Lytix Biopharma ASA (LYTIX) Earnings Call Transcript & Summary

And welcome to Lytix Biopharma Q2 2026 presentation. Before I walk you through the agenda, let me set out where this company now stands and what our strategy is because the second quarter changed the picture of politics. We have received feedback from the FDA that clears the path to a registrational Phase III study of Ruxotemitide in combination with Pembrolizumab in high-risk resectable melanoma. The central question for OLED asset Ruxotemitide is no longer unanswered. We have a defined registrational path and our strategy from here has three parts: First, we continue the registrational enabling work to ensure the program remains partner-ready; second, we are actively pursuing partnership to fund and execute the study and evaluating alternative options to advance the program. A global registration study of this kind requires capital well beyond our current resources and regulatory clarity of this type is precisely what the potential partner requires before committing the capital; third, we continue to broaden the clinical evidence base behind Ruxotemitide with two investigative initiated studies at limited cost to Lytix. NeoLIPA top line results in the second half of this year and the new investigator-led ALETTA study, which extends us into the second standard of care regimen in Neoadjuvant melanoma. Everything you will hear today is related to that strategy, a defined path to registration, a partnering process to fund it and a widening of clinical data to support it. With that, let me briefly outline what you will hear today. We will start with the science, how Ruxotemitide works and why the mechanism is relevant for Neoadjuvant melanoma. Then we will take you through the highlights, including the feedback from the FDA on our progress proposed registration study in melanoma. The new investigator-initiated study ALETTA and the continued progress with our partner, Verrica, basal cell carcinoma. After that, I will introduce our new Chief Business Officer, Timothy Herpin, who joined us in August and who leads our partnering process. Finally, yes, we'll present the financial results and our capital position before we open the floor for questions. Let me briefly introduce the team for today's meeting. I'm Oystein Rekdal, CEO and Co-Founder of Lytix. With me today is our CFO, Gjest Breistein; and our Chief Business Officer, Tim Herpin, who I will introduce properly a little later in the presentation. Our Chief Medical Officer, Karim Benhadji, continues to need the clinical program under regulatory dialogue we will discuss today. Karin's role is to ensure that our trial design or regulatory strategy and our clinical execution, meet what the regulators, regulatory authorities and future partners expect. And the FDA feedback we recently received is a direct result of that work. So let's give you the company overview and start by explaining our Oncolytic molecule platform. Lytix was founded on a discovery rooted in the body's own defense mechanisms. It all started with a naturally occurring host defense peptide like [ deferisine ] and through extensive medicine chemistry studies, we generated the shorter peptide Ruxotemitide, a chemically modified peptide of just 9 amino acids. Its dual mode of action is what differentiated from other approaches. Our second asset, LTX-401, extends the platform into small molecules intended for deep ceded tumors. That program is in late-stage preclinic development and we are preparing for clinical entry in 2027. Let us look more closely at how our drug candidates work because their mechanism address some major challenges in current cancer therapy. Lytix Biopharma has built an innovative oncolytic molecule platform with molecules that work through a 2-step mode of action. First, all drug skill cancer in a way that destroys the cell wall. This result in exposure of mutated proteins or tumor antigens that can be recognized by the immune system. Second, molecules that stimulate the immune system are also released from the destroyed cancer cells. This 2-step event is followed by activation of immune cells that target cancer cells that have not been killed by the drug directly, which results in further cancer cell death and durable anticancer effects. And this mechanism, local destruction, followed by systemic immune activation, make our molecules ideal for being used before surgery. Before surgery, the tumor is still present and can serve as a powerful source of mutated proteins or tumor antigens. These slides make clearly illustrates the power of the 2-step mode of action. In the left panel, injection of Ruxotemitide in these patient's tumors resulted in cancer cell killing and complete tumor aggression of all the treated melanoma lesions. In the middle panel, you see a distant cancellation that was never injected, which still regressed completely over time. This is what we define as an abscopal effect and it's happening due to activation of the patient's own immune system. Importantly, the response were durable in some patients beyond 24 months. The overall safety profile of ATLAS-IT -05 was manageable and consistent with what is expected from local immunotherapy and pembrolizumab. I would remind you that these patients were heavily pretreated and already failed to respond to prior immunotherapy and had a poor prognosis. The final results were presented at AACR in San Diego in April and pool data from Atlas ITO3 and Atlas IT05 in melanoma and in triple negative breast cancer were presented at ASCO in Chicago on May 30. In the NeoLIPA study, the same combination is used in a Neoadjuvant setting, which means treatment before surgery. It is an ongoing investigated initiated Phase II trial led by Dr. Henrik Jespersen at the Norwegian Radium Hospital, evaluating intratumoral Ruxotemitide plus Pembrolizumab in patients with high-risk resectable melanoma. The interim data presented at the Nordic Melanoma Meeting were encouraging. Among the first nine evaluable patients, 88% achieved an overall pathological response including 55% with a major pathological response and 44% with a complete pathological response. There were no relapses reported at that time of the interim and releases. In the Neoadjuvant setting, complete pathological response is an important indicator of anti term activity and can correlate with longer-term outcomes. For reference, the SWOG is study, which established the benefit of the Neoadjuvant Pembrolizumab reported a pathological response. Complete response rate of 21%. Enrollment is progressing well with an 85% of planned patients included as of August, and top line results remain on track for the second half of 2026. So how could Ruxotemitide potentially be used in future clinical practice. There are currently no pro-approved drugs for the Neoadjuvant treatment of high-risk resectable melanoma. But two regimens are considered standard of care in this setting and are included in the practice guideline in both the U.S. and Europe. Nivolumab plus Ipilimumab and Pembrolizumab. These regimens have improved outcomes for patients with many patients still relapse and there is still room to improve long-term outcomes. Our goal is not to replace immune check inhibitors. Our goal is to make them work better. Ruxotemitide has the potential to activate many immune cells that can attack cancer cells. Immune check inhibitors releases brakes on the immune cells, so they can attack and kill cancer cells elsewhere in the body. Ruxotemetide works like a cancer vaccine, but it is made inside the patient from the patient's own cancer. Immunotherapy has to do two things: attached to show the immune system what the tumor looks like, and it has to alert the immune system. Ruxotemtide does both and use the tumor itself as a vaccine. That is why we treat before surgery. Here you see the status of our pipeline. ATLAS-IT -05, our combination study of Ruxotemitide plus Pembrolizumab in anti-PD-1 and PD-L1 refractory melanoma is completed and provide promising results. NeoLIPA, our Phase II Neoadjuvant melanoma study is ongoing and progressing well. And it is now supported by a defined registration plan, which we will come to shortly. A second Phase II study in Neoadjuvant melanoma, ALETTA is designed and conducted independently by the Netherland Cancer Institute and the European Institute of Oncology. That study is due to start in early 2027, and we will come back to it later in the presentation. Through our partner, Verrica, Ruxotemitide known as VP-315 in their programs has completed Phase II invasive cell carcinoma and Verrica is preparing for a Phase III program. And one is in late-stage preclincal development. We are continuing preclinical activities direct with clinical entry planned for 2027. I will now hand over to Karim, who will spend minutes on some promising news in our field in August, which is highly relevant for our technology.

