Vascular Biogenics Ltd (VBLT) CEO Dror Harats on Q2 2021 Results - Earnings Call Transcript
Aug. 16, 2021 10:55 AM ETVascular Biogenics Ltd. (VBLT)
Vascular Biogenics Ltd (NASDAQ:VBLT) Q2 2021 Earnings Conference Call August 16, 2021 8:30 AM ET
Company Participants
Dror Harats - Chief Executive Officer
Amos Ron - Chief Financial Officer
Conference Call Participants
Etzer Darout - Guggenheim Securities
Susan Chor - Oppenheimer & Co
Ramakanth Swayampakula - H.C. Wainwright
Soumit Roy - Jones Trading
Operator
Greetings. Welcome to VBL Therapeutics Second Quarter 2021 Financial Results and Update Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.
I will now turn the conference over to the VBL team. Thank you. You may begin.
Unidentified Company Representative
Thank you. Good morning, everyone, and thank you for joining today's VBL Therapeutics second quarter 2021 financial results and corporate update. Leading the call will be Professor Dror Harats, Chief Executive Officer; and Amos Ron, Chief Financial Officer. A press release of the company's financial results was issued earlier this morning and is available on the Investor Relations page of the company's website at vblrx.com.
Before turning the call over to management, I would like to remind everyone that during this conference call, forward-looking statements made by management are intended to fall within the Safe Harbor Provisions Act of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 as amended. As set forth in our press release, forward-looking statements involve risks and uncertainties and that may affect the company's business and prospects, including those discussed in our filings with the SEC, which include,
among other things, our annual report on Form 20-F. These filings are available from the SEC or on our website.
Any forward-looking statements made on today's conference call speak only as of today's date, Monday, August 16, 2021, and the company does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today's date. As a reminder, this call is being recorded and will be available for audio rebroadcast on the company's website. There will be a Q&A session following the company's prepared remarks.
With that, I'd like to turn the call over to Professor Harats. Please go ahead.
Dror Harats
Thank you, Eric, and good morning, everyone. Joining me on today's call is Amos Ron, our Chief Financial Officer, who will discuss the second quarter financial results for 2021.
We continue to make progress in our OVAL clinical trial, a registration-enabling Phase III study of VB-111 in ovarian cancer. The most significant event of the second quarter was the OVAL protocol change agreed upon with the U.S. FDA. Progression-free survival was added as a primary endpoint to the original overall survival end point. Successfully meeting either endpoint is expected to be sufficient to support a BLA submission. The details of the change were described in a presentation at this year's ASCO annual meeting in early June and the accompanying press release.
Successful meeting of the progression-free survival endpoint with the readout anticipated in the second half 2022 and has the potential to accelerate the BLA submission by approximately one year compared to original projections based on the readout of the overall survival primary endpoint, which remains anticipated in 2023. In addition to potentially shortening the time for the anticipated BLA submission, the protocol changes have several positive implications for the OVAL trial and VB-111's potential use as a treatment for platinum-resistant ovarian cancer.
First, including a second independent endpoint derisks the trial as we now have two shots on goal to obtain a result that will enable us to submit a BLA. Second, keeping the overall survival endpoint, preserve the opportunity to differentiate VB-111 from currently available ovarian cancer treatment which were approved based on progression-free survival data so far and did not show an overall survival benefit.
As part of our discussion with the U.S. FDA's CMC, the Chemistry Manufacturing and Controls group, it was agreed that VBL would provide additional data and documentation on new batches to be used in the OVAL study in the U.S. We submitted all requested materials to the agency in early August, and the CMC group is evaluating the data we sent them. At this point, we do not have an estimated timetable on when we will hear back from the agency regarding their review.
In the meantime, we took a precautionary step to reserve supply of FDA-approved batches of VB-111 for U.S. patients who are being actively treated in the OVAL study. And in June, we voluntarily paused enrollment of new U.S. patients. Existing patients enrolled in the U.S. continue on protocol and enrollment continues in Europe, Israel and Japan. Despite the temporary pause in U.S. enrollment, we maintain our expectations with respect to the timing of the PFS data readout in the second half of 2022.
