Candel Therapeutics, Inc. (CADL) Earnings Call Transcript & Summary

All right. Good morning, everyone, and welcome to B. Riley's oncology conference. I'm Kalpit Patel, a research analyst here at B. Riley, and it's my pleasure to introduce our next company, Candel Therapeutics. With me, I have Paul-Peter Tak, the company's President and CEO. Paul-Peter, thank you very much for joining us today. Maybe we can start with a brief overview of your approach for fighting cancer. Curious to hear how your approach is differentiated relative to historical attempts for utilizing oncolytic viruses. So I'll pass on the mic to you.

Okay. Thank you so much, Kalpit, and hi, everyone. Candel Therapeutics has 3 platforms: 2 are clinical platforms; and then third, we have a newly created discovery platform. And the first is an investigational medicine called CAN-2409. It's actually not an oncolytic virus. We call it a viral immunotherapy. It's a way to immunize the patient against the patient's own tumor. So we induce an immune response that is specific for the injected tumor, but that also has a clear effect on the uninjected distant metastases. So it's a form of in situ vaccination, so you don't need to inject all the tumor metastases. You don't need to give it very often. It's much more like COVID-19 like a vaccination schedule where you give 2 or 3 injections in the patient's life actually with durable responses. We are testing it in multiple indications, and that's why I call it a platform. The second is an asset called CAN-3110. That is a true oncolytic virus, but it is differentiated from every other HSV, every other herpes simplex virus, because it contains the so-called ICP34.5 gene. Everybody else [ has knocked ] this gene out because of safety concerns. But the problem is that if you do that, you have a safe virus, but actually you also sacrifice efficacy. And so we've reinserted [ a needle ] for this gene under control of a tumor-specific promoter. So it replicates and it exerts its aggressive action against the tumor cells only in the tumor while sparing the healthy tissue. We've tested this concept. We were the first to do this in humans, and we've now experience in more than 41 patients. There's no dose-limiting toxicity. We see some transformative clinical responses in recurrent high-grade glioma. Here, again, we can expand into other tumors outside the brain with a diagnostic biomarker, which is Nestin. So that's why I call it a clinical platform, which is very differentiated from other HSV gene constructs. And then the third is a newly created discovery platform that we call enLIGHTEN. It reflects the name of Candel: light. And we just unveiled this platform at the same time that we announced a discovery partnership with Carl June and Neil Sheppard at University of Pennsylvania to create synergy between CAR-T cells used for solid tumors and new viral immunotherapies that we designed to create synergy and to convert nonresponders into responders. We could do the same in discovery partnerships with pharmaceutical companies to create synergy with their cell therapies or antibody drug conjugates or immune checkpoint inhibitors to convert nonresponders into responders. So that's also where we are open to business.

Okay. Good. Let's talk about your efforts in lung cancer with 2409. You have 2 cohorts that you're testing initially. Maybe explain the rationale behind that specific trial design and why you chose only to enroll patients with stable disease and progressive disease into this trial.

So we focus here on an area of high unmet need. And for each indication, we look at the medical unmet need, the scientific rationale. We've done extensive market research to look at the commercial opportunity, developability, et cetera, et cetera. So at this time, we focus on patients with Stage III or Stage IV non-small cell lung cancer. They are -- they can't undergo operation. They're not resectable tumors. And they have already been treated with immune checkpoint inhibitors for a prolonged period of time, at least 18 weeks. And then at some point, the conclusion is these are immune checkpoint inhibitor inadequate responders, and most of these patients have also failed chemotherapy. So the therapeutic options are extremely limited in these patients, so there's a huge unmet need. And that's where we now test in 2 sub cohorts patients with progressive disease. That's arm 2. So these patients may have exhibited an initial response to new checkpoint inhibitors or may have had stable disease. But then at some point, the tumor starts to grow again. That's why the prognosis is so poor, and again, there are no real therapeutic options for these patients. So we give them 2 administrations in total of CAN-2409, and we've shown that we are able to convert progressive disease into stable disease. And I guess we'll come back to that. Arm 1 is an area that's a little bit more exploratory because they actually have stable disease during continued immune checkpoint inhibitor treatment. But you may make the case that patients do not like to have a stable tumor. They want to see a decrease in the tumor. So that's where we started to explore whether we can create synergy also in this population that has a slightly more favorable prognosis.

