Oncolytics Biotech Inc.

Welcome to Oncolytics Biotech's fourth quarter and full year 2022 conference call. All participants are now in 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 will now like to turn the call over to John Patton, Director of Investor Relations and Communications. Please go ahead.

Thank you, Operator, and good morning, everyone. Earlier this morning, Oncolitics issued a press release providing recent operational highlights and financial results for the fourth quarter and full year of 2022. A replay of today's call will be available on the events and presentation section of the Oncolitics 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 Pallad Rear Rep, including statements regarding the company's focus, strategy, and objectives, the company's belief as to the potential and mode of action of Pallad Rear Rep as a cancer therapeutic, the design, aims, and anticipated benefits of the company's current pending clinical trials, and anticipated timing of the release of additional data, the company's plans and expectations regarding potential registrational studies, the company's business development plans and strategies, the company's financial runway, and other statements related to anticipated developments in the company's business. These statements are based on management's current expectations and beliefs and are subject to a number of factors which involve none other than risk, 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 four looking statements. and a new forward-looking statement in which Oncologics expresses an expectation or belief as to future results. Such expectations or beliefs are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will be achieved. These factors include results of current or pending clinical trials, risks associated with intellectual property protection, financial projections, actions by regulatory agencies, and those factors detailed in the company's filings with CFR and the SEC. Oncolytics does not undertake any obligation to update these forward-looking statements except as required by applicable laws. Speaking on today's call will be Oncolytics Chief Executive Officer, Dr. Matt Coffey, Chief Medical Officer, Dr. Thomas Heinemann, Global Head of Business Development, Andrew D. Gododaro, and Chief Financial Officer, Kirk Look. I will now turn the call over to Matt to begin management's remarks. Please go ahead, Matt.

Thanks, John, and thanks to everyone joining us this morning. Looking back over the past year, it's clear that 2022 was a transformational time for our pipeline and company, and one that has set us up for another exciting year in 2023. Emboldened by the accomplishments that you'll be hearing about on today's call, we are advancing a pipeline that now includes two high-value registrational opportunities for Pella Rea Reb, or Pella as we'll call it, with each representing a core pillar of our business and foundation for growths. The first and longest standing of these pillars is of course our HR positive HER2 negative breast cancer program. Last year we completed enrollment in the program's second randomized phase two trial, bracelet one, which is approaching a crucial data rate out that we anticipate sharing at a major medical meeting next quarter. We expect this readout, which Tom and Andrew will discuss in more detail, to provide key data that will validate the program's prior positive results and help inform the design of subsequent registrational trial. Just to provide some additional company history, our breast cancer program's prior positive results come from IND213, a randomized phase two trial that counts as one of the two pivotal studies required for regulatory approval of Pella in breast cancer, per a special protocol assessment agreed with the FDA. IND213 showed a statistically significant and clinically meaningful near doubling of overall survival in HR-positive HER2-negative breast cancer patients who received Pella plus Paclitaxel compared to those who received Paclitaxel alone. These data build upon Phase I results demonstrating Pella's single-agent activity in HR-positive HER2-negative breast cancer and also inspired the AWARE-1 study, which met its primary endpoint and demonstrated how Pella remodels the tumor microenvironment and trains the immune system in ways that may enhance the efficacy of a wide range of oncology treatments. With all these data in place, we believe a successful outcome from Bracelet 1 would represent a key inflection point for our breast cancer program, as it would clear the way for Pella's advancement into a registrational study and bolster our business development activities. I'll turn to our pancreatic cancer program, which emerged as our second core pillar late last year following some remarkable proof-of-concept data from our Phase I-II goblet study presented at the 2022 CITSE annual meeting. The pancreatic cancer cohort reported a 69% objective response rate, including a confirmed complete response in 13 valuable patients treated with a combination of Pella, the checkpoint inhibitor atezolizumab, and the chemotherapeutic agents gemcitabine and nabpaclitaxel. These results generated excitement from our team and key opinion leaders in the field because the average response rate observed in relevant historical control trials in pancreatic cancer is only about 25%. The 69% objective response is nearly three times what would have been expected. Based on the strength of these data, as well as discussions with key opinion leaders and potential partners, we believe the most prudent next step for our pancreatic cancer program is to determine the optimal registration enabling pathway as expeditiously as possible. To do this, we continue to engage with the FDA, who granted Pella fast-track designation in pancreatic cancer in the fourth quarter, and other key stakeholders to align on the optimal design for such a study, which Tom will discuss further. Looking ahead, advancing our pancreatic and HR-positive HER2-negative breast cancer program towards regulatory approval will be our primary focus. Alongside these efforts, we will selectively continue to evaluate Pella's therapeutic potential in additional indications through collaborations with leading industry players and academics, as this was the strategy that allowed us to maintain momentum in our breast cancer program while bringing our pancreatic cancer program forward as our pipeline's second core pillar. And with that, let me turn the call over to Tom and Andrew for a more in-depth discussion of our clinical programs and business development efforts. We will start with you, Tom.

