observed in the blood of the patients. We have now also been able to evaluate the T cell responses in the tumor of some of these patients in detail. And we are very happy to see that these T cell clones that are expanded in the tumor. We can also find them in the blood and the T cell clones found in the tumor has also expanded in the blood. So it really indicates that these vaccine-induced neoantigen-specific T cells that we trigger in the periphery or in the blood is also able to infiltrate the tumors, which is likely when we see this nice link between immune responses 10.

What we all see is important order for this to translate into clinical efficacy. And then this last one, I just want to repeat because this is important for our vaccine platform and the differentiating factor of our vaccine platform to what we've seen with other vaccine platforms that also in the clinic, we did in this study. We have the ability to evaluate in detail whether the immune responses to each neoepitopes in some of these patients were CD4 or CD8 T cells, and then in the majority of these patients, we see is really a strong and dominating CD8 T cell response received CD8 T cell responses to neoepitopes in anything between 53% and 100% of the neoepitopes actually being able to use the CD8 T cell response, which we believe is very important in order to provide clinical efficacy.

So in summary, for VB10.NEO. We've seen across all the patients that is generally safe and well tolerated. And this is in patients with advanced cancer and multiple different indications and late stage. So there are like 1 to 4 prior lines of systemic treatment. The vaccine and T cell responses are broad and also importantly, long-lasting that we believe is important for these long durable efficacy that we also can see and observe in the C-O2 trial. The majority of neoepitopes that we see in these polyfunctional CD8 T cells, and it's really the type of immune response that we believe is most important for providing clinical efficacy.

Now we also added that these T cell responses are listed both in TMB high and low patients, which is important potential in the broad ranging of cancer indications. And then as we hope and expect, but important also to be able to show that the T cell clone analysis in tumor and blood indicate that the vaccine-induced specific T cell responses that we have observed in the blood are actually able to infiltrate the tumors, which is where they are important in order to provide clinical efficacy.

So then I think I'll hand over back to Michael if you're back.

[Michael Engsig, executive]

I'm back. I hope -- thanks a lot. And I apologize for that interruption. I'm afraid I managed to kick myself out of the call. Please for taking over when you move on to quick run through of the data we announced VB10.16 for our C-02 trial. And let me again just emphasize that we feel these data were in indeed, transformative for Nykode, not only for the VB10.16 program, but for the technology platform as such in terms of the validation it gives to our vaccine body construct and the approach of targeting the antigens to the antigen presences.

So VB10.16 is our therapeutic cancer vaccine against HPV16-driven cancer types, it's basically built, like you know, the vaccine body with the targeting unit, a dimerization unit. And then we have incorporated the E6 and E7 antigens into the antigen unit. Again, also important to emphasize the program is wholly owned by Nykode. So we have entered collaborations with partners, but we have not given away any commercial rights to this program.

A quick look at the patient population. So HPV16-driven cancer types does represent a significant unmet medical need. And the prognosis for -- in particular, the recurrent and metastatic cervical cancer patients is very poor with a 5-year survival rate of less than 5%. Cervical cancer is a larger part of this, but it's not the largest or the only. So in addition to cervical cancer, we also see a large group of head and neck patients. being driven by HPV16 and fiction in addition to a group of slightly smaller but combined, still sizable type off of cancer types, Anal, Vulvar, Vaginal and Penile. So in total, we are looking at approximately 130,000 new HPV16 driven cancer types alone in the U.S. and Europe per year.

When we look at the outlook for these cancer types, we -- and you might here say, unfortunately, are looking at increasing number of incidents despite the availability of prophylactic vaccines. And that's in part due to not 100% efficacy of these vaccines and probably even more because of a low uptake of this vaccine in certain parts of our world.

So on a 10-year horizon here, we are looking at forecast that shows a significant increase in the incidence and we probably will continue to see an unmet medical need for decades into the future.

A quick look at the trial design. So C-02 was enrolling up to 52 patients. It was run across 6 different countries, in Europe and enrolled patients with advanced cervical cancer. The patients were put on a combination of VB10.16 and atezolizumab for 12 months. After which the treatment was stopped and the patients were followed for additional 12 months.

