Oncolytics Biotech Inc. (NASDAQ:ONCY) Q4 2023 Earnings Call Transcript

Oncolytics Biotech Inc. (NASDAQ:ONCY) Q4 2023 Earnings Call Transcript March 9, 2024

Oncolytics Biotech Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, and welcome to Oncolytics Biotech's Fourth Quarter and Full Year 2023 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 conference call over to Jon Patton, Director of Investor Relations and Communications. Please go ahead.

Jon Patton: Thank you, operator, and good afternoon, everyone. Earlier today, Oncolytics issued a press release providing recent operational highlights and financial results for the fourth quarter and full year 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, company's belief as to the potential mechanism of action and benefits of pelareorep as a cancer therapeutic our clinical development plans for 2024, including initiation of our first registrational studies for pelareorep, manufacturing program, our cash runway, and other statements related to anticipated developments in the company's business.

A doctor in a white coat discussing clinical trial results with a patient in an oncology practice.

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, there can be no assurance that these statements or expectation or belief 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. Oncolytics management team is on the call today to review our fourth quarter 2023 and year-end results, including Chief Executive Officer, Dr. Matt Coffey; Chief Financial Officer, Kirk Look; Chief Medical Officer, Dr. Tom Heineman; and Vice President, Product Development, Allison Hagerman. Now, I'll turn the call over to Dr. Coffey. Matt?

Matt Coffey: Thank you, Jon. Good afternoon, and welcome to the Oncolytics Biotech fourth quarter conference call. 2024 marks the year that Oncolytics will become a late-stage cancer company with the initiation of our first registrational studies for our proprietary immunotherapeutic product candidate pelareorep or pela as we'll refer to it. This brings us closer to achieving our mission of improving the lives of patients with cancer, so we'll begin the year with significant enthusiasm. The transition to becoming a late-stage biopharma company reflects significant progress in positive clinical and translational data reported from our clinical programs in 2023. A key element of this transition is making smart investments in manufacturing, which is why Allison Hagerman will join us to talk about the steps we're taking, so Oncolytics is set up for success as pela moves closer to beginning registrational trials.

During our call today, we would like to share some of the key highlights from the last several months, outline our clinical and strategic objectives for 2024, included in manufacturing, review our financial results for the fourth quarter and full year 2023, and take your questions. Positive clinical and translational data helped close 2023 on a high note. Starting with our clinical results, we reported positive clinical data from three cohorts in the Phase 1/2 GOBLET study in pancreatic cancer, colorectal cancer, and anal cancer. Each indication has achieved the predefined "Stage 1 success criteria" defined according to the Simon two-stage study design. In addition, data from the pancreatic and anal cancer cohorts demonstrated response rates that were nearly 3x greater than published historical controls.

Positive clinical results were supported by valuable translational data from further analysis of the AWARE-1 breast cancer study and from cohorts in the GOBLET study. These data underscore pela's mechanism of action as an immunotherapeutic agent. Importantly, the data demonstrated a positive correlation between response rates and pela's ability to induce the expansion of T cell populations, measured by increases in the CelTIL score and the level of tumor infiltrating lymphocytes or pills in the peripheral blood. TIL expansion could become an important biomarker of clinical outcomes that could be used in future clinical studies and to guide patient care. The positive data that we reported throughout 2023 include the BRACELET-1 breast cancer data reported in June have also attracted interest and enhanced ongoing interactions with our clinical collaborators and potential strategic partners.

The overall survival data for BRACELET-1 continues to mature for patients receiving pela and paclitaxel. Overall survival is an important metric to potential partners and will likely serve as a catalyst to further our ongoing business development conversations. Additionally, these conversations have further informed our thinking on the design of future registrational studies. We've sharpened our strategic thinking thanks to the contributions of our Board of Directors, including our new director, Pat Andrews. Her experience in navigating registrational trials in oncology and completing transformational business development agreements complements and expands the strategic expertise of our Board. We look to extend the transformational and strategic mindset in all of our discussions in 2024 and beyond.

