Q4 2023 Evaxion Biotech A/S Earnings Call (Danish)

Participants

Christian Kanstrup; CEO; Evaxion Biotech A/S

Birgitte Rønø; Chief Scientific Officer; Evaxion Biotech A/S

Jesper Nyegaard Nissen; CFO, COO; Evaxion Biotech A/S

Ahu Demir; Analyst; Ladenburg Thalmann & Co. Inc.

Swayampakula Ramakanth; Analyst; H.C. Wainwright & Co, LLC

Thomas Flaten; Analyst; Lake Street Capital Markets, LLC

Richard Ramanius; Analyst; Redeye AB

Presentation

Christian Kanstrup

Hello, everyone, and a very warm welcome to this Evaxion business update conference call on the back of our full year 2023 results. I'm Christine Kanstrup, I'm the CEO of Evaxion.
With me today, I have Birgitte Rønø, our Chief Scientific Officer; I have Jesper Nyegaard Nissen, our Chief Operating Officer and Chief Financial Officer. What we will be covering today is I will be giving a brief, welcome also a brief corporate update. Then we will have begin, dive into the R&D and business update, and Jesper will be covering the 2023 financial results. After a few conclusion remarks by me, we will be heading in to the Q&A session.
So looking forward to an interactive session, before getting started I just want to direct your attention to the fact that we will be talking about future today. And of course, when talking about the future that entails uncertainty. So I do direct your attention to the forward-looking statement slide, which is contained in the presentation deck for today.
With that, let me give you a brief summary of where we are today. First of all, we have refined our strategy. We have launched it and it's well and good. And just to remind you, this is about a three-pronged business model and I would touch upon it in a few seconds.
Then we have also seen strong progress on our financing strategy. We have now a cash into Q1 2025 secured. We have MSD GHI as our last shareholder, very pleased with that. We have also seen solid progress on our R&D and business strategy. We have reached a key milestone in the MSD vaccine collaboration. We have our precision back sign project on track and just today, we also released exciting and strong EVX-B1 data.
Across the business, we have been focusing on optimizing our cash burn for important, so without compromising our long-term growth opportunities that also entails that we have been optimizing the organization and we are focusing on investing for maximum return on investment. So all in all, I would say we are very pleased with where we are at this point in time in the Evaxion journey.
Let me just give you a brief corporate update. I just wanted to recap a little bit on our strategy and our refined strategy. We have a three-pronged business model, which is based upon our AI immunology platform. Important here is also that we are having a multi-partner approach to value realization.
So when you look at our strategy, the core of the strategy that is the AI immunology platform, our leading and validated platform for fast and effective design or discovery design and development of novel vaccines. Based upon this platform we have the three- pronged business model to realize value.
One is targets, one is pipeline, and one is responders. The target piece that's around a multi-partner approach focusing around either single or multiple target discovery design and development agreements. And here the MSD vaccine collaboration we have is a good example of what we want to achieve within the target prong of our business model.
Then we have our pipeline, this is about our own development for select high-value programs, bring these programs to -- major value inflation point before we pursue partnering. And here pf course, we are excited about the upcoming one year Phase 2 data for EVX-01, which we expect in the third quarter.
Finally, we have the responder prong, which is really about utilizing our core capabilities within data and predictive capabilities to develop responder models. And here we had the proof of principle for our checkpoint inhibitor model in the fourth quarter last year and are looking to progress that in a partnership-based approach. So our strategy, core AI immunology and then it's about targets, pipeline, and responders in a multi partner approach.
Then a brief update on our financing strategy, which has been a key element to progress that over the past months here. And I'm very pleased to see the strong progress we have seen here in December '23, we closed a $5.3 million private placement. Here we welcomed MSD Global Health Innovation Fund as a shareholder very pleased to see MSD on the cap table.
In February, we closed a $15 million gross public offering. Also here we had MSD GHI participating and that now means that MSD GHI is the largest shareholder of Evaxion with just below 15% ownership. In parallel with this, we have been intensifying our focus on value realization via partnering.
We have the ambition to fund our 2024 operational cash burn of $14 million by our business development income. And to do so it's critical that we have the right focus on advancing various partnership discussions. So all in all, a significant progress on our financing strategy. As I said, cash into Q1 2025, so that was the brief corporate update I wanted to give before handing over to Birgitte, give us an update on all the exciting things that have happened within the R&D side of the business over the past months, Birgitte, will you take it from here?

