Mendus AB (publ) (IMMU) Earnings Call Transcript & Summary

Welcome to the Mendus Q4 2023 Presentation. [Operator Instructions] Now I will hand the conference over to the speaker, CEO, Erik Manting. Please go ahead.

Good morning, everyone, and thanks for joining our quarterly webcast related to the release of our Q4 and year-end numbers. I will guide you through an update of what happened in the past year and also forward-looking, how we will take the company in the next steps of this development. 2023 was a transformative year for Mendus. We saw in our Phase II trial, the ADVANCE II trial, long-term survival in AML patients with a higher risk profile due to their measurable residual disease or MRD positive status. And that aligns with an observation which we saw in the Phase I trial, which we have completed and which we published last November, where also we saw that the patients, particularly patients with a relatively low disease burden, but still with a high risk profile based on the cytogenetic tumor profile showed long-term survival. And this was, for us, a confirmation that we were on to something special, potentially special in the sense that we are addressing a very deadly disease due to a high relapse rate and we show after treatment with vididencel cell, long-term survival in Phase II in the majority of patients. This was a major signal for us and it allowed us to raise money in the summer, we raised around SEK 370 million through a fully secured rights issue, but also with a directed issue to Flerie as an important new shareholder for Mendus. And very importantly, at the same time, we were able to announce a manufacturing alliance with NorthX Biologics, which is a Sweden-based biologics manufacturer to support the large-scale manufacturing of vididencel, our lead product, which is needed to make sure that we can enter into late-stage development and in the end commercialization. We showed positive data from our ALISON trial in ovarian cancer at different conferences demonstrating and confirming the potential of vididencel to figure very broad and robust immune responses in cancer patients and we had multiple abstracts including also on our intratumoral primer ilixadencel and publications in peer-reviewed journals throughout the year. Very importantly, we secured Fast Track Designation from the FDA. End of last year, we were able to announce a collaboration with the Australasian Leukemia and Lymphoma Group, which will allow us to expand the clinical testing of vididencel as an AML maintenance treatment in combination with standard of care in a larger randomized controlled trial, which will be carried out by ALLG. And finally, we reported positive survival data from the ADVANCE II trial, which confirms a very stable picture with many patients now in long-term follow-up after our Phase II trial. And we combine that with immunomonitoring data showing actually that the robust immune responses we observed with vididencel are also associated with the durable clinical responses. As a reminder, we are developing vididencel as a cancer maintenance treatment. Why is it relevant? First of all, tumor recurrence is, by far, the deadliest cause related to cancer. So the initial treatment with conventional methods like chemotherapy, for example, is often successful, the deadliest cancers are deadly because they come back very quickly after the initial treatment. Also from an immunological perspective, the immune system is no longer inhibited by cancer cells being around, and it gives a better chance of an active immunotherapy like vididencel, which needs to train the patient's own immune system to be successful. Vididencel has a competitive product profile as a product, which is based on a cell line, which allows for scalable and centralized manufacturing. It doesn't require, for example, patient material or genetic engineering. It's a cell line, which we can grow to large quantities and then transform into the product vididencel. It's off-the-shelf, so it's readily available for use when it's needed without any delay and it can be administered by a simple intradermal administration. Also very importantly, for maintenance treatment is that it has a very benign safety profile. The only product-related side effects we have observed in the clinic so far is limited to the injection side where we see a redness and swelling indicating that the product triggers a local new response. And also, we could show actually now in the ADVANCE II trial immunomonitoring that actually the product does indicate -- does trigger, sorry, also a local immune response in the skin, which is next translating into a more systemic immune response against residual cancer cells. So very safe products with durable clinical response in acute myeloid leukemia. Finally, we have a strong regulatory dossier, which is not only based on orphan drug designations in the U.S. and Europe and the Fast Track designation in the U.S., but also, for example, validated by an ATMP certificate related to our manufacturing process by the EMA. AML is a highly deadly disease because it relapses so quickly. Actually, if left untreated, almost all AML patients relapse within a matter of months. And the only real curative approach is a bone marrow transplant or hematopoietic stem cell transplant in short HSCT. Even after transplant, patients sometimes have residual