Nykode Therapeutics ASA

OSE:NYKD

Earnings Call Transcript 2023-Q2

[Operator]

Hello, and welcome to the Nykode Therapeutics Q2 2023 Financial Results Presentation. [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. Please go ahead, sir.

[Michael Engsig, executive]

Thank you very much, and a warm welcome to everybody joining in for this call. We are once again very happy and pleased to be updating you on what's going on in Nykode therapeutics over the last quarter. Just for formalities, again, as usual, we assume you're all familiar with our forward-looking statements. On that note, we'll move forward. I'm pleased to be joined here today by Agnete Fredriksen, our Co-Founder and Chief Business Officer; as well as Harald Gurvin, our Chief Financial Officer. Together, we will take you through an update on our business activities and R&D program as well as the financial results. We look at the highlights and Q2 for 2023 was yet a very busy and successful rewarding quarter for us.

Most importantly, of course, we reported the positive trial results from our Phase II trial exploring VB10.16 -- hold on -- Exploring VB10.16 in patients with advanced cervical cancer in combination with atezolizumab. And we'll just give you a brief overview of the key results from those -- from that reporting later in this call here. We also announced the expansion of our clinical collaboration with Roche into the C-04 trial, where we'll be combining VB10.16 with the atezolizumab again in the potential registrational trial C-04 in advanced cervical cancer.

The company has this morning report the financial positions. And again, we have to report that we are well capitalized with a cash position of USD 174 million at the end of the second quarter. After the end of the second quarter, we've still been busy and continuing the business activities. So we have received now the approval from the competent authorities in all 8 European countries for the VB-C-03 trial exploring VB10.16 in combination with KEYTRUDA in PD-L1+ first-line head and neck cancer. We've also had the clearance from the independent review committee for continuing with the 9-milligram dose of VB10.NEO in the N-02 trial, which we are running together with Genentech, they reported no safety concerns. And obviously, that's very important since this constitute the first time that we get the go to continue the enrollment of 9 milligrams.

Just to remind you all here, we are exploring 9 milligrams in this study on the basis of the very favorable safety profile that we've seen with our VB10.NEO and all other clinical candidates we've so far had in clinic. And our hope is here to explore whether there is additional efficacy to be gained by opening the dose. Also happy to report that we are appointing Henrik Sondergaard as Head of our dedicated Autoimmune research. Henrik will be starting with us 1st of September, again, a testament to our commitment to move the Autoimmune field forward. Quick look at the pipeline. And here, again, I just want to emphasize our VB10.16 program from which we will be seeing quite a number of activities in the near coming time.

So we do plan to dose the first patient in the C-03 trial in third quarter of this year here. So eminently, as I mentioned, we have received all the approvals from the competent authorities. We also plan to initiate a C-04 trial, our potential registrational trial and next step in the cervical cancer program in fourth quarter 2023. And again, pointing down to the bottom of this slide, our Autoimmune program, we have indicated, and we plan to continue with that, that we'll be updating the market on the science and the progress on our Autoimmune programs in this quarter, so imminently.

And with those words, I'm going to hand over to Agnete Fredriksen to take us through an update on the R&D side.

[Agnete Fredriksen, executive]

Thank you, Michael. So first, we'll focus on VB10.16 and the progress we are seeing in the VB10.16 developments here at Nykode. --Brief review, VB10.16 is an Off-the-shelf therapeutic cancer DNA vaccine targeting HPV16 induced malignancies, and this is the most prevalent oncogenic HPV strain that we are targeting with this product. We're using 2 full-length proteins from HPV16 as the antigens in the vaccine. It's both E7 and E6 that are consecutively expressed in cancer cells in patients with an HPV-driven disease. And importantly, this is one of the products that is still wholly owned by Nykode, and we have all the rights for VB10.16 still.