Thank you, Oystein. Indeed, very exciting news. Moderna and Merck reported that in the study with over 1,100 melanoma patients, adding a personalized cancer vaccine on top of standard immunotherapy following surgery reduced the risk of cancer relapse. So this is the first large success of its kind. There was a very positive market reaction that as you what investors think of the biology Moderna share price more than doubled that day at the announcement, adding grow 30 billion of value in a single day. I want just to be clear, that the reaction of that size in a large company is not something you can translate to directly to Lytix. But core principle they approved here is the principle we have built on. The difference is how you do it. Their approach requires vaccine designed and manufactured for each individual patient. Based on the selection of predicted tumor antigens or mutated protein fragments. Our approach is of the Chef product injected into the tumor that will lead to killing the tumor and releasing the tumor -- the patient on tumor material. the patient's own tumor material to whole repertoire of mutations, not a group of it, not a selection. It's simpler to make and available to any patient. Next, please. This is the most important slide in the presentation today. In July, we had a meeting with the FDA in the U.S. to discuss our planned registrational trial of Ruxotemitide in combination with pembrolizumab in high-risk resectable melanoma. The FDA raised no objection to the general design of the proposed randomized open-label Phase III trial of neoadjuvant, Ruxotemitide-Pembrolizumab against Pembrolizumab alone. Also raised no objection to the event-free survival as the primary endpoint of the trial, more to the single agent Pembrolizumab as the comparator. The FDA further stated that single and well-controlled trial may be sufficient evidence to support restorational approval of Ruxotemitide in combination with Pembrolizumab. The final determination of approvability from the FDA will depend on the totality of the data that submitted for the new drug application. So let me explain why these matters in few points. First, the core design now is set in its main elements, the size, the comparator and the primary endpoint can be fixed. Which means the scope, the cost and the duration of the rational Phase III trial can be planned with great precision. Second, the primary end point event-free survival is an established rectory endpoint in Neoadjuvant setting. And the control, as discussed previously, is one of the established standard of care in Neoadjuvant melanoma. And finally, one in rather than to a single well designed controlled Phase III trial may provide substantial evidence of effectiveness subject obviously to the authority of the data to support the registration in this setting. This is the most capital efficient route to the market. We now have defined the registrational plan, and we have a much clear basis for partnership discussions intended to fund it. Now we are continuing restriction activities to keep the program partner really and activities include protocol organization, CRO evaluation and site selection, while we are also actively pursuing partnerships to fund and execute the study and also valuating alternative options to advance the program. As mentioned by Oystein earlier, we have also announced our new ABC initiated study. We are adding a second clinical study in Ruxotemitide program in Neoadjuvant melanoma is now included in the ALETTA study as an instigator initiated with our Phase II study in patients with resectable Stage 3 melanoma. The study is designed and conducted independently by the Netherlands Cancer Institute and European Institute of Oncology and is led by Prof. Christian Blank. Christian -- Sir Blank is a global key opinion leader and one of the pioneers of Neoadjuvant immunotherapy in melanoma, is price is changing trials, including the NADINA trial, have established nivolumab and Ipilimumab as standard of care in this disease. The arm relevant for us in this randomized trial is a randomized comparison of Ipilimumab and nivolumab, the standard of care alone versus ipilimumab, nivolumab and Ruxotemitide and a biomarker-selected patient who have low interferon camera signature. Those patients are known to not respond well to under immunotherapy. Approximately 47 patients will be randomized in that comparison in each arm within the IIa study that will enroll over 260 patients in total. The trial is planned to start in early 2027. So let me explain why this matters strategically. As we mentioned earlier, there are two standard of care regimens in new adjuvant melanoma pembrolizumab that we are pursuing as a comparator as an add-on for our Phase III client and Ipilimumab and nivolumab. ALETTA will generate the first randomized controlled data in Ruxotemitide with epilumab and nivolumab. So the evidence base will span both of standard of care regimens that are used in this setting.

