Circio Holding ASA (CRNA) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the third quarter presentation of Targovax' results. My name is Øystein Soug, I'm the CEO of Targovax. And with me today in the office or should I say studio, we have Torbjørn Furuseth, the CFO. And also calling in from London, we have Magnus Jäderberg, our Chief Medical Officer. I will take you through the introduction. Torbjørn will go through the finances. And last but not least, Magnus will take you through the clinical program with focus on colorectal, mesothelioma and melanoma. Before I start, I just want to remind you that it's possible to send in questions through the web page, which we will answer after -- right after this presentation is concluded. Now in Targovax, we aim to unlock the clinical benefit of cancer patients by deploying multifunctional platforms to target key immune regulators and oncogenic drivers. Our lead product is ONCOS-102, which we direct towards and try to combine with checkpoint inhibitors. And we have encouraging data, not only in combination with checkpoint inhibitors, but also in monotherapy and in combination with chemo so far. And on top of ONCOS-102, we have a really exciting pipeline that we are developing and to create a broad horizon of possibilities for Targovax, not only scientifically but also medically and commercially. We have a really exciting few months ahead of us in Targovax right now because over the next few months, we are going to readout main data from our most important trials. Now Let me first start by reminding you a little bit about what we do and who we are. So in Targovax, we are not developing checkpoint inhibitors, but checkpoint inhibitors are important to the story nevertheless. Because over the last 10 years, checkpoint inhibitors have revolutionized cancer therapy. They are now being used in a large portion of the cancer population. They sell for more than $20 billion per year, and KEYTRUDA is the second best grossing of all drugs globally. But even though checkpoint inhibitors work really well in some patients, they don't work in all patients. Even in the best indications like melanoma and lung, only 10% to 40% of the patients respond to checkpoint inhibitor therapy. And this is where ONCOS-102 come in and can play a great role in the future because checkpoint inhibitors, they don't kill cancer. They enable T cells to kill cancer and immune activators, like ONCOS-102, they produce or induce the immune system to produce the right T cells that will actually kill the cancers. Taking a look at our pipeline. ONCOS-102 is clearly the most important drug in our pipeline. And the top 3 arrows here are our 3 most important trials, mesothelioma, melanoma and colorectal cancer. As I mentioned, mesothelioma is going to have an important readout in overall survival before the end of the year. And also in melanoma, where we have already completed one part of the trial, we're now continuing in the second part of the trial, and there's going to be overall ORR data reading out before Christmas. The colorectal trial is a combination with checkpoint inhibitor Imfinzi by AstraZeneca. We're not the sponsor of that trial, so we're not guiding as precisely on when data is coming out, but we certainly believe and hope that there will be updates from that trial also during 2021. At the bottom, you will see our emerging pipeline with ONCOS-200 series, which are oncolytic viruses based on the ONCOS backbone with multiple transgenes and novel modalities. Some of them are proprietary, we're developing ourselves and some we develop with our partner, Leidos. And on the far bottom, you will see the mutant RAS platform, which I'll say a few words about later as well. Going to the recent highlights. We start with colorectal cancer. And in colorectal cancer, we are combining with Imfinzi. Now this is a Simon two-stage design, which means that the results from the first stage -- there are some preset criterias that we need to reach, determine whether we continue into the second stage of the trial. And what happened during the quarter was that we had success. We reached that target. We reached that threshold. And we're now recruiting 14 more patients, and we continue treating patients with colorectal cancer in combination with the checkpoint inhibitor, durvalumab, Imfinzi. Very happy about those data. In mesothelioma, we have been reporting PFS data during the year, and some of that data is going to be presented at SITC later in November. We raised some money during the quarter, and Torbjørn will say a few words about that later. The European patent office, they have granted us a patent on ONCOS-102 in combination with checkpoint inhibitors. And we have designed -- set up a new Scientific Advisory Board. And the gentlemen, you can see on this slide, it's Raphael Clynes, Dmitriy Zamarin of Memorial Sloan Kettering and Dean Fennell from Leicester University. And these gentlemen are global key opinion leaders in their respective fields, that being immuno-oncology drug development, oncolytic viruses and mesothelioma. So we're really proud of having attracted these guys, and I'm confident that they will play an instrumental role together with management in driving the progress further, not only on ONCOS-102, but also on the emerging pipeline. And you will remember that up until last year, Targovax has been developing a mutant RAS cancer vaccine in pancreatic cancer, TG01. Going forward, we also aim to continue treating more patients with the TG vaccines. And we aim to do that in new indications, in new combination and using -- also trying out a new adjuvant. And the way we want to do that is through clinical out-licensing and collaborations in order to keep the cost down. The most tangible initiative here is that we have sold an option for a China license to IOVaxis Therapeutics in China. Now that option is still valid. And we hope and believe that IOVaxis is going to exercise that option during the next few months and start new trials in China, producing more data on TG. Outside of China, we also aim to start investigator-sponsored trials with academic partners to test new indications, test new collaborations or new combinations and test a new adjuvant. We haven't signed anything yet, but we hope and believe that during the next months, we will be able to produce something tangible for you on that front as well. Now in addition to clinical development, further clinical development of TG, we are also involved or we're trying to develop a more innovative immuno-oncology platform targeting RAS. And we mentioned 2 of these initiatives here for you. One is with our collaborator, Valo. With them, we are coating ONCOS-102 with mutant RAS peptides, essentially in order to vaccinate the patient, again, mutant RAS using the virus as an adjuvant. The second initiative here or collaboration with Oblique Therapeutics is that we're using the ONCOS virus as a backbone, as a vector to deliver a payload of antibodies targeting mutant RAS. So this is -- it's preclinical. It's quite early, but it is a very exciting avenue for us. Good. Next point on the agenda is finance, and I give the word to Torbjørn.