Now, as we look ahead, we are steadfast in our focus on achieving important objectives this year that move pela forwards on the regulatory pathway. These include in the first half of the year, we intend to provide guidance on a registrational path for pela in breast cancer. Also in 2024, we plan to initiate a registration study for pela in pancreatic cancer using an adaptive design. I'd like to take a moment to expand on our thinking for each indication, starting with breast cancer. We expect our registrational strategy in breast cancer to focus on an evaluation of pela in combination of paclitaxel compared to paclitaxel monotherapy in patients with metastatic disease who are HR+/HER2-. As a reminder, we are continuing to follow patients in the BRACELET-1 HR+/HER2- metastatic breast cancer study and expect to report overall survival data this year.

That being said, the data we've reported so far are supportive of the statistically significant near doubling the median overall survival seen in the IND-213 study. With respect to our plans for pancreatic cancer, we expect our registration study to focus on the evaluation of pela in combination with atezolizumab, gemcitabine and nab-paclitaxel compared to the combination of gemcitabine and nab-paclitaxel in patients receiving first line treatment for Pancreatic Ductal Adenocarcinoma or PDAC. We continue to develop a study protocol that utilizes an adaptive design, building on the positive results from the GOBLET study. The registrational strategy for PDAC will incorporate learnings from our previous interactions with the Pancreatic Cancer Action Network also known as PanCAN, and ongoing conversations with their newly announced alliance partner, the Global Coalition for Adaptive Research or GCAR.

As a result of these relationships, we've been able to collaborate with key opinion leaders in the pancreatic cancer community, and their enthusiasm for pela's potential in this indication reinforces our commitment to bringing new treatment options to patients. I'd also like to mention the expansion of the enrollment in the GOBLET cohort focused on anal cancer. The American Cancer Society estimates that there will be about 10,500 new cases of this cancer in 2024. We recently announced plans to begin enrolling Stage 2 of this cohort based on positive results in the first stage of the Simon two-stage program, reported at an international medical meeting in November of last year. The study will evaluate the combination of pela and atezolizumab in patients with second line or later disease.

While anal cancer is very rare, there is no standard of care for these patients who have progressed to advanced disease, so positive results may provide an opportunity for a rapid regulatory pathway. We hope to report additional data in 2025. Before I turn the call over to Tom Heineman, there are three key messages we would like you to take away from today's call. First and foremost, propelled by the encouraging clinical and translational data we unveiled in 2023, pela is poised to embark on registrational trials for pancreatic cancer and breast cancer as early as 2024. The consistently positive outcomes from seminal studies such as BRACELET-1, AWARE-1 and GOBLET have captured the attention and deepening engagement of the clinical oncology community and potential strategic partners.

Secondly, we eagerly anticipate the forthcoming release of overall survival data from the BRACELET-1 breast cancer study in 2024. This data represents an important milestone anticipated to serve as a significant catalyst in bolstering our registration endeavors for pela and a focal point of interest for our prospective biopharma collaborators. Lastly, the compelling data stemming from the anal carcinoma cohort of the GOBLET study advocates for the expansion of this cohort. With the potential for fewer than 20 additional patients to be enrolled, we could swiftly transition towards a registrational study in this clinical unmet need area. Particularly noteworthy is the distinctive approach of excluding chemotherapy in favor of leveraging the demonstrated synergy between pela and a checkpoint inhibitor, underscoring our commitment to pioneering novel and effective treatment modalities.

Finally, as always, I'd like to thank everyone in the Oncolytics organization and our collaborators for your dedication to the mission to improve the care of patients with cancer. Your work to advance the development of pela inspires me and everyone around us every day. Tom?

Tom Heineman: Thanks, Matt. During today's call, I'd like to provide a snapshot of the key features of pela and an update on our ongoing clinical programs. Pela is administered intravenously, which allows it to work systemically by selectively infecting tumor cells wherever they may be in the patient. Some tumor cells are killed directly by pela infection. In other cases, pela infection results in the accumulation of double stranded RNA in the cancer cells. This induces a proinflammatory response in the tumor microenvironment that primes the tumor for immunologic killing. Specifically, pela infection results in increased T cell infiltration into the tumor, expansion of tumor infiltrating lymphocytes, also known as TILs, and stimulation of both innate and adaptive immune responses.

