Evaxion Biotech A/S Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
October 31, 2024

There are 6 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the Avaxion Business Update Conference Call Q3 20 24. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to your first speaker today, Christian Kannstropp, CEO. Please go ahead.

Speaker 1

Thank you so much, and good morning and good afternoon to all of you and a very warm welcome to this Evaxion business update conference call on the back of our Q3 earnings release, which has been out earlier on today. I'm Christian Kansdrup, CEO of Evaxion. With me today, I have Birgitte Wainwright, my Chief Science Officer. I have Mads Kornberg, our Head of Investor Relations. Also with me today for the first time, I have our new CFO, Thomas Smith, who just joined us.

Speaker 1

And I would actually like to start out by just handing over to Thomas for a very brief introduction of who you are. Thomas?

Speaker 2

Thank you, Christian. And also from my side, good morning and good afternoon to everyone on the call. As mentioned and as written here, my name is Thomas Smith and officially will be joining here 1st November as the CFO of Action, having spent the last few days with handover from Jesper. I'm an accountant auditor by Training and Education and I've spent the past more than 25 years within the life science industry, many different roles within the company of Roche, amongst other, also Financial Officer in Germany. And I've been Group CFO also in Hamburg earlier.

Speaker 2

So I'm really, really looking forward to now joining in action, this being my office first business update conference call and excited to be working together with the team and also with the shareholders.

Speaker 1

Great to have you on board, Thomas. Let's jump to the agenda, which is very similar to what we normally do. I will start out with a brief introduction. Birgitte will take an R and D business update. We will have Thomas go through the financial results.

Speaker 1

I will conclude before we jump into the Q and A. But before we get going, let's also just direct your attention to this slide, the forward looking statement slide. As normal, we will be talking about the future. Of course, when you talk about the future, that does entail uncertainty. Hence, I carefully direct your attention to the forward looking statement slide, which speaks to the uncertainty about talking about the future.

Speaker 1

With that, let's get into the introduction and look at the key achievements since last business update. I think it's fair to say that I am super proud of the team and proud of what we have achieved during the last quarter. It has been a very busy quarter and it has been a quarter with a lot of significant achievements and we have seen a continued strong strategy execution. Several milestones have been achieved across the company. If we start out with our multi partnering strategy here, of course, in September, we signed a transformative deal with MSD, the European name for Merck around EBX B2 and B3.

Speaker 1

This is providing a significant financial and strategic value to Evaxion. Also, I'm proud to see that we see a continuously increasing external interest in both our pipeline and our platform and we have a number of ongoing partnership discussions. We've also seen a very solid pipeline progress, which Brigitte also will get back to. We did release the very convincing 1 year clinical data from the Phase II trial with EBX-one. We did present the proof of concept for mRNA based B2 vaccine.

Speaker 1

We are also spending a lot of effort in continuously strengthening the platform and the organization. We launched an upgraded version of Eden. Birgitte will get back to that as well. And then as we just talked about, Thomas has been appointed as CFO. So an exciting quarter, a busy quarter, but important a quarter with a lot of significant achievements.

Speaker 1

And let me just start out or go a little bit spend a few minutes on the MSD agreement, which is truly transformative for us. Just to remind everyone, it's an optional licensing agreement. It's covering EBX B2 and B3. And it is ensuring a fast and effective development of these two vaccines to address a serious unmet need. Let's also remind all of you that no approved vaccines are available for the infectious diseases those two vaccines are targeting.

Speaker 1

This does mean a significant financial and strategic value to us, not only for the short term, but also very importantly so for the long term. We have received the $3,200,000 upfront payment in October. We are expecting up to $10,000,000 in 20.25 contingent upon MSG exercising the options to license either 1 or both candidates. In terms of total financials, milestone payments of up to $592,000,000 per product plus royalties on sales. Needless to say, this is providing a potential very important source of income and funding for the years ahead.

