Nykode Therapeutics AS (NYKD) Earnings Call Transcript & Summary

Greetings, and welcome to the Nykode Therapeutics Q1 2025 Financial Results Presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Michael Engsig, CEO of Nyko Therapeutics. Please go ahead, Michael.

Thank you very much, Kevin. And also from my side, a very warm welcome to all participants to this webcast for our first quarter results and update from the business. A quick reminder of our forward-looking statements, assuming you're all familiar with this kind of forward-looking statements. We will move on. As usual, I am very happy to have with me here today Agnete Fredriksen, our Chief Scientific Officer, Head of Business Development and Co-Founder, as well as Harald Gurvin, Chief Financial Officer. And together, we'll try to take you through a deep dive in the business update and the financial numbers for the first quarter. So happy to report that we have finalized the organizational streamlining that we set out to do and announced in the beginning of the year. We have finalized that in the first quarter, and we'll maintain a very strong focus on cost control in the company going forward, which will, in turn, allow us to execute on our future priorities, which we look forward to update you on in the near future. We have also had Susanne Stuffers elected as Chair of the Board at the Extraordinary General Assembly on the 23rd of April. We have included a very brief bio on the right of this slide here, which we invite you to read further. We also announced the approved dividend of NOK 1 per share, which was approved at the Annual General Meeting on 26th of May. And we have announced that we will be providing an update and further details to the company's strategy and priorities in connection with the second quarter results for 2025, which we expect towards the end of August this year. And once again, I want to take the opportunity to express our gratefulness and thankfulness to -- for the continued commitment from our employees as well as our shareholders. In addition to those trends, we have also seen a good string of data come out from the research lab. So we did publish the final Phase II data from our VB10.16 C-02 trial in the peer-reviewed BMJ JITC journal. And the data did, as we have announced earlier, confirm the prolonged benefits and vaccination effect that we also saw in the interim analysis. We have one slide on that, a little bit later. We did also in the first quarter, present a strength of new pre-clinical data from our immune tolerance platform which again demonstrates the APC-targeted platform's ability to modulate multiple arms of the immune system, again, supporting a broad application in autoimmune disorders, and Agnete will take us further into the key data from that presentation. We will be presenting new data from the two trials, VB10.16 C-02 as well as VB10.NEO N02 at the upcoming ASCO, which starts in a few days, again, highlighting the potential of Nykode's immunotherapy platform to induce robust and durable immune responses across multiple tumor types. And we'll take you a little bit further into those data also in this call here and just a little bit of reminding everybody of the limits to what we can publish before the actual posters are released. Switching to VB10.16, our lead asset, our lead clinical assets. As mentioned, we were very happy to see the final data released in the BMJ JITC journal in the beginning of the year, a peer-reviewed journal with a high factor, which again underscores the importance and significance of these data. As we have previously highlighted, the publication also, again, mentioned the favorable safety profile of VB10.16 in combination with atezolizumab in 52 patients. It confirmed the durable efficacy with a median overall survival of 24.7 months and an objective response rate of 29.2 months in the PD-L1 positive subgroup. There's a lot of other good interesting data in that publication. So we're just here to draw your attention to a few of the ones here. And again, most importantly is a general information of the prolonged benefit and vaccination effect that we have seen consistently with VB10.16. We are heading to ASCO now to present further data from the same trial. So the journal did represent the final key analysis on the primary and most important endpoints, but we will continue to release data as we get further into the data pool. So we expect a lot of further interesting insight coming out of this trial in the coming period. And we'll be presenting some of those at the ASCO in a couple of days, which just draw the attention to a few of those, does see an association between the T-cell response, the HPV16-specific T-cell response and patients with reduced systemic immunosuppression during treatment. We also see an association between tumor microenvironment characteristics and response rates. And both of these provides interesting insights into both the mechanism of action of the vaccine as well as the ability to target the appropriate most optimal patient populations in the future. Again, here, we do find these signals elucidating to the treatment's effect on systemic immunosuppression and support the importance of identifying the right patient populations for optimal efficacy going forward. Our C-03 trial is on track. In the C-03 trial, we are investigating VB10.16 in combination with pembrolizumab in first-line head and neck patients. The Part 1 trial, which is the one we are currently in Part 1 of this trial is exploring increasing dose level in a group of patients, and we have enrolled, as you see this figure, we have one patient at 3 milligram, six patients at 6 milligram and six patients at 9 milligram. We are currently on track to be making the preplanned safety conclusions for the doses, which would theoretically enable us to select the right dose going forward. And we're also exploring opportunities to provide insights into preliminary data from this trial here in the second half of 2025. So look forward to that also. With those words, I'm going to hand over to Agnete to take us through an update on both the VB10.NEO, individualized cancer immunotherapy as well as our immune tolerance program. Agnete?