Thanks, Matt. I'd like to kick off my portion of the call by setting the stage for what to expect from Bracelet One's anticipated readout next quarter. As a reminder, Bracelet One is a randomized phase two trial to be conducted in collaboration with Pfizer and Merck KGA. It enrolled patients with HR-positive HER2-negative metastatic breast cancer into three distinct cohorts. The first two cohorts mirror the IMD213 study that Matt referenced earlier. with one cohort evaluating paclitaxel monotherapy and the other evaluating the combination of paclitaxel and Pella. In addition, the third cohort evaluates a combination of paclitaxel, Pella, and the checkpoint inhibitor of Velumab. At a medical meeting next quarter, we anticipate reporting progression-free survival and tumor response results from this trial, which was designed to enroll a total of 48 patients. While enrollment into BRACEV-1 is complete, It should be noted that many patients continue to be followed for critical endpoints. Accordingly, some key results of the study, including overall survival, will only come into focus as the data mature. Given its size, BRACEF1 is not powered to demonstrate statistical significance between the study groups. A successful result from the trial would, therefore, be to see one or both of the cohorts that include Pella numerically outperform the paclitaxel monotherapy arm. Achieving this result would result in a second randomized data set supporting Pella's ability to deliver meaningful clinical benefit to HR-positive HER2-negative breast cancer patients, further de-risking our program as we move towards a registrational study. As we look ahead for our breast cancer program, we're also highly encouraged by recent data presented by our partner, Adlai Norte, at last year's San Antonio Breast Cancer Symposium. These data were from Adlai's single-arm bridging trial evaluating Pella plus Paclitaxel in Chinese patients with HR-positive, HER2-negative metastatic breast cancer. As you just heard, Pella plus Paclitaxel is the same combination being studied in bracelet one's second cohort. Results from Adlai's bridging trial demonstrated this combination's favorable safety profile in Chinese patients and showed tumor shrinkage in 12 of 14 evaluable trial participants with seven achieving a partial response. Of the seven patients with partial responses, three had their responses confirmed by subsequent scans, while two others had potentially confirmatory scans pending. Notably, one patient continued to maintain a partial response after nearly a year following the presentation's cutoff date. And although they are still evolving, I would like to also note that the trial's progression-free survival results presented at the San Antonio Breast Cancer Symposium showed a median PFS of 9.1 months. These interim results from Adelaide's bridging trial further demonstrate the ability of pellet plus paclitaxel to drive durable clinical responses in HR-positive, HER2-negative breast cancer patients. We believe this promising finding bodes well for Bracelet 1's upcoming readout. I'll now speak about our recent results in pancreatic cancer and what they mean for the program moving forward. These data were presented at the CITSE meeting last year and came from our Goblet study, which is a phase one to multi-indication trial being conducted in collaboration with Roche and AIO. The trial was designed in two stages so that any cohort that achieves a pre-specified response rate in stage one may be expanded to enroll additional patients in stage two. As Matt previewed, Goblet's pancreatic cancer cohort evaluated the combination of Pella, the PD-L1 checkpoint inhibitor atezolizumab, and the chemotherapeutic agents gemcitabine and nabpaclitaxel in first-line patients with advanced or metastatic disease. We reported an objective response rate of 69% in 13 available patients with eight patients achieving a partial response and one achieving a confirmed complete response which is a quite rare finding in this indication. The study combination was also shown to be well tolerated. To help provide a full understanding of these results, I'll emphasize some key points made during a recent Key Opinion Leader webinar, a replay of which can be found on our website. This webinar featured Goblet's principal investigator along with two additional pancreatic cancer experts. First, I'll emphasize that achieving a 69% response rate in goblets pancreatic cancer cohort far surpassed our expectations going into the trial. As Matt mentioned, the average response rate from pancreatic cancer trials of gemcitabine plus nabpaclitaxel is only about 25% or roughly a third of what was observed when we added pellet and a checkpoint inhibitor to this regimen. Moreover, a number of trials have shown that checkpoint inhibitors only improve outcomes in pancreatic cancer patients classified as MSI high, who represent only about 1% of all pancreatic cancer patients. This helps explain why older chemotherapeutic regimens, such as gemcitabine plus nabpaclitaxel, remain the standard of care in pancreatic cancer, despite providing a median overall survival of less than a year. The next point from our KOL webinar that I'll emphasize is that Goblet's pancreatic cancer cohort included patients that are quite typical and similar to what would be expected in a randomized registrational trial. Of the available patients, 13 had metastatic disease, with nine having liver metastases, and the average age of the patients was just over 62 years. Having achieved these very encouraging results in a representative population increases our confidence as we move our program towards a registrational study. And the last point I'll emphasize is that we have a robust set of mechanistic data from prior trials supporting godless results, which suggests Pella synergistically acts with checkpoint inhibition and chemotherapy to drive tumor responses in pancreatic cancer. These data have demonstrated Pella's ability to activate and expand anti-cancer immune cells while simultaneously reversing immunosuppressive tumor microenvironments. Immunologic effects such as these are known to enhance the efficacy of checkpoint inhibition, highlighting the scientific rationale for the Goblet study. Based on Goblet's compelling results, as well as the unmet need and current treatment landscape in pancreatic cancer, we have chosen to forego the stage two expansion phase for the trial's pancreatic cancer cohort so that we can move directly towards a registrational pathway. Given the clear signal of activity we've seen in Goblet's pancreatic cancer cohort to date, we believe this is the most clinically appropriate next step for the program and one that is in the best interest of patients. To enable the advancement of our pancreatic cancer program to a randomized trial, We are gathering input from regulators and other key stakeholders on the optimal design for its next trial. As we work to do this, we will benefit from our Pancreatic Cancer Program's recent fast-track designation from the FDA. This designation will provide us with the opportunity to communicate more frequently with the agency about our data and plan development pathway. It also provides a degree of validation for Godwit's interim results since receiving fast track designation requires that a therapy show some advantage over available treatments, such as superior effectiveness. While it's too early to share the specifics of what Pella's next pancreatic cancer trial will look like, what I can say now is that we are envisioning a randomized phase two study with an adaptive design. Ideally, this design would allow seamless progression from an interim analysis to an expansion phase designed to support a regulatory file. We look forward to our continued work designing this trial and to sharing more details once they are finalized. Lastly, before handing off the call to Andrew, I would like to remind all listening that in addition to its pancreatic cancer cohorts, Goblet also includes cohorts evaluating Pella-Atezolizumab combinations in metastatic colorectal and advanced anal cancer. We expect to have additional updates from these cohorts over the course of the year and have been pleased with the overall enrollment to date. With that, I'll now ask Andrew to speak about our business development efforts. Andrew?