disease or MRD measurable residual disease, and relapse is actually also the main reason why transplant fails and why patients relapse. So relapse and AML is really the main barrier to long-term survival, and that's the medical need we are addressing. This is data we published November of last year from our Phase I trial, and it had two very important observations. First was there is a split between the patients with high levels of disease and with low levels of disease. And what we saw was the main correlation for long-term survival was low levels of disease. So patients with less than 10% blast in their bone marrow blast being cancer cells showed a much better survival, overall survival than patients with high levels of disease. This confirms the setting I just described in which we are exploring in our Phase II trial. The second very important observation was that there was no correlation between the cytogenetic risk profile of the tumors of the patients and the outcome. So in other words, also patients with a very high risk profile responded well to the therapy, indicating that the therapy as an immunotherapy works different from conventional therapies like chemotherapy and targeted therapies. The ADVANCE II trial focuses only on patients with lower disease burden but all with a positive MRD status. So with measurable residual disease. These patients are in the first complete remission following chemotherapy with sensitive matters like PCR or flow based methods, we can pick up the residual cancer cells and MRD is associated with very high relapse rates, and that makes this patient population a relatively higher risk patient population. This is the data we presented at ASH last December. And what you see is that initially, there is a relatively quick drop. And what we could show is that these patients had a relatively poor immune system. But what you start to see is that in the long follow-up, a lot of patients, actually 14 out of 20 remained disease-free over long periods of time with the longest patient now for 5 years after initial treatment. And this plateau that you start to see is typical for immunotherapy. What happens is the immune system is trained, in this case by the vididencel treatment and then you start to see that it takes control over the residual cancer cells and that actually leads to a much longer survival than what you see with, let's say, traditional therapies like chemotherapy or targeted therapies, which slow down the disease. This is actually long-term disease control. The relapse-free survival, so the amount of patients that are still disease-free is also very long with 11 patients still in first complete remission but with a median relapse-free survival for now 2.5 years. Also very importantly, at ASH, we showed a much broader immunomonitoring study, which was part of the Phase II trial. So what we did is we collected samples from patients, from the skin, from the blood. What we could show that was in the skin, there was an immediate triggering of a local immune response. But it could also show that in the blood, there was a very broad immune response, not only driven by T cells, but for example, also by B cells and cross-presenting dendritic cells, indicating that the immune system is trained in a very broad way. And also with respect to the T cells, we saw that there were responses against a broad range of tumor-associated antigens and what is rapidly depicted here also that those responses correlated with the survival outcome. This is the current standard of care in AML maintenance. It's the only approved drug called oral azacitidine or Onureg as a brand name. And what you will see is that the difference between the placebo arm in this registration trial, which is the blue line and the red line, which is the patients treated with oral azacitidine is relatively short. So there's a few months survival benefits related to the oral azacitidine, but it has been approved. It's the only approved drug currently in AML maintenance. The other thing you see is the established importance of MRD, but also in this particular study, you see that the patients with MRD have a worst outcome as compared to the patients with an MRD negative status with a median relapse-free survival in the placebo group of less than 3 months and 7 months in the patients treated with AZA. What we will next do is to do a larger randomized controlled trial with standard of care, so we will combine our drug vididencel with azacitidine, we will compare it with an azacitidine only arm. And this is a relatively large trial, and we were very happy to be able to team up with the Australasian Leukemia and Lymphoma Group, a very active clinical research group that was, for example, also contributing to the trial I just showed for oral azacitidine. They have an umbrella trial set up in combination with oral azacitidine, and they were triggered by the data we presented at ASH and very motivated to set up together with us, the trial which combines vididencel with oral azacitidine, and together with ALLG, we will run a trial that initially includes 40 patients but can then be extended with another 100 patients after initial safety and feasibility has been established. But for us, a very major step forward in being able to explore and expand the clinical expansion of vididencel in a larger patient population in combination with standard