Birgitte Rønø

Yes, thank you, Christian. So today, I'm excited to give an update on the recent progress achieved in some specific R&D pipeline programs.
So let's turn to slide 9. We have communicated initial encouraging data from our EVX-01 personalized cancer vaccine Phase 2 trials, we have increased our focus on developing a precision cancer vaccine with broad applicability. For our EVX-B1 [Staph aureus] vaccine, we have completed studies with an undisclosed partner assisting our AI immunology designed antigens in a large animal model of surgical site infection. Further, we've made significant progress in our EVX-B3 vaccine development program with MSD reaching the first milestones.
So if we turn to slide 10, we see our pipeline and we are advancing vaccine candidates for both cancer and infectious diseases and all these vaccines are designed based on our AI immunology platform. Our pipeline includes several vaccine candidates at various stages of development and that exemplifies our commitment to saving and improving lives with AI immunology.
If we look at our EVX-01 Phase 2 trial on slide 11, this is our most advanced program in metastatic melanoma and for each patient that is enrolled in the trial. We manufacture a tailored vaccine that is fitting the tumor profile and the immune system of the individual patients.
Once the patients are enrolled, they are administered with anti-PD-1 pembrolizumab, which is the standard of care for this indication. And then they're treated with our personalized EVX-01 vaccine at week 12.
If we move to slide 12, we have monitored the ability of the EVX-01 vaccine to induce a specific T-cell response in the first five patients. And on the graph to the right, you see the data from this initial analysis in all of the five patients we've assessed so far, we see a strong and specific response against the vaccine antigens. And further we have confirmed the favorable safety profile of EVX-01, which we also observed in the Phase 1 study. At the next significant milestone is one year clinical readout in Q3 this year.
So on slide 13, we have a little bit of information about one of our cancer vaccine innovation programs, we have intensified our efforts significantly for this program and the based on the discovery of the highly conserved novel, a class of tumor antigens, so-called endogenous retroviruses. We have developed a precision based cancer vaccine concept with potential to broaden the applicability and to treat more cancer patients with a vaccine. A upcoming milestone for this program is preclinical proof of concept in Q4 '24.
So if we turn to our infectious disease programs on slide 14, we have a little bit of a highlights from our [B1] project this morning, as Christian mentioned, we announced that we have some very encouraging results from this program against Staphylococcus aureus infections.
So we and an undisclosed collaborator, we tested our vaccine antigens against Staphylococcus aureus in a clinically relevant animal model of surgical site infections. And we saw that our [androgens] they, protective, the animals against surgical site infections indicating promising potential for clinical efficacy. And currently, we are engaged in discussions with the elaborate later regarding this path forward.
So for our EVX-B3 program, we have tested and we have designed a vaccine and this program is conducted in collaboration with MSD. We have used our proprietary platform, AI immunology, and we have identified novel targets against a bacterial pathogen causing severe health issues.
So we have now concluded on the antigens discovery and in science phases. And that marks a significant first milestone for the development of the vaccine candidate.
And next milestone is conclusion on target discovery and validation work in collaboration with MSD in the second half of 2024.
So in summary, we've made substantial progress across our pipeline candidates, and we are eagerly anticipating an exciting 2024 marked by some significant milestones ahead.

Christian Kanstrup

Birgitte, thank you so much for this update. Truly exciting events that has taken place here and now I will hand over to COO and CFO, Jesper Nyegaard Nissen, to take you through the 2023 financial results.