Thank you, Karim. So let me now connect the evidence base to that regulatory part. Final results from Atlas ITO5 were presented on April 20 at the Annual American Association for Cancer Research Conference in San Diego. Safety and epic results with ruxotemitide and pembrolizumab in melanoma and in triple breast cancer represented on May 13 at the Annual American Society of Clinical Oncology Conference in Chicago. Presentation at the two major international cancer conferences underline that these data are strong enough to stand on a global stage, and they provide an important foundation for our discussion with regulatory authorities and with potential partners. NeoLIPA remains the key near-term value driver. Enrollment is progressing well with 85% of patients now included, and we are made on track for top line results in the second half of. Those results will provide additional Phase II data to support the partnering discussion. Turning to our partner, Verrica to the organization. Verrica is preparing for a Phase III program with VP-315, our oncolytic ruxotemitide in basal cell carcinoma including CRO selection and manufacturing of Phase III clinical supplies. Verrica had previously indicated a 2026 time line for initiation of this study and it no longer guides to a specific start date. The timing of the study initiation is therefore not currently known. New Phase II data on May 15 and at the Society for Investigator Dermatology showed a 67% overall reduction in untreated non-target basal cell carcinoma lesions and complete histological clearance in 21% of these nontreated lesions following treatment of the injected lesions. These findings provide further evidence of a potential scope effect consistent with the data from our own ATLAS-IT -05 study. That's important external validation of items systemic activity and of its potential in a sec cancer indication beyond melanoma. We also strengthened the leadership team with 2 key hires during this period. Renee Christine Amundsen joined as Chief Operating Officer in April; and Timothy Herpin joined as Chief Business Officer in August. And on the financial side, cash and short-term financial investment amounted to NOK 91.4 million at the end of the second quarter, supporting continued execution of our key value-driving activities. Yes, we take you through the details shortly. Before we turn to the financials, I would like to introduce our new Chief Business Officer, Timothy Herpin joined Lytix in August to lead our partnership discussion as we advance toward the registration study. He brings more than 20-ish of business development experience in biotech and pharmaceuticals, with strategic partnering and transaction across oncology and infectious disease. With regulatory clarity now in hand, the partnering process becomes an important value-creating activity in front of this company. And it was important for us to bring in a leader with exactly that background at exactly this point. So Timothy, please, could you please say a few words.

