Oncolytics Biotech Inc. (ONC) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by and welcome to the Oncolytics Biotech, Inc. 2020 Annual Meeting Conference Call. [Operator Instructions] I would now like to hand the call over to Kirk Look, Chief Financial Officer. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to the Annual General Meeting of Shareholders of Oncolytics Biotech, Inc. My name is Kirk Look, and I'm the Chief Financial Officer of Oncolytics. Joining me today is Matt Coffey, President and CEO; as well we have Wayne Pisano, Deborah Brown, Angela Holtham, Leon Kruimer, Bernd Seizinger and Bill Rice, who, I believe, have joined us online as well. Other members of management also joining us online are Allison Hagerman, Rita Laeufle, Andrew de Guttadauro and Michael Moore. Now before we begin, this year, in light of concerns regarding the COVID-19 outbreak, we have opted for a hybrid meeting using a virtual service of physically holding the meeting in Calgary to ensure a quorum has been properly established in accordance with our bylaws. We've chosen this approach for this year's annual meeting in order to reduce the risk of spread of infection to our employees, shareholders, directors and other stakeholders. This hybrid format also permits us to comply with government directums restricting large gatherings. For convenience, we have divided today's meeting into 2 parts: first, the formal business portion will address the real requirements for the meeting, including voting on the resolutions. After we conclude the formal part of the meeting, Matt Coffey will provide a brief corporate update. As with any new technology, unexpected glitches may occur, and we appreciate your patience. Our service providers for this platform at Lumi are very experienced at running this type of meeting and will help us work through any challenges. Before we begin with the formal business portion of the meeting, I will provide some comments on voting and questions at today's meeting. In making the decision to move to a hybrid-type meeting, it was paramount to ensure that shareholders' rights were protected. We've ensured that this meeting offers shareholders the same opportunities to participate as in past in-person meetings. We will conduct the vote on the matters before us by poll. On a poll, every registered shareholder and proxy holder who has obtained a control number in advance are entitled to vote on each matter. Voting during this meeting could only be done through our virtual voting platform on the webcast. Once the polls are opened, registered shareholders and proxy holders who have obtained a control number will be able to cast their votes. The login information and login process is outlined in our press release dated April 30, 2020, which is on our website. When logging into the meeting, if you have a control number, enter it when prompted; if you do not have a control number, please log in to the meeting as a guest. The password for everyone is oncy2020, all lower case. Now the polls for all resolutions are now open. You may vote at any time during the meeting until the polls are closed after the last item of business has conducted. And thank you to those of you who have already voted. For those who have not yet voted, we encourage you to vote now. I welcome all guests who are not registered shareholders or holding proxies of registered shareholders. As a reminder, as with any in-person meeting, only registered shareholders and duly appointed proxy holders are able to vote or ask questions. Shareholders can submit questions at any time during the meeting. There will be opportunities for shareholders to ask questions specific to each resolution on the webcast. [Operator Instructions]. Please read the instructions in the text box before submitting your question. In particular, we ask that you identify whether your question relates to a motion being considered as part of the formal business of this meeting or whether it is of a more general nature. We will address questions that directly relate to a particular motion at the appropriate time of the meeting, and we will save general questions for the question-and-answer period following the formal business. If a question is personal in nature, we will follow-up with you individually after the meeting. Once you've finished typing out your question, click the submit button, the secretary will receive the questions and at the appropriate time, we'll read them out loud in order for everyone to be aware of the question being dealt with. With respect to questions other than proposed amendments or objections, the Chair or our Chief Financial Officer, will address the question as appropriate. If you have a number of questions that are the same or similar on a -- or very similar on a topic, we will paraphrase the questions and mention that we have received similar questions. During the general question-and-answer session, after Matt's remarks, we will endeavor to address all general questions from our registered shareholders or proxy holders that are not specific to a resolution. However, please note that due to time constraints, we may not be able to address all questions today. Now the Annual Meeting of the Shareholders of Oncolytics Biotech, Inc. will now come to order. Prior to the meeting, the Board of Directors of Oncolytics appointed me, Kirk Look, Chief Financial Officer, to be the Chair of this year's Annual General Meeting. With the consent of this meeting, I will ask Matt Coffey to act as Secretary of the meeting. The first item of business will be the appointment of scrutineers. With the consent of the meeting, I will ask Ms. Jennifer Villareal of AST, our transfer agent, to act as scrutineer of the meeting. I have received a declaration prepared by an officer of AST that the notice calling this meeting with the company management information circular and form of proxy were mailed on April 7, 2020, to shareholders of record as at March 23, 2020. Accordingly, with the consent of the meeting, the reading of the notice of meeting will be [ dispensed with ] and I request the secretary to keep a copy of the notice of meeting and proof of the notice with the minutes of this meeting. I would ask the secretary of the meeting to summarize the scrutineer's report on attendance.

The scrutineers have advised there is a quorum present, and therefore, I declare this meeting regularly called and properly constituted for the transaction of business.

Based on the scrutineer's report, I declare that the requisite quorum of shareholders is present. I direct that scrutineer's report be kept with the minutes of this meeting. I now declare that the meeting has been regularly called and is properly constituted for the transaction of business. The formal business of this meeting consists of: presenting the financial statements for fiscal 2019; fixing the number of directors; electing the directors; approving, via an ordinary resolution, the number of common shares of the corporation issuable pursuant to the unallocated stock options reserved for issuance under the corporation's stock option plan; approving, via an ordinary resolution, the number of common shares of the corporation issuable pursuant to unallocated share-based awards reserved for issuance under the corporation's incentive plan; and appointing the auditors of the corporation. As the first matter of formal business, I table at this meeting the financial statements of Oncolytics Biotech, Inc. for the period ended December 31, 2019, together with the report of the auditors thereon. Copies of the financial statements have been mailed to registered shareholders. With the consent of the meeting, the reading of such statements and report will be dispensed with. I do wish to recognize and advise the meeting that the auditors of the corporation, EY LLP, are in attendance online, being represented by Rob Mitchell. I do not propose to ask shareholders to approve the financial statements tabled. However, I will be pleased to receive any questions concerning the financial statements after the termination of this meeting. The next item of business is to set up the number of directors at 7. As Chair, I propose the following motion that the number of directors be set at 7. I will now ask the secretary to please advise if any questions specific to this motion were submitted. Noting there are no questions, please cast your votes. Please vote now. [Voting]