Jesper Nyegaard Nissen

Thank you, Christian. I'll focus my comments on our financial results for the full year of 2023 compared to the full year of 2022. All the numbers that I review will be approximate for each sharing during the call for additional information regarding our full year results and prior period comparisons, please refer to the business update and full year 2023 financial results press release and the Form 6-K as well as the Form 20-F that we both filed last week.
Starting with our cash burn this we have in 2023, as Christian talked to had -- focus on optimizing without compromising our long-term growth opportunities. The external spend, as well as the organization has been slimmed to reflect our focused strategy and intensified focus on value realizing via partnering.
We have reduced the organization in terms of [FTEs] to the tune of 30% during 2023 and more than half the cash burn when comparing to cash burn entailed in the approved budget for 2023 each of the expected cash burn shared as part of the company milestones for 2024.
As of December 31, 2023 cash and cash equivalents were USD5.6 million following the public offering in February 2024, resulting in net proceeds of $12.7 million. We expect that our existing cash and cash equivalents will be sufficient to fund our operations and capital expenditure requirements into February 2025, if all prefunded warrants, including the public offering are exercised. We expect necessary funding will be in place into April 2025.
If we look at our expenses, research, and development expenses for 2023 amounted to $11.9 million and general and administrative expenses to $10.4 million for the period. R&D expenses decreased by $5.1 million or about 30% compared to 2022.
The decrease was primarily driven by a decrease in external development costs of $3.2 million related to clinical trials. Further, a decrease we're seeing in employee related costs of $1.8 million due to a reduced headcount and a shift in our employee mix.
Looking at general and administrative expenses, they were at $10.4 million and increase of $2.2 million or 27% compared to the period last year. The increase was primarily driven by an increase of $1.3 million in external costs related to legal fees, professional fees and cost related to capital raises and an increase in employee related costs of [$0.9 million] related to full-time effect of 2022 hires and changes in senior management.
These increased due to the timing of funding of projects and business initiatives compared to 2022 and the expansion of the organization throughout 2022 meet the requirements as a listed company.
Looking solely at Q4 2023 versus Q4 2022, the G&A costs were down [USD0.5 million -- USD0.3 million] to USD2.1 million or 13%, this is primarily driven by reduction in our insurance, but also following the reduction in other external spend.
The net loss for 2024 amounted to a loss of $22.1 million compared to a net loss of $23.2 million last year.
And with that, I would like to turn back to you, Christian, for a few concluding remarks before the Q&A.

Christian Kanstrup

Thank you so much Jesper, and then to end up here with a few conclusive remarks. I think if we look at the past six-months and the Evaxion journey here, I think it's fair to say that the events we have seen unfolding confirms a strong strategy execution. We launched our refined strategy, we anchor that and we are now executing upon it.
Importantly, of course, as you also alluded to, the progress with the MSD vaccine collaboration we had the encouraging natural, the Phase 2 data from EVX-B1 and we are progressing our a precision vaccine a project, which I'm very excited about.
So strong progress on the strategy execution, and we are looking very much forward towards the upcoming milestones in 2024. And the first milestone we had in our externally communicated milestones of course, EVX-B1 the conclusion of the final MTA, starting with a potential plan that we announced today with encouraging data.
Now we are in discussions with the collaborate on path forward throughout the remainder of the year, we would have several important milestones, both from a platform from compound and from a partnership point of view. And we are looking forward to keeping you all updated on the milestones as we progress them.
So with that, I would say thank you for listening to the presentation here. And now I'm looking forward to the Q&A session, and we will open the floor for question.

Question and Answer Session

Operator

(Operator Instructions) Ahu Demir, Ladenburg Thalmann.

Ahu Demir

Good morning thank you so much for taking my questions. I have a couple. My first question is regarding the today's press release on EVX-B1, curious if you could provide more color on the collaboration as well as data is the point where there will be a goal no-goal decision and if the collaborator is not willing to move forward, are you planning to move forward? Or is that something that you are not willing to do at this point?

