Nykode Therapeutics ASA

OSE:NYKD

Earnings Call Transcript 2022-Q3

[Operator]

Greetings, and welcome to the Nykode Therapeutics Third Quarter 2022 Financial Results Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Chief Executive Officer, Michael Engsig. Thank you. You may begin.

[Michael Engsig, executive]

Thank you very much and also from our side, a warm welcome to all participants joining here, both from Europe and the early birds from the U.S. I'll start out with a could known the forward-looking statements. We assume we are all familiar with that, so on that note we'll move forward.

With me today here at this third quarter call, I'm very pleased to have Agnete Fredriksen, our Co-Founder and Chief Business Officer; as well as Harald Gurvin, our Chief Financial Officer. I'm Michael Engsig, CEO of Nykode.

A quick introduction to those of you who are new to Nykode. Nykode is a Norwegian-based immunotherapy company. We're entirely focused to building the leading immunotherapy company, and we're focused to on our dual strategy, advancing our portfolio which consists of good mix of in-house programs and partner programs through development stages towards the market, while at the same time, investing in broadening out the application and the potential of our platform.

We have also focused on validating and derisking the company through clinical data partnerships, a broad application, as I mentioned, and a solid cash position. So we have taken 4 different compounds, all based on our core platform into clinical development. We have consistently shown through these clinical trials, the ability to raise a strong T-cell response and in particular, a strong broad CD8 killer T-cell response.

We've also consistently shown that the technology is well tolerated and safe for the patient, both as a monotherapy and in combination with various other anti-candida drugs. We entered 3 partnerships with top tier U.S.-based biopharmaceutical companies, built the organization to scale. We're now more than 150 employees in the company, offices in Oslo and Copenhagen and Denmark. And we've also focused on internalizing core competencies in the early research and in immunomonitoring area.

As I mentioned, the potential is all in the -- platform's potential is already now used across a number of different tumor types and both in oncology and we've also taken it into infectious diseases. And we've announced that we see a potential to move this into autoimmune diseases also.

We just this today reported a strong cash position, USD 212 million at the end of third quarter. And the company is listed on the vote for Stock Exchange.

So it's been another busy quarter and this one in terms of clinical trials. So we started out by reporting the exciting interim results from our T cell-focused CoV-2 vaccine. That was followed by the positive immunogenicity results from our Phase I trial with VB10.NEO, our individualized cancer therapy that we are developing together with Genentech.

And finally, we reported the additional efficacy analysis from our Phase II trial with VB10.16, which is right now investigated in patients with advanced cervical cancer. And Agnete Fredriksen will take us into a deep dive on these data in a few minutes.

On the finance side, as we mentioned, we continue to have a very strong cash position of USD 212 million. And we were recently included in 2 of the important indexes on the Oslo Stock Exchange. We're growing the company now up to 153 patients as of -- sorry, employees as of today.

And with all those words, I'm going to hand over to Agnete.

[Agnete Fredriksen, executive]

Thank you, Michael. Yes, so you have to change the slide. Yes. So first, briefly going through the data that we were very happy to announce this quarter within COVID 19. So the data we announced now was VB10.2210, which is a vaccine against COVID-19 that is focused on eliciting very broad T-cell [indiscernible] So this induces T-cell responses both against Spike and against additional antigens from COVID-19. So that means we included 7 antigens in addition to COVID-19. In the antigenic unit of the Vaccibody vaccine, which allows us to induce a broad response against antigens that are also conserved across different variants that arise at this while it continues to mutate.

The next slide, Michael. So we've performed the first immune trial, investigating VB10.2210 as a booster vaccine to people who has been previously vaccinated with an mRNA-based vaccine that includes the Spike antigen. And this study has been performed in 2 sites here in Norway with the primary objective to look into safety, reactogenicity and cellular immunogenicity as a secondary objective.

So for this -- the data that we were happy to announce, we can see that VB10.2210 induced de novo T cell responses to all 4 non-Spike antigens conserved across SARS-CoV-2 variants.

We also can see that the vaccine was able to allude to a very broad response, so against all the different antigens that we could see. But well we could see that we could analyze that a response to most patients to more than one of the antigens of the peptides that we included from each antigen in each patient's vaccine. This confirms the induction of broad responses to the vaccine antigens that we include in our vaccine and that we see across different studies with different antigens, both with an infectious diseases as well as oncology.

So when we also looked into the different types of immune responses, we know that this vaccine has the attention of inducing T-cell responses, which can include both CD4 T-cell responses and CD8 T-cell responses and also knowing that the CD8 T-cell responses have been shown to be relevant for elimination of the season and early time points and reduction of severity of the disease. And we have evaluated the CD4/CD8 distribution in 5 patients where we do see a dominant CD8 response in all patients tested so far, which again confirms the mechanism of action and the unique ability to generate the strong and broad CD8 T-cell responses. So we feel this data continues to confirm the unique mechanism of action and the broad CD8 T-cell responses we see.

