Oncolytics Biotech Inc. (NASDAQ:ONCY) Q3 2024 Earnings Call Transcript

Oncolytics Biotech Inc. (NASDAQ:ONCY) Q3 2024 Earnings Call Transcript November 13, 2024

Operator: Good afternoon and welcome to Oncolytics Biotech’s Third Quarter 2024 Conference Call. All participants are in a 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 would now like to turn the call over to Jon Patton, Director of Investor Relations and Communication. Please go ahead.

Jon Patton: Thank you, operator and thank you all for joining us. 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 pelareorep, including statements regarding the company’s mission, strategy and milestones, the company’s belief as to the potential and mechanism of action of pelareorep as a cancer therapeutic, our potential registrational opportunities for pelareorep and our plans and strategies related thereto, our plan to continue enrollment in GOBLET cohort 5, our ongoing business development initiatives 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 known and unknown risks, 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 forward-looking statements. In any forward-looking statement in which Oncolytics 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 these statements 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 other factors detailed in the company’s filings with SEDAR and the SEC.

Oncolytics does not undertake any obligation to update these forward-looking statements, except as required by applicable laws. Now I’m pleased to introduce the members of our management team who are joining me to discuss the important progress we made during the third quarter. These are Chair of Oncolytics Board of Directors and Interim CEO, Wayne Pisano; Chief Medical Officer, Dr. Tom Heineman; Chief Financial Officer, Kirk Look; and Vice President of Business Development, Christophe DeGois. Wayne will start the conversation this morning, so I’ll hand it off to him. Wayne?

Wayne Pisano: Thank you, Jon. Good morning. Also thanks to everyone who’s joining our call today, especially because we’ve had several meaningful news events since our last update. Following my brief introduction, Tom will provide a recap of the BRACELET-1 data and our plans for a clinical trial design to support the accelerated approval of pelareorep in metastatic breast cancer. He will also expand upon our plans for pelareorep in gastrointestinal cancers. Christophe will discuss our large addressable market opportunities and partnership efforts. Kirk will review the financials. And finally, we will end by taking your questions. In the third quarter of 2024, we reached a critical milestone in our development of pelareorep or pela, as we often call it, our leading immunotherapeutic agent.

The BRACELET-1 breast cancer study reported its final data and the combination of pela plus paclitaxel showed substantial improvement compared to paclitaxel monotherapy in critical metrics like progression-free survival, overall survival and 24-month overall survival rate. Progression-free survival and the 24-month overall survival rate nearly doubled, while overall survival showed an approximate 14-month benefit. We believe these data provide us the opportunity to significantly impact the lives of patients with HR+/HER2- metastatic breast cancer and we believe the next appropriate step is a registration-enabling study utilizing BRACELET-1 outcomes as the basis for an accelerated approval development path. Now before Tom provides a more comprehensive update, I would also like to highlight that we are continuing enrollment in the safety run-in phase of GOBLET cohort 5 in newly diagnosed patients with metastatic pancreatic ductal adenocarcinoma, supported by the Pancreatic Cancer Action Network.

Additionally, we continue to work with GCAR on finalizing the master protocol and seeking FDA feedback for the registration-enabling study in pancreatic cancer. With the potential for two registrational studies ahead, we believe 2025 will be an exciting year for pela and for Oncolytics. Now I’d like to turn the call over to Tom to provide a more detailed update. Tom?

Thomas Heineman: Thank you, Wayne. Just to quickly refresh anyone who hasn’t heard our story for a while or is new to what we’re doing, pela is an intravenously delivered immunotherapeutic that acts systemically. It introduces double-stranded RNA into the tumor, which promotes an inflammatory response that makes the tumor visible to the immune system. At the same time, it stimulates antitumor cellular immune responses that can attack the now visible tumor. Our main priorities are to advance our planned registrational studies in breast and pancreatic cancer. So that is where we will focus our discussion today. Starting with our breast cancer program, we recently shared efficacy results from the BRACELET-1 study, which exceeded our expectations across the board, including both progression-free survival, PFS and overall survival, OS.

The median PFS nearly doubled from 6.4 months in the control arm to 12.1 months in the pela arm. Similarly, while median OS was 18.2 months in the control arm, it could not even be calculated in the pela arm because more than half the patients were still alive at the end of the study. Nonetheless, using the conservative assumption that all the pela patients would have passed away at the time of their next clinic visit, the median OS would have been 32.1 months, well more than one year longer than the control patients. Perhaps even more telling, the proportion of patients who live two years or longer nearly doubled from 33% in the control arm to 64% in the pela arm. It’s important to note that the patient populations were well balanced across the study groups with no substantial differences that would be expected to bias results in favor of pela.