Christian Kanstrup

Yeah no, I mean I can say -- and then I'll have Birgitte additional comments. I mean, we just got the data in and we're excited to see the data. And as you also see in the release, it is -- I was a clinically relevant data here and now we are in discussion of path forward and of course, it's clear having a set of preclinical data in a large non rodent model this important, especially considering you can say that Staph aureus is an area where you have seen a number of clinical failures.
So having a model which hopefully as more predictive for clinical outcome is important. So right now, we are in discussion with the collaborator. And I would say the data is, of course, supportive of the compound and Birgitte, I don't know if you have more comments to add to the question here?

Birgitte Rønø

I can add that we've conducted three separate studies in this animal model, and I think the data speaks for itself. I mean, it's very promising, and we believe that this model is -- I would say, a better indicator for clinical efficacy in the end. I mean, we've conducted mouse animal experiments in the past and with also very promising outcome.
But I believe that this model in large non-run animals, it gives a great sign of what you hope to see in the clinical side. And of course we think this point is very important because it will be -- the conclusion on or the dialogue with the collaborator is, of course, only relevant if the data was positive.

Christian Kanstrup

So you can say it, of course, it confirms our belief in strong assets and of course, is important for our -- engaging in discussions around the way forward for this EVX-B1 in partnership-based model.

Ahu Demir

Makes sense. Thanks, Christian. And I have two other questions. The other question I have is on EVX-B3. So since it's a major collaborator, MSD curious what are the next steps and when there will be a point to make decision at some time in the near term feature?

Christian Kanstrup

Birgitte do you want to take that one?

Birgitte Rønø

So what we've done so far is to use AI immunology to design the vaccine. And the next space is to manufacture the vaccine. And then tested in a preclinical model, and we are aiming to reach that by the end of the year.

Ahu Demir

I see sounds great. And my last question is more general, so since the platform technology you have is versatile you have PIONEER, EDEN, ObsERV, RAVEN. So curious if you get any in bonding interests or when you reach out is there one particular vertical you have more special interest by the pharma or biotech firms so when you're establishing partnership? Is there one that more emphasized in your conversations?

Christian Kanstrup

I would say first of all, of course, we have been more focused in our external communication as a result of also a refining strategy, focusing more on partnerships. And that has, of course, also resulted in more incoming requests.
And I would say we are seeing a interest in both the infectious disease side of the business and the oncology or cancer side of business. So I would not say there's it's still more towards one or the other Birgitte of course, you just in Washington now for the World Vaccine conference. So, I don't know if you have a little bit of flavor as well.

Birgitte Rønø

Yeah, but I think -- so our AI immunology platform, I think that the companies can see the benefit of us using all these different building blocks and make or create models that can solve complex immune related healthcare issues. We have interest in our infectious disease pipeline candidates, but we also see interest in our oncology assets. So I think it will be difficult to answer more specifically than that.

Christian Kanstrup

But of course, as, then we had the R&D Day. What's that now a couple of weeks ago, and this was first time we really talked about this, I think pretty unique modular architecture of with the various building blocks, and it was also important for understanding what the platform can do and how flexible it is in tailoring towards partner needs.

Ahu Demir

Makes sense thank you so much for taking my questions.

Christian Kanstrup

Thanks.

Operator

(Operator Instructions) Swayampakula Ramakanth, H.C. Wainwright.

Swayampakula Ramakanth

Thank you. This is RK from H.C. Wainwright, good afternoon, folks.

Christian Kanstrup

Hey RK.

Swayampakula Ramakanth

Hi, so starting off with EVX-B3, so once MSD takes this into the clinic, do you have any additional obligations in terms of developing the molecule? And also as it enters the clinic, do you get another milestone or is it all dependent on how it progresses through the clinical phases that you get down you get milestone payments?

