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Oncolytics Biotech Inc. misses on earnings expectations. Reported EPS is $-0.1 EPS, expectations were $-0.07.

Operator: Good morning, and welcome to Oncolytics Biotech’s Third Quarter 2023 Conference Call. All participants are now in listen-only mode. There will be a question-and-answer session at the end of this call. Please be advised that this call is being recorded at the company’s request. I would now like to turn the call over to Jon Patton, Director of Investor Relations and Communications. Please go ahead.

Jon Patton: Thank you, operator, and good morning, everyone. Earlier this morning, Oncolytics issued a press release providing recent operational highlights and financial results for the third quarter of 2023. A replay of today’s call will be available on the Events section of the Oncolytics’ website approximately 2 hours after its completion. After remarks and 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 objectives, company’s belief as to the potential mechanism of action and benefits of pelareorep as a cancer therapeutic our clinical pipeline, and I believe that we are on track for license-enabling studies in metastatic breast cancer and metastatic pancreatic cancer.

An executive standing in a modern biotechnology laboratory with beakers, tubes, and vials.

Company’s expectations regarding the release of additional results and/or updates in respect of its ongoing clinical studies, company’s business development plans and strategies 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 the convenient 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 protections, actions by regulatory agencies and those other factors detailed in this 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’ll bring on CEO, Dr. Matt Coffey for his overall highlights and to introduce the rest of the management team who will be speaking today. Matt?

Matt Coffey: Thank you, John. I’ll open by saying that Oncolytics has made substantial progress since our last quarterly updates and I want to say thank you for joining us for today’s call to hear about these operational highlights and third quarter 2023 financial results. During the call today our Chief Medical Officer, Tom Heineman, our Global Head of Business Development; Andrew de Guttadauro; our Chief Financial Officer, Kirk Look, and I will present an update on our clinical program, summarize the data was presented at ESMO and other recent and upcoming medical meetings, to discuss how recent data readouts and other opportunities bolster our business development efforts and potential, outline our upcoming milestones and provide you with our outlook on our cash runway and summarize third quarter financial results.

Then we’ll open the call up for questions. Oncolytic intends to deliver on its mission to improve the survival of patients with cancer by investigating the novel immunotherapy pelareorep or pela as we’ll refer to it in carefully selected indications and treatment regimes that will leverage its unique mechanism of action to provide the most meaningful clinical benefits. This is measured by improvements in overall survival and progression-free survival supported by an improved T-cell profile. The data presented at the European Society for Medical Oncology, or ESMO, from the pancreatic and colorectal arms at the GOBLET study are a highlight of 2023. I’d like to underscore a few observations, and Tom will take you through the detailed results. First, we have now met the SIMON 2-stage success criteria in two consecutive GOBLET cohorts evaluating pela in patients with first-line pancreatic and third-line colorectal cancer.

Importantly, this is the third indication where we’ve seen pela combined with atezolizumab provide encouraging results in patients. These are breast cancer with the AWARE study plus pancreatic and third-line colorectal cancer in the GOBLET study. We also continue to see the combination of pela and chemotherapy providing response compared to historical controls, demonstrating its potential as an immune therapy backbone. Additionally, we’ve seen the expansion of tumor-infiltrating lymphocytes, or TIL clones correlated with tumor response and a strong correlation between T cell clone expansion and improvements in the tumor microenvironment, or TME, consistent with pela’s differentiated mechanism of action. Critically, pela treatment continues to be well tolerated, which is important as we continue to evaluate additional indications and potential oncology treatment combinations.

And finally, in addition to meeting the success criteria for both the pancreatic and colorectal cancer cohorts, the data are compelling, especially for pancreatic cancer, where we saw objective response rates, progression-free survival rates and rates of overall survival that exceeds historical controlled trials. Taken together, these data show how pela mechanism of action facilitate synergy with both chemotherapy and checkpoint inhibitors in multiple indications. Furthermore, the results expand that data set that forms the basis of a potentially compel product profile for pela and give us additional confidence in advancing our clinical program. We will use the results of both GOBLET segments presented at ESMO, combined with our analysis of the current treatment paradigm and competitive landscape to map out our next steps for registration studies.

As we review Oncolytics’ third quarter, along with the company’s recent operations, I believe there are three key take-home messages. First, we believe pela has the potential to be a differentiated and effective immunotherapy that could improve the lives and overall survival of people with cancer. This is based on positive, consistent results in gastrointestinal and breast cancer, including data presented at ESMO 2023 for pancreatic cancer and colorectal cancer. The totality of our clinical data set shows significant improvements in tumor response and overall survival, coupled with highly correlated immunological responses measured by an improved T cell profile in the tumor microenvironment. Second, we are proud to be making the transition to a late-stage company running Registrational Trials with the upcoming start of the Phase III Precision Promise study in pancreatic cancer.