of care. AML maintenance is, like I said, the main, maybe, solution for the high relapse rates at -- in AML in the field as a whole. And we are currently focusing on patients that have been treated with high-dose chemo and that are still MRD positive, but we will broaden that patient population in the CADENCE trial, which is a trial we will run with ALLG. So to also include the MRD-negative patients because they also have a high relapse rate. So it's a broader patient population, but still very much in line with the patient population we treated in the ADVANCE II Phase II trial. But there's additional patient populations, like I said, also in transplant settings and relapse is very high and is related to MRD. And also, there's a new patient population, which were deemed chemo unfit in the traditional treatment landscape for AML with where there's now a new drug called venetoclax, which is very successful in bringing more patients in a complete remission, but those patients will also, in the end, require maintenance therapy. So there's a broader positioning that we could explore with vididencel cell. So the clinical development path is one that is currently driven by the completion of the ADVANCE II trial, which we have read out, of course, now also long-term survival. So with a successful readout and the new trial, the CADENCE trial, starting in the first quarter of 2024, which is a larger randomized controlled trial in combination with oral azacitidine. As a company, we will prepare for a strategy that leads in the end to registration, and we can carry out the plan either by ourselves or in combination with the partnership, for example, but this is the plan that we will work out in terms of how the trial will look, how the regulatory feedback will be. And this will be particularly in the combination with oral azacitidine in the patient population we have been addressing in the ADVANCE II trial and now also in the CADENCE trial, but like I said, also, there's a possibility to potentially explore additional patient populations in AML maintenance. Very importantly, the partnership with NorthX Biologics has begun immediately after the summer of last year and we are now working together with them to serve the large-scale manufacturing of vididencel to support such late-stage development and in the end, commercial launch. Then we have the trial in ovarian cancer ongoing, which is exploring safety and feasibility in a very different setting in a solid tumor setting, what we can report and have reported in the course of last year is that also in ovarian cancer patients, we see very strong immune responses and broad immune responses against multiple antigens upon treatment with vididencel. Of course, we need to show whether that leads to survival benefit or not. And that's a readout we planned for in the second half of this year 2024. Ilixadencel, an intratumoral primer based on dendritic cell biology is a product that has been repositioned. We have explored it in a broad range of solid tumors that we have decided to now focus on soft tissue sarcomas because that's a group of tumors that responds very poorly to currently available therapies after first-line failure. So patients that have undergone successful first-line treatment still are at very high risk of tumor progression and checkpoint inhibitors and other immunotherapies have not been successful in soft tissue sarcoma. So this setting will allow us to look for a strong and confirmative clinical signal with ilixadencel with a relatively small number of patients. And this is a trial we continue to prepare for in the first half of this year and on which we will update as soon as we are able to disclose the details. Finally, we use our platform to combine with other immunotherapy modalities, and we have particularly shown that we can expand so-called memory NK cells, and this is a program that we are working on in our research group to see if we can expand this into a potential new pipeline program for the company because also the memory NK cells have been associated with long-term survival in bloodborne tumors and particularly after transplant. So for us, it's a natural fit with our overall focus related to the lead product, vididencel. With that, I'll provide an outlook for this year, which is on the one hand, that we are expanding the clinical development of vididencel in AML, for which we have taken major steps, including the collaboration of ALLG and the collaboration in the alliance we have with NorthX Biologics to make sure we can step up the large-scale manufacturing. We'll have additional readouts from the ovarian cancer trial, including the primary analysis in the second half of 2024. And we are preparing ilixadencel to reenter into the clinic in soft tissue sarcomas. And finally, we have the research pipeline, which is exploring the NK cell program and novel therapeutic concepts in combination with other immunotherapy modalities. So all in all, we look forward to, again, an eventful and transformative year. We have a plan for an investor event on March 12, which we will announce in detail shortly. But please mark in your calendars that on March 12, end of the day, from 3 to 5, we will have a company event to more extensively talk about the company strategy and the way forward. With that, I would like to hand it back to the moderator and open to Q&A.

