Gritstone bio, Inc. (NASDAQ:GRTS) Q1 2024 Earnings Call Transcript

Gritstone bio, Inc. (NASDAQ:GRTS) Q1 2024 Earnings Call Transcript May 9, 2024

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

Operator: Greetings. My name is Latonya and welcome to Gritstone bio’s, First Quarter 2024 Conference Call. Please note this event is being recorded. At this time I would like to introduce George MacDougall, Head of Investor Relations and Corporate Communications at Gritstone. Please go ahead sir.

George MacDougall: Thank you, Latonya and thank you everyone for joining Gritstone’s conference call to discuss our financial results, clinical and business updates for the first quarter of 2024. With me on the call today from Gritstone are Andrew Allen, co-founder President and CEO; Celia Economides, Executive Vice President and Chief Financial Officer and joining us for the Q&A portion will be Karin Jooss, executive vice president and Head of R&D. Today after the market closed we issued a press release providing corporate updates and financial results for the first quarter of 2024. The press release is available on our website. I’d like to remind you again that today’s call is being webcast live via a link on Gritstone’s Investor Relations website, where a replay will also be available after its completion.

After our prepared remarks, we will open up the call for Q&A. During the course of this call, we will make forward-looking statements that are based on current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties and actual results may differ materially from those that are described. We encourage you to review the risk factors in our most recent Form 10-Q filed with the U.S. Securities and Exchange Commission and is also available on our website. All statements on this call are made as of today based on information currently available to us. Except as required by law, we disclaim any obligation to update such statements even if our views change. Gritstone hosts these calls on an ad hoc basis and we hope you’ll find today’s call useful.

With that, let me turn it over to Andrew. Andrew?

Andrew Allen: Thank you, George and good afternoon everybody. And thank you for joining our first quarter 2024 conference call. This is a very exciting time for Gritstone, and I’ll begin today’s call with a review of our most recent data from our personalized cancer vaccine program GRANITE, as well as provide other clinical and corporate updates. Then Celia will present her financials and I’ll come back to share closing remarks. Okay, let’s get going. So we recently shared preliminary data from our randomized Phase 2 study of GRANITE in frontline metastatic microsatellite-stable colorectal cancer patients. These early data are highly encouraging and they suggest that our personalized neoantigen vaccine is inducing therapeutically beneficial immune responses in the 67 patients included in our preliminary dataset.

Let’s review what we showed. Firstly, the patients we’re treating in this study are typical colorectal cancer patients. Approximately 75% of them have liver metastases and approximately half of them have KRAS mutations. In terms of efficacy, we observed a trend towards progression free survival or PFS benefit, with a hazard ratio in the overall population of 0.82. Median progression free survival or PFS in this indication is approximately 11 months. The last patient randomized in this study entered in August 2023 and these data were cut in early March 2024, meaning that last patient was on the study for only approximately eight months, obviously short of the median PFS of 11 months. That renders these data rather immature. But even though these data are preliminary, with over 60% censoring, meaning that over 60% of patients have not yet achieved an event of progression or death, this is a promising signal.

As you may know, a hazard ratio of less than one implies a treatment benefit, and the lower the hazard ratio, the stronger the treatment effect, i.e., the greater the benefit. Now, to get a better understanding of what outcomes we may see as the overall dataset matures, we identified at baseline prior to therapy a subset of patients that would be likely to progress faster than the overall population. Nearly all of these patients, and we refer to them as high risk, had liver metastases. As expected, the PFS data in this group were more mature with 44% censoring, and the apparent PFS benefit associated with GRANITE therapy was much stronger in this high risk population than in the overall population. We reported a hazard ratio of 0.52, which is striking and equates to a 48% relative risk reduction of progression or death with GRANITE versus control.

The early data in these high risk patients who give us information faster give us a potential window into the future, and as our data mature, meaning more patients experience disease progression, we expect the clinical benefits of GRANITE versus standard of care to become more pronounced. We’re excited to share the mature PFS data on all patients in the third quarter of 2024, and then we plan to discuss final phase three endpoints with the FDA. The encouraging PFS data at this early time point are important. PFS has historically been a proxy for overall survival in this disease and has therefore been used by regulatory authorities as the basis for approval of novel therapies. Previously, we’ve been cautious about PFS as an efficacy endpoint, given the potential for pseudoprogression with immunotherapy.

