Vascular Biogenics Ltd (NASDAQ:VBLT) Q2 2020 Earnings Conference Call August 13, 2020 8:30 AM ET
Michael Wood – LifeSci Advisors
Dror Harats – CEO & Director
Amos Ron – CFO & Company Secretary
Conference Call Participants
Kevin DeGeeter – Oppenheimer
Jonathan Aschoff – ROTH Capital Partners
Swayampakula Ramakanth – H.C. Wainwright & Co.
Jonathan Kreizman – Valore Research
Greetings and welcome to the VBL Therapeutics Second Quarter 2020 Earnings Conference Call. [Operator Instructions].
As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Wood of LifeSci Advisors. Please go ahead, sir.
Thank you, Operator. Good morning, and thank you all for participating in today’s second quarter 2020 results and corporate update call for VBL Therapeutics. Leading the call today will be Professor Dror Harats, CEO of the company; and Amos Ron, the company’s CFO. A press release with the financial results became available at 7:00 a.m. Eastern Time today and can be found on the Investors page of the company’s website at vblrx.com.
Before we begin, I’d like to remind everyone that various remarks about future expectations, plans and prospects constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. VBL cautions that these forward-looking statements are the subjects of risks and uncertainties that could cause actual results to differ materially from those indicated. Any forward-looking statements made on today’s conference call speak only as of today’s date, that’s Thursday, August 13, 2020.
And the company does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today’s date. As a reminder, the conference call is being recorded and it will be available for audio rebroadcast on the company’s webcast. [Operator Instructions].
So with that, I’d like to turn the call over to Professor Harats, CEO of VBL. Dror, please go ahead.
Thank you, Michael, and good morning, everyone. Joining me on today’s call is Amos Ron, our Chief Financial Officer, who will discuss the second quarter 2020 financial results. We are now just past the midpoint for the year, and we are very happy with the progress the company made so far and the milestones we have achieved. Our clinical programs evaluating VB-111 continued to move forward, and our work with MOSPD2 monoclonal antibodies is advancing toward the first IND filing. We also strengthened our balance sheet during the quarter with the successful completion of 2 equity financing.
Let me begin with an update on our Phase III OVAL study, which is investigating VB-111 in platinum-resistant ovarian cancer.
Ovarian cancer is a silent killer with a high mortality. According to the NIH official data, in 2017, there were over 230,000 women living with ovarian cancer in the United States. Ovarian cancer is frequently detected in advanced stages as the patients are asymptomatic in the early stage. Treatment advanced disease usually include surgery and platinum-based chemotherapy. Unfortunately, most of the patients who achieved remission with first-line chemotherapy will ultimately develop recurrent disease and each subsequent line of therapy is characterized by shorter disease-free intervals. The worst outcome are reported for patients with platinum-resistant disease.
In spite of investment of substantial resources, current therapies are insufficient and are not translated into survival benefit in the vast majority of patients. There is a huge unmet need for therapies that can extend patient survival with good quality of life, particularly of those with advanced disease. This is exactly the goal of our OVAL study. This controlled double-blind Phase III potential registration study in recurring platinum-resistant ovarian cancer has been designed to show overall survival benefit as its primary endpoint. OVAL is being conducted in collaboration with the GOG Foundation.
Earlier in March, the independent Data Safety Monitoring Committee, or DSMC, of the OVAL study conducted an efficacy interim analysis, and the outcome of this was featured in a presentation at the ASCO conference in June. The goal of this analysis was to see in an early stage of the study is a positive signal that was seen in our Phase II study in ovarian cancer could be replicated in a double-blind, randomized, placebo-controlled trial.
The analysis was successful. It demonstrated that the response rate in the VB-111 treatment arm was 58% or higher with an absolute percentage advantage of 10% or higher over the control arm. The patient with most — with post-treatment fever, which is frequently observed after VB-111 treatment, the response rate was even higher, 69%, which is very encouraging. This week, the independent DSMC overseeing this trial completed a preplanned second interim review. The analysis was initially projected to occur in the fourth quarter of 2020, and we are pleased that it took place ahead of time. The analysis looked at an unblinded data from the first 100 patients, which were followed up for at least 3 months and assessed overall survival in the second — in the 2 treatment arms for futility.