Another important development is the recent award of a $5 million grant from PanCAN to support a new Phase II combination study in pancreatic cancer. If this study generates the same responses we’ve seen to date in pancreatic cancer, it could result in another pela-based combination therapy being selected for inclusion in the Precision Promise Phase III platform trial. Third, we are well positioned to advance our clinical program based on a focus on capital efficiency with a strong balance of $40 million, including $17 million raised in an August public offering and the overallotment plus a $5 million PanCAN grant. Before I bring Tom on, I want to thank everyone on the Oncolytics team for your unwavering dedication to our mission and your fine work.

Now I’d like to turn the call over to our Chief Medical Officer. Thom?

Thomas Heineman: Thanks, Matt, and good morning, everyone. This morning, I would like to provide an update on our clinical programs, take you through the recent and upcoming medical meeting presentations and close by providing you with an update on our next steps. As you know, we have carefully designed our clinical development program to fully explore the clinical potential of pela across a range of cancers and treatment combinations including chemotherapy and checkpoint inhibitors or both. Our therapeutic approach takes advantage of pela’s ability to induce anticancer immune responses through the introduction of its double-stranded RNA into tumor cells. This results in a range of potentially beneficial immune effects, including the induction and expansion of anticancer T cells.

At the same time, pela also modifies the tumor microenvironment to make it less immunosuppressive, which allows more effective killing of the tumor by pela-induced immune responses. Our clinical pipeline is focused on two lead indications, each are positive HER2-negative metastatic breast cancer and metastatic pancreatic cancer, which are on track for licensure-enabling studies. In addition, we are also investigating pela in metastatic colorectal cancer and metastatic anal cancer. We are making excellent progress on the clinical development of pela. Starting with breast cancer, the next milestone will be a readout of survival data from the BRACELET-1 study. While we cannot precisely predict when these data will be available, we expect to be able to report results in 2024.

In pancreatic cancer, we expect to initiate the Precision Promise Phase III study in the first half of 2024. This trial will compare the GOBLET study treatment regimen of pela, atezolizumab, gemcitabine and nab-paclitaxel with a control arm of standard of care gemcitabine plus nab-paclitaxel in patients receiving first line therapy for metastatic pancreatic cancer. We are very excited to be part of the Precision Promise clinical trial. This innovative study was developed with guidance from the FDA to accelerate the registration of novel pancreatic cancer therapies. Participation in the Precision Promise clinical trial will allow efficient evaluation of the pela-based combination therapy and will reduce the cost of development by about 50% compared to a traditional pancreatic cancer Phase III study.

If successful, this clinical trial is expected to support approval of the pela-based combination therapy for first-line treatment of patients with metastatic pancreatic cancer. Pending finalization of the definitive study agreement and based on the timing of regulatory feedback and the pace of enrollment, we hope to reach the initial data readout from the Precision Promise study in the first half of 2025. Jumping into recent and upcoming medical meeting reports, I would like to summarize the GOBLET data we presented at ESMO, touch on our SITC presentation and briefly comment on the anal cancer cohort from the GOBLET study. Let’s start with the data presented at ESMO. As you know, GOBLET is an open-label Phase I/II Simon 2-stage signal finding study designed to evaluate pela in combination with the PD-L1 inhibitor atezolizumab, with or without chemotherapy in patients with different gastrointestinal cancers.

The primary objectives of each cohort of the study are safety and either objective response rate or disease control rate at week 16. Translational data, including T cell receptor sequencing, are also being analyzed. At ESMO, we reported updated clinical results from the pancreatic cancer and third-line colorectal cancer cohorts, including overall response rate, disease control rate, progression-free survival and interim overall survival. In the pancreatic cancer cohort, a total of 13 evaluable patients with advanced or metastatic pancreatic ductal adenocarcinoma were enrolled. Patients were treated with a combination of pela, atezolizumab, gemcitabine and nab-paclitaxel. In this cohort, 93% of patients had metastatic disease mostly in the liver.

Three or more responses at week 16 were required to meet the predefined efficacy success criteria. Updated data from this cohort showed that eight of 13 patients had a partial response, and three patients had stable disease. These data translate to an objective response rate of 62% and a disease control rate of 85%. We are pleased to report that this objective response rate is more than twice the rate of about 25%, observed in earlier randomized studies in comparable pancreatic cancer patients. Additional efficacy results as of the data cutoff of September 18, 2023, showed a median duration of response of 5.7 months, a median progression free survival of 7.2 months, an interim median overall survival of 10.6 months and an interim 12-month overall survival rate of 46%.