This slide here gives you a perspective on what we think good would look like before we show you the results. And it's always an interesting challenge to try to figure out what we should compare with when we try to judge whether these data were good. In this slide here, we show you the main parameters in median and overall survival and median progression-free survival for chemotherapy, which is historically the first-line treatment then we show it for the 2 checkpoint inhibitors that have published the results in the PD-L1 positive subpopulation.

The reason why we focus on this subpopulation is because that subpopulation that we will be focusing our development program on in the future. And for KEYTRUDA and Libtayo, you see median overall survival ranging from 11 months to 13.9 months and median progression-free survival from 2.1 months to 3.0 months. So very much in the same ballpark. And this is where we feel checkpoint inhibitors would end up in a more therapy in a PD-L1 positive population of -- with patients with advanced cervical cancer.

Then we also show the published results for TIVDAK, they've reported median overall survival of 12.1 month and median progression free survival of 4.2 months. The reason why we show TIVDAK here is because that is the product VB10.16 would likely go into a competition with a new patient population that we are targeting.

So the conclusion is before we look at the results that anything in terms of median progression-free survival over 4 months. And in terms of median overall survival of more than 14 months would constitute a very good result.

Quick look at the patient disposition. And this disposition looks very much like you would expect from a trial enrolling patients with advanced cervical cancer. There are 2 things that I'd like to draw you and thank you to here One is the PD-L1 positive distribution here, you see slightly less than half of the patients were PD-L1 positive. If you were to go out and do a ramp sampling of the population, you likely would see a larger proportion of patients being PD-L1 positive.

We tend to see the historical data somewhere in between 70% to 80% to 90% of the patient population. Another data point here is the median age 47.5. So importantly, this is not a group of very elderly patients. This is, unfortunately, women who are in the prime of their age looking forward to start enjoying an active life with their kids and have many years on the labor market still.

If could look at the results here. We show these results on this for all patients and the PD-L1 positive group of subpopulation, and I just want to draw your attention to the lower part of the table here. So median progression-free survival for the all patients group was 4.1 months. And for the PD-L1 positive population was 6.3 months, median overall survival for the old patients group was 16.9 months and for the PL1 positive was not reached, which means estimated to be more than 25 months. And if you compare that with our slides that I was trying to put into context what good looks like we set everything above 4 months median progression-free survival and everything above 14 months in median overall survival would constitute a very good result.

So looking at the -- both the old patient and in particular, PD-L1 positive patient population, we are extremely encouraged by these results. We also showed the spider plots here. And here, we've divided between nonresponders and responders, and importantly, even for the group who are by the RECIST criteria termed nonresponders, we do see a very long and durable stabilized situation, which from many patients is also a significant clinical benefit.

Of course, these long stable situations for the nonresponders also contribute significantly to the overall survival data that we've seen. The [indiscernible] or the overall survival. We've been through the data here. So this is just to put a little bit more nuance on it, as you are looking at the split between PD-L1 positive PD-L1 negative on the right side of this graph here. I already did mention that for the PD-L1 positive, we will not reach the median overall survival, for the PD-L1 negative group, we're looking at 7.3 months. And I just want to emphasize, this does also constitute interesting results for that particular patient population who do not have any other viable treatment alternative right now that is safe to provide.

So we will be focusing on the PD-L1 positive patient population, but we will not entirely forget the PD-L1 negative. We will be assessing various ways to also be providing opportunities for those in the future development program.

Very importantly, when you report clinical data for vaccine compounds, it's always imperative, we feel to be able to show a correlation between the immune response that you are vaccine and used at the clinical outcome. And we see too many vaccine results out there that do not show this correlation. So it's comforting to us to, again, be able to see a strong correlation between the antigen-specific immune response created by our vaccine and the resulting clinical outcome for the patients. This is 1 of the key parameters that also encourages our partners when we show the results to them.