So we have, by this data successfully proved that our technology with the APC-targeted Vaccibody technology, unique T-cell responses. It can be used together with Adaptive Biotechnologies method of selecting immunogenic T-cell epitopes, that we can incorporate into our vaccine. And it confirms, again, the ability of our platform to induce this broad CD8 dominated T-cell responses that can recognize viral peptides on the cell surface. And this has the potential to eliminate infected cells.

And it also substantiates the favorable safety profile we have with our platform, continue to demonstrate that it's well tolerated across studies. We have also said that we will continue to guide on sort of the development strategies for our COVID vaccines first half of next year.

This has been a busy quarter. Also recently, we had the opportunity to announce immunogenicity data from our VB N-01 study, which is our study with our fully individualized concomitant antigen-based vaccine. So this vaccine is based on the same platform as the COVID vaccine. It has the same targeting unit with the chemokine, enzymization unit, and then in the antigenic unit, we identify patient-specific mutations for each individual patient, and we manufacture 1 vaccine per patient that includes this most immunogenic and selected cancer neoantigens in the antigenic unit for each patient. And we continue to see a 100% manufacturing success rate in this -- with this vaccine. And we have previously announced positive genicity data and clinical data from the first 14 patients.

And now as of 2020, we entered an exclusive out-licensing deal with Roche and Genentech for this program. And then we were very happy to be able to update on the safety and immunogenecity data from this program with more patients. So this includes 41 patients originally and then immunogenicity data in a subset of these patients. So this is a study where all patients have had prior chemo, prior checkpoint inhibitor therapy with an anti-PD-1 or anti-PD-L1 and 80% of these patients are continuing on the checkpoint inhibitor, and then we add the vaccine on top.

And when we look into the immune responses against the antigens that we select per patient, we have up to 20 neoepitopes selected per patient, that we identify in each patient's tumor. And we can see that all patients across all the 5 different indications show the response to at least 1 neoepitope, which we're very happy to see. And then on average, 53% of the neoepitopes were immunogenic. That range from anything from 3 to 20 neoepitopes and gives us comfort in the ability of this vaccine to induce a broad response.

Looking more in detail, we can see the majority of these epitopes are lower responses. But importantly, we also see amplification of pre-existing responses. So this is something we see that is induced by the vaccine in 95% of the patients.

Then -- when we here again wanted to look into and characterize the immune responses in more detail. We've been able to do this in 6 patients so far across 3 different indications. And looking into the distribution of CD4 versus CD8 responses in these patients, you can see many of these patients do have a dominating CD8 T-cell response. And we can see when we look in detail, we can actually see that anything between 53% and 100% for the neoepitopes were able to see the CD8 response, which we again feel is really comforting for our technology and its ability to induce this CD8 T-cell responses.

We also characterize them in even more detail knowing that the T-cells that can secrete multiple cytokines are most effective when it comes to being able to have induce a clinical response. And we see polyfunctional CD8 and CD4 T-cell responses.

In summary, we can see that the data in this indication as well includes -- indicates that it's very safe and well tolerated in all these patients with different solid tumors, with different background therapies. We see broad T-cell response, and we see the T-cell responses also remain for many weeks after the last proximation. And these are totally functional.

So just another data set that we have released now across 3 different programs that indicates that we are able to induce the same kind of T-cell responses independent of the antigens that we include.

With VB10.16, we looked a bit more in detail on the data that we released earlier in May. So we look in more detail into these patients that we have in an ongoing cervical cancer study. In this study, we've shown before that we have included heavily pre-treated cervical cancer patients, meaning we included patients that had failed prior systemic treatment lines, anything between 1 and 5 prior systemic treatment plans.

And we also highlighted that 30% of the patients actually have failed 3 or more prior lines of treatment. We also have highlighted that these patients have been heavily burdened by metastases, with 90% of the patients having extra pelvic metastases and many with liver, lung or both metastasis. And this is something that we wanted to look into in more detail.

The data we released before showed in totality in this interim analysis and objective response rate of 21% and disease control rate of 64%. Importantly, this is our interim data. So we are looking forward to release full year data after 1 year of treatment later. In this interim data, they were being treated anything between 3 and 20 months.

And earlier this month, we were able to look a bit more into detail on the effects in the different treatment lines. And we can see that if we had only included patients that have been treated with 1 or 2 prior lines of treatment, this is really where we see the responders when it comes to objective response rate, and that would have led to a 30% objective response rate, which gives us the opportunity to compare a bit more in detail to other competitors that have more patients in these patient groups.

We importantly do see disease control also in patients with deals up to 5 prior treatment lines, which we think is very encouraging as well. And again, we do see a nice correlation between the T-cell responses and the clinical responses. We basically see the same picture when we look into the number of extra pelvic metastases, which is another way of looking into the severity of the disease, and we see a nice effective response rates up to at least 5 extra pelvic metastases. And then we see the response rate reduces with these patients that have a very -- have many metastases.

