Theriva Biologics, Inc. (TOVX) Earnings Call Transcript & Summary

Good day, and welcome to the Synthetic Biologics Business Update Call. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Vincent Perrone, Director of Corporate Communication at Synthetic Biologics. Please go ahead.

Thank you, Jason, and good morning, everyone. Welcome to Synthetic Biologics business update conference call to discuss the planned acquisition of VCN Biosciences. Today, I'm joined by Steven Shallcross, Chief Executive and Chief Financial Officer; and Dr. Vince Wacher, Head of Product and Corporate Development. From the VCN team, we're joined by Manel Cascalló, PhD, Chief Executive Officer of VCN; and Frank Tufaro, PhD, Chief Operating Officer of VCN. Synthetic Biologics issued a press release this afternoon, which provided an overview of the planned acquisition, this release can be found on the Investor Relations section of our website at www.syntheticbiologics.com. During our call today, we'll provide an overview of VCN details on the transaction, a discussion of VCN's pipeline and upcoming milestones, and importantly, the synergies created by bringing together both companies. We'll take questions after our prepared remarks. In addition to the phone line, this call is being streamed live via webcast, which will be archived on our website, syntheticbiologics.com, for 90 days. During this call, we will be making forward-looking statements regarding Synthetic Biologics and VCN Biosciences' current expectations and projections about future events. Generally, the forward-looking statements can be identified by terminologies such as may, should, expects, anticipates, intends, plans, believes, estimates and similar expressions. These statements are based upon current beliefs, expectations and assumptions and are subject to a number of risks and uncertainties, including those set forth in Synthetic Biologics' filings with the SEC, many of which are difficult to predict. No forward-looking statements can be guaranteed, and actual results may differ materially from such statements. The information on this call is provided only as of the date of this call, and Synthetic Biologics undertakes no obligation to update any forward-looking statements contained on this call on account of new information, future events or otherwise, except as required by law. With that, I'd like to turn the call over to Steve. Steve?

