Nykode Therapeutics ASA

OSE:NYKD

Earnings Call Transcript 2022-Q4

[Operator]

Greetings, and welcome to the Nykode Therapeutics Q4 Webcast. [Operator Instructions] Note, this conference is being recorded.

I will now turn the conference over to our host, Michael Engsig, CEO. Thank you. Please begin.

[Michael Engsig, executive]

Thank you very much, operator, and also from my side, a very warm welcome to all the participants for this quarterly webcast here on our financial results and update on the company highlights.

Just to begin with a quick look at our forward-looking statements. We assume you're all familiar with those on a not note, we'll move forward. Together with me, I'm pleased to have Agnete Fredriksen, our Chief Business Officer and Co-Founder; as well as Harald Gurvin, our Chief Financial Officer.

Quick introduction to Nykode Therapeutics for those of you who are new to the story. Nykode is a clinical stage immunotherapeutic company. We are entirely focused on exploiting our unique and proprietary immunotherapy platform, which uniquely targets the engine to the antigen presenting cells and in turn, generate a strong CD8 T cell response, which has been shown to be correlated with clinical responses in solid tumors. Our technology is modular in its buildup, which also provides a high degree of versatility that allows us to easily incorporate new antigens and adapt the products to new diseases across the oncology, infectious diseases and autoimmune space. We are dedicated to advancing our wholly owned and lead assets VB10.16, an immunotherapy developed for HBV 16-driven cancer types. And we are very happy to have been reporting both positive clinical data from that program back in May and followed up with additional positive data in November last year, and we are very much looking forward to be reporting the final data from the CO2 trial in the first half of 2023. We've also announced an expanded development program, an ambitious one at that, which includes a potential registrational study in advanced cell cancer to be initiated towards the later part of 2023 as well as an expansion into head and neck with a dose escalation study that we're doing in combination with Keytruda to be initiated in the first half of 2023. We believe in partnerships and have been signing a number of transformative partnerships for the company, including 2 large out-licensing deals with Genentech and Regeneron as well as other partnerships with top-tier partners.

We're well capitalized with a cash position of USD 26 million as per the first of December and will come into further details on the financial reporting towards the end of this call. So both fourth quarter and 2022, its entirety has been a transformative year for a code, and we've been announcing a string of positive results across our programs, including our wholly owned lead VB10.16 as well as our individualized cancer vaccine, VB10.NEO, which we developed in combination with Genentech. We've also announced a collaboration with MST on the combination of VB10.16 with KEYTRUDA and the BBC3 trial. We'll tell you more about this role in a few minutes as well as a strategic manufacturing partnership with Victor Hill Biologics that will give us certain securities on supply chain flexibility. We are, as I mentioned, very much looking forward to the major event, which is the final reporting from the VB10.16-C02 trial, which has been enrolled in patients with advanced cervic cancer. And this final analysis will cover the entire treatment phase for all the patients in this trial here. We've also post the Q4 announced a collaboration with GOG Foundation, which will help us both design the optimal CO4 trial and also held the execution of the CO4 trial, will tell you more about that in a few slides.

With those words, I'm going to hand over to Agnete to take us through the key highlights from the positive data we reported in fourth quarter.

[Agnete Fredriksen, executive]

Thank you, Michael, and we will start off with some focus on the individualized cancel antigen-based vaccine program that that we are currently running then in tight collaboration with Genentech. So this is where we work with the individualized neoantigen-specific vaccines, and these are custom-designed and manufactured as one vaccine per patient really based on mapping each patient's cancer specific mutations. If you have followed the field recently, there has been multiple positive data and Moderna and Merck announced at the end of last year, interesting clinical benefit for their individualized new antigen-specific cancer vaccine. This was in an adjuvant setting, but we really see that this has generated new enthusiasm for the promise of cancer vaccines, particularly then in early-stage disease. It's important for us to highlight that Michael is a key player in this field. We were one of the first companies in the clinic with an individualized cancer vaccine, and that's our VB N-01 trial, where we had the first patient first dose already in 2018. Nykode has also -- last year, after entering a partnership with Genentech in 2020, we were presenting positive data in multiple indications. This has been in the trial setting with checkpoint inhibitor experience an advanced metastatic setting in multiple different indications. So is a bit different setting from the data that we've seen from Moderna and Merck. So we presented updated positive immunogenicity data from this trial which shows us and confirm the broad and strong CD8 skewed immune response. You've seen before that in preclinical studies. We are able to show a broader and stronger and more CD8 skewed immune response than multiple other vaccine technologies that focus on the antigen alone when we incorporate our targeted APC targeted technology. We also said that we have 100% manufacturing success rates with this important business is on the DNA plasmid backbone and is also safe and well tolerated across the studies we reported so far.