Thanks, Tom. I'll start by building off a point Matt made at the top of the call, noting how 2022 was a transformational year for Pella's potential licensing value proposition. By adding Goblet's recent date in pancreatic cancer alongside IND213's statistically significant results in breast cancer, We've provided Pella with a second registration opportunity that is significantly de-risked by differentiated clinical data. Moreover, each of Pella's potential registration programs provides a robust market opportunity for prospective partners. For HR-positive HER2-negative breast cancer, estimates indicate that there will be nearly 300,000 drug-treatable patients across the U.S., Japan, and major European markets by 2028. Looking at first-line metastatic pancreatic cancer, the number of drug-treatable patients is expected to reach 135,000 in this same timeframe. With addressable markets of this size and clinical data demonstrating Pella's potential to substantially improve upon the standard of care in these indications, we believe we are well-positioned as we pursue a single licensing deal for both of our breast and pancreatic cancer programs. According to feedback from our conversations with potential partners, Bracelet One's evolving results will be a crucial component of the data set supporting any deal. As we work towards a licensing agreement for Pella's rights in the US, Europe, Japan, and elsewhere, we are pleased to have already partnered with Adelaide Nortai on its development and potential commercialization in certain Asian territories such as Singapore, South Korea, Macau, Hong Kong, Taiwan, and China, which is the world's second largest and fastest growing pharmaceutical market. Adlai recently took an important step to accelerate Pella's development in China, thanks to the results from the bridging trial Tom discussed earlier in the call. With these data showing that Pella plus paclitaxel was well-tolerated and generated durable responses in the study, Adlai now has the opportunity to interact with Chinese regulators to discuss potential registrational approaches for Pella in this jurisdiction. In addition, the positive results of the bridging trial are expected to allow for the inclusion of data from the IND 213 and bracelet 1 in Adelaide's future regulatory submissions, thereby expediting Pella's path to approval in China. Now, before handing the call to Kirk to review our annual financial results, I'd like to reiterate our enthusiasm for the outlook of our BD prospects and remind everyone that due to the nature of licensing discussions and our commitment to drive competition between prospective parties, we are unable to predict the timing of any potential partnership. That said, I'll again note that our ongoing interactions with prospective partners have indicated that showing meaningful data from BRACE-IT-1 would be a critical step towards reaching a deal. This isn't surprising, as a successful outcome from BRACE-IT-1, together with IND213's statistically significant results, would give us two randomized data sets demonstrating fellows' ability to drive clinical benefit and HR-positive HER2-negative metastatic breast cancer patients. With IND213 counting as one of two pivotal studies required for FDA approval, it would also position us to move rapidly into a substantially de-risked registration study and an indication with a large market opportunity and high unmet need. As we look toward bracelet 1's anticipated readout next quarter, I should emphasize that we will continue to advance in a deliberate manner as the overall survival Tom mentioned matures. With several patients still receiving treatment, there's an opportunity for a truly impressive endpoint, and we could sell ourselves short if we rush into a deal prematurely based on data that could improve over time. With industry leaders such as Pfizer, Roche, MercSorano, Bristol-Myers Squibb, and Insight, already familiar with Pella thanks to collaborative clinical trials, we intend to run a methodical and competitive process that ensures we reach the best possible outcome for our shareholders. Many of the key pieces needed to achieve our BD goals are already in place thanks to our current data in breast and pancreatic cancer, and we expect that the continued execution of our clinical regulatory strategy will bring us to a successful outcome. One final note, we continue to advance our preclinical CAR-T program in ongoing discussions with multiple potential biopharma research partners and maintain constructive conversations on a potential clinical trial. With that, Kirk will now review our fourth quarter full-year financial results. Kirk?