Thank you, Vincent. I'd like to start the call today by sharing how excited we are about this acquisition, which we believe will prove to be a transformational event for the company. As many of you are aware, we have for some time been evaluating a number of strategic options to expand our portfolio, given our strong balance sheet. Along with our bankers and advisers, we pursued a thorough strategic process to evaluate a range of value-creating alternatives, including licenses and acquisitions of companies and clinical stage assets that could complement and enhance our current pipeline. Of the dozens of companies we evaluated, VCN clearly stood out from the pack. We selected VCN due to the strength of the platform and scientific talent, which is highly synergistic with Synthetic's development, regulatory and commercialization expertise. This acquisition positions us to build a portfolio of innovative therapeutics that we believe will address massive unmet medical needs with a first-in-class platform. By way of background, VCN is advancing a new oncolytic adenovirus platform designed for systemic administration. VCN's oncolytic adenoviruses are designed for increased tumor penetration, directly killing tumor cells and promoting antitumor immune responses. VCN's lead oncolytic virus VCN-01 has been evaluated in 70 cancer patients in different difficult-to-treat indications, most notably pancreatic ductal adenocarcinoma or PDAC and retinoblastoma. Based on the compelling data from these clinical trials, we plan to initiate a Phase II clinical trial of intravenous VCN-01 in combination with chemotherapy as first-line therapy in newly diagnosed metastatic PDAC patients. We also plan to conduct a pivotal Phase II/III trial of intravitreal VCN-01 monotherapy in pediatric patients with advanced retinoblastoma. Importantly, EMA has granted Orphan Drug designation to VCN-01 for use in PDAC, which will allow for at least 10 years of market exclusivity upon potential approval in this indication. In addition to an outstanding oncolytic virus platform, VCN brings an exceptional team to the company with scientific talent that is highly synergistic to our own development, regulatory and commercialization expertise. VCN was cofounded by internationally recognized experts in oncolytic adenoviruses for cancer treatment. Joining us today is VCNs Co-Founder and CEO, Dr. Manel Cascalló, who will become Managing Director of Europe for Synthetic Biologics. Manel is one of the world's leading experts in oncolytic virus therapies. He's authored numerous scientific papers and reviews in peer-reviewed journals and has been awarded several patents on the use of adenoviruses as antitumoral agents. Manel has also served as an expert for the European Medicines Agency on oncolytic viruses. Manel has a company today by Dr. Frank Tufaro, who has extensive international experience in oncolytic virus development and is expected to join Synthetic Biologics as Chief Operating Officer after closing. Frank previously served as CEO of a clinical stage biotechnology company developing oncolytic virus-driven immunotherapies for cancer. Frank also served as the President and CEO of Allera Health Products and Managing Director of Medigene. He was one of the original founders of Neurovir, Inc., and served as Executive Director of PNP Therapeutics and as CEO and Board Chairman of Nurel Therapeutics. Rounding up the team is Dr. Ramon Alemany, Co-Founder of VCN and an internationally recognized expert in oncolytic adenoviruses for cancer treatment with more than 80 original publications and numerous patents in the field of gene therapy and viral therapy. Ramon established a Virotherapy Group at the Translational Research Laboratory at the Catalan Institute of Oncology in 2001 and has been on the Executive Board of the Spanish Society of Gene and Cell Therapy. He previously held research positions in the U.S. at the MD Anderson Cancer Center, Baxter Healthcare and University of Alabama, Birmingham, and has consulted to a number of companies developing oncolytic virus therapies. As you can see, this clearly is a very seasoned and accomplished management team. I'd like to take a moment to summarize the transaction details as we believe the structure of the investment is extremely favorable for the Synthetic Biologics shareholders. First off, we're acquiring 100% of the outstanding equity of VCN, which will operate as a wholly owned subsidiary of Synthetic Biologics. The total upfront consideration for the acquisition is $4.7 million in cash and the assumption of $2.4 million of VCN liabilities, allowing us to preserve our strong balance sheet. Additionally, VCN will receive shares of Synthetic Biologics common stock, representing just under 20% of the total outstanding shares of the company's common stock as of today. There will be no additional royalties or commercial milestones to the sellers. And finally, the balance of the purchase price will include up to $70.3 million of payments contingent upon the achievement of future clinical milestones. This is a very important point because the payment structure is back-end loaded, meaning a specific payment is only made once its corresponding milestone is achieved. We believe this demonstrates the confidence of the VCN team as well as our own confidence in the assets. And this structure allows us to protect and preserve value for shareholders. Future milestone payments are predominantly based on future Phase II and Phase III clinical and regulatory milestones. So assuming we meet these milestones, we believe the value created for shareholders will far exceed the potential future payments made to VCN. As a final point, the transaction is subject to foreign direct investment approval by the Spanish government, and this approval is a condition to closing. We've been advised by our legal team that the approval process will take approximately 60 days, although the regulation provides for up to a 6-month review period. Before I turn the call over to the VCN team to discuss the science in more detail, I'd like to emphasize a few more key points that we believe will drive long-term shareholder value. First, VCN brings a robust clinical pipeline that is highly complementary to our own. These therapies address significant unmet needs and have demonstrated very encouraging results in initial clinical trials. In addition to expanding the breadth and depth of the scientific and clinical teams at VCN, we believe this acquisition clearly places us at the forefront of oncolytic adenovirus development. The acquisition also provides us immediate access to laboratory facilities and personnel for joint discovery and development. In addition, we will gain a multinational presence, which we believe will facilitate access to key clinical study sites, patients, regulatory agencies and provide us with an immediate footprint in key European markets for future partnering and commercialization activities. Importantly, we have a strong balance sheet with over $72.1 million of cash as of September 30, 2021, which we believe will provide a significant runway to both support our existing programs as well as help accelerate the development of VCN's pipeline including VCN-01 and VCN-11 through important milestones that we believe will drive significant shareholder value. We could not be more excited about the outlook for the business. And on that note, I'll now turn the call over to Manel Cascalló, who will now discuss the VCN platform in much more detail.

