Evaxion Biotech A/S

Greetings and welcome to the Evaccion Biotech fourth quarter and full year 2021 earnings call. At this time, all participants are on the listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, please press star 1 on your telephone keypad. If anyone should require operator assistance, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Corey Davis. Thank you, sir. Please go ahead.

Thanks, Donna. And hello, everyone. Thanks for joining us. Let me quickly remind you that today's discussion contains certain statements that are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because forward-looking statements involve risks and uncertainties, they are not guarantees of future performance and actual results may differ materially. from those expressed or implied by these forward-looking statements due to a variety of factors, including those risk factors discussed in the company's prospectus filed on November 5th, 2021, and the company's current and future reports filed with or submitted to the Securities and Exchange Commission. At this time, I'd like to turn the call over to Lars Wigner, the company's president and CEO. Go ahead, Lars.

Thank you, Corey. Good morning, everyone. Thank you for joining us for this Evaction Biotech Q4 earnings call. I'm Lars Wikner, the chief executive officer of Evaction. With me today is Evaction's co-founder and chief business officer, Nils Møller, who is currently the interim chief financial officer. We'll give you a short presentation on our business and results, and then open the call up for any questions you may have. Let me begin. by saying Evaction continues to demonstrate exciting clinical momentum in the fourth quarter of 2021 towards our goal of becoming a world leader in AI-driven immune therapies. As many of you know, Evaction specializes in decoding the human immune system and using the data to rapidly discover and develop potentially effective drug candidates to improve the lives of patients with cancer and infectious disease. We believe that our AI models allow us to identify unique drug targets, which may translate into a higher likelihood of clinical success. In October 2021, we announced a clinical trial collaboration and supply agreement with Merck, one of the world's leading immune oncology companies, to evaluate the combinations of Evaction's cancer immune therapy, EVX01, in combination with Merck's Kethrutin, in a Phase IIb clinical trial in patients with metastatic melanoma. In January 2022, we received regulatory clearance to initiate this Phase IIb trial of EVX01 with Cthulhu. We plan to have the first patient's first visit for EVX01 in the first half of 2022. Also in January 22, we completed recruitment for our Phase I-IIa clinical trial for EVXO2, advancing into a dedicated Phase IIb clinical adjuvant trial in patients with resectable melanoma. We plan to file for regulatory clearance for EVXO1-O3 in patients with resectable melanoma by the first half of 2022, and have first patient first visit in by second half of 2022. The EVX01, 02, and 03 products all come from our pioneer AI platform, which generates patient-specific cancer immune therapies. In other development areas outside cancer, we remain on track on the lead candidate on our EDEN platform, which generates vaccines against bacterial diseases. This program, EVX, B1 is a vaccine for the prevention of staph aureus in skin and soft tissue infections. We also plan to select our second bacteria product candidate in the first half of 2022. We plan to select the first viral candidate from our Raven platform in the second half of 2022. Outside of the clinic. We closed our follow-on public offering in November 2021, raising net proceeds of 24.9 million U.S. dollars. Evaction also received the 2021 Enabling Technology Leadership Award in the Artificial Intelligence Enabling Drug Discovery Industry by the leading global research and consulting firm Frost & Sullivan. We are honored to receive the award, and I'm very proud of the hard work and commitment of the whole Evaction team in advancing our vision for better global health. Evaction also gave a presentation at the Immuno UK conference, which was held in London. One of our senior scientists, Emma-Christine Jappe, introduced Evaction's AI immunological core technology, and detailed how the company is using AI to decode the human immune system. She focused on Pioneer and demonstrated how Evaction is continuously working to improve the platform through immunological data generation and the development of optimized AI models. This concludes our business and operational updates for Q4 2021. I will now turn the call over to Nils for news on our follow-on public offering and the 2021 financial review.