Again here, just to put these data in context, we are focusing on the PD-L1 positive patient population since this is the patient population we are going to prioritizing in the next step of our development program. On the left, we show you the data VB10.16 plus atezolizumab in the PD-L1 positive group which is a group of 24 patients out of this trial here, overall survival -- sorry, overall response rate, 29% medium progression-free survival 6.3 and a very, very impressive median overall survival not reached in this patient population yet comparing to what you would expect or what you see in a PD-L1 positive stock population with Pembrolizumab and Cemiplimab of 2.1 to 3-month progression-free survival and 11 to 13.9 months overall survival.

Again, on the right, we show the data for TIVDAK, which amounted median progression free survival of 4.2 months and median overall survival of 12.1 months. So we do deem these data for VB10.16 plus atezolizumab to be very competitive and indicate a strong clinical and very durable clinical response.

We have done 1 additional stock population analysis, and that's the group of patients that we call PD-L1 positive patients who have received only 1 prior line of systemic anticancer treatment. The reason why we focus on this patient population also is because in C-04 trial that we'll be starting towards the end of the year which will be a potential registrational trial.

We will be enrolling patients that are PD-L1 positive and have only received 1 prior line of treatment. So although it's not exactly the same patient population because it's not the same prior line of treatment. It does indicate that the earlier you go in this disease state here, the stronger the data becomes. So here, we have impressive overall response rate of 40% disease control rate of 80%. That means 4 out of 5 women in this patient population actually received a clinical benefit median duration of response to 17.1 months, median progression-free survival mind bottling 16.9 months and median overall survival not reached. So indicating more than 25 months at this point.

This slide shows our development program. I want to draw your attention to C-03 and C-04. C-04 is our potential registrational trial, the next step in the advanced cervical cancer patient population. There will be enrolling patients who are refractory to first-line treatment, which consists of checkpoint inhibitor chemotherapy at plus/minus atezolizumab in the U.S. We will be running this trial in collaboration with the GOG, which is the clinical key opinion leaders and experts, you want to be running this trial with in the U.S. and we aim to enroll the first patient in the fourth quarter of 2023. This potentially could be a fast path to the market and the patients for VB10.16.

In addition to that, we announced we are expanding into head and neck, also an important patient population with a significant unmet need. And the first step in that direction will be C-03, well the testing VB10.16 in combination with pembrolizumab, which is supplied by MSD. And we have submitted the clinical trial applications for that program, waiting for the final goal, and we plan to be enrolling the first patient in the first half of '23.

So I will not bore you with repeating all these data, but just conclude in the end that together, we find these data really indicate a potentially differentiated normal anti-tumor response of VB10.16 in combination with atezolizumab, in particular in the PD-L1 positive patient group.

So -- sorry, 2023 have really been the year of VB10.16 so far. It will continue to be that. As I said, we are now all hands on deck with the initiation of C-03, which is the first important step into head and neck and the C-04, which is a very important next step into cervical cancer. So obviously, the organization is highly focused on these 2 programs at the moment.

With those words, I'm going to hand over to our CFO, Harald Gurvin, to take us through the financials that we reported this morning. Harald?

[Harald Gurvin, executive]

Thank you, Michael. Nykode is financially well positioned to grow and execute the company's strategy over the next years with a cash position of $186 million at quarter end. We are also very pleased with the publication of our first ESG report in connection with the annual report for 2022. ESG is the key focus area in Nykode and we'll continue to expand our ESG reporting going forward.

As previously stated, we continue to explore and prepare for a potential listing on the Nasdaq Global Market in the U.S. We can unfortunately not give any guidance on timing, which will depend on, amongst other market conditions.

Looking at the income statement, we reported revenues of $3.1 million in the first quarter relating to the R&D activities under the agreements with Genentech and Regeneron. Our other income represents government grants from SkatteFUNN and the Research Council in Norway, where we have a total of 3 projects running.

Looking at employee benefit expenses and other operating expenses, we have been ramping up the organization and our research and development activities over last years, resulting in increased expenses. Please note that the first quarter of 2022 includes a noncash reduction of $4.8 million in employee benefit expenses relating to security cost accrual on share-based payments.

In line with the increased interest rate levels, finance income has increased mainly due to increased interest income. So overall, we recorded a net loss of $10.4 million for the first quarter of 2023.