We will now proceed with the election of directors. The information circular contains the names of management's proposed nominees to the Board of Directors, which are: Deborah Brown, Matthew Coffey, Angela Holtham, Leonard Kruimer, Wayne Pisano, William Rice, Bernd Seizinger. I understand that these nominations have consented to act as directors. And as Chair, I propose the following motion that the persons nominated for election be individually elected as a Director of the corporation to hold office until the next Annual Meeting of Shareholders or until their successors are elected or appointed. I will now ask the secretary to please advise if any questions specific to this motion were submitted. Noting no questions, please cast your votes. Please vote now. [Voting]

We will now proceed with the approval of the number of common shares of the corporation issuable under the stock option plan as outlined in the information circular. As Chair, I propose the following motion: to approve via an ordinary resolution, the number of common shares of the corporation issuable pursuant to the unallocated stock options reserved for issuance under the corporation's stock option plan. I will now ask the secretary to advise if any questions specific to this motion were submitted. Noting no questions, please cast your votes. [Voting]

We will now proceed with the approval of the number of common shares of the corporation issuable under the incentive share award plan as outlined in the information circular. As Chair, I propose the following motion: to approve, via an ordinary resolution, the number of common shares of the corporation issuable pursuant to the unallocated share-based awards reserved for issuance under the corporation's incentive share award plan. I will now ask the secretary to please advise if any questions specific to this motion were submitted. Noting no questions, please cast your votes. [Voting]

We will now proceed with our final item, the appointment of EY LLP as our auditor as outlined in the information circular. As Chair, I propose the following motion: to appoint EY LLP as auditors of the corporation for the ensuing year and authorizing the directors to fix their remuneration. I will now ask the secretary to advise if any questions specific to the motion -- to this motion were submitted. Noting no questions, please cast your votes. [Voting]

Now before announcing the voting results, is there any other business that anyone present wishes to bring to the attention of the meeting? Noting no further business, I would now declare the polls to be closed, and we will proceed to present the voting results. I now ask the secretary to provide the preliminary results of the voting.

Thank you, Mr. Chair. I have received confirmation from the scrutineer that each of the 7 directors nominated by the Board have been elected by at least 70% of the votes cast for the election of directors. The motion to approve the ordinary resolution approving the number of common shares of the corporation issuable pursuant to the unallocated stock options reserved for issuance under the corporation stock plan has been approved by at least 55% of the votes cast in respect of that matter. The motion to approve the ordinary resolution approving the number of common shares of the corporation issuable pursuant to the unallocated share-based payment awards reserved for issuance under the corporation's incentive share plan award have been approved by at least 60% of the votes cast in respect to that matter. And the motion of the appoint EY LLP as the auditors of Oncolytics has been approved by at least 85% of the votes cast in respect of that matter.

Thank you. I declare each of the resolutions considered at today's meeting in respect to those matters as carried. The exact number of votes cast in respect of each matter will be filed on SEDAR and made available on our website. With that, thank you again to all our shareholders and proxy holders for your attendance today. I'd like to remind everyone that Matt will provide a corporate update following this formal part of the meeting. As this concludes the formal part, I declare the meeting terminated. Thank you.

This concludes today's conference call. You may now disconnect.

Hold. Hello?

[Operator Instructions] You may begin.