Safety results from the BRACELET-1 study were in line with pela’s well-understood and favorable safety profile based on more than 1,100 treated patients. The next question is, where we go from here? After discussions with key opinion leaders, our biopharma collaborators and the FDA, we have identified an approach that can generate primary endpoint results within two years of the start of patient enrollment. Accordingly, our next planned breast cancer study is anticipated to be a registration-enabling large Phase II study of around 180 HR+/HER2- metastatic breast cancer patients. We would use progression-free survival as the primary endpoint and would power the study to achieve a Phase III level of success if the expected clinical benefit is achieved.

If pela-based therapy demonstrates a progression-free survival benefit comparable to that seen in BRACELET-1, we anticipate seeking licensure potentially through the accelerated approval pathway. This approach has been used to achieve the initial approvals of other breast cancer treatments, including Pfizer’s IBRANCE and Daiichi’s in HER2. We believe this is a cost-effective and efficient strategy for the development of pela in breast cancer. I would now like to move to the GOBLET study and our opportunity in gastrointestinal cancers. So far, we have evaluated pela-based therapies in first-line metastatic pancreatic ductal adenocarcinoma, or PDAC, third-line metastatic colorectal cancer and second line or later anal cancer. Despite the difficulty of treating these specific cancers, pela-based combination therapy met the initial predefined efficacy success criteria for each of these indications.

Our highest priority in GI cancers is pancreatic cancer. We’ve seen exciting efficacy signals in previous studies and the objective response rate we reported in the pancreatic cancer cohort of the GOBLET study was more than double historical objective response rates. The strength of these results attracted the attention of multiple potential partners. One of these collaborators is the Global Coalition for Adaptive Research or GCAR, which specializes in the design and conduct of cost-effective innovative adaptive clinical trials intended to support licensure. We are currently collaborating with GCAR to develop an adaptive registrational-enabling study to evaluate pela-based combination therapy in metastatic PDAC and we expect to seek with GCAR, FDA guidance on the study design.

We look forward to continuing our collaboration with GCAR on this exciting opportunity and we will provide an update as this program advances. As a complement to our work with GCAR, we also received a $5 million grant from the Pancreatic Cancer Action Network, also known as PanCAN, to evaluate a different pela-based combination therapy in PDAC. Historically, the two most common standards of care in metastatic pancreatic cancer are the chemotherapy regimens of gemcitabine, nab-paclitaxel or modified FOLFIRINOX. The gemcitabine/nab-paclitaxel regimen is the focus of our work with GCAR, while the PanCAN grant is funding the evaluation of pela combined with modified FOLFIRINOX. This is an attractive opportunity because if pela-based therapy demonstrates benefit when combined with both commonly used chemotherapy regimens, it may lead to improved therapeutic options for nearly all metastatic pancreatic cancer patients.

Earlier this year, we announced the dosing of the first patient in the new GOBLET cohort evaluating pela, combined with modified FOLFIRINOX. Enrollment into this cohort of the GOBLET study is ongoing and we will provide additional updates when they become available. Should the combination of pela and modified FOLFIRINOX produce a positive outcome, it would result in another registrational opportunity for pela in this challenging indication. Before I turn the call over to Christophe to expand on our business development efforts as well as our most recent commercial assessments, I would like to briefly summarize our immediate priorities. First, we plan to pursue an accelerated approval pathway for pela in HR+/HER2- metastatic breast cancer through a large registration-enabling study that compares paclitaxel plus pela to paclitaxel alone.

Since we’ve already demonstrated pela’s clinical benefit in two prior randomized studies, we are confident in this approach. Secondly, we are working with GCAR to finalize the protocol for the metastatic pancreatic cancer trial evaluating pela, gemcitabine, nab-paclitaxel and atezolizumab and we will seek guidance from the FDA on this approach, which we believe will open another registrational pathway for pela. And finally, we continue to enroll patients into the GOBLET study cohort evaluating pela combined with modified FOLFIRINOX, which is in newly diagnosed pancreatic cancer patients. Our conviction in pela’s broad therapeutic benefits grow stronger with each positive dataset as does our belief in pela’s potential to improve the lives of cancer patients.

