Evaxion A/S Q1 FY2021 Earnings Call

Greetings. Welcome to Evaxion First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Mary-Ann Chang of LifeSci Advisors. You may begin.

Thank you, operator, and good morning, everyone. Welcome to the Evaxion Biotech conference call on the first quarter results. Earlier today we issued a press release that outlines what we plan to discuss today. This press release is available on Evaxion's website. During the call, Lars Wegner, CEO of Evaxion, will provide a brief corporate update, after which Glenn Vraniak, the CFO, will review the financial results. After the prepared remarks, we'll open up the call for Q&A where Lars and Glenn will be available to answer your questions. Before we begin, I'd like to remind everyone that statements made during this conference call relating to Evaxion's expected future performance, future business prospects, or future events or plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are intended to be subject to the Safe Harbor protection provided by the Reform Act. Actual outcomes and results could differ materially from this forecast due to the impact of many factors beyond the control of Evaxion. Evaxion expressly disclaims any duty to provide updates to forward-looking statements, whether as a result of new information, future events, or otherwise, participants are directed to the risk factors set forth in Evaxion's F-1 and 20-F other periodic reports filed with the Securities and Exchange Commission. With that said, I will now turn the call over to Lars.

Thank you, Mary-Ann. And good morning, everyone. Welcome to our call. I'm delighted to provide you an overview of our progress over the quarter before handing it over to Glenn to discuss financials. So moving into the business highlights, Evaxion made strong progress in Q1 2020, successfully completing our US IPO in February, and continuing to advance our clinical and preclinical programs. The recruitment of our Phase 1 and 2A trials on our two lead immune oncology product candidates EVX-01 and EVX-02 remains on track. We anticipate data readout late in Q2. We plan to assemble the data and provide an update on the results and next steps by mid-July for both EVX-01 and EVX-02. As a reminder, EVX-01 is a peptide-based therapy being assessed in advanced metastatic cancer including melanoma, non-small cell lung cancer, and bladder cancer. Data showed that EVX-01 is well-tolerated with one complete response and two partial responses out of five patients; one patient had reactive cells with 80.5% of the administered new epitope including reactive shots. The July report update will include both the data from the dose escalation and the recommended total of nine patients. EVX-02 is our DNA-based vaccine being assessed in adjuvant melanoma. Five patients have been recruited to date in the first part of the trial, which assesses this new delivery modality. Our lead product candidate EVX-03 for multiple cancer indications and EVX-B1, a vaccine for the prevention of Staphylococcus, are also progressing as expected to our preclinical development and CMC. We anticipate regulatory filing for our clinical trial EVX-03 in the second half of '21. And we continue to develop our RAVEN AI platform for vaccine design and development for viral diseases. As most of you know, we closed our US initial public offering in February, raising net proceeds of $27.9 million after underwriting discounts and commissions. This contributed to our cash position of $27 million at the end of the first quarter. We published a paper in the peer-reviewed Journal Scientific Reports describing the study on the bacterium Staphylococcus aureus, which may facilitate a better understanding of the host-pathogen interaction during invasive infections. Our Director in normal immune-oncology presented at the FAS New Antigen Summit in Europe, describing Evaxion's recent improvements in determining cancer neoantigen measurement and prediction of peptides in complex stability. Last but not least, we have also moved to our new headquarters and research laboratory facility located in the DTU Science Park in Hørsholm near Copenhagen, Denmark. In terms of expected milestones, I have already mentioned the Phase 1 and 2A data readout on EVX-01 and EVX-02 expected in late Q2. So we will be busy and exciting, with a few exciting months ahead of us. With that summary, I will hand it over to Glenn for a brief overview of our financials.

Thank you, Lars, and good morning everyone. On February 9, 2021, as mentioned by Lars, we closed our US IPO raising net proceeds of $27.9 million after underwriting discounts and commissions. This contributed to our cash position of $27 million as of March 31, 2021, as compared to $5.8 million as of December 31, 2020. Research and Development expenses were $3.9 million for the quarter ended March 31, 2021, as compared to $2.5 million for the same period in 2020. The increase of $1.4 million was primarily related to increased spending net of grants income for ongoing developments on our platforms, preclinical product candidates, and clinical trials. In addition, employee-related expenses increased due to higher headcount. General and administrative expenses were $1.3 million for the quarter ended March 31, 2021, as compared to $2.8 million for the same period in 2020. The increase of $0.5 million was primarily related to increases in overhead and professional fees tied to the expansion of our corporate function for our initial public offering. Net loss was $4.1 million for the quarter ended March 31, 2021, or a $0.23 loss per basic and diluted share as compared to $3.1 million or $0.20 loss per basic and diluted share for the same period in 2020. In terms of guidance, we reaffirm our guidance that our existing cash resources will be sufficient to support our operations into 2022. And that concludes the financial review of Q1, and we will now open the call for your questions.