Speaker 1

What's also important when we look beyond the EMEA Financials is that this is an important validation of both our AI immunology platform, but also our pipeline from a world leader in vaccine development and commercialization. I think it's fair to say that, that validation, we see that with an increasing interest in discussing potential partnerships with us from other companies. So a very important element in our multipartner strategy is that we have a strong validation from a world leader in vaccine development and commercialization. Then

Speaker 3

let's jump to

Speaker 1

the next slide and take a look at our milestone overview. As already said, a busy quarter. We have achieved a number of important 24 milestones, launched the upgraded Eden, got the preclinical proof concept on EBXB2 for mRNA, presented the 1 year readout from the Phase 2 with EBXB1. And we also have the milestone on the EBXB3 and conclusion of the partners or the target discovery and validation work with MSD. You can say that is now superseded by the option and licensing agreement because next step here will be the expected, hopefully, exercise of the option from MSG in 2025.

Speaker 1

We are on track for the preclinical proof of concept with our IRF based precision vaccine concept, also expected in 2024. And then for the BD ambition of generating BD income or cash in equal to our annual cash flow, I'll have an update on that on the next slide. For the business development ambition, we have, as already mentioned, secured $3,200,000 this year, up to $10,000,000 in 2025, contingent upon option exercise, of course. And we are seeing a solid and increasing interest in both pipeline and platform. What candidly said is that certain discussions are moving into 2025.

Speaker 1

Business Development timing of that is uncertain, and we are seeing despite the strong interest that certain discussions are taking longer time than anticipated. Others are being initiated later, meaning that certain things are moving into 2025, which does mean that we will not be meeting our $14,000,000 business development income or cash in 2024 ambition. What is important, however, this, of course, creates a solid basis for business development income in 2025. It's fair to say we are still having a number of discussions or we're having discussions which could potentially conclude in 2024 with additional business development income. But timing is, of course, uncertain given that we only have 2 months left of the year.

Speaker 1

One final update I would give before handing over to Birgitte as also addressed in our release we had out earlier on today, is our the situation around our NASDAQ deficiency letter. We did in May receive notification from NASDAQ that we do not meet our minimum equity requirement. Actually, even though we did, in fact, meet it by the end of the Q1, but we ended up not meeting it by the Q2, That resulted in a notification from NASDAQ based upon which we submitted a plan and got an exemption until November 4. Our aim is to ensure compliance via a combination of business development income and capital markets activities, and we remain very committed to our NASDAQ listing. But it's also clear that this will not be achieved by November 4 as a number of factors have impacted timing and we had to have certain things aligned.

Speaker 1

We are, however, in a constructive matter with NASDAQ or constructive discussion with NASDAQ on this matter. And of course, we have a plan for how to ensure compliance. The way it works is when we're not meeting the November 4 deadline for the extension, we will be receiving a notification or delisting notification from NASDAQ, which we will be appealing and requesting a hearing. At this hearing, we will be pursuing an additional 180 day exemption in order for us to be able to secure compliance in a balanced way. Of course, no guarantee of an additional 180 day extension can be given.

Speaker 1

But as mentioned, we are in a constructive dialogue with NASDAQ around this matter and do have a plan in place for how to pursue compliance. As I said, we remain very committed to our NASDAQ listing and will pursue this very diligently. So with that, I will hand over to Birgitte for an R and D update. Birgitte?

Speaker 4

Thank you, Christian. It hasn't been a very busy and exciting Q3. So besides the transformative MSD agreement, we have made a significant progress across our R and D pipeline. So next slide, please. Today, I will be focusing on the milestones achieved in our EDX-one program and then I will present the preclinical proof of concept data we achieved in our gonorrhea vaccine program with the messenger RNA version of our EDX B2 vaccine candidate.

Speaker 4

And finally, I'll present the outcome of our efforts in improving the EDEN model. So next slide, please. So at the ESMO Congress in September, we presented the encouraging 1 year clinical data from our ongoing Phase 2 study in the study of our personalized cancer vaccine EVX-one in combination with anti PD-one therapy in patients with advanced melanoma. So we have treated 16 patients with EVX-one and the current status is that we have 11 patients active in the trial with 10 patients having received all 10 PBX-one doses and 4 patients having received the last dose of pembrolizumab. This means that we are well on our way to the 2 year data readout planned for Q3 next year.