So briefly, VB N-01 is a study we've reported this positive data. This is the trial that we initiated before entering the partnership with Russian Genentech and then after signing the agreement with Russian Genentech, we started at the end the 2021, the N-02 study, which is ongoing, then in more than 10 indications. And this is where we are doing all our dose escalation. Recently, we have also revealed that we are increasing the dose up to 9 mg in this trial, which will be the first trial where we look first, obviously, into safety over 3x higher dose than what we tested before. And then subsequently, if this is safe, we will be able to investigate whether we have even further increased efficacy by increasing the dose. And this trial is really just to highlighting this data we presented in the fourth quarter. Based on what we have seen here, the breadth of the response is really confirming what we've seen in preclinical studies. We generate a response to a high number of new epitopes also across, in this case, all patients. We see a new adjuvant specific response after predicting and selecting epitopes based on each patient's tumor and manufacturing on vaccine per patient.

Now we also see that these are primarily de novo responses, which is important that they are new to the patients after starting vaccination but also an ability to amplify these responses that were already preexisting in the patients. And importantly, we continue to see this strong CD8 dominated T cell responses in this trial. So these data are not just important for us for the individualized cancer vaccine program, but it's really giving us comfort on the translatability of our vaccine platform's unique abilities compared to other vaccine technologies, that goes across the platform and not just per product. Then for VB10.16, this is a wholly owned asset, and you've seen in 2022 throughout that we are focusing on rapidly advancing this asset now in multiple different indications. It has the potential to treat patients with an HPV 16 positive cancer across for cervical, head and neck and other diseases are caused by HPV. And we have a pretty broad program ongoing with VB10.16. Importantly here, we are now very much looking forward to report final data from the CO2 trial in cervical cancer. We reported interim data from that trial back in May last year. And now we are getting ready to do the final analysis and then report the data of how these patients will do after a whole year of treatment or more. Based on interim data, we have also decided to expand into head and neck and cervical cancer as well as other potential trials. I'll go a bit more into the rationale for this in the subsequent slides. So importantly, here, let's say, a reminder for the interim data that we announced last year in anticipation of the future updated data set that will come out for remembering that this trial was in heavily pretreated advanced cervical cancer patients. We have said before, it's fully enrolled. So 52 patients. This broad then treated with a 3-mg dose of VB10.16. We have highlighted that this patient population includes a high number of patients with multiple prior systemic treatment lines. So they have failed multiple lines of systemic cancer treatments as well as we have also a quite high percentage of PD-L1 negative patients, knowing that these patient populations with later stage as well as PD-L1 negatives are in general, the patient populations that respond less optimal to checkpoint inhibitors. And the last interim analysis was a preset where we had 18 patients that had reached the 18-week scan. As you can see here in the spider plot but there were multiple patients that have been followed for a shorter period than 18 weeks and only a few patients that had gone through the entire first year of treatment. So this is really what we are then expecting to report within the next few months. Then all patients or 52 patients would have had the possibility to be followed for the entire first treatment year as well as some patients we will have longer-term follow-up when it comes to our all soil and durability of responses. And we have highlighted before that these very long-lasting clinical responses that we see in those patients that were followed for a year last time is what we are most excited about looking into for the final data analysis to see if we can repeat that pattern in more patients, that will be very important and meaningful for the promise of VB10.16 in the future.

