IMV Inc. (NASDAQ:IMV) Q4 2022 Earnings Call Transcript

IMV Inc. (NASDAQ:IMV) Q4 2022 Earnings Call Transcript March 16, 2023

Operator: Good day and thank you for standing by. Welcome to IMV’s Fourth Quarter and Fiscal Year 2022 Results Webcast. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to Mr. Andrew Hall, Chief Executive Officer at IMV. Mr. Hall, please go ahead.

Andrew Hall: Thanks, Jason. Good morning and welcome everyone to the IMV 2022 quarter four earnings call. I am Andrew Hall, the CEO of IMV. During this call, we will discuss our business outlook and make forward-looking statements regarding clinical timelines, enrollment, probabilities and business expectations. Any forward-looking statements made today are pursuant to and within the meaning of the Safe Harbor provisions of applicable securities laws. These comments are based on current expectations of management regarding future events and operating performance and should not be seen as guarantees of future performance or results. All forward-looking statements are subject to risks and uncertainty that could cause actual results to differ materially.

These risks are discussed in our continuous disclosure documents filed in compliance with applicable securities law in Canada and the United States. The press release, Form 20-F, the MD&A, and the financial statements have all been posted on our website at imv-inc.com. If you wish to receive a copy of these documents, please contact us. Also note at the conclusion of prepared remarks that we will take questions from sell-side analysts only. So, good morning, everyone. Today, I am going to speak directly to all IMV shareholders, now with complicated science rather in language that confirms what we do matters and what we are developing is working. I want to talk about five things, the VITALIZE trial with detail about the dossier and the trial timeline, the financials of the business, the DPX platform, the market response to IMV over the last few months and why we have engaged Stonegate to explore strategic options.

Both Jeremy and Brittany are with me today and they will join me in answering questions. In February, we made public that in an early look of patient data from the VITALIZE trial, maveropepimut, a cancer vaccine, had demonstrated efficacy in patients with DLBCL that are refractory to the most advanced therapies ever created. What do we mean by a refractory patient in the VITALIZE trial? By protocol, there is strict enrollment criteria that define a refractory patient, but let me tell you who those patients actually are. These are patients with such advanced disease that they are dying in screening before enrollment. The protocol for VITALIZE enrollment requires baseline life expectancy of 3 months. Sadly, many of these patients have such rapidly progressing disease they cannot make it through screening.

This is the population of patients we are treating with maveropepimut. In a study that is built to inform a registration trial, the treatment is driving confirmed complete responses. In the next month, I believe we will complete full enrollment of VITALIZE. This will be 30 plus patients across two arms. In the recent release of the data, there was some confusion as to how far progressed this trial is. Let me be clear, we are nearing complete enrollment for the full Stage 1 even allowing for a few extra patients. The fact that we have seen the same number of complete responses in the first handful of patients as we had seen for the whole SPiReL trial and those complete responses have been confirmed by at least two scans, one at 70 and one at 140 days is to say the least encouraging.

What’s more? In a world where therapies used in refractory settings are often considered inactive if there is no initial toxicity, we have shown efficacy yet again without any systemic toxicity. I want to highlight one of those complete responses in VITALIZE that was presented at the recent IO360 meeting in New York. This patient, this young man, is 24 years old. His disease had progressed through standard Rituxan-based therapy, then stem cell transplant, and more recently through CAR-T therapy. He was running out of options. He enrolled in the VITALIZE trial last fall. On his first scan, 70 days later, his disease was gone. On his second scan, the disease is still gone. He is a complete confirmed responder. For the first time since diagnosis, this patient was back at the gym and doing things a 24-year-old should be doing.

When we talk in our mission of giving a better life, this is it. I joined IMV 2 years ago and became CEO a year ago. I joined because of what I saw IMV could become, a platform technology that meaningfully delivers the biological promise of cancer vaccines is something we have dreamt of, but faced with constant historical failure though it was impossible. This is what IMV is doing. Honestly, if the DPX technology had been discovered at a large pharmaceutical company, I believe it would already be the gold standard and great therapeutics would already be in market, but it wasn’t and the opportunity to make it the gold standard therefore remains. It’s the promise of what DPX technology and DPX-enabled therapies can provide that drives what we do.