Okay. And in the initial data, you showed a 25% in that cohort with stable disease and then a 12% ORR in the cohort with progressive disease. Give us some perspective on these results and what the expected outcomes would be with salvage therapies, whether it's chemotherapy or anything else.

Yes. So most of these patients don't get chemotherapy in the context of standard of care. The best publication that shows exactly the same population has been published in 2018 by Gandara and colleagues, and what they did is they included a similar patient population and then switched them to atezolizumab. So this is the so-called OAK study. So this is the best benchmark. Key experts in the field all agree about this. And what they observed is an overall response rate of 7%. So that's the benchmark. So the results that we see are extremely encouraging. I should also mention that with immunotherapies, ORRs are not necessarily the best end point, right? These have been developed to evaluate the effects of chemotherapy, kinase inhibitors, radiotherapy. But a big lesson from the field of immune checkpoint inhibitors, as the pioneering field in immunotherapies, has shown that there may be patients who initially do not have an ORR and a response according to the RECIST criteria, but you are able to stabilize the disease. And these patients live longer with a high quality of life, and that's the goal for the patients. And that's also a meaningful end point, which is survival. So we see in our study very high disease control rates, which basically means patients who fulfill the RECIST criteria plus the patients where it was possible to convert progressive disease into stable disease. And we actually see this in arm 2 patients with progressive disease in 77% of the patients. So this is unheard of and a very encouraging result. And the expectation would be that, that will translate into improved progression-free survival, and I guess we'll come back to that.

And what's the benchmark for disease control rate? I know you mentioned 77% in cohort 2. But what was the DCR in that other study that you're referring to?

Yes. That's 56%. So 77% is really much higher than what has been published before in this population. Very encouraging.

Got it. And oftentimes, when investors look at these combination-based studies, when you have a checkpoint inhibitor on board, you have chemotherapy added as well, how do they delineate the benefit of what your specific agent is doing? Is there -- are there any certain pieces of translational data that suggest the outcome is driven by 2409?

Yes. So first, we know that if you select patients with therapy-resistant disease, as we do, that you will not see placebo effects. You don't see a regression to the mean, and there's no effect of expectation bias. So if you see results and you compare it to baseline population, as I just described for the OAK study, then you can compare whether this is clinically meaningful. But you're right. Translational results are very important as well. So we've done very deep immunological studies. We know based on most models, extensive preclinical work that we've done in the past, that the effects of CAN-2409 are mediated by CD8+ cytotoxic tumor-infiltrating lymphocytes. And in animal models, you deplete these antibodies, then it doesn't work anymore. So ultimately, the effect is mediated by CD8+ tumor-infiltrating lymphocytes. And that's exactly what we show in the ongoing non-small cell lung cancer clinical trial. We've shown a very significant increase in the number of these CD8+ T cells at the site of the tumor. They get closer to the tumor cells. We've done a proximity analysis. And we can also show that there's an increase in the number of circulating CD8+ cytotoxic T cells. So these are the cells that will -- that have been educated how to recognize the tumor cells. They're looking for metastases. And indeed, we see an effect on uninjected lesions in 2/3 of the patients. That is very significant. You can also measure in the serum the levels of so-called soluble granzymes. They are cytotoxic enzymes produced by these cytotoxic T cells, cells that have been trained how to eliminate the tumor cells. So a highly significant result there as well. So the mechanistic data clearly underscore the specific effect of CAN-2409.

Got it. And maybe let's zoom in on the 4 partial responses that you had in the trial. Are any of those responses still ongoing? Do we have a more recent update?