Like the objective response rate outcome, these results compare favorably to those reported in prior clinical trials. Moving to the translational results. Our updated data showed that study treatment resulted in the expansion of T cell clones, including new and preexisting tumor-infiltrating lymphocytes, or TILs. Importantly, inconsistent with prior studies, expansion of TIL clones appears to correlate with tumor response. No safety signals were identified in this or any of the GOBLET cohorts consistent with our other studies. The updated results confirm that the pela combination therapy outperforms historical controls and provide strong support for advanced pela into the Phase III Precision Promise study. Next is the GOBLET colorectal cancer cohort, in which pelareorep, in combination with atezolizumab and the chemotherapy trifluridine and tipiracil, also known as TAS-102, was evaluated in heavily pretreated patients who have received two prior lines of chemotherapy for metastatic colorectal cancer.

Stage 1 of this cohort enrolled 15 evaluable patients of whom four achieved stable disease at week 16, indicating that this arm of the study also met its prespecified success criteria. Overall, six patients showed stable disease for a disease control rate of 40%. It is important to note that this is a second GOBLET study cohort in a row that has met its success criteria, further supporting pela’s ability to synergize with atezolizumab. In addition, translational data from this arm of the study demonstrated that pela increased the tumor expression of PD-L1 as well as the expansion of new T cell clones in the blood. Therefore, these data confirm that Pela has taken up by tumor cells and is able to stimulate T cell expansion, even in heavily pretreated colorectal cancer patients.

These results are encouraging given that exhaustion of tumor infiltrating lymphocytes resulting from the late stage of the disease and from extensive prior chemotherapy, may limit their ability to expand in response to treatment. Moving on to SITC. We presented the translational data from the AWARE-1 breast cancer study in an abstract with the full data from the poster expected later today. You may recall that the AWARE-1 study evaluating pela+Letrozole with and without atezolizumab in patients with HR+/HER2- breast cancer. Data presented at AACR in 2021 showed that this combination acted synergistically to upregulate PD-L1 expression on tumor cells and enhanced infiltration of T cells into the tumor. The study data presented at SITC this year includes imaging mass cytometry, or IMC, to study samples at the single cell level from patients who receive pela, letrozol and atezolizumab.

IMC technology makes it possible to evaluate tumor immune responses and cellular interactions in the tumor microenvironment in much more detail. The results reported this year at SITC provide further support for pela’s mechanism of action by demonstrating its ability to increase cytotoxic T cells in the tumor. In addition, the data show that pela upregulated PD-L1 expression in tumor tissue, potentially making tumors more amenable to checkpoint inhibitor therapy such as atezolizumab. With the game-changing availability of checkpoint inhibitors and the recognition that many patients progress or do not respond to checkpoint inhibitor treatment, there is a great deal of effort being made in the biopharmaceutical industry to find and test treatments that can turn a patient who would likely not respond to checkpoint inhibitor therapy into one who would.

This may be achieved by making the tumor microenvironment more immunologically active, that is to say hot and attribute pela has demonstrated in several different cancers. I should note that the synergy of pela with atezolizumab in breast cancer is demonstrated in the AWARE-1 study is what prompted Oncolytics to select atezolizumab as a checkpoint inhibitor to combine with pela and the GOBLET study of gastrointestinal cancers. Finally, I will touch on the anal cancer cohort of the GOBLET study. This was also designed as a Simon 2-stage study. In Stage 1, we will enroll 10 evaluable subjects eligible for second line or later therapy who are treated with a combination of pela and atezolizumab without chemotherapy. Two or more responses are required to meet the prespecified success criteria and advanced to Stage 2 of the study.

We expect to report interim results from this cohort, including preliminary objective response rate in Q4 of 2023. These results will help to shape our future development pathway for this program. Everyone at Oncolytics is genuinely pleased by pela’s consistent clinical success in a series of difficult-to-treat cancers, which also includes HR+/HER2- metastatic breast cancer as reported at ASCO last June. These clinical successes are strongly supported by the translational research results that further solidify pela’s immunologic mechanism of action and make us optimistic that pela has the potential to be a highly effective immunotherapy for people with different cancers. Before I hand the call over to Andrew, I would like to take a moment to thank all of the patients, caregivers, clinical investigators, study site teams and our many collaborators for their efforts and dedication to advancing pela for the benefit of cancer patients.

Andrew?

Andrew de Guttadauro: Thanks, Tom. As discussed, the positive and consistent data readouts we’ve seen this past month for gastrointestinal cancers, along with BRACELET-1 data from ASCO, continue to keep us engaged with existing and new potential biopharma partners. On our previous financial results call, I mentioned the process of bringing some of these relationships all the way to fruition can take time. We are thrilled to be selected by Precision Promise for their adaptive Phase III Platform Trial with a combination of pela, gemcitabine, nab-paclitaxel and atezolizumab in pancreatic cancer. Initial pancreatic data from that treatment combination from cohort 1 of the GOBLET study was announced around this time last year but Wayne selected for Precision Promise and receiving a grant from PanCAN to explore pela with modified FOLFIRINOX in pancreatic cancer, only came to light late this past summer.