Our next milestone for OVAL is the upcoming DSMC review expected this quarter. This time, it will include review of 75% of the study population, that is about 300 patients. To date, we have had three successful DSMC reviews of the study. The most recent one was in February of this year. Following the review, which looked at 200 patients, the DSMC again gave us a green light to proceed as planned.
In the second quarter, we also significantly strengthened our cash position. Earlier in the quarter, we closed a public equity offering at market price to raise net proceeds of $26.4 million from existing shareholders as well as institutional funds from the U.S. and Israel. Together with the additional of $12.3 million that was injected into the company during the first quarter, mostly through the existing of warrants that were issued in 2020, we now have more than $57 million on hand. These funds are expected to cover the company until the year-end 2023, which is beyond clinical readouts in OVAL and the potential BLA submission of the VB-111 in ovarian cancer.
As VBL prepares for success and potential commercialization of VB-111, we had a few changes to our Board of Directors. We are happy to welcome Alison Finger and Michael Rice to our Board. Alison was previously the Chief Commercial Officer at Bluebird Bio and has extensive experience in global product commercialization, including commercialization of gene and cell therapy products at Bluebird. Michael's experience in health care capital markets will be critical to VBL as we approach the disclosure of top line data from OVAL and as we plan to execute our strategic and operational objectives in bringing VB-111 to patients.
Finally, our planned succession for the Chairmanship of our Board was recently completed. Marc Kozin, who joined our Board as Vice Chairman last October, is now our Chairman. Dr. Bennett Shapiro stepped down as the Chairman, but will continue to contribute to VBL as a member of our Board.
Before I hand the call over to our Chief Financial Officer, Amos Ron, I would like to say that we have continued our momentum from 2020 into the first half of 2021 and are optimistic about the second half of this year. We are encouraged by the significant investments of VB-111, and I look forward to sharing updates on our ongoing programs through the rest of the year.
With that, I will hand off the call to Amos, who will discuss the financial results for the second quarter. Thank you.
Amos Ron
Thank you, Dror, and good morning, everyone. As of June 30, 2021, we had cash, cash equivalents, short-term bank deposits and restricted bank deposits totaling $57.2 million and working capital of $49.2 million. We expect that our cash and cash equivalents and short-term bank deposits will be sufficient to fund operating expenses and capital expenditure requirements until year-end 2020.
Revenues for the second quarter were $188,000 as compared to $158,000 for the comparable period in 2020. R&D expenses net was $6.6 million for the fiscal year compared to $4.7 million in the same period in 2020. General and administrative expenses was $1.5 million for the second quarter compared to $1.3 million in the same period in 2020. And finally, comprehensive loss for the second quarter was $8 million or $0.12 per basic share compared to $5.8 million or $0.14 per share -- per basic share in the comparable period in 2020.
With that, I will turn the call back to the operator for the Q&A portion of this morning call. Thank you.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question is from Etzer Darout with Guggenheim. Please proceed.
Etzer Darout
Great. Just a couple on sort of the VB-111. I guess the first is, does the precautionary pause of U.S. patients, does that change the nature of the update in the third quarter by the DSMC? And I guess, similarly, with respect to sort of the investigator glioblastoma trial, if there's sort of any impact on that study sort of concerning sort of the batches for that study?
Dror Harats
Thank you, Etzer. Actually, the pause that we were voluntarily took not to recruit new patients in the United States or to screen for a new patient in United States was done mainly because we know that there are patients on the trial right now using the batches that are already approved by the FDA for this study. And we don't want to be in a position that the patient is responding to VB-111 and we know that some patients are actually staying on the drug for quite a long time, and we will be in a position that we want to have a supply to give to these patients. And therefore, we voluntarily took this step. But this step is not going to affect the DSMC review, because the DSMC review was a cutting 0.8 that was not affected at all by this. And if any, just when we announce to the centers that we are going to stop screening, you can imagine that they had a list of patients that they wanted to recruit to the trial, and they actually recruited quite a significant amount of patients. So the review is going to be done off a bit over 300 patients, which is about 75% of the patient population of the trial.
