Nykode Therapeutics AS (NYKD) Earnings Call Transcript & Summary

Greetings, and welcome to the Nykode Therapeutics Update Conference Call and Webcast. [Operator Instructions]. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Nykode's CEO, Michael Engsig. Please go ahead, Michael.

Thank you very much, Kevin. And thanks to all the participants joining in despite this short notice for the update we have on the VB10.NEO program this morning. Before we dive in, I just want to remind everybody of the forward-looking statements. We assume you are familiar with this one. And on that notice, we will go to first slide. So just to remind everybody, the focus of today is VB10.NEO, Nykode's individualized cancer vaccine. So VB10.NEO built on the principle of determining the patient-specific vaccine targets, build that into a personalized vaccine and get the vaccine back to the patients. It's a concept we've been working on for years, and we have been in a global license and collaboration agreement with Genentech since September 2020. That was an agreement that provided Nykode not only with a partner, but also with upfront and milestones amounting to more than USD 200 million at the time. VB10.NEO has been tested in 2 clinical trials: N-01, which Nykode-initiated and conducted independently before the partnership; and N-02. And together, these 2 patients have assessed -- have been enrolling patients in two basket trials with more than 10 different solid tumor types. N-02 was designed and conducted in collaboration with Genentech and is in its final stages at this moment. Yesterday, Nykode received a notification of termination from our partner, Genentech. Making the collaboration termination effective as of January 6, 2025. That means that Nykode will regain control of VB10.NEO and the intellectual property, which in turn means that we will be able to independently decide the strategic path forward for that program and we will have the ability to also decide on future licensing partners. Importantly, for us, there are no requirements in determination to refund any of the upfront payments or make any future payments to Genentech should VB10.NEO reach patients and the market. Also importantly, for us and for all shareholders, the Notice of Termination does not, in any way, reference clinical data or any aspects related to the technology platform, adverse events observed, so there is nothing in this termination that should impact on our conviction in the potential of VB10.NEO and its ability to generate a unique broad patient and tumor-specific immune response as we have reported earlier. That also means that we are in a position where we need to speculate on the motivation. And it's our clear impression that this decision by Genentech-Roche is a result of an assessment of their overall portfolio of activities and a more politically driven decision to prune some of the activities away. We've seen that with other collaborations recently, and as I said, I want to emphasize, not related to anything we have observed in the program. We will now work hard inside Nykode to determine the best path forward for the program, which could include potential new partnerships. And we'll report back to the market as we come to decisions together with the Board on how to take this forward. We remain confident not only in our technology platform, but also in VB10.NEO, as I said, and are to some extent excited to be able to take our own decisions for the program going forward. We realize that this is somewhat fresh out of the press. And at this point, you may find that we have limited information. We wanted to give you an update on the situation, of course, also the underlying rationale for the decision, which is not related to -- or reference to any clinical data in the Notice of Termination. And then we look forward to further update you on our thinking when we get to the quarterly reports towards the end of the month. As we continue to have a strong focus on cost containment program and runway extension initiative that we have already given you some insight into the last quarterly report and which, of course, only becomes more relevant with today's announcement. So stay tuned. And I think with those words, Kevin, we can open up to the bunch of questions I'm sure the audience will have.

[Operator Instructions] Our first question comes from an investor from [ BioInvest ]. When can update from Regeneron be expected?

So we -- it is -- as it has always been, it's up to our partners to communicate the progress on our collaboration projects. We -- there's no change to that. We see absolutely no reason why today would have any impact on our Regeneron collaboration. And Regeneron have not indicated publicly when they will be updating from this program. So we are not in a position to give any further guidance on that. We simply are not allowed to give public guidance on that. So also here, we say, as we usually say, we have a good ongoing collaboration and exchange of both data and next step and remain confident around that partnership.

And a follow-up from the investor from [ BioInvest ]. Will data from the Genentech N-02 trial be made public?

That is actually a good question and of course, fully understandable. We've had very, very short time to both assess the contractual implications of this and discuss it with our partners at Genentech. One of the things that is -- was very important for us is to make sure that we regain full control of the program and the necessary IP. And as important also, we regain the right to license it to a future partner. That was the most important thing. One of the things that we still need to discuss is the ownership of the data from the N-02 trial, which Genentech formally owns and paid for through the recurrent R&D fee regulated by the contract. So it is subject to a discussion with Genentech over the next 60 days on how we handle the ownership for the data. And therefore, we'll not be able to answer that question today. But of course, we will work to come to a situation where we can make the data public.

Our next question is coming from Arvid Necander from Carnegie. How much visibility do you have into Genentech's final analysis of data generated to date? And there's a follow-up, but I'll let you go there first. Would you see -- let me just -- I want to finish -- sorry about that, Michael. Would you see the potential for repartnering? Do you intend to further invest into this program or pursue new partnerships based on available data?

