Oncolytics Biotech Inc Q3 FY2023 Earnings Call

Good morning, and welcome to Oncolytics Biotech's Third Quarter 2023 Conference Call. All participants are now in listen-only mode. There will be a question-and-answer session at the end of this call. Please be advised that this call is being recorded at the company's request. I would now like to turn the call over to Jon Patton, Director of Investor Relations and Communications. Please go ahead.

Thank you, operator, and good morning, everyone. Earlier this morning, Oncolytics issued a press release providing recent operational highlights and financial results for the third quarter of 2023. A replay of today's call will be available on the Events section of the Oncolytics' website approximately two hours after its completion. After remarks from company management, we will open the call for Q&A. As a reminder, various remarks made during this call 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 mission, strategy and objectives, the company's belief as to the potential mechanism of action and benefits of pelareorep as a cancer therapeutic in our clinical pipeline, and I believe that we are on track for license-enabling studies in metastatic breast cancer and metastatic pancreatic cancer. The company's expectations regarding the release of additional results and/or updates in respect of its ongoing clinical studies, 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 the convenient assurance that these statements or expectations or beliefs will be achieved. These factors include results of current or pending clinical trials, risks associated with intellectual property protection, financial protections, actions by regulatory agencies and those other factors detailed in this 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 laws. Now I'll bring on CEO, Dr. Matt Coffey for his overall highlights and to introduce the rest of the management team who will be speaking today. Matt?

Thank you, Jon. I'll open by saying that Oncolytics has made substantial progress since our last quarterly updates and I want to say thank you for joining us for today's call to hear about these operational highlights and our third quarter 2023 financial results. During the call today, our Chief Medical Officer, Tom Heineman, our Global Head of Business Development; Andrew de Guttadauro; our Chief Financial Officer, Kirk Look, and I will present an update on our clinical program, summarize the data presented at ESMO and other recent and upcoming medical meetings, discuss how recent data readouts and other opportunities bolster our business development efforts and potential, outline our upcoming milestones, provide you with our outlook on our cash runway, and summarize third quarter financial results. Then we'll open the call up for questions. Oncolytics intends to deliver on its mission to improve the survival of patients with cancer by investigating the novel immunotherapy pelareorep, or pela as we'll refer to it, in carefully selected indications and treatment regimens that will leverage its unique mechanism of action to provide the most meaningful clinical benefits. This is measured by improvements in overall survival and progression-free survival supported by an improved T-cell profile. The data presented at the European Society for Medical Oncology, or ESMO, from the pancreatic and colorectal arms at the GOBLET study are a highlight of 2023. I'd like to underscore a few observations, and Tom will take you through the detailed results. First, we have now met the SIMON 2-stage success criteria in two consecutive GOBLET cohorts evaluating pela in patients with first-line pancreatic and third-line colorectal cancer. Importantly, this is the third indication where we've seen pela combined with atezolizumab provide encouraging results in patients. These are breast cancer with the AWARE study, plus pancreatic and third-line colorectal cancer in the GOBLET study. We also continue to see the combination of pela and chemotherapy providing response compared to historical controls, demonstrating its potential as an immune therapy backbone. Additionally, we've seen the expansion of tumor-infiltrating lymphocytes, or TIL clones, correlated with tumor response and a strong correlation between T cell clone expansion and improvements in the tumor microenvironment, or TME, consistent with pela's differentiated mechanism of action. Critically, pela treatment continues to be well tolerated, which is important as we continue to evaluate additional indications and potential oncology treatment combinations. Finally, in addition to meeting the success criteria for both the pancreatic and colorectal cancer cohorts, the data are compelling, especially for pancreatic cancer, where we saw objective response rates, progression-free survival rates, and rates of overall survival that exceed historical controlled trials. Taken together, these data show how pela's mechanism of action facilitates synergy with both chemotherapy and checkpoint inhibitors in multiple indications. Furthermore, the results expand the data set that forms the basis of a potentially compelling product profile for pela and give us additional confidence in advancing our clinical program. We will use the results of both GOBLET segments presented at ESMO, combined with our analysis of the current treatment paradigm and competitive landscape to map out our next steps for registration studies. As we review Oncolytics' third quarter, along with the company's recent operations, I believe there are three key take-home messages. First, we believe pela has the potential to be a differentiated and effective immunotherapy that could improve the lives and overall survival of people with cancer. This is based on positive, consistent results in gastrointestinal and breast cancer, including data presented at ESMO 2023 for pancreatic cancer and colorectal cancer. The totality of our clinical data set shows significant improvements in tumor response and overall survival, coupled with highly correlated immunological responses measured by an improved T cell profile in the tumor microenvironment. Second, we are proud to be making the transition to a late-stage company running Registrational Trials with the upcoming start of the Phase III Precision Promise study in pancreatic cancer. Another important development is the recent award of a $5 million grant from PanCAN to support a new Phase II combination study in pancreatic cancer. If this study generates the same responses we've seen to date in pancreatic cancer, it could result in another pela-based combination therapy being selected for inclusion in the Precision Promise Phase III platform trial. Third, we are well positioned to advance our clinical program based on a focus on capital efficiency with a strong balance of $40 million, including $17 million raised in an August public offering and the overallotment plus a $5 million PanCAN grant. Before I bring Tom on, I want to thank everyone on the Oncolytics team for your unwavering dedication to our mission and your fine work. Now I'd like to turn the call over to our Chief Medical Officer. Tom?