Thank you, Michael. So this month, we will be at ASCO, as Michael mentioned, and we will also present data from the VVB-N02 trial. This is the trial where we have been testing VB10.NEO, which is a personalized DNA-based neoantigen vaccine in combination with atezolizumab in a dose escalation trial, Phase Ib. This was done in tight collaboration with Genentech. What you will learn from this poster is that the trial included heavily pretreated patients with a medium of 5 prior lines of therapy across more than 10 different patients, including indications that are not known to respond to checkpoint inhibitors or immunotherapies, mostly PD-L1 low negative and/or have previously progressed on an anti-PD-1, PD-L1 treatment. That is also evident with the median progression-free survival being less than 2 months, meaning most patients progressed already at the first scan, which limits the ability to evaluate long-term immune responses as well as really the clinical response assessment. However, we are very happy to see that the neoantigen-specific immune responses were still observed in all patients. We did also observe de novo immune responses. So that means immune responses to antigens incorporated in the vaccine that were not evident before vaccination in 85% of the patients, bearing in mind that many of these patients, we only have one on-treatment sample available. Then we -- for those patients where we had more than one on-treatment sample, we have also been evaluating the durability, and we can see durable T-cell clone expansion in 82% of these patients. So it's very promising on the immunogenicity signals here in that patient population. We do see a favorable safety profile, bearing in mind that this is the first trial where we have tested up to 9 mg of our DNA vaccine. So the trial supports further development in solid tumors and other settings. Then we can go to immune tolerance. We have still continuing to work on our immune tolerance platform. We were in Boston in Q1 presenting new data from our immune tolerance program. This progress really shows that we have reached a stage where we have successfully been able to establish several tolerant relevant methods and assays. This supports already insight into the mechanism of action and efficacy, but also importantly sets us up to accelerate further platform and lead candidate optimization now that these methods have been established and are functional. We do also, for the first time, show durable efficacy in disease models also when starting treatment after disease onset. So to show you some of these data, we have been able to show low durable efficacy also after starting treatment in mice that have already had a disease onset with clinical scores being above 1. And we see that only with two treatments here starting at day 11 and day 15, 14 and no further treatments, we still see that the mice continue to be disease-free. So very promising data here. We have also been able to establish a method in-house where we can analyze the regulatory T-cells in detail. We have established an adoptive transfer model, which gives us an opportunity to really characterize the effect of our antigen-specific T-cells in an abundance that gives us opportunities to really understand and characterize the T-cells and how it responds to the treatment. And here, you can see that we are actually able to get up to 50% of the regulatory T-cells, the FOXP3 positive regulatory T-cells when we have treated these mice with our vaccine, and this is an assay allowing us to do this experiment within a week. So setting us up for really evaluating abundance of different versions of our platform in the future. It's also shown for the first time that we can also have an effect on reducing autoantibodies. We have previously focused on the effect on the disease development as well as on the T-cell compartments. And here, we show for the first time that we're able to reduce antigen-specific autoantibodies. And we know these do play an important role in several autoimmune diseases. So it's very good to see and allows us to really test different versions now in the upcoming months and establish the platform. Then I think, I give the word to you. Michael?

Yes. Just to remind everybody that we have announced that we will be providing an updated and further detailed strategy for the company in connection with our second quarter results 2025 towards the end of August this year. But they will center around the core priorities that we have for the company right now, which is VB10.16, VB10.NEO and the immune tolerance platform. And as of now, our priorities is to present the C-02 data tomorrow and add other opportunity that we find. in the coming half year, continue to progress the C-03 trial, allowing us to report both preliminary and full data from Part 1 as well as plan the next step. And of course, in general, be providing an update on how we see the development plan and strategy for VB10.16 going forward. For VB10.NEO, our focus is on getting the data presented at ASCO as well as here, update all of you on our strategic approach to position VB10.NEO as the most attractive unencumbered individualized cancer vaccine for the future when we expect to see a flurry of readouts from general field of individualized cancer vaccines in the coming years. Immune tolerance, we will be looking forward to providing further insights with additional data in the coming months on the path to optimize and establish our immune tolerance platform as potential best-in-class platform in this field here. And also here, we expect to be providing further details on our strategy going forward, which could include exploring early partnerships as well as defining our own lead candidate programs. More on this in August, looking forward to that. And with those words, I'm going to hand over to Gurvin to take us through the financial update.