[Operator Instructions] The next question comes from Chien-Hsun Lee from Pareto Securities.

Congrats with the progress. Just trying to understand your strategy for the upcoming AML trial, you decided to include both MRD positive and negative patients, may I ask, what's the reason behind it? Is it the MRD positive patient will give a higher success rate?

Yes, I think it's an excellent question, Chien. And to start with the MRD part of the question, there is no false positive MRD patients. So in other words, whether you use PCR or flow-based methods to pick up potential residual cancer cells. If it's there, it's there. There are a lot of false negatives. So also when you look into, for example, the QUAZAR -- sorry, the QUAZAR trial data, you see that also the patients with an MRD-negative status still have a very high relapse rate. So there's a lot of false negatives, where you don't pick up the disease for whatever reason, but it's still there. So we believe that the broader AML patient population will benefit from this approach and also the effect that we see on relapse-free and overall survival is not a very incremental effect. It's a relatively large effect. So we expect to see that also in the broader AML patient population, and then there is no reason to exclude patient groups.

Okay. Maybe a follow-up question. So if I understand correctly, so the decision of step-up to pivotal will happen after first readout. So may I asked, what exactly do you need to see in order to make the decision?

Yes. So on the one hand, we will not be dependent in our progress on the CADENCE trial. The CADENCE trial is just taking a major hurdle for us, which is a sizable trial, randomized controlled trial in combination with azacitidine. What can we expect based on what is known today is that both compounds, both azacitidine and vididencel have a very good safety profile. But still, you have to show that it's actually holding up. So the most important initial readout we want to see from the CADENCE trial is safety in combination with azacitidine, right? At the same time, we have already, of course, completed the active study phase of ADVANCE II, and we have the long-term follow-up data, so we're wrapping up the data from that trial to also be able to discuss them with the regulators. And on the basis of that, combined with the initial data from the CADENCE trial, be able to conclude what will be the pivotal trial design to get this product registered in AML maintenance, particularly in the setting we are currently targeting, which is after first complete remission.

The next question comes from Antti Siltanen from Inderes.

So first, I wanted to ask about 2023. In hindsight, did you have any surprises during the year in terms of cost development or clinical progress or any other areas?

Yes, Antti. There were, I think, a couple of hurdles that we took, right? And in hindsight, the surprise is maybe when you take them, you realize you've taken major steps. At the beginning of the year, we had good data but we were lacking the financing to set up the clinical development. And we knew we had to do one way or the other, a larger trial with oral azacitidine, which would be a very costly trial. Not only because you need to engage a lot of clinical centers, but also because today, the oral azacitidine is a very expensive drug, which is not reimbursed everywhere. So we needed to do the trial, but we didn't have the means to move forward. Also, we knew we had to step up the manufacturing. We have here at Mendus in-house, the research lab and also the so-called CMC team, right, which works on the process development of our manufacturing processes, but we are not a GMP facility. So we need to work with third parties to in the end manufacture our product in a GMP setting. Those were major hurdles, which at the beginning of last year, we were not sure how to take them. And so the outcome being that we were able to do a significant raise in the summer and in conjunction with that, also closed the manufacturing alliance with NorthX Biologics was a major step, and the fact that ALLG was able to set up together with us such an attractive trial design at costs that we can currently afford, and there are some additional benefits to working with Australia, which has to do with, let's say, tax benefits offered by the Australian government. So we have set up an Australia daughter company to be able to make use of that as well. But that allowed us to take major steps which at the beginning of last year, we were not sure how to take them. So I think that was the main outcome until of last year.