Thanks, Matt, and good morning, everyone. This morning, I would like to provide an update on our clinical programs, take you through the recent and upcoming medical meeting presentations and close by providing you with an update on our next steps. As you know, we have carefully designed our clinical development program to fully explore the clinical potential of pela across a range of cancers and treatment combinations, including chemotherapy and checkpoint inhibitors. Our therapeutic approach takes advantage of pela's ability to induce anticancer immune responses through the introduction of its double-stranded RNA into tumor cells. This results in a range of potentially beneficial immune effects, including the induction and expansion of anticancer T cells. At the same time, pela also modifies the tumor microenvironment to make it less immunosuppressive, which allows for more effective killing of the tumor by pela-induced immune responses. Our clinical pipeline is focused on two lead indications, positive HER2-negative metastatic breast cancer and metastatic pancreatic cancer, which are on track for licensure-enabling studies. In addition, we are also investigating pela in metastatic colorectal cancer and metastatic anal cancer. We are making excellent progress on the clinical development of pela. Starting with breast cancer, the next milestone will be a readout of survival data from the BRACELET-1 study. While we cannot precisely predict when these data will be available, we expect to be able to report results in 2024. In pancreatic cancer, we expect to initiate the Precision Promise Phase III study in the first half of 2024. This trial will compare the GOBLET study treatment regimen of pela, atezolizumab, gemcitabine, and nab-paclitaxel with a control arm of standard of care gemcitabine plus nab-paclitaxel in patients receiving first-line therapy for metastatic pancreatic cancer. We are very excited to be part of the Precision Promise clinical trial. This innovative study was developed with guidance from the FDA to accelerate the registration of novel pancreatic cancer therapies. Participation in the Precision Promise clinical trial will allow efficient evaluation of the pela-based combination therapy and will reduce the cost of development by about 50% compared to a traditional pancreatic cancer Phase III study. If successful, this clinical trial is expected to support approval of the pela-based combination therapy for first-line treatment of patients with metastatic pancreatic cancer. Pending finalization of the definitive study agreement and based on the timing of regulatory feedback and the pace of enrollment, we hope to reach the initial data readout from the Precision Promise study in the first half of 2025. Jumping into recent and upcoming medical meeting reports, I would like to summarize the GOBLET data we presented at ESMO, touch on our SITC presentation, and briefly comment on the anal cancer cohort from the GOBLET study. Let's start with the data presented at ESMO. As you know, GOBLET is an open-label Phase I/II Simon 2-stage signal finding study designed to evaluate pela in combination with the PD-L1 inhibitor atezolizumab, with or without chemotherapy in patients with different gastrointestinal cancers. The primary objectives of each cohort of the study are safety and either objective response rate or disease control rate at week 16. Translational data, including T cell receptor sequencing, are also being analyzed. At ESMO, we reported updated clinical results from the pancreatic cancer and third-line colorectal cancer cohorts, including overall response rate, disease control rate, progression-free survival, and interim overall survival. In the pancreatic cancer cohort, a total of 13 evaluable patients with advanced or metastatic pancreatic ductal adenocarcinoma were enrolled. Patients were treated with a combination of pela, atezolizumab, gemcitabine, and nab-paclitaxel. In this cohort, 93% of patients had metastatic disease mostly in the liver. Three or more responses at week 16 were required to meet the predefined efficacy success criteria. Updated data from this cohort showed that eight of 13 patients had a partial response, and three patients had stable disease. These data translate to an objective response rate of 62% and a disease control rate of 85%. We are pleased to report that this objective response rate is more than twice the rate of about 25% observed in earlier randomized studies in comparable pancreatic cancer patients. Additional efficacy results as of the data cutoff of September 18, 2023, showed a median duration of response of 5.7 months, a median progression-free survival of 7.2 months, an interim median overall survival of 10.6 months, and an interim 12-month overall survival rate of 46%. Like the objective response rate outcome, these results compare favorably to those reported in prior clinical trials. Moving to the translational results, our updated data showed that study treatment resulted in the expansion of T cell clones, including new and preexisting tumor-infiltrating lymphocytes, or TILs. Importantly, inconsistent with prior studies, the expansion of TIL clones appears to correlate with tumor response. No safety signals were identified in this or any of the GOBLET cohorts consistent with our other studies. The updated results confirm that the pela combination therapy outperforms historical controls and provide strong support for advancing pela into the Phase III Precision Promise study. Next is the GOBLET colorectal cancer cohort, where pelareorep, in combination with atezolizumab and the chemotherapy trifluridine and tipiracil, also known as TAS-102, was evaluated in heavily pretreated patients who have received two prior lines of chemotherapy for metastatic colorectal cancer. Stage 1 of this cohort enrolled 15 evaluable patients, of whom four achieved stable disease at week 16, indicating that this arm of the study also met its prespecified success criteria. Overall, six patients showed stable disease for a disease control rate of 40%. It is important to note that this is a second GOBLET study cohort in a row that has met its success criteria, further supporting pela's ability to synergize with atezolizumab. In addition, translational data from this arm of the study demonstrated that pela increased the tumor expression of PD-L1 as well as the expansion of new T cell clones in the blood. Therefore, these data confirm that pela has been taken up by tumor cells and is able to stimulate T cell expansion, even in heavily pretreated colorectal cancer patients. These results are encouraging given that the exhaustion of tumor-infiltrating lymphocytes resulting from the late stage of the disease and extensive prior chemotherapy may limit their ability to expand in response to treatment. Moving on to SITC, we presented the translational data from the AWARE-1 breast cancer study in an abstract, with the full data from the poster expected later today. You may recall that the AWARE-1 study evaluated pela+Letrozole with and without atezolizumab in patients with HR+/HER2- breast cancer. Data presented at AACR in 2021 showed that this combination acted synergistically to upregulate PD-L1 expression on tumor cells and enhanced the infiltration of T cells into the tumor. The study data presented this year at SITC includes imaging mass cytometry, or IMC, to study samples at the single-cell level from patients who received pela, letrozole, and atezolizumab. IMC technology makes it possible to evaluate tumor immune responses and cellular interactions in the tumor microenvironment in much more detail. The results reported this year at SITC provide further support for pela's mechanism of action by demonstrating its ability to increase cytotoxic T cells in the tumor. In addition, the data show that pela upregulated PD-L1 expression in tumor tissue, potentially making tumors more amenable to checkpoint inhibitor therapy such as atezolizumab. With the game-changing availability of checkpoint inhibitors and the recognition that many patients progress or do not respond to checkpoint inhibitor treatment, there is a great deal of effort being made in the biopharmaceutical industry to find and test treatments that can turn a patient who would likely not respond to checkpoint inhibitor therapy into one who would. This may be achieved by making the tumor microenvironment more immunologically active, that is to say hot, and attribute pela has demonstrated in several different cancers. I should note that the synergy of pela with atezolizumab in breast cancer, as demonstrated in the AWARE-1 study, is what prompted Oncolytics to select atezolizumab as a checkpoint inhibitor to combine with pela in the GOBLET study of gastrointestinal cancers. Finally, I will touch on the anal cancer cohort of the GOBLET study. This was also designed as a Simon 2-stage study. In Stage 1, we will enroll 10 evaluable subjects eligible for second-line or later therapy who are treated with a combination of pela and atezolizumab without chemotherapy. Two or more responses are required to meet the prespecified success criteria and advance to Stage 2 of the study. We expect to report interim results from this cohort, including preliminary objective response rates in Q4 of 2023. These results will help to shape our future development pathway for this program. Everyone at Oncolytics is genuinely pleased by pela's consistent clinical success in a series of difficult-to-treat cancers, which also includes HR+/HER2- metastatic breast cancer, as reported at ASCO last June. These clinical successes are strongly supported by the translational research results that further solidify pela's immunologic mechanism of action and make us optimistic that pela has the potential to be a highly effective immunotherapy for people with different cancers. Before I hand the call over to Andrew, I would like to take a moment to thank all of the patients, caregivers, clinical investigators, study site teams, and our many collaborators for their efforts and dedication to advancing pela for the benefit of cancer patients.