Photo by National Cancer Institute on Unsplash

Mindful of that ambition, let me highlight some of the positive validation we at IMV created in 2022. In clinical trials, we demonstrated that in metastatic bladder cancer, treatment with maveropepimut in combination with pembrolizumab, a checkpoint inhibitor, resulted in the observation of complete responses. This reflects the return of lymph nodes to a normal size. This was in patients that had already failed a checkpoint inhibitor. We also initiated the AVALON study in platinum-resistant ovarian cancer. This is the first study designed at IMV for registration and right now, we are recruiting 40 patients in Stage 1. Should similar efficacy be evident in these patients as what we had seen in previous smaller trials, we will immediately continue to Stage 2, which, when combined with the Stage 1 data, we believe will satisfy FDA guidance for accelerated review and approval.

As of today, we have recruited over a quarter of the first 40 patients. And based on first scans, we will know how the first handful of patients, are responding shortly. With respect to our annual financials, which you can view in detail on SEDAR, EDGAR or on our website, we ended the year with a net loss of $38 million compared to a net loss of $36.6 million in 2021. This increase of $1.4 million was largely driven by an increase in loan interest associated with our venture debt following the drawdown of $10 million in the second quarter. By restructuring the business in quarter three last year and focusing the clinical programs, R&D expenses were comparable to the year prior despite incurring large startup costs for two global late-stage clinical trials.

In December, we raised $9 million, which brought our December 31 cash to $21.2 million. This cash takes us into the second half of 2023 and will allow us to see through the completion of the Stage 1 VITALIZE data and an early read of how the data is trending from the Stage 1 of the AVALON study. On the scientific side, we continued our exploration of DPX differentiation by presenting multiple scientific advances. In 2022, we showed that in addition to meaningful eruption of survivin-specific T cells, maveropepimut drives survivin-specific B and indeed NK-cells, which we believe, sets us apart from other modalities. We also highlighted the uniqueness of DPX at a scientific meeting SITC in November. Unlike other methods of delivering vaccine targets that have become vogue in research like lipid nanoparticles that incidentally often most traffic targets to deliver, we showed that DPX specifically targets the draining lymph nodes, which is where you want it to go, the schoolhouse of the immune system.

Let’s talk a little bit about why that’s important? A cancer vaccine is an attempt to educate the immune system to cancer being bad. More accurately, to provide the right instruction to allow the immune system to specifically recognize and eradicate cancer cells, whatever those insidious cells maybe. In practice, this has proven to be very difficult. In fact, today, there is really only one vaccine that is approved by the FDA to treat cancer, a vaccine called Provenge for prostate cancer. And some could argue that it was not a cancer vaccine by its strict MOA. We believe prior cancer vaccines have failed, because they do not and they cannot deliver the appropriate immune instruction exclusively to the right immune cells, cells we call antigen-presenting cells.

Rather, these older vaccines spread immune instruction throughout the body, which can actually turnoff or defeat the intended immune response. While these older vaccine strategies can create short-lived immune response, the response does not persist. Not surprisingly, these vaccines fail to provide clinical benefit. Simply put, these vaccines fail to shrink tumors. This is why our data is so encouraging. In our history of DPX-based research, we know that it enhances the therapeutic effect of many types of immune-educating cargo. We know, for instance, it can traffic small molecules like STING in a way that mitigates to toxicity typical for this mechanism, enhancing its therapeutic potential. We know the same is true for other therapeutic modalities, both in oncology as well as in infectious disease settings.

Above all of this, though, we know that it enhances the utility of mRNA and peptide-based vaccine cancer. Factors we knew this years ago. The challenge was that the science that is seminal to this understanding was not built in a way that was immediately obvious to those outside of the organization. This is the reason we brought Dr. Graff to IMV’s management and Dr. Kalos to IMV’s Board to validate and enhance the DPX platform for cancer treatments. We are learning alongside renewed interest in this whole field of cancer vaccines that DPX-enabled therapies can drive confirmed clinical responses not seen with historical efforts. So how is it that despite all of this, we have lost so much value in the capital markets, accelerated recently by the sell-off following the DLBCL data release?