Yes. So this study is still ongoing. So in 2 of the 4 patients, although they were having an inadequate response to immune checkpoint inhibitors, we still have a continued response. And in one patient, this is now already more than 14 months. So extremely encouraging result. Also, when we look at patients who had progressive disease but who convert into stable disease, they do not fulfill the RECIST criteria but they stabilized, we now have patients who actually have a prolonged follow-up and continue to do very well clinically. And I can show you, let's see if that works technically, I can show you what that means for a patient. So here, you can see an example of a patient in the study that we -- have met the real tumor values, on the top right of the figure, right? You can see the actual values in millimeters based on the CT scan. You see the tumor continues to grow over time. On the x-axis, we show time in months. So we have long follow-up here. Then you can see what happens after the first injection with CAN-2409, a dramatic decrease in the tumor size, and you can see the illustration on the bottom. And then you can see, after the second injection, it gets even better. And we have now followed up for more than a year. And you can see that this patient continues to do well with a treatment that is well tolerated, easy to administer and that really leads to prolonged progression-free survival.

Yes. And Paul-Peter, on this chart on that graph -- upper right graph, were there other drugs that were administered at the same time when you saw that tumor reduction? Or was it just CAN-2409?

Yes. So the only -- what we did is the only change -- the only variable is CAN-2409. So this patient has been treated with immune checkpoint inhibitors for more than 18 weeks of progressive disease. So you don't expect further improvement, and we continue the same immune checkpoint inhibitor. And then the single variable is the administration of CAN-2409. So we're looking at real effects of CAN-2409 treatment in these patients with an initially inadequate response.

Got it. That's fantastic. Okay. And you took an early look at the progression-free survival in cohort 2 for the 26 patients, and you saw median PFS of 8.11%. I guess how does that compare to just standard therapies?

Yes. [indiscernible] So first, we have actually shown that we can -- we've met the individual tumor growth trajectories. And we can show [ that initially, the tumor was ] growing, and then we can stabilize it in nearly all patients. Then we have shown, as we discussed, that this translates into high levels of disease control. We don't propose that this will be the primary end point of the future pivotal trial, but it gives us confidence that it works because disease control is expected to be a surrogate marker for progression-free survival. So in December, we were able to show for the first time the effects on progression-fee survival. As we mentioned, in arm 2, this is 8.1 months. And what would you expect based on the literature in this population, not more than 4 to 5 months. So a very meaningful improvement in progression-free survival. In arm 1, although the numbers are still small in arm 1, the results look even better, and we see progression-free survival of more than 11 months. Again, we need to be cautious because that's a small cohort, but very encouraging. And then progression-free survival is expected to be a surrogate marker for overall survival. So now we're following these patients, and we expect to have these data over time. Patients need to live long enough actually to have these data. But it's a very consistent and very encouraging data package.

Got it. And you mentioned an update. I think you said December of this year. Should we expect more patients' worth of data? Or is it just going to be more of a -- more mature data from the current set of patients?

Yes. So we presented the most recent data, so the very first data, in December, and this is available online. If you go to the website of Candel and go to the IR site, you will find the R&D online -- virtual event with speakers like Jim Allison, Pad Sharma, Roy Herbst, Nino Chiocca and others who speak about our programs, right, world-class leaders. And so that was the last data cut. What are we going to present in Q3 of this year? We will have prolonged follow-up. So we will have more mature progression-free survival data of at least 6 more months, so that's very meaningful. We might see some initial overall survival data based on case reports, as I've just shown you. We will have more patients as well. Arm 2, we aim to include, in total, 40 patients, and we expect to reach that point around April 1 of this year. So we'll have more patients in both arm 2 and in arm 1. We will have more mature data in terms of survival data, and we will have more immunological biomarker data.

Got it. And maybe, how are you leveraging these results for planning a potential pivotal study? Have you engaged with the regulators at all? Or is that after you have the update in 3Q?