Thanks, Andrew. It's my pleasure to report that Oncolytics' current cash resources have us in a strong financial position with an anticipated runway into 2024 based on our current projections. This runway is expected to take us past multiple potential value inflection points, including Bracelet 1's anticipated readout next quarter. Now, moving on to our fourth quarter and year-end financial results, we ended 2022 with $32.1 million in cash and cash equivalents in marketable securities, compared to $41.3 million in cash and cash equivalents as of December 31st, 2021. General and administrative expenses for the fourth quarter of 2022 were $3.7 million, consistent with $3.8 million for the fourth quarter of 2021. For the full year 2022, G&A expenses were $11.5 million compared to $13.3 million for the full year 2021. This change was mainly due to lower investor relations activities. Consistent with prior quarters in 2022, the global business conditions had negatively impacted market sentiment for the biotech industry and the overall capital markets. Though we anticipate this changing in 2023, we limited our IR activities accordingly in 2022. That research and development expenses for the fourth quarter of 2022 were $4.8 million compared to $3.7 million for the fourth quarter of 2021. For the full year of 2022, research and development expenses were $15.4 million compared to $12.9 million for the full year of 2021. The changes from the fourth quarter and full year 2021 to the respective 2022 periods were mainly driven by advanced care goblet platform study and higher personnel-related expenses to support our R&D program. The net loss for the fourth quarter of 2022 was $8.6 million compared to $7.8 million in the fourth quarter of 2021, which equates to a net loss of 14 cents per share for both periods on a consolidated basis. And finally, the net loss for the full year 2022 was $24.8 million compared to $26.3 million in the full year 2021, equating to a net loss of 43 cents per share for the 2022 period, and a net loss of 49 cents per share for the 2021 period on a consolidated basis. I will now hand the call back to Matt for some closing remarks. Matt? Thanks, Kurt.