Pseudoprogression is a phenomenon where lesions actually grow at the beginning of treatment prior to shrinking, which can lead to the attendant risk of patients being incorrectly labeled as having progressive disease. To date, we have seen no evidence of pseudoprogression in our Phase 2 study, which supports the use of PFS as a Phase 3 efficacy endpoint, perhaps as the basis for approval, and this topic will be discussed with FDA at our end of phase ii meeting. It’s also worth noting we’ve seen apparent extension of PFS with GRANITE before. We observed PFS and OS extension in third line colorectal cancer patients treated in our Phase 1/2 study of GRANITE, wherein the 50% or so of the patients with biochemical and molecular responses to GRANITE, meaning reductions in tumor markers.

We saw extended PFS and OS compared with the non-responding patients. The interim data from this Phase 1/2 were published in Nature Medicine in 2022, and recall that we also saw similar signals of apparently extended OS again linked to biochemical and molecular responses in a Phase 1/2 study of SLATE, our off the shelf cancer vaccine that uses the same platform technologies as GRANITE. But this was in patients with advanced non-small cell and microsatellite-stable colorectal cancer. The fact that we are seeing these concordant signals across different studies, different settings, and different disease types gives us further confidence that granite could be driving meaningful clinical benefit. Now, to limit the potential impact of pseudo progression, we set PFS as the first secondary efficacy endpoint for our Phase 2 trial, and the primary endpoint was set as molecular response, a specific method of measuring change in circulating tumor DNA, which I’ll abbreviate to ctDNA.

And this was based on what we’d seen in Phase 1/2. And of course, there were no controls in that study, so therefore we had to make an assumption about how chemotherapy would affect ctDNA going into this study, what we observed is that chemo actually has an unexpectedly prolonged effect, rendering a single time point definition of ctDNA response, which is what we used unreflective of clinical benefit. Now, importantly, when we look at ctDNA trends across the entire study period, we see broad evidence that GRANITE patients are indeed experiencing greater reductions in ctDNA versus those in the control group. This finding is consistent with the PFS signal. So the data emerging from the randomized Phase 2 of our GRANITE trial build upon what we observed in the Phase 1/2 trial and suggest that Granite neoantigen directed immunotherapy could deliver strong PFS result in metastatic colorectal cancer patients in a few months time.

And again, we expect those mature data in the third quarter of this year. Why would positive data be significant for patients? Because colorectal cancer is now the leading and second leading cause of U.S. cancer deaths in males and females under 50, respectively. In addition to being the second leading cause of cancer mortality worldwide, microsatellite stable tumors comprise about 95% of all metastatic colorectal cancer diagnoses and treatment options are few, with no approved immunotherapies for this highly resistant cold tumor. A positive randomized trial result would therefore offer desperately needed hope for one of the largest and most underserved solid tumor communities worldwide. Why would positive granite data be significant for the field?

Because immunotherapy is generally believed to be ineffective in so called cold tumors, such as microsatellite stable colorectal cancer, and since checkpoint inhibitor therapy alone has not delivered benefit in this setting. To date, to our knowledge, all of our neoantigen directed personalized cancer vaccine competitors have studied cold metastatic tumors and have reported little to no signal of efficacy with their platforms. Hence their current focus on adjuvant indications and or hot tumors success for GRANITE in a cold metastatic tumor could open the door for effective immunotherapy to the majority of solid tumor patients, both in metastatic and adjuvant settings, a potentially dramatic expansion of the overall opportunity. And finally, why would positive mature PFS data be meaningful for Gritstone?

Because, of course, it suggests potential for a big opportunity immediately ahead of us in metastatic colorectal cancer, and that our objective of unlocking the broad set of immunologically cold tumors may be within reach. Having PFS as a reliable early measure of the effectiveness of our therapy gives us a potentially faster regulatory path in colorectal cancer and any other indications we pursue. Expanding the scope of immunotherapy to a wide spectrum of cancer patients is the holy grail of immuno-oncology for good reason. It’s challenging, and it’s not been done before despite decades of effort. Now, along with GRANITE, we continue advancing our other promising programs and platform technologies, and we’re attracting great recognition and support.

The recent SLATE publication in Nature Medicine highlights the promise of our off-the-shelf platform for solid tumors, which we believe is ready for plug-and-play applications across a spectrum of solid tumors. This promise is underscored by the ongoing collaboration with Dr. Steven Rosenberg of the National Cancer Institutes to evaluate our mutant KRAS directed vaccine candidate in combination with an autologous mutant KRAS directed TCRT cell therapy. The recent presentation of the latest improvements to edge, our state-of-the-art prediction platform that leverages artificial intelligence to identify the new antigen targets we encode in GRANITE, further underscores our leadership position in the field of neoantigen directed cancer vaccines.

