Oncolytics Biotech Inc.

benefit by adding a checkpoint inhibitor to the treatment regimen. We view the completion of Bracelet 1 as the last major step on Pella-Riorep's path to a registrational study and expect the data generated to inform the design of this future trial. Now, I'd like to briefly mention data from two separate investigator-sponsored studies that were featured in poster presentations at the annual AACR meeting last month. These studies, in two difficult indications, relapsed refractory myeloma and glioblastoma, showed promising survival and biomarker data when PelorioRep was combined with chemotherapy. These combinations also stimulated innate and adaptive immune responses, which formed the basis for the observed clinical responses. The learnings gleaned from these studies will help fuel our business development efforts and accelerate our ongoing clinical programs. Lastly, I'd like to discuss a peer-reviewed paper recently published in Science Translational Medicine that evaluated Peller-Riorep's ability to enhance the efficacy of CAR T cells and enable their success in solid tumors. CAR T cells are produced by removing natural T cells from a patient and genetically engineering them to include a receptor that is specific for an antigen expressed on cancer cells. This directs CAR-T cells to the site of the cancer where they mediate tumor cell death. Since their initial development, CAR-T cells have been a transformative therapy and have been shown to generate long-term cures in patients with leukemia, lymphoma, and other blood-based cancers. Unfortunately, The benefits of CAR T cells have thus far been limited to the comparatively small subset of cancer patients with hematologic malignancies, and their inability to effectively treat solid tumors remains a longstanding problem. This is largely due to three challenges. First, the immunosuppressive microenvironment of solid tumors restricts CAR T cell infiltration into tumors and diminishes their effectiveness. Second, CAR T cells have limited perseverance, which hampers their anti-cancer activity. And lastly, their heterogeneous nature of solid tumors leads to antigen escape, which allows tumors to evade killing by leaving CAR-T cells with nothing to target. The results published in Science Translational Medicine showed that the addition of Pella-REAREP overcomes each of these challenges as it reverses immunosuppressive tumor microenvironments, increases CAR-T cell perseverance, and prevents antigen escape by creating dual-specific CAR-T cells that take advantage of Pella-Riorep's ability to replicate within the tumor. These dual-specific cells are directed against the tumor both by their engineered receptor targeting its specified tumor antigen and by a separate receptor that targets Pella-Riorep replicating within the tumor. By overcoming each of these challenges, Pellarearep was able to drastically improve the persistence and efficacy of CAR T cells in urine models of skin and brain cancer. When compared to treatment with either Pellarearep or CAR T cells alone, CAR T cells loaded with Pellarearep led to statistically significant survival benefits. When Pellarearep-loaded CAR T cells were followed by an intravenous Pellarearep boost, We saw further enhancement in efficacy with tumor cures observed in more than 80% of treated mice in each model. If these findings are translated to the clinic, they could have a profound therapeutic impact and alter treatment paradigms across many indications. According to the US National Cancer Institute, approximately 90% of cancer cases diagnosed in 2021 were solid tumors. While these patients are currently unable to benefit from CAR-T therapy, the preclinical data featured in Science Translational Medicine point to Pella-Riorep as the key to unlocking the potential of this revolutionary treatment modality for these patients. We believe this provides an excellent opportunity for business development, which I'll now let Andrew discuss. Andrew?