So look at the right, you see the Vaccibody structure with this particular target in units that we're using among many products giving us this unique immune response profile against the antigen that is included at the other end of the molecule, both E7 and E6 as I mentioned. So if you go to the next slide, Michael, this is giving you an overview of the ongoing activities in -- with VB10.16 in [HNSCC] now working with multiple different trials in parallel. Finalizing, finalizing the C-02. As you know, we reported data in this quarter that we're now reporting from, which was very promising. We have set as the next step that we will also update further on updated longer follow-up survival data from these patients in first quarter '24.

C-03 is the trial that we are very much looking forward to get fully started. Importantly here, this will be the first time we will test VB10.16 with up to 9 mg. The previous trial has focused on a 3 mg dose. And it will be in PD-L1+ patients in combination with KEYTRUDA, which is an anti-PD1 and it will be in first-line patients and then the C-04 trial, which will be a very important trial for Nykode, which has potential for being a registrational trial. It's still on track to be started Q4 this year in combination with atezolizumab.

Thank you can go to the next slide. So just briefly reviewing why VB10.16, now will have a lot of focus at my [indiscernible] in the coming period. We were extremely enthusiastic about the results that we achieved in the VB-C-02 trial reported back in April, particularly with the focus here on the PD-L1+ patients. We achieved an ORR of 29% PFS, median PFS of 6.3 months and median overall survival not reached. At that time point estimated to be at least 25 months.

And then we are happy to also share today that the median overall survival has not yet been reached as the newest look at the data, but further details on what that will constitute as the end result is still planned for first quarter next year. As you see, for all these parameters, we are looking at doubling to 3x higher efficacy results compared to what we see with checkpoint inhibitors. And importantly, we also have included Tisotumab vedotin [team] back here to the [right] with a different modality, but still importantly here in the same range with a much shorter overall survival in the data reported to date.

So we continue to focus on this long-term durability of responses that is helping us achieving a long survival for the patients.

If we focus, particularly in the data analysis, we did in the second quarter on the subpopulation, which actually constituting 16 patients that are PD-L1+ and have received only 1 prior line of systemic anticancer therapy, we enrolled in this trial, patients with 1 to 5 prior lines of systemic anticancer therapy. We're looking at those with only one. We actually also observed better efficacy, data across all endpoints with up to 40% ORR, 80% DCR, 30% complete responses. And here, actually, the PFS increases to 16.9 months. And obviously, overall, survival not yet reached in this subpopulation as well.

And why do we highlight this? It's basically because the future trials that we plan both the C-04 trials will be in PD-L1+ patients, and it will be in patients with only 1 prior line of systemic anticancer therapy, although the first line treatment has changed and will include KEYTRUDA in that trial. We obviously see that we have the best efficacy in patients that have not had to undergo multiple lines of previous therapy before receiving VB10.16.

And also, as I said, importantly, the C-03 trial is in PD-L1+ patients that are actually also in PD-L1+ patients, and these are actually first-line patients, so have not received any prior line of systemic anticancer therapy, which means we're moving even one step further up here, focusing on still advanced cancer patients. But not the patients that have undergone multiple previous trials.

I think we can move forward. For VB10.NEO, which is an important asset for Nykode, fully out licensed to Genentech, Roche -- we believe this technology has a potential to be the leading technology for individualized cancer neoantigen immunotherapy. We have, by this product, develop very strong in-house bioinformatic competences and also develop our own proprietary neoantigen selection method. It was trained on our own Nykode data, and we have seen the immune responses over the last year, giving us comfort that we also in the clinic can generate, it's unique and also broad and CD8 dominated immune responses. We actually focus in neoepitopes selection on clonal and clinically relevant epitopes before solely looking at immunogenicity, which I think is important as a second qualifier for the high number of patients and the high number of neoepitopes that we found to be immunogenic in the study.

And importantly here, also some of the high-quality immunogenic neoepitopes, correlate with clinical responses. As a DNA vaccine, we believe that there's a huge advantage in the field of individualized, even more than anywhere else. DNA plasmid manufacturing is an intermediate in mRNA and viral vector production and as well by definition, be more of a rapid, cost-effective and robust method. And so far, we've achieved 100% manufacturing success rate for those patients, where we find that a biopsy within [indiscernible] mutation is also very safe and well-tolerated platform.