With that, I will turn the call over to Christophe to discuss pela’s market opportunity, our ongoing collaborations and future partnership opportunities. Christophe?

Christophe Degois: Thanks, Tom. Since joining Oncolytics, I’ve focused on facilitating business development opportunities as well as working to articulate the broad opportunity we have with pela to potential strategic industry partners. We continue to have conversation with our current collaborators, Pfizer and Roche, in addition to potential biopharma partners. With the announcement of the final data from BRACELET-1, including a 5.7 months progression-free survival benefit and nearly 14 months overall survival benefit, I anticipate we’ll be able to have enhanced discussion about pela going forward as this is an asset that is clearly ready to move to registrational setting. There are numbers of potential partner who could be interested in the progress we’re making and in our plans for the future.

We just completed a robust analysis of the HR+/HER2- metastatic breast cancer population and are encouraged by the potential pela may have in this indication. Using the assumption that pela could be ready for an accelerated approval in 2027, we anticipate an addressable population of around 55,000 patients in the U.S. at that time. We derived these numbers by factoring in patients who would have progressed on endocrine therapy and who are ineligible for, not responsive to, or progress on [indiscernible], which is an antibody conjugate is becoming part of the breast cancer treatment paradigm. If we then project sales going forward for the U.S. and Europe, assuming a 15% to 20% market penetration by the year 2033, we see the potential for $2.4 billion in annual sales for U.S. plus EU5.

This would create a meaningful breast cancer drug franchise to just about any biopharma partners. And that is what we are offering in our discussion going forward, a multibillion- dollar potential drug with the potential for accelerated approval in a few years. While we are obviously very excited about the breast cancer data and opportunity, pela has shown exciting efficacy in multiple cancer indications. The pancreatic cancer data has been reported is very compelling as well. In the second quarter, we entered into a collaboration with GCAR and last year received funding from PanCAN via the Therapeutic Accelerator Award. Both of these strategic relationships provide external validation of the potential of pela-based combination therapy. GCAR selected the combination of pela, gemcitabine, nab-paclitaxel and atezolizumab for investigation in the inaugural pancreatic cancer program after a thorough vetting process, which included meetings with key opinion leaders and multiple committees.

We’re working with them to finalize the master protocol and have GCAR submitted to the FDA for guidance. Importantly, the GCAR alliance will provide access to trial sites, rapid patient enrollment and control arm drug supply. PanCAN is a nonprofit organization dedicated to fighting pancreatic cancer in a comprehensive way by advancing scientific research, building community, sharing knowledge and advocating for patients. PanCAN Therapeutic Accelerator Grant is funding cohort 5 of the GOBLET study, which is pela plus modified FOLFIRINOX with and without atezolizumab. As Tom mentioned earlier, modified FOLFIRINOX is the other chemotherapy backbone that is most often used besides gemcitabine plus nab-paclitaxel. So a meaningful response with the FOLFIRINOX combination would create significant opportunity to improve the treatment outcomes for a large number of patients.

With that, I’ll bring on Kirk to cover our Q3 2024 financial highlights. Kirk?

Kirk Look: Thanks, Christophe and good morning, everyone. I’d like to discuss our financial results for the third quarter of 2024, which will be provided in Canadian dollars, unless otherwise noted. A full summary of our financial results can be found on the Investors section of our website under Filings and Reports or in the press release issued earlier this morning. As we start to ramp up our efforts to put pela on the path to registration, we continue to be efficient with our cash resources and keep our critical milestones in mind. As of September 30, 2024, the company reported $19.6 million in cash and cash equivalents. Net cash used in operating activities for the nine months ended September 30, 2024, was $19.1 million compared to $22.3 million for the nine months ended September 30, 2023.

The decrease reflects non-cash working capital changes, partly offset by higher net operating activities in 2024. Our general and administrative expenses for the third quarter of 2024 were $3.1 million compared to $5.2 million for the third quarter of 2023. The decrease was primarily due to lower investor relations activities and transaction costs that were part of our 2023 public offering. Research and development expenses for the third quarter of 2024 were $6.8 million compared to $5.8 million for the third quarter of 2023. The increase was primarily due to higher manufacturing expenses and clinical trial expenses. Increased manufacturing expenses were related to completing a cGMP production run in the quarter, increased clinical trial expenses that were associated with our GCAR collaboration, BRACELET-1 study closeout costs and the clinical data management of legacy studies.