Thank you, Tom, and good afternoon, everyone. From a BD perspective, we are very excited by the preclinical results presented in Science Translational Medicine. Despite only being approved for a subset of cancer patients with hematologic malignancies, CAR-T therapies generated more than a billion dollars in sales last year. Pelorera's potential to enable CAR-T success in solid tumors, therefore, represents an opportunity to greatly expand what is an already large market. To pursue this opportunity, we plan on using our preclinical data to engage with partners who are interested in licensing Pellaria Rep and leading its development as an enabling technology for CAR T therapies. Having a partner assume the cost and development responsibilities here will allow us to participate in the upside of this lucrative CAR T commercial opportunity with minimal risk and a continued focus on our current clinical programs in breast and other cancers. I'd like to mention the ongoing bridging clinical trial being conducted by our partner, Adlai Nortai, who is working to develop and commercialize Pelorirap in China and other Asian territories. This trial evaluates Pelorirap-paclitaxel combination therapy in Chinese breast cancer patients. The trial recently advanced into its third and final dose escalation cohort after data from the first two cohorts showed the study combination was well-tolerated and did not lead to any new safety signals. As a reminder, the trial's second cohort evaluated a dosing regimen equivalent to what was administered in IND213, while the third cohort's regimen is equivalent to the PelorioRep paclitaxel cohort being evaluated in Bracelet 1. The bridging trial aims to accelerate Adelaide's development of PelorioRep by allowing them to incorporate data from IND213 and Bracelet 1 to inform plans for a Phase III study designed to support registration in rapidly growing pharmaceutical markets. China alone recorded 416,000 cases of breast cancer in 2020, and our partnership with Adelaide provides a valuable opportunity to expand Pelorirap's commercial prospects into important international regions. The last safety updates I'll discuss today come from Goblet, our Phase I-II gastrointestinal cancer trial being conducted in collaboration with Roche. This trial is evaluating Pelorirap in combination with PD-L1 inhibitor atizolizumab. in patients with advanced or metastatic pancreatic, colorectal, and anal cancers. The trial has seen rapid progress since the first patient's dose last November. Each of its two safety run-ins have been successfully completed with no safety concerns noted during independent reviews by the trial's Data Safety Monitoring Board, or DSMB. Following these positive DSMB reviews and authorization from Germany's regulatory body, all of the trial's four cohorts have now cleared for full enrollment. With each of the safety updates I just mentioned and the data from the presentations at AACR, we have added to an impressive database demonstrating Pella Rear Rep's ability to combine with a myriad of leading anti-cancer agents without causing unacceptable toxicities. This has been shown across many indications, which supports the case for Pella Rear Rep to be developed as an immunotherapy backbone that can enhance the efficacy of other agents. Tellurerep Safety Database has thus proven to be a strong selling point in our conversations with potential biopharma partners interested in harnessing its immunologic effects to maximize the commercial impact of their drugs and therapeutic candidates. Next, I'd like to talk about how we envision our BD efforts progressing, particularly as we head towards Bracelet 1's anticipated top-line data readout. As data matures from Bracelet 1, and factoring in the data we've already generated for IND213 and AWARE-1, we'll be able to better leverage the full suite of immunotherapeutic effects of Peloreref and find the most advantageous strategy for partnership. With that in mind, we plan to be methodical in our efforts to seek a global clinical and commercialization partnership as we move towards registration. Given the number of relationships we've established with leading biopharma companies, including some who've already expressed interest in the Bracelet-1 study, We hope to generate competitive tension between potential partners to ensure we reach the best deal possible for our shareholders. Beyond breast cancer, we plan to continue utilizing partnerships with academic and industry leaders to advance Pellarear Rep-based combination therapies. As Matt mentioned, we believe this strategy aligns well with Pellarear Rep's pharmacologic profile. Data from AWARE-1 and other clinical studies have demonstrated Pellarear Rep is both an active immunotherapy and a versatile backbone therapy with the ability to activate anti-cancer immunity and remodel the tumor microenvironment. As a backbone therapy, Pella Rear Rep can increase the efficacy and addressable patient populations of a variety of therapeutic modalities. We have already begun to prove out this strategy with checkpoint inhibitors, which comprise a multibillion-dollar market despite as few as one in five patients adequately responding to these therapies. As discussed earlier, we are now working to solve this problem in breast and GI cancers with our Bracelet 1 and Goblet studies. To efficiently replicate this approach across other indications and drug classes, we aim to have partners who will share in the responsibility for these development efforts. This will allow us to maximize our opportunities for value creation without deviating from our core focus on breast cancer. And with that, I'll now let Kirk proceed with a discussion of our financial results. Kirk? Thank you, Andrew.