Edge now predicts HLA class one presentation of epitopes with greater than 80% positive predictive value. Performance well beyond that of public models, and it offers what we believe to be a leading technology within the field. Edge also now includes a comprehensive state-of-the-art model for predicting peptide presentation by HLA Class 2 in the context of active vaccination, which could serve to further strengthen T cell responses to our novel vaccines. We were among the first players to leverage AI technology in this fashion and will continue to invest in edge to further what we believe to be a key potential strategic advantage. Beyond oncology, we continued pushing forward in infectious disease, largely leveraging external dollars. Our recent presentation at the ESCMID Conference reinforced previous Phase 1 findings and highlighted the durability and potential broad utility of our self-amplifying mRNA vaccine against COVID-19.

The efforts and dialogue with BARDA regarding running a Phase 2b head-to-head study in COVID-19 continue, and we remain very excited about this important 10,000 subject study. Along with BARDA and others engaged in prophylaxis efforts, we’ve garnered support from other leading players, including Gilead Sciences for therapeutic vaccine for HIV, and we remain excited about the broad potential applicability of our capabilities and self-amplifying mRNA platform in infectious disease. As our data mature across our portfolio, we continue to execute on our mission of delivering the most potent and durable vaccines. Now, I’ll turn over to Celia to speak to our financial position.

Celia Economides: Thank you, Andrew. Good afternoon everyone. We ended the quarter with cash, cash equivalents, marketable securities, and restricted cash of $52.8 million. As you are aware, in April of 2024, we completed an underwritten public offering resulting in gross proceeds to Gritstone of $32.5 million, bringing our pro forma cash, cash equivalents, marketable securities, and restricted cash to approximately $85.3 million. In February, we made the difficult decision to reduce our workforce by approximately 40%. Combined, these actions have reduced our estimated quarterly cash burn rate and extended our Runway into the fourth quarter of 2024. As you know, our priority is driving the GRANITE program forward, and our OpEx reflects this.

On the infectious disease side, to date, we have primarily funded our programs with non-dilutive outside capital. Several of our long-standing infectious disease collaborations continue and could potentially serve to bring additional capital to the company. As we think about the next steps for our ID business, we are exploring strategic funding approaches to support our growing infectious disease programs and business. In addition to our current collaborations, new partnerships in both oncology and infectious disease could serve as additional sources of capital. Turning now to our Q1 2024 operating results, we reported a net loss of $40.4 million, compared with $34 million for the same period last year. The increase in our net loss is primarily attributable to the decrease in collaboration revenue of $0.7 million, an increase in research and development expenses of $2.5 million, and an increase in our G&A expenses of $1.8 million.

The establishment of collaborations and partnerships is a core part of our business strategy as we continue to leverage our unique platforms and capabilities. Our collaboration license and grant revenue for the first quarter ending March 31, 2024 totaled $1.7 million. This is compared to $2.4 million for the same period in 2023. Our research and development expenses were $33 million for the three months ended March 31, 2024, compared with $30.5 million for the same period in 2023. The increase in R&D cost was primarily due to a one-time severance and impairment charge and increases in facilities related costs, which were partially offset by decreases in lab supplies, personnel related costs, and outside services. G&A expenses for the period were $8.5 million, up from $6.7 million for the same period last year.

The increase in G&A expenses for the period ending March 31 was primarily attributable to personnel related expenses, facilities related costs, outside services, and a one-time severance charge. As of March 31, 2024, Gritstone had approximately $97.6 million shares of common stock outstanding, prefunded warrants outstanding to purchase approximately 7.2 million shares of common stock at a nominal exercise price of $0.01 per share and approximately 13.3 million shares of common stock at a nominal exercise price of one 100th of a cent per share. In summary, we are confident in our ability to execute on our strategic objectives and toward our growth inflection points. I’ll now turn the call back over to Andrew for some closing remarks.

Andrew Allen: Thanks, Celia. We started Gritstone to expand the emerging benefits of immunotherapy to all patients with solid tumors, and we’re unwavering in our focus on that critical goal and very pleased with the progress we’ve made supporting the potential for neoantigen based cancer vaccines. Importantly, we’re getting ever closer to randomized Phase 2 data we believe will demonstrate much needed benefit in a key population of newly diagnosed metastatic microsatellite-stable colorectal cancer patients. This large group of patients is in desperate need of a therapeutic advance since median overall survival from the time of diagnosis has remained stuck at just around two years. We anticipate sharing mature PFS data as well as additional ctDNA data in the third quarter of this year.