Then moving on to the balance sheet. We have a strong cash position, as mentioned, of $186 million at quarter end. Trade receivables were down in the quarter due to received also the $2.5 million milestone under the Genentech agreement in the first quarter, while other receivables increased due to accrued interest and prepayments during the quarter.

Moving on to equity and liabilities. We had total equity of $148 million at quarter end, which represents a strong equity ratio of 72%.

And with that, I will give the word back to Michael.

[Michael Engsig, executive]

Thank you very much, Harald. And before we open up for questions, just take a quick look at the outlook for the next 12 months. So trying not to repeat myself too much here after the final results of VB10.16 C-02 trial, which, again, we feel was really transformative for the company and the program itself. We are very much focusing on getting the C-03 trial, first head and neck underway and enrolled in the first half, as well as getting the all-important potential registrational trial C-04 kicked off in the fourth quarter of this year.

Also importantly, this morning in our report, we have announced that we will be disclosing the identity of the first -- or the next program that will be starting in the fourth quarter of 2023. So that's the -- that will be the result of our internal discovery engine in the oncology field. When we nominate the development candidate from that program. And just keep in mind here that we have previously said we are running intensive discovery activities. We're obviously looking at many different opportunities at the same time. So what we'll be doing here is informing the market on which candidate and which indication we'll be focusing on for the next oncology development program.

We'll also be providing updated survival data from the C-02 trial in the first quarter of 2024, and we're looking forward to providing updates from our autoimmune program in the third quarter of 2023.

And with those words, I think we can open up for questions.

[Operator]

[Operator Instructions]

My first question is, The New York Times yesterday published an article about BioNTech's mRNA personalized vaccine for pancreatic cancer, where we stated a cost of production of U.S. dollars, I believe it says per $100,000 per dose or $100 per dose. I'm not sure what that says, I'm sorry. Could you give us some color on how does this number compare to the production cost of your DNA vaccine specifically for VB10.NEO?

[Michael Engsig, executive]

Yes. Thank you very much for that question, Gonzalo, Equity Analyst from ABG. I think I'm going to hand over the word to Agnete to take us through a couple of perspectives on that one.

[Agnete Fredriksen, executive]

Yes, it's a good point, Gonzalo. We saw the same numbers. And I think we mentioned before that manufacturing of our DNA plasmid is inherently a shorter process, meaning less labor work and also less steps because when you are manufacturing an mRNA-based vaccine make the plasmid DNA vaccine as a template for then the mRNA and then it's also formulated in this lipid nanoparticles.

And it's interesting to see the cost of good numbers. But I think that's where we can say that we believe cost of goods obviously will be super important in order to have a viable product that goes to the market and particularly in early stages and in combination with a checkpoint inhibitor. We do believe that cost of goods will be an essential parameter in order to reach the market and without mentioning anything about the comparison here.

I think just looking at the manufacturing process, we believe this should be a differentiating factor between DNA vaccines and mRNA-based vaccines before reaching the market. I don't know if you want to add something, Michael?

[Michael Engsig, executive]

No. I think that's perfect. I think you clarified it actually did say $100,000 per patient.

[Operator]

Our next question is coming from Geir Holom from DNB Markets. As far as we understand, regarding the nomination of an additional oncology development candidate for a new internal oncology program in the fourth quarter of 2023. This may be either a candidate with the potential to address multiple indications comparable to VB10.16 or more like a mono indication candidate. Could you please elaborate on the company strategy in deciding between these 2 paths?

[Michael Engsig, executive]

Certainly, thank you very much, Geir. Good opportunity to maybe give a little bit more flavor on how we work in the discovery engine of Nykode. So imagine that we at all time having multiple programs running and trying to find the best vaccine candidates against the various disease models. So when we say we'll be coming out with a -- with announcement on which programs to take for actually means that we will be making a prioritization between the various different cancer types and the vaccine candidates within those cancer programs.

So when we do that, we are looking at various different parameters. One -- very obvious 1 is the unmet need that we're looking at for that cancer indication. And that's a factor which itself is contributed by several different factors. So what else do you see in that development program, both on the market in terms of alternative treatments, and in terms of the competition that is heading through discovery and development and how significant is the unmet need from the patient's perspective. So that's 1 parameter we are looking at.