As you recall, overall survival is the primary endpoint of the OVAL study. The committee has recommended that the trial continue as planned. When the company blindly reduce RA data in all trial participants, that is in the treatment and control groups combined. We continue to observe a high response rate of over 50% of the total evaluable patients. This high response rate is, of course, encouraging as well.
Recruitment in the OVAL study is proceeding well in spite of the COVID-19 pandemic. Overall, the pace of recruitment is in line with our initial projection and even slightly better. Still to further expedite the development of VB-111 we are currently getting ready to expand the OVAL trial to additional geographies.
We should provide additional update on OVAL as study advances. The next periodic DSMC review in the OVAL study is expected as planned in the first quarter of 2021.
We are excited to advance VB-111 for the potential benefit of Ovarian cancer patient and would like to thank all the patients and their families as well as the investigators and health care professionals who are taking part in this important ongoing study.
Turning now to our MOSPD2 program. We are conducting two parallel drug development programs that are exploring the potential of MOSPD2, a protein, which we identified as a key regulatory of cell motility and as a therapeutic target for inflammatory diseases and cancer. Our proprietary antibodies targeting MOSPD2 have potential for treatment of various inflammatory medications, and we are advancing our elite candidate, VB-601 towards IND.
In June, we submitted a pre-IND application for the FDA, which is currently under review by the agency. We expect to start toxicology studies in the fourth quarter of 2020 and first-in-man study is expected in 2021. An inflammatory disease — in inflammatory disease, we presented new data at the EULAR 2020 meeting on the use of our anti MOSPD2 antibodies as a potential treatment of rheumatoid arthritis.
We showed the treatment with anti-MOSPD2 antibodies significantly inhibited arthritis progression in the collagen induced model of arthritis. The treatment reduced disease severity by more than 50% and blocked further disease progression. Importantly, in the advanced phase of the disease, anti-MOSPD 2 demonstrated higher activity than anti-TNF alpha, the classical therapy on the market to date with a $17 billion market in America. Actually, our data go beyond preclinical results as a MOSPD2 in the crime scene in human disease.
We showed that biopsy is taken from RA patients show strong staining for MOSPD2 in the inflamed joint, which is another supportive evidence for the clinical relevance of MOSPD2 in RA. Our data in RA add to additional findings we presented in NASH and colitis as a Digestive Disease Week, or DDW, 2020 meeting.
In a study that was rated in the top 10% of all abstract in this category and was selected as poster of distinction. Our data show the treatment with anti-MOSPD2 antibodies, decrease inflammation and fibrosis in a NASH model and significantly reduced disease activity in a colitis model. In our second program on MOSPD2 in oncology, we are studying bio-specific antibodies aim to kill tumor cells. Having established that MOSPD2 as a target whose expression is induced in multiple type of tumors. The most recent data from this program were presented in the late-breaking session at the AACR virtual meeting in June. The results were from preclinical study in which we administrated our antibodies to animals that had established metastatic cervical and breast cancers. We showed the treatment with the bispecific antibodies resulted in a statistically significant improvement in survival. The data also shows that our antibodies mediated killing of tumor cells by CD8 T cells in a dose-dependent manner and induced T cell activation in vivo.
To summarize, as you can see, significant progress has been made in both our quick programs, VB-111 and MOSPD2? We will keep you informed as additional updates come up.
I will now turn the call over to Amos Ron, our CFO, to review the financial results for the quarter. Amos?
Thank you, Dror. Revenues for the second quarter 2020 were $158,000 compared to $168,000 for the comparable period in 2019. Research and development expenses are shown net of IAA grants. Research and development expenses net were approximately $4.9 million for the second quarter compared to approximately $3.7 million in the comparable period of 2019. The increase in research and development expenses net is — in the second quarter was mainly related to the increase in the MOSPD2 activity and a decrease in the IAA grant, offset mainly by payroll-related costs for share-based compensation expense. General and administrative expenses for the second quarter were $1.1 million compared to $1.2 million for the second quarter 2019.