The preliminary PFS data we shared recently, accompanied by the supportive ctDNA over time analyses demonstrating early trends in favor of GRANITE immunotherapy are all very encouraging. And to remind you, these data are following on from and consistent with highly supportive Phase 1/2 data from a single arm trial in patients with very advanced metastatic disease. We’re on the cusp of determinative data from this novel platform in a large patient population that has traditionally been considered unresponsive to immunotherapy, this is a truly exciting prospect for Gritstone, for the fields, and most importantly, for patients and their families. I’d like to thank you all for joining us today, and I’ll turn the call over to the operator for questions.

Operator: Thank you. [Operator Instructions] Our first question comes from Marc Frahm with TD Cowen. Please proceed.

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Q&A Session

Marc Frahm: Hi, thanks for taking my questions. Maybe, Andrew, can you speak to kind of how event rates in the CRC trial have kind of evolved since the February update and given where they are now, just kind of how much uncertainty there still is or isn’t that the mature PFS data will really be available in Q3?

Andrew Allen: Yes, it’s a little early to give definitive answer because we don’t obviously do exhaustive data cuts regularly that sites find that tiresome. But we have no reason to doubt the maturity of the data at this time point because a lot of Phase 3 trials have been run in this very same population with highly consistent data. So the control arm, I strongly expect, will behave as many other control arms have before, with that median PFS of around 11 months. As you’re aware from the baseline disease and demographic data that we shared recently, this population of patients is very typical, with 75% having liver metastases. So there’s no reason to believe that this is a particularly good or bad population of patients. There is, of course, some degree of informative censoring in the way we collect data, meaning that you get data on the patients who progress the fastest.

And that is probably working against the GRANITE arm, because most people believe, with good reason, that vaccine immunotherapy is going to be more effective in people with lower volume, less extensive disease. Those patients will progress, on average, a bit more slowly. And of course, that means we have less data in that population, but we have more data in the high risk group that progress faster and we showed you those data. And obviously that gave us further reason to be optimistic for mature data in Q3.

Marc Frahm: Okay, that’s helpful. And then maybe on the BARDA front, can you just remind us how that money has actually been allocated? And is it required to be spent on COVID or is there some risk here that maybe, with the avian flu epidemic going on, at least for now on the veterinary side, that some of it may get moved over to flu? And related to that, any work you guys are doing on the avian flu side?

Celia Economides: Yes. So the specific contract that we were awarded back in the fall of 2023 was part of Project NextGen, which was focused on next generation COVID vaccines. As you may recall, there were several periods for that contract, and we were in the base period, of which that time expired at the end of March. And we are now in a no cost extension period of that contract while we work out the GMP raw materials for launching the Phase 2b study. So those particular dollars in that particular contract was specific to COVID. Now, you may or may not recall that BARDA has actually shifted those funds into a different funding vehicle called RRPV. So we have applied to that vehicle as well and are now waiting to hear back.

Andrew Allen: And in regards to your question on flu Marc, the same principles apply to flu as applied to SARS-CoV-2, which is that, obviously the concern is always that there is ongoing mutation within those surface proteins, particularly the hemagglutinin and the neuraminidase, that can lead to immune evasion. And that means, of course, you’re often reacting to what is in the environment around you. The same principles that we deployed against SARS-CoV-2 are relevant here. i.e. that you want durable antibodies and ideally you want T cell immunity against conserved regions of the virus, because even if surface proteins are mutating, many of the other nonstructural proteins are not mutating because they’re highly constrained, i.e. their function is so critical to the virus that they can’t change.

That’s the basic science that underpins our so called chimeric SARS-CoV-2 vaccine, where we include both the surface protein. In the case of SARS-CoV-2, of course, that spike and we include regions of other nonstructural proteins that have conserved epitopes, particularly for CD8 T cells. You can apply that same logic to flu, and we are doing preclinical work in influenza, as you would imagine.

Marc Frahm: Okay, thank you.

Operator: The next question comes from Jon Miller with Evercore. Please proceed.

Chengxiang Liu: Hi, this is Chengxiang on for Jon. Thanks for taking our question. I guess the first one is for the readout in the second half of the year. What is your bar for success? Do you need to see PFS benefit from patients with low ctDNA at baseline to feel confident moving forward?