This is a question we have asked ourselves a lot recently. I can tell you what didn’t drive it, abandonment of IMV position by long-term shareholders in Q4. While the share consolidation in December reduced their holding by 10:1 as it did for every IMV shareholder, including myself, this was not a reflection of significant selling as was misinterpreted by some. To our knowledge, most of our long-standing institutional investors remain invested in IMV. That said, the market conditions are difficult. Capital is difficult to find and the negative pressure on small companies or small cap companies either. In February of this year, at IO360, Dr. Graff presented an overview of the DPX platform and progress maveropepimut has made in clinical trials.

The presentation was really well received and clearly laid out the distinct benefits of our vaccine technology as well as the clinical experience and our complete responders in vitalized to an audience filled with the biggest names in our field, BioNTech, Moderna, Gridstone, Scorpion, Merck, J&J, Regeneron amongst others. Consistent with our disclosure obligations, we issued a press release to highlight these exciting data. Even though in VITALIZE, we had already seen the same number of CRs in the first handful of patients that we had seen in all of the SPiReL trial, there was a pronounced sell-off of IMV stock. We believe this reflects a fundamental understanding of the purpose of the trial. So let me clarify. The purpose of VITALIZE has always been to confirm and extend the understanding of the clinical benefits seen in the preceding SPiReL trial and then to set the stage for a potential registration trial in these highly refractory DLBCL patients.

As I said earlier, we will soon enroll the first stage of this trial. Once all patients progress through their first scan, we will curate the data presented at the Scientific Cancer Conference and plot the path forward for registration. So how is it that a company with positive clinical data, at least two shots on goal for registration with a platform that is constantly proven to enhance the therapeutic potential across a broad spectrum of mechanisms has a market cap below $10 million? The truth is I don’t have that answer. I look at our peer companies in this field, and I believe their valuations are incongruent with us, often with lead therapies less advanced than maveropepimut and frankly, with a lower probability of success. We can’t change the larger economic environment, but we can ensure that IMV is in the best position possible to capitalize on our clinical success.

It’s for this reason, we’ve engaged our long-time partner, Stonegate, to help us explore strategic options in this difficult market. So let me wrap up. We’ve spent significant effort in the last 12 months to focus the efforts of IMV on advancing maveropepimut in clinic and building an ever stronger case for our DPX technology. I remain convinced that this technology will realize the real performance €“ sorry, the real promise, I should say, of therapeutic cancer vaccines. The world needs better treatments for cancer. I love reading that our peers developing cancer vaccines are making a meaningful difference to patient outcomes in early and even pre-cancer settings. The whole field benefits from this type of peer validation. What we’re doing in IMV is important, but what we are creating at IMV is different.

I look forward to presenting the full set of data for VITALIZE and AVALON soon, which we believe will drive meaningful value for IMV and enable multiple opportunities. I thank you for your attention today, and we look forward to taking questions. Operator, I’ll pass back to you.

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Q&A Session

Operator: Our first question comes from the line of Joe Pantginis with H.C. Wainwright. Your line is now open.

Joe Pantginis: Hi, everybody. Good morning. Thanks for taking the questions and thank you for the perspective today. I believe the clinical data speak volumes. So I appreciate the additional perspective, Andrew. So first, I just want to dive a little bit more into the logistics around the upcoming news flow post the enrollment of Stage 1 for both VITALIZE and AVALON. Obviously, you said get patients past the first scan and curate the data for a conference. So I’m just curious, is there the potential for any top line sort of press release data ahead of that? Are you going to keep the integrity of the data for the conference?