Okay. Thank you, Steve. Nice to be here. Let me initiate just -- basically, I'm trying to explain to you all our technologies and assets. But maybe the first thing relevant to explain a bit about the oncolytic viruses. And oncolytic virus is, basically, it's a technology based on the use of viruses that replicate selectively in tumor cells and not in normal cells. So you have a very specific agent. But one of the beauties of this technology is that are adenovirus are immunogenic [indiscernible] and that makes that the body of the patients can react against the tumor directly, and that's much more powerful therapeutic option. Oncolytic viruses are very appealing at this moment because they can be combined with other therapeutics like chemotherapy, but also with most advance therapeutics plus can be checkpoint inhibitors or even with CAR-T cells. And in fact, that results that there are some products already approved in the oncolytic virus field and also very few companies still in the public market. However, the field of oncolytic virus have still major challenges. And probably the more relevant of that is the systemic administration. Why is so important? Because cancer, it's a systemic disease. So most patients die for metastasis, not from primary tumor. So allowing the virus to reach the tumor by systemic route, it's really, really important. Another important thing is that when you go systemically, it's much easier to repeat administration because local administration allows only treat a primary tumor, but not repeatedly different lesion. And it's important to know that most oncolytic companies to date are doing their development by inter-tumoral administration. However, our scientists has developed an series of platforms that allow for a selectivity of our products that allows systemic administration, okay? This systemic administration combined with highly replicative properties of our product unique properties to our products. Beyond the differential characteristic of our technologies is the use of enzyme that degrade tumor matrix. And that makes us our virus when replicating can diffuse into the tumor matrix and enhance their spreading and problem of the action of other therapeutic agents. Let me explain in this slide, it's kind of a cartoon, about how the different mechanisms, include in our products work together to get the best therapeutic options. So first, our selectivity, the selectivity of our products allows systemic administration. That means that the virus after going injected in the bloodstream can arrive to the primary tumor but also to metastasis. And once the metastasis virus replicates and by replicating, it expresses hyaluronidase this tumor matrix derating enzyme, enhanced the spending of the virus and opens the matrix of the tumor. But at the same time, as step #3, our virus kill the tumor cells, release new antigens of the tumor cells that attract the immune system react against the tumor. And when this immune system are rising tumor matrix is much more open by the action of hyaluronidase. So the different machines are collaborating between them and doing a strong therapeutic effect. With these technologies, we have developed a small platform of products, the most important of this is VCN-01. VCN-01 it's a product that contains modifications based in selectivity through the of the [indiscernible] stomach a left pathway. It makes very, very broad use for different types of cancer and can be dosed systemically without major of target toxicities. The virus is also engineered to express this hyaluronidase called PH20 and has other modifications to enhance systemic delivery as modifications in the capsid to power the interaction with tumor cells. This product has been tested in a quite extensive clinical program by Phase I in different indications. First one of them is pancreatic cancer. Obviously, anyone who thinks about pancreatic cancer, it's devastating disease. Also, it accounts for the 14 in terms of incidents in the wet wall pancreatic cancer is the third highest cause of cancer associated deaths in U.S. and the fourth in Europe and that is increasing with time. It's expected that in 2030, pancreatic cancer is going to be the second most relevant cancer-associated death. That devastating disease, it's also makes that the patients survive out for 1 year, it's below 25%, which is extremely low, one of the poorest survival in all solid tumors. The therapeutic options for these metastatic diseases are also quite lamide. So basically, some combinations with chemotherapies like called [indiscernible] and it's a mix of different chemotherapies or an approach combining gemcitabine and conjugated paclitaxel. But for instance, the checkpoint inhibitors, one of the most advanced therapeutic right now in cancer has been demonstrated largely in effect in pancreatic cancer. And why? Because stroma in pancreas, stroma is these extracellular proteins that protects the tumor cells and makes it very difficult or therapeutic agents to go into. If you can see in this picture at your right part in this slide, you see whole looks of pancreatic cancer. It's really a mass, a very dense mass where it's very hard to get the products into. And one of the -- that's called stroma disease, so desmoplastic disease reaction. And that makes that attacking this stroma, it's a critical thing in pancreatic cancer. And that's why our products as VCN-01 that express hyaluronidase a tumor degrading matrix enzyme, it's very, very interesting for getting this kind of tumor. We have initiated a Phase I program with VCN-01 in pancreatic cancer where we have tested in dose escalation, open label single intravenous administration of VCN-01 with different regimens of combination of chemotherapy basically with Gemcitabine, Abraxane. We have tested different regimens in the testing the product in monotherapy, just administering chemotherapy and the virus at the same time or just first the virus and 1-week later, the chemotherapy. And we have evaluated the [indiscernible] profile. We have defined the recommended Phase II dose for the Phase II, and we have also evaluated antitumor activity. The data obtain in this trial shows that really the best approach or the best regimen is the sequential administration, first the virus and 1-week later chemotherapy. With this approach, we have obtained a quite relevant overall survival for patients of its 13.5 months, which is significantly longer than obtained with the standard of care with Gemcitabine and Abraxane alone. And in terms of response rate, we have an overall and also right around 50% of patients are responding. But interestingly, there's a clear dose dependency in the response rate. And we see that the patients see that at the highest dose that it's safe, and it's the rate of dose, we obtained 83% response rate, which is much, much higher that obtained with chemotherapy alone, which is 23%, as you can see in the right part in this table. But it is relevant that the survival of some patients, that the majority of patients had survival more than 1 year and there's even patients who are surviving more than 2 years. So that's quite promising antitumor activities there. We want also to expand in our Phase II products. But this trial has also allowed the opportunity to demonstrate up something extremely relevant that it's