Financial income net for the second quarter 2020 was approximately $3,000 compared to approximately $132,000 for the second quarter in 2019. The decrease was primarily attributable to unfavorable changes in the currency exchange rates. Comprehensive loss for the second quarter was $5.8 million or $0.14 per share compared with $4.7 million or $0.13 per share for the second quarter of 2019.
As of June 30, 2020, we had cash and cash equivalents, short-term bank deposits and restricted bank deposits of $41.3 million and working capital of $36.1 million.
Our cash position was enhanced during the second quarter by equity financings that we completed in May. Net proceeds were approximately $6.4 million. We expect that our cash and cash equivalents and short-term bank deposits at June 30 will be sufficient to fund us — our operations and capital expenditure requirements into the third quarter of 2020. For further details on our financials, please refer to Form 6-K filed with the SEC.
We will now open the call to questions.
[Operator Instructions]. Our first question comes from the line of Kevin DeGeeter with Oppenheimer.
Congrats on the really encouraging update on OVAL. A few questions from me today. Dror, can you remind us as to what triggers the next interim assessment in the first quarter of 2021?
So actually, because it’s a registration trial, and we are talking about 400 patients. And of course, it’s not a short trial. So DSMC, unless there is an urgent or some reason for them to meet, we’ll meet regularly every 6 months, so that mean twice a year. Each time that the DSMC meet, they’re not only looking at a safety results, which, of course, they will — are getting very detailed safety on the whole study, but they also look at an unblinded fashion on every endpoint. So if in the first interim analysis, they looked at response rate, mainly with CA-125. In this interim analysis, it was preplanned, they looked at overall survival because the first one was for efficacy, and this one was for futility, for the safety of the patients.
From now on, they are going to look at all the results, both for efficacy and for safety and they will get the result as if we are at the end of the trial each time. And of course, they will guide us if we should go according to plan, or if there is any alarm or any reasons this time of safety or if there is any major signal of efficacy. And then, of course, there is always an ethical issue. If you do see efficacy, should you keep on treating patients with placebo. And therefore, they’re going to actually meet, convene every 6 months and guide us as their sponsor and the steering committee, which is mainly built from GOG people, if we should go with the trial without any modification.
Terrific. And with regard to the effort to expand the number of sites. And I think you mentioned geographies as well. Can you do perhaps 2 things. One, remind us how many sites are currently open? And then two, your general thought process in terms of geographies and perhaps target number of sites to open in the coming months?
So right now, we, I believe, opening 65 centers. Don’t get me on the exact number. It might be 64 or 66, but we are having almost all the centers that we are planning to have both in Israel and in United States. And actually, all the centers are open for recruitment. And although, we have the COVID-19 patient traveling to get VB-111 to the centers where they need to get it. So it’s quite encouraging. The geography extension is mainly to Europe and to Japan. There are 2 good reasons to do it. First, to expedite the time that we are going to actually recruit patients. And the second thing is, of course, for regulatory issues, both in Europe and in Japan.
Because of — or due to the COVID-19, we actually elected not to start in Europe previously, when the pandemic was really quite better. And right now, we are working on it and the same in Japan. But I can tell you that also, we didn’t open it both Europe and Japan. We are actually ahead a bit of our plan on the recruitment.
Perfect. And then maybe just one last one for me, if I may. With regard to the 601, really positive to hear the path into potential clinical development 2021. Do you anticipate a Phase I program in healthy volunteers or in a patient population with active disease and kind of if the latter, what patient populations might make sense?
So we are still debating this issue. You all know that there is an option today is to go directly to patients. It’s a bit more complicated. And I believe that that’s — and I’m not committing right now. We will go first to healthy volunteers because we would like to study in a much deeper way, the way our monoclonal antibody is working on the immune system. And the easiest thing is to actually take healthy volunteer where they have a normal and healthy immune system and see what our 601 antibody is doing not just to monocytes migration, but also to all the function, which we know that so far in ex vivo study, it doesn’t do anything to the function of monocytes. It doesn’t affect any T cells or B cells, but it will be much better understanding to it in vivo, of course, in human being. And as I was mentioning, we start having some evidence in humans from the studies that we were doing on histology. And hopefully, we will show more data in human even before starting the Phase I, but the idea is to start with a short study in healthy volunteer right now and then go to the indication that we will pick up.