Yes. So when it comes to insight, I think we have indicated before that the trial is, as such, formally conducted by Nykode in close collaboration with the Genentech data. So I would say we have a good insight into what data have been generated and when and also what has been shared with who at what time point. So I would say we have a good insight into what Genentech had analyzed and concluded at what time point. And as I said, there is nothing in the termination letter that in any way references to any data that they have seen. So -- and I think it is also our -- at least my very strong impression that the team we worked with on the Genentech side was enthusiastic to the end about the program and the technology and the data. And that's why I say my impression is that this is a decision taken at a very high level in Roche that probably relates to a pruning of their pipeline. When it comes to the potential for repartnering as I said. And that is the very honest answer right now. This notification from Genentech is very new. So the right thing for us to do is, first of all, to ensure that we have the rights to decide the program's fate and path forward, including also the right to pursue new partnerships if that is what we want to do. But we have not had the chance yet to sit and discuss with the Board what we consider the best way forward to capitalize and monetize on this asset here. So here, we will simply have to use the coming period for in-depth discussions in the management team and with the Board and determine what is the best path forward to realize the value that we still see very much in this asset.

Our next question today is coming from Lucy Codrington from Jefferies. Has Genentech shared the Phase, is it Ib, data with you?

So as I said before, the trial is generated by Nykode in collaboration with Genentech, which means that the data as such when it becomes available is also visible to us, and we are in the final stages of the trial, which means that not all data are cleaned up yet. So in short, I think to answer it a little bit differently. Yes, we know as much as they know.

And a follow-up from Lucy Codrington from Jefferies. You said it does not reference clinical data, but does it explicitly say it is not related to clinical data? In August, you said they were committed to the program and that the data analysis of N-02 is ongoing, which implies that data could have played a role in the decision.

Yes. And the fact is -- and I think right now, I'll stick to the facts. The fact is that the notification letter refers to a specific clause in the contract that is just called For Convenience, which means that it is a very simple complication. Importantly, for us, that means that there's absolutely no reference to the clinical data or any other observations or impressions around our technology platform, which I think matches the impression that we've had from the collaboration. And I will also be very open to say this is obviously a surprise for us, not least in the light of the good ongoing discussions we had with the Genentech team, including on a possible next step. So there's nothing for us that indicates that this is related to the data they've seen being in any way not what they were expecting.

Our next question today is coming from VLK Sebastian. First of all, previously, you've been on constraint -- you've been constrained by the partnership to disclose any data or guidance on VB10.NEO. Now that those constraints are released, can you provide some insight into when you release the clinical data for N-02 and there are follow-ups.

Yes. Thank you very much for that question, also Sebastian. I think I partly answered that before. One of the aspects that we still need to determine and actually sit down and discuss with Genentech is the ownership of the data for N-02, which Genentech formally owns according to the contract, partly because they actually funded the trial. So at this time point here, we're not in a position to give a specific answer -- definitive answer to that question yet. But obviously, as I said before, we hope to be in a position where we can provide the insight into the clinical data for N-02, but cannot promise that today.

And a follow-up, how are you thinking about prioritization of capital for the further clinical development of VB10.NEO in solid tumors and VB10.16 programs in cervical and HNSCC?

So this decision, just to make that clear, or this event does not change our plans for VB10.16. They remain unchanged as we have communicated before. For VB10.NEO, I think it's fair to say that it's too honest -- too early, sorry, too early to say at this time point. The decision and communication from Genentech is very fresh out of the press. We will now need to take the time to sit down and fully understand the -- all aspects of the implications of this decision and have a thorough assessment internally and together with the Board on how we best move forward with VB10.NEO. And then we will provide an update to the market as we get to conclusions there, again, emphasizing that there is nothing in this decision here that gives us any reason to believe VB10.NEO is not a very interesting asset that has the potential to address a wide range of tumors, not only solid tumors. And I think we remain very optimistic on the prospects of VB10.NEO going forward, but we do need time to have a good discussion, including also with the Board.

And next, a follow-up from Sebastian from VLK. Can you provide some insight into how the collaboration with Genentech work from an operational perspective? Do you have the capabilities in-house to do tumor sequencing, epitope selection and vaccine generation? How capital-intensive is running the study for personalized vaccine compared to HPV cancer vaccine? Will you be able to run such a trial yourself?

So I think we've addressed that a bit before, but I'll repeat that again. And I hope that should not be news in any way. The N-02 trial was conducted by the Nykode team. So it is our technology, it is our manufacturing chain and supply chain setup. It is our epitope selection algorithm, et cetera, et cetera, that have been used in the trial. So do we have the capabilities to execute these trials ourselves? Absolutely. All that knowledge resides in Nykode. How capital-intensive is it? I think personalized cancer vaccines is a different setup than off-the-shelf vaccines. They do come more costly in terms of producing the personalized cancer vaccines, obviously. both when you are in the early clinical development, but also when you hit the market. So it is more costly to run a personalized cancer vaccine clinical trial than an off-the-shelf or any other immunotherapy program. How costly obviously depends solely on the number of patients you enroll in a program. And that's why we will need to sit down and say what will be the next right step to take. I think right now, we have a lot of good insight from our discussions with Genentech on what the next step could entail. So I think we have a lot to build on from the partnership, but we do need to sit and have a thorough thought and discussion with all stakeholders, including the Board before we communicate any decision on that.