We can assess the immunotherapeutic action of pela through clinical effects such as changes in tumor size, time to disease progression, and overall survival; in addition, we can assess the immunologic effects of pela treatment by such measures as the expansion of TILs in the blood. Data demonstrating a positive correlation between clinical response and TIL expansion support the potential use of this measure as a biomarker in future clinical trials and during patient care. In 2023, Oncolytics provided important clinical and translational data from the BRACELET-1 study, from multiple GOBLET study cohorts and from the AWARE-1 study. Based on these results, I will take you through our clinical plan for 2024. As Matt indicated, this year we expect to provide guidance on our registrational plans for pela in breast cancer, initiate a registrational study of pela in pancreatic cancer, and report the overall survival results from the BRACELET-1 breast cancer study.

In addition, we plan to initiate a new pancreatic cancer cohort in the GOBLET study. The new cohort will evaluate pela plus modified FOLFIRINOX with or without atezolizumab in patients with newly diagnosed metastatic pancreatic cancer. This new cohort will be supported by the $5 million PanCAN therapeutic accelerator grant and has been submitted to the German regulatory authorities. We also will expand enrollment into the anal carcinoma arm of the GOBLET study. Now, I'd like to add a few additional comments on the BRACELET-1 breast cancer data, the new pancreatic cancer cohort in the GOBLET study, and the expansion of the GOBLET study anal carcinoma cohort. We continue to follow BRACELET-1 study patients for survival. The last patient enrolled in the study will reach two years of follow-up in 2024.

Once this milestone is reached, the survival results will be analyzed and we will expect to report these results by the end of the year. As Matt mentioned, we also expect to provide an update on our registrational plans for breast cancer in the first half of this year. The progression free survival results already reported from BRACELET-1 are consistent with the near doubling of median overall survival seen in the earlier IND-213 breast cancer study. Furthermore, they support the possible use of progression free survival as the primary endpoint in a future registrational breast cancer study, which would reduce the time required to complete the primary study analysis. Moving to the GOBLET study, the new pancreatic cancer cohort, in which we will evaluate the combination of pela plus modified FOLFIRINOX with or without atezolizumab, is expected to begin enrollment in the coming months.

We are enthusiastic about this new cohort because it will enable us to study pela in combination with one of the most widely used pancreatic cancer treatment backbones and to directly assess the value of adding a checkpoint inhibitor. We are very grateful and encouraged by the support we received from PanCAN to conduct this study. PanCAN is an important voice in the pancreatic cancer community, and our work with them has led to valuable relationships with key leaders in this field. Moreover, their belief in the potential of pela provides additional validation of our efforts in this indication. Positive results from this study could expand the population of pancreatic cancer patients who may benefit from pela-based therapy and may ultimately provide physicians with much needed treatment options for this devastating disease.

We expect to begin enrollment into this study cohort in the coming months. Before closing, I'd like to talk about the enrollment expansion of the GOBLET anal carcinoma cohort, in which patients are being treated with the combination of pela and atezolizumab and without any chemotherapy. In November of 2023, we reported encouraging preliminary results from this cohort namely a 37.5% objective response rate compared to historical results for checkpoint inhibitors alone of 10% to 14%. Based on this, we have decided to expand enrollment into this cohort by an additional 18 valuable patients, and we plan to add more study sites to reduce the enrollment time. We believe potential biopharma partners have a keen interest in this cohort because of the limited benefit provided by checkpoint inhibitor monotherapy, which is commonly used in second line or later anal carcinoma patients.

Furthermore, the promising preliminary results from this cohort support pela's ability to synergize with checkpoint inhibitors and enhance their efficacy in cancers where they've historically provided little benefit. This study could open the door to an additional registrational pathways for pela in an indication with a clear medical need. Finally, I would like to express our appreciation to the patients, study site staff, and investigators who participated in our clinical studies. We are very grateful to you for making these research efforts possible. As you can tell, 2024 will be a year rich in clinical activities and I look forward to updating you on our progress as the year unfolds. Next up, as Matt mentioned at the start of the call, Allison will provide an update on our manufacturing and product development efforts.

