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

Ladies and gentlemen, welcome to the Annual Meeting of Oncolytics Biotech, Inc. Please note that this meeting is being recorded. I would like to introduce Kirk Look, Chair of the meeting. Mr. Look, please go ahead.

Good afternoon, and welcome to the Annual Meeting of the Shareholders of Oncolytics Biotech, Inc. My name is Kirk Look, and I am the Chief Financial Officer of Oncolytics, and I'll be serving as Chair of this meeting. Joining me today is Matt Coffey, President and CEO; as well as we have Wayne Pisano, Deborah Brown, Angela Holtham, Bernd Seizinger and James Parsons, who I believe have joined us online. Other members of management also joining us are Allison Hagerman, Andrew de Guttadauro and Tom Heineman. Now for convenience, we've divided today's meeting into 2 parts. First, the formal business portion will address the legal requirements for a shareholders' meeting, including voting on the resolutions. After we conclude the formal part of the meeting, the second part will consist of an opportunity for general Q&A. Before we begin with the formal business portion of the meeting, I will provide some comments on voting and questions at today's meeting. As with any technology, unexpected glitches may occur, and we appreciate your patience. Our service providers for this platform at TSX Trust Company, are very experienced at running this type of meeting and will help us work through any challenges. Now the virtual platform we are using, allows us to ensure that shareholder rights are protected and our meeting offers shareholders the same opportunities to participate as in past in-person meetings. We will conduct the vote on the matters for us by a 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 can 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 log-in information and log-in process was outlined in our notice, which was mailed out to shareholders and can also be found 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 into the meeting as a guest. The password for everyone is Oncolytics, O-N-C-O-L-Y-T-I-C-S 2022, all in lower case. Now the polls for all resolutions are open. You may vote at any time during the meeting until the polls are closed after the last item of business has concluded. Thank you to those of you who have already voted. For those who have not yet voted, we encourage you to vote now. Now I welcome all guests who are not registered shareholders or proxy holders 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 during the formal part of today's call. [Operator Instructions] There will be opportunities for shareholders to ask questions specific to each resolution on the webcast. Again, as a reminder, only registered shareholders or proxy holders with a control number are entitled to ask questions on the matter at hand during the formal part of our AGM. Other questions and answers from our guests will be handled at the end. [Operator Instructions] 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 have finished typing out your question, click the Ask Now button. The secretary will receive the questions and at the appropriate time, we'll read them out in order for everyone to be aware of the question being dealt with. With respect to questions other than proposed amendments or objections, we will endeavor to cover them as part of the general Q&A session at the end of the meeting. If we have a number of questions that are the same or very similar on topic, we will paraphrase and group the questions and mention that we have received similar questions. Once again, we will attempt to address all general and appropriate questions from our shareholders, proxy holders and guests at the end of our corporate update. That said, all questions regarding timeliness and expectations of timelines, we refer everyone to our public disclosures that can be found on our website. We have no comment in response to questions concerning timelines and expectations of timelines beyond what has already been disclosed. Finally, please note that due to time constraints, we may not be able to address all questions today. With that, I would like to call the number -- Annual Meeting of the Shareholders of Oncolytics Biotech, Inc. to order. 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 Christine [indiscernible] of TSX Trust Company, our transfer agent, to act as scrutineer of the meeting. Now I have received a declaration prepared by an officer of TSX Trust Company that the notice calling this meeting with a company management information circular and form of proxy were mailed on May 17, 2022, to shareholders of record as of May 2, 2022. 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 service 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 the business.

Based on the scrutineers' report, I declare that the requisite quorum of shareholders is present. I direct that the scrutineers' report to 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 2021, fixing the number of directors, electing directors 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, 2021, 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 with the auditors of the corporation, EY LLP, are in attendance online being represented by Ms. Janet Wang. 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 the number of Directors at 6. As Chair, I propose the following motion that the number of Directors be set at 6. I will now ask the secretary to please advise if any questions specific to this motion were submitted. As there are no questions, please cast your votes, and please vote now. [Voting]

We will now proceed with election of Directors. Information circular contains the names of management's proposed nominees to the Board of Directors, which are Deborah Brown, Matthew Coffey, Angela Holtham, James Parsons, Wayne Pisano, Bernd Seizinger. I understand that these nominees have consented to act as Directors. 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 the 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. As there are no questions, please cast your votes. Please vote now. [Voting]

Appointment of auditor. 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'll ask the secretary to advise if any questions specific to this motion were submitted. There are no questions. Please cast your votes. Please vote now. [Voting]

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

Thank you, Mr. Chair. I received confirmation from the scrutineer that each of the 6 Directors nominated by the Board has been elected by a majority of the votes cast for the election of Directors and the motion to approve EY LLP as the auditors of Oncolytics has been approved.