Thank you very much, Øystein. So looking at the P&L, we see continued cost control into the third quarter and our total operating expenses of NOK 22 million. So that's good to see. The external R&D expenses are a bit down as we're now wrapping up our clinical trials that we are running. Also the payroll is somewhat lower than the older quarters, that's due to the holiday season. And also we managed to take down the other operating expenses a bit to NOK 4 million, that's including the depreciation and amortizations. So the NOK 22 million OpEx is very nice to see with some financial expenses. We have a total loss for the period of NOK 23 million. And the cash outflow or cash burn in the period was NOK 24 million. So that takes us to a cash position at the end of the period of NOK 78 million. After the third quarter, so in October, we also did a private placement or capital raise. And we saw a good market for biotechs and an opportunity for us to extend our runway. And that was fairly important for us. Having not done it now with election and all the data coming in, we would have needed to wait until first quarter of '21. You never know how the markets are at the time. And at that time, we would be very low on cash. So it was very good for the company to extend the runway with this raise. We targeted NOK 75 million, that was the amount that we felt was sufficient. And we saw strong interest for the transaction. It was multiple times oversubscribed. 78% of the shares were subscribed by foreign or international investors -- or sorry, new investors, and 66% were international investors. AP-4 increased their ownership by purchasing 1 million shares. And they are still the fourth largest investor. And we also had international institutions, life science specialist funds coming into the transaction. So that's very good to see, and we're very happy with that. We plan for a repair share offering, but since the share price traded below the subscription price, the repair issue were canceled. So looking at the shareholder base, we have HealthCap, RadForsk, Nordea and AP-4 and Thorendahl Invest, the 4 (sic) [ 5 ] largest owners but some larger investors in the nominee accounts that came into the company. So to sum up, cash position of NOK 78 million at the end of the quarter plus the private placements. The cash burn of NOK 24 million, a current market cap of NOK 530 million, NOK 550 million (sic) [ NOK 530 million ] . What we see in the last year or in 2020 is a very strong trading in the stock in the company. Almost 80% of the shares were traded the last 6 months. And that corresponds to almost NOK 3.5 million of trade on an average per day. So with that, I conclude the finance section and hand the word over to Magnus. Can we connect with you in London?

