Circio Holding ASA (CRNA) Earnings Call Transcript & Summary

Welcome to Targovax and the presentation of our third quarter results. My name is Erik Digman Wiklund. I'm the CEO at Targovax. With me today, I have Chief Financial Officer, Lubor Gaal; as well as Chief Scientific Officer, Victor Levitsky. To remind you, Targovax is a biotech company developing novel immunotherapies for treatment of cancer. We have 3 major pillars in our development program. Number one, our lead clinical stage asset is ONCOS-102. This is an oncolytic adenovirus which we deliver directly into tumors. Our core focus here is in PD-1-resistant melanoma. This is aggressive skin cancer that has become resistant to other immunotherapies, and we try to reactivate the response by using our highly inflammatory oncolytic virus, ONCOS-102. The next step here is to start a Phase II trial next year in the PD-1-resistant setting, and I'll come back to some updates from this study. Our second clinical stage program is a mutant KRAS neoantigen vaccine. This is called TG. With the KRAS program, we are preparing to initiate 2 investigator-sponsored trials in 2 different indications: one in Norway, one in the U.S.A. So this is reentering the clinic now in an enhanced format to what the product was like in the past. This is advancing the TG and KRAS program according to our strategy in the low-cost manner for Targovax, where we're relying on external partnerships to drive the program forward as well as research grants from the Norwegian Research Council and Innovation in Norway. Thirdly, and maybe our most innovative part of our pipeline in the discovery phase, we have new products in development within the space of circular RNA, and Victor will tell you more about this program and some important data we generated during the year. Highlights from the quarter is that we've made strong progress on all of our 3 pillars. For ONCOS-102, the protocol for the Phase II trial was approved by the U.S. FDA, trial preparations are in progress, the Principal Investigator has been identified and everything is being put in order to get the trial up and running. We expect the trial to start enrolling patients next year. On the KRAS program, the same thing, regulatory approvals are in place for the protocols as well as ethics approvals at the hospitals. So all these are proceeding according to plan. We expect both of the studies in our pipeline to open this year. And on circular RNA, it's important here to note that circular RNA overall has gained strong momentum in the industry. When we launched our program 12 months ago, this was something novel that quite a few had actually heard of and this has now grown into a highly active space with several important transactions occurring. So momentum is really building for circular RNA as a therapeutic class in the pharmaceutical industry. In terms of our program, we've made very important progress. We've shown technical proof of concept for our structural design of circular RNA. This means we have been able to engineer circular RNAs that are highly efficient. And secondly, we've achieved a technical proof of concept that our delivery -- vector delivery system is functional and enables us to actually deliver the circular RNA that we want to make. Victor will tell you more about this program in a minute. But first, I hand over to CFO, Lubor Gaal, to take you through the numbers from the third quarter.

Thanks, Erik. I have the pleasure to present the financial results of the last quarter to you. As you can see, our operating expenses have been fairly low compared to the previous quarter, but are in line with what we have spent a year ago. This is because the payer expenses are now smaller and lower. And we have deferred some of our operating expenses into the next quarter. On the cash flow, you can see we have spent about NOK 30 million this quarter. This represents some investment into future clinical studies that Erik just mentioned in preparation of the Mela 2 study in -- for having access to clinical sites and also to prepare for clinical supplies. On the next slide, as you can see, we spent NOK 30 million this -- last quarter. We now have a cash balance of just under NOK 100 million. And our market cap has been fairly stable in the last quarter around NOK 200 million. Our daily trading volume is 2.5 million shares, which represents a fairly good liquidity for all our investors. And with that, I hand over to Victor to speak about our progress on the science side.