The other 1 is the likelihood of success. And that, of course, will be, to a large extent, an estimate from our side. So we are typically looking at how effective in the preclinical models does our lead candidates seem to be, what kind of immune response can we induce, what kind of correlation between immune response and effect in the preclinical animal models we're looking at. So that's a second parameter we will be looking for.

And the third parameter is a rough estimate on the development program and the associated costs that we look at in front of us. So it is really a multiparameter analysis that we're doing across the various programs before we decide which program to prioritize and which lead candidate within that program, do we want to take into preclinical development and then into development. And it's a significant step for us because once we take that step -- it is a little bit of -- it's not fully irreversible, but that's why we really put our money and resources down that candidate.

From that point of view, we'll be starting on really building up and solidifying the manufacturing process for that candidate and we'll be starting the final preclinical tox programs for that candidate for our vaccine, as we've said many times, we right now have a relatively easy tox program because that is a positive spill effect between the programs. But we still need to do a range of formal studies.

So it's important that we are very considered before we take the decision on which new program each candidate to bring into the development. Then we'll be going through the CMC upscaling process and the tox program before we start the first clinical program. So it's very much a structured planning and execution process from that point on.

[Operator]

We do have a follow-up from Geir Holom from DNB Markets. Assuming you combine the new candidate with a CPI and intend to finance the study yourself, is it an opportunity to also pay for the CPI? Or would you aim for some sort of partnership?

[Michael Engsig, executive]

Yes, I think you and that you want to add some color on that.

[Agnete Fredriksen, executive]

Yes. Yes, sorry Yes, yes. Thanks, Geir. I mean -- there's always an option to pay for a CPI. I think that always depends on the strategic consideration we take. Whether or not it will be in combination with the CPI is also dependent on the cancer indication as well as the stage of disease that we will target in the end. So that's not something we have guided on yet.

But you know that we are in very close collaboration with a number of CPI manufacturers. We do have, obviously, close collaborations with Roche and Regeneron as well as Merck. So we will obviously take all those considerations into account, but the likelihood of pursuing a drug supply for checkpoint inhibitor is obviously high if we choose to go in an indication with the clinical trial design that warrants a combination with the checkpoint inhibitor, I would say.

[Operator]

Sure. This is also from Geir as well. Being a highly innovative company, could you please elaborate on the priorities for the people in the R&D department at the moment?

[Michael Engsig, executive]

Yes. Sorry, we can add some color on that one. And if we applied into the helicopter perspective, loading down at the research and the development department you would see an allocation of the people -- the majority of people will be allocated to the VB10.16 program, which is still a wholly owned program to the Genentech program and to the Regeneron program.

So those 3 programs take the majority of people we have in the R&D departments. Then if you take a dive a little bit deeper down, you and go into the research and the CFC department, you will see additional resources being spent on our internal discovery programs, and that will be split amongst oncology, autoimmune disease and infectious diseases, I would guess right now with a slight overweight on the oncology programs and a fourth leg, which is also extremely important for us is the continuous improvement of our technology platform. That's the efforts that, for example, led to the announcement of the fourth module at the AACR last year.

So it's important for us to emphasize that we continue to invest resources and capital in developing the next generation of our vaccines. But as I said, majority of resources will be spent on VB10.16, the Genentech program and the Regeneron programs.

[Operator]

Our next question is coming from Gonzalo Artiach from ABG Sundal Collier. Regarding the announcement of the new vaccine by the end of the year. Could you give us some color on what does the nomination of a lead candidate mean in terms of future development i.e., how much preclinical work will be needed from that day in order to transition into clinical trials. How advanced are you at the current stage in terms of antigen selection and potential indications?

[Michael Engsig, executive]

Yes. Also a very good question, Gonzalo. So there's a couple of different perspectives on that answer. And I think the first 1 to have in mind is as long as we stay with a cancer vaccine or a vaccine body that is in structure similar to VB10.16 and VB10.NEO that means it has the same target in the same dimerization unit, but it's just the antigens that we've exchanged then there's a high degree of -- I mean, positive spillover effect from the prior programs before entering the clinic. We've seen that multiple times that when we take a program into a new country, the fact that we have data from the other vaccines does bring a very high level of comfort already at the get-go.