Hello. Good morning. Yes, you can. I hope you can hear me properly. So yes, so I'm going to talk to you about our colorectal study collaboration. I'm going to talk to you about the mesothelioma study. And I'm also going to talk to you about the melanoma study, a few words about that. So if we start with colorectal cancer. Just to remind everyone, it's the third most common cancer. And it's the fourth most common reason for dying from cancer. And one of the things that is important when a patient is diagnosed with colorectal cancer is to understand some of the genetic pattern of these patients' cancers. And broadly speaking, we are providing these into those who are what we call microsatellite stable and those who are not microsatellite stable. Now what does it mean? Well, we're here talking about the stability of the mutations in the patient. It is an important point because it will direct us physicians in how to treat the patients. And generally speaking, about 85% of the patients are microsatellite stable and about 15% are unstable. And that's important because different treatments are used for different types of genetic stability. So if we go on to the next slide. We're here talking about the microsatellite stable patient group, the largest group of colorectal cancers. There's a huge unmet medical need. And one of the reasons is that checkpoint inhibitors, they’re very successful immune therapies, as Øystein mentioned earlier on, are not actually working in this type of colorectal cancer. If you’re looking at the Stage IV, these are the patients who have metastases and specifically, microsatellite at stable metastasis scattered around the peritoneal cavity. It's very hard to treat. You can see here that about 100,000 patients globally, unfortunately, get this type of late-stage, hard-to-treat colorectal cancer with a very poor survival rate of less than a year. Radiotherapy is sometimes used to reduce the bulk of the tumor, but it's rarely ever a curative treatment. And so if we go to immunotherapy, I've already alluded to this, unfortunately, immunotherapy in the form of checkpoint inhibitors don't actually work. And that means that experimental treatments or trial participation is really the best option that we physicians can offer these patients. If we look at that microsatellite stable population, they have low mutation burden, a few mutations and few addressable neoantigens. And if you remember the neoantigens are the signals to the immune system that something is wrong. And if you don't have these type of signals, of course, immune system will simply not see the cancer and therefore, not be activated. So here lies the rationale for introducing ONCOS-102 in this whole disease pattern. And that ONCOS-102 is a product that can immune activate the patient’s tumors. So there is a need to combine immune activation with a checkpoint inhibitor, for example. So as you can see on the lower right-hand corner of the slide, we are here talking about microsatellite stable, colorectal disease, those that have spread intraperitoneally. We have provided ONCOS-102 intraperitoneally through an indwelling catheter, and we had systemically, an anti-PDL1 check inhibitor in the form of durvalumab. Now in this trial that I'm going to show you some data from in a moment, we set some criteria for how and when we should expand the size of the trial. And the first part of the trial has 13 patients. And I'm very pleased to report that we've reached the criteria for expanding this trial to 27 patients. So that's big news because it provides potentially patients and clinicians with a different way of dealing with these hard-to-treat patients. Next slide. So this is a setup. I have mentioned this before, so we're here talking about an important collaboration between Targovax, AstraZeneca, providing durvalumab, Cancer Research Institute and Ludwig Cancer Research. As we said, we're talking about colorectal cancer with peritoneal spread, refractory to all treatments, in particular, platinum treatment stats, the most common way to treat these patients. And we are administering the ONCOS-102 intraperitoneally. The setup of the trial is described at the bottom of the slide. And as you can see, we first performed what we call a safety lead-in, where we make sure that combining ONCOS-102 with durvalumab is something that patients can tolerate. And I'm very pleased to report and have mentioned this earlier that we have no issues with tolerance. We did present some data at the ASCO meeting earlier this year. And we showed in that, that there were clinical responses that were immune [ active ] responses, and we had good tolerance of the combination of ONCOS-102 and durvalumab. We are, then, just about wrapping up Part 1 with the 13 patients And we already know at this stage before that's completed that we have reached that important criteria, which is that we have enough patients who have responded with DCR that stands for disease control, meaning stable disease, partial response or complete response at a certain time point of the trial to expand it to Part 2, which has now opened up with 14 additional patients, making a total of 27 patients. So next slide, I just wanted to recap on the data that we presented at ASCO this year. So we here presented data from the safety lead-in. And on the left-hand side, the different bars, colored gray, light blue and dark blue, represent different dosing schedules. And I think what's encouraging at this stage, although small numbers, is that you can see here how there's some sort of dose response here in that it was only in the high-dose schedule that we saw a clinical response. And indeed, that's the reason why we and Astrazeneca and Ludwig as well as Cancer Research Institute decided to continue with that schedule for the Part 2 and the Part 1 that's still running. On the right-hand side, you can see tumor change presented at best overall response. And again, the same encouraging pattern where the high-dose schedule sync to how a clinical response that you don't see in the low-dose schedules. Next slide. I'd like to move on to mesothelioma. As you know, we're at the tail end of a smaller randomized trial in this disease. So what is malignant pleural mesothelioma? Well, it's a highly malignant cancer in the lining of the lungs. And one of the underlying challenges with this disease is that symptoms come very late in the disease process. Which means, by the time that we physicians diagnose a patient with malignant pleural mesothelioma, it's nearly always too late for surgery. So maybe 10% can be operated on. But the remaining patients, unfortunately, all we can offer is chemotherapy. So a challenging disease. And again, with radiotherapy, sometimes we do provide radiotherapy to patients if the surgeon thinks that a patient's tumor is at the border line size where it might be resectable if we can shrink it a little bit. And sometimes we use radiotherapy for palliative reasons. So the mainstay of malignant pleural mesothelioma treatment is chemotherapy. And up to a few weeks ago, there's only been one approved standard of care. That's been pemetrexed/cisplatin, a combination of 2 complementary chemotherapies. They've been around for close to 20 years. And with a median overall survival of about 1 year in first-line disease. Now what about immunotherapy? Well, various checkpoint inhibitors have been tried in this disease, and up to recently, the response rate hasn't been particularly good. There are a couple of small trials in second-line disease that made it into the U.S. NCCN guidelines. And -- but nothing else really. In fact, some checkpoint inhibitors previously have failed in first-line disease. But about 2 months ago, Bristol-Myers Squibb presented a large Phase III study in first-line disease, where they compared ipilimumab and nivolumab in that combination versus chemotherapy, the pemetrexed/cisplatin standard of care. And they showed some good median overall survival response, which resulted in the FDA actually approving this combination a few weeks ago for the U.S. The file is at the moment with the European authorities, and we shall see how they will deal with that file. But it's an important finding. And in my way of seeing it, it does show that checkpoint inhibitors have a role to