Speaker 4

So let's dive into the data we presented at ESMO. Next slide, please. So for the primary analysis, we are looking at the clinical response improvement of patients that do have stable disease or partial response before dosing with EVX-one, so after this 12 week run-in phase of pembrolizumab treatment. And currently, we do have 4 patients out of the 14 patients included in this primary analysis that have had an improved clinical response upon administration of EVX-one therapy at week 12. So we saw that EVX-one in combination with pembrolizumab resulted in an overall response rate of 69%, which we believe compares favorably to historical data from pembrolizumab monotherapy trials.

Speaker 4

So we are very encouraged with this early data. We also saw that 3 out of 16 patients achieved a complete remission of the tumor target lesion. Next slide, please. If we look at the changes of the target lesions over time at the plot in the top, it is evident that the target lesions are reduced in the 1st 12 weeks, so in this templizumab run-in phase and then further reduced upon introduction of EVX-one at week 12. Also from the spider plot, it is clear the new reduction of the lesions in 5 or in 15 out of 16 patients.

Speaker 4

If we look at the lower plots, we have zoomed in on the reduction of the tumor target lesions from week 12, so where we introduced EDX-one. And here we see that there is a clear further decline of the lesions upon this time point. We have not reached OS and PSF yet, indicating a doable clinical response. So overall, we are very pleased with this interim data and we find it very promising and we are definitely looking forward to following the implementation. Next slide, please.

Speaker 4

So the second of these three milestones achieved in September was our EVX C2 mRNA program. So in September last year, we entered into an agreement with Epigen Biologics to develop a messenger RNA, CVX-two or EVX P2 vaccine. And in September, we presented the preclinical proof of concept of this messenger RNA vaccine candidate. We saw that the candidate triggered a targeted immune response in mice, shown in the graph in the middle panel, with the ability to eliminate several clinically relevant neisseria gonorrhea strains. The data provides preclinical proof of concept for the messenger RNA based version of CDX-two and it also underlines that the targets that are identified by AI immunology are delivery modality agnostic as we have seen similar results with our protein based version of this vaccine candidate.

Speaker 4

So next slide, please. So the 3rd major milestone achieved in September was the launch of a new version of our Eden model. We use Eden to identify protected B cell antigens that are included in our infectious disease vaccine. So the upgraded Eden prediction model can now predict toxin antigen, allowing for the development of improved bacterial vaccines. So as bacterial toxins are often key contributors to disease, via neutralization is essential for developing effective vaccines.

Speaker 4

And we strongly believe that this now adds to a more efficacious vaccines against various bacterial and also to some extent other infectious disease. So overall, very promising progress across the entire R and D pipeline in Q3.

Speaker 1

Thank you so much, Birgitte. And now I will hand over to Thomas for his first quarterly business update and for Thomas to take you through the numbers. Thomas, could you take it from here?

Speaker 2

Yes, certainly, we'll do. And maybe let me jump straight into the Q3 financials and let me start with the financial highlights. In Q3, we recorded a revenue of $3,000,000 which again to what Christian mentioned earlier, is primarily stemming from the new MSD agreement announced back in September 26 September 26. The agreement obviously is well aligned with the financing strategy and the ambition and has also looking forward the potential to generate substantial future revenue. We've also been executing well on the earlier and ongoing cost reduction initiatives.

Speaker 2

And as a result of that, we are seeing lower spend compared to the same period in 2023. Cash and cash equivalents were $4,600,000 as of end of September. The $3,200,000 upfront payment from MSD agreement, we have received in October, but is therefore not included in the September or Q3 figures, but obviously will be once we get to Q4. And we expect that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into March 20 25. Turning to the profit and loss statement.

Speaker 2

A net loss for the quarter was posted of $1,900,000 compared to a loss in the same quarter last year of $5,700,000 The improvement is, as just mentioned, primarily driven by the recognized revenue, but also reduced G and A spending. There's a slight reduction in the R and D expenses versus the same quarter last year, as the R and D expenses were 2.6 €1,000,000 this year versus €2,800,000 last year. The decrease is primarily related to headcount. And on the mentioned G and A expenses, there's $800,000 lower expenditure in Q3 this year versus Q3 last year. And the decrease is mainly due to lower expenses following changes in the executive management team made in 2023.