Regarding the other two trials that we are running. The one that we are running with the NCI in colon cancer is not affected in any way by this event because they have enough supply for what they need for the trial. But in the GBM trial, we're also not screening for new patients because we just were in a position that we were about to open more centers, and we didn't want to open them before we know that we have the batches approved to go. Now the drug is already in the U.S., waiting for the final approval from the CMC. And the moment that we will get it, we will be able to open back post recruitment for the OVAL and for the GBM trial.
Operator
Our next question is from Kevin DeGreeter there with Oppenheimer.
Susan Chor
This is Susan on for Kevin. Just a couple of questions. First, just a modeling question. Is the step within R&D expected to last for the rest of the year? Is 6.6 million new baseline?
Dror Harats
Can you repeat the question? We couldn't hear you well.
Susan Chor
Sorry. Let me try again. Is the R&D spend for this quarter the new baseline for the remainder of the year?
Amos Ron
Are you referring to the increase in R&D expenses for the quarter?
Susan Chor
Yes.
Amos Ron
Yes. Okay. So we do not expect the current or this quarter run rate to continue for the full year. We expect to be in line with our average of about $2 million or a little less per month run rate on the year. And the total R&D expenses for the year will be a bit higher than last year, because we are advancing the VB-601. And the oral study is gearing up, but not in the portion that was evident in the quarter.
Susan Chor
A follow-up question on VB-111 enrollment. So I think in June, you guys had enrolled 300 patients. Can you provide an update on the number of patients enrolled?
Dror Harats
We don't provide it on a regular basis. Usually, we provide it when we get to significant numbers. So I would prefer not to say the number right now, but we keep on progressing. Of course, we are not screening now in the U.S. So the pace is a bit slower, but we believe that we can actually -- if things will work well with the CMC, we will be able to meet the time line of finished recruiting by year-end or beginning of next year.
Susan Chor
Great. And just one last question. Did the FDA provide any guidance on the review process? And I guess my follow-up to that is, is there any kind of on-site inspection that might delay time lines?
Dror Harats
No. We don't expect any on-site inspection. You know that usually, the on-site inspection is coming when you submit the BLA. Of course, it was -- the FDA wanted to know a lot of information, in our case, before we submit the BLA, and I believe that one of the reason is because we were shortening the time for potential BLA, but it's all done in data that we are sending them and documentation. There is no on-site visit. The FDA actually guided us quite thoroughly on what exactly they need to see in the status that we are sending them. And we believe that we send them all this information at the beginning of the month. We know that they are working on it right now and reviewing it. And we've been assured that they will come back to us at the moment that they will review this step.
Susan Chor
That's all the questions from us.
Operator
Our next question is from RK with H.C. Wainwright. Please proceed.
Ramakanth Swayampakula
Dror and Amos, regarding the precautionary pause that you're taking on the U.S. side in terms of enrollment, do you -- what commentary do you have on if there is a potential impact on the statistics or in the population mix when you get to the final analysis of the oral study.
Dror Harats
I don't think -- that's a very good question, but I don't think that it will have an effect on either the statistics or the overall population. When we took this step, we already had the majority of patients coming from the U.S. So there won't be an issue of where the majority of patients coming from because you know that that's part of the thing that the FDA will want to see and they know that the majority of patients coming from the U.S. anyway. The second thing is that there is no real big change in the pace of recruitment because just before this pause, as I was saying before, we had quite significant amount of patients that were screened.
So our plan was, all of the time -- our statistical plan was all the time assuming that we will be fully recruited by first quarter 2022. And because we knew that we are recruiting better than anticipated, we were saying year-end. So I don't think it will change any of the statistics or if it will change any of the mix of population that we will have.
Ramakanth Swayampakula
And then for the people that you've already recruited in the U.S., is the shelf life of the drug long enough in case some of these patients need to stay on the drug for longer than anticipated?
Dror Harats
Shelf life that we have for VB-111, now if I recall right, it's about 5 years. That's a very long shelf life, and we don't have any issue. I believe it was 4.5%, and we are extending it right now, but we have no issue with shelf life. And by the way, we have no issue with production. We are making more batches and some of the batches will be already for the commercial and batches all looks very well. So it was only the issue of showing that the new facility and the release lab are actually comparable to what was done in the other site.
