Oncolytics Biotech Inc Q2 FY2024 Earnings Call

Good afternoon, and welcome to Oncolytics Biotech Second Quarter 2024 Conference Call. All participants are now in a 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 Communication. Please go ahead.

Thank you, operator. Earlier today, Oncolytics issued a press release providing recent operational highlights and financial results for the second quarter of 2024. A replay of today's call will be available on the Events section of the Oncolytics website. 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 milestones, the company's belief regarding the potential and mechanism of action of pelareorep as a cancer therapeutic. We believe that we are positioned to execute on our key priorities and reach multiple milestones throughout the second half of the year and into 2025. Our potential registrational opportunities for pelareorep, anticipated timing of the release of additional data, our cash runway, 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 statements, which Oncolytics expresses an expectation or belief as to future results, such expectations or beliefs are expressed in good faith and are believed to have a reasonable basis. But there can be no assurance that the statement or expectation or belief will be achieved. These factors include results of current or pending clinical trials, risks associated with intellectual property protection, financial projections, actions by regulatory agencies, and those other factors detailed in the company's filings with SEDAR and the SEC. Oncolytics does not undertake any obligation to update these forward-looking statements except as required by applicable laws. Joining me to discuss the substantial progress we made during the second quarter are a few members of the management team, including Chair of Oncolytics' Board of Directors and Interim CEO, Wayne Pisano; Chief Medical Officer, Dr. Tom Heineman; Chief Financial Officer, Kirk Look; and Vice President, Business Development, Christophe Degois. And with that, it's my pleasure to turn the call over to Wayne.

Thank you, Jon. Good afternoon. I appreciate everyone taking the time to join us today. I know you are accustomed to our CEO, Matt Coffey, leading these presentations. Personally, and on behalf of the Board, I'd like to wish Matt a swift recovery. In the interim, the board and I are highly confident in our tenured executive team's ability to continue executing our mission, achieve our strategic priorities, and deliver on our long-term goals, ultimately bringing pelareorep to patients with cancer. Following my brief introduction, Tom will provide an update on the clinical advancements. Christophe will discuss recent collaborations and partnership opportunities. Kirk will review the financials, and finally, we will end by taking your questions. In the second quarter of 2024, we continued to make excellent progress in advancing our potentially leading immunotherapeutic agent, pelareorep, or pela, as we often refer to it. We believe we are well-positioned to execute on our key priorities and reach multiple milestones for the second half of the year and into 2025. Now, before Tom provides a comprehensive update on our progress and how recent activities continue our mission to improve the lives of people with cancer, I would like to highlight a few important advancements. Notably, we held an extremely productive Type C meeting with the FDA, and we were able to communicate what we consider to be the optimal path for pela in breast cancer going forward. With input from the agency, we were able to align on key elements for the next steps we plan to take and are bolstered by compelling data from two randomized breast cancer studies showing the benefit of pela combined with paclitaxel compared with paclitaxel monotherapy. This gives us confidence in pela's potential to demonstrate a clinically meaningful benefit in a future registration enabling study. Importantly, we remain on track to report overall survival results from the BRACELET-1 trial in the second half of 2024. Looking at the opportunity in pancreatic cancer, we dosed the first patient in the modified FOLFIRINOX cohort of the GOBLET study. This represents an exciting opportunity to evaluate the combination of pela with another first-line pancreatic cancer chemotherapy regimen that could result in a second registration program in this indication. As you may recall, this opportunity came about as a result of positive data demonstrating that the combination of pela, atezolizumab, gemcitabine, and nab-paclitaxel in pancreatic cancer patients more than doubled the tumor response rates compared to the response rates of chemotherapy treatment alone. That dataset not only garnered fast track designation from the FDA but also brought us to our collaboration with the Global Coalition for Adaptive Research (GCAR), where this combination will be evaluated in an adaptive registration enabling trial. As we near a critical inflection point in the company's growth trajectory, we are encouraged by the recent regulatory and clinical progress and look forward to building on this momentum. I would now like to turn the call over to Tom to provide a more detailed update.