Thank you. Hi, everyone. It's Matt Coffey, President and CEO of Oncolytics Biotech, and I'm happy to be presenting today at our AGM. Now before I start, I'd really like to extend my well wishes to all of you watching today during these very challenging times right across the globe. The next slide is our forward-looking statement, which I'll draw your attention to and then right into the [ meta def ]. Now this is a little bit of a different presentation than what we normally give. The assumption here is, it's shareholders, they know the technology. So we really wanted just to give an update what we've accomplished in 12 months and what we plan to do for the next. Now it's an interesting time for the oncolytic viral space. We're entering the mainstream, and we're doing so on the back of what's happening with a class of agents called immune checkpoint inhibitors. These are tremendously powerful agents, but they're interesting because they don't interact with the tumor. When people think oncology treatments, they're thinking chemotherapy that directly kills tumor. What checkpoint inhibitors do is they take the brakes off the immune system. They allow an adaptive immune response, and these are your T cells, so the educated portion of your immune system to start recognizing and eliminating viral -- or a tumor from the body. And what we're seeing actually here is we've just pulled out some headlines, oncolytic viruses and immune checkpoint inhibitors, the best of both worlds. I think that really puts it in a nutshell. Checkpoint inhibitors go viral. Checkpoint inhibitors are bringing oncolytic viruses back into the spotlight, and it's true. I've always believed that oncolytic viruses are in and of themselves active, but the tools that we now have at our disposal because of the rise in the dominance of these checkpoint inhibitors, there's tools now to measure whether we've had a successful vaccination. We can actually see whether the patients are creating new T cells against the tumor. So we're really able to ride along with what the industry is doing while advancing what we want to do with our own checkpoint inhibitors, which I think is really key. So if we just go to the next slide, as I said, it's a tremendously valuable asset class, and it's going to do about $56 billion in sales. So these immune checkpoint inhibitors have transformed cancer treatment, but they are not without their limitations. What they don't often speak to is that really only 1 in 5, maybe 1 in 4 patients is likely to respond to a checkpoint inhibitor. And there's a cascade of reasons why this is the case. First and foremost, primarily and acquired resistance. And then resistance due to interactions between the cancer cells and the immune system. And what these really are is lack of inflammation. Some tumors, which they refer to as hot or cold, hot being very inflamed phenotype, cold being one that's not. Checkpoint inhibitors really don't work where there's a lack of inflammation because they're not targeting the tumor, they're targeting the immune cells. Those immune cells have to be in the tumor to be functional. If they are -- if there's no inflammation, there's really no way that it can work. What I'd like to think is, you could have a massive free-standing army, but unless you have it in the right country, it's really not going to help you fight any battles. So unless you can mobilize your immune cells to the tumor, it's not likely to drive a lot of benefits. The other issue is, whether you actually have T cells that recognize the tumor. Now probably about 1 in 5 patients are going to have T cells that are [Audio Gap] not very functional, but they do at least recognize the tumor. We'll get into this. But you have to have these pre-existing T cells for checkpoint inhibitors to work because they're not targeting the tumor, they're targeting the immune system. You have to have auto-reactive or self-recognizing T cells at baseline. And then the last real challenge is some tumors don't express very high levels of PD-L1. Now PD-L1 is the receptor that checkpoint inhibitors interact with. It's very hard to shoot a target if there is no bull's eye. So you really do have to express this on tumor cells, and we're going to get into this in the discussion because new agents are being approved based on the amount of PD-L1 that the tumor expresses. In the instance of Tecentriq, its approval is based on the patients having at least 1% positivity of PD-L1 on the tumor cells. If they don't have that, they're not going to respond, so they're not recommended for it. Now the big push or why companies like Merck, like Pfizer, like Roche, like BMS, are working in the oncolytic viral space now is they really believe agents like ours can overcome these limitations. And I'll talk to how we're doing this, and why we're excited about this. But what the goal here really is, is a rationalized combination therapy that basically makes up for the limitations that checkpoint inhibitors have. And the other aspect is if we really can activate the immune system, we should be able to have a biomarker that allows us to explore these options for patients. Because again, patients, especially with late-stage disease, have a finite amount of time that they can respond to a treatment. So we want to get these patients on the appropriate therapy for them. Otherwise, you're just wasting time, money, energy, when they really need to get on something that's maybe a little bit more personalized. So what does pelareorep do? And why is pharma working with us to do this? First and foremost, the virus creates a beautiful inflamed tumor phenotype. And this just makes sense. We have tumor-specific replication. Infected cells recognize they're infected, and this is causing the release of chemical flares, things like chemokines and cytokines that alert the immune system to the fact that there's a problem. And because it's tumor specific, we can redirect the immune system to where that site of infection is. Now what's important about this is it's mobilizing the immune system, and this is a very important concept. What it's doing is it's taking the immune cells from the peripheral blood to cells that are trafficking around our body, and it's pushing these into the tumor so that they can react and fight against the disease. What's important also, as I said, checkpoint inhibitors require pre-existing T cells. Viral therapies create these. So if we can prime the immune system, if we can go in before the checkpoints are administered, instead of having 1 in 5 patients with pre-existing T cells, we believe we can push that number to the majority of tumors, 50%, 60%, 70%, 80%, 90% based on the signs that we're seeing. The second thing is, as these cells become infected, they're releasing these chemical signals, but the one I want you to think about is interferon. Interferon in the tumor environment causes PD-L1 to be over expressed. And I'll show you some slides with this. But you can imagine all of a sudden cells that did not express PD-L1 now become highly expressing of it. And that just allows the checkpoint inhibitors to work. We've demonstrated synergies with immune checkpoint inhibitors. We had a number of publications in the last year. And what we're getting from the early AWARE data is, yes, it does seem to lower the threshold of response. We do seem to get much more trafficking into the tumor through an endpoint that we call CelTIL, which is just a measure of how much inflammation, but it does seem the checkpoint inhibitor lowers the threshold so we can get much higher levels of inflammation into the tumor. And importantly, because the virus causes a predictable change in patients who are responding, we can measure this. So we can tell that patients are responding to treatment within weeks, not months, not years, but literally, within 3 weeks, we can tell if they've had a positive vaccination effect. Now one of the things -- and we have Andrew de Guttadauro on the phone. He'll talk, too. He's been very busy on the partnering side. As you can see with the number of collaborations and co-development deals and ICTs and everything else we're doing, it's been a very busy time for us. Now what we wanted to do over the next 12 months is really ramp up what we are doing on the partnering side. And to do this, Andrew went out and found basically a consultancy group that does this type of work for us. So basically, what you're doing is you're hiring, if you will, entire BD group, if you will, who can go out through their experiences and talk to with the various companies. The first thing they do, though, is they need to gauge what people think about the agents. They need to understand whether there's works on this, whether it's a wonderful opportunity, whether it's a marginal opportunity because it really changes their outreach. So the first thing that they do is they do market research. And the way that they do this is, is we've engaged the top consulting firm that's providing us an unbiased perspective or activities by engaging clinical opinion leaders. So these are people from the leading academic institutions to review our current data and our clinical plans. And what this really allows them to do is a litmus test to see what the key opinion leaders, what academic institutions think of the agents. Now to ensure the objectivity and the feedback, the opinion leaders look at the information without knowing the product or the company in question. Likewise, we don't know who these key opinion leaders are, either. We just simply know job titles. But again, these are people who work in the immuno-oncology space, who work in the breast cancer space. So it's a targeted outreach. And again, it's just a check to see where the weaknesses are and where the strengths are. Now what we're getting from people is there's an understanding that immuno-oncology really is going to be the future in breast cancer, especially metastatic breast cancer. And what's really leading the way there is Tecentriq approval in triple-negative breast cancer. But what we're hearing, and you can read the quotes here, "We are generating a robust immune response is critical. The product has multiple highly desirable qualities, including route of administration, which is our ROA; safety profile; and importantly, the CD8 infiltration." Now these 2 concepts, the route of administration and CD8 infiltration, are going to become a reoccurring theme throughout this presentation. So 2 things just to hold in the back of your mind. Now KOLs are finding pelareorep's activity very encouraging. And again, just to read, there's a doubling of overall survival in hormone receptor-positive disease is highly compelling and exciting. Triple-negative breast cancer patients have highly challenging microenvironments, which would deter most immune activators. And this is important, again, because we're going to talk about the opportunity in triple-negative breast cancer. But again, another KOL's writing here. "It is extremely valuable to demonstrate selective penetration of the oncolytic virus given the intravenous delivery." Now this theme, again, IV delivery allows us to access more patients. If we're stuck with intratumoral injection, it really limits the scope of the product. So these KOLs really are gravitating to how we're delivering this agent. And finally, the fact that this is late-stage patients makes the data very impressive. You don't see any agents in this setting with this level of overall survival. So we went from 10 months to nearly 21. So that's a very significant improvement for these patients. And it's not something you normally see in this challenging environment. So the KOLs are picking up on this. And finally, when we ask them about our clinical development program for AWARE-1 and BRACELET leading into the Phase III. Specifically to AWARE, one of the KOLs are saying that the window of opportunity data provides reasonable direction regarding further development. The study design is well thought out and warrants further investigation. So again, AWARE-1 gives us the biochemistry. It really points to how this is drawing the immune cells into the tumor. And then the BRACELET study is basically a recreation of our IND 213. And what they're saying here is BRACELET trial should provide a meaningful signal regarding the outlook of this program. So the 2 programs we have now in breast are critical success factors into stepping into that Phase III. So the next slide. Some more thoughts from our KOLs. And again, this is validating for us because you do -- you set out the hardware, you want to make sure you're going in the right direction, and these are people who are working with all of these agents. What they're thinking is that based on the OS and primary translational data that we're definitely going in the right direction, and that the IV route is used very, very positively as compared to other oncolytic viruses. Now the KOLs are expressing high overall level of enthusiasm, and they're saying the future of breast cancer treatment is testing immune activators in combination with checkpoint blockade. So again, we're very much in the current space or where people are paying attention. The OS data interpreted is very impressive. And lastly, the AWARE-1 will be impactful, in their opinion, seeing the PD-L1 expression go up is very exciting. I look forward to seeing this combination with checkpoint blockade. So we are working with the world's key opinion leaders, but an external view of the company is very positive as is the view of the data. And the next slide, if I say nothing else, if there's nothing else I can leave you with is this last thought. And this is the one that really stood out in the report. This was from an academic institution. And it was a Veteran Principal Investigator who does a lot of work with TLR3 checkpoint inhibitors and his quote is "The most exciting immune activator approach I have come across." So this is coming from an academic who has the opportunity to work with whoever they want. And people have said, well, how did you get people like Martine Piccart, Aleix Prat, Padmanee Sharma to work with you. It's because the outside view is this is a very promising agent. It's a very promising approach. And I think it's something that we can exploit. Now the next steps for this group is really outreach to the corporate partners. They'll be working with Andrew de Guttadauro. But the other really attractive thing about this is breast cancer is a very large market. And I'm going to let Andrew de Guttadauro, our Vice President and President of the American SAB, to walk through the next few slides, just to give a little bit of background about what this potential market could look like for a company like Oncolytics.