A good starting point for us to move forward in the individualized cancer neoantigen space, also now with additional positive sentiment for individualized cancer vaccines in the community.

And can we go to the next, and for that VB10.NEO, [indiscernible] we have 2 trials N-01 and N-02, where both are in advanced cancer setting with multiple different indications included in both trials. Important difference from the N-01 to N-02 trial is here also, a dose escalation up to 9 mg and we also today were able to share this, we see that the 9 mg dose also seems to not give us any safety concerns, and we have not observed any dose-limiting toxicity. So this is actually the first time, the Vaccibody DNA platform has been tested in the clinic with the 9 mg dose.

The reason is because we have seen no safety concerns with the 3 mg dose. We see very promising efficacy with the 3 mg dose, but there could also be untapped efficacy that we don't want to see left on the table. So that will be exciting to follow in the future.

We can move to the next slide. For additional highlights from our research and development activities. Oncology, we are still on track to select the new development candidates from our own internal research in Q4 2023 and looking forward to expand the pipeline in the future with additional wholly owned products. We also have told you previously that we have started to test our platform technology and tweak it so that it can induce tolerance against specific antigens for application to treat autoimmune disorders as a focus. With some promising initial results on immune responses, we have promised you that we will update you further in the third quarter, which will be expected soon with some updates on the progress for that program.

We also wanted to share today that we have appointed Henrik Sondergaard as head of our tolerance, our autoimmunity group. It's dedicated to work on this specific field. It will be effective from September 1st as a new initiative. So I think you can sense that we are doubling down a bit on autoimmunity. We believe it has a huge potential in the future, and we may have a competitive edge. I think that is it from me.

[Michael Engsig, executive]

Thank you very much, Agnete. I'm going to hand over to take Harald to go through the financials.

[Harald Gurvin, executive]

Thank you, Michael. Nykode is financially well positioned to execute the company's strategy over the next years with a cash position of $174 million at quarter end. 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, amongst others on market conditions.

Looking at the income statement, we reported revenues of $5 million in the second quarter and $8.1 million for the first half relating to [indiscernible] from $3.1 million and $3.8 million for the same period in 2022.

Our other income represents government grants from SkatteFUNN and the Research Counsel of Norway, where we had a total of 3 projects. Looking at employee benefit expenses and other operating expenses, we have been ramping up at both the organization and our research and development activities over the last years, resulting in increased expenses. Please note that the first half of 2022 includes a noncash reduction of $6.6 million in employee benefit expenses relating to social security cost accrual on share based payments. In line with the increased interest rate levels, finance income has increased mainly due to the increase in interest income. So overall, we recorded a net loss of $9.2 million for the second quarter and $19.6 million for the first half of '23.

Just quickly on the balance sheet also. As stated, we had a strong cash position of $174 million at quarter end. You will see a reduction in the trade receivable at year-end due to receipt of the $2.5 million milestone under Genentech agreement in the first quarter.

Moving on to equity liabilities. We had a total equity of $140 million, which represents a strong equity ratio of 74%. And with that, I will give the word back to Michael.

[Michael Engsig, executive]

Thank you very much, Harald. Moving on to the outlook and as we mentioned before, we are enthusiastically looking forward to further goals and achievements for Nykode Therapeutics going into the second half year of this year here. Most imminently with the start-up of C-03, our expansion of VB10.16 program into head and neck. And as I mentioned earlier in this call here, we expect to dose the first patient in this trial in the third quarter. We are also on track to start up the potential registrational trial, C-04, in the VB10.16 program in fourth quarter, and we have earlier been guiding that in the last part of the discussion with FDA on the trial design. And we look forward to be able to update you both on the trial design and our thinking around the development plan for VB10.16 going forward including also how we see opportunities of this program going into earlier-stage cancers.

We've also indicated that we will be obtaining and putting an aim to the next internal program moving into the development phase towards the fourth quarter of this year. That's the result of activities in our own Discovery division. So obviously, we are looking very much forward to that part also. And we have said we will be updating on the survival data from the C-02 trial. So the trial that we did report the final data from -- in April this year, will be reporting follow-up data in the first quarter next year.