Speaker 2

The balance sheet as end of September 30 shows that our that due to capital increase in February 24, the equity has now improved by EUR 4,800,000 compared to the year end last year, while we at the same time, obviously, are investing and continuing to invest into pipeline and platforms. Cash and cash equivalents as of September 30 of SEK 4,600,000, as just mentioned again, I just want to stress that, does not include the SEK 3,200,000 MSD agreement payment, but we expect that this cash will carry us forward from an expense operating expense and capital expenditures requirement into again March 2025. Therefore, of course, we will continue to work diligently to improve, as Christian mentioned earlier, cash flow through continued business development income and also Capital Market activities. And with that, I will hand it back over to you, Christian, for some conclusive remarks and following Q and A.

Speaker 1

Excellent. Thank you so much, Thomas. And just to conclude, I think it's clear from the run through here that we are seeing a solid execution of strategy and plans. We had a strong quarter in terms of milestone achievements with a good mix of milestones across different parts of the strategy. What is also encouraging is the signing of the transformative MSD agreement and in general a solid business development pipeline where we have full focus on continuing progressing those discussions and also initiating new discussions with interested parties to continue being able to feed the business development pipeline.

Speaker 1

Other top priorities are, of course, the continuation of the VASO I Phase II trial. Brigitte mentioned we are on track for the 2 year readout in Q3 2025, which will be an important milestone for next year as well. And then we have a number of novel preclinical activities ongoing as a basis for expanding our pipeline. So full focus on executing upon the strategy and strong delivery across all the different parts of the strategy. So with that, I would like to open for Q and A.

Speaker 1

And thank you all very much for listening into this first part.

Operator

Thank you. Thank you. We will now take our first question. This is from the line of Thomas Flaten from Lake Street Capital Markets. Please go ahead.

Speaker 5

Hey, Thomas. Hey, good afternoon, guys. I appreciate you taking the questions. Just a couple for me. Can you walk us through the specific triggers that are required to generate the up to SEK 10,000,000 from Merck next year?

Speaker 1

Yes. I mean, you can say the up to SEK 10,000,000 is in case they license or exercise the option for both assets. And then the if we start with the December 1, EBXB3, that's finalization of the work that we initiated in September last year. You can say that we set out on target discovery and validation of EBAIX P3, which is for an undisclosed effect of these targets. So that's finalization of that, which is just execution of the plan that has been laid out.

Speaker 1

For EBXB2, MSD is doing some confirmatory preclinical analysis on the assets. So we are, as such, not involved in the B2 work, and we are more or less wrapping up our involvement or participation in the B3. What I can say also is that, I mean, this next part of the collaboration is well on track and everything is anchored in terms of plans.

Speaker 5

Got it. And then from an ongoing business development perspective, do you are you seeing more interest in on the oncology side of the business or more on the viral bacterial side or perhaps it's balanced across

Speaker 1

the Well, I would say over the past couple or past months, couple of months, we have definitely seen a pickup in the interest around the infectious disease side of the business, which as I also mentioned, our part is related to announcing the Merck agreement. But that pickup in interest actually started also before we announced that. So that's where we are seeing the increase also around, say, new target discovery and validation partnerships. So it's tilted towards that. Of course, with the EBX-one Phase II 1 year data out, of course, there's also been discussions around those data.

Speaker 5

And then one final one, if I may. In what format do you expect to release the IRVE proof of principle, proof of concept data?

Speaker 1

Birgitte, do you want to answer that?

Speaker 4

I can end up. We are planning to present the data at a conference in December.

Speaker 5

Got it. I appreciate it. Thank you very much.

Speaker 1

Thanks, Thomas. Thank you.

Operator

Thank you. We'll now move to our next question. This is from the line of Swayampakula Ramakanth from HCW. Please go ahead.

Speaker 3

Thank you. Good afternoon, folks. Hey, Ark. I'm about Thomas Schmidt.

Speaker 2

Thank you.

Speaker 3

I have few questions, but let's start from the pipeline side of things. Ram Brigetta, you were stating that you would have some biomarker data in the first half of twenty twenty five from the EVX-one Phase 2 study. Can you just highlight for us what additional biomarkers data would we be seeing that we have not yet seen?

Speaker 4

Yes. Thank you for that question. So currently, we have not analyzed all samples that we have collected from the patients in the EDX-one Phase II study. So it is additional T cell analysis that we will conduct. We will also do a little bit more on like a general profiling of the immune cells in the patients.