Thank you, Wayne. As a reminder, pela is an intravenously delivered immunotherapeutic agent that acts systemically, inducing anti-cancer immune responses and promoting an inflamed tumor phenotype that is turning cold tumors hot. This allows the anti-tumor immune cells induced by pela to attack the cancer. As Wayne mentioned, we are currently focused on advancing pela toward registrational studies in breast and pancreatic cancer. We have exciting data in other indications like anal cancer that could eventually lead to additional registrational opportunities. But for today, we'll just focus on breast and pancreatic cancer. Starting with our breast cancer program, I'd like to touch on two topics: our recent productive Type C meeting with the FDA and the anticipated BRACELET-1 study survival results. In June, we provided a recap of our Type C meeting with the FDA. We had a very productive and helpful discussion with the agency that provided valuable guidance on our proposed registration enabling study. One perhaps underappreciated takeaway was that the FDA endorsed progression-free survival as the primary endpoint of the study with overall survival as a secondary endpoint. Having progression-free survival as the primary endpoint mirrors the path taken by Pfizer for the initial approval of Ibrance based on the PALOMA-1 study and could save substantial development time by allowing us to reach the potential registrational endpoint sooner. The patient population for the registrational study is anticipated to include patients who have failed hormonal therapy and have received no more than one line of antibody-drug conjugate therapy. Our de-risked breast cancer program builds on compelling data and key learnings from two prior randomized studies, BRACELET-1 and IND-213, which demonstrated clinically meaningful benefits in patients who were treated with pela and paclitaxel compared to paclitaxel alone. I should also mention that we have translational data from the AWARE-1 study that provided valuable insights into pela's immune-mediated mechanism of action, including its ability to remodel the tumor microenvironment. Aligning with the FDA on key design elements and objectives of our planned registrational trial marks a critical step toward bringing this innovative treatment to patients. Next, I'd like to move on to the anticipated BRACELET-1 survival data. As a reminder, BRACELET-1 is a Phase 2 randomized study in patients with HR+/HER2- metastatic breast cancer. The study enrolled 48 patients into three cohorts. Patients in cohort 1 received paclitaxel, which served as the control arm. Patients in cohort 2 received paclitaxel plus pela, and patients in cohort 3 received paclitaxel, pela, and the checkpoint inhibitor avelumab. We previously reported strong tumor response and progression-free survival results from the BRACELET-1 study. These included a near tripling of the confirmed overall response rate, a greater than 50% improvement in median progression-free survival, and a hazard ratio of 0.29 for patients receiving pela and paclitaxel compared to paclitaxel alone. Overall survival results have not yet been reported due to ongoing patient follow-up but are anticipated later this year. As noted, the earlier IND-213 study showed a statistically significant survival benefit in HR+/HER2- metastatic breast cancer patients who received the combination of pela and paclitaxel compared to paclitaxel alone. A strong overall survival readout in the pela-paclitaxel arm in the BRACELET-1 study will serve to further validate these earlier findings and support continuing discussions with potential strategic partners and regulators. Now turning to our pancreatic cancer program, I'd like to start by highlighting our new GOBLET study cohort, which is supported by a $5 million therapeutic accelerator award from the Pancreatic Cancer Action Network, or PanCAN. PanCAN launched a therapeutic accelerator award to speed up pancreatic cancer drug development, so new therapies could be made available to patients sooner. By way of background, the GOBLET study is a Phase 1/2 signal finding study in advanced or metastatic gastrointestinal cancers. The study is being conducted across 17 centers in Germany and is being managed by AIO, a medical oncology working group within the German Cancer Society. To date, we have evaluated pela in first line metastatic pancreatic ductal adenocarcinoma (PDAC), third line metastatic colorectal cancer, and second line or later anal cancer. In each of these indications, the pela-based combination therapy met the pre-specified success criteria. Pancreatic cancer has one of the lowest survival rates among all cancers and is the third leading cause of cancer mortality in the U.S. Despite its growing incidence, efforts to improve upon the standard of care have met with limited success over the past several years. In June, we announced the dosing of the first patient in our new GOBLET study cohort evaluating pela combined with modified FOLFIRINOX, with or without atezolizumab in newly diagnosed metastatic PDAC patients. This study utilizes an assignment to stage design and the co-primary endpoints are objective response rate and safety. If Stage 1 success criteria are met, one or both treatment arms may be expanded to Stage 2, in which 17 additional patients per arm would be enrolled. The chemotherapy regimens of modified FOLFIRINOX and gemcitabine nab-paclitaxel are the two most common standards of care in metastatic pancreatic cancer. We previously reported that the combination of pela, gemcitabine, nab-paclitaxel, and atezolizumab yielded tumor response rates more than double the historical results. Should the combination of pela and modified FOLFIRINOX also produce a positive outcome, it would indicate that an even broader range of metastatic PDAC patients may benefit from pela-based therapy. Importantly, this treatment regimen could result in another registrational opportunity for pela in this challenging indication. While we believe there's an exciting opportunity for pela combined with modified FOLFIRINOX, our immediate registrational strategy in PDAC continues to focus on pela combined with atezolizumab, gemcitabine, and nab-paclitaxel based on very positive results from the GOBLET study. We continue to collaborate with GCAR to design a study utilizing an adaptive approach to evaluate this combination therapy, and we look forward to providing an update as our plans are finalized. Before I turn the call over to Christophe, who will discuss our GCAR collaboration in more detail, I would like to briefly mention our two presentations at this year's ASCO meeting, details of the trial design for our new GOBLET study pancreatic cancer cohort in which pela is combined with modified FOLFIRINOX were presented. Additionally, we presented an abstract detailing pela's ability to induce the expansion of tumor-infiltrating lymphocytes (TILs) across multiple cancers, including breast, pancreatic, and colorectal cancer. Pela's ability to expand TIL populations is important because TIL expansion correlates with tumor response. These data further highlight pela's immunotherapeutic mechanism of action and its promise as a backbone immunotherapy for multiple cancer indications. Taken together, we are extremely excited about the advancements across our pipeline and the growing body of clinical data showcasing pela's broad therapeutic potential. With that, I will turn the call over to Christophe, who is joining us for the first time on a financial results call. He'll be heading up our business development efforts going forward and is here to discuss our recent collaborations and partnership opportunities.