And then also excitingly, we will be updating the market on the progress in our Autoimmune program during the third quarter, so during the month of September. And then we are very excited to invite you all to a Capital Market Day that we'll be hosting, hosting the U.S.-based 1 on the 20th of September in New York. More details will follow on that. And we are very happy to announcing that we will also be inviting a key opinion leader within the field of cervical cancer to come present the perspective -- the outside perspective of the field and Nykode's VB10.16 program in that context.

We will also be hosting a secondary Capital Market Day in Oslo in the following week on September 27th. Unfortunately, that will not include the opinion leader, but otherwise, the program will be the same. So we hope to see as many of you as possible for those 2 meetings.

And with those words, I'm going to hand the word back to the operator to take us through the questions.

[Operator]

[Operator Instructions] Our first question today is coming from Gonzalo Artiach from ABG Sundal Collier in Stockholm. The question reads, yesterday the U.S. Department of Health and Human Services awarded more than $1.4 billion for a project to support the development of new ways to protect against COVID-19 new variants. One of the goals is to develop more effective and longer-lasting coronavirus vaccines. I was wondering if you could give us how your COVID-19 vaccine fit in this, given the VB10.2210 data that you released in September '22, showing induced protection against conserved antigens outside spike, potentially providing protection against new variants of concern.

[Michael Engsig, executive]

Thank you very much, Gonzalo. And i think my initial response is it's tempting to react to this one here. And we certainly also understand the background of your question, no doubt, there might be opportunities here. But we strongly believe that the long-term success of a company like Nykode relies on our ability to really prioritize our resources and focus on the activities that we believe generates the most effective shareholder value for the shareholders.

And on that line, we are currently focused entirely on our oncology pipeline, our partnerships. And as we have mentioned here, the new activities in the autoimmune disease setting. So we are for now sticking with our decision not to continue the development of the VB10.2210 program without a partner. We will continue the efforts to identify a partner. But as I said, before we have identified a partner, we will not be doing more development in this program.

[Operator]

Thank you. Our next question today is coming from Geir Holom from DNB Markets in Oslo. And in several parts. I'll ask them one at a time. Our first question is how many people will be in the new tolerance research group, led by Henrik Sondergaard?

[Michael Engsig, executive]

Good question, Geir. Thanks a lot. So -- and this is always a bit of a tricky question to answer in a simple way when you're working in a matrix organization like our research department is, so the most simple way to put up is we will have somewhere between 10 to 15 people engaged throughout the research organization in the activities related to the autoimmune disease field, including, of course, Henrik Sondergaard our new Head of Tolerance program.

[Operator]

Our next question is from Geir Holom from DNB Markets in Oslo. Given the technology's potential, are you also considering developing therapies for patients with rare diseases, both Moderna and BioNTech have made such efforts and is often highlighted that therapies addressing such diseases have a relatively shorter path to market.

[Michael Engsig, executive]

Yes, again. Thanks for the question Geir, I fully understand the background for the question. I'm going to answer it in 2 ways. The first one is the rationale that drives Moderna and BioNTech to look at this especially from a technology point of view, would certainly also apply to Nykode. We have the same conditions and circumstances that would actually allow us to play in that field. However, as I mentioned under the first question from Gonzalo, we are right now set in a disciplined focus on our priorities. And our priorities is, as I said, our partnerships, our quality program with VB10.16 and internal discovery in oncology at our efforts in the autoimmune disease area. So we for now do not have any plans to expand into the field of rare diseases. But I do see the opportunity space that you bring up here. We can take the next question.

[Operator]

[indiscernible] Geir Holom from DNB Markets in Oslo. To what extent is Nykode using AI or artificial intelligence in your drug discovery efforts?