Andrew Allen: Yes, the median PFS is 11 months. I think, obviously we’re looking for a meaningful improvement on that, which means a hazard ratio probably better than 0.75%. And certainly the data we’ve generated so far suggests we’re on track to exceed that bar, your question about low ctDNA, there are two populations, really, that have low ctDNA that we study. There’s the group that begins the study with low ctDNA, and that group generally would be called the lower risk group, because we know, and we’ve shown, indeed a few weeks ago, that if you have low ctDNA at baseline, the rate of progression is lower, than if you have high ctDNA. So that population is a lower risk population, although they all are expected to progress.

So it’s not that they have some kind of benign disease, they will progress, and sadly, that disease will kill nearly all of these patients in relatively short order. But they do progress a bit slower, and perhaps vaccine based immunotherapy will be more effective in that population. There is generally a link between ctDNA level and disease burden, so it is reasonable to assert that the low ctDNA population have lower disease burden, which is therefore perhaps more amenable to vaccine based immunotherapy. This is obviously the idea behind the focus on adjuvant indications that Moderna and BioNTech are pursuing. So it is an important population. Then there’s a second group of low ctDNA, which is the patients who complete their induction chemotherapy and then are rendered ctDNA negative by that induction chemo.

Now, that’s good for those patients. It obviously means they’ve done well on chemo. Sadly, most of them will recur. However, and that’s an analysis that you may recall we presented a few weeks ago. And what we were able to show is that although the numbers are obviously are quite small, there is a difference in the two arms whereby patients receiving vaccines stay negative for longer than the patients in the control arm, and there is more radiologic progressive disease in the control group than in the vaccine treated group. So those data are certainly encouraging, and obviously we’ll be following up in that population as well. So two different ways to answer your question, but both of them are important, and both of them in principle, could do even better on vaccine than the high risk group where we currently have the most mature PFS data.

Chengxiang Liu: Thanks much. Just want to follow up on the ctDNA, I guess. Why did ctDNA continue to decrease in the chemo arm after induction therapy? And do you have any thoughts on what sort of ctDNA endpoint might be more predictive for survival?

Andrew Allen: So we don’t know. We did not anticipate that. Obviously, we wouldn’t have set the endpoint the way we did. So clearly we had a failure of the endpoint in the study. That’s an important distinction that I think has been lost on a lot of people. You can have an endpoint fail or a product fail or both. In this case, the endpoint failed because we saw ctDNA dropping in the control group just for the first three to four weeks after the completion of induction chemo. And so that’s presumably telling us that there is some delayed or persistent effect of the induction chemotherapy. We had no data to guide us before we designed the study. So this was a new observation, and obviously it’s one that tripped us up, but at some level not that important, because obviously what matters A, is that PFS is delivering clear signals here and is a more relevant regulatory endpoint, as we discussed in this call.

And secondly, the long-term ctDNA analysis is highly consistent with the PFS signal. In other words, patients on vaccine do better. ctDNA is controlled for longer, and that certainly is what you would expect from an active therapy in this disease setting. Now, moving forward in this disease, we will not be worried about ctDNA because we’re now potentially entering Phase 3, and we’ll be using traditional endpoints, PFS or OS. And obviously, that’s something we’ll be discussing with the agency at the end of Phase 2 meeting. And as you know, PFS has been used for approval in this first line disease setting. So that’s what we’ll be doing in metastatic colorectal cancer. However, we obviously, if all goes well, we’ll be developing the program in other settings, and particularly in earlier stage trials, especially if single arm ctDNA outcomes are potentially very important as an early efficacy metric before you get to big randomized studies.

And therefore, it is important that we understand how to interrogate ctDNA in a way that renders it a useful surrogate for clinical endpoints such as PFS and OS. Today, I can’t give you the answer because we don’t have the mature PFS and OS data, but of course, the data we’re generating will be an invaluable resource to enable us to figure out a way to use ctDNA that adeptly captures long term clinical benefit and can then be deployed in single arm smaller trials in other indications.

Chengxiang Liu: All right, thank you so much.

Andrew Allen: Thank you.

Operator: The next question comes from Mayank Mamtani with B. Riley Securities. Please proceed.

Unidentified Analyst: Hey, guys, Madison here on for Mayank. Thanks for taking our question. So, wondering, what do you guys anticipate the touch points will be with the FDA whenever you meet to discuss Phase 3? And also curious how those patients could look relative to what we’ve seen in GRANITE. After 75% liver met 50% KRAS, if that’s just kind of representative of the population. And then lastly, the fact we didn’t see any pseudo progression, do you expect that would hold in a Phase 3, or is that something that you’ll attempt to address in the design in the event there is pseudo progression? I appreciate it, guys. Thanks.