the mechanism of action of this product. And that this product it's really acting it was -- has been designed, okay? One of the interesting thing is that the virus expressed hyaluronidase and we can see hyaluronidase expression in the lot of patients. That is very relevant because that allows have a tracking mechanism for knowing if your virus is efficiently replicating the tumor mass something that very few other oncolytic viruses have and can provide this type of information. With this system, we have seen that in the lot of patients, we see higher levels of hyaluronidase up to at least 1 month after a single intravenous administration of the product, which means that the virus is still working for a long period of time. But when we analyzed the biopsies of these tumors, we see also a strong inflammation and also a strong infiltration by CDA that's these pictures that you have in your right part in this slide. Basically, we see a strong infiltration by CD8-positive lymphocytes that has been observed not only in primary tumors, but also in the hepatic metastatic, which highlights again the importance of systemic administration for an effective therapy in pancreatic cancer. So that's the first evidence of action of VCN-01 pancreatic cancer. But VCN is also conducting all our developments in retinoblastoma. Retinoblastoma accounts for the 11 types of cancer in child in the first year of life, and it's characterized it, but that the picture, as you can see in the right part that is called leukocoria, which means white pupil, okay? It's the marker of this disease. It's an important disease that needs, in some cases, a local administration. That's why we have designed a clinical trial administering inter detailing VCN-01 and that's something that supports very well VCN-01 due to the selectivity of the virus as it's so selective we really can inject the virus without damaging normal retina. We have tested that also combined with chemotherapy before the treatment. And that's basically the aim of this trial is to avoid the an utilization of the eyes of the patient because that's the final endpoint because at the end, these patients what we have this retinoblastoma in the eye, they have -- the eye have to be removed before there are brain metastases that impair the life of the patients. In this trial that we have conducted, we have conduct -- we have tested 2 administration by interterminal route in a dose escalation way, and we have also tested tolerability, recommended Phase II dose and antitumor activity. And you can see here that there's some nice evidence how the virus is acting. You see on the right part of this slide, the patient #2, hold the number of BPU seats that are the precaution of the nucleation of the tumor decrease significantly with time. And in the patient #3, we have seen even a complete regression. A complete regression that it's quite prolonged in time especially its still free of disease more than 3 years after being the administered with VCN-01, which is quite relevant in terms of help impact, okay? What's more programs with VCN-01, we have also different programs in other indications, collaborating with world leading clinical restructuring institution in U.S., in Europe, in -- trying to test our product in, for instance, head and neck carcinoma in combination with [indiscernible] trial that is still ongoing, a trial administrated intravenously VCN-01 to treat brain tumors in University of [indiscernible] in U.K. And we are also planning to initiate very soon a clinical trial in combination with CAR-T cells in University of Pennsylvania in [indiscernible] that's going to be extremely interesting, another of trials that we are conducting right now. But what's next with VCN-01? We are planning, obviously, a Phase II program in pancreatic trial because our data and pancreatic are very interesting, and we think that we can conduct a controlled trial. But it's very early because as we have administering our product concomitant with At the same time, that chemotherapy, we don't have the patients to select to be treated with our product or with the standard of care. They can be treated with both things at the same time, and that's very interesting from a patient point of view, but also from a regulatory point of view because that enhance and faster that the process of getting the product approved. This trial is expected to be initiated during this year -- sorry, next year. And the principal investigator is Manuel Hidalgo is an extremely well-known expert in pancreatic cancer, currently in Weill Cornell University here in New York, but it's also a member of the Board of Directors of Bristol-Myers. So it's a very relevant person. And we expect -- we have a very good feeling for this trial, and we are very eager to new wholly design. We are also initiating the trial in retinoblastoma. That could be even a pivotal trial. And that trial is going to be a multinational multicenter center evaluating intravitreal administration. In this case, the principal investigator is going to be [indiscernible] physician also in hospitals in Barcelona, but also in different research institutions in Argentina and Uruguay. So that's going to be very exciting to see the results of this trial. But with all these data generated with VCN-01, our scientists really wanted to expand the applications of our product. And that's why they have developed a new technology that we call Albumin Shield technology that basically, it's a modification in the capsid of the virus that may when the virus is injected in the blood of the patient, it's cover it by albumin in the lot of patients. And what's the sense of that? The idea is that when you protect that your virus with albumin, the virus cannot interact with some neutralizing antibodies that are agents that are going to eliminate the virus in the blood, and that allows to repeated administration of the product. So that's very exciting because that can be a very promising platform to treat hard-to-treat tumors, and basically, that's a change in the game of oncolytic viruses. With this technology, we are building up a platform of different candidates, basically of [indiscernible] called VCN-11 contains hyaluronidase expression and this Albumin Shield technology, but we are also combining the hyaluronidase with other therapeutic agents and proteins that can be expressed by the virus like the specific engager, toxins, immune modulators to generate a platform of different candidates. And that obviously has the potential for different licensing opportunities, that's extremely interesting for Synthetics. So let me summarize a bit more about what's our platform. So basically, we have a differential platform for oncolytic virus optimized for systemic delivery that allows treating metastatic tumors, but also with a very relevant set margins that are highly replicative that really are base therapeutic very that express that genes that we can use to track the expression of the virus that also expressed a tumor degrading enzyme called hyaluronidase and that allows the combination with chemotherapies and also to really enhance antitumor activity of the product. And we are also testing new platforms that allow systemic delivery in repeated administration regimen. Okay. Thank you for your time, and I will turn the call back to Steve.