Still every time you bring something new into clinical development, there is a set of preclinical tox study that will have to be done, so I'm not calling it formality, but it has to be done to prove that it's safe to take it into the patient. So if you compare it to other development or discovery programs, Gonzalo the number of preclinical studies that we will have to do will be less as long as we stay with the already familiar vaccine structure that you are familiar with.

So what will take -- let's say, what is on the critical path from the day we select our development candidate. So we are ready to go into the clinic is actually the CMC-related activities of being able to manufacture this on the GMP conditions in the right scale and secure the quality at every step of the manufacturing process, both of the substance and of the product. That is usually what is on our critical path during that phase of development.

[Operator]

We have a follow-up from Gonzalo. Regarding the COVID-19 candidates, you mentioned that you were open now for partnerships. How active are you planning to be in terms of looking for potential partners? What is the point of view of adaptive regarding these decisions? Is there any plan to continue working together with them and other segments and indications?

[Michael Engsig, executive]

I think that's a question for you, Agnete.

[Agnete Fredriksen, executive]

Yes, I think -- yes, thanks for the question, Gonzalo. I think we are always open for partnership and also always exploring partnerships because different kinds of partnerships can make sense in order to optimize the advancement of our candidates over time for pushing them forward to the market with the highest likelihood of success. And that's also the consideration we now have for the COVID candidates at this time point, the optimal way forward for the COVID vaccines in the current landscape regulatory landscape, current approvals that we've seen, et cetera, there are considerations that we take into account and 1 employee the resources in the optimal way.

And now it's really a partnership path that we believe would be the most sensible in order to pursue an opportunity that VB10.2210 or other candidates that we have could reach the market in the optimal manner. So we do have some activities ongoing in order to look into the potential opportunities with -- and I think we have all the same common wishes and background for making those kinds of decisions.

We do really appreciate the collaboration we have with Adaptive on this candidate and their epitope selection capabilities, and we'll guide on future potential collaborations with Adaptive and/or other partners when these become relevant.

[Operator]

And a follow-up from Gonzalo, there's been a lot of talks regarding the FDA getting more and more hesitant to approve drugs based on single-arm trials. This seems to be an even more material trend now. Given the fact that the FDA issued a new drug guidance for special mention on that matter, -- could you please give us -- sorry, could you give us some color on how you see this moving forward? And how much can this compromise -- how much could just compromise your potentially registrational trial?

[Michael Engsig, executive]

Yes, good point also to bring up in this discussion here -- Gonzalo here, I want to emphasize or repeat what I've said earlier on this topic also the guidance and the -- also the updated guideline that FDA issued is in no way new to the industry. I think it's very much in line with what both FDA and all other relevant stakeholders have been saying for years that we need to take up a little bit on the -- I would almost call it misuse that we've seen on these regulatory tools in the U.S. that people get accelerated approval without actually committing to the confirmatory trial. And that's also why they've made it slightly more difficult and they have strengthened the wording around when can you use what kind of trials.

Very important to note, they have not excluded single-arm trial, but they are saying it needs to be justified. Now we are in dialogue. I think we've said that repeatedly with the authorities in the U.S. And we can't say anything about the nature of those dialogues at the moment, except that they are progressing. And those dialogues will lead to the further conclusion on how exactly we want to design the C-04 trial.

We feel confident there is a path forward for the C-04 trial, exactly how we decided to design it in the end, we still have to await the final outcome of the discussions with FDA before we can tell you that. Obviously, since we're guiding that we will be starting the trial in the fourth quarter this year, you can't assume that it's not going to be too far in the distance when we are ready to tell you basically the conclusions of our deliberations with the FDA.

So in conclusion, on right now, we feel confident that we'll be able to reach a good conclusion with the FDA on how to design this trial here and bring the C-04 forward as a potential fast track to the market. That's our strong assessment right now.