Thank you, Lars. As Lars mentioned, we closed our follow-on public offering in Q4, which was multiple times oversubscribed and which included the full exercise of the underwriter's over-allotment option for which we announced the pricing on November 4th, 2021, which raised net proceeds of 24.9 million US dollars, including underwriting discounts and commissions and other offering expenses. This follow on from our IPO in February 2021, which raised net proceeds of 27.9 million US dollars after underwriting discounts and commissions, but before offering expenses. We also completed a drawdown and received our first tranche of 7 million euros, approximately 7.7 million US dollars from the European Investment Bank loan on February 17, 2022. As of December 31st, 2021, cash and crash equivalents were 32.2 million US dollars as compared to 5.8 million US dollars as of December 31, 2020. We expect that the net proceeds from our IPO and our SPO, the proceeds from drawdowns and amounts available under the ERB loan, and our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements through at least the next 12 months. Research and development expenses were 19.6 million US dollars for the year ended December 31, 2021, as compared to 10.9 million US dollars for the year ended December 31, 2020. The increase was primarily related to the increased spending net of brand income for ongoing development on our platform's preclinical product candidates and clinical trials. In addition, employee-related costs increased due to the higher headcount. General and administrative expenses were $6.3 million for the year ended December 31, 2021, as compared to $5.7 million for the year ended December 31, 2020. The increase was primarily due to an increase in professional fees related to the expansion of our corporate function for our initial public offering, partially offset by the decrease in employee-related counts. Net loss was $24.5 million for the year ended December 31, 2021, or $1.26 loss per basic and diluted share as compared to 15 million US dollars or 0.97 US dollars lost per basic and diluted share for the year ended December 31, 2020.

Thank you, Nils.

That concludes our presentation today. Now it's time to open up the call for any questions.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is star 1 to register questions at this time. Our first question is coming from Kevin DeGieter of Oppenheimer, please go ahead.

Hey, thanks for taking our question. Could you comment on the recent approval of the first of the LAG-3 antibodies, you know, in a fixed combination with the PD-1? You know, do you sort of see, you know, that compound just serving a similar or different patient population relative to one? And just any thoughts as to how that approval may or may not impact potential pace of enrollment for the 012B study? Thanks.

Thanks, Kevin, and good questions. We've all been following the development of the combination of checkpoint inhibitors in this field, and especially the large trial with LAG3. So it was expected to pan out, as we saw. We do see that the landscape in metastatic manoma is changing. It is an ever-changing landscape that you need to monitor both for clinical trial and commercial opportunities for your compound. We don't see a big challenge in it. We see that the market space is developing. We see this data as being a decent potential for patients in this space. It's also still actually shown to be pretty toxic. A bit more than I actually expected. So good efficacy results, but a lot of toxicity still. It will of course play a role. I think we have a very unique value proposition with the combination of PD-1 and EVX-01. Due to the fact that EVXO1 is a really precise medicine, which means you are truly only targeting the cancer cells, this allows for a very clear-cut efficacy, but it also allows for having very limited off-target effects. The majority of the side effects you see, of course, on PD-1 and also LAK3 is off-target effects. That means we believe we will have effective therapy but also very well-tolerated therapy almost in the line of monotherapy with checkpoint inhibitors. So we definitely believe there is a huge place for therapies that are this precise with this efficacy and safety profile. Thank you.

Great. Thank you for that. And then maybe as our follow-up, I think you called out you know, first half of the year for first patient, you know, dosed in the phase 2B study of EVX01. Can you comment on, you know, number of sites either open or expected to be open, you know, in the first half? And, you know, any thoughts even at, you know, preliminary on potential pace of enrollment?

Yeah, so we just got, as we also announced, clearance in Australia where we will set up multiple sites and that's already in the working. So that will be the place where the first patients will start recruiting and then we will down the road receive clearance in EU and US and start sites there. So it will start with multiple sites in Australia And that's already in the making. So I believe we are on track on that. And then EMA and FDA following that.

Thanks for the update. You're welcome.

Thank you.

Our next question is coming from Thomas Flatton of Lake Street Capital Markets. Please go ahead.

Hey, guys. Thanks for taking the question. Just to follow on to the prior answer, Lars, can you give us some sense of timing for the submission to – EMA and FDA for clearances in the U.S. and Europe?

Yeah, I could give an idea. We have not communicated specifically to the market on the timing. We already in dialogue and have been for some time, both with EMA and FDA. We do not expect a lot of hiccups in that process. So we believe it will follow as we're currently planning. We're not saving exact time, but it will be as fast as possible. We're already in dialogue and we see no dark clouds in the horizon. So we're quite happy with our regulatory interactions so far.

And just to go back to the PD-1-LAG-3 combination, given that you're bringing in patients who are on background PEMBRO, do you see any shift in standard of care in where ethical considerations could be raised in terms of treating patients with what some would argue would be the older standard of care as opposed to the new standard of care, especially here in the U.S. where it will be on the market first?