Thanks, Matt. So I want to talk a little bit about our breast cancer market as 2 discrete opportunities. The first one, which I think many of you are aware of is the one that we are looking to pursue based on the promising data that we saw in the 213 Phase II study, and subsequently, the data that we're generating from the AWARE-1 study and soon to be generating data through the BRACELET trial that is one that's in partnership with Pfizer and Merck KGaA. So that market, HR+/HER2- is actually the largest of the 4 breast cancer populations, about 70% of the -- of all breast cancer patients. So right now, you can think of about just over 3 million patients in the U.S. women have breast cancer. Of that, about 70% or just about 2 million are HR+/HER2-. And by the time you get to the metastatic setting, you've got about just over 112,000 patients who are HR+/HER2-. That's ultimately the addressable patient population for our product based on the BRACELET trial that we'll be starting soon. Secondly, though, as Matt mentioned, there's a second population. Next slide, please. And that's actually the second biggest subpopulation. That's the triple-negative breast cancer market. Now this is a challenging market. It's about 13% to 15% of all patients. So it's a smaller number in terms of prevalence and incidents. It's about just under 0.5 million patients. However, these are patients with very few options, whereas in the HR+/HER2- metastatic setting, there are lot of products that can at least extend progression-free survival and do so with minor side effects. When you get to triple-negative and you become one of the third of the patients who are metastatic, there really isn't much to offer them. Now recently, Roche's Tecentriq about a year ago received an indication that is rapidly making it the standard of care for these metastatic patients. And that's for patients that, as Matt mentioned, have a PD-L1 expression of at least 1%. Now that PD-L1 expression threshold of 1% means that of all those patients in that third who are metastatic, about 4 in 10 are eligible for Tecentriq. And those 4 in 10 represent, according to analysts, at least $1 billion, if not a larger, revenue opportunity for Roche. So the question is, what can you do to make more patients benefit? What do you do with the other 60%? And essentially, what you need to do is raise that PD-L1 expression above 1%. We've seen through AWARE-1, we're continuing to examine it, that we do have potential to AWARE that -- to raise that PD-L1 expression. So with the AWARE-1 trial, one of the things we're examining beyond the opportunities in HR+/HER2- is the ability to potentially take triple-negative patients who don't have PD-L1 expression of at least 1% and raise them above that threshold so that they would be eligible for Tecentriq therapy. As you can imagine, it wouldn't take a lot of patients to unlock a lot of value for Tecentriq or for other checkpoint inhibitors who are also pursuing the triple-negative opportunity. Next slide, please. So what does all that mean in terms of our licensing strategy? Well, what we're looking for is a global clinical development and commercial partner that can work with us to, first and foremost, make the most of these breast cancer opportunities I have just reviewed. And by that, I mean, work with us to get through the registrational trials needed to gain approvals in HR+/HER2- and hopefully subsequently, potentially also in triple-negative breast cancer. Beyond that, obviously, we are examining other areas where we believe that inflaming -- creating an inflamed phenotype in the right type of tumor target would open up the ability for checkpoint inhibitors to be either more efficacious or be efficacious in the first place. So we're looking obviously for a partner who will work with us on all development opportunities and then help us, once we have the appropriate registrations in place, to commercialize the product. Now in terms of what commercialization looks like, we are looking to retain at least half of the commercial rights in the U.S., our home markets, but to give the rest of world's commercialization responsibilities to our global partner, with the exception of China and a few other Asian territories that are already previously licensed to our partner for that part of the world that's Adlai Nortye. So what we're looking to do essentially is make the most of that. And one of the ways we're doing that, obviously, is with all the combination trials that we're doing with Merck, Roche and Bristol-Myer Squibb because obviously, we want to show that hopefully, we are agnostic to the checkpoint inhibitor. In other words, if we work with one inhibitor, we should be able to work with all of those. And by showing -- demonstrating that through these trials to bring as many potential partners to the table to pursue a licensing deal. Next slide, and I'll turn it over back to Matt.