[Agnete Fredriksen, executive]

Yes. I think is a good question, as I alluded to during the R&D update, we started to build an AI group with internal competencies within this field quite early also because of the use of this know-how in the neoepitope selection method. And I think that gave us a head start for having internal competence and using this competence not just to predict neoepitopes for the individualized space, but we also have that knowledge now for exploring for other drug discovery, for understanding how we build to sign new vaccine, but also how we capture and analyze and take the advantage of all the data that we generate in or had generated so far and make sure we learned the most out of that for future discovery efforts.

So Geir, I think we are approximately 10 to 15 FTEs as well in the [indiscernible] working with different aspects of AI in Nykode.

[Operator]

Our next follow-up is I just want to make sure this next call is coming from Geir Holom from DNB Markets in Oslo. The partnership with Adaptive is no longer mentioned in your report, and there's also limited signs of an active partnership looking at Adaptive's material following the pause efforts with SARS-CoV-2 is the partnership selective? And if so, in what way?

[Agnete Fredriksen, executive]

Yes. I think you alluded to the fact that we have announced that on the back of the positive data we've seen in oncology and the need to focus in oncology and also now with autoimmunity, where we believe we have an interesting technological competitive edge and a very interesting future, we decided to not invest further in the development of SARS-CoV-2 vaccine that we did together with Adaptive in-house and rather focus on having this available for potential partners that would like to take a piece of this vaccine into further development.

So obviously, that is the simple reason why you don't see it in the report anymore. But obviously, we still have a relationship with Adaptive. We are working with Adaptive on multiple different aspects, including a lot of different analysis of the data that we are generating in [multiple flash].

[Operator]

Our next question is coming from Sebastiaan van der Schoot from Van Lanschot Kempen in Amsterdam.

Regarding the potential registrational study in cervical cancer. Can you over your thinking on how the implementation of KEYTRUDA in the 1L setting may impact the efficacy results as seen on C-02.

[Michael Engsig, executive]

Thank you very much, Sebastian for that question. And let's see if I catch your thinking on this one here. So the C-02 data showed us several things. So in addition to the broad once again being very well tolerated. It also showed us a compelling overall response rates in the patient, in particular, the patients that were PD-L1+ and in particular, the patients that had only received 1 prior line of treatment. It also showed a long and durable response, both in terms of survival, but also in terms of immune responses. These factors together do lead us to believe that this product has a very competitive edge going into the earlier stages, including, by the way, also adjuvant setting. And therefore, we also do think that going in first line in patients that are refractory to KEYTRUDA it will have the ability to provide benefit to these type of patients.

I don't think we are confidently the regulators also do not expect to see the same level of objective response rates that we saw in the C-02 trial. And we don't think that is necessary in this patient setting here. So obviously, you will see a different response rate when you take this product into patients that are checkpoint inhibitor refractory, but I think that is fully in line with [indiscernible] and the regulators' expectations and will not, as such, provide any hindrance for the regulatory strategy that we have.

[Operator]

Yes, there is a follow-up from Sebastiaan van der Schoot from Van Lanschot Kempen in Amsterdam. Also on the C-04 trial, do you anticipate that a potential registration can be based on ORR alone or will require durability data?

[Michael Engsig, executive]

And here, we are now of course working on the various scenarios in front of us. So the base case scenario for our regulatory strategy is to base the accelerated approval on the ORR data alone. Should we require durability data, it's merely a matter of extending the trial to include these measurements also. But this case scenario in our planning is built on the assumption that we'll be able to take the straight forward with ORR. By the way, it's worthwhile noticing that in our dialogues with the regulators in the U.S., they certainly have given a very clear signal that in the end, approval of a product in this segment, which still has a very high unmet medical need will not be based on 1 parameter. It will be based on the totality, which includes also the safety profile compared to the competitive alternatives. And then that's where we think we have a very, very good profile as well as the durability.

[Operator]

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

[Michael Engsig, executive]

Thank you very much, Kevin, and thank you very much to everybody dialing in to our call this afternoon. I wish you a continued good day. And we look forward to seeing as many of you as possible to one of our 2 Capital Markets Day in either New York or in Oslo. Thank you very much.

[Operator]

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