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. Thank you again to all our shareholders and proxy holders for your attendance today. As this concludes the formal business, I declare the meeting terminated. Thank you. We will now move to the second half of our meeting. Before we begin, I'll note that this portion of the call is being recorded and that a replay will be available on the Events and Presentations section of the Oncolytics website approximately 2 hours after its completion. [Operator Instructions] I'll also note that various remarks made during this portion of the call may contain certain forward-looking statements relating to the company's business prospects and the development and commercialization of pelareorep, including statements regarding the company's focus, strategy and objectives, the company's belief as to the potential and mode of action of pelareorep as a cancer therapeutic. The design, aims and anticipated benefits of the company's current pending clinical trials and the anticipated timing of the release of additional data, the company's plans and expectations regarding a potential registrational study, the company's business development plans and strategies and other statements related to anticipated developments in the company's business. These statements are based on management's current expectations and beliefs and are subject to a number of factors, which involve known and unknown risks, delays, uncertainties and other factors not under the company's control that may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations implied by these forward-looking statements. In any forward-looking statement in which Oncolytics expresses an expectation or belief as to future results, such expectations or beliefs are expressed in good faith and are believed to have a reasonable basis, but there are -- there can be no assurance that the statement or expectation or belief will be achieved. These factors include results of current or pending clinical trials, risks associated with intellectual property protection, financial projections, actions by regulatory agencies and those other factors detailed in the company's filings with SEDAR and the SEC. Oncolytics does not undertake any obligation to update these forward-looking statements, except as required by applicable law. I will now pass the call off to Matt. Please go ahead.

Thank you, Kirk. I'd like to begin by thanking Leon Kruimer for his years of service to the Board. We are grateful to have had this guidance, and we're looking forward to executing the development path that he helped put us on. I'm also excited to welcome James Parsons to the Oncolytics Board of Directors. Mr. Parsons was most recently the CFO of Trillium Therapeutics, an immuno-oncology company focused on CD47 technology, which was acquired by Pfizer last year for an aggregate purchase price of over $2 billion. We've been impressed with his vision for the future of Oncolytics, and now he is excited about the opportunity the company has in front of it. Before we start taking questions, I'll remind everyone that unlike years past, we are holding our AGM separate from our first quarter earnings and corporate update conference call. For those interested in hearing a thorough review of the progress that the company has made and our outlook for the rest of 2022, I recommend that you listen to the replay of that call, which is available on our Investor Relations section of our website. We've also released 2 letters to shareholders discussing recent company news and revisiting our history on April 6 and January 11. These can be found in the press release section of our website. In terms of our 2022 outlook, we are advancing towards a number of critical near-term milestones as we execute our clinical programs. First, we expect to share an update on the pancreatic cancer cohort and the GOBLET study at ESMO GI later this month. We also anticipate sharing BRACELET-1 topline data, which will help inform the design of a registrational study in HR+/HER2- breast cancer. It should be noted that we have cash runway that gets us to and through these significant milestones and into the middle of 2023. Next, I'd like to proactively address one question we frequently received, which is the expected timing of a partnership. Though I can't predict the specific timing of an external partnership. What I can tell you is that we continue to have dialogue with current and potential business development partners, and we're very pleased with the progress being made. Our Global Head of Business Development, Andrew de Guttadauro, provided more details on this topic during the aforementioned first quarter conference call, which includes discussion on how our BD efforts are progressing, our goals for partnership and our plans to strike the deal that will maximize value for the company and its shareholders. Also on the Q1 call, the available clinical data from AWARE-1 presented at the ESMO Breast Cancer 2022 Meeting that demonstrate pelareorep's ability to decrease the risk of breast cancer recurrence and improve patient prognosis by remodeling the tumor microenvironment. We also recap data from a pure paper demonstrating [indiscernible] and overcome the limitations of CAR T cell therapy in solid tumors and potentially open up a therapeutic market worth billions of dollars. Additionally, we shared the rapid progress being made in the bridging study or the bridging clinical trial in breast cancer with Adlai Nortye in China and our GOBLET study in gastrointestinal cancers that is being conducted in collaboration with Roche and AIO. We anticipate providing another comprehensive corporate update on our second quarter earnings call in August as has been our standard practice. We remain grateful to the employees and business development partners that enable our efforts to generate meaningful clinical data as we advance our lead breast cancer program towards a registrational study. Our ultimate goal of providing patients with new and much-needed cancer treatment options has not changed, and we continue to work expeditiously towards this end. Finally, I'd like to extend one last thank to our shareholders, whose support and continued interest is greatly appreciated. Now we will begin the Q&A session where I will be joined by Kirk; Andrew; our Chief Medical Officer, Tom Heineman; and our Vice President of Product Development, Allison Hagerman. Kirk, please go ahead and can you read questions from me, please.