Great. My second question is I'd like to clarify, when you're going towards the pivotal trial, do you still see the monotherapy arm as an option? Or are you purely focused on the AZA combination in the pivotal phase?

Right. I think the situation of oral AZA is simple. It has been and is still the only approved drug in AML maintenance. So you need to think tactically about what to do and also with a longer view on whether or not you can circumvent this kind of co-medication or whether you are better to combine with it. And like I said initially, our main hurdle was that we know it's probably smartest to combine with the oral AZA, because AZA has been around forever, basically versus the subcu. So subcutaneous administration and injected form now is the oral azacitidine. So a lot of hematologists worldwide are used to working with azacitidine. And although it wasn't very effective, it's still a backbone drug. And for example, also venetoclax, the drug I mentioned, which is getting more patients in complete remission is combined with the azacitidine. So I think the safest bet is to combine with azacitidine, but again, it was a major hurdle because we had to step up not only the amount of clinical centers we work with, but also to think about how the co-medication will be paid for. And in the current setting, basically, the situation of ALLG is taking care also of the co-medication, right? So we can plug into an already ongoing trial, and that took away a major cost hurdle. So longer term, I think this is the most rational thing to do. And also the initial data from the CADENCE trial will allow us to more clearly refine the clinical strategy in the end needed for registration.

And my final question, you mentioned the possible indication expansion within AML. So I wonder if you can talk a little bit more about that. So what kind of indications are you thinking about?

Well, first of all, we can't do all the heavy lifting at once, right? So I think the most important part is that we will start preparing for the pivotal trial strategy. But it's pretty obvious that there is a high unmet medical need in AML and also related diseases such as myelodysplastic syndromes or MDS. And yes, sadly, a lot has failed in that field. Also recently, there were major disclosures from Gilead and Novartis who have new programs targeted pathways and also a kind of immunotherapy approach, but they did not succeed in pushing through those programs, and they've recently announced they will stop those programs. So on the one hand, it's very sad for the field as a whole and for AML and MDS patients globally, but this also means that there is still a very high unmet medical need that needs to be addressed. So in that sense, we see the opportunity, and we feel the responsibility to think more broadly, but first things first. It's just to describe the broader opportunity we currently see but to make sure that we get to a point where we can enter into a pivotal stage trial in the main patient population, we're currently addressing, That's, of course, the most important thing.

The next question comes from Christian Binder from Redeye.

I just have one quick follow-up. Sorry, can you hear me?

Okay. We seem to have some technical issue here. So please just hold on, and I'll make sure that the speaker is back. Just a second, and we'll sort the technical issue here.

The conference call resumed shortly.

This is the technician. We have some technical issue, but we are sorting it out. So please stay tuned. So we have the speaker back with us. So here is Erik to answer the question.

All right. Perfect. Can you hear me now?

Yes, we can hear you perfectly, Christian.

Perfect. I just had one follow-up regarding the business development side of things. It seems like the plans you have allows you to proceed pretty quickly from Phase II to pivotal stage. At the same time, potential partners usually want to be involved in all stage design. So what are kind of your thoughts around going in alone potentially or partnering? How part of the risk award look, so to speak?

Absolutely. Well, I think the good thing about the data we currently have and also the indication is that we can that we can choose, basically, right? So if we can run a trial with a relatively limited amount of patients were needed for registration, with the current shareholder base that we have, we may consider to go at it ourselves. But at the same time, we realize obviously that a potential partnership will be very helpful in terms of getting things over the finish line and preparing for commercial launch. So at this point, Christian, I think the most important part is that we will have to take care of the exact planning and design of a pivotal stage trial and at the same time, keeping all options open with respect to how many when we get to the finish line.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Well, thank you, operator, and sorry for the technical disruption people. I don't know exactly what happened, but thanks for being part of the call, and we look forward to keeping you and the rest of our stakeholders up-to-date with our next steps. Thanks.