Our next question comes from the line of Jonathan Aschoff with ROTH Capital Partners.
Congrats on the progress. And I was wondering, what is the minimum survival delta between the groups that was required for a second interim success progressing without modification?
This is an excellent question, Jonathan, and it’s not in the public domain. But you all have to understand that we are talking very early in the study, although, we already recruited for this analysis 1/4 of the patients, 100 patients, but it’s only 3 months follow-up. So it was mainly for safety and futility. So I don’t want anybody to make anything about efficacy of the survival at this point. It is too early to call. I believe that the next time where the DSMC going to look at the data in 6 months from now, and they will already look at most probably about 200 patients or more, and some of them will have a very long follow-up that will be the first meaningful time to look at signals of efficacy.
And therefore, we didn’t disclose it, and we don’t want to actually mention the numbers. The only thing I can tell you that they told us that we can go forward with any — without any minor or major modification of the study.
Okay. And then second interim, that was triggered solely by greater than or equal to 3 months for at least 100 patients and had no minimum requirement whatsoever for death number, right?
Can I assume that you did not get any blinded information regarding survival in patients that had a fever, nothing like that, right?
Of course, not. We are not going to get any blinded information from now on. This is a registration unblinded data. Blinded data, of course, we do get. I misunderstand your question. Yes, we do get blinded data on survival. We do get blinded data on response rate. We do see the blinded data because, as you know, everything right now is on is CRF and the blinded data is actually something that we do see. Are we going to talk about the blinded data? We wanted to separate it completely from the DSMB or the DSMC recommendation. So it will be clear to everybody that the DSMC didn’t disclose any unblinded data to us. So when I talked about response rate on the blinded data, the only thing I mentioned today, we have more information on the other endpoints of the study. But of course, it’s always quite risky to talk about blinded data.
Okay. So when you were referring to the maintenance of a high response rate “over 50%.” You didn’t specify, but can I assume that you’re still referring to CA-125 and not resist criteria?
When I talk about over 50%, it was CA-125 because that’s what we disclosed before. But we’re also seeing the resist response rate as well. And we will take the opportunity to talk about it, I would say, in the near future.
Okay. Lastly, the timing for the GBM and the colorectal initiations, is that — they are just still very difficult because of the IST nature or do you have a handle on that?
So actually, we are really on track there in both studies, although you can imagine that to start the study in the middle of pandemic, it’s not simple. And many times, it’s even deferred completely, but that’s not the case here. But I prefer to talk about it when we have the first patient team. And when we will have the first patient team, we will announce it. But we’re really optimistic.
[Operator Instructions]. Our next question comes from the line of Swayampakula Ramakanth with H.C. Wainwright.
I apologize. I’ve been shunting between calls and if I’m going to ask something which has been already answered, I apologize for that, too. A couple of quick ones. In your remarks, you mentioned about increasing the — or expanding the study into certain additional geographies for the OVAL trial. Could you comment a little bit on the — if there’s a need for it? Or what is the strategy behind expanding. Is it more for registration purposes into other geographies?
So actually, when we decided to do it, it was for a very good reason, both for getting a good recruitment for the trial and meeting the timeline, and of course, for registration. Right now, the recruitment is going very well. But nevertheless, I think it will expedite the recruitment, and it’s very important for registration. So we have both reasons in our mind.
And then regarding the MOSPD2 programs. At this point, what additional preclinical work do you need to do before you can start designing your Phase I programs or your clinical programs?
So actually whoever familiar with the regulation of a monoclonal antibody development, you always have 2 meetings with agency. The first one is a pre-IND meeting, where you have to actually submit to them already your synopsis for the Phase I clinical trial and outline, what type of development you want to have, and we already submitted that to the agency. So we already have a lot of details about what we want to do in the Phase I and what we want to do later on.
Of course, exact dosing is — depends on the toxicology. And the second thing you have to submit to the agency at this point is what is your toxicology plan. You can actually skip this meeting, if you want, but then you come to an IND meeting, and it might be that the agency won’t think or will not think that you had significantly enough pre-clinical or toxicology studies. So we already submitted the whole program to the agency. I was saying that it’s under review. We already know the mood, what they think about it. But I will disclose everything when we will get an official response from them. But the plan is to start the toxicology in the upcoming quarter, in the fourth quarter. So you can imagine that we are in line with what we planned. And then when you get the toxicology report and everything done, that’s when you can submit basically the IND to the agency. But it won’t be the first time that they see the whole thing because they already got most of the materials that they are going to see in the IND, except for the result of the toxicology.