play in malignant pleural mesothelioma. That's important because, of course, one of our plans for the future is to combine ONCOS-102 with a checkpoint inhibitor, something that I mentioned earlier on. Next slide. So what about these ipi/nivo data, what do they say? And what will be the impact of this new standard of care? Well, firstly, to just say that the median overall survival was 18 months or 18.1 months for the combination of ipi/nivo versus chemotherapy of 14.1 months. So I mentioned earlier on that the chemotherapy median overall survival was around 12 months, so here, it's 14 months. So that is a little bit of a shift. But if we ignore that, we can still see that there's a clear 4-month benefit when you give ipi and nivo versus chemotherapy in the median overall survival. Now when you then dissect a little bit further into the 2 main subgroups, something I have mentioned earlier on as well because you have the larger group of 80%, 85% of epithelioid disease, certain type of histology, and then you have a smaller 15%, 20% on non-epithelioid disease. And what was very interesting with this ipi/nivo trial was that it was really only in the smaller group of non-epithelioid disease, where you saw a clear difference between the checkpoint inhibitor combination and chemotherapy, while in the epithelioid histology, there really wasn't any significant differences. So how would clinicians deal with this? And how would later on European regulator authorities and, in fact, also reimbursement authorities deal with this discrepancy between the performance across the 2 histologies. Well, that's difficult to say. But having spoken to both European and U.S. clinicians since the FDA approval, we have some sense of what might happen. And the expectation is, of course, that for non-epithelioid patients in the U.S., that would be a rapid uptake. But the information I've been given so far is that in the epithelioid, the large epithelioid subgroup, physicians will continue to use chemotherapy plus [ findings of ] Avastin apart from potentially patients with high PD-L1 expression, where checkpoint inhibition will be added. So in Europe, it's a little too early to say. And as I alluded to earlier on, it would be interesting to see how the European authorities address the 2 histology performance differences and also, of course, subsequently, reimbursement authorities, looking at the combination of 2 checkpoint inhibitors versus generic chemotherapies. So good piece of information, good use for immunotherapies in this disease, good news for patients, but still a very significant medical need and opportunities for new therapies to improve on these response rates, in particular, in epithelioid disease, the large group of 80%, 85% of patients. Next slide. Yes. So this is a slide where we've plotted our data compared to historical data. So our data in first-line disease is a dark blue circle at the right-hand side of the slide. This shows close to a 9-month progression-free survival. And you can see then the gray dots scattered around those are all chemotherapy pemetrexed/cisplatin. And the light blue dot is represented by the ipi/nivo data, I just talked about. So just looking at progression-free survival, it looks like the data we got at the 12-month interim analysis is stacking up pretty well actually. We are now just around the corner to the 18-month analysis and we look forward to sharing those with you later on this autumn and winter. Next slide. So when we look at the 12-month analysis of the ongoing trial and when we look at clinical response and immune marker responses, we're very pleased to see that there is an association between immune activation and clinical outcome. And of course, that's what we all want to see with immunotherapies. We want to understand -- we could see an improvement in progression-free survival or overall survival, but we want to understand why that is. And what we have plotted here with the spider clog is this association between key immune markers such as cytotoxic CD8+ T-cells, those were T cells that are able to kill cancer cells. The ratio of the cytotoxic T cells that are able to kill on those who are not able to kill, but they're already CD8+ T cells. And you can see here also other aspects such as PD-L1 expression, and an important ratio of macrophages. So there are good macrophages, we call them M1. And there are bad macrophages, M2. The good ones help in immune system, broadly speaking, the bad ones, M2, don't help the immune system, in fact, they hinder the immune system. So the ratio of the good and the bad macrophages are really important. And you can see here, the blue bar here representing patients who received ONCOS-102 regimen and who are alive at 1 year. And you can see here that there's a nice association between those important immune markers and the fact that they were alive at 1 year into the trial. So what this shows is that there's a powerful immune activation, ensured by the ONCOS-102 addition to chemotherapy. But equally important that this particular pattern, of course, sets us up very nicely to combine with a checkpoint inhibitor. In other words, there is a clear rationale for combining ONCOS-102 with a checkpoint inhibitor in this particular disease. Next slide. So just to summarize those bits and pieces, so, so far, we haven't seen anything of concern in terms of tolerance. We have already presented 12-month median progression-free survival and 1 year survival rate, and we're pleased with those. As I said, around the corner, we have 18-month data coming. We do understand the mode of action, and we've seen that association between the immune activation and the clinical outcome. And as I said, a very strong rationale for combining with checkpoint inhibitor. Indeed, that is, of course, why Merck are talking to us about how to take this indication further in combination with pembrolizumab. What's the plan now? Well, because there is a new shift of standard care, we, of course, with Merck have to reconsider the trial design that we're going to pursue. So we're now talking to Merck. We're talking to investigators. We will, of course, also wait for the 18-month data. That will also provide some additional information. And my expectation is that instead of, therefore, as we reported earlier on, recruit the first patient in the spring of next year, that there will be a delay and that we should be able to get back to you with more precise information of how we're going to take this further with Merck sometime beginning of next year. So next slide, one slide on melanoma, just to recap. You're aware of a melanoma study we're running in checkpoint refractory disease. So these are patients who have already had checkpoint inhibitor, and they haven't responded. What we do is that we bring them into the trial. We provide ONCOS-102 for a few weeks and then we recharge the patients with KEYTRUDA in the first part. And the second part is now running. We continue to give ONCOS-102 throughout the trial in parallel with KEYTRUDA. And so the first year result on the first part result was presented last year. Next slide. And you've seen this slide before. And is just to remind everyone that data we saw from Part 1 stacks up very well with the competition. Well, these are the data of 33% overall response rate in that smaller group of 9 patients. If you compare that with Replimune's data, they're pretty close or 31%. There's a toll-like receptor 9 agonist company and compound that provided about 25% overall response rate in this particular population, and there's also an HDAC inhibitor with some data. Further down the slide, I've included 2 trials: One with the coxsackie virus produced by Merck, CAVATAK, and a study by Idera. Those studies aren't quite comparable because they were actually CTLA4 inhibitor naïve. So they were naïve to one type of checkpoint inhibitor. And they were actually given that particular checkpoint inhibitor during the trial. So there is an underlying response rate of about 10% to 20%, which you have to consider. So not quite comparable, but for completeness, we have included that on this slide. So competitive data, of course, it's going to be very exciting to see what the Part 2 comes up with in a couple of months. So with that, I'll hand back to Øystein.