Our first question is from Kevin DeGeeter with Oppenheimer. Please proceed with your question.

Hey, thanks so much for taking my question. You know, maybe two on 01 and 02, and then a follow-up on 03. Looking at the data update, should we expect to learn more about the recommended phase 2 dose for 01 during that update, and with regard to 02, realistic expectations in terms of duration of follow-up on those five patients? Thank you.

Thank you, Kevin. So on EVX-01 we have nine patients and we expect to be able to determine the dose that we're going to move forward. But we also expect to have the full readout in logical and clinical on those patients for EVX-01 for the update in late Q2. For EVX-02 we are primarily looking at immunogenicity for a decision of moving into a potential phase two, and we'll be expecting to have an immunological picture of our DNA technology in the new epitope space as the foundation for that decision. As you are probably aware, EVX-02 is running in adjuvant melanoma looking for relapse-free survival. So the base decision for potential phase 2 on EVX-02 will be based on immunological data.

Thank you. I'm sorry, you largely had more.

Nope, proceed Kevin.

Okay, and then with 03, can you just walk us through what needs to be completed with regard to IND filing, and reminders on how you're thinking about the patient population for potential Phase 1 for that compound?

Our EVX-03 is a DNA-targeted therapy that basically challenges the antigen-presenting cell. We are currently running out tox studies on that program, and everything is running according to plan. So we expect to be ready for the IND filing as we have previously mentioned. We have not yet chosen the indication for EVX-03, but we will when we are done with the tox studies, and of course, prior to the IND filing, we'll share the clinical development plan for EVX-03. Additionally, regarding new epitope therapies, we have a lot of different indications to choose from, as the majority of solid tumors have many mutations and are potential candidates for such therapies. We're doing that exercise analysis as we speak. Thank you.

And our next question is from an undisclosed participant. Please go ahead with your questions.

Thanks for taking my question. On 01 and 02, any color on the timing of your Phase 2 decision and design after you reported the data in the second quarter? Will you start the Phase 2 immediately or will that take some time? Just any color on the kinetics?

Thank you. So we, of course, as most other companies are doing, are already preparing for a potential phase two. We have not communicated any timelines for phase two, but of course, we plan to move it forward if the data supports it as quickly as possible. However, no exact data has been shared with the markets yet, and we'll do so together with the readout.

Okay, understood. I see that you are still deciding on the indication, but will the high levels of design include all types of tumors, a selective model with particular tumors, or will there be different groups for each tumor type? Additionally, how do you assess the immunogenicity data across different tumor types?

Yes, that's a good question. We haven't settled on a design yet, and we will probably design the study as a potential Phase 1 to that extent into two arms. We've not made a decision if it's one indication or multiple indications with the number of arms yet. So I can't share any more details on that. There are some similarities between the tumor types, so you will be able to compare immunological data across tumor types. However, I would still say there will be noise in the data set, and preferably, if you want to compare immunogenicity, you want it from the same study in the same tumor type. Our expectation in these high mutation tumor types is that you will see pretty similar immunogenicity; at least that's what we expect. That will also be our expectation among technologies, even if they are different indications, as long as they have high mutational burden tumors. If you go down to some of the very low mutational burden tumors, I would also be a bit concerned about drawing conclusions from high mutational burden to low mutational burden new epitope therapies. We believe that there will be a difference here. I hope that makes sense?

Yes, it makes sense. Thanks a lot for answering my questions.

Our next question is from Kevin DeGeeter with Oppenheimer. Please proceed with your question.

Hey, Lars, just want to understand what you're thinking about internal investment, RAVEN, versus opportunities for third-party funding, whether they be government-related or other entities? And then just from a bandwidth standpoint, how are you thinking about the right way to optimize the learning embedded within RAVEN? Thanks.

Yes, I think it's an excellent question. The RAVEN platform has always been supported by non-dilutive grants, which basically means that the majority of the research is financed by government grants. As most of you are aware in cancer, the T cell components are pretty similar to the viral space. Therefore, we are moving rapidly forward on the viral platform based on all the experience we have from the cancer space. We do believe that both platforms will rapidly advance not just in Corona but in any virus and find the right target. We'll also find targets that are broadly protective even when strains mutate. That’s what we are currently building. We have already moved forward rapidly on the software side and are now starting to test the platform in different preclinical models. As soon as we have some interesting data and proof of concept to share, we will share it with everyone.

Thanks for taking my questions.

And it looks like we have reached the end of the question-and-answer session. I now turn the call over to Lars Wegner for closing remarks.

Perfect, so there are no more questions. That concludes this call. Thank you all for your interest in Evaxion. We look forward to speaking again soon. Thank you.

This concludes today's conference and you may disconnect your lines at this point. Thank you for your participation.