Thank you, Lubor. As has been introduced already by Erik, we have recently initiated a program -- research and development program at Targovax based around circular RNA. And in fact, several very important business development deals have taken place recently in this space. Orna Therapeutics have been -- has entered a collaboration with Merck on the circular RNA development. And Merck has invested $150 million upfront payment and expected up to $3.5 billion milestone payments according to different stages of this program. Furthermore, Flagship Pioneering started a new company, which also is active against -- active around the program focused on circular RNA. At Targovax, we have 2 individuals who have laid the base for circular RNA biology approach, represented by Erik Wiklund, who is our CEO; and Thomas Hansen, who is now the Head of Research at Targovax. The main differentiating aspect of circular RNA is that it has a circular structure as it follows from its name. And it differs from linear RNA because of its high stability. Linear RNAs are degraded very rapidly inside cells in a matter of minutes or hours, depending on the sequence of RNA, but circulars are very stable, and they drive expression of proteins from the circular message for a very extended periods of time. In addition to this feature, circular RNA possess other biological characteristics, which are mentioned on this slide, allowing to introduce different innovative novel aspects into the biological activity of products, which are based on circular RNA. And we are planning, of course, to explore these features further to develop new immunotherapy for cancer. Our approach is different from the one which is pursued by other companies, which I have introduced on the previous slide. These other companies are primarily focusing on generation of circular RNA in vitro and then delivering already premade circular RNA as a drug to patients. We are planning to use vector delivery systems, where circular RNA will not be produced prior to administration to humans, but its expression will be driven by this vector system delivered into patients. And during 2022, we have established a technical proof of concept for circular RNA vector approach, explore the advantages of this approach versus conventional linear RNA and also achieved some progress in optimization of our vectors, which allow delivery and expression of circular RNA in view. And here, you can see an illustration of this approach that when we express proteins from either linear or different designs of circular RNAs, we can see that circular RNA drives significantly higher level of protein expression and protein, in this case, represents a potential biologically active compound, which will be treating the patient. And this happens in spite of the fact that in terms of RNA copy numbers, we generate less circular RNA, but we express more protein from this message. And this is related to this aspect of higher biological stability of circular RNA and cells that I already described to you. Comparing then now different platforms of biological product delivery based on RNA, we can distinguish the 3 major approaches. One is the well-characterized approach of synthetic linear RNAs, which have been recently successfully used for development of vaccines against COVID and other infections. Synthetic circular RNAs, primarily differentiate from this approach due to that stability aspect that I've described. But our approach based on vector delivery system not only allow us to deliver this product in the liver and induce potent immune response against the target antigen, but also deliver this product into solid tumors and bypass manufacturing challenges that these other platforms may be facing. So this sets us on a pretty rapid and easy path forward towards clinical development. We are planning to focus on 3 different pillars in our development program. The one which is prioritized based on our experience in the field of oncology and onco-immunology where we are going to express validated immunostimulatory targets to further boost immune response against tumors in patients. In addition to that, we are also planning to target tumor promoting signaling pathways and metabolic pathways in tumor cells and use this platform to further enhance and improve cancer vaccines based on new antigens in the field of cancer therapy. But obviously, this approach has also high promise in other fields of drug development such as development of vaccines against infectious diseases and gene therapy and enzyme replacement therapy for various diseases, rare diseases with very interesting opportunities for partnership and co-development deals. So in summary, during this year, we have achieved a significant progress with this program, where we have demonstrated technical proof of concept for vector delivery of circular RNA. We also made significant progress in further development of vectors allowing to achieve this and also demonstrated -- generated data directly demonstrating superiority of circular RNA approach versus linear RNA approach. And we are planning to provide first in vivo proof-of-concept data in animal and new experiments earlier next year. And with this, I pass the word back to Erik for overall conclusions.

Thank you, Victor. So we think that Targovax has a unique edge in this emerging space of circular RNA. We have the world-leading experts working for Targovax, probably the most experienced scientists, Dr. Thomas Hansen in circular RNA. Secondly, our unique vector delivery system enables us to reach solid tumors, and it has already clinical validation. And this also gives us a time advantage, which we think is very, very beneficial. Third, the manufacturing aspect is not to be underestimated. We already know how to manufacture our vector system. It's using commercially available equipment. We can rapidly redeploy our existing processes to make circular RNA candidates. However, manufacturing for synthetic circular RNA done in vitro is still an unresolved challenge. And this will take time, and we believe delay others in this space, and again, give us an advantage where we can be quicker because we have already established the manufacturing process. And third, as far as we know, there are no other circular RNA companies currently with an active angle into solid tumors. So this we see as a differentiating factor as well. So overall, this is how we plan to take this program forward. It's something we're very excited about, and we have made important technical progress, and we look forward, as Victor says, next year to start putting this into in vivo experiments and seeing how this performs in the relevant biological system. So with that, we conclude the formal part of the presentation, and we open up for Q&A. It's possible to submit questions through the questions box on the webcast, and I invite Victor and Lubor back to join me.