Okay. The first question pertains to AWARE-1. So what is the significance of AWARE-1 for the future development of pelareorep?

That's a great question, and I think I would like to hear Tom's input on this, and then I'll add my thoughts to it. But certainly, Tom will come at it from more of a clinical perspective.

Yes. Thank you very much for the question. So the AWARE-1 study provided considerable data that greatly enhance our understanding of pelareorep and its potential as a cancer therapeutics. And perhaps, most importantly, confirmed pelareorep immiologic mechanism of action, which helps explain the strong efficacy results we saw in the prior IND 213 study, in which patients with HR+/HER2- metastatic breast cancer who received pelareorep in combination with chemotherapy at a median overall survival nearly twice that of patients who receive chemotherapy alone. The AWARE-1 study also provided considerable information on the immunologic effects of pelareorep and its ability to modify the tumor microenvironment, which strongly support the development of pelareorep in other cancers besides HR+/HER2- metastatic breast cancer. This includes several GI cancers for which there's a high unmet medical need, which have proven resistant to treatment with immunologic therapies. And finally, the AWARE study provided significant insights that continue to inform our ongoing biomarker development efforts.

Thanks, Tom. I would just add to that, AWARE-1, I think really explains why we see the success that we do in certain indications. So many of these patients do not have an immune system that's aware of the disease. And here, what we, I think, have demonstrated very, very clearly is that the virus in and of itself can change that tumor microenvironment to be more receptive to immunological surveillance and that success can be enhanced by -- in this instance, the presence of Tecentriq, an approved checkpoint inhibitor. So I think that opens the door for us to explain and design studies like taking the results from 2013 and understanding why we were so successful in that environment, but also predicting what we can do in a Phase III environment. I think it also explains why we have the activity with CAR T cells, why we have the collaborations with bispecific antibodies and basically, how we can leverage this activity with any immuno-oncology product that really relies on T cells for their activity. I really believe that the AWARE study gets us into some novel areas and speaks to the activity of the agent in these patients.

So another question we have pertains to our manufacturing. Are we seeing any supply chain issues in regards to the manufacturing of pelareorep?

Actually, for that one, I'm going to hand it off to Allison Hagerman, who's much more aware of that than I am.

Thanks, Matt. Oncolytics is well stocked with drug products available for all clinical programs, including progression into a Phase III environment. The supply chain challenges that we are seeing and continue to see are related to raw material availability, and this is quite widespread across the industry. So along with our contract manufacturing partners, we have taken steps to mitigate and minimize this risk as best as possible, which includes actions such as qualifying additional suppliers, stockpiling critical materials where we can and establishing rolling order systems based on lead time tracking to ensure we have access to the materials we'll need to continue producing drug substance and drug products.

Okay. Thank you. Is there any updated information or a path forward for the AML work being done at the University of Arizona?

Actually, that's a very prescient question. We conducted a number of studies with a very talented investigator named Steffan T. Nawrocki, University of Arizona. He continues to do work in the AML space using pelareorep as the standard backbone. And actually, it was Tuesday of this very week, he just asked for more materials to continue his work. I would anticipate presentations and posters from him later in the year or early in next, but it is an area that we are actively looking at, and we will continue to do so. Steffan is just a fantastic collaborator, and we're very pleased with the work he's produced.

So what is the partnership strategy in the CAR T environment compared to what you're looking for from a large biopharma collaborator in the area like breast cancer? Andrew do you want to....