This increase was partly offset by lower GOBLET study costs as we focus on enrolling cohort 5, which is supported by the PanCAN grant. The net loss for the third quarter of 2024 was $9.5 million compared to a net loss of $9.9 million for the third quarter of 2023. The basic and diluted loss per share was $0.12 in the third quarter of 2024 compared to a basic and diluted loss per share of $0.14 in the third quarter of 2023. Now we are very excited to move pela further along the path to registration and we are looking at multiple upcoming milestones. We are moving forward with our registration-enabling study in HR+/HER2- metastatic breast cancer based on the clinical benefits observed in IND-213 BRACELET-1 in addition to the feedback we received from the FDA.

Our collaboration with GCAR is continuing to progress and we are nearing the finalization of the master protocol. Cohort 5 of the GOBLET study, the combination of pela and modified FOLFIRINOX with and without atezolizumab continues to enroll and we expect safety data in early 2025, followed by efficacy data later next year. We are also looking for updated efficacy data from cohort 4 of GOBLET next year. That is the cohort evaluating pela and atezolizumab in second-line or later anal cancer. So we always try to end our calls by expressing our gratitude to the people who are instrumental in helping us continue our mission of giving cancer patients the opportunity to live longer, better lives. This includes the entire Oncolytics team, our investors, our patients and their families.

Now I would like to open the call for Q&A. Operator?

Q&A Session

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] First question comes from the line of Soumit Roy with Jones Trading. Please go ahead. Soumit, you may be on mute.

Soumit Roy: Hi. Good morning, everyone. Sorry, I was on mute. Congratulations on all the progress. And wanted to check on the upcoming San Antonio Breast Cancer update. Should we expect any closer data cut? Or what kind of detail should we expect there?

Thomas Heineman: Yes. Hi, Soumit, Tom Heineman here, Chief Medical Officer. The data that we presented in this call are, in fact, the final results. Because of the timing and – of the meeting, we will not have anything – any update at San Antonio. But the results presented are, in fact, the final results. So there are – there is no more updated cut expected.

Soumit Roy: Got it. And a quick one on the HER2-status is – could you remind us, they were IHC 2 and below or…

Thomas Heineman: Well, when this study was started, the antibody drug conjugates were not on the market and they were not being used, right? So there was no reason to test specifically the HER2 status. All of the patients in the study fell into the classic characterization, however, of HER2 low. So they were all two or lower according to the standard definition.

Soumit Roy: Got it. Thank you again for taking the questions.

Thomas Heineman: Sure.

Operator: Next question comes from Louise Chen with Cantor. Please go ahead.

Louise Chen: Hi. Good morning, everyone. Thank you for taking our questions. First, on your breast cancer registration-enabling study, can you provide additional color on the potential to achieve accelerated approval? How early will you able to achieve this? Or do we have to wait until the trial completion for regulatory action? And I do have a follow-up. Thank you.

Thomas Heineman: Okay. Well, I’ll start. It’s Tom Heineman again. So the path for regulatory approval and accelerated approval is based on our prior feedback with the FDA and on precedent, right? And so we think that the study, as designed, will provide a clinically meaningful benefit. And if it does provide a clinically meaningful benefit comparable or even anywhere close to what we saw in the BRACELET study, that would result in a statistical level of p-value of less than 0.05, okay? And so in other words, with that study, we would hit all the main points that the FDA is looking for when they consider an approval. So one, we would have a clinically meaningful benefit. Two, we would have statistical – a highly statistically significant study; and three, if it performs as it has in all our previous studies, we would have a solid safety profile, which are the three main things the FDA is looking for, okay?

So the FDA, of course, will never tell you in advance that they will approve anything before they see the data. But if this study performs as we expect it to, we would hit on all the points that we think would be compelling for the FDA to support a regulatory approval following in the precedent set by such – by many drugs but including such drugs as IBRANCE in HER2. And with regard to the timing, perhaps I can hand that off to Kirk to discuss the timing explicitly. If you don’t mind, Kirk.

Kirk Look: Yes. In terms of timing, we would – once we can get the study up and running and enrolling, we expect enrollment to happen over an 18-month period and then data maturity is expected to be six months after the last patient is on. And then we would expect to be in a – subject to the data, of course, we expect to be in a filing position after that point in time.