Thank you, Michael. With the organizational streamlining finalized in the first quarter, we are on track for a sustainable cost base to facilitate execution of our long-term objectives. It's never fun having to say goodbye to good and talented colleagues, but we have transitioned into a leaner, focused and not least motivated organization with a continued emphasis on cost control and strategic prioritization. The full effect of the restructuring is expected by the third quarter of 2025. And we will, as Michael mentioned, also provide updated guidance on cash runway as part of the strategic update in connection with the second quarter 2025 report. Looking at the income statement, we had no revenue from contracts with customers in the first quarter following the cancellation of the contract with Genentech in November last year. Part of $245 million in upfront and milestone payments received under the contract were taken to income over time as our R&D services under contract were delivered. Following the cancellation of the contract, the outstanding balance of $6.8 million was taken to income in full in the fourth quarter. We can already see the effects of the organizational restructuring with employee benefit expenses of $3.7 million in the first quarter, down from $8.8 million in the same period last year. As mentioned, we expect to see the full effect of the restructuring in the third quarter. Other operating expenses have also reduced significantly from USD 7.2 million in the first quarter '24 to $3.5 million in the first quarter '25, reflecting the reduction in clinical activities. Finance income and costs were net $4 million positive in the first quarter, which mainly relates to unrealized currency movements on Norwegian kroner exposure. So overall, we recorded a net loss of $1.4 million for the first quarter compared to a net loss of $14.9 million for the same period in 2024. Then moving on to the balance sheet. We had a strong cash position of $106.2 million at the end of the quarter. As previously communicated, we received a decision from the Norwegian tax authorities in October 2023 relating to the tax treatment of payments received under a license agreement entered into 2020, which generated a payable of approximately $30 million to the tax authorities in the fourth quarter of 2023. Nykode is confident that the upfront payment has been treated correctly, a view which has also been confirmed by third-party experts. Nykode appealed the decision in the first quarter of 2024, and the payment has been booked as a receivable while we wait the outcome of the appeal. The receivable is in Norwegian kroner and the dollar amount in our accounts will fluctuate with movements in the exchange rate, which also explains the large unrealized movements in finance income and cost in the income statement between the quarters. In February this year, we received a letter from the tax authorities that we can expect a draft of the recommendation from the Secretariat in the first quarter of 2026. Moving on to equity and liabilities, we had total equity of $134 million, which represents a strong equity ratio of 91%. And with that, I will give the word back to Michael.

Thank you very much to both Harald and Agnete to taking us through this update. I think with those words, we are ready to open up for questions, if there are any.

[Operator Instructions] Our first question today is coming from Geir Holom from DNB Carnegie. He said, Vinay Prasad, the new Head of CBER, has expressed skepticism towards cancer vaccines. Are you taking this into account in the planning of the next study? Also, what have your experiences been like running C-03 in Europe?

Yes. Thank you very much, Geir, for that question. And without -- or trying to not get into anything around U.S. politics at this webcast here, just address it, I think, from a more general point of view. I'm not sure whether I share your view that he's expressed skepticism towards cancer vaccines as such. But I do agree that he has provided the usual and sound caution towards overemphasizing results from very, very early-stage trials. And we share, of course, that need for large and confirmatory clinical trials, which we see some of our peers have endeavored on and have also provided data from. So I think, the industry is as usual, planning right now to provide the definitive proof of mechanism and efficacy for this class of therapies. Our understanding is that his announcements have mainly concerned the mRNA modality of which we are not. As you all know, we are focusing on the DNA modality as of yet and has a different characteristics. So we do not really see any significant impact on us from these statements, but do share the need for confirmatory data. I think that's a sound advice always. The second part of your question, Geir, what have been our experiences running a C-03 in Europe. I think overall, only positive experiences. It's not the first trial we run in Europe. We've been running many, many trials in Europe and in many countries, many sites. And also in this case here, it's been a good experience with very motivated clinicians in the sites. And I want to again take this opportunity to extend a deep felt gratitude to both the team in the company who kept grinding and working hard through the period of transition that we've been through in Nykode, but also indeed and as much the investigators who have worked hard and tirelessly to enroll the patients into our trial and provide the treatment and collect the data. And of course, also to the patients and family who have entered this trial in a period of turbulence on Nykode. So we remain extremely grateful to all stakeholders for this one here. And maybe also for Q1, I do want to say that, again, it has been a positive experience to involve Norwegian sites in the conduct of this trial here. So whenever we can, we will try to also at least use some clinical sites in Nykode's home country.