We have also looked into previously, this includes PD-L1 positive as well as net patients and we see a very high objective response rate in the PD-L1 positive, higher in PD-L1 negative, taking into account that the checkpoint inhibitor monotherapy in this indication as published around 14% to 16% objective response rate in PD-L1 positive. And then in general, 0% in PD-L1 negative patients. And so it will be important for us to look into these subpopulations also in the subsequent readout. I think for the key inflection points that we are now seeing ahead of us for VB10.16 is this long-term follow-up from the CO2 trial. Importantly, we will look into patients that have had a minimum of 12 months. It's PD-L1 positive as well as PD-L1 negative patients that we will see how response treatment and it will be patients with both one or more prior systemic treatment lines based on the data that we've also released earlier that there is a higher likelihood of seeing strong responses in patients with 1 or 2 prior semi treatment lines than those that have failed more than 3 prior systemic treatment lines. So this will be both an update on our objective response rate and disease control rate. Importantly, although new parameters that we haven't looked into before, will be duration of response and overall survival. Then for the CO3 trial, that's actually a trial that we are expecting to have the first patient first dose also in the first half of this year and in addition to the dose escalation trial that we have mentioned for the N-02 trial, this is also a trial where we will be able to look into how the higher 9 mg dose will perform in comparison with the 3 mg dose. It will be in PD-L1 positive patients, where we've seen also in CO2 trials that we have the highest efficacy, and it will be in first-line patients where we also have seen before, but we have the highest efficacy. And we will be in combination with pembrolizumab after we announced that we signed a collaboration and supply agreement with Merck in December last year. But for VB10.16 in addition, we have an important program ongoing and is preparing for the first patient first dose also in the C-04 trial, which is the potential registrational trial, and this is a trial that we now recently announced that we will do in tight collaboration with GOG. It is to be initiated in Q4. We are currently on track to do that. It will be then also in recurrent or metastatic cervical cancer setting. These will be refractory to first-line treatment, then including the checkpoint inhibitors performed in U.S. This is really a patient population with a high unmet medical need, where we have a potential for fast to market. And VB10.16 will then be given in combination with the selected checkpoint inhibitor, I will inform you on the decision on which one before we start the trial. And as mentioned, we are extremely fortunate to have been able to attracts the collaboration with Gynocological Oncology Group Foundation. This is a U.S.-based expert group that is really focused on gynecological cancers, and it has a 50-year history of designing and executing clinical trials in cervical cancer, and they've really been involved in most of the treatments that have had approval in this gynecological settings. Then the last from the operational point of view is importantly, our strategic partnership with Helm. As Michael mentioned, this is something that's important for us to secure and optimize manufacturing moving forward as a company with multiple programs running in parallel. This is a highly repeatable plus DNA manufacturer with a proven track record. This will give us highly comparable cost of goods and maybe most important flexible forecasting model and that will secure capacity for our entire portfolio, both with our own programs, but also then for delivery to our partner programs. and the ability for us to do a potential tech transfer to partners is also something that will be supported by steam and that includes our own Nykode IP. So this has been an important collaboration for us moving forward.

[Michael Engsig, executive]

Thank you very much, Agnete. Just a few words on the organization, which will be on the next slide. Continue to grow, although if you compare the last quarterly report, you'll see a slightly lower, some would say, more controlled pace. we now reach 157 employees across the organization, which includes all people who have signed and started working for the company. the distribution across the different functions is on a stable part of traitor with 50% engaged in research and approximately 4% engaged in development activities, including DMC.

And with those words, I'm going to hand over to Harald Gurvin, our CFO, for a review of financial numbers.

[Harald Gurvin, executive]

Thank you, Michael. Nykode is financially well positioned to grow and execute the company's strategies over the next years with a strong cash position of 206 million at year-end. We're also very pleased with the successful uplift to the main list of the Stock Exchange in the second quarter last year and the subsequent inclusion in the Oseberg Benchmark Index and also burst mutual funding leg 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 did not give any guidance on timing, which will depend amongst others, on market conditions.

Looking at the income statement. We reported revenues of 2.7 million in the fourth quarter and 7.2 million for the full year relating to the R&D activities under the agreements with Genentech and Regeneron. This is down from 31 million and 33 million, respectively, for the same period in 2020. Due to 30 million upfront payment booked under the Regeneron agreement in the fourth quarter of 2021. Our other income represents government grants from Scottetoon and the Research Council , where we had a total of 4 projects running in 2022.

Looking at employee benefit expenses and other operating expenses, we have been ramping up both the organization and our research and development activities over the last years resulting in increased expenses. Overall, we recorded a net loss of 12.2 million for the fourth quarter and 42.7 million for the full year 2022.

Then moving on to the balance sheet. We have, as I said, a strong cash position of 206 million at year-end. Also looking at trade receivables. These are the amounts invoiced under the Genentech and Regeneron agreement. The reduction in trade receivables is due to a 20 million milestone from Genentech, which was invoiced in the fourth quarter of 2021 and received in the first quarter of 2022. Lastly, moving on to the equity liabilities. We had total equity of 157 million, which represents a strong equity ratio of 71%.

And with that, I will give back to Michael.

[Michael Engsig, executive]

Thank you very much,. And just to finish off reviewing our achievements for 2022. It was both busy and successful year with a lot of progress on -- across our programs with the positive results from our VB10.16 trial in VAT circa cancer as well as the announcement of the next studies for VB10.16 cervical cancer and head and neck cancer. We also reported positive results from our T cell focused candidates in our COVID program. We reported positive in gene results from our individualized cancer vaccine that we are developing together with Gene we reported the announced the strategic manufacturing collaboration with liter. Looking ahead is also going to be a busy and hopefully as a successful year. in 2023. And most importantly, obviously, we are looking forward to be able to announce the final analysis data from our VB10.16 C02 trial, which will take place in the first half of 2023. We also look forward to announcing the initiation of our expansion into head and neck with the CO3 trial. A trial that we are running together with MSD will provide future for the combination. We look forward to get the potential registrational trial C04 off the ground, hopefully initiating that towards the end of the year, this trial we are running in collaboration with U.S.-based GOG. And then we are very much looking forward to be able to update you with additional preclinical data from our auto new program in the third quarter of 2023.