Okay. Thank you, Manel. Before we open to Q&A, I'd like to take a moment to talk about the strength of the combined platforms. As Manel clearly described, we plan to initiate an international multicenter Phase II clinical trial VCN-01 in newly diagnosed metastatic PDAC patients at centers across the U.S. and EU. We also plan to conduct a pivotal Phase II/III trial in pediatric patients with advanced retinoblastoma. There are also a number of upcoming investigator-sponsored studies of VCN-01 including the study at the University of Pennsylvania, again, that's Carl June's lab, combining VCN-01 with CAR-T cell therapy in pancreatic and ovarian cancer patients. In separate studies, in the U.K. and Spain, evaluating VCN-01 monotherapy in patients with brain cancers. In addition to the VCN programs, we continue to advance our existing clinical pipeline. Washington University continues to screen and enroll patients in our Phase Ib/IIa clinical trial SYN-004 in allogeneic HCT recipients for the prevention of acute graft-versus-host disease. A data readout for the first of 3 antibiotic cohorts is anticipated during the first quarter of 2022. As previously announced, the Phase I placebo-controlled multi-ascending dose study of SYN-020 remains ongoing and is intended to evaluate the safety, tolerability and biodistribution of SYN-020 upon repeated dosing and up to 32 healthy adult volunteers. At this time, the first 2 cohorts of [ 8 ] study participants in each have completed their study drug treatment and dosing of the 3 cohort is nearing completion. The top line data readout from this clinical trial is anticipated during the second quarter of 2022. Results from this study and the previously completed Phase I single ascending dose clinical trial SYN-020 are intended to support the development of SYN-020 in multiple potential clinical trial indications providing opportunities for both internal development and out-licensing. Turning now to our upcoming milestones. We anticipate a significant level of activity going forward, which we believe will deliver important catalysts to drive the shareholder value. Key near-term clinical milestones over the next 6 months include the initiation of VCN-01 dosing in the investigator-sponsored study at the University of Leeds. The initiation of VCN-01 dosing in combination with CAR-T cells in the investigator-sponsored study at the University of Pennsylvania. A data readout from the first cohort of the SYN-004 study in allogeneic HCT patients and top line data from the multiple ascending dose study of SYN-020 in healthy volunteers. During the second half of 2022, we expect to initiate key clinical trials, including a Phase II study of VCN-01 in PDAC patients, a Phase IIa study of SYN-020 and a Phase IIb/III pivotal trial of VCN-01 in retinoblastoma. We also expect to report data from the second antibiotic cohort in the first Phase Ib/IIa study of SYN-004. Looking ahead to the first half of 2023, we plan to report data from the Phase IIa trial of SYN-020 and the third antibiotic cohort of SYN-004. We also plan to file the IND for VCN-11 and initiate a Phase I clinical trial of VCN-11 in ovarian cancer and other solid tumors. So as you can see, we have a very, very busy 18 months ahead of us with a number of major catalysts forthcoming. The merger with VCN is truly a transformational opportunity for the company. We believe VCN brings an outstanding drug pipeline and a first-class management and product development team, all very complementary to what we've already built. And importantly, our pipeline remains supported by a very strong balance sheet to move these programs forward. As I mentioned earlier, through our strategic process, we evaluated countless companies and VCN easily separated itself from the rest. Their oncolytic adenovirus platform has the potential to transform the treatment of cancer by allowing for systemic delivery, high selectivity and enhanced tumor access. The data thus far, obviously speaks for itself. I strongly believe as does our management team, our Board of Directors and the VCN team that we are more excited than ever about the outlook for the company, and we look forward to providing further updates as we continue to advance our combined platforms. Now I'll turn the call back to Vincent to open the call for questions.