Thank you, Tom. I'm excited to join the team and see a real opportunity for pela and Oncolytics to make an impact on the treatment of cancer, so I'm glad to be here. In the second quarter, we entered into a preliminary collaboration with GCAR, which we believe underscores the strength of the growing pela dataset that continues to attract and pique the interest of the clinical oncology community. GCAR is a non-profit corporation, uniting physicians, clinical researchers, advocacy and philanthropic organizations, biotech pharma companies, health authorities, and other key stakeholders in healthcare, whose objective is to expedite the discovery and development of treatment for patients with rare and dead diseases. As a sponsor of innovative trials, including master protocols and adaptive platform trials, GCAR is dedicated to the advancement of science by modernizing clinical trials that support more efficient, less costly drug development. We are pleased to partner with GCAR and are honored that pela has been selected as the first therapeutic for evaluation in the planned adaptive trial in pancreatic cancer patients. The selection process was thorough and involved meeting with and presenting our clinical data to multiple pancreatic cancer key opinion leaders. We're working together to finalize a Phase 2/3 master protocol design that will evaluate pela and other investigational therapies for the treatment of pancreatic cancer. The GCAR anticipated trial design seeks to cut registrational study time and reduce trial costs, speeding up the journey to potentially deliver effective cancer treatment sooner. This strategy, which includes leveraging GCAR's extensive investigator network, offers a cost-effective opportunity to enhance our ability to quickly and effectively advance the development of this pela-based combination therapy for metastatic pancreatic cancer, a disease with a very high unmet medical need and limited treatment options. Beyond GCAR, we intend to continue to seek strategic opportunities to collaborate and maximize the therapeutic and commercial potential of pela. We have ongoing dialogue with current and potential collaborators and believe additional data updates will continue to strengthen our value proposition. I will now turn the call over to Kirk to review the financial results for the second quarter of 2024.