Allison?

Allison Hagerman: Thanks, Tom. I'm excited to share the progress we've made over these past few months. As Matt and Tom have just shared, 2024 is poised to be a very important year for Oncolytics as we advance pela to registrational study readiness. A key element of this advance is the cornerstone investment we will be making in the pela product supply. Throughout my discussion, you will hear me use the word product, product supply, and supply chain. These are all industry terms related to manufacturing and are not intended to denote an FDA approved product. I will also use the term drug substance meaning purified bulk pelareorep material, the active pharmaceutical ingredient. Drug substance is used in the manufacture of drug products, the finished dosage form packaged for patient administration.

Key takeaways from my section are we have a well-established product supply chain for pela, we have made numerous batches of material at increasing scale and pela has a long shelf life. We have been working with a high quality contract manufacturing organization for some time and we are investing in optimized manufacturing scale up and validation so that we are ready to support product registration. For a bit of background, pela drug substance is produced in a simple eight step process and stored in bulk at -80 degrees Celsius. Finished drug product can be stored at -80 or -20 degrees Celsius. Pela material has a long shelf life with ongoing drug substance stability out pass 10 years plus an established drug product expiration period of six years from date of product filling.

Pela is made by our Contract Development and Manufacturing Organization or CDMO MilliporeSigma SAFC located in the San Diego area. Master and working cell banks and virus banks are established and validated. All raw materials are sourced from qualified suppliers and the process operating parameters are well defined. We have been working with this organization, formerly known as Sigma-Aldrich, for more than 15 years with consistent staffing at both organizations. The MilliporeSigma site has a well-established quality management system and our protocols and procedures are well aligned. In addition, the site produces GMP materials for other organizations, including commercial products, and has completed nine successful inspections including the FDA and other health authorities.

They have handled numerous biologics over the years and are a leader in bio vector manufacturing, so they are familiar with assets like pela. Stable staffing, a well-established quality management system, and working with the CDMO that has been FDA inspected are all very important for consistency, quality and risk management, which are always top of mind in manufacturing. In the fourth quarter of 2023, we initiated a new GMP production campaign with the drug substance process transitioned to single use equipment and scaled up to a 200 liter bioreactor, increasing the purified batch size to about 12 liters of bulk drug substance. The first GMP batch has been completed and once routine manufacture has been established, our next step will be the validation batches.

Our successful track record in scale up and consistent production gives us confidence that our investment in the next level of pela drug substance batches will go well as we continue this work in 2024 and 2025. In conjunction with the scale up, we also optimized some upstream elements of the process, including a change in detergent to align with European long-term guidelines. Thankfully, this switch won't impact the purified drug substance or product. The detergent is cleared through the purification steps and the final pela product concentration and formulation remains the same. In addition to drug substance manufacture in the fourth quarter of 2023, we also completed a second automated drug product fill in a full isolator system. This provides an aseptic environment for filling and high level of sterility assurance and also allows for larger quantities per lot, reducing the cost of goods.

Moving on to a few operational notes, pela is very simple to ship and store at study sites. We believe a user-friendly product interface is important and are confident that pela fits that specification well. Pela drug product single dose vials are shipped to study sites on dry ice and can be stored at -80 or in a -20 Celsius freezer. It is straightforward to prepare a dose for administration to patients. From where we stand today, we have an adequate supply in place to support our current and future clinical program, including the registration enabled studies. In conclusion, Oncolytics has invested very carefully in our supply chain so that we can support our clinical program and be ready to validate commercial manufacturing processes at the right time in support of future product registration.

We plan to invest in manufacturing over the next year to support our registration plans for pela. Once we close our prepared remarks, I will be happy to take questions and I look forward to providing further manufacturing updates over the course of the year. Now, I'd like to turn the call over to Kirk to review the financial results for the last year. Kirk?