Andrew Allen: Yes, thanks, Madison. Good question. So, in a slightly different order, in which you ask the questions by design, this was a very straightforward frontline study across the United States in a variety of centers with very straightforward inclusion and exclusion criteria, very standard. And that’s good, of course, because it means there’s not much opportunity for patient selection. You’re just taking the patients that come through the door, and there aren’t that many trials in frontline colorectal cancer. So, most people who were clinical trial eligible and at a site where our trial was operating, would have been offered our study, which is why it enrolled very swiftly, particularly in the first half of 2023. So there is unmet need there the trial is very straightforward and recruits patients without any special selection.

We don’t anticipate changing that for Phase 3. Why would you? You want a representative population, so that’s good news. And obviously, we would anticipate that the degree of liver metastases and KRAS mutations will be constant in the Phase 3, because, of course, your dream is to run a Phase 3 that is basically unchanged from your Phase 2. That reduces the chance that something new, you’ve made some new assumption, or something else is happening that’s altering the outcome. You want that so called sleep easy Phase 3. So our incentive is to change as little as possible. And obviously, we’ll go to the FDA, and the traditional forum is an end of Phase 2 meeting, which we’d anticipate towards the end of this year, taking to them the data from this study, which, of course, we’ll have in hand in Q3.

And then we’ll be discussing, among other things, the Phase 3 primary efficacy endpoint. And that is likely to be a choice between PFS and OS. We also, of course, need to align with the FDA on manufacturing because these are complex products. We’ve obviously been in lockstep with the FDA from the very get going fact we first spoke to the FDA about manufacturing before we were in the clinic, when we were literally designing the layout of our biomanufacturing facility. So we held a Type C meeting back then just to solicit FDA’s input to make sure that we were on the right track in terms of the way we make these products. There’s obviously a step up in regulatory quality as you move to Phase 3 and commercial, and we need to make sure that we’re aligned with the agency.

That’s also part of the end of Phase 2 meeting alongside the clinical endpoint discussions.

Unidentified Analyst: Got it. Thank you.

Operator: The next question comes from Kaveri Pohlman with BTIG. Please proceed.

Unidentified Analyst: Hi, this is Christian. I’m on for Kaveri today. My first question is, I would like an update on the CORAL program. I saw that you guys presented positive data recently on the CORAL study on South African patients, and there was positive data in the three vaccine candidates. So is there any development there? Are you guys planning to which candidate are you guys planning to move forward?

Andrew Allen: The. Obviously, if successful with our BARDA study, we’ll be moving forward another candidate because, of course, we’re expecting there to be an update of the strain that is required for the fall season of 2024. As you’re aware, WHO and the EU have issued guidance to use the JN.1 variant, if you remember, obviously, last year, it was the XBB.1.5 variant. So there will be a strain change. We’ve not disclosed the exact nature of the T cell component that we’ll include in the vaccine, but that will be included. That’s part of our chimeric vaccine design, intended to induce protective antibodies as well as those protective T cell responses against conserved antigens. So that’s the expectation going forward, and that’s the primary focus of the CORAL program right now.

Unidentified Analyst: Okay, thank you. And regarding the BARDA study, I just noticed in the press release that it says the company will be initiating that as soon as they can. Should we still expect that in fall 2024 or is that being reevaluated?

Andrew Allen: Yes, it depends a little on our ability to meet the FDA’s criteria around GMP raw materials. So obviously that’s a little contingent on further interactions with the agency, which is why we are cautious about specific guidance at this point.

Unidentified Analyst: Okay. Thank you so much.

Andrew Allen: Thank you.

Operator: The next question comes from Catherine Novack with JonesTrading. Please proceed.

Catherine Novack: Oh, hi, guys. Good afternoon. Thanks for taking the question. Just a couple, I guess. I wanted to ask about the prevalence of high risk disease versus low risk. And do you consider this a predictive enrichment factor or mainly saw benefit due to the fact that patients had more mature PFS curves?

Andrew Allen: Yes. Thanks, Catherine. So the way we did this analysis was to look at the, we calculated the baseline circulating tumor DNA on every subject where we had that information. And then we took the control group and we split it right down the middle and we just bifurcated that population. We then applied that same cutoff to the vaccine arm, the test arm, and it actually was slightly lower than the median for the vaccine arm. So the vaccine patients actually had slightly higher baseline ctDNA than the control arm, which obviously works against the vaccine arm, all things being equal, which is good from a conservative data analysis point of view. So that’s how we set it. So it was a 50-50 in the control arm, slightly more in the vaccine arm.