Thanks, Christophe, and good afternoon, everyone. I'd like to briefly run through our financial results for the second quarter of 2024, which will be provided in Canadian dollars unless otherwise noted. A full summary of our financial results can be found on the investor section of our website under filings and reports, or in the press release issued earlier this afternoon. We continue to be cognizant of our cash resources and make the necessary investments to progress pela’s development while ensuring we have funds needed to reach critical milestones. As of June 30, 2024, the company reported $24.9 million in cash and cash equivalents with a projected cash runway into 2025. Net cash used in operating activities for the six months ended June 30, 2024, was $14.3 million compared to $16.3 million for the six months ending June 30, 2023. The change reflected non-cash working capital changes partly offset by higher net operating activities in 2024. Now, general and administrative expenses for the second quarter of 2024 were $3.4 million, consistent with $3.5 million for the second quarter of 2023. Research and development expenses for the second quarter of 2024 were $4.6 million compared to $3.7 million for the second quarter of 2023. The increase was primarily due to higher clinical trial expenses, including BRACELET-1, data analysis, and the GCAR collaboration, as well as higher share-based compensation expenses. The increase was partly offset by lower production run and process and analytical development activities in manufacturing. The net loss for the second quarter of 2024 was $7.3 million compared to a net loss of $7.4 million for the second quarter of 2023. The basic and diluted loss per share was $0.10 per share in the second quarter of 2024, compared to a basic and diluted loss per share of $0.12 in the second quarter of 2023. Now, this is an exciting time for the company and as we conclude today's call, I would like to highlight a few critical events that we believe bring us closer to our ultimate goal of regulatory approval for pela. In the second quarter of 2024, we continued to propel pela towards registration, enabling studies in breast and pancreatic cancer. We established a strategic collaboration with GCAR and continue to have productive discussions with key opinion leaders, our clinical collaborators, and regulators. In summary, we received productive feedback from the Type C meeting with the FDA for our planned registration enabling trial for pela and HR+/HER2- metastatic breast cancer, and expect to provide further guidance on the path forward in the second half of the year. We continued following patients from the BRACELET-1 breast cancer study and remain on schedule to report overall survival data in the second half of this year. We entered into a collaboration with GCAR for inclusion of pela in an adaptive registration enabling pancreatic cancer trial, and expect to finalize the master protocol for pela, gemcitabine, nab-paclitaxel, and atezolizumab in the second half of 2024. We dosed the first patient in the new GOBLET modified FOLFIRINOX pancreatic cancer cohort supported by funding from PanCAN, which could result in another registrational opportunity for pela. We expect to report a safety run and update in the second half of the year. Taken together, we believe our robust, positive clinical and translational data support pela's mechanism of action as an immunotherapeutic agent and its potential to improve the lives of people with cancer. Before we conclude today's call, I would like once again to thank the entire Oncolytics team, our investors, and the many people who are supporting us along the way, including our patients and their families. With that, we are happy to take questions.

And we will now take our first question. This comes from the line of Louise Chen from Cantor.

This is Kirby on for Louise from Cantor. First, can you remind us of the size of the commercial opportunity for pela and HR+/HER2- metastatic breast cancer? And second, what would your registration trial design look like?

Thanks for the questions, Kirby. First, I'll turn it over to Christophe to speak to the market.