First, let me extend my gratitude to our clinical trial participants, employees, partners, investigators, and shareholders for their contributions towards our progress over the past year. This progress has brought us to an exciting and crucial point in our corporate evolution. In our HR-positive HER2-negative breast cancer program, the continued advancement of Bracelet 1 has us closing in on a critical data readout that, if positive, will bolster our BD prospects and accelerate Pella's path into a registrational study in this indication. And alongside Bracelet 1's advancement, we collaborated with Roche and AIO to generate compelling data in pancreatic cancer, providing Pella with a second clear path towards a registrational study. In addition, our recent data in pancreatic cancer provide a blueprint for how we can efficiently enhance Pello's value proposition by adding near-term value drivers to our pipeline without taking focus away from its core pillars. We will continue to follow this blueprint as we move forward as our primary internal focus will be the advancement of our breast and pancreatic cancer programs so that we can move into a registrational environment with multiple shots on goal and reduce risk of binary events. In parallel, we will use collaborative studies to advance Pella in additional highly prevalent indications and to further demonstrate how Pella's immunotherapeutic mechanism of action positions it as a platform molecule with expansive therapeutic potential. With world-class collaborators and a talented team that provided their ability to execute the strategy over the last year, we believe we are well-positioned for continued success as we work to improve the lives of cancer patients through Pella's development. With that, we will now open up the call for Q&A.

Operator?

We will now begin the question and answer session. If you have a question, please press Start followed by the number 1. If you want to withdraw your questions, please press Start 2. Your questions will be pulled in the order they are received. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from John Newman from Canaccord Genuity. Please go ahead.

Hi, guys. Thanks for taking the question. I just wondered if you could talk at all about potential design for a particular study following goblet in pancreatic cancer. Just curious, mostly on the control arm, just sort of what you're thinking about there, just in general terms for that study. I know that some of the agents that We rely on, and other cancers have not worked as well in pancreatic cancers, so they might not be as suitable for control. But just curious if you could talk about that.

Sure. It's Matt, and then I'll pass it off to Tom. Goblet, the pancreatic arm looked at Pella in combination with nabpaclitaxel, gemcitabine, and atezolizumab, and that's where we saw the 70% objective response rates. The standardized backbone in this population would be falferinox or gemnapaclitaxel. I think the question really comes is, do we look at a third arm where we'd add atezolizumab to the chemo backbone and compare that to that same triplet with the virus added? What we've heard from KOLs is because checkpoint inhibitors have been so well studied in the context of chemo backbones, whether it be falferinox or napaclitaxel, that they really haven't seen in the activity with regards to objective response, PFS or OS. So a lot of our collaborators feel it would be unethical to do that triplet without the addition of Pella or even to run it as a control worm because it's known not to be active and it is known to be toxic. So I think we could either just run a simple two-arm study of gem napaclitaxel versus that plus pellet plus atezolizumab. We may have to run, you know, we'll call it 15 patients or so of the checkpoint inhibitor plus the chemo just to show futility, just again to reproduce the fact that it's not active and that it is toxic. But we're hoping ethics and regulators would look at the historical and realize it's not an active drug combination and allow us not to go forward with that. Tom, do you have anything to add to that?