There was a rigorous vetting process, with multiple meetings over many months with experts and opinion leaders from PanCAN, so we are thrilled to have proven pela’s potential to a well-respected global panel of experts. The opportunity pela and modifying FOLFIRINOX could be potentially very meaningful. Standard care for pancreatic cancer hasn’t changed much for several decades, with most patients receiving either modified FOLFIRINOX or gemcitabine plus nab-paclitaxel as their first-line metastatic treatment options. A pela-based combination with gemcitabine and nab-paclitaxel will be evaluated in the Precision Promise Phase III study, which covers one of the treatment options for pancreatic cancer patients. If pela can also show similar signs of efficacy when combined with modified FOLFIRINOX with or without a checkpoint inhibitor, the Oncolytics could capture significant first-line patient population and provide thousands of pancreatic cancer patients with an improvement over the currently available treatment options.

Keep in mind, our BD goals remain the same. We aim to secure a global clinical and commercialization partnership with a leading biopharma company under optimal terms. We already have relationships with companies like pfizer, Merck, Roche, Incyte and others. A number of our studies, including GOBLET and BRACELET-1 have been conducted as clinical collaborations with these large pharmaceutical companies. These collaborations have provided us with important validation support, including the agents used in the treatment combinations. Working collaboratively and continuously updating them on our clinical progress enables them to become increasingly comfortable with pela, its mechanism of action and its potential to improve the lives of cancer patients, which we believe will serve us well in any partnering discussion.

I try to remind our shareholders that we can’t predict the timing of any potential partnership. We will be thorough as we navigate the best possible outcome for Oncolytics and its shareholders. We hope to secure a single licensing deal for both our breast cancer and pancreatic cancer programs that allows us to minimize clinical and commercial risk while providing us through upfront payments, milestones and royalties. As we continue to report encouraging data across multiple indications and with multiple cancer treatments, we intend to create competition among potential partners and foster continued interest. We plan to provide additional updates as appropriate and look forward to enhancing Pela’s value proposition. Now I’ll hand it to Kirk for a review of our financials.

Kirk?

Kirk Look: Thanks, Andrew. This morning, I’d like to provide an update on our cash balance, our financial runway and provide you with a high-level review of our operating results for the third quarter of 2023. As a reminder, all figures are in Canadian dollars, unless otherwise stated. First, I’ll touch on our financial position, cash balance and financial runway. I’m pleased to report we closed the third quarter with $40 million in cash and cash equivalents. During the quarter, despite the continued challenging capital market environment, we successfully closed a public offering, securing over $21 million. Along with the prudent use of our at-the-market facility in the first half of the year, we have raised over $30 million in 2023.

With the recently announced $5 million grant from PanCAN, we’ve continued to maintain a financial runway that exceeds 12 months. With respect to our operating results, Oncolytics continues to demonstrate remarkable fiscal responsibility. We aim to maximize our resources, ensuring that each dollar spent contributes to our R&D efforts as we move our breast and pancreatic cancer programs towards approval. Now research and development expenses for the third quarter of 2023 were $5.8 million compared to $3.7 million for the same period in 2022. The change mainly reflecting higher manufacturing expenses as we scale up our production process and work to comply with changing environmental standards. Specifically, during the quarter, we completed a scaled up engineering production line along with the associated batch testing.

General and administrative expenses for the third quarter of 2023 were $5.2 million, and this compares with $2.4 million for the same period in 2022. The change was mainly associated with higher investor relations activities along with a portion of the transaction costs associated with our public offering allocated to G&A expenses. Net loss for the third quarter of 2023 was $9.9 million or $0.14 per share on 69.8 million weighted average shares outstanding. This compares with a net loss for the third quarter of 2022 of $4.4 million or $0.08 per share. Finally, with our prudent financial management, combined with our ability to secure funding in this tough equity capital market, we’re well positioned for 2024 and achieving our development milestones.

With my financial review complete, I’ll now hand the call back to Matt for concluding remarks. Matt?

Matt Coffey: Thank you, Kirk. In closing, I want to come back to our three key take-home messages: first, we believe pela has the potential to be a differentiated and effective immunotherapy that it can improve the lives and overall survival of people with cancer; second, we are proud to be making the transition to becoming a late-stage company running Registrational Studies with the start of the Phase III Precision Promise study in pancreatic cancer on the horizon; third, we are well positioned to advance our clinical programs based on a solid cash balance that gets us to key data readout milestones. Looking ahead to the rest of the year and into 2024, we are focused on achieving the following milestones. Later today, we will be presenting additional cellular immune data from the AWARE study demonstrating how pela replication in the presence of atezolizumab derives the immune cells into the TME and homes then to the infected cancer cells.