Sure. Happy to weigh in. So for those who saw the poster that was presented last year, showing pelareorep's synergies with CAR Ts and saw it -- to treat solid tumors, where CAR Ts on their own have been unable to be efficacious or the recently published article that built on that poster in translational medicine in April. The opportunity there, is really not so much to use a lot of color rear rep but to enable CAR T therapies to penetrate into the tumor work in solid tumors where they have not had the same transformative effect that they have in liquid tumors and then to persist longer with a second dose of pelareorep. So essentially to potentially unlock this huge multibillion-dollar market, you'd only need 2 doses of pelareorep. 1 to use in combination with the CAR T and 1, a certain amount of time later to increase persistence. As such, the CAR T opportunity is such that it could sell a lot more CAR Ts, not pelareorep. So it's not something that we want to pursue ourselves. We are not a CAR T company. We're not looking to sell 2 doses at a time. So it's really to allow CAR T partner to develop the combination approach so that it can eventually sell CAR Ts in solid tumors. And under that scenario, we see something along the lines of an upfront payment to be able to pursue that opportunity, some milestone payments, success payments along the way, and ultimately, we get a royalty off of the sale of the CAR T that can cost $300,000 to $400,000 based on what they're priced at now. That's very different from what we're looking for in a breast cancer and broader partner. What we're looking at really treating patients over the long term months or even years with pelareorep, where obviously we would be looking to maximize the use of pelareorep, the sales of pelareorep and the direct revenue from it. So one is more of a royalty stream based on the cell of CAR T rather than the pelareorep, but the long-term partner for breast cancer and other potential malignancies is really a partner to develop and eventually monetize the full value of pelareorep across a range of tumors through long-term use of pelareorep.

Thanks, Andrew.

Yes.

Sorry, we're reading the questions on. So another question. If the share price does not rise above USD 1 after the requisite time, would you do another reverse split to remain listed on NASDAQ?

So great question again. Obviously, I think everyone has seen the stock market be ravaged in the last 2 quarters. Unfortunately, we do find ourselves at a point where we are trading below $1, but I'm confident that the data that we have coming combined with a resumption of normality in the markets would not require us to do a share split. We have -- I think you have 6 months to address it, and then you have to come up with a plan and then you have another additional 6 months to get your share price over that dollar. So this is a problem that hopefully will be resolved here as the markets resume sort of normal trading, but I don't see that as something that shareholders have to worry about at this particular junction. I mean, unfortunately, we're looking at an environment where there are scores and scores and scores of NASDAQ-traded companies that are trading at or below cash. There's this particular example where a company with $5 billion in cash is trading at a $4 billion market cap. So I think what we're seeing in the markets is a period of insanity that I think will, at some point, go back to normalcy, and I think we'll actually see valuations that are appropriate. And I'm glad that we have cash on hand to allow us to weather this period. I'll just read the question out loud and I'm going to push Andrew under the bus for this one. Does the milestone payment for Phase III kick in once Adlai Nortye begins their study in China? Or does it only apply if/when ONC begins the North American study?

You're asking whether -- when would the payment trigger?

Yes. Is it a China study or a global study or a North American study? If I'm interpreting the question correctly.

I -- based on the North American, but I would have to check it. That's a great question. I don't know off the top of my head. I would have to look it up.

My memory of it is, it's one in North America.

I believe it is the North American...

But the anticipation is, it would be a truly global study with inclusion...

Yes, there's some nuance to it, and that's why I'm being a little bit hesitant right now without having a chance to refresh my mind with the agreement because obviously, part of the question is, is it a global study with Chinese participation in sites? Or are they doing their own separate trial altogether for Phase III? And that is one of the nuances I'd have to check in order to say definitively. I believe it's the start of our trial, but I can't say that without checking the full agreement.

We can look into that.

Absolutely, we can.

Okay. So we have a couple of -- a few questions here that we have chosen to respond directly to the individual. So we'll -- if your question wasn't answered, expect an e-mail outreach from us. And other than that, the Q&A is complete.

Thank you for joining us for our AGM. We are looking forward to the updates we have in store over the coming months and for the rest of the year. Wishing everyone a great evening, and thank you for your time.

Ladies and gentlemen, thank you for attending today's meeting. You may now disconnect.