Thank you, Oystein. I joined Lytix because of the combination of a differentiated mechanism, clinical data in 2 independent indication and now a defined registrational path in high-risk resectable melanoma. This is a compelling package to bring to prospective investors and partners. My focus is straightforward to find business development opportunities that unlock value for Ruxotemitide and lead to the funding and execution of the registrational study and then subsequently approval and commercialization of the product. Those discussions are ongoing, and we will update the markets as they progress. Back to you, Oystein.

Many thanks, Tim. And with that, I will now hand over to our CFO, Gjest Breistein, who will take you through the financial results and outlook.

Thank you, Oystein. Before I turn to the numbers, I want to say something about what they represent. The second quarter was 1 of the most important quarters in the company's history. Following our meeting with the FDA, the agency raised no objection to our proposed randomized Phase III trial. I want to be clear about what that means because it's easy to understate. We went into that meeting, not knowing whether we would be asked to run another Phase II first. We came out with a defined path to a registrational study. That is a step change for this company, but it did not happen by itself. It's a result of a company-wide effort over several quarters, clinical, regulatory, CMC and manufacturing work carried out in parallel. Total operating expenses for the second quarter were 26.8 million. That is essentially unchanged from the first quarter, which was also 26.8 million. The comparison against the second quarter of last year needs one qualification. That quarter shows only 5.2 million because we reversed 10.2 million of Atlas IT05 accruals. Adjusted for that reversal, the second quarter of 2025 was around 15.4 million. So the real year-on-year increase is meaningful, but it's not the fivefold jump the reported figures suggest. Direct R&D was 15.9 million, the largest single component. This is the line where the FDA outcome lies. It covers the closeout of the final reporting of data ITV study and also the clinical, regulatory and CMC work that went into the FDA submission. For the first half as a whole, operating expenses were 53.6 million, and the loss for the period was 52.6 million. I would put it this way. We invested a defined amount of capital in the first half of the year. And what we bought with that was regulatory clarity of the fastest available fruit to registration. That is the return on the spend. Two things to take from the left-hand chart. First, the step-up happened in first quarter and has held the quarters are flat. Second, direct R&D is the largest component in both, which tells you where the money is going into the company into the program and not into overhead. On the right-hand side, Cash and short-term investments were 91.4 million at the end of June against 120.2 million at the end of March. Operating cash outflow was approximately 29 million in each of the first 2 quarters. Let me be straightforward about what that means. On the current run rate, that is a runway of roughly 3 quarters. A couple of things are worth understanding alongside it. First, we are not currently running an expensive clinical trial. NeoLIPA is an investigator-initiated study. The registrational study has not started. So our spending is preparatory work which we control directly quarter-by-quarter. That is real flexibility and is a very different position from a company locked into a fixed cost of running a Phase III trial. Second, Funding a global registrational study of this kind requires capital well beyond our current resources. Our stated strategy is to advance the study through development partnerships. The FDA outcome is precisely what makes Ruxotemitide, a compelling proposition for such a partner. We are also preparing to fund the program through equity financing if that is the best route for our shareholders. We are evaluating both and we're not dependent on either Tier 1 alone. Turning to the balance sheet. Total assets were 100.3 million. Balance sheet remains highly liquid, 29 million in cash and 62.4 million in short-term financial investments. Total liabilities were 13.7 million, down from 19.8 million at year-end. Equity was 86.6 million. Let me close on what this half year represent financially. We deployed just under 54 million in operating expenses over 6 months. What we bought was a defined registrational path, the most valuable thing the company could have acquired this year. The financing task ahead is real, and we are working on it with focus. But there's a difference between needing capital to fund a defined regulatory endorsed program and needing capital to find out whether you have one. We firmly are in the first position. To our knowledge, no Norwegian immuno-oncology company has taken a proprietary asset into Phase III regulatory study subject to securing unnecessary funding and completing the remaining regulatory and operational preparations, we believe Lytix could be the first. Oystein will now take you through what that path look like across the pipeline.