Thank you, Steve. Jason, we'd like to open the phone line to questions. Would you kindly describe the procedure to ask questions for our listeners?

[Operator Instructions] Our first question comes from James Molloy from Alliance Global Partners.

I was wondering, if you could walk through a little bit the VCN differentiating from other adenoviruses out there? There's a number out there. It's been a challenging space; I love to get your thoughts on the differentiating factor from you guys have versus some of the other things we've seen out there? And then let's talk a little bit about any comp -- in some of the therapies, looking at the combination therapy with immuno-oncology, I was wondering which IOs you're looking at to combine with there?

Okay. Thank you for your question. Basically, our competitive advantage are basically the unit properties in terms of selectivity and replication capabilities of VCN-01 that makes one of the few viruses that can be dosed as high as one time 15 [indiscernible] viral parts with extremely high build that allows reaching metastases, and that's very, very differential with other companies that -- it's really hard to demonstrate the presence of virus in metastasis after systemic administration. The other thing is that our product is expressing enzyme that enhance spreading of the virus and allows tracking the replication of the virus. So replication, outstanding replication selectivity that allows high doses to be administered systemically and degradation of the matrix that allows effective therapy and expression of enzyme that is really useful. That's a differential with respect to the remaining companies' development oncolytic adenoviruses and in general of viruses because most of them has been tested by intra-tumoral administration, and we are very focused on the systemic administration, okay? Your second question was more related to immunotherapy and approaches. Obviously, we have demonstrated in a very cold tumor very immunogenic poorly reactive tumors like pancreatic cancer that our virus is able to use a perfect inflammatory response. And that's very unique, okay, because pancreatic provides a unit virus, it's working or not. And that the evidence that we have get in terms of activation of the immune system makes them extremely interesting to combine with immunotherapies that are not working right now in pancreatic cancer. And so the combination with the multiply is not inhibitor, it's very straightforward in pancreatic cancer, but also the combination with, for instance, CAR-T cells and other immuno-based product like can be NK cells, et cetera.

Yes. In terms of competition, VCN's products are unique because they replicate, we call them superusers, they replicate to much higher levels. So once they're in the tumor, they can kill more tumor than other companies, viruses have shown. Most of the companies are also developing viruses like herpes simplex which can't really be delivered systemically, it's a completely different type of virus with an envelope. It's not amenable to growing to high titers. And so that field is really very, very far in the future if they're going to be able to deliver them. So we think that the major differentiator compared to competitors is that we've already shown clinically what the Phase II dose needs to be, which is 1 to 13 virus particles. And we've also shown that, that's effective that tumor killing. And we've also shown that it can persist for many, many days. And we do that because we have a biomarker. This hyaluronidase enzyme not only is killing the tumor trauma, but it also leads into the systemic circulation. And that allows us to, therefore, prove that the virus is still there replicating weeks to months after a single dose. So it's almost like a time course delivery drug. And again, we're the first company that I'm aware of that's really generated this kind of data, certainly in pancreatic cancer and I suspect that the only other successes have been so far in local tumors like melanoma and brain tumors, which are very different. The brain doesn't have metastatic disease, melanomas are on the skin. This is really the first time we're going to be attracting a very major cancer like pancreatic. And secondly, because of our ability to combine it with standard of care chemotherapy, we're going to be able to treat newly diagnosed patients, which is very different than our competitor oncolytic virus companies who typically go in as almost salvage therapy after they failed the initial treatments.

Maybe just 2 quick follow-ups, if I could, please. When you look at -- you've got a very deep and broad pipeline is excellent. You look at is panc, panc is clearly the first and then retinoblastoma with an orphan indication, which you see as sort of your biggest opportunity in front of you rather than your nearest opportunity? And given the potential pricing opportunities in orphan and the unmet medical need, is that -- where do you see that vis-à-vis panc. And then can you speak a little bit to any AEs that we're seeing have been to date in the Phase I trials?

Yes, I couldn't hear the second question, you're a bit fuzzy with it. But did you say that AAZ, was that?

I'm sorry, AE, adverse event.

Okay. I'm sorry. It didn't come too clearly. So maybe about AEs, you can speak to that in clinical trials, is that what we're looking at, what we're seeing in clinical in terms of safety.