[Operator]

Our next question is coming from [Arvind Necander] from [Carnegie]. While the 2 LCC could offer a fast path to market, the addressable population is fairly small. Considering its disappointing results with Roche's BioNTech's mRNA vaccine in the advanced pretreated setting and Moderna's promising results in the adjuvant setting, what makes you sure the advanced pretreated setting is the right potential to pursue? How did you balance the risk reward when arriving at the strategy?

[Michael Engsig, executive]

So I think also here, Arvind thanks very much for bringing up this important aspect also. And that's a good opportunity for us to clarify a couple of positions here. We do not think advanced cervic cancer is the only right area to go and so we very much agree that adjuvant setting is also a very interesting area to take our vaccines, not only VB10.16 into.

So for us, it's more a matter of prioritizing the sequence of order of which we take these steps. And we've said that taking on the back of the very, very positive C-02 data in advanced cervical cancer. We have said that taking VB10.16 into the C-04. So staying in advance cancer field in designing the trial that -- the way we intend to trial it will constitute a potential fast path to market, which we extremely important, not just for these patients, not just for VB10.16 [Technical Difficulty]

[Operator]

Hello? I'm going you both speaking at the same time, sorry.

[Agnete Fredriksen, executive]

I did not hear Michael for a long period.

[Operator]

He was there.

[Michael Engsig, executive]

Sorry. I'll just continue.

[Operator]

Just wanted to give you the follow-up coming from Arvid, me one more, please. With [Technical Difficulty]

[Michael Engsig, executive]

Can I interrupt you? Yes. I see a message that we've gone off of sound. I just want to.

[Operator]

No, I hear everything is totally clear.

[Michael Engsig, executive]

Yes. Very good. Excellent. Yes, I'll just finalize that one can the question on that one. So we just want to repeat the guiding we also gave when we reported the positive results for C-02 that we indeed look at adjuvant setting as a very relevant patient population to also pertaining VB10.16 both in advanced -- sorry, both in the cervical cancer field, but also in the head and neck. We just need to get our heads around the planning for that one. So thank you very much for that question, Arvid.

[Operator]

And a follow-up for [Margare]t. With [Segon] guiding for top line results from TIVDAK confirmatory trial around year-end 2023. What makes you confident that an accelerated pathway will still be available by the time VB-C-04 is top line?

[Michael Engsig, executive]

Yes. And here, I am -- sorry, I mean here, we have to be a little bit careful or sensitive on what we -- so we obviously have a lot of discussions ongoing with the stakeholders in the field. So you'll have to wait a little bit on our updates on the program the way we decided to get, I think, the full flavor on that one there. Our -- the -- let's say, the conclusions we've had for -- based on discussions, both with the FDA and with the clinicians in the U.S. tells us that [FDA] deposit is open in front of us. So I'm not really sure we're ending up at the same conclusion that you're ending up here that around the TIVDAK trial. We remain quite confident in the path going forward also in the window of opportunity regarding the full approval here.

[Operator]

And a follow-up from [Arvind Necander] from [Carnegie], considering the commercial opportunity in 2 LCC and investments needed to build a fully fledged commercial organization, it seems like it would make sense to partner VB10.16. Could you give us an update on your go-to-market strategy and potential time lines for partnering?

[Michael Engsig, executive]

Agnete, I hope we have you on here. So you want to add some color on that perspective.

[Agnete Fredriksen, executive]

Yes, I think we've said several times that we are continuing to build the company. And at this point in time, we have the capabilities and think it's a wise decision for us to pursue late-stage clinical development of our candidates, but that VB10.16 is running rapidly forward.

And then we do not have the intention to build up by commercialization and marketing department for -- to be ready for VB10.16. So yes, we will be looking for a partner for VB10.16 at a certain time point. Then that's true. Exactly when and where is something that we are continuously evaluating. But -- and these data are also affecting our decisions, and that's something that we will take into consideration in order to make the optimal plan for the success of VB10.16 for the value for everyone on this asset.