Andrew Hall: Hi, Joe, nice to hear from you. I think we learned that top line data when we presented it in February is not what the market is looking for. We now do the math, obviously, from completing enrollment shortly plus the time to complete the first scans that will have a good look at the data that we will be able to, I guess, submit into late-breaking conferences in the summer of this year. We are targeting a full disclosure of the data in the third quarter. We have enough data in hand to be confident about the direction that, that’s pointing. The real timing of that, though, is going to be a little bit of how it lines up with the schedule of conferences. I think it’s reasonable to say though, Joe, and I’m happy to have Jeremy opine on this, that the early look element of the data is not going to be it.

We will show the full cohort. And remember, the first scan is the first scan. What we’re really wanting to see in the VITALIZE study is that durability of response which we showed with responders that were confirmed and complete across two scans. Jeremy, do you want to add a little flavor to that?

Jeremy Graff: No, I think you have it spot on. I think the summer is what we’re targeting to be able to divulge the first scan data from the entire Stage 1 and then sometime later in the year, perhaps ASH would be the ideal spot where we can divulge additional data and the durability of response. The durability is really critically important.

Andrew Hall: Yes. And so the follow-on question you’re asking, Joe, about AVALON, we guided €“ this time last year, I think that AVALON was almost exactly 6 months behind the DLBCL study. The way we’re recruiting AVALON at the moment, it may be a little closer than 6 months, but it’s on that same time line. And so we will complete enrollment for that study around about the third quarter of this year and then run the same time line for the presentation of the data.

Joe Pantginis: Got it. Thank you for the color. And then I guess, just some of commentary or questions around your internal workings and your strategic review. So first, as these studies look to expand, I just want to make sure any manufacturing needs are already in place to be able for €“ to be able to handle the intended expansions? And then if you can comment on your strategic review, obviously, a lot of working parts, I can’t talk about the specifics, but can you talk about sort of the maturity of various sort of options? And are there any internal options you’re potentially considering saying picking one indication and just focusing on that for now until resources become available?

Andrew Hall: And it’s two excellent questions, as always, Joe. Thanks for that. The first answer of the question with respect to supply of what we’re now considering is going to be commercial product. We’re very well evolved. We actually switched our CDMO in the 2022 horizon to make sure that we were well set for commercial supply, understanding that the ovarian study, whilst staged is, in effect, designed as being registrational. So as we are thinking about building out supply for the clinical studies today, but then the extension trials that will be registrational, we’re in a very good position with respect to the supply of commercial product. With respect to the strategic optionality, so this is €“ we’re not unique in this situation.

The trials that we are doing as they get closer to being registration become more expensive. We’ve seen the capital availability for small cap companies being limited. And I think we are prudently now saying maybe the best path forward for this organization is in formal collaboration combination. The thing we want to make sure we’re preserving. The drug works. A lot of companies fail clinical programs and are forced into strategic options. That’s not where we’re at. We’re in a situation where the drug is actually working, and we want to make sure it gets to market, not just for patients and not just for the better therapies for cancer, but for IMV shareholders. There has been an amount of time and money invested in, I believe, what is going to be a platform that is really foundationally important to this whole therapeutic field.

We’ve got to give it the best chance possible and that is very likely in a formalized collaboration. Now the exact mechanics and details of what that collaboration is going to be, Joe, I can’t talk to, but these aren’t conversations that we started yesterday. This is an evolution of that. And the reason we elected to work with Stonegate is we have been working with these guys for now over a year in conversations as they related to sort of platform-based strategic business development, other business development, we are just formalizing that we are very much in the market for that and looking to accelerate that as we wade through this challenging market.

Joe Pantginis: Appreciate the color Andrew. Thank you.

Andrew Hall: Thanks Joe.

Operator: Thank you. Our next question comes from the line of Brandon Folkes with Cantor Fitzgerald. Your line is now open.

Andrew Hall: Hi Brandon.

Brandon Folkes: Hi. Thanks for taking the questions and thank you. Hey. Good morning. So, maybe just two from me. Can you just talk about the feedback you have had post the VITALIZE February data disclosure from perhaps corporates and strategics? And then staying on that data set, anything you can say about the two out of the eight patients not staying on study through the first scan? Was that sort of an anomaly within those first eight patients, or is that sort of something we should consider as we see these study patients coming through? And then obviously patients going to be bit available patients or just study patients enrolled? Thank you.