Yes, in terms of safety, obviously, it's much more complex because when you do this kind of local administrations, sometimes toxicity is higher, and it's difficult to control because if you have a virus that is fully replicative, you can have some problems. If you have a virus that is partially defective due to the mutation incorporate, effectively is not good. So systemic -- the good thing for systemic administration is that you receive systemic responses also from the logical part. And I think it's much, much more relevant than the other approaches.

Yes. And I think the first question, I think in terms of what's our immediate which is a more important and maybe more important indication or so. I mean, they're very, very different. Of course, retinoblastoma being an orphan and it's actually an intravitreal administration, it's something that we can measure directly. It's already working reasonably well in the patients we've looked at. We're very interested in pediatric indications because it gets you sort of a different regulatory path. And again, we don't think about pricing right up front. But these are people who you're preserving usually the average age of diagnosis is like 12 months. So you're preserving vision in patients for their entire life, potentially 80, 90 years or more. So if you can cure that, which it really is curative, you can preserve vision in these patients. So we think that that's critically important. PDAC is another one where 70% of patients come in with metastatic disease, which is nonresectable, roughly 70%. And they only have chemo right now. And so we feel because VCN has already tested the virus along with chemotherapy, and it seems to be enhancing it, we think that virtually every patient that this should be something that physicians would want to put their patients on, because we're not changing standard of care. We're going to give you everything that's available today plus virus. And we think that's going to be very important. And that's a big -- even though it's an -- pancreatic is technically an orphan, but it's a big, big, big, important market. And we think we can move quickly because we can do a control control Phase II in newly diagnosed patients, which is very different than my experience with other oncolytic viruses in the past.

[Operator Instructions] Next question comes from Jason McCarthy from Maxim Group.

Congratulations on the acquisition. A couple of questions. First, on the AV, in general, VCN-01, in particular. Does it have a particular tropism, I saw that there was no -- that was reduced or lower liver tropism. Are there specific tumor types that it seems to home in on when you're giving it intravenously? And in addition, does VCN actually -- VCN-01 has anything in any payload of any kind?

Right. Do you want me to answer that? Or would you like to -- okay. First of all, it is detargeted. We haven't mentioned all the genetic changes that have been made. It's detargeted from the liver. The other thing that the beauty of adenovirus, part of it is it's not an envelope virus. It doesn't tend to break out of the systemic circulation into all tissues. It really is restricted to the bloodstream until it gets to a leaky vasculature. And that could be the liver, which is now detargeted from or it could be a tumor. And so we find that that's where the virus ends up is in the tumor tissue, where then it establishes using the normal adenovirus receptor called the CAR receptor and some other molecules, it can infect cells apparently quite efficiently. And again, we can -- we have a biomarker for that, so we can actually measure the amount of infection and the duration of that and also because it's a super producer virus, it replicates extraordinarily well it should spread from cell to cell with the hyaluronidase being secreted as well. and the hyaluronidase will kind of eat ahead of the virus. So you're going to get a nice opening up of the tumor. One of the other things I just want to mention to folks who follow the field, unlike certain viruses like VSV that kill cells within an hour or 2, adeno takes actually several days before it decides to kill the tumor cell. And therefore, we can express hyaluronidase for days and then the cell dies. And that's -- we think that's an important component of why adenovirus is, in this particular type of indication when you're secreting enzymes, is important. We're not in this particular virus expressing other immunotherapy agents or toxins or anything. Hyaluronidase seems to be doing the job adequately. But in the future with VCN-11, we see that as a real platform that could be developed partially ourselves or licensable. We can put other people's molecules like bispecifics or toxins or CD40 ligand 41BB, those kinds of things fit in the virus. We can also maintain hyaluronidase and we can also get the Albumin Shield, which allow to do multiple dosing without having to do any strange manufacturing. Albumin Shield is just part of the regular virus that's very similar to the product we already have. It's manufactured identically to the current product. So we're going to leverage our current knowledge to get the VCN-11 into the clinic fairly shortly.

So you had mentioned leaky -- kind of leaky blood vessels as a mean to the virus to get in, where I thought panc's are a little bit more avascular, which is where we saw checkpoints and things have a hard time getting across into there. Is the mechanism of action to kind of soften up the stroma part of what gets VCN-01 into more a vascular tumor type like a pancreatic tumor?

Yes. That's a very interesting question from a mechanistical point of view. The reasons why the virus, it's reaching to tumors preferentially is basically due to the size of the virus, okay? The virus supply rose around 100 nanometers, but it's the ideal size to cross the barriers of leaky vasculature in the tumor that when we talk about leaky vasculature, we refer to vasculature generated by neoangiogenesis, it's a kind of the organ size of vasculature. The adenovirus can extra sink quite easily to these pathways. For small molecules can be even harder because it depends on the chemical structure can be trapped by the metrics. The adenovirus has the correct size and moreover, it expresses hyaluronidase with powers also the spreading of the virus because the size of the hyaluronidase producers in the metrics, the that producers in the hyaluron metrics is perfect for the spending of the virus.