Thanks, Tom. As discussed, the positive and consistent data readouts we've seen this past month for gastrointestinal cancers, along with BRACELET-1 data from ASCO, continue to keep us engaged with existing and new potential biopharma partners. On our previous financial results call, I mentioned that the process of bringing some of these relationships all the way to fruition can take time. We are thrilled to be selected by Precision Promise for their adaptive Phase III Platform Trial with a combination of pela, gemcitabine, nab-paclitaxel, and atezolizumab in pancreatic cancer. Initial pancreatic data from that treatment combination from cohort 1 of the GOBLET study was announced around this time last year, but our selection for Precision Promise and receiving a grant from PanCAN to explore pela with modified FOLFIRINOX in pancreatic cancer only came to light late this past summer. There was a rigorous vetting process, with multiple meetings over many months with experts and opinion leaders from PanCAN, so we are thrilled to have proven pela's potential to a well-respected global panel of experts. The opportunity with pela and modifying FOLFIRINOX could be potentially very meaningful. Standard care for pancreatic cancer hasn't changed much for several decades, with most patients receiving either modified FOLFIRINOX or gemcitabine plus nab-paclitaxel as their first-line metastatic treatment options. A pela-based combination with gemcitabine and nab-paclitaxel will be evaluated in the Precision Promise Phase III study, which covers one of the treatment options for pancreatic cancer patients. If pela can also show similar signs of efficacy when combined with modified FOLFIRINOX, with or without a checkpoint inhibitor, Oncolytics could capture a significant first-line patient population and provide thousands of pancreatic cancer patients with an improvement over the currently available treatment options. Keep in mind, our business development goals remain the same. We aim to secure a global clinical and commercialization partnership with a leading biopharma company under optimal terms. We already have relationships with companies like Pfizer, Merck, Roche, Incyte, and others. A number of our studies, including GOBLET and BRACELET-1, have been conducted as clinical collaborations with these large pharmaceutical companies. These collaborations have provided us with important validation support, including the agents used in the treatment combinations. Working collaboratively and continuously updating them on our clinical progress enables them to become increasingly comfortable with pela, its mechanism of action, and its potential to improve the lives of cancer patients, which we believe will serve us well in any partnership discussion. I try to remind our shareholders that we can't predict the timing of any potential partnership. We will be thorough as we navigate the best possible outcome for Oncolytics and its shareholders. We hope to secure a single licensing deal for both our breast cancer and pancreatic cancer programs that allows us to minimize clinical and commercial risk while providing us through upfront payments, milestones, and royalties. As we continue to report encouraging data across multiple indications and with multiple cancer treatments, we intend to create competition among potential partners and foster continued interest. We plan to provide additional updates as appropriate and look forward to enhancing pela's value proposition. Now I'll hand it to Kirk for a review of our financials.