Kirk Look: Thanks, Allison, and good afternoon, everyone. In this segment of the call, I'd like to take you through our financial results. I will be providing data in Canadian dollars unless otherwise noted. Full summary of our financial results can be found on the Investors section of our website under filings and reports or in the press release issued earlier this afternoon. The company closed the year with $34.9 million in cash and cash equivalents, compared to $32 million in cash, cash equivalents and marketable securities as of December 31, 2022. We believe this will enable us to achieve the most critical near-term milestones set out in today's call. The net loss in the fourth quarter of 2023 was $3.9 million, compared to $8.6 million in the fourth quarter of 2022, equating to a net loss of $0.05 per share in the fourth quarter of 2023 compared to $0.14 per share for the same period of 2022.

The net loss for the full year of 2023 was $27.8 million, compared to $24.8 million in the full year 2022, equating to a net loss of $0.41 per share for the 2023 period and a net loss of $0.43 per share for the 2022 period on a consolidated basis. The net loss for the fourth quarter and full year of 2023 included gains of $4.8 million and $5.3 million, respectively, mainly related to the change in fair value warrants issued as part of our 2023 public offering. General and administrative expenses for the fourth quarter of 2023 were $4.2 million, compared to $3.7 million for the fourth quarter of 2022. For the full year 2023, general and administrative expenses were $16.1 million, compared to $11.5 million for the full year of 2023. The changes between the fourth quarter and full year 2023 and the respective 2022 periods were mainly due to higher Investor Relations activities.

Our full year 2023 expenses also included a portion of our 2023 public offering transaction cost. Our research and development expenses for the fourth quarter of 2023 were $4.7 million, compared to $4.8 million for the fourth quarter of 2022. For the full year 2023, research and development expenses were $17.7 million, compared to $15.4 million for the full year 2022. The changes between the fourth quarter and full year 2023 and the respective 2022 periods were driven by higher manufacturing expenses associated with implementing single use equipment and scaling up our drug substance production process. This is offset by lower costs related to our ongoing clinical studies and reduced clinical and safety data management. Now, in closing, I'd like to spend a moment to elaborate on a few of Matt's comments regarding our organizational transition.

Pela is a potential backbone immunotherapy that has shown efficacy signals in multiple indications. We have meaningful data from over 120 metastatic HR+/HER2- breast cancer patients and 120 pancreatic cancer patients. Notably, we continue to capitalize on opportunities to further validate pela's potential through initiatives like PanCAN's therapeutic accelerator program, which after a thorough and highly competitive process resulted in a grant of US$5 million fully funding our modified FOLFIRINOX, PDAC cohort and GOBLET. There are also opportunities to broaden pela's application to indications like anal cancer where an efficacy signal has emerged. We have assembled a management team that is well-positioned to bring pela to patients, and attracting a Board member like Pat Andrews reflects the strength of our team and pela's potential.

Finally, we have fostered important relationships with organizations like PanCAN, PrECOG, AIO and clinical collaborators like Pfizer and Roche. Our positive clinical data is enriching our discussion with a number of current and potential clinical and strategic partners. Before I turn the call back to Matt, I'd like to note that our financial strategy and organizational development have provided us with a cash runway through critical clinical milestones and into 2025. I look forward to providing you with further updates on our transformation to a late-stage oncology company throughout the year. Matt?

Matt Coffey: Thanks, Kirk. The clinical data we reported in 2023 puts pela on a clear trajectory towards registration with metastatic breast cancer and metastatic pancreatic cancer as our highest priority indications. Our dedication to collaboration and engagement remains steadfast as we foster important discussions with the clinical oncology community and prospective strategic partners. Together, we are committed to expediting pela’s journey to markets, ensuring both swift progress and financial prudence every step of the way. This collective effort fuels our optimism and drives us towards a future where pela's transformative potential can positively impact countless lives. As we conclude today's call and embark on this New Year, we have a bright outlook for the development of pela and a hopeful outlook for patients with an unwavering dedication to our mission.

Together, all of us, we're pioneering the path filled with hope, determination and the resolute belief that every step forward brings us closer to uplifting patients' lives and the reshaping of the landscape of cancer treatment. We look forward to updating you on our progress this year and thank you for taking the time with us today. Operator, I would now like to open the call for questions.

See also Wall Street Picked These 13 AI Stocks for 2024 and 12 Most Undervalued Biotech Stocks To Buy According To Hedge Funds.

To continue reading the Q&A session, please click here.