Thank you, Gjest. Let me summarize where this leaves us. In melanoma, the FDA raised no objection to our proposed Phase III design, with event-free survival as the primary end point and stated that the single registrational study may support a new drug application. Registrational enabled work is advancing on plan, as we have heard, and NeoLIPA top line result remain on track for the second half of 2026. We have also added a second opportunity in melanoma through the investigator-initiated ALETTA study. which is due to start in early 2027, and will generate the first random data for Ruxotemitide in combination with ipilimumab and nivolumab. Both for both these investigator-initiated studies, the ongoing NeoLIPA study and the planned ALETTA study, the majority of costs are covered by the study sponsor, enabling Lytix to generate highly relevant clinical data for Ruxotemitide in a cost-efficient manner. In basal cell carcinoma Verrica is preparing for a Phase III program, including 0 selection and drug manufacturing. Following the recent FDA feedback in melanoma and our discussion with Verrica in BCC, Lytix will continue to work both internally and with Verrica to maximize the commercial potential of ruxotemitide across all skin cancer indication for the benefit of the patient. And beyond ruxotemetide, LTX 41 continues in preclinical activities with clinical entry plan for 2027. Our strategy -- strategic focus is clear and unchanged. Our strategy is to actively pursue partnership to fund and execute the registration study and to evaluate alternative options to advance the program to generate and to generate supportive clinical data and strengthen those discussion that strengthens those discussions. And to maintain the disciplined capital allocation that has brought us up to this point. With FDA feedback that clears the path a strengthened organization and a defined route to approval, Lytix entered the second half of 2026 from a meaningful derisked position. Thank you. And with that, we will open for the Q&A session that will be led by Petter Tandberg.

Thank you, stand all the presenters for a good presentation today. I'll start off the Q&A with Verrica that we had some questions on here. You addressed this in the presentation as time, but I'll start off with this here. Verrica has provided limited details on its Phase III time line since announcing preparation. When should investors expect a clear readout on Verrica progress? And what visibility do you currently have into their program?

So Verrica report independently their progress with VP-315. They have reported that the first half of year 2026 been focusing on CRO selection and manufacturing of the Phase III clinical supply. They have in each earlier indicated, start of S3 in 2026. And at the moment, we have no specific date for when the Phase III will start. And we expect that Verrica will announce that as soon as that is concluded.

Another point of Verrica, there's another question here. This might go to you, Gjerst. What does lack of or delay of milestone payment for starting mean for the investment strategy and capital need for Lytix.

Thank you. For our budgeting, we never use uncertain milestone payments as a source of funding. So with our return strategy, we haven't really put that into consideration. So the timing of it would not affect what we are planning to do further.

Thank you. There is also some questions here on the recent developments and results in the immunotherapy space. Maybe this goes for you, Karim. Has the positive Moderna results had a positive effect on the investor and pharma sentiment for Neoadjuvant oncology treatments.