The reason we did that was simply to try and generate a more mature data set, because of course, everybody is asking the question, ourselves included, what will these data look like when we have the mature data? And so what we were trying to do was find a very fair way of identifying a population of patients who have events faster. And baseline ctDNA is remarkably efficient at selecting for the patients who have faster events. And that’s clear from the Kaplan-Meier curves that we showed. So that’s why we did it. And you could argue reasonably, that the high risk population is the population that’s going to do the worst on vaccine, because as I mentioned in my response to another question, there is a general belief, based now on data, that lower volume disease does better on immunotherapy, and perhaps particularly on vaccine immunotherapy.

The lowest volume disease is in neoadjuvant setting. And that’s where, of course, we’ve seen particular success by Moderna, who obviously did not see signal in advanced metastatic disease, but have seen signal in high risk adjuvant melanoma. So within a metastatic colorectal population, there are obviously some patients with very extensive disease and some patients with very mild or minor disease, but they all have metastatic colorectal cancer. ctDNA splits them and it gives you more data faster in that high risk group with more extensive disease. So the fact we saw such a strong signal there is reassuring that as the data mature, we will then see a signal at least as strong in the low risk group may be stronger. And therefore our intention is not to think about this high risk stratification once we’re past Q3.

And at that point, we anticipate we’ll be including everybody and treating everybody and hopefully seeking a label in everybody, because in principle, if the product works in everybody, which is what we anticipate, then of course, you don’t want to be selecting out against particular patients.

Catherine Novack: Got it. Thank you. That’s very helpful.

Andrew Allen: Yep.

Operator: The next question comes from Roy Buchanan with Citizens JMP. Please proceed.

Roy Buchanan: Hey, thanks for taking the questions. I think you just answered my GRANITE question, which is stratifying by ctDNA. So it sounds like you’re not going to do that going forward into the Phase 3.

Andrew Allen: Well, let’s be clear, Roy. We haven’t got the data yet in the low risk group, so everything we’re saying today is speculation. What we have got is data in the high risk group, which looks very good. Now we wait for data in the low risk group. So I want to be super clear about this. It’s not that we have no signal in the low risk group. We have no data in the low risk group because very few of them, as of early March, had achieved a progression or death event. So it’s not evidence of absence of effect, its absence of any evidence about anything, and therefore you just wait. But what you would expect, based on the literature and what we’ve seen from others, is that the effect of the vaccine in that low risk group will be at least as good as in the high risk group, perhaps better. And if that’s indeed what we see, then there would be no reason to worry about patient selection going forward.

Roy Buchanan: Okay, got it. Okay, thank you. I guess a few on CORAL. So this RRPV holding vehicle or whatever it is, and you’re waiting to hear back from that. Any sense on when you might hear back on that? And is that a new set of people that are going to decide whether they like this program or that program or technology versus the first decision on the GRANITE?

Andrew Allen: It is a different entity, but obviously there is relatedness, but the exact nature of those relationships is not very apparent to outsiders like us, so related but distinct.

Celia Economides: It is a consortium that’s under BARDA’s direction.

Roy Buchanan: And do you have any timelines of when they’re going to get back to you?

Celia Economides: We have not provided any guidance on that.

Roy Buchanan: Okay. And then you mentioned potentially partnering to fund the ID programs. Will that also potentially include COVID-19? Thanks.

Celia Economides: Yes, potentially.

Roy Buchanan: Okay, thank you.

Andrew Allen: Thanks, Ron.

Operator: The next question comes from Arthur He with H. C. Wainwright. Please proceed.

Arthur He: Hey, good afternoon, Andrew and team. This is Arthur on for [indiscernible]. I just had a quick one regarding the GRANITE. Just curious, when you see the ctDNA reduction opposed to the chemo, did you see, is there any correlation for the reduction with the baseline character of the tumor? I just curious, is there any way you guys could minimize these noisy background if you go into use ctDNA to further as a biomarker for the evaluation in the future?

Andrew Allen: We haven’t performed those analyses yet. Obviously, it’s a phenomenon that relates to the tumor response to chemotherapy, specifically to FOLFOX/FOLFIRI plus bevacizumab. And that regimen is only used in colorectal cancer. Derivatives of it, I guess, used in pancreatic cancer, but it wouldn’t have great utility outside of this colorectal cancer setting. And so determining who does well on chemotherapy is obviously not particularly critical to our development program going forward.