Ramakanth Swayampakula
My last question is any commentary on the colorectal cancer and the recurrent GBM studies in terms of the progress? And also any update on the time lines at all in terms of data expectations?
Amos Ron
So the colon cancer is -- continue as planned. And as you all know, we agreed with the National Cancer Institute doctors that we will actually look at biopsies to see if indeed we are turning the cold tumor off the colon into a hot tumor, meaning that we have inflammation there and a lot of CD4 and CD8 cells. For that, we need enough biopsies where the patients are on VB-111 alone and when they are on combined therapy. As you can imagine, patients that's going on trial like this at NCI are quite advanced in their disease. And we are collecting enough patients and enough biopsies for that. And the moment that we will have it and that we will have data on the histology, of course, we will share it with the market. The point that the study is ongoing and the point that it takes time. I don't think that's a bad signal, but I don't have more information about that.
Regarding the GBM trial, some centers are open, some centers are ready to open. But again, for the sake of the patients that are on the OVAL trial, we didn't want to use any of the material that is already approved by the agency to use in the U.S. for clinical trials, for any trial, except for the patients that are on the OVAL trial and getting VB-111 because there are a significant amount of patients that are actually on the drug, and we have to make sure that we have enough supply for them.
Operator
[Operator Instructions] Our next question is from Soumit Roy with Jones Trading. Please proceed.
Soumit Roy
Congrats on the progress. If you could just give us a little color on what percent of patients are from the U.S. versus ex U.S. and how many sites U.S. versus ex U.S.? And second is, if you have any idea on what the patients are -- what kind of treatment they would undergo post relapse? And if there is a possibility of redosing a stable patient, if that's -- mechanistically, it makes sense?
Dror Harats
Yes. So thank you, Sumit, for the question. In the U.S. we do have over 200 patients out of these 300 patients. So the majority are coming from the U.S. There is no question about it. There are about 64 sites in the U.S. alone. So we are talking about majority of sites coming from the U.S. as you can you imagine. We also have a significant number of sites in Israel, in Japan and in Europe, but the study was planned from the beginning to have the majority of patients from the U.S. What was your second question?
Soumit Roy
Does it make sense mechanistically to be able to redose these patients for stable disease patients? Or that's not something you -- because of vector or antibody development won't allow?
Dror Harats
No, no. Actually, the antibodies does not prevent the drug from working because it takes about a few cycles of the drug in the blood to get into the endothelial cells and they stay actually quite protected and the gene is there for a very long period of time. And we showed it both in animal models and in human being when we had a chance to biopsy from tumors. The expression of the drug is quite significant for a long period of time, and we could see responses in recurrent dosing. So there is no question that you can give it in a recurrent dosing. And actually, that's why we are treating the patient every 8 weeks until progression. And we allow in the OVAL trial to actually treat beyond progression until we are sure that this is real progression and not to pseudo progression.
And in the colon study, we're giving the drug every 6 weeks, not every 8 weeks. So we are giving the drug in -- as a repeated dosing until the patient progressed. When they progressed, theoretically, I think that what should be given is checkpoint inhibitors because maybe one of the reasons theoretically that the patient would progress is that we induce the immune system there or brought it there. But then the checkpoint inhibition by the tumor restart working. But we cannot control it because it's not part of the trial of the OVAL trial. It is part of the colon study at NCI, where we combined it with checkpoint inhibitors. So if you ask me what the doctors do when the patient progress, as far as I know, they go on chemotherapy, they try to put them sometime a radiation, but there is no real treatment for platinum-resistant of ovarian cancer.
Soumit Roy
Congrats on the progress.
Dror Harats
Thank you very much.
Operator
This does conclude our question-and-answer session. I would like to turn the conference back over to the VBL team for closing comments.
Dror Harats
So thank you all for joining us on today's call, and have a wonderful day. Thank you.
Operator
Thank you. This does conclude today's conference. You may disconnect your lines at this time. And thank you for your participation.