Louise Chen: Great. Thank you. My follow-up question is on your first upcoming major milestone, which is finalizing the master protocol for your adaptive registration-enabling trial. Given this is for first-line PDAC patients, we’re wondering how quickly will you be able to complete patient enrollment? Thank you.

Thomas Heineman: Well, once the – so we need to finalize the protocol, as we mentioned, it will need to be discussed with the FDA. In other words, there are some upstream steps. Once that study starts enrolling, we would have to map out the timelines precisely based on the parameters of the study at that time. But we expect it to enroll quickly because this is a – this is not a rare disease. This is a, unfortunately, relatively common cancer and we would be expecting to work with all of – well, or many of the best, highest potential recruiting potential sites in the U.S. and maybe even elsewhere. So while I hesitate to put a precise timeline on it, we expect the study to enroll very efficiently. And Kirk, maybe you’d like to expand on that, I don’t know.

Kirk Look: No, no, I think that’s exactly right.

Thomas Heineman: Okay.

Louise Chen: Great. That’s helpful. Thank you so much.

Operator: The next question comes from Michael Freeman with Raymond James. Please go ahead.

Michael Freeman: Hey, good morning, Wayne, Kirk, Tom, Christophe. First of all, congratulations on the sensational metastatic breast data. This is – it’s truly impressive. So my question is, on the back of this overall survival data, I wonder, perhaps, Christophe, if you could describe your partnering and business development approach and algorithm as you have this powerful data in hand? And if you could describe – maybe just summarize how progress is going? And for instance, like have you seen an accumulation of pharmas in your data room? And then I’ll have a follow-up after this.

Christophe Degois: Yes, sure. This is Christophe Degois. Yes, we last year – I mean, before I joined the company, last year, we had – when we presented the interim data, the PFS data, we had some interest from pharma companies but obviously, they wanted to see the final data. As explained during this call, we got this data very recently. So we are putting our [indiscernible] orders and starting to reengage pharma companies. Obviously, we’ve been talking, as mentioned before, we’ve been talking to our current partners but we’re also expanding to other companies. I think the end of the year coming and JPMorgan, I think where we’re really now preparing for a big outreach and a large outreach. And that will be with your typical big pharma partners that are interested in the solid tumor market but also potentially European or Asian companies for more regional partnership.

We haven’t decided yet of the best options. We are looking at the different options right now. So obviously, in the coming months, I think we will be very active.

Michael Freeman: Okay. Yes, that’s helpful. I guess when you think about a partnership, how would you contemplate structuring that sort of a partnering deal or sort of business development deals, like the type of outreach you’ve just described, how do you expect the structure of an ultimate deal might be?

Christophe Degois: Again, this is a little early but we have definitely – if you look at what we’ve done so far, we’ve had the capacity to run the Phase II trial that Tom described in breast cancer. But there are also other opportunities, as we explained. Obviously, pancreatic cancer, even in breast, there may be other opportunities, early on opportunities. So I think our objective is going to bring a partner that’s going to help us accelerate the development of the drug in breast, I mean, in metastatic breast cancer but potentially also in the other indication. We are a fairly small company. Our focus right now is definitely on bringing pela approved for breast cancer. But we cannot neglect the other opportunities in other solid tumors.

So for us, I think the ideal partner is somebody who is going to get committed to help us accelerate that and also prepare for the launch of the drug. If we get accelerated approval, we want someone who is going to help, especially on the commercial side preparing the market for the drug. And that’s where the big pharma or large biotech can really bring value.

Michael Freeman: Absolutely. And just very quickly, just one more. What pricing are you using in your – as you size these markets as you just did very well?

Christophe Degois: Yes, that’s a very good question. We’ve made some assumption on that. And the pricing we’re using is the pricing similar to [indiscernible], with a slight premium since we’ll be coming post [indiscernible] for most of the patients. And we’ve looked at the pricing of [indiscernible] in the U.S. and outside the U.S. As you can imagine, the pricing outside the U.S. is slightly different.

Michael Freeman: Okay. Thank you very much. I will pass the line now.

Christophe Degois: Thank you.

Operator: There are no further questions, go ahead. Please continue.

Kirk Look: Well, that concludes our call today. Again, I’d like to thank everyone who took the time to join us this morning and learn more about our recent progress in BRACELET-1 and our plans for registration in this indication. I hope everyone has a wonderful day. Again, thanks very much. Have a great day. Bye.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.