By the end of the year, we expect to provide an update on the fourth cohort from the GOBLET trial in patients with anal cancer. In the first half of 2024, we expect to announce the start of the Phase III Precision Promise study in pancreatic cancer. This is a combination study with pela, nab-paclitaxel, gemcitabine in the checkpoint inhibitor atezolizumab, solidifying Oncolytics as a late-stage clinical opportunity. Also in the first half of 2024, we will initiate a new arm in the GOBLET study evaluating pela in combination with modified FOLFIRINOX with or without atezolizumab in patients with early-stage pancreatic cancer, supported in part by the $5 million grant we received from PanCAN. Also, we expect to report survival data for the BRACELET-1 study in patients with HR+/HER2- breast cancer.

The timing to report these results is linked to the number of progression events defined as disease progression or death. While it’s not possible to predict the exact timing for survival data, we believe that may be available before the end of 2024. We are evaluating next steps for this indication and plan to provide investors with a further update on our plans in 2024. Now before we sign off, I want to thank our investors, investigators and collaborators for supporting Oncolytics. I’m also grateful for the patients participating in our clinical trials and our fantastic employees for their hard work. We are dedicated to leveraging Pela’s unique mechanism of action to improve the care and survival of patients with cancer, and we look forward to keeping you informed about our progress.

Operator, we can now open the line for questions.

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Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Louise Chen from Cantor. Please go ahead.

Louise Chen: Hi. Congratulations on all the progress this quarter and thank you for taking my question. So I wanted to ask you about BRACELET-1. And if there’s any new data or updates that give you incrementally more confidence that you’ll show some good overall survival data? And then secondly, for the GOBLET anal data, what exact data are you planning to show in the interim? Are you going to put out a press release? And then if you were going to show data, what do you think would be competitive data or how do you know what you’d ideally like to see? And then last question on your partnership. Have you started those discussions yet? And ideally, what kind of partner would be good for you, somebody global, somebody involved in oncology? What do you think about here? Thank you.

Matt Coffey: Sure. Hi, Louis. Thanks for the question. Your first question was about breast cancer on the BRACELET data, where — you can tell we’re a little bit cautious about saying we would have the overall survival [indiscernible]. What makes me really quite excited about the evolving data as we reported at ESMO or around ESMO, patients receiving paclitaxel, none of them unfortunately made a progression past 12 months. And for the pela+paclitaxel arm, we were seeing 33%, I believe, the number was. We’re still actually tracking patients on the pela, paclitaxel arm who are at or above two years now, without progressing. So for in metastatic breast cancer study, this is a remarkable outcome for these patients. But as you can tell, the patients haven’t progressed, they also haven’t died.

So we’re still collecting the overall survival data. We do believe we’ll have the events in 2024. But as I said, we’re still tracking a number of the patients on the test arm for just PFS, so that’s a fabulous outcome. That’s why we have the confidence, frankly, is just because they’re still participating in the study. In terms of the anal cancer, what we’ll be looking for there likely is a response data like the rest of the GOBLET, what the primary endpoint was objective response. Here, what we need for success is two out of 10 patients or better. And that one is really quite exciting as well because if you look at it, it’s simply tazolizumab with pela. There is no chemotherapy. So this is pretreated patient population in the second line setting.

If we do see responses, it would be due to the drug combination atezolizumab+pela. So no one can make the argument well, maybe it was chemo, what have you. Now in terms of what the objective response rate in this population is it’s going to be historically around 10% to 13%. Incyte recently reported on a study in that patient population, I think it was 90 to 100 patients ballpark where they reported the most recently, they had three studies, one reported a 10% response, one with 11%, one with 13%. So if we see anything in excess of that, especially if the responses are dramatic, deep and lasting, I think it sets us on quite a successful course because, as you know, anal cancer in the second line has no treatment options. It is a clear unmet need area.

So if we see anything, I think, in excess of this 13%, we’re off to the races, if you will. In terms of partnering, we’re in discussions with a number of groups. Really what everyone is looking for, I think, and I think the catalyst that I think this is what we’re striving for as well. The PanCAN study is being run with atezolizumab. Obviously, that’s going to be generating randomized data with substantial and I think that is potentially an inflection point. On the breast cancer side, what we’d like to do is look at a trial design very similar to the PanCAN, where we can get an interim look, which provides us and partners with the confidence that this drug combination is active. Again, the data that we’ve presented, two randomized studies, is very compelling, both of them having reached their endpoints, both of them being either statistically significant for survival as PH-9213 (ph) or as you can see with the confidence intervals on the BRACELET today that didn’t cost one.