Christian Kanstrup

I would say I give for first step is dependent upon the outcome of the current --you say discover design phase here and which then if successful and of course, if aligned with what MSD, is seeing then that would result in a traditional licensing agreement.
And the level of involvement from our end there is to be discussed and determined at that point in time. Right now, we have a work plan which bands into the second half of this year, and then we will be discussing how do we best combine our capabilities of the two companies for the next phases of the vaccine development project?
I think it's fair to say MSD is, of course, a very capable in doing large-scale clinical trials, but we also have a lot to add in other phases just AI immunology platform itself. So -- it's to be decided based upon the outcome when we conclude the work here during the second half.

Swayampakula Ramakanth

Fantastic and then the EVX-B1, obviously it's very encouraging to see the way the data is progressing in large animals, also reiterating what you have seen in the mouse models. So when do you think you would be able to publish some of this data for us to take a look at and then obviously, it depends on the partner, but what are the -- how quickly can this get into the clinic? Or again, it all depends upon how your collaborator is looking at it, because this is certainly a very -- I think it's a large unmet need, especially in the surgical wounds?

Christian Kanstrup

Yeah, no, there's no doubt I mean, that's also why we are excited about the data because it is a significant unmet need. And you can say exactly when data will be published, it depends very much on how we are progressing the current discussions and with whom we bring this forward in -- but of course, our objective is to progress quickly given the unmet need and Birgitte, you can speak a little bit more to -- yeah how quickly it can be in the clinic of course, it is our most progressed, infectious disease assets, right?

Birgitte Rønø

Yes. So the next steps would be the final anti enabling activities. So that includes toxicology studies and also the CMC activities. And that is, of course, time-consuming activities, it will probably take 1 year once 1.5 year to get to the point where clinical trial could be initiated.

Swayampakula Ramakanth

Okay, thank you. And the last question from me is on the EDEN version to the new AI model that you're working on. What's unique about this version to first one?

Christian Kanstrup

I mean the unique part about the 5.0 that we are looking to launch mid this year is that it incorporates some of the newer building blocks that we also discussed at our R&D Day and thereby, you can say in short, further increases the predictive capabilities of the EDEN platform, which already is high, but will be even stronger. So it's allowing for even more effective in a discovery of a novel vaccines towards infectious diseases.

Birgitte Rønø

And it will also expand the training data set significantly and thereby increasing the precision of their model.

Swayampakula Ramakanth

Great thank you. Thank you for taking my questions.

Christian Kanstrup

Thank you RK.

Operator

(Operator Instructions)Thomas Flaten, Lake Street Capital Markets.

Thomas Flaten

Hey, guys, appreciate you taking the question, on the preclinical work you're doing on the ERVs, I was curious if there are any particular tumor models that you're focusing on? Are you doing more of a basket approach just to refine future strategy at this point?

Christian Kanstrup

Birgitte, do you want to take that -- that has been discussed?

Birgitte Rønø

Yes, so right now we are looking into several indications for ERVs based cancer vaccines, and we do see several options which is very encouraging and very promising. And we haven't selected one single indication yet, we might run with a few and therefore, we haven't settled on the animal model, of the mouse model for testing this concept.
And we do have a huge collection of animal tumor models in-house and therefore, I think we can move once we have decided on the indication we can move rapidly into the preclinical testing. And I should also mention that we have done a ERVs vaccination in animals before. So we do have experience with these types of antigens in preclinical setting.

Thomas Flaten

Got it, I appreciate that and have you had any interest whether inbound or generated through your efforts in the EVX-03 program?

Christian Kanstrup

Well, I think it's -- we can't really comment, specifically on the individual assets. But as we talked about there, I mean, there's some discussions in general around both sides of the business. So I think we share a lot of excitement around the EVX-03. And it's a, of course, a key asset for us that we also want to move forward in a partnership-based approach. I mean, we did announce that we won't bring it into clinical development ourselves. But that does definitely not mean that we don't want to bring it forward in a partnership-based approach.

Thomas Flaten

Got it, appreciate you taking the question thank you.

Christian Kanstrup

Thanks

Operator