I mean this is a very changing environment with obviously some ADCs making some changes in the market based on recent data. So we're currently in the process of updating the commercial opportunity. I think in the next call, we'll be able to provide more detail. There's still a significant commercial opportunity if you think about the way pelareorep is going to be used in this patient population. Obviously, they're not approved yet, but I think it's very likely that they would come right after the initial therapy. Unfortunately, as you know, this patient population will still relapse, and they'll need a subsequent line of treatments. We believe there's a significant commercial opportunity in patients who have failed initial therapies and those who are not eligible for initial treatments because of very low oxygen levels or other conditions that may prevent the use of an ADC.

And I'll ask Tom to respond to the plan.

Yes. So we expect to move forward with our next trial in the form of a registration enabling large Phase 2 study with a primary endpoint of progression-free survival, in the population that Christophe described, which includes patients who have either failed antibody-drug conjugate therapy following progression on hormonal therapy, or patients for whom antibody-drug conjugate therapy is inappropriate or who cannot tolerate such agents. This study would allow us two opportunities to win. If it meets a high level of significance for the investigational arm, it would put us in a position to apply for an accelerated approval. At a very minimum, it would substantially de-risk any subsequent trial that we would conduct to confirm the efficacy of the combination therapy.

And the next question comes from the line of John Newman from Canaccord.

I also had a question about the registration enabling study for pelareorep and breast cancer. I'm assuming that most of the patients, if not all the patients enrolling in the study will have previously been treated with an ADC. Is there any specificity as to which ADC? And then the second question that I had was just in terms of the geography of the study, would this be primarily a U.S. based study or would you also include patients from Europe?

Yes, John, I can comment on that. I think as Christophe said, the treatment approach in patients as it relates to the antibody-drug conjugates is still evolving. So I don't think anyone can say with precision exactly what proportion of patients in our study would have failed antibody-drug conjugate therapy. But I think it's very reasonable to assume that the majority of them would have received antibody-drug conjugate therapy. There will be patients who are not appropriate for antibody-drug conjugate therapy or who take it for a short period of time and cannot tolerate it. So there will be patients who come into the study through other pathways. But at present, the data that are available in the population we're looking at suggests that the antibody-drug conjugate therapy that patients would have failed before coming into our study would likely be HER2 agents. That's the agent for which the data currently exists, suggesting a solid benefit immediately following the failure of hormonal therapy. On the geography, yes. I apologize for the oversight. We would anticipate that this study would have substantial enrollment in North America, of course, and we're currently evaluating possible other geographies for enrollment. It seems reasonable to expect that there would be sites in some of the major Western European countries, for example. Beyond that, we need to consider our options.

And the next question comes from the line of Soumit Roy from Jones Research.

Possibly a question for Tom. The BRACELET-1 trial, have you disclosed the P-value, or was it too small of a cohort size? And second question is for the Phase 2/3 registration trial in breast cancer, do you expect potentially a portion of patients being treated with ADC as the only major variable difference between BRACELET-1 and the Phase 2/3? Or do you see other changes could be there?

We have disclosed the P-value for the PFS comparison. The comparison, the P-value for the comparison between paclitaxel and the paclitaxel plus pelareorep was 0.03. So it was significant at less than the 0.05 level. Regarding the differences in the BRACELET population, yes, I think you're right. We would be enrolling patients in this study as discussed already, who have failed ADC therapy, which were not enrolled in BRACELET because they simply did not exist at that time. But otherwise, the patient population would be essentially identical to the BRACELET patient population.

A quick follow-up. Do you expect to do any sub-analysis separating out those patients with prior ADC in Phase 2/3? Or how are you thinking of what structures you'll look at?

We haven't formalized our analysis plans to that level, but I'm sure that we would be looking at any distinctions between significant population groups within any randomized study.

And the next question comes from the line of Michael Okunewitch from Maxim Group.