Thanks, Andrew. That was great. [Audio Gap] do last year, and I think we've accomplished what we wanted to is really derisk the investment thesis. What we're hearing from the KOLs is there's a lot of excitement. But there was a lot of interest in progressing the work with the checkpoint inhibitor in further demonstrating the proof-of-concept around the biomarker, but also just increasing the numbers. They said, listen, if they can confirm this response, this could be the standard of care in breast cancer. So really what we're doing is we're just expanding the numbers that create a more compelling story. The clinical proof of concept, we ran a randomized study and saw doubling of overall survival. We [Audio Gap] capture a lot of data around how it was occurring with the immune system. And frankly, at the time of the study was run, the tools that we needed to do this really didn't exist. Agents or assays like the TCR sequencing, which we'll get into, were only invented a few years ago and are really only adopted now. So the concept of what we're doing really is to be as conclusive as we can that this is being driven through the immune system. And between AWARE-1 and BRACELET, it gives us that data. It gives us the checkpoint inhibitor data that we require, and it also validates the biomarker to go into the Phase III. Now this was a good year for us in biomarkers. The first one we identified, we'll get into it, is called TCR sequencing. But more recently, through our collaboration with the National Cancer Institute, they identified a second one called CEACAM6, which is not relevant in the breast cancer space, but certainly is relevant in the GI space. So we'll talk to that. Allison Hagerman, who's in charge of our manufacturing has kept us on a 3-year plan around the manufacturing. So we're in good shape to meet whatever demand that we need. And it's been a busy time for us with our relationships. We're working closely with Adlai Nortye, Pfizer, EMD Serono, were about to start a study. It should have actually started if it wasn't for the pandemic, but we believe we can make up for lost time. Our collaborations with Roche, Merck and Bristol-Myers Squibb. So we really are validating what we're doing. And really, what the reason we wanted to do this was to derisk the Phase III program and the development program as much as we could. Next slide. So I came to you all last year with what it is that we wanted to accomplish, and it really felt into 5 buckets. We wanted to advance the breast cancer trials, and we've done that with the AWARE-1 study in Spain. And the announced BRACELET study, which basically verifies the results of 213 study. We've expanded the collaborations, which is again an external validation. We're working with a group like PrECOG, which is one of the preeminent breast cancer groups in the world and did so in co-development with Merck KGaA and Pfizer. We're really leveraging the pelareorep-induced inflamed phenotype. And again, you can see this from the comments that are coming from the KOLs. What people are looking for is immune activators that can be used in concert with checkpoint inhibitors. Because, again, we need to create T cells, mobilize those T cells and cause over-expression of PD-L1. And that's something that our agent offers through a route of administration that's as simple as an intravenous delivery. We've confirmed and identified not only the TCR sequencing, but also our new biomarker, CEACAM6. And we wanted to maintain our manufacturing capabilities. And by hook or crook, in this confusing time, we've been able to actually do so. Now what I'd like to talk to you next is our prognostic and predictive biomarkers. And I think what people need to understand is this reduces [Audio Gap] tremendously. If you can read out the [Audio Gap] never going to respond to treatment prior to you even start [Audio Gap] on a clinical study, you [Audio Gap] smaller becomes much quicker and the data much cleaner because you're not trying to signal or figure out why someone didn't respond. If you can eliminate them right at the beginning so that they are not in your data set, it creates a smaller study that's much more likely to succeed. And how we're doing this is the next 2 assays. The first one I'd like to talk about just for a moment is T cell clonality. And both of these -- T cell clonality is a 1 ml blood draw so you just simply go in, they would put a needle in your arm, draw blood, and they would actually tell you whether or not you have a sufficient immune system to even respond here. But what we have found, T cell clonality correlates with an improvement in PFS and overall survival. And we can predict this at baseline, but we can confirm whether they've been vaccinated as early as 3 weeks. So we can see those changes. And I'll share with you what that looks like, but really what it's characterizing or looking at is whether you have adequate immunological reserve at baseline. So do you have a healthy immune system? Can you respond to it or are you so far gone that it's just not likely to respond? The second one is CEACAM6. Now this actually requires tumor tissue. So unlike the first one, which is a blood draw. This is a biopsy from the tumor. And what we're looking for here is high expression of a gene called CEACAM6. And what this is, it's a protein that interferes with viral trafficking. So patients who have very high levels of this really don't expect to have much benefit. Again, CEACAM6 is predominantly only seen in GI cancer. So things like colorectal or pancreatic cancer where the NCI approved this assay out. But what this one is associated with is low levels of CEACAM6 correlated with improvement in PFS in pancreatic cancer patients. And you'll see this becoming something we use going forward. Next slide. Now this is just a graphic representation, if you can imagine. Bear with me, a little creative license. But what it is, is the TCR sequencing, T cell clonality, what it's looking at is your T cell populations. Your T cells are a record of everything that you've been exposed to in your life, and these are your memory T cells. These are the cells that we go to vaccines for. What you're looking for is to create long-term immunity against whatever it is that you want to develop long-term immunity against. If you look to the flu vaccine, hopefully, you'll develop long-term immunity against the flu. A measles vaccine will create new T cells that are reactive against the measles virus and so on and so forth. So if I was to draw your blood at any given point, these individual T cells are unique, they are individual clones, and they all recognize or target something. So if you could imagine soldiers on a field that are targeted with shooting one very specific thing, whether it be a rock or a tree or what have you, they're only capable of interacting with that one target. So what we're looking for at baseline is someone who has a lot of different T cells that can respond nimbly and quickly to an effect so that they're okay to use an immunotherapy like this. What we want to avoid is patients that have very low or flattened effect, which just means their immune system has been beaten up by the disease or the chemotherapy, and they're really not likely to respond to it. Now as I pointed to before, if you look at the first half or the top half of this graph, the challenge for checkpoint inhibitors is you require that orange dot. And that orange dot is a bit of a rarity in a patient population. And what that orange dot is, is it's a T cell that at baseline recognizes the tumor. Now over time, these T cells will become exhausted because the tumors get bigger and bigger and bigger, and you just won't generate any new of these T cells unless something changes. Now checkpoint inhibitors will act on that exhausted T cell and revitalize it, make it energetic again and expand its numbers so that after treatments, you have a portfolio or a group of -- repertoire of T cells that's now enriched for that little orange dot. And really what this is, is you're just trying to [Audio Gap] or expand your army to recognize and kill the tumor. Now the difficulty is, is if that patient doesn't have that orange dot at baseline, checkpoint inhibitors are never going to do anything for them. They don't have autoreactive T cells that can recognize the tumor. And this is one of the big failings in checkpoint inhibitors, but this is also the solution that we present. Now pelareorep, in combination with a checkpoint inhibitor, we don't require that autoreactive T cell at baseline. The whole point of this approach is we're going to go in, we're going to systemically deliver the virus and your immune system is going to react to this infection. And what this does, if we successfully vaccinate someone, it creates these new T cell clones. They grow and we end up with a clone army, if you will. We know that we're effective if we can detect these new clones. And I'll show you what it looks like here in a minute. But the goal here really is, is to change your repertoire so that you are greatly enriched for these orange clones that recognize the tumor. Now the other thing I should point out, these de novo or recently created T cells are much more reactive than the old exhausted ones. And I had a doctor tell to me one time, he said, "You can give steroids to an 80-year-old and they'll get stronger. But if you give steroids to an 18-year-old, they're going to get a lot stronger." And this is really what we're doing here. We're creating a new T cell army, that in concert with checkpoint inhibitors, is going to be very