I'm happy to report that Oncolytics continues to be in a strong financial position with cash and cash equivalents of $39.5 million as of March 31, 2022, compared to $41.3 million as of December 31, 2021. Based on our current projections, our existing financial resources leave us well capitalized into 2023. This is expected to provide runway through multiple clinical data readouts, including the upcoming announcement of Bracelet 1's top line results. Operating expenses for the first quarter of 2022 were $2.6 million, compared to 3.1 in the first quarter of 2021. This change was mainly due to lower investor relations activities and associated expenses. Now, research and development expenses for the first quarter of 2022 were 3.7 million compared to 2.8 for the same period last year. This increase was due to the progression of the Goblet study, the completion of a product fill, higher manufacturing-related process development activities, and a higher compensation expense in support of our expanded clinical program. The net loss for the first quarter of 2022 was 6.8 million compared to 6.4 million for the first quarter of 2021. equating to a net loss of $0.12 per share for the first quarter of 2022 and $0.13 per share for the first quarter of 2021. With that, I will now pass the call back to Matt for some concluding remarks. Matt?

Thanks, Kirk. Let me conclude by expressing my enthusiasm for where I see Oncolytics headed. Thanks to thoughtfully designed clinical studies highlighted by IMD 213 and its supportive studies, We have established Pella as a broadly safe immunotherapeutic agent and demonstrated its ability to deliver a statistically significant and clinically meaningful survival benefit to breast cancer patients in a well-controlled, randomized clinical trial. We have thoroughly characterized its immunological effects, including its ability to awaken innate and adaptive anti-tumor immunity and remodel tumor microenvironments by promoting the infiltration of cancer-fighting immune cells and upregulating PD-L1 expressions. We also showed that we can enhance these effects with checkpoint blockade. All this has clearly differentiated Pella from competing agents. It has also strongly piqued the interest of thought leaders across industry and academia, allowing us to establish valuable relationships. We are leveraging these relationships to advance a diverse pipeline and expect to achieve multiple clinical milestones by the end of the year. These include anticipated updates from the Goblet Study at the upcoming ESMO World Congress on Gastrointestinal Cancer Meaning as well as Bracelet One's anticipated top-line data readout in Q4. With Bracelet One's upcoming readout, we are aiming to propel our lead program into a registrational study while providing the necessary proof of concept for our broader clinical development strategy. A positive outcome in Bracelet One will establish the role of Pella as an emerging immunotherapy and will likely bode well for a program like Godlet, which is yet another example of a collaboration with an industry leader. We would also embolden our efforts to expand Pella's therapeutic impact through partnerships that seek to develop it as a backbone of combination therapies and additional indications. As we advance Pella's development, we will continue to dedicate our primary focus and resources to our breast cancer program along with GI cancers through the Goblet Study. We believe this capital-efficient approach represents the best strategy to maximize shareholder value as we work to bring Pella to cancer patients in urgent need of novel therapies. Finally, I'd like to briefly thank all those responsible for bringing Oncolytics to where it is today, starting with our shareholders. We greatly value your support, which is what makes our fight against cancer possible. I also need to extend my gratitude to our employees, partners, and collaborators who have enabled an impressive collection of data highlighting Pella's wide-ranging therapeutic benefits. Lastly, and most importantly, I want to thank the patients who have participated in our clinical trials and their families. It's the desire to improve the lives of patients that serves as the driving force behind all the work we are doing as a company. With that, I'll ask the operator to open it up for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star followed by one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the pulling process, please press star followed by two. And if you're using a speakerphone, please lift your handset before pressing any keys. Your first question comes from John Newman with Canaccord. Please go ahead.

Hi, guys. Thanks very much for taking my question. I just wondered if you could talk a little bit about future plans for Pella ReRef in conjunction with CAR-T. So you've recently published some interesting information regarding loading CAR T cells with Pell ReRap. And I'm wondering if you could discuss potential future clinical plans there.

Thanks. Hey, John, how are you? Good, thank you.