No, not really. I agree. I think the most straightforward path and probably the most valuable to clinicians would be simply to run a control arm of gemcitabine and nabpaclitaxel. And as Matt alluded to, you know, any design we would have to discuss with our investigators and the regulators first. But I think that would be the path we would prefer to go down as the simplest and probably the most meaningful.

Great. Thank you. Thank you.

As a reminder, should you have a question, please press star one. Your next question comes from Patrick from HC Greenwright. Please go ahead.

Thanks. Good morning. My first question is around bracelet one. I'm just wondering if you can discuss the numerical separation you'd be looking for on PFS and tumor response. And also, if you could tell us when you would expect a mature date on overall survival and if it's the data set expected next quarter. or the mature data that would help guide the path forward for the program. And separately, I'm wondering if you could remind us about that agreement with Pfizer. How does it impact the path forward for breast, the timing of when Pfizer can decide to move forward with the program, or when you can decide to seek a different collaboration partner for a potential registrational program?

Tom, I'll let you take the first part of the question, and then I'll ask Angie to take the one regarding the relationship with Pfizer and where we are in that process.

Okay, so the, I mean, it's impossible to say exactly what numerical difference, you know, we would consider meaningful, but I think we would obviously want a difference that is, you know, a clear separation between the arms, you know, six months versus 6.2 months or something would not move the needle, but a separation that is, I think, substantial on a proportional level would be very meaningful. And so that's what we would be looking for. With regard to the, that by the way applies to both the objective response and the PFS because we're looking at both of those endpoints in the immediate readout that's coming along. For the overall survival, you know, it's impossible to predict when that will be mature precisely because patients, it depends on how patients do on the study. But I think that it's likely that those data would be available in the, you know, first, second, third quarter of next year or something in that timeframe.

Tom, could you maybe speak to how that affects our decision-making process in terms of looking at phase three?

Oh, sure. Yeah, sure. Sorry. Yeah, I think that in breast cancer, historically, both objective response rate and even more so PFS have been very predictive of the overall success of treatments and PFS, as you are probably aware, is in and of itself a licensable endpoint based on prior experience. So we would view any objective response and PFS data as very impactful in moving forward and would not consider it necessary to wait for overall survival data to move on to the next step in that program.

Great.

And then, just as a reminder, and just in terms of how, you know, the agreement with Pfizer, how that impacts, you know, potential collaboration going forward.

Sure. Andrew. Patrick, this is Andrew.

They had, Pfizer has a period of, where they can review the data before it can be shared with anybody else under confidentiality. That period is over, but that doesn't mean that Pfizer isn't still looking at the data because the data is still maturing, as Tom mentioned. So we are now outside that period, so we can, under confidentiality agreement, also share the data with other parties besides Pfizer.

Got it. And then, you know, earlier just discussed having a competitive process for potential collaboration. I'm wondering if you could elaborate a little bit more on that level of engagement with these potential partners, especially after the initial goblet data. And if there's particular interest in breast or pancreatic, and so, you know, could one data set or the other be more impactful driver of these collaboration discussions?

I think both are equally critical. If I had to bet, I'd say breast is a little more, more so just because we have a broader body of data, but Pfizer, you know, the PANC data really drove some interest in BD. So we have quite a few companies that are looking at the data across both pancreatic and breast. And I think it's the fact that you have two shots on goal actually strengthens both your credibility of the data overall, but also allows you to basically drive more interest. So, you know, there's certainly certain companies that are breast or in GI cancers that have more of a bias towards one or the other. But I'd say anybody who's interested in one is also asking about the other. I've yet to see anybody who just wants to review PANC or breast.

Great.

Thank you very much. Thank you.

There are no further questions at this time. You may proceed.

Thanks, operator. Let me conclude by thanking all listening and stressing how pleased we are with our recent progress, as well as our excitement for what lies ahead. We look forward to providing additional updates in the future and wish everyone a great day.

This concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.