Certainly. Our next question is coming from Georg [indiscernible] from ABG Sundal Collier. And there are two questions. First one is, can you provide some insight into why Genentech chose to enroll patients with so many prior treatment lines? And there is a follow-up.

I think I'm going to hand over the word to you, Agnete, to take us through this first part of the question.

Sure. I mean, I do think if you look at the history of how clinical development in cancer vaccine has been done, it is not unusual to start with a patient population that do not have any other alternatives for the early testing of new kinds of treatment. That is what happened here. Remember that we started this trial also before the first real studies with cancer vaccines in adjuvant setting that was started with IITs in particular indications, where there are not that many options for treatment starting. So there has been a dramatic change in how early these cancer vaccines being developed in a clinical trial setting. We have been in dialogue with Genentech to change the patient population and focus on earlier lines. That was the discussion we were heavily engaged in before the collaboration was terminated. So full agreement that this needs to be tested in a different patient population in the future. I can only say that, of course, the Genentech, if it was possible to see dramatic changes in some of these really, really hard to treat patients, that's obviously a fast-to-market option. But with so limited follow-up, it's hard to give the vaccine even a chance to change the course of the disease so that we were in full agreement with Genentech that we needed to move into a different patient population for the future.

Are you ready for the follow-up?

Yes.

What is the current status of the data right for the entire N-02 data set?

So we can't comment in detail on that until the final, final negotiation with Genentech is signed and concluded. But I do think you can appreciate that we are allowed to share the NO-2 data at ASCO with all the details of importance included in the poster. So that is what I can say today.

[Operator Instructions] Our next question is coming from Shan Hama from Jefferies. It's in several parts. I'll ask them one at a time. The first part is, what was the rationale for issuing a dividend?

Thank you very much, Shan. And although, as you all know, decisions on dividends is really a board matter, but we'll try to address this from a high-level point of view. So the decision to issue the dividends is, as it always is in these cases here, a balanced consideration on the capitalization of the company compared versus the -- in consideration of the near-term plans and capital needs for the company's operations. And in the current case, the Board did conclude that it was prudent to issue out a part of the cash service to the shareholders. And that, of course, reflects that we feel right now that with the current cash position post the dividend issue, we are well positioned to execute on the plans that we are expecting in front of us near term.

Second question from Shan Hama from Jefferies is, have you had any recent communications with Regeneron to indicate commitment to the partnership?

So we are, as always, not really in a position to provide further updates on Regeneron. There are pros and cons when you enter partnerships. There are many, many pros and one of the few cons is that you lose the control of the communications. So we cannot really say anything from that partnership until we are saying something -- as soon as we can say something, we will be saying something. But of course, we always have ongoing communications with our partners.

And the third part of Shan's question from Jefferies is, is the goal to keep VB10.16 wholly owned? Or are you looking to partner out as soon as you have material data?

Yes. Also here, I think we are on the plan that we have been for a long time. We do not think that a company like Nykode should be planning for commercializing a product like VB10.16 or so. So the long-term plan for VB10.16, and I'm saying long term with some hesitation here is to find the right partner for VB10.16 to commercialize the product going forward. Then from there, it's always a matter of finding the right balance between building up value, which translates to shareholder value on the asset before you find that partner and of course, also the ability and availability of the right partner out there. So we will continue to develop our assets, but with a very clear intention of identifying a good suitable partner to really accelerate the further development of the asset as soon as possible. When exactly that will be is also extremely difficult to answer with full certainty. But definitely, our plan is to find a partner for VB10.16 at some point during development.

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

Thank you very much for all of you listening in here, this morning here to our quarter 1 webcast. As I said a couple of times, we are very grateful for your continued commitment to Nykode, and we look forward to be providing further updates and details to our corporate strategy in connection with the second quarter announcements towards the end of August. And with those words, I want to wish you all a good day.

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