Thanks, Andrew. This morning, I'd like to provide an update on our cash balance, our financial runway and provide you with a high-level review of our operating results for the third quarter of 2023. As a reminder, all figures are in Canadian dollars unless otherwise stated. First, I'll touch on our financial position, cash balance and financial runway. I'm pleased to report we closed the third quarter with $40 million in cash and cash equivalents. During the quarter, despite the continued challenging capital market environment, we successfully closed a public offering, securing over $21 million. Along with the prudent use of our at-the-market facility in the first half of the year, we have raised over $30 million in 2023. With the recently announced $5 million grant from PanCAN, we've continued to maintain a financial runway that exceeds 12 months. Regarding our operating results, Oncolytics continues to demonstrate remarkable fiscal responsibility. We aim to maximize our resources, ensuring that each dollar spent contributes to our R&D efforts as we move our breast and pancreatic cancer programs towards approval. Research and development expenses for the third quarter of 2023 were $5.8 million compared to $3.7 million for the same period in 2022, reflecting higher manufacturing expenses as we scale up our production process and work to comply with changing environmental standards. Specifically, during the quarter, we completed a scaled-up engineering production line along with the associated batch testing. General and administrative expenses for the third quarter of 2023 were $5.2 million, compared to $2.4 million for the same period in 2022. The change was mainly associated with higher investor relations activities along with a portion of the transaction costs associated with our public offering allocated to G&A expenses. Net loss for the third quarter of 2023 was $9.9 million, or $0.14 per share on 69.8 million weighted average shares outstanding. This compares with a net loss for the third quarter of 2022 of $4.4 million, or $0.08 per share. Finally, with our prudent financial management, combined with our ability to secure funding in this tough equity capital market, we're well positioned for 2024 and achieving our development milestones. With my financial review complete, I'll now hand the call back to Matt for concluding remarks.