And with those words, I'm going to hand back to operator and open up for questions.

[Operator]

[Operator Instructions] And our first 3 questions come from Gonzalo Artiach with ABG Sundal Collier.

[Gonzalo Artiach Castañón, analyst]

The first question. Recently, Moderna and Merck obtained breakthrough designation for mRNA-4157 melanoma vaccine based on their PH2 trial data. Could you also apply to the FDA for breakthrough designation for VB10.16 and could the fact that C02 trial was run only in Europe and not in the U.S. affect the outcome of the potential decision of the FDA.

[Michael Engsig, executive]

Thank you very much, Gonzalo, for that excellent question. And I'm going to break the answer into 2 different sets. To the first question, could we, in theory, apply for breakthrough at the segnation for VB10.16? Yes, we could. But due to the requirements for breakthrough designation, we believe the correct timing for such an application would be when we have the interim results from the CO4 trial that we'll initiate towards the end of the year. So in that sense, the location of CO2 in Europe is not in any way a hindrance for a later breakthrough designation.

[Gonzalo Artiach Castañón, analyst]

And the second question regarding the GOG Foundation collaboration, could you give us some color on what are the steps and key requirements that the GOG Foundation needs or demands in order for them to join a trial such as C04 as a collaborator?

[Michael Engsig, executive]

Yes. And of course, this is a question that should be better directed to them. But I'll give you our flavor for what we believe they consider important and why they choose to intake collaboration with us. So I think, first of all, they need to be excited by the technology and the product candidate that you're entering into a collaboration with them around. And we've had long discussions and interactions with the GOG on the platform technology of Nykode and in particular, VB10.16, and the interim clinical data that we have shown earlier for this program. And I think that's the most important starting point for a thoughtful discussion with then they need to have some confidence in the company that they want to work with. And finally, they need to believe in the -- both the trial design and the subsequent development strategy that you put forward. And that's why it's been so important for us to discuss the development strategy and the potential registrational nature of CO4 at a potential fast-to-market path for the product candidate. So it is, as you can, a multifactoral element when they consider who they want to work with.

[Gonzalo Artiach Castañón, analyst]

Based on your CO2 interim data, you reported that patients that received VB10.16 in the 2O or 3O of treatment seems to have a better response to the vaccine, higher efficacy numbers reaching an ORR of 30% in average combining these 2 lines. Does this have any implication in terms of future patient selection in your upcoming C04 trial?

[Agnete Fredriksen, executive]

Yes, good question. And I mean, I think we've said before that there are no surprises to us that you are expecting a higher efficacy in the earlier lines of treatment in the later line. And this is one of the reasons that in the CO2 trial, where we are not really controlling how many lines the patients have received before. We were a bit concerned seeing the number of patients that came in with the later lines of our treatment. And looking into the efficacy numbers, we also confirm that in the earlier settings, we see a higher objective response rate as well as the rate. So it's not a surprise to us. And I think, yes, you see it both in the CO4 trial as well in the CO3 trial and the CR3 trial in head and neck. We're doing it in first-line patients and in the C04 trial in in patients that have then faced 1 prior line of treatment, which will be then including the checkpoint inhibitor treatment in the first line. So yes, expected, and I think you can see that in our future development plans that we are moving in that direction. These are also PD-L1 positive patients enrolled for those trials, which is also another parameter we're looking for. Patients that has the highest opportunity to respond to treatment.

[Operator]

And we have 3 questions from equity analysts, Geir Holom with DNB Markets.

[Geir Holom, analyst]

You recently stated that you will be spending most of your resources, both capital and manpower on oncology. Second, on audio immune and last infectious diseases. Has -- one, has your experience from the SARS.COV trial strengthen your view on Nykode's potential within infectious diseases Two, we know you believe a balanced T cell and B cell response is an interesting way forward with infectious disease, do you think the current construct of the Vaccibody molecule and especially the targeting unit produces sufficient B-cell response to achieve that balance. And three, could you elaborate on how you are currently working on your preclinical efforts within autoimmune diseases, i.e., how much of your company's map power is put on these efforts.