Thank you, Magnus. Now let's move to the indications of timing going forward. As you can see on this slide, you've seen this before. The one change compared to what we presented last quarter is on mesothelioma in the first half of 2021. We've indicated that there might be the first patient treated in a next trial in mesothelioma. As Magnus explained, that has now been delayed. We think there is a great scientific rationale for combining checkpoint inhibitors with ONCOS-102 in this indication. And now we're also seeing that checkpoint inhibitors are becoming relevant in this indication, which is very good. But we have to go back to our collaborator Merck and to KOLs to discuss and explore the path forward before we start anything here. Before then, we have plenty of interesting news items that we're waiting for before Christmas. As we talked about IOVaxis, they have an option to take a license for China. We're waiting for that to happen before the end of the year. And also in melanoma and mesothelioma, we indicate that there's going to be data before year-end. Of course, when you plan data so late in the year, it might slip over to early January, but it's not going to be anything drastic, and we maintain our guidance that is going to happen before the end of the year. Mesothelioma, as I said, that's going to be overall survival data, the first time we look at it, very exciting. And in melanoma, we're waiting for ORR data for the next 12 patients. But as always, perhaps the most interesting aspect here is not the clinical data alone, but in correlation with immune activation data. So there's going to be a very few -- a very exciting few weeks and months ahead of us in Targovax. Good. That concludes our presentation. We have some questions that have come in from the web. And you have those there, Torbjørn?