Thank you, Kirk. In closing, I want to come back to our three key take-home messages: first, we believe pela has the potential to be a differentiated and effective immunotherapy that can improve the lives and overall survival of people with cancer; second, we are proud to be making the transition to becoming a late-stage company running Registrational Studies with the start of the Phase III Precision Promise study in pancreatic cancer on the horizon; third, we are well positioned to advance our clinical programs based on a solid cash balance that gets us to key data readout milestones. Looking ahead to the rest of the year and into 2024, we are focused on achieving the following milestones. Later today, we will be presenting additional cellular immune data from the AWARE study, demonstrating how pela replication in the presence of atezolizumab derives the immune cells into the TME and homes them to the infected cancer cells. By the end of the year, we expect to provide an update on the fourth cohort from the GOBLET trial in patients with anal cancer. In the first half of 2024, we expect to announce the start of the Phase III Precision Promise study in pancreatic cancer. This is a combination study with pela, nab-paclitaxel, gemcitabine in the checkpoint inhibitor atezolizumab, solidifying Oncolytics as a late-stage clinical opportunity. Also in the first half of 2024, we will initiate a new arm in the GOBLET study evaluating pela in combination with modified FOLFIRINOX with or without atezolizumab in patients with early-stage pancreatic cancer, supported in part by the $5 million grant we received from PanCAN. Additionally, we expect to report survival data for the BRACELET-1 study in patients with HR+/HER2- breast cancer. The timing to report these results is linked to the number of progression events defined as disease progression or death. While it's not possible to predict the exact timing for survival data, we believe that may be available before the end of 2024. We are evaluating next steps for this indication and plan to provide investors with a further update on our plans in 2024. Now before we sign off, I want to thank our investors, investigators, and collaborators for supporting Oncolytics. I'm also grateful for the patients participating in our clinical trials and our fantastic employees for their hard work. We are dedicated to leveraging Pela's unique mechanism of action to improve the care and survival of patients with cancer, and we look forward to keeping you informed about our progress. Operator, we can now open the line for questions.

Thank you. We will now begin the question-and-answer session. Our first question comes from Louise Chen from Cantor. Please go ahead.

Hi. Congratulations on all the progress this quarter and thank you for taking my question. So I wanted to ask you about BRACELET-1. And if there's any new data or updates that give you incrementally more confidence that you'll show some good overall survival data? And then secondly, for the GOBLET anal data, what exact data are you planning to show in the interim? Are you going to put out a press release? And then if you were going to show data, what do you think would be competitive data or how do you know what you'd ideally like to see? Lastly, regarding your partnership, have you started those discussions yet? Ideally, what kind of partner would be good for you, someone global, someone involved in oncology? What do you think about here? Thank you.