Arthur He: All right, thanks. And my second question for the update, further readout in the third quarter, besides the PFS, mature PFS and more ctDNA data, what other data set could we expect can give us more information regarding the pivotal study design?

Andrew Allen: Yes, so the overall survival data will still be very immature at that point. Median overall survival is around two years in this disease. So again, following the same logic, if PFS is basically around one year or just shy, you need to give it another year to get to very mature OS data. Now we are doing some additional analyses. Karin, our Head of R&D is on the phone here. So, Karin, perhaps you want to give a little flavor as to what additional correlates we might have for the Q3 update.

Karin Jooss: Yes, we are looking in a subset of the patient population. We perform TCR-Seq, we perform ALICE bot [ph] analysis. So we do look at translational data, which we actually have published significant data in our nature medicine papers. So we do some of that work, but we don’t anticipate the data to look any different to our goal for manuscript. But TCR-Seq an ALICE bot you can anticipate that we are also potentially, if we have enough cells, perform ICS, looking for poly functionality or even killing. So we have a great toolbox, and depending on the number of cells we have from these blood trials, we will, in a subset only of these patients looking for T cell response, TCR-Seq, as well as functionality of the T cells.

Arthur He: Great. Thanks for the addition of color. Thanks for taking that question.

Andrew Allen: Thank you.

Operator: The next question comes from Corinne Johnson with Goldman Sachs. Please proceed.

Unidentified Analyst: Hi, this is Omari on for Corinne. I have a couple questions. What gives you confidence that the PFS will strengthen as the data matures? And on the hazard ratio is the piecewise Cox pH model of prespecified analysis.

Andrew Allen: So the confidence comes from two primary sources directly and one indirect source. First of all, we saw the same phenomenon of PFS and OS extension in the Phase 1/2 study in third line colorectal cancer patients, not a randomized study, but those who had reductions in their bone biomarkers, including ctDNA, had this apparently extended PFS and OS. So we’re repeating that observation in this study. Secondly, the high risk analysis gives you a way of peering into the future, and it’s obviously not a perfect analysis. No one can foretell the future. If they could, it would be easy. But it’s a reasonable way of asking the question, if I expect the low risk group to behave similar to the high risk group, then what would I see in the future?

And obviously, the high risk analysis is quite mature and looked very encouraging. So that’s the second direct bit of evidence to encourage optimism for the Q3 mature data. The indirect support comes from the notion that the data we’re waiting for are in the low risk patients. And data from other players, most notably Moderna, suggests that those low volume disease patients are the ones that do best on vaccine based immunotherapy. Therefore, if you believe that that applies to this study, we should see signals at least as strong, if not stronger, in the lower risk population as the dataset rounds out and matures. Your second question was about the GPW statistical test, and I couldn’t quite catch it, was the question, are we using that in the summer in Q3?

Unidentified Analyst: Piecewise Cox pH model. Was that a pre specified analysis for this study?

Andrew Allen: Yes. So we’ve actually been in a lengthy dialogue with FDA around the way to statistically analyze the study because it is clear that patients are randomized at the beginning of their induction chemotherapy, and for the first, on average, five months, the treatments are identical across the two arms of the study, and then the treatments diverge, and therefore, the Kaplan-Meier plots of progression free survival will not meet the proportional hazards assumption. And that is a requirement if you’re going to use the standard logrank test. So we knew that the way the study was designed, logrank was not the appropriate statistical test and appropriate way to analyze these curves that, in fact, what you wanted to do was a time weighted system.

So we entered this discussion with the agency and we settled with them on GPW, the global. Sorry, generalized piecewise analysis. And we’ve done a very simple model for this study. Any progression event prior to six months is given a weighting of zero, and any progression event after six months is given a weighting of one. That’s the way we’ve analyzed these data and that was pre-specified.

Unidentified Analyst: Thank you.

Andrew Allen: Thank you.

Operator: Thank you. At this time, there are no further questions in queue. I’d like to turn the call back to Andrew Allen for closing comments.

Andrew Allen: Thank you very much. That represents the end of our call, so we have nothing further to add. Just like to thank you for your time and attention. Obviously, we’re very excited to see these data in Q3, and we hope to be able to really move the ball forward for these patients who’ve been waiting a long time, for some reasons, for optimism and with that, thank you very much.

Operator: Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.