And the shown in animal models that, that actually will allow more pembrolizumab, for example, or checkpoints to get into the tumor. So that's been shown in animals and presumably, it will be working in -- it could be the same thing happening with Gemcitabine, Abraxane in the current pancreatic trial.

So just 2 more questions. We've seen since the days of [indiscernible] right, some advances in the clinic for [indiscernible] focus oncolytic viruses in terms of use of things like microRNAs to ensure viral degradation if they find their way into healthy cells. Is that something or an approach that could be used for VCN-11 or something even next-gen beyond that in terms of really dialing in the specificity of your oncolytic virus?

Theoretically, it could be because there's no technical limitation for that. But the point is that the selectivity that we get with adenovirus is much, much higher with, [indiscernible] virus is extremely big buyers with different viruses controlling airway it's replication of the virus. You need to control a lot of things for [indiscernible] virus. That's not the case for adenovirus. With a single key master gene that we call P1A, we've gone through all the replication of the virus. So we are very proficient controlling the selectivity of the virus. And the proof is that in our trial after admission as high as 1/10 to the 13 viral, it's enormous amount of virus, we don't see major toxicity events in patients. So also theoretically, it could use the technology of miRNA or whatever, at the practical level, we don't need that because adenovirus is much easily resulted in a selectivity virus.

Got it. And just last question from the Phase I trial in pancreatic cancer. It was intravenous administration, correct, right? And you went from 10th of the 12 to 10th to the -- like 3x the dose at 10th to the 13, you get this really nice 80% or just above that response rate, but there's a small number of patients, I would think in a larger trial, maybe that number comes in a little bit, still a great result. But since you had no AEs, could you still continue to push the dose of virus to try to get to an MTD in your next trial? Is that something that you're thinking about?

Eventually, we could, but 1/10th of the 13 is a very high dose even from a manufacturing point of view, we need the virus that it's extremely replicative to getting that dose injected in patients. That's something that we get with the VCN-01. Most of the companies it has a hard time for getting high doses administered, okay? With VCN-01, it's a very replicative virus, we can do it. However, as we have seen that the virus stands in the tumor, reach the metastasis at 1/10th of the 13 very efficiently and the virus is still replicating for more than 28 days, probably it's not working to force so much the toxicity profile. I mean it's very, very high dose. And in fact, any other oncolytical virus has been never dosed at 1/10th of 13 and being the a recommended Phase II dose as well.

And to your question as well, we are going to be administering a second dose. But instead of kind of overloading in 1 dose, we're going to be waiting several months where when the first virus then disappears, we'll be adding a second dose. And so we think that's a more effective way to kind of administer these drugs instead of trying to kind of overload on day 1.

Got it. Now -- sorry, Steve. That was now my second last question because you just mentioned something. On the repeat dose, so you -- so for VCN-01, if you don't have the albumin, do you get or could you get neutralizing antibodies that could be an issue on a repeat dose of that one? Or do you start to look towards getting to that albumin-coated VCN-11 and that next-generation approach?

So we have prime both approaches. For VCN-01, we think that we can redose after a 3-month period. We have monitored it very closely, the levels of antibodies in our trial with VCN-01. And we know perfectly that after normally 14 weeks, the levels of neutralizing antibodies decreased significantly. And so that's why we can redose the virus. That fits very well with the vaccine approach with COVID, for instance. For AstraZeneca vaccine they recommend redosing after 3 months, and that's exactly the same way after the route is not the same, but it's a very coincident data. And we know right now that if we redose VCN-01 after 3 months, it's going to be effective. And that's why we are planning for our Phase II trial in pancreatic cancer. With VCN-11, the idea is that we can shorter much more a period between readministration, maybe in 1 month or even in short. And that makes a flexibility to treat tumors that are really, really hard to treat.

This concludes our question-and-answer session. I would like to turn the conference back over to Steven Shallcross for any closing remarks.

Thanks, Jason. I'd like to thank everyone again for taking the time today to join in our call, and I hope you share our enthusiasm for the VCN transaction. Our best days lie ahead of us, and we believe 2022 will be a very exciting and transformative year for the company. I'd like to offer a special thanks to our shareholders for your ongoing support, and we look forward to keeping you updated on our progress. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.