So first, we have a question on the finance. The general environment for biotech companies to raise money is very challenging right now. What is your confidence that Targovax can secure the required funding to keep running all 3 programs, ONCOS, TG and now circular RNA.

Yes, indeed. The financial environment for the biotech industry is challenging, but not just for biotech, I think generally, it has been challenging to raise money. The good thing is that Targovax has been in discussion with specialist investors who really understand our business, the long time line and see the value that is within Targovax, and we are in constant discussion with them about investments into Targovax, and we are very confident that we will lead to a successful conclusion. Of course, we're looking for international investors who understand the dynamics of this industry, understand the value in Targovax and what it takes in order to get to the next value inflection point.

And I'd like to maybe add that even in these tough markets, we're getting quite significant interest. So people are really interested to hear about our programs. And in particular, I think the circular RNA is driving people's interest in Targovax and make them curious to learn more about what we're doing.

Then we have one more for Lubor. When do you expect to sign a partnership for circular RNA?

That's a very good question. We actually went to BIO-EUROPE last week. BIO-EUROPE is the largest partnering conference here in Europe, has over 4,000 attendees. We reached out to many pharma companies regarding our programs. We got a lot of interest from those pharma companies, especially as Erik said, in our circular RNA program. We had many, many good discussions with those companies, which we're, of course, now taking forward. And we are confident that this could lead to some collaboration next year.

Then we have a couple of questions on TG. On the development slide, you list TG vaccines as trial initiations in second half 2022. Have patients already been enrolled? What is the latest status of these studies?

So these 2 trials that we have on our pipeline slide are so-called investigator-sponsored trials that means they're driven by academics and sponsored by the hospitals. There, the progress is as follows. The relevant ethics and regulatory approvals are in place. Protocols are approved, and all the necessary preparations are being made to enable opening of the sites. And as far as it looks now, both of these trials will open for recruitment during this year. And then exactly when the first patient will be enrolled is still to be determined. But these investigators are investing heavily into the trial, and they are excited about the project. So we anticipate this will be prioritized and highly interesting study for the relevant sites.

Then we have a question about IOVaxis. What is the latest news in regards to the IOVaxis agreement?

The IOVaxis agreement is still on, as previously communicated. As we have said in the past, the regulatory authorities in China has requested that IOVaxis does extra or additional preclinical toxicology work in vivo. This is not something that was requested in -- by Western authorities. It was somewhat surprising, but IOVaxis is busy running the experiments that have been agreed with the Chinese authorities. So these are currently ongoing. IOVaxis is spending a lot of resources to satisfy the requirements. The data from these studies, I think, will be expected next year. And with that in hand, hopefully, they are able to get the approvals they need from the authorities in China and then proceed to start clinical developments.

Then there are several questions on the circular RNA. What is the difference between Targovax approach and Orna?

Yes. So Orna, as some other companies are active in this space, they are pursuing, as I mentioned already in my presentation, delivery of synthetic in vitro-produced RNAs. And this differs from what we are trying to do because we will deliver RNAs through a vector system. That might be a very important aspect because you know that linear RNAs performed quite well in vaccination against COVID, but they are far from ideal. And the immunogenicity of linear versus circular RNA remains to be a question. So with our delivery system, we will compensate for the potential lower immunogenicity of circular RNA, at the same time benefiting from other features, positive features, again, as we described, which are high stability and higher protein yield, which can be generated from the circles. So we will -- essentially we'll be combining positive aspects of both RNA and vector delivery systems with our approach.

So basically, what we are doing is different from Orna and Laronde. We can -- you can discuss what is better, but it's certainly a differentiated approach. And as far as we know, there is no companies at the moment trying to do exactly the same thing as Targovax. So we see this as both technically different and giving this ability to go into solid tumors, which with existing delivery technology is actually challenging to do with mRNA and circular RNA.