reactive to the tumors and hopefully very efficacious. So if we go to the next slide, this assay is called TCR sequencing. And it looks super complicated, but it really, really isn't. All we're doing is we're sequencing every single T cell receptor in the body, which sounds horrendous. It sounds very complicated, but it's not. Think of it almost like ancestry.com. All we're doing is, opposed to sequencing an entire individual, we're just sequencing out all their T cells. And what we get is a very distinct population. Again, patients are going to have hundreds of millions of T cell clones. And what we want to be able to do is detect changes in these T cell clones after treatment. So what you're seeing here is called an abundancy plot. And the gray dots are what your immune system looks like at baseline. We treat them with the reovirus. And if we successfully treated the patients, we should start seeing, and as you're seeing it here, these new T cell clones, the orange dots, if you will. The blue dots are clones that have been basically cycled out or edited out. We don't need them anymore. And what you're really left with is a class photo, if you will, at baseline or at the beginning of the semester and at the end. And really, what we're looking is we want to see those changes over time. Now there's 2 classes of T cells that will basically be evoked by immunotherapies like ours, our checkpoint inhibitors. The first one is these existing expanded T cell clones, and that's the middle field that we've circled here. And you can see maybe there's a dozen, a dozen and half clones that will respond to checkpoint blockade. And these are these autoreactive T cell clones that we need. Now these patients would be eligible for a checkpoint inhibitor because they have pre-existing T cell clones, but if you look through the next bubble here, this is what reovirus creates, brand-new T cell clones. And what's important to this one particular patient, they've created over 400 new clones. Now compare that in contrast to the dozen or so clones that they have at baseline. These T cells are what we're shooting for. And when we see this magnitude of change, it correlates with improvements in progression-free survival and overall survival. So with a very simple inexpensive blood draw, we can tell the patient at 3 weeks whether they've been vaccinated against their tumor and whether they've successfully created new T cell clones. And these T cell clones or CD8-positives are what are going to infiltrate the tumor. And I'll talk to you all in a minute about what this means in our breast cancer study. Now the next assay is, as I said, not a blood draw, this is a biopsy. So what we're looking for here is the amount of protein expression or RNA expression of a protein called CEACAM6. Now high levels of CEACAM6 have been shown to block viral infection. Our colleagues at the National Cancer Institute looked at a study that we had run in pancreatic cancer. And frankly, we missed the primary endpoint. There was a lot of signal to noise, but they were able to use this biomarker to look back and really explain why they had super responders. Now we knew the study had given us a signal because there was a lot of patients that really did well when exposed to the virus, but we didn't have a way of teasing out who these patients were or why they responded better. The National Cancer Institute, to their credit, dug into it. They had the archival tissue. And what they found is in patients who had low levels of CEACAM6 who were able for viral processing, what we see here is about an 80% improvement in PFS in patients with low level of CEACAM6. So again, the plan here is we would do this at baseline and just select for the patients that have this low level. Now there was no difference in CEACAM6 expression on the control arm. So it doesn't matter what the level is the patients don't respond to, in this instance, gemcitabine. And really what we're doing or what we hope to be able to do is exclude the nonresponders and focus solely on those super responders who can drive benefit. As I said, in a very small study, we reached statistical significance in PFS in as few as, I believe, it was 48 or 49 patients. So this is really the power of these biomarkers, whether it be CEACAM6 or be TCR sequencing. The next slide. So our lead indication is breast cancer. And just to remind you, we saw doubling in overall survival in -- on 80-patient randomized study run by the NCIC. What this led us to was, we wanted to have a better understanding of how our agent worked. We saw a doubling in overall survival. This signal was in patients with hormone receptor-positive disease but we didn't have a reproducible way of guaranteeing whether the patients would respond or not. We were in discussions with Roche, and Roche was intrigued by the survival benefit, but they said they really wanted to understand mechanistically how the virus was working. So as opposed to going back into the metastatic population, we went into patients who had operable disease. So these are young women who have early stage disease, and what we're doing is neoadjuvant. So basically, we're going in and we're treating the patient prior to surgery to hope to reduce it. Now to my mind, the first 2 cohorts are the most important because this represents where we want to move in our first registration study in breast cancer and that's hormone receptor-positive. So what we're looking at here is the effect of adding Tecentriq to the virus or the virus alone. And that's Cohort 1 and 2. Now we'll give an update on this here. We put out a press release earlier in the week reporting on 6 patients. We've actually finished Cohort 1. We're halfway through Cohort 2. We've enrolled into Cohort 3, and then the pandemic happened. So all these samples are sitting in Spain right now. And we're just shipping them over to the U.S. so that we can analyze them. Cohort 3 is a very important cohort for us as well because as you can imagine, and as Andrew said, triple-negative breast cancer is treated based on the expression of PD-L1. You need at least 1% to be eligible to receive Tecentriq. So you can imagine the opportunity if we can expand that number. If we can prime these patients and make low level expressers, high level expressers, it's a tremendous market opportunity and a very [Audio Gap] quite a large and well-regarded area of breast cancer. The next 2 cohorts, 4 and 5, these are small subtypes. We committed to do this with regulators. But really, what's [Audio Gap] driving our clinical development are cohorts 1, 2 and 3. And we'll be giving an update on that later in the month. Now what we're seeing here is pretty fantastic, if you will. We are seeing the best viral replication that we've ever seen in tumors. And again, these are primary lesions. So we weren't even sure it would get to primary disease to see that the infection levels at 70%, 80%, 90% is pretty encouraging. And it may explain why we actually see single-agent activity in breast cancer, whereas we don't often see it elsewhere. So what we've done here is these women were treated with standard of care plus virus. They're treated for a 3-week period. They go for definitive surgery so that they have the lesion removed. And what this allows us to do is to look what's happening in the normal tissue as well as the tumor tissue. And what we can definitively say now is we have tumor-specific replication following IV administration in primary breast cancer. The impact of this, you can see in the CD8 counts, we get a dramatic increase in CD8 cells that are infiltrating the tumor. So we've created new T cells and we've relocated them to the tumor. And importantly, critically, we're seeing over-expression of PD-L1. So the 3 things that we were looking for in the study, the creation of new T cells, the mobilizing of out of the tumor to create an inflammatory event and over-expression of PD-L1 we are seeing. Now importantly, the checkpoint inhibitor seems to lower that threshold to have a positive CelTIL score. So CelTIL is simply a pathologist telling you how many inflammatory cells are in the tumor. What we're seeing or what we reported is this assay on the left -- or on the right correlates very well with our CelTIL score. So we can see this pro-inflammatory event. And why CelTIL is important is simple. Patients that have a high CelTIL score or more inflammatory cells have better outcomes. It's a prognostic factor for how these patients will respond to treatment. But it's very important that we have -- prime that immune system before we go in with a checkpoint inhibitor. Now, this thing is, from a scientific perspective, most important to me is the fact that we have educated the immune system, and it's very important in this setting. You can imagine these poor women, this is their first diagnosis with breast cancer and they must be terrified. They sign up for a clinical study like this, they have to go for definitive surgery. And what I find so encouraging and so hopeful about this study is with a picture like this, we can definitively say we've taught the immune system to recognize their tumor. And we've taught it while it was still very minimal disease that hasn't metastasized. And why I can make this statement is because we have the entirety of the tumor tissue. So all we've done here is we've taken that tumor tissue after surgery and we plated it out, and we applied the immune system of the patients at baseline or at 3 weeks. And you can see the difference here. At baseline, your immune system doesn't react to the tumor, it's invisible. It just doesn't