Speaker 4

So looking for regulatory T cells, other immune suppressive immune components in the PBMCs. We have also collected serum samples for soluble analytes, and we will, of course, look at some of the standard cancer related and inflammatory related soluble analytes. So an extensive biomarker package is what we're working on at the moment.

Speaker 3

Thank you for that. And then one more question on the pipeline. Outside of the ERV data that we are expecting later this year, what additional data set or data from your programs could we be seeing or let's say, over the next 6 months?

Speaker 4

Yes, really good question. So we are currently looking at prioritizing the pipeline and also defining milestones for the coming year. So I think we it might be a little bit too early, but we're the pipeline and also defining milestones for the coming year. So I think we it might be a little bit too early to disclose exactly what we are thinking within the early part of our pipeline.

Speaker 1

But RK, we will, when we are ready, of course, communicate expected, say, key milestones for 2025 and what you can expect both from a R and D, but also, of course, from a general corporate point of view. So that is currently being discussed.

Speaker 3

Thank you. One last question for me and Christian. We understand that

Speaker 4

the

Speaker 3

$14,000,000 or so that you are planning to raise through BD activities during 2024 is not going to be done and some of it will be pushed into 2025. But is there any opportunity for you to close out some sort of a BD transaction over the next 2 months? Or should we just assume all of it should be expected in 2025?

Speaker 1

No. I have potential for closing an agreement additional agreement this year. But of course, 2 months left. You have Thanksgiving, you have Christmas. That's why I don't didn't include specific guidance on I want to conclude another deal, but it could be possible.

Speaker 1

But of course, that's a challenge with BD, right? It takes time and unfortunately, most often, it takes more time than you expect. It's very rarely that it goes quicker than expected. That did happen with the MSD deal, but that's also very rare. So there is potential, but we also only have 2 months left of the year, which is impacted by, yes, you would say various vacation and holidays.

Speaker 3

Got it. Got it. Thank you very much. Thanks for taking all my questions.

Speaker 1

You're welcome.

Operator

Thank you. There are no further questions coming through. So I will now hand back to the speakers for any closing remarks.

Speaker 1

Excellent. Thank you so much. And I just want to thank everybody for listening in and for your questions. And we are truly excited about the quarter and are looking very much forward to the time ahead. So thank you so much for your time, and we'll make sure to keep you updated on any developments, of course.

Speaker 1

Thank you so much again for calling in.

Operator

Thank you. This concludes the conference for today. Thank you for participating and you may now disconnect. Speakers, please stand by.

Powered by Quartr

Key Takeaways

  • Transformative MSD partnership: Evaxion signed an optional licensing agreement with MSD covering EBX B2 and B3 vaccines, receiving $3.2 M upfront in October, up to $10 M in 2025 contingent payments, and potential milestones of $592 M per product plus royalties, validating its AI immunology platform.
  • Positive 1-year Phase II EVX-one data: Interim results in advanced melanoma showed a 69% overall response rate with three complete remissions in 16 patients on pembrolizumab plus EVX-one, outperforming historical PD-1 monotherapy benchmarks and setting up a 2-year readout in Q3 2025.
  • mRNA EVX-B2 gonorrhea proof-of-concept: Preclinical studies in mice demonstrated that the mRNA-based EVX-B2 candidate elicits targeted immune responses capable of eliminating multiple Neisseria gonorrhoeae strains, underscoring the platform’s delivery-modality agnosticism.
  • EDEN platform upgrade: The newly launched EDEN model can now predict toxin antigens for B cell targets, enhancing Evaxion’s ability to design vaccines that neutralize bacterial toxins and improve efficacy against various bacterial diseases.
  • Financial and NASDAQ update: Q3 revenue was $3 M (primarily from MSD), net loss narrowed to $1.9 M with reduced R&D and G&A spend, cash of $4.6 M at September-end (excl. Oct payment) funds operations into March 2025, and management is pursuing a NASDAQ listing extension beyond the November 4 deadline.
AI Generated. May Contain Errors.
Earnings Conference Call
Evaxion Biotech A/S Q3 2024
00:00 / 00:00