Sure. Hi, Louise. Thanks for the question. Your first question was about breast cancer related to the BRACELET data. We are being a bit cautious about predicting the overall survival data. What excites me about the data we shared at ESMO is that none of the patients receiving paclitaxel made any progression beyond 12 months, which is unfortunate. For the pela plus paclitaxel arm, we observed around 33 percent. We are still monitoring patients on the pela and paclitaxel arm who are now at or beyond two years without progression. This is a remarkable outcome for the metastatic breast cancer study. However, as you can see, since the patients haven’t progressed, they also haven’t died, so we are still gathering overall survival data. We believe we will have more events in 2024. As I mentioned, we are continuing to track some patients on the test arm for progression-free survival, which is a great outcome. Our confidence is bolstered by the fact that these patients are still participating in the study. For anal cancer, we are likely looking for response data, similar to the other GOBLET trials, where the primary endpoint was objective response. We require at least two out of ten patients to succeed. This is quite exciting because it involves only atezolizumab combined with pela, without any chemotherapy. This trial involves a second-line pretreated patient population, so if we observe responses, they would be attributed to the combination of atezolizumab and pela. Historical data indicates that the objective response rate in this group is around 10 to 13 percent. Incyte recently reported on studies involving 90 to 100 patients in this population, with response rates of 10, 11, and 13 percent. Therefore, if we achieve anything above that, particularly if the responses are significant and enduring, it places us on a successful path, especially since there are no treatment options for second-line anal cancer, highlighting a clear unmet need. If we exceed the 13 percent benchmark, we’re in a strong position. Regarding partnerships, we are in discussions with several groups. What everyone is seeking, and what we are also aiming for, is a significant catalyst. The PanCAN study using atezolizumab is generating randomized data, which could serve as a potential turning point. On the breast cancer front, we want to design a trial akin to PanCAN that allows for an interim look, instilling confidence in us and our partners regarding the activity of this drug combination. The data we've presented thus far are compelling, with both trials achieving their endpoints, showing statistical significance in survival or demonstrating significant confidence intervals in the BRACELET data. This highlights the statistical significance, even within a smaller group, and we aim to generate additional data with our partners so that everyone can be involved before concluding Phase III, similar to the PanCAN scenario. We have been fortunate with our work on atezolizumab, achieving success in all three studies showing synergy. I believe this will influence our discussions. As Andrew pointed out, we aim to remain competitive in partnerships. We are seeking a large biopharma partner that can assume a global role with us, focusing on pancreatic cancer and metastatic breast cancer indications where we have already demonstrated success and potentially expand into other areas. Currently, our goal is to obtain approval to broaden access across multiple indications and settings, enhancing opportunities for more patients to receive treatment, as we are very pleased with the recent results. Tom, do you have anything to add regarding breast cancer or anal cancer?

No, other than to emphasize that we've now seen consistent success across the HR+/HER2- breast cancer. We've met the success criteria, obviously, in pancreatic cancer, colorectal cancer, and with the anal carcinoma report coming up, I think everything is looking very promising.

Thank you very much.

Thanks, Louise.

Our next question comes from the line of John Newman from Canaccord. Please go ahead.

Hi, guys. Good morning. Thank you for taking the question and good work and all the progress here. I have a question about the PanCAN study. I believe you mentioned you'll be starting that in the first half of '24, the Phase I/II study. What I'm curious about is, are you able to treat through progression with pelareorep? So obviously, if the patient is being treated with chemotherapy or a PD-1, those therapies are not always continued through progression, but I’m wondering if you're able to do that with just pelareorep? Thanks.

I'm going to push Tom under the bus on that one. Tom, can you speak to the plan in terms of dosing on the modified pelareorep study?

For the Precision Promise study, which includes gemcitabine, nab-paclitaxel, pelareorep, and atezo, the protocol has been developed with FDA guidance and has been thoroughly reviewed. This protocol does not allow treatment past progression. Additionally, we are incorporating an extra arm to the GOBLET study, where we will combine pelareorep with modified FOLFIRINOX, with or without atezolizumab. In this study, we have the option to treat past progression.