I just want to see if you could help clarify the nature of the additional registrational opportunity that you're saying could emerge from cohort 5 of the GOBLET study. Is there an expectation here that you could file for accelerated based on that data, or are you referring to the ability to launch a second registrational study based on that data?

Yes, so the data that we're generating in cohort 5 of the GOBLET study, we view that as a kind of signal finding proof-of-concept data. We would not expect those data to support an accelerated approval in and of themselves. However, as we are planning to move forward with the other combination, the pela plus gemcitabine and nab-paclitaxel in collaboration with GCAR, which would be in a registrational approach. It is certainly possible if the cohort 5 results look good and turn out the way we hope and expect they will, that combination could be evaluated, for example, in the platform study such as what we're doing with GCAR already or through some other mechanism.

And then one other for me, and I'll hop back in the queue, I wanted to see if you had any expectations on the size of the potential pivotal study in breast cancer that you'd need based on the prior PFS data that you have in pass for pela in this setting?

Yes, what we're looking at, I mean, the model that we're following is very similar to the approach that was used by Pfizer, for example, for their initial licensure of Ibrance and then subsequently, by Daiichi for the initial licensure of Enhertu. So what we'd be looking at would be a study of sub-200 patients, 180 to 200 patients, somewhere in that order of magnitude.

The next question comes from the line of Rahul Sarugaser from Raymond James.

Also, I'll just reiterate George's point about wishing a speedy recovery for Matt. But also following up from Jason's question. Now that you've gone through the Type C meeting and you're looking at setting up the breast cancer trial, these patients are effectively going to be second or third line after hormonal therapy or potentially an ADC. So perhaps you can let us know, give us your sense of your confidence on patient recruitment, the number of sites you'll need to fill the study, and how fast you think you'll be able to recruit, given that we think this is going to be a relatively competitive patient group.

Well, I mean, I think that keep in mind that for the next study in breast cancer, we are not planning to compete with Enhertu. We would be recruiting patients who can either not receive Enhertu, for example, or who have failed Enhertu. For those groups, the only options really available are traditional chemotherapy for the large majority of those patients. To the contrary, I suspect that there will be a pretty high demand for patients' participation in a study that offers something with clear earlier data that improves upon standard of care chemo, if you see what I'm saying. In other words, I think there will be plenty of patients who would be looking for better options than what would otherwise be available. So I would anticipate that enrollment into the study would be reasonably straightforward.

Now just as a follow on pivoting to the GOBLET study in PanCAN, could you perhaps give us a sense of the destination at which point partners might be interested? Is there a set of outcomes or interim readout that you think would engender that interest?

That's a challenging question. Our expectation regarding pancreatic cancer is that, once we see the results from the first part of the GCAR study, we will be able to use that information to engage potential partners. We are particularly interested in cohort 5 of the GOBLET study with the modified FOLFIRINOX combination. If it yields data similar to cohort 1 with the gem nab-paclitaxel combination, we believe there is a significant opportunity to capture a large share of the pancreatic cancer treatment market at this time. Once that data is available, we will begin to reach out to partners. However, we will have meaningful outreach sooner with the overall survival analysis from BRACELET, which we expect to receive before the data from the pancreatic cancer cohorts.

You answered my other questions, so thanks very much, Kirk. Really appreciate it. We'll get back in the queue, and best wishes to Matt.

Thank you. That concludes our Q&A session for today. And I will now hand back the call to Kirk Look. Please go ahead, sir.

Thank you, everyone, for all that are participating in today's call and for your interest in Oncolytics Development. We continue to be passionate about improving cancer treatment options for patients, and we're taking the necessary steps to bring pela to patients by working with our regulators, our clinical collaborators, and the investigators running our studies. We really look forward to our next opportunity to provide another update on our progress and share our plans for the rest of the year and into 2025. I'll end our prepared remarks by wishing everyone a great evening. Thanks very much.

Thank you. This concludes our conference for today. Thank you all for participating. You may now disconnect your lines.