It does speak to the fact that it is statistically significant even in a small group, but we want to be able to generate basically additional data with the parties so that everyone can come in prior to the conclusion of the Phase III very much like in the PanCAN situation. Now that being said, we’ve been very fortunate with our work with atezolizumab. We’ve now got three out of three successful studies that being, the AWARE, which demonstrated the synergy with atezolizumab in terms of enhancing that cell T score enhancing the inflammation and improving the quality of it. The data we’re presenting today at SITC with the IMC really a much more granular look of which cells are being recruited, where we’re seeing the inflammation, and this is really at the cellular level.

So what we’re looking at here is the infected cells and which cells are being recruited to eliminate that cells, whether it be MDSC, CD8 core positive cell, T memory and T helper. So it gives us a very granular look of what’s happening, but it is very clear this is driving immunological response. Also successful was the — it was the pancreatic study, which led to the PanCAN study and now more recently with third-line turbine colorectal, where, again, we met the primary endpoint. So it’s very clear there’s synergy with atezolizumab and presumably other PD-L1 inhibitors. GOBLET, assuming that the results are positive, this would be the fourth study in a row that would show synergy with atezolizumab. So I think for parties looking at this as a partnering opportunity even though the ends are small, they’re cumulative consistent and reproducible.

So I think that will drive some of the discussions as well. And as Andrew pointed to, we’ve always wanted to be very competitive across partnerships. But what we are looking for is a large biopharma that can take on a global role with us to take the indications where we already know we’re successful that being PDAC in metastatic breast cancer and then expand that into other areas as well. I mean for us right now, the goal is to get that approval so that we can expand access across multiple indications and settings to just provide more patients with the opportunity to receive it because we really are quite impressed with the results that we’re seeing as of late. Tom, was there anything you wanted to add either on the breast side or on the anal cancer?

Thomas Heineman: No, other than to emphasize that we’ve now seen consistent success across the HR+/HER2- breast cancer. We’ve met the success criteria, obviously, in pancreatic cancer, colorectal cancer and with the anal carcinoma report coming up, I think everything is looking very promising.

Louise Chen: Thank you very much.

Matt Coffey: Thanks, Louise.

Operator: Our next question comes from the line of John Newman from Canaccord. Please go ahead.

John Newman: Hi, guys. Good morning. Thank you for taking the question and good work and all the progress here. I have a question about the PanCAN study. I believe you mentioned you’ll be starting that in the first half of ’24, the Phase I/II study. What I’m curious about is are you able to treat through progression with pelareorep. So obviously, if the patient is being treated with chemotherapy or a PD-1, those therapies are not always continue through progression, but wondering if you’re able to do that with just pelareorep? Thanks.

Matt Coffey: I’m going to push Tom under the bus on that one. Tom, can you speak to the plan in terms of dosing on the modified pelareorep study?

Thomas Heineman: Yeah. So — well, so for the for the Precision Promise study, which is the gemcitabine, nab-paclitaxel pelareorep and atezo in that study, the protocol — again, this protocol has been — was written in — with guidance from the FDA and has been highly vetted. In that protocol, there is no treatment past progression, right? We are also doing the — adding the additional arm to the GOBLET study, where we’re combining pelareorep with modified FOLFIRINOX plus or minus atezolizumab. And in that study, we do have the option to treat past progression.

John Newman: Okay. Great. Thank you.

Operator: Our next question comes from the line of Soumit Roy from Jones Research. Please go ahead.

Soumit Roy: Good morning, everyone and congrats on all the progress. Going back to the ESMO presentation on the pancreatic data, it looks like the — would the real comparator study would be NAPOLI trial with and the [indiscernible] and the OS is kind of coming close to it. So I’m curious, in the frontline setting, are you thinking the modified FOLFIRINOX arm is a better option where you can see a very clear benefit in a larger patient cohort? What’s your thinking about?

Matt Coffey: I read your report, thank you for that by the way. Looking at the NAPOLI study, I would argue that, that patient population since they’ve not had previous exposure to any chemotherapy and they were predominantly not in a metastatic setting as to our — I wouldn’t say that’s an apples-to-apples comparison. Also, it was an odd study and that it’s basically a derivative of modified FOLFIRINOX and then comparing it to nab-paclitaxel. I would have thought a better comparator would have been modified FOLFIRINOX as the comparator arm because nab-paclitaxel basically, the thinking is it’s not as active, but you don’t pay a TOCs penalty in the way that you would with modified FOLFIRINOX. So I’d argue the NAPOLI study has a few fundamental differences and flaws that make the comparison difficult.