When will it be in the clinic with circular RNA?

Yes. So we have a very aggressive clinical development program, which should bring us to the clinic by 2025. And this is very, very rapid and very fast according to the industry standards. But this is possible to achieve because we already have a prevalidated, clinically validated delivery platform, and we have very strong expertise in circular RNA as we try to convince you today because we really have top scientists working for the company.

And in addition to the manufacturing, of course, this is already established basically commercially available equipment. It's -- we know how to make these vectors, and that's a big advantage. This means we can redeploy what we already have in terms of manufacturing at scale and that also enables us to do this quickly. So this highly ambitious goal of entering clinic in 2025, we believe, is very achievable.

And I would like to stress that we're trying to do this, of course, in a very cost-efficient manner. We are having in collaboration with academic institutions. Our research group is small but very, very knowledgeable. And we're, of course, leveraging a network of CROs to our advantage so that we can move quickly in a very cost-efficient manner.

Have you considered expanding the circular RNA platform into treatment of degenerative joint disease?

Yes, that is definitely an option. As I presented in my slides, that would represent like a third pillar for our program to go into gene therapy and enzyme replacement therapies. But for the moment, for the reasons that we discussed due to our expertise and the primary focus, we will be primarily working in the field of onco-immunology. But as I said, Targovax remains wide open for potential collaborations and co-development deals in that space as well.

And conceptually, I think this is a very interesting angle because circular RNA really opens or changes the whole dynamics in gene therapy. So gene therapy today, either if you use linear mRNA-type approach, you need to deliver all the time because the mRNA is unstable. You need to inject every day or very often to have a stable enough delivery of what you're replacing. DNA-based gene therapy relies on inserting novel DNA into the genome of the patient. This is complicated to do, and it carries a lot of safety risk because this insertion of new DNA into the genome is quite problematic to -- both to do technically and also to be sure about the safety. Now with circular RNA, you suddenly have something that is highly stable. So this means you can use the RNA and you can deliver much less frequently than you would with an mRNA approach. So we believe circular RNA in general can alleviate the need for doing gene therapy in the classic sense and really enable this technology to move forward. So this is one of the spaces that we're most interested in both in terms of the scientific development, and of course, it's something we're exploring actively in Targovax.

Yes. I mean I would like to add to this that we understand that our technology or the circular RNA technology is much, much broader than just the -- our focus on oncology. But we are an oncology company, we're focusing on. That's where we're good at. But in our discussions with pharma company, of course, we're talking much broader. We're also looking at other uses, other therapeutic areas where we can leverage exactly what Erik was saying, to generate new medicines in other areas.

Then we have a question about Valo. What about Valo Therapeutics and Oblique Therapeutics?

These are preclinical research collaborations and they are progressing in the lab. We will report the data at a suitable time in the future when we've reached reasonable milestones and aligned with the other party.

Then last question to Erik, what value inflection points can be expected during the next 6 to 12 months period?

So I think important value inflection points during the next period will be starting of our trials with KRAS. So we will be back in patients with our new and enhanced TG vaccine. We will be testing a new delivery route as well as a new adjuvant. And what we hope to see there is both that it's safe, it's manageable and then we get enhanced immune responses. So I think that will be a very, very important step for the TG program. On ONCOS-102, we will be back in the clinic with ONCOS-102 in PD-1-resistant melanoma in this larger Phase II trial that is being planned. We're trying a higher dose. An important milestone will be a safety review of that higher dose and the ability to move forward with an improved dosing. And then on circular RNA, we're pushing forward fast. Next year, we will have in vivo proof-of-concept data. And as Lubor said, we are optimistic that there are many partnering opportunities out there, and we believe that is doable next year. But of course, it's difficult to promise or guide on specifically doing a deal. So with that, I think we ran through most of the questions. Thank you for everyone who watched and submitted questions to us. Don't hesitate to contact us via e-mail or telephone. We're always happy to speak to our loyal investors. So thank you from Targovax and see you next time.

Thank you.

Thank you.