Andrew Hall: And let me ask a question €“ but we will answer the question backwards, and I will have €“ I will give Jeremy full permission to give the details as to why those two patients were excluded. And I know it wasn’t part of our disclosures, and we may have to do some additional filings ready for this, but I apologize. Jeremy, do you want to talk about those two patients and why they were not included in scanning. I want to make sure we give everyone confidence that this wasn’t IMV sort of cherry picking and manipulating data, which is some of the concerns I know our shareholders express. Jeremy, do you want to talk about those patients and why we consider them to be replaceable in the protocol?

Jeremy Graff: Yes. I think, Andrew, you touched a bit on it earlier. The inclusion criteria for the trial come with an expectation of a life expectancy for patients of 90 days or more. It’s hard in this really refractory patient population with patients who are actually passing away during our screening protocols to really anticipate if those patients can make it out that form. So, we have some patients very desperately ill who make it into the trial and then very shortly thereafter progress very quickly. And those are the kinds of patients we are talking about. Now, as we continue to enroll and fulfill enrollment, I think Brandon asked about as well, the evaluable patient population. So, we will probably over-enroll a bit so that we can account for these types of patients as we learn more and more about this particularly refractory patient population.

Andrew Hall: And then to your first question, Brandon, about what the feedback has been from the data? Everyone is very encouraged about the data, but they see that it is €“ it’s an early signal. I think what people are most curious about, these patients are really refractory. The annotation that they have passed through so many therapies and a cancer vaccine, and you know this as well as that often takes a while to get going. You need to sort of educate and instruct an immune response, which can take time. The fact that we are seeing patients who are so refractory respond to a therapeutic modality like this gives us really good confidence. And particularly in a space where in the early disease setting where you would expect to see a greater therapeutic effect, we are starting now to see with Merck, Moderna and others putting really good data into market.

We are seeing this effect in a really refractory patient. And that’s got a bunch of people scratching their heads as to what’s IMV doing that’s a bit different. Jeremy, probably worth you adding a little color to that perspective.

Jeremy Graff: Yes. I think it is an important piece. So, when we think about treating advanced disease, we are of course treating active disease. What you just mentioned in reference where the really exciting data for the RNA vaccines in a prophylactic or a pseudo-prophylactic setting in a patient setting where the patient does not have active disease and you are defeating its recurrence. In our case and in most of the cases for prior cancer vaccine efforts, we have tried to treat advanced cancer patients, and that’s much tougher. Those established cancer lesions are immunosuppressive in and of themselves. In other words, they beat back on any immunotech, you try to inspire. It’s a much higher hurdle to shrink existing disease than it is to prevent recurrence of disease.

And so I think when we reflect on our data, when we continuously see shrinkage of advanced disease, not just in one disease setting, not just diffuse large B-cell lymphoma, but also metastatic bladder, also advanced metastatic ovarian cancer, gives great confidence that the way our drug works, the way it consistently and continuously feeds immune instruction into the immune system. The way it enables priming of anticancer T-cells, wave after wave across time helps us to imagine how it is that we can be successful in shrinking preexisting advanced lesions when others have not been successful in that space.

Andrew Hall: And Brandon, just to sort of get to the center of the question, we are getting very positive feedback on the data from strategics from academics, from people that are close to the field. The challenge is, and everyone recognizes this, us included, it’s early. This is not the full data set and everyone is very anxious about seeing the full data set. We are obviously getting pretty close to that. So, everyone at IMV is excited.

Brandon Folkes: Great. Thank you very much. Appreciate all the color. Yes. And congrats on the progress, I mean it looks good.

Andrew Hall: Thanks Brandon.

Operator: Thank you. Our next question comes from the line of Doug Loe with Leede Jones Gable. Your line is now open.

Doug Loe: Thanks operator and good morning gentlemen.

Andrew Hall: Hey Doug.