Okay. Great. Thank you.

Our next question comes from the line of Soumit Roy from Jones Research. Please go ahead.

Good morning, everyone and congrats on all the progress. Going back to the ESMO presentation on the pancreatic data, it looks like the real comparator study would be the NAPOLI trial with and the data is kind of coming close to it. So I'm curious, in the frontline setting, are you thinking the modified FOLFIRINOX arm is a better option where you can see a very clear benefit in a larger patient cohort? What's your thinking about?

I appreciate your report. Regarding the NAPOLI study, I would argue that the patient population differs since they had no prior chemotherapy and were primarily not in a metastatic setting like ours, making it a challenging comparison. Additionally, the study is essentially a version of modified FOLFIRINOX compared to nab-paclitaxel, and I believe modified FOLFIRINOX would be a more appropriate comparator because nab-paclitaxel is generally considered less effective, although it doesn’t have the same toxicities as modified FOLFIRINOX. Therefore, the NAPOLI study has several significant differences and flaws that complicate the comparison. With regard to PanCAN's interest in modified FOLFIRINOX, many clinicians prefer it due to its perceived increased activity, even though recent ESMO publications from the SOLTI group suggest the difference might not be as pronounced. Modified FOLFIRINOX will remain a frontline treatment option. PanCAN sought to study its effectiveness and whether we could enhance its activity with pelareorep and atezolizumab, but this remains experimental. We are grateful for the $5 million grant from PanCAN to conduct this research, though we cannot assess its activity until treatment begins. I believe it will show greater efficacy, but it involves more drugs, which could lead to unacceptable toxicity, although we haven't seen this yet. It is also possible that modified FOLFIRINOX could interfere with the T cell response due to the many drugs involved, so we are conducting this experiment to evaluate its activity. The protocol is randomized, comparing modified FOLFIRINOX with or without pela and atezolizumab, which will allow us to better understand their contributions. However, I do not expect any toxicities with pela as it has been well tolerated in the past, and previous combinations of pela and atezolizumab have also been well received. With any new drug combination, there is always some uncertainty, but we have the support of a respected organization like PanCAN for this study. We believe it will demonstrate increased activity, and we expect to have results by next year. Tom, do you want to add anything regarding the NAPOLI study?

In pancreatic cancer, a significant majority of patients, over 80 percent, have a KRAS mutation. Therefore, this mutation is unlikely to be a distinguishing factor in this particular patient population.

Understood. That was very helpful. Another question is I know it's probably not an enrollment criterion, but are you looking into any biomarkers of the 13 patients in terms of genetic markers or PD-L1 levels, something to explain the non-responders or patients who are staying on a shorter duration of response? Anything you're seeing there?

The biomarker I find particularly interesting is the expansion of tumor-infiltrating lymphocytes, which we have shown correlates with tumor response. For those unfamiliar with our research, we were asked by Roche if there is any link between existing T cells and tumor response. We revisited this question, focusing on the resident T cells or TILs within the tumor at baseline. The rationale is that if inflammatory cells are present within the tumor, they are likely targeting it. These T cells are auto-reactors that may have become exhausted, and we aimed to determine what happens to these TILs after treatment. We showed that in patients who respond to treatment, we can observe these TIL clones expanding in the blood. This indicates an expansion of preexisting T cells that recognize the tumor, which we can detect as early as two to three weeks. We can immunologically identify that these patients had an exhausted T cell clone beneficial for tumor elimination, and through the combination of atezolizumab and pela, we can expand these populations to more effectively eliminate the tumor. This highlights the immunological status, which we can measure quickly and appears to be consistent. For us, this offers insights into predicting which patients may experience better immunological outcomes. Tom, since you're more familiar with the protocol, are there any biomarkers we are evaluating?

We are examining various markers, but so far, the TIL expansion appears to have the strongest correlation with response and aligns with existing literature. This makes it the most intriguing marker we have identified at this point.