Yeah. If you ask me that question two years from now, we would potentially have designed it differently. But first of all, it's not a sure thing that it will be standard of care. There are still other combinations, and right now people are getting either checkpoint inhibitor as monotherapy, checkpoint inhibitor plus CTL-4, which is pretty toxic, and now a new one entering, which is checkpoint inhibitor plus LAK3, that still is quite, I think it's double the rate of people that have to discontinue due to side effects compared to monotherapy. So there are patients in all those groups today even though they are compost approved. So I believe there will be three pools of patients also in the future, also in two or three years, which is checkpoint inhibitors monotherapy, then checkpoint inhibitors LAC3, and then potential checkpoint inhibitors in EP. That might fade out with the LAC3 data. But those patients that cannot tolerate the combinations, they will also always be there. So we don't see a huge issue as we plan to recruit very rapidly to recruit in the patient population on monotherapy. I don't think the LAX3 will enter into the other markets. And even when it has entered, we are pretty confident there will still be a large pool of patients. It's still quite a large pool of patients getting monotherapy, and that pool will remain there. And then the next question comes in the planning of future phase two, should we consider triple therapy? That's definitely something every company in this space should be considering if they have a therapy that is well tolerated as ours. But right now we don't see any major issues in the recruitment as we will be recruiting over next year.

And then just one final one, if I may. On EVX-02-03, you said you're going straight to regulatory filing following on the completion of enrollment in the study. What data will you be taking to the regulatory agencies, and is there any interim data that you'll be sharing with them that we won't see on any success you've had in the 02 study so far?

Yeah, we have not announced. We have more data as the program has matured, and that will be shared with the regulatory authorities. We also plan, of course, to share that with the community outside the regulatory authorities. The exact timing of that we haven't disclosed, but we do expect to be sharing that data later this year as it is needed for our regulatory processes of H2P as well.

Excellent. Thanks, guys, for taking the questions.

But it will be an, yeah, Thomas, and just, it will be an interim because it's in the adjuvant melanoma, and we, the full readout will be when we have the full year follow-up on the last patient.

Great. Thank you. Thank you.

Thank you. Our next question is coming from Ahud Demir of Leidenberg Thalmann.

Please go ahead.

Hello, Lars, Neil. Thanks for taking my question. I would like to ask about the AID drug response platform. What are the aspects that you use and how it might be implemented in the ongoing and future trials? And also a follow-up question on the same line is, can it be applied to both, like three of the platform aspects, Pioneer, AIDEN, and Raven? Could you comment on this, please?

Thank you, Ahu. Great question. Our AI Deep is a drug response platform, and based on our current data, it seems that based on the immunological profiling of the tumor microenvironment, we're able to predict which patients are actually responding to immune therapy and which are not. And right now, we're working on validating that in a larger data set, not from our own clinical trials, but from collaborators. And when we have that data, we will be developing the AI team as a drug prediction platform, but it will not be 100% related just to our programs because we believe it can actually predict on all immunological active drugs, such as checkpoint inhibitor, LAG3, et cetera. And we are also developing a business model for that that will be different than our normal drug development path. So it's super exciting platform. Here in 2022, we will validate in a large data set. If it pans out showing the same data as it did on our phase 1, 2a, we definitely have a drug response platform. And when that is validated, we will of course also implement it in our own clinical trial going forward. But right now, we believe it's too early with not enough patients. to include it. The only way it's included is actually we're grabbing data from our current trials to actually train the AI system to perform even better. The AI deep are uniquely for cancer. It is based on biopsies and how the tumor microenvironment is actually expressing different genes and that means it's primarily relevant for our pioneer platform and not so much for EDEN and RAIDEN. I hope that answered the question, Ahu.

Yes, that's very helpful. So my other question would be on the ADEN platform, what state of the IND enabling studies are you currently doing for EVX B1 program as you are preparing for the IND filing in the second half?

So that's our staff Aureus vaccine program. And as many of the callers are aware of, it's a huge medical problem. There are no current vaccines approved. So the path to the clinic, which is a phase one in healthy volunteers, is of course to finalize the tox package. That's a larger milestone that is ahead of us on EVXB1.

And my last question would be about the clinical sites as well. So does the Ukraine more impact, do you have a site there and does it impact the expected enrollment by any means for the company?

So that's another good question. We're all concerned about what is happening in Ukraine. Logically, it does not impact any of our business. We don't have collaborators. We don't have sites. We don't plan to have sites. So we don't expect that it, in its current stage, will influence our programs. Just as we were, the last couple of years, been battling COVID, we were able to actually successfully run our clinical trials. We're confident that we can also do that, of course, all depending if the situation develops into another direction. But currently, as things are, we don't expect any direct impact on company performance.

Thank you.

Perfect. And then back to you, Donna.

Thank you. Ladies and gentlemen, this concludes today's question and answer session and today's event.

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