And one further follow-up from Sebastian at VLK. Looking over the next 12 months, what can we expect from data readouts from the current pipeline?

So for the next 12 months, I'd say we have guided that the conclusion from the C-03 is the next milestone to look for. But I also indicated that we are right now in a situation where we will assess our path forward, including the strategy for VB10.NEO. We're also in a situation where we are thoroughly prioritizing partnership opportunities for our lead program, VB10.16 in order to uplift costs. So we will be providing updates on our strategy forward as we get in towards both the Q3 and the rest of the year. So yes, I'd say stay tuned for updates on our strategy forward.

Our next question today is coming from [ Rasmus Hansen ] from [ RMH ]. In the Q2 presentation, Page 27, you said you would give an update on Nykode's inverse vaccine technology platform in Q4 2024. Was it Wednesday's update you were referring to? Or can we expect further updates later in this quarter?

And I'll hand over the word to Agnete, our Chief Scientific Officer and Head of BD.

Yes. So that's correct. We had the presentation at the PEGS conference in Barcelona this week, and we're very happy to share a couple of new data sets that are important for us in order to pursue further development and move further with the optimal lead selection and the indication selection for our program. So this is where we were able to show work in a new model that is more clinically relevant, which are relapsing-remitting EAE or MS model. We were also able to show a new candidate or a new product candidate in those experiments and also see that, that works, then we again confirm the strength of the APC targeting, which is Nykode taking proprietary technology and how it performs compared to a nontargeted version. We may be able to add some more words on that on the Q3 report. That was the update plan so far.

Thank you. Our next question today is coming from [ Sven Schering ] from [ TrustInvest ]. When is a decision expected on the tax case?

Yes, this is Harald, CFO. I can answer that. It is just over a year since we received the ruling, we have appealed. We don't have any specific insight into the timing, but we do understand it could take up to 2 years from when we received it.

[Operator Instructions] We do have a further question coming from [ Kristen Nirsted ] from I'm not sure where they're from, but [ Kristen Nirsted ] says, as shareholders we're getting somewhat tired. Could you comment on the share price versus cash position?

Yes. Thanks for that question, Kristen. And I can assure you that I understand your frustration. This is not a favorable position to be in, I think, for many reasons. We remain convinced in Nykode, and I'm sure also in the Board that our platform and assets does constitute a value that is significantly, to put it mild, undervalued or under-reflected in today's share price. I think today's share price is a reflection of the setbacks we've had recently. And our focus right now is on providing a clear path going forward and reestablish the conviction in both the platform, our assets and strategy. And the good news is that thanks to the partnerships that we did, not least with Genentech, but also with Regeneron, we do have cash that makes -- puts us in a position where we do not need to go to the capital market to ask for more cash unlike many other biotech companies right now. So we are in a position to really decide our own fate and put together the right path forward. As I said, when we announced the discontinuation of C-04, that was a prioritization decision we took when we saw the commercial potential for the patient population we were aggressively shooting for was eroding away. We decided to reallocate those costs to more important aspects of the VB10.16. We also announced that we were postponing certain activities, and we were reducing the organization in a strong focus to show cost containment or restraints and extend the runway. As I mentioned earlier in this call here, we continue to have a very strong focus on cost containment and runway extension. And obviously, today's announcement does not make that less relevant. So we will continue to focus hard on that. There's one more question.

Yes, we do have a further question coming from [ Sven Schering ] from -- do you think you need to pay for the data from Genentech?

The very honest answer here, Aspen, is at this time point, I can't give you a very clear answer on that one. The data from the N-02 trial is one of those aspects we will sit and have to negotiate and come to a good resolution with Genentech on. So we'll be able to give you an update later on that. And it would be premature of me to speculate to what. If so, then certainly not a lot, and we'll have to discuss if that's actually something we need to do for the further progress of the trial, but we'll give you an update when we know the answer to that.

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Yes. Thank you very much for everybody dialing in and for posing the questions. We have to acknowledge that today is another one of the very hard days for the company. This is a very negative surprise to get this from our partnerships, but we also see a silver lining in the sense that we now regained control of the program, the right to sublicense. We remain convinced about VB10.NEO and its ability to drive a unique immune response. And we will now sit down and have a good discussion on the best path forward for VB10.NEO, which could include entering new partnerships. We look forward to keep you updated as we further hone our strategy and drive our projects and assets forward. I can promise you all, we will continue to have a very strong focus on cost containment and runway extensions and hope to be able to give you further updates on that also in the near future. With those words, despite the negative news, I hope you all will have a good Friday and a good week when we get that far. So thank you very much from here.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.