There's some additional work being done regarding the findings from Dr. Anne Noonan at OSU, who has shown that patients with better outcomes exhibit lower CEACAM6 levels, as seen in the NCI study. We are also verifying this result, as it could serve as a selection criterion based on pretreatment rather than post-treatment. We will provide more information on this topic in the future.

Nothing you've seen on KRAS due to demutation or DNA damage response mutations?

In pancreatic cancer, a large majority of patients, over 80 percent, will have a KRAS mutation. Therefore, this is unlikely to be a distinguishing factor in that specific patient group.

All right. Thank you so much.

Thanks, Soumit.

Our next question comes from the line of Jason McCarthy from Maxim Group. Please go ahead.

Hi, guys. This is Chad on for Jason. Thanks for taking the questions. I was just wondering, in the same way you got the grant from PanCAN to run a different combo in pancreatic, do you think there would be a similar opportunity in breast cancer, say, evaluating pela with a different checkpoint that was used in BRACELET-1?

Excellent question, Chad, thanks. Yes, we believe that at ESMO we presented significant data showing a tripling of the objective response rate when we added pela to paclitaxel, along with a 50% increase in median overall survival, and we are monitoring overall survival with a hazard ratio of 0.29. The improvement was remarkable. However, when we introduced avelumab, it negated that benefit. We have since learned that avelumab is the only approved checkpoint inhibitor that retains a non-modified Fc portion. For those unfamiliar, the Fc portion of an antibody resembles the letter Y. It is the part that engages and interacts with immune cells. Other developers have silenced the Fc portion to prevent it from engaging with macrophages, as this can lead to T cell engulfment and ultimately suppress the T cell response rather than enhance it. Literature indicates that avelumab treatment can result in hyper-proliferation, potentially accelerating tumor growth. Combining it with our agent that relies on T cell response was unwise, as evidenced by our TTR sequencing showing a total collapse with the addition of avelumab. Partners indicated this was an anticipated result due to the non-silenced Fc portion. We still believe there is potential for breast cancer to benefit from checkpoint inhibitors, particularly atezolizumab, which targets PD-L1 rather than PD-1. This is advantageous as we can express it on the tumor cells more effectively. There should be synergy with durvalumab, but we've also observed synergy with other PD-L1s that possess non-silenced Fc portions, such as Merck's. The evidence for atezolizumab shows promising underlying synergies, and we believe it warrants exploration in the breast cancer domain. This will be a critical aspect of our life cycle management for several reasons. I am confident in the success of our two randomized studies with just paclitaxel and pela, and I am optimistic that a third study will yield similar results. However, we are also interested in enhancing our outcomes—achieving complete responses, improving survival rates, and increasing objective responses. The Phase III study may not specifically analyze that, but it will factor into our life cycle management. We need to determine the level of benefit required to ensure reimbursement for a combination therapy potentially costing between $300,000 and $400,000. This is a challenge we must address as we conduct the Phase III program to seek approval and outline subsequent steps. I agree that avelumab was an unfortunate choice, and I don't believe it reflects the true synergy observed with other checkpoint inhibitors, which we can further investigate. It was interesting; we had a Board meeting yesterday where we discussed the clinical aspects as we conduct the Phase III trial, looking into potential collaborations with groups like PanCAN, EORTC, NCI, and NCIC to strengthen research into other pivotal indications. Checkpoint inhibitors will play a significant role in this landscape.

Great. Yeah. Thanks for the detailed answer there and taking the question, and congrats again on all the progress.

Thanks, Chad.

That was just our last question. I'd now like to turn the call back over to Mr. Coffey for any closing remarks.

Thank you for that. Thank you to everyone who turned in to hear about our progress. The data presented at ESMO on pancreatic and colorectal cancer, in addition to our AWARE-1 abstract data presented at SITC, reinforce the ability of pela to remodel tumor microenvironments and generate immune responses in patients even in those with immune systems diminished by previous lines of therapy. The data also adds to the portfolio of evidence that pela synergizes with checkpoint inhibitors like atezolizumab. We'll continue to advance towards licensure-enabling studies in breast and pancreatic cancer and provide additional updates on our progress. With that, I wish everyone a wonderful rest of your day. Thanks again, everyone. I appreciate it.

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.