In terms of PanCAN interests with modified FOLFIRINOX, there is a lot of clinicians that prefer it because there is a thinking that it is more active, although recent publications at ESMO from the — I’m just trying to think of the group that did, it’s SOLTI, pardon me, is the group that published it would suggest that maybe the difference isn’t as much as you could see. That being said, modified FOLFIRINOX is going to be used as one of the frontline treatment options. PanCAN did want to study it to see if it is more active, if we can enhance that activity with pelareorep and atezolizumab but it is an experiment. We’re very delighted that PanCAN provided a $5 million grant for us to do this, but we won’t know the activity until we actually treat it.

I mean I believe it’s going to be more active. But on the flip side, it’s a lot more drugs. The toxicity could be unacceptable. We’ve never seen that before, but it is possible. But it could also be that the modified FOLFIRINOX and interferes with the T cell response as well because there is so many drugs present. So we’re running the experiment to see what the activity looks like. What’s nice about that one is it is a randomized protocol. So it’s modified FOLFIRINOX, pela plus or minus atezolizumab. So we’ll have a better look at the contribution. But again, I’m not anticipating there to be any toxicities with pela because it is so well tolerated. To date, pela, atezolizumab combinations have been well tolerated as well. But with the new drug combination, there’s always a little bit of uncertainty.

But certainly, we have the backing of a very prestigious group like PanCAN to study this. So the belief is that we’ll be more active, and we’ll know later next year. Tom, do you have anything to add about that NAPOLI study? Tom, you might be on mute.

Thomas Heineman: Yeah. Terribly sorry. Yes, the NAPOLI study was certainly an interesting study, but it didn’t really — for the reasons, Matt mentioned, it didn’t really answer all the questions. And I think the pela+FOLFIRINOX study will be very interesting. And it’s not that there’s an obvious reason why pela should work better with FOLFIRINOX, although — but we have reasons to believe that it may work with FOLFIRINOX and some clinicians for different reasons in different parts of the world simply prefer FOLFIRINOX over the gemcitabine and nab-paclitaxel for some of their patients. So by investigating pela in combination with the modified FOLFIRINOX we are able — we would be able to cover the entire pancreatic cancer first-line population, right?

So it expands our ability to provide benefit to patients regardless of physicians own particular perspectives on the standard of care treatment. And also just to comment on the safety side, we have never combined pela with modified FOLFIRINOX. But in other studies, we have combined pela with the components of FOLFIRINOX. So, although you never know for sure, we don’t have any reason to believe that it will behave poorly with any of the components of the FOLFIRINOX.

Soumit Roy: Understood. That was very helpful. Another question is I know it’s probably not an enrollment criteria, but are you looking into the — any biomarkers of the 13 patients in terms of genetic biomarker or PD-L1 level, something to explain the non-responders or patients who are staying on a shorter duration of response, anything you’re seeing there?

Matt Coffey: The one biomarker that I’m very interested in is the expansion of the tumor-infiltrating lymphocytes that we’ve demonstrated correlates to tumor response. So for anyone not familiar with the story, we were able to — and it was a question of Roche [indiscernible] actually, they said, is there any correlation with the existing T cells and tumor response. So we went back — and again, this is all the TCR work. We looked at the resident T cells within the tumor or the TILs at baseline. And the reason for that is the assumption is if you have inflammatory cells within the tumor that are most likely directed against the tumor. So this is an auto reactor T cell that’s become exhausted. So we wanted to look what happens to those TILs post treatment.

And what we were able to demonstrate is in the responders, those TILs, we could see those clones expanding in the blood. So we know we’re actually getting an expansion of preexisting T cells that do recognize the tumor, and we can look at that as early as two to three weeks. So we can immunologically say these patients had an exhausted T cell clone that was useful in eliminating the tumor and the combination of atezolizumab and pela, we’re able to expand those populations to eliminate the tumor more effectively. So it speaks to the immunological status. We can measure it quickly, and it appears to be reproducible. So I think for us, it allows us really to start guessing which patients are going to have better immunological outcomes. Tom, you’re closer to the protocol.

Is there any of the biomarkers that we’re looking at?

Thomas Heineman: Well, we — so we are looking at a variety of different markers. But I think to date, as you pointed out, Matt, the TIL expansion is the one that seems to be the most — it has the best correlation with response and is also consistent with the prior literature. So I think that’s probably the most interesting one that we’ve identified so far.

Matt Coffey: There’s some additional work being done with If you’re familiar with the literature Dr. Anne Noonan at OSU has demonstrated that the patients with better outcomes have lower CEACAM6 levels. That was in the NCI study looking at this. So we are verifying that result as well because that could be a selection criteria based not post-treatment but pretreatment. So we’ll have additional information for you there in that area as well.

Soumit Roy: Nothing you’ve seen on KRAS due to demutation or DNA damage response [indiscernible] mutations?

Thomas Heineman: Well, just — so in pancreatic cancer, the large majority of patients, somewhere in the 80-plus percent will have a KRAS mutation. So that is unlikely to be discriminatory in that particular patient population.