[Agnete Fredriksen, executive]

Yes, I can take a slab of those. Yes, we have recently announced the data from the SARS.COV 2 trial for a T cell-focused candidate, and that gave us the confidence and strengthen our view of our technology's potential to generate also a strong and broad T cell responses as well here, we also see the CD8 skewing of the immune responses in an infectious disease setting and it's basically the same as what in the oncology setting. So it's a platform feature that we are continuing to see across antigens, whether they are from infectious diseases or from oncology. Importantly, that is with a particular targeting unit that we have chosen to work with, which is based on the T-cell focused and cross presentation and CDH skewing. And this is something we see then also across -- into infectious diseases, which can be important in order to eliminate for instance, virally infected cells. I think the safety that we also presented from this trial gives us the opportunity to work in a prophylactic setting, for instance, as well. For the second question, I think we've seen before, and we've published data on the platform on the opportunity for us to work with this really modular technologies. We can work on fine-tuning our platform technology in order to to more T cells or B cell responses, TH1, TH2 and a lot of details by only simply changing the targeting unit. And recently, in 2022, we've added on this for module technology in addition, that gives us another layer or in order to further control the immune responses in different directions. So when we move into different diseases in infectious diseases, there may be different correlate of protection that may be an opportunity for us in the future to custom design a vaccine that gives the right kind of immune response to that particular disease. So that's the future opportunity working on the modularity and the targeting unit that we have in our vaccine. And that is really for the third question on autoimmunity, something that we are then employing also for autoimmune diseases, a bit similar to what we could do in infectious diseases by changing the targeting unit and making sure it goes to certain subsets of antigen presenting cells that are more of the toll Genentech DC type and also adding on the fourth and fifth modules in principle that can further make sure that this local immune response is skewed to immune tolerance and regulatory T cells that will be antigen-specific. We believe that the technology as we have presented it is unique when it comes to how specific and how many different modules that we are employing in one vaccine technology in order to make sure it can lead to antigen-specific immune tolerance compared to whatever is as is out there in development for antigen-specific autoimmunity, but it's still early stage. This is an early stage preclinical setting for us. So in that case, we are obviously having a lot of focus on auto community, and we have a strong belief that this can be extremely important for the company and generate a new leg for us. But when -- Harald is looking at the finances. It's not taking a huge bulk of the finances, it's taken more in our brain, I think, at the moment.

[Operator]

Our next question comes from Bertrand Delsuc with BioTelidex.

[Unknown Analyst]

What to expect from the 9-milligram dose. How do you know how DCs are saturated or not in terms of antigen internalization and antigen presentation.

[Agnete Fredriksen, executive]

Yes, that's a good question. And we have a lot of data on this from preclinical settings, and I'm generating more and more insight into these questions as we speak, both ourselves and with partners. We do see that we can -- we do have a very strong dose response in preclinical settings where we can continue to increase the dose. It also is an effect on the number of injection sites. So if you separate the dose -- the higher doses in multiple injection sites. You have for this potential saturation that you are potentially referring to here and can continue to increase the total systemic responses in the patients. We are also very much -- the first thing that we will be looking into is whether it's safe, and it's really because the streaming dose that we've seen in in all the trials up until now has not presented itself with any concerning safety signals and that's the reason why we are moving into a higher dose. We want to really explore if there can be additional efficacy left on the table. And the data that we will generate will answer whether we are at the top of the curve or whether there is more efficacy to be taken out by increasing the dose without sacrificing anything on safety.

[Operator]

[Operator Instructions] We have an additional question from Bertrand Delsuc with BioTulidex.

[Unknown Analyst]

Do you have plans for VB10 Neo in earlier settings than advanced and metastatic like the neoadjuvant one in melanova or other cancer types.

[Agnete Fredriksen, executive]

Yes. So VB10, we are obviously not in control of communication of the further development as this was out-licensed to Genentech in the future. I can maybe comment on a general basis that as mentioned before, that the earlier early stage of disease is that we meet the patients with a vaccine. We believe that the likelihood of seeing efficacy will be more and more evident. And since our vaccine has the safety profile that we now referred to a few times, we believe also in the future that it has a place in early lines of treatment. However, we are quite enthusiastic by also seeing efficacy in advanced patients at this stage. So we believe that there is an opportunity along the treatment paradigm.

[Operator]

And there appears to be no additional questions at this time. I'll hand the floor back to our speakers at Nykode for closing remarks. Thank you.

[Michael Engsig, executive]

Thank you very much. And once again, a big thanks to all the participants for joining for this update on our quarterly results and company highlights. We look forward very much to bringing you further updates, in particular from the final analysis of the CO2 trial, which will be due in the first half 2023.

And with those words, I think we can close the call today. Thank you very much.

[Operator]

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.