Doug Loe: You have sort of addressed this €“ yes, good morning Andrew. You have addressed this and some of your other commentary, but then just to ask this question more directly. I mean you can garner as much insight into the effectiveness of the therapy by patients for whom it doesn’t work as you can for patients for whom it does. So, just maybe just kind of answer directly any insights you have from SPiReL or DeCidE as to what patient characteristics are sort of predictive of responsiveness. And it could be any number of things like prior chemotherapy history, stage of disease, you are combining DPX-Survivac with pembrolizumab. So, are you actively screening for PD-L1 or PD-1 receptor expression levels or any other thousand other things you could be screening forward? Just some understanding of what patient characteristics are sort of corresponding to buyback responsiveness would be helpful insight? Thanks.

Andrew Hall: Yes. So, I love the question and expect nothing less. Thanks for the intriguing scientific question. I would happily speculate, but I am clearly not well educated enough to do that. Jeremy Graff is a much better source for that information. But I will preempt the question by saying that in these refractory patients, it’s often nice to see them have some response to previous therapies and that may be acute for the way that they respond to maveropepimut, but I will let the educated scientists in the room, give you a bit of a flavor of his perspective, Jeremy?

Jeremy Graff: Sure. Thank you, Andrew. And Doug, thank you for the question. I think it’s a very interesting but complex question. And we have an entire translational research team, focused on trying to ferret this out. Some of what you mentioned in your question, we know it will be true. From the SPiReL data in the relapsed/refractory diffuse large B-cell lymphoma setting, the Phase 2a study that we had run a couple of years ago, it was very obvious that the benefit that we had seen with maveropepimut and pembro was mostly ring-fenced by the pembro biomarker, PD-L1 status. And so the PD-L1 positive patients are where we saw the complete responses, where we saw the additional partial responses and where we saw the greatest durability of response.

That’s certainly precedented for therapies that involve pembrolizumab. What we also know is the patients that do the best, whether it’s on that SPiReL DLBCL trial or our ovarian trials historically or our bladder trials that we have mentioned. Our patients that show the eruption of survivin-specific T-cells, surviving as a cancer protein, as you know, that’s over-expressed across most cancers, especially very advanced cancers. And surviving is the target against which we are educating the immune response with maveropepimut-S. Our best responses, our complete responders show us the greatest percent of survivin-specific T-cells, and those T-cells persist where we have been able to look with longitudinal sampling. They can persist more than 2 years.

That’s remarkable in the cancer vaccine space. So, we are always interrogating what are the metrics, if you will, what are the characteristics of a patient and the patient’s tumor that may dictate success. We know as well at the molecular level. That if a patient’s tumor has a lot of cancer-associated fibroblast, we published this last year in a couple of different conferences that, that patient tends not to do as well on any immunotherapeutic as well as maveropepimut. So, we are always trying to refine this so that we can ensure that we put maveropepimut in the right place. In our ongoing trial in diffuse large B-cell lymphoma, the VITALIZE trial, we are, in fact, scoring every one of these patients for PD-L1 status, given the relationship we had seen in SPiReL.

Now, we are using the Merck test now to understand more precisely what we mean by PD-L1 positivity. And as we look through the entire roster of data, when we get all 30 evaluable patients available to us, we will be able to understand whether or not the benefit that we saw in SPiReL ring-fenced by PD-L1 status holds true in this larger international company-sponsored trial or if we are seeing the benefit across a wider swap of patients. But these are all very, very important things, Doug, that we are constantly interrogating because we are trying to make sure that we pinpoint the right patients for our drug.

Doug Loe: That was good color. Thanks Jeremy.

Jeremy Graff: Thanks Doug.

Andrew Hall: Thanks Doug.

Operator: Thank you. I would now like to turn the conference back to Andrew Hall for closing remarks.

Andrew Hall: Thank you, operator. Well, thank you everyone for your attention this morning. Joe, Brandon, Doug, thank you for the questions. It’s an interesting time in small-cap biotech, and we believe we are pointing the organization in the right direction by the evolution of data that we are creating as well as the exploration of things that we believe is strategically prudent. Thank you everyone for your interest in today’s call and I wish you a great rest of your day. Thank you for your time.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.