Yes. There are some questions now here. And I think we can start with melanoma. Øystein, you mentioned already, but there are a couple of questions on the timing of melanoma and mesothelioma, and is there a reason why it hasn't come by now.

No. So just to make sure, we have not seen the data. So there is no problems relating to those data. To the extent that there might be a delay, it has to do with COVID. Some of these hospitals, they -- it was hard to do monitoring, especially during the first -- or the second quarter of the year. But that is not now an issue, but that data is coming around Christmas.

All right. And more on melanoma, maybe to you, Magnus, what would you consider as a good result in melanoma? And if you get good results, what would the plans be going forward?

Okay. So I mean, if we look at the Part 1 that we presented last year, we had 3 out of 9 patients with a response which is excellent. And of course, it was on the back of those data that we decided to add a Part 2, primarily to get more patients in. As you know, the more patients you have in the trial, the more certain you can be that what you see is a true effect. So that's the reason why we added another 12 patients making a total of 21 patients. What is good data? I would say, if you go back to the slide I presented on the competition, good data is an overall response rate somewhere in the region of 25% to 30%. I think the other thing that would be important, and that's something we set out from the very beginning, which is that we're keen to identify subpopulations of patients that may respond even better. And therein lies part of my answer to your question which is how are we going to move forward? Well, obviously, if we see that certain subgroups of patients respond even better than others that, that may, in fact, be the path into the future in melanoma. We've already heard Øystein mentioning the importance of immune data, immune activation data. They're coming a little bit after the clinical data. And of course, that will also direct us towards certain subpopulations and also how we would sort of move that further into a next stage of the development.

Very good. And then a question on colorectal cancer. Presuming that the final data are attractive, what strategic options do we have to continue the program in terms of we continue the collaboration we have or take over the control and sponsor the trial ourselves? You would, Magnus?

My -- I'm sorry. Okay. Okay. Yes, very happy to answer that. I was waiting for my boss ,Øystein, to maybe start. So yes, I mean, as you know, we have a really interesting collaboration with AstraZeneca. The way this contract is written is such that we jointly own the data. So if the clinical data come in positive, the obvious next step is we're going to sit down with AstraZeneca and think about how we're going to develop a registrational program. So yes, it's -- it could become something very significant, not just for us in Targovax, but actually for patients as well.

Very good. So then over to TG. And there's a question in Norwegian, I need to translate. But what are your expectations for the TG deal in China? And also regarding the timing, when there's 2 months left of the option.

Yes. And obviously, we are not the ones executing those options. So we don't know exactly when it is going to happen. It is correct that the option is valid for 1 year, starting beginning of January last year. So we expect that to happen. We hope and expect that to happen, that they're going to take that option. Now what is going to drive the thinking of the Chinese when taking this option is probably, we think, an acceptance of an IND in China. So that timing might actually be in the hands of the Chinese regulators. As to exactly what point in time it's possible for us to start new trials in China. We think that's going to kick off their exercise of that option. And whether that happens in December or January, I don't think that is going to materially affect our thinking around this.