Soumit Roy: All right. Thank you so much.

Thomas Heineman: Thanks, Soumit.

Operator: [Operator Instructions] Our next question comes from the line of Jason McCarthy from Maxim Group. Please go ahead.

Unidentified Participant: Hi, guys. This is Chad on for Jason. Thanks for taking the questions. So I was just wondering, in the same way you got the grant from PanCAN to run a different combo in pancreatic. Do you think there would be a similar opportunity in breast cancer, say, evaluating pela with a different checkpoint that was used in BRACELET-1?

Matt Coffey: Excellent question, Chad, thanks. Yes, we do believe that — and again, for people looking at the story, at ESMO, we presented was a tripling of the objective response rate when we added pela to paclitaxel, a 50% increase in the median overall survival, and then we’re tracking for overall survival. The hazard ratio is 0.29. So it was really quite a remarkable improvement. When we added avelumab, it eliminated that benefit and what we’ve found out since and subsequently avelumab is the only approved checkpoint inhibitor with a non-modified Fc portion. So for anyone not familiar, the Fc portion on an antibody. So an antibody basically looks like the letter Y or a ranch. The part that would engage with is the bolt is the SAB portion.

That’s the portion that changes and finds the epitope and allows you to have a selective antibody response against a specific epitope. The handle of the ranch interacts with other immune cells through MHC molecules. Every other developer on the planet has silenced that FC portion so that it doesn’t engage with macrophage. And the reason for that is it can lead to T cell engulfment or macrophage engulfment of the T cells. So as opposed to expanding a T cell response, it will actually collapse it. And there’s actually publications in the literature talking about how avelumab treatment can actually lead to hyper proliferation, just to say it will actually lead tumors grow faster. So it was a poor choice to combine with an agent like ours that relies on a T cell response.

And you can see this from our two TTR sequencing, the addition of avelumab caused total collapse. When we spoke with partners about this, they said that was an expected outcome based on this non-silence FC Portion. So we still think breast cancer can benefit from the addition of a checkpoint inhibitor and especially something like atezolizumab where it is directed against the PD-L1 MOD rather than PD-1 and that’s just to say, for us, it’s better because we’re getting expression on the tumor cells itself. So we can actually direct where we want to direct. So it should work with durva, atezolizumab, but we’ve seen synergy with other PD-L1s that have that have non — half silent Fc Portions like Merck. I’m just — with the growing body of evidence the atezolizumab is looking really good in terms of the underlying synergies.

Yes, I think we should be looking at this in the breast cancer space. And I think that becomes an important component of our life cycle management. for a couple of reasons. I think we’ll be successful with just paclitaxel and pela, two randomized studies, I’m very comfortable, thinking that a third study is going to be as successful as the last two. But the question is can we make it even better? Can we get complete responses, even better survival, more objective response. So I think it makes sense to study that. But the Phase III is not going to look at that. That will be more of a life cycle management aspect. And then the question is reimbursement. A tele combination will be priced like other — any other immunological therapy. If we add a checkpoint inhibitor, that will double that number again.

So the question is how much benefit do we have to see to ensure reimbursement of a drug combination that could be looking between $300,000 and $400,000 conservatively. So it is a question we have to answer, but it will be answered as we’re running the Phase III program so that we can say, okay, let’s get the approval. Here’s the next steps, but I agree with you wholeheartedly. Avelumab, unfortunately, was a poor choice and I don’t think it’s reflective of the underlying synergy we see with other checkpoint inhibitors, and it is something we can study. And it was interesting, we just had a Board meeting yesterday, and the clinical component of our discussions were as we’re running the Phase III, where can we get other studies with cooperative groups like PanCAN, EORTC, NCI, NCIC to really start bolstering studies into other pivotal indications.

And obviously, checkpoint inhibitors is going to figure very largely into that picture.

Unidentified Participant: Great. Yeah. Thanks for the detailed answer there and taking the question and congrats again on all the progress.

Matt Coffey: Thanks, Chad.

Operator: That was just our last question. I’d now like to turn the call back over to Mr. Coffey for any closing remarks.

Matt Coffey: Thank you for that. Thank you to everyone who turned in to hear about our progress. The data presented at ESMO pancreatic and colorectal cancer, in addition to our AWARE-1 abstract data presented at since they reinforce the ability of pela to remodel tumor microenvironments and generate immune responses in patients even in those with immune systems diminished by previous lines of therapy. The data also adds to the portfolio of evidence that pela synergizes with checkpoint inhibitors like atezolizumab. We’ll continue to advance towards licensure-enabling studies in breast and pancreatic cancer and provide additional update on our progress. With that, I wish everyone a wonderful rest of your day. Thanks again, everyone. I appreciate it.

Operator: Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.