see it. It doesn't know how to respond. It doesn't view it as a threat. Post-treatment, these cells will start stimulating interferon and other cytokines. So when the cells come in contact with the tumor tissue now, they know it's something that they should be combating and trying to eliminate. And you can imagine these women now have circulating antibodies and T cells that know the target and kill tumor cells. So we've effectively vaccinated the patients using their own immune system to target disease. And the hope and the goal here is to hopefully prevent any recurrence. We're hoping that this is a one-time event now for these patients. And certainly, with the robust responses that we're seeing, you'll see it in the comments from the KOLs, we will open up a very, very, very large market in the neoadjuvant sense. So whereas metastatic patients have to go through many, many, many rounds of treatment, if we can develop this here in the neoadjuvant setting, it is a huge target market and the impact to these patients is huge. If you could imagine knowing that you've been successfully vaccinated against your disease, it liberates you from the fear of recurrence. And this is really what we want to be able to move the product to eventually. Now the next slide is our study called BRACELET. This is our co-development deal with Pfizer and Merck KGaA. So this is true cost sharing, it's 50-50. They provided the product. They helped us with the biomarker plan. And really, what this is, it's just a redo over of the 213 study, which captures the biomarker data that we need to successfully step into that Phase III. It's a more targeted study than our 213 study because it's focusing on patients who have hormone receptor-positive disease or HER2-. Quite a small study, it's 3 arms. So firstly, paclitaxel which is control arm versus virus paclitaxel. And then Pfizer and Merck tacked on a third arm, which is adding Bavencio or their checkpoint inhibitor to this drug doublets, if you will. Now what we're looking for here is simply the development in an inflammatory phenotype. We're looking for this increase in T cells. We're looking to see whether we can mobilize them. We're looking for over-expression of PD-L1, and we're trying to correlate this to objective response at 16 weeks. These 2 studies in totality allow us to very comfortably move into the Phase III with a biomarker and with the knowledge of whether we want to add a checkpoint inhibitor to that Phase III program. And the early results are pushing us in that direction. So we are anticipating opening BRACELET study very early or hopefully very soon. There will be 20 participating centers. We've used this down [Audio Gap] the pandemic to basically teach the sites, have the site initiated. And now many of the sites are just not treating oncology patients because of the pandemic, but with the U.S. opening up now, we anticipate there will be a backlog of these patients. And with 20 participating centers, we're hoping to play catch-up here. We are seeing emerging clinical signals elsewhere, and this is what's so exciting. The company is, first and foremost, pursuing breast cancer. But really, if all we're doing is activating the immune system towards other checkpoint inhibitors, it's a much, much, much broader opportunity than breast cancer. And we're seeing early signals of this. The one area that we're very excited about is GI cancers. And we're excited about GI cancers for a number of reasons. We published earlier this quarter that we saw 93% clinical benefit rates in colorectal cancer of this KRAS mutation. And what's important about this is Professor Sanjay Goel who did the work, was able to demonstrate that there's a repeatable activation of the immune system with every cycle that contain virus. There was no change to the immune system on the cycles where virus was not [Audio Gap] So we do know it is entirely due to the virus. And how we can characterize this is a rapid maturation of dendritic cells followed by an activation of our adaptive immune response. So there's basically activation of CD8-positive cells. We're also seeing upregulation of PD-L1. And this has really caught the eye of large pharma. Now we've also seen and reported positive results in pancreatic cancer, another GI malignancy, and this was, again, through the National Cancer Institute, where they identified CEACAM6. Patients that had low level had a doubling in their progression-free survival with a p-value of 0.05. So what we're working with now is academic and industry leaders to come up with a basket study that would allow us to look at GI malignancy through the lens of checkpoint inhibitors to see whether we can use these biomarkers like CEACAM6, like T cell clonality, to identify patients early and allow them to stay on study if they're doing well and to get them onto something else if they're not. So keep tuned for that. We're hoping Andrew de Guttadauro will be able to announce something on the partnering or industrial side of this. So stay tuned, if you will. So the other work we're doing or that we've done with industry is in pancreatic cancer. We ran a small study. It will be reported at ASCO this year in pancreatic cancer. Now we previously ran a study in pancreatic cancer. It was a combination of KEYTRUDA, gemcitabine and virus. This looks at KEYTRUDA and virus alone. So we've excluded the checkpoint inhibitor. It just tells us whether we do need that. It's up to 30 patients. Primary endpoint here is objective response rate. And as I said, we're anticipating presenting data at ASCO coming up in June, which will now be through a virtual meeting. Now the last area I'd like to touch on is multiple myeloma. And this is a little bit different for us because it's a heme malignancy. So this is our one foray, if you will, in nonsolid tumor. So this is a disease of the blood. We measure response through a protein called M protein. And all this is, think about it like a PSA, if you have prostate cancer. Cancer cells will produce PSA. So if you have a lot of cancer cells, you have a lot of PSA. If you have no cancer cells, your PSA should be vanishingly small. These multiple myeloma cells produce a protein called M protein, which we can detect in the blood through a simple blood draw. So it's a really nice model system because we can see whether the patients are responding. As opposed to having to have them go through an MRI, we can just do a simple blood screen. What we're seeing here is, I think, very representative of the slide at the bottom. Checkpoint inhibitors really haven't offered much success in the multiple myeloma space because the tumors are incredibly immunosuppressive. And by that, I mean, they actually reject inflammation. You don't have positive inflammatory cells. If anything, you've accumulated elements of your immune system that prevent inflammation. And you can see this here with PD-L1 expression. At baseline, very few of the cells present anything resembling PD-L1. Post-treatment with the virus, it's over 90%. So if we can do something like this in triple-negative breast cancer, basically we prime the immune system to work with Tecentriq in breast. So it's important that we're in multiple myeloma because it does give us these teachings. Now we are presenting data at ASCO later this year, so again, June, on a study looking at carfilzomib and the virus. This is where these results are from. And we had a KOL call on this earlier in the year. We're very fascinated by what we're seeing, to be honest. We're actually getting cytokine release syndrome because the tumors are lysing so, so, so quickly, and these are refractory patients. So what we're actually seeing is the patients are having a 70% to 80% drop in their M protein in a matter of days. So the body does have to basically deal with all this debris, if you will. But again, updates expected and if you -- checkpoint inhibitors have now worked in space because there is no expression of PD-L1. So we were able to share this slide with the folks at Bristol-Myers Squibb, and they said, why don't you just repeat the study but add OPDIVO at day 8. And that was as simple as what led to us doing a study with BMS. If you go to the next slide, this is the study that we're doing. It's just wrapping up now. It's simply a study of carfilzomib, KYPROLIS and the virus. These are in multiple refractory patients. Again, I would have you look at the notes that we've given out on the KOL call. But again, this will be presented at ASCO. And this study led directly to the next study which is identical to this. We've simply added OPDIVO. So again the rationale here is, we've created inflammatory events, we've created new T cells, and we've mobilized these to the bone marrow and caused the cells over-express PD-L1. So it's a very rational design-driven focus on why we've done this. And what this ends up with is a clinical program now that looks like Slide 29. The focus is breast cancer. BRACELET-1 and AWARE are to design and allow us to focus our Phase III program. It's to provide that instruction on whether we do want to add a checkpoint inhibitor and it's to validate our breast cancer biomarker, which is the TCR sequencing that we talked about at length. We have an expanding interest in GI malignancy based on publications and presentations in the space earlier this year. And lastly, we're following up on leads that we're seeing in multiple myeloma. So again, it's a rational program that's evidence based, and it's based on positive clinical signals. Now on that note, I will let Mr. Kirk Look step in and give a corporate update.