And we also see this reduction on the disease control rate. Again, we do see a very nice correlation with the immune responses and clinical responses. So in totality, we continue to be enthusiastic about the data we generated VB10.16 in this trial and look forward to the full year data that we will be analyzing in the first half of 2023.

Then Michael, I give back to you.

[Michael Engsig, executive]

Thank you very much, Agnete. A quick look at the organization. As we already mentioned, we are continuing to ramp up and by the mid-November now 153 employees in the organization. We continue to focus on building up mainly in research and development. So more than 50% of the organization is now actually engaged in the early-stage research and 33% in the development activities. Probably we'll see a slight ramp up in the development part of the organization over the coming 12 months as we engage in further development of the VB10.16.

And with those words, I'll hand over to Gurvin to take us through the financials.

[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 $212 million a quarter. We are also very pleased with the successful uplift to the main list of the Oslo Stock Exchange in the second quarter and the subsequent inclusion in the Oslo Børs Benchmark Index and Oslo Børs Mutual Fund Index in the third quarter.

As previously stated, we continue to explore a potential listing on the NASDAQ global market in the U.S. We can unfortunately not give any guidance on timing, which will be spend on amongst other market conditions.

Looking at the income statement, we reported revenues of $650,000 in the third quarter and $4.5 million for the first 9 months 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. We have total of 4 projects running.

Moving on to the employee benefit expenses and other operating expenses. We have, as Michael said, been ramping up the organization and our research and development activities over the last years, resulting in increased expenses. Other operating expenses of USD 14.8 million in the third quarter include a non-recurring cost of $6.3 million relating to the R&D services provided over time under Regeneron and Genentech agreement.

The non-recurring costs represents an increase in the total cost estimate for these activities and under IFRS, such increase needs to be booked when identified. So overall, we recorded a net loss of $14.9 million for the third quarter and $30.5 million for the first 9 months of 2022.

Then moving on to the balance sheet. As mentioned, we had a strong cash position of $212 million at the end of the quarter. And looking at trade receivables, these are the amounts invoiced on the Genentech and Regeneron agreement. The reduction of trade receivables for the period is due to a $20 million milestones from Genentech, which was invoiced in the fourth quarter of 2021 and received in the first quarter of 2022.

And then finally, moving on to equity and liabilities. We had a total equity of $167 million at quarter end, which represents a strong equity ratio of 73%.

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

[Michael Engsig, executive]

Thank you very much. Just a final slide here, a quick look at the upcoming catalysts in front of us. So we are looking forward to an exciting period ahead of us. We will be coming back with an update on where we see the opportunities and which of these opportunities will prioritize within the VB10.16 program, and we'll do that in -- during the course of December this year.

Then we, of course, also very much look forward to coming back with the interim analysis following the first year of treatment as ones during the first half of next year for the C-02 trial. And we are focused on initiating the trial that we have already disclosed in the head and neck segments, that will be a Phase I trial, where we will set different doses of VB10.16.

Then we are also looking forward to the progress on the autoimmune disease in the early stage program. This is still at the preclinical stage, and we will be coming back to the market within the course of the first 9 months of 2023, to provide further guidance on where we see this franchise or business area moving for Nykode.

And with those words, I'd like to thank the participants for listening in, and we are looking for questions.

[Operator]

[Operator Instructions]

Our first question here is a 2-part question. That says cemiplimab was recently approved by the European Commission as the first immunotherapy in second-line recurrent or metastatic cervical cancer, irrespective of PD-L1 expression level or tumor histology. A, how do you compare these results with Nykode's interim data? And b, does this approval in any way affect your strategy within cervical cancer?

[Agnete Fredriksen, executive]

Yes. Thanks for the question, and congratulations to Regeneron for the approval, and we are close partners with Regeneron. So we are happy to see that they have success here in Europe today. The data generated so far by cemiplimab, we haven't had the opportunity to talk to them today about how they perceived the approval, but the data that they've generated is interest, and it gives basically microjet more opportunities to continue development in cervical cancer.

As you are all aware, our VB10.16 is intended to be given together with a checkpoint inhibitor, and we see that more of these checkpoint inhibitors being approved in the indication with quite similar results. You can -- they will always have different patients with different number of lines of prior therapy and also different effects in different patients with different levels of PD-L1. And I think this is, for us, a positive direction that continues to prove that immunotherapy can be approved and have effects in this patient population and still confident to see the addition of VB10.16 as we have shown in detail before with the interim data and look forward to see in the full year data.

[Operator]

[Operator Instructions] I am not showing any further questions at this time. I'd like to hand the call back over to you for any closing comments.

[Michael Engsig, executive]

Thank you very much, and thanks again for everybody listening in, and thanks, Gaya, for your questions. And we wish you all a continued good day and good holidays in the U.S. for those listening from there.

[Operator]

Thank you. This does conclude today's teleconference. You may disconnect at this time. Thank you for your participation, and enjoy the rest of your day.