Okay. The last question from me is on 201 for veterinary use. What’s the status there? How much of — how much can you disclose publicly on what’s happening within that program with the European collaborator?
Okay. So you all recall that we have small molecules that we actually did a deal with one of the big vet companies, and they already — we already met 2 of the milestones in the program. And because of the COVID-19, and I was saying it before, one of the important trials, the clinical trials in vet is on animal, it’s not on human being. But this trial was postponed because of the COVID-19. It’s going to be done in one of the, I believe, universities in United States. And I can tell you right now, that it’s actually going to start or starting very soon. So there was a little delay, but hopefully, things will progress now very quickly.
Our next question comes from the line of Jonathan Kreizman with Valore Research.
Congrats on the developments around the OVAL trial. So I have a question or two around MOSPD2. You published a series of papers and presented some considerable preclinical advancement achieved today. It would be helpful if you could share what are the next steps we should expect and whether these could include any commercial options? And maybe some thoughts you have around the prioritization of some of these programs? How you plan to approach for clinic and some timelines you think are realistic considering the current environment?
Okay. So Jonathan, thank you for the question. In terms of coming milestones in the MOSPD2, I believe that the first and most important one will be the discussion with the agency, which we are expecting to get soon. And that’s going to be an important milestone because that’s basically going to reassure our program towards the market. The next very important thing will be, of course, the toxicology, where also we have 2 stages in this toxicology, and we might be able to disclose it. But if we will keep on with the toxicology, that should be a good sign to the market of what we do see so far is very good. Otherwise, of course, if there are issues in toxicology, you always have to rethink about the program. If everything goes well, we are going to present more data on multiple sclerosis quite soon. There is a conference coming.
And hopefully, we are going to present there important data. But I believe that relatively soon, we will have some more evidence on the activity of MOSPD 2, not just in animal models, but also in things that are related to human beings. And when we’ll have this, we are going to actually present it to the public, and hopefully even have a key opinion leader event, talking about why this program is so unique in inflammation. And I believe what I was saying today about RA. I just want to emphasize a little bit more about it. In all these models, in animal models, you give a anti-TNF alpha, and you do see response. But then when the disease progresses, it’s actually a vein almost completely or pathway with the MOSPD2 monoclonal antibodies, it’s actually the opposite. It’s actually working on the chronicity of all these diseases. And even if the animal can start developing the disease, and maybe get to about up to 30%, 50% activity of the maximum diseases you can get. But then it just flattened down or even subside because monocytes play a major role in chronic inflammation. So I believe that the next year, we are going to come with more results both in preclinical in some human ex vivo study that we are doing with the toxicology. And then, of course, with the IND.
Right. And just again, on prioritization, any — you have several of these programs out there. Any thoughts around which ones you expect would progress earlier into the clinic next year?
I believe that in the VB-601, which is for inflammation, is going to be definitely the first to go and not the bispecific. Bispecific, as we all know, it’s more a complicated program. And in terms of what indication we are going to look at first, there is an option that we will pick up multiple sclerosis as the first indication. But the whole toxicology program is actually aimed to the Phase I and Phase IIa and IIb, and there is no much different in terms of the agency regulation, which program we are picking. So we are deferring this decision right now. As you can imagine, whenever we come with more results, and this is completely different program from any other anti-inflammatory programs on the market. We do get questions, interest, discussion and of course, one of the, I would say, part of our decision where exactly to go. Of course, it’s where there is a need, where there is a trial that you can achieve actually proof-of-concept relatively easily? And what is need of the market in terms of option to get a strategic partner is shape here. Because if it’s indeed working in many different inflammatory indications, this is going to be a huge program.
We have no further questions at this time. I would now like to turn the floor back over to management for closing comments.
So thank you all for participating in our call today and keep safe in this very hectic time. Thank you very much.
Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.