Well, thanks, Matt. So just before moving on to our milestones and news flow, just wanted to point out our marketing capital data. I think importantly, what this slide shows is our cash position. So we have been very successful since the beginning of the year in continuing to strengthen our balance sheet. And this is very important for Oncolytics. It's actually proven up quite nicely with respect to the COVID pandemic, in that we had put in a large amount of cash into the coffers before it all started in March. And we reported at the beginning of March, we had a cash balance of just around $30 million, and we continue to maintain that through the pandemic times. And we think that this is very important, and importantly, funds our operations to the second half of next year. With respect to milestones and news flows. So the top of the slide just outlines the news -- the milestones and the news flow that we are comfortable with the timing. The AWARE-1 breast cancer data, we announced the abstract earlier this week, but that data will get presented virtually at ESMO Breast. But we do, at ASCO, expect to have the multiple myeloma study readout as well as second-line pancreatic cancer study, the interim data readout at ASCO as well, consistent with what Matt commented on before. The multiple myeloma study will have interim data at ASH this year. And then the final data from the pancreatic cancer will be in the fourth quarter of this year. These are the items that we're comfortable with. I just wanted to point out other anticipated milestones and news flow. We do expect that this will happen. But just given the times that we're in, I think we can all appreciate that some of this is -- can be fluid. It's not like we're waiting idly by. We're doing as much as we can to progress these items. But do expect to see us initiate the BRACELET study. We believe it will be -- it's imminent, but we do expect it either this quarter or next quarter. The Phase II BRACELET study, the interim data, while we are -- we will be reporting on that as soon as we can, which obviously is a function of enrollment. The AWARE breast cancer, the final biomarker data. We will be moving that forward as soon as Spain opens up and we start to be able to enroll patients again. That is slowly happening based on our understanding and discussion with SOLTI, and we are pushing that as best as we can. And then into 2021, we will complete enrollment in the BRACELET study and report out the BRACELET study. But again as soon as we have better clarity, as soon as we see how the globe opens up their economies, we'll get back to the shareholders with an update. So with that, we just wanted to thank everybody for their time and wanted to open it up for questions and answers. Operator?

[Operator Instructions] And we have no questions queued up at this time on the phone.

Well, I do want to say thank you to everyone for their participation here. My thoughts and prayers go out to all the frontline workers and essential workers, the delivery guys, the doctors, everybody during this tough time. It is obviously very difficult. We are doing our best to look after our patients and our staff. But we do appreciate the interest that you have all shown for the company and our product. So thank you very much, and we look forward to providing you updates on our activities as they come to fruition. Thank you.

[Audio Gap] today's conference call. You may now disconnect.