So what sort of transpired since this has become public? Andrew's been able to negotiate a number of MTAs And a number of companies are looking to see whether their constructs behave as well in a pre-clinical environment as Professor Bile's work did at Mayo. As you know, various companies have various CAR-Ts targeting various moieties. So what they want to be able to do is basically emulate the work that Dr. Bile had done. And then I think we could be looking at getting into a number of clinical studies very quickly. Andrew, do you want to talk a little bit about the commercial strategy around the CAR-T and how we see a way forward with this?

Yeah. It's obviously something we don't want to develop organically. We're focusing on breast first and last and foremost right now. And the reason for that part is, if you've read the paper, essentially you have a prime and a boost dose of Pellaria Rep. So it only sells, each CAR-T treatment would only sell two doses of Pellaria Rep, which is negligible. but it would sell CAR-Ts that go on the order of $400,000 to $500,000 a year. So we see the value for us financially being in getting a piece of the actual sale of that CAR-T that would not be sold were it not for the ability to treat that solid tumor that Pellarera conveys. So the way we see it is we would want to get a reasonable upfront. I won't go into what those numbers are, but it has to be something we feel comfortable with. some development milestone payments, and then when the product is approved, a certain percentage of each sale of a CAR T treatment.

Okay, great. Thank you.

Ladies and gentlemen, as a reminder, if you do have any questions, please press star 1. Your next question comes from Patrick Chichiro with HC Wainwright. Please go ahead.

Hi, good afternoon. This is Jason on for Patrick. And I guess my first question is also just around the CAR T kind of building off the previous question. And what I'm wondering is, are there any plans in terms of moving into higher or larger organism for preclinicals and kind of like producing for IND enabling studies?

That is ultimately the goal.

What we'd like to do is work with these various partners in their preclinical model. It's interesting. We've discussed, you know, how we can potentially move this forward with some other partners, including the collaborators at Mayo. Because so many of these CAR-Ts are well understood now in the clinic, especially the hemolignancy ones, and because the tox profile around Pella is so well known, We're not sure if we would actually need to do higher organisms, say cyanologous monkeys or beagles or what have you. What we may be able to do is what we've done with the initial work done in checkpoint blockade, where we've just run a safety run-in in three to six patients or a three-by-three design. So we might be able to forego any additional animal testing required to get into the clinic and And that's generally the thinking. We'll have that conversation, or our partners will have that conversation with the agency, but our current thinking is it would not be necessary.

Okay, great. Yeah, that's really helpful to know. And just one more question, if I may. So I know there wasn't any update today in terms of the RioGLIO program, and especially with the positive results that you guys presented for the long term at AACR earlier last month. So can you kind of just give us an update of what is the next plan or what is the next update for this? And that's all for me for today. Thank you.

It's interesting. The emerging data that we're getting, especially aware and we anticipate if the science holds, we should expect similar outcomes with bracelet and goblet. There was a lot of interest around the GBM work. The virus did seem to provide a survival advantage at the high dose, as well as a PFS advantage at the high dose. Where we think this is likely to go is with the addition of checkpoint blockade. We actually have a number of animal models and publications in the space demonstrating that the virus can be very effective in the GBM space. And of course, our more recent work with CAR T. This isn't on our critical path, though, in terms of what we would like to do in the clinic. Really, the goal is is to get the results out of Bracelet and start that phase three program in Brest in the context of a partner. We also believe that Goblet could potentially lead to a second route to a registration study, allowing us to avoid any binary events in that phase three setting by running two different programs. What we think is very attractive, though, is if we do partner with a company that has checkpoint blockade In terms of their development path and lifecycle management, I think we've demonstrated very effectively that the virus can be used synergistically in GBM. And I think the next logical step would really be exploring that in the context of either CAR T, checkpoint blockade, and then getting that on a regulatory path.

Oh, great. Thank you so much.

There are no further questions at this time. Please proceed.

Again, I just want to thank everyone for taking the time to listen to our quarterly updates, and I'd like to thank everyone for their questions. Have a lovely day.

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