[Operator]

And our next question is coming from [Rowan Sebastian] from [indiscernible] Congrats on all the progress. Some questions from our side. You briefly mentioned the interim results of the N-01 trial. Can you provide some color on the time lines regarding updated results of N-01, N-02 regarding -- and then regarding VB, would you like me to stop there or keep going?

[Michael Engsig, executive]

Yes. Yes. No, that's -- yes, let's take this one first. Thank you very much, Sebastian. On fortunate, as we said a couple of times before, the communication strategy for N-01 and N-02, so in general, is really on the shoulders of our partners from Genentech. We are, from time to time, in discussions with them on what can be disclosed and what cannot be disclosed.

And as you can see, they are forthcoming and supportive of trying to allow us to disclose or release data. From time to time, we just released a small batch of immogenecity data from the VB10 N-01 trial that Agnete reviewed earlier today. But unfortunately, we cannot give further guidance on the release of either of those 2 trials. We really have to await our partner's decision to release on that one.

[Operator]

And the second part to the question is regarding VB10.16, you mentioned that you mainly focus on PD-L1 positive patients. Can you please describe how you see its path to market? Is your accelerated approval potential?

[Michael Engsig, executive]

Yes. And I think that's why we really emphasize the potential of the C-04 trial. So the C-04 trial will be enrolling PD-L1 positive patients with advanced cervical cancer who are refractory to the first-line treatment in the U.S., which is the pembrolizumab plus chemotherapy plus chemotherapy plus minus bevacizumab. And that's a patient population that currently do not have any good, safe other alternative treatment approved in the U.S.

So that will be a potential registrational trial, and we do see that as a potential fast path to the market in the U.S. But from there, we will, of course, be expanding the scope of VB10.16 as we have indicated, into head and neck where we currently are not seeing exactly the same opportunities in terms of fast parcel where we're actually starting in first-line treatment, and we'll also be looking at bringing our program into the adjuvant setting in the future, both in cervical cancer and head and neck. And we've said repeatedly that we will not be forgetting the PD-L1 negative patients as we will not be forgetting the additional cancer types that are driven by HPV16.

[Operator]

And a follow-up as well. Can you provide some color on the intended patient population for C-04, how many patients will all patients be PD-L1 positive? Will all patients have prior CPI exposure?

[Michael Engsig, executive]

Yes. So I think I effectively answered that question right now. So we will be enrolling patients who have failed first line, which includes pembro in the U.S. And by implication, therefore, the patients will be PD-L1 positive. This is something, of course, we will be checking upon enrollment also. So that's a yes to both of those questions, Sebastian.

[Operator]

And further follow-up. On your immune pipe -- I'm sorry, on your autoimmune pipeline, what can we expect timing-wise for an update regarding progress or possible disclosure of targets?

[Michael Engsig, executive]

Agnete do you feel like adding a bit of color on that one?

[Agnete Fredriksen, executive]

Yes. So the ordering program that we have shown you and then the data that we've shown here from this program before is really the focus initially is really to develop the optimal platform technology that we can pursue for autoimmune indications in the future. So we are currently focusing a lot on identifying how and where we should utilize the platform, which targeting units, which potential for modules, et cetera, then there will be the optimal one in order to make sure that we can really skew the immune response into the immune tolerance across different future potential auto antigens.

So that's something we are doing in parallel in pursuing and reviewing the different indications and potential clinical programs that will be the most relevant ones that we would like to pursue when we decide on the optimal lead candidate, which is basically what Michael also they explained in detail when it comes to our oncology programs. There's a lot of preclinical data where we nail down the design of the vaccines before we will nominate a lead candidate.

And with the auto immune program, I think it's very important for us that this is a novel technology, a novel technology platform where we get a lot of feedback on the positive potential of this platform being able to induce a very specific, very antigen-specific tolerance. But still early stage, I would say. So an update will be an update, and then we'll see also I think we will provide at least give you quite a lot of indications of where we would like to go with this program.

[Operator]

We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

[Michael Engsig, executive]

Yes. Thank you very much, Kevin, and thank you very much to all of you for the breadth and wealth of questions here. It's always a little bit more fun when we have engagement through these questions. So we appreciate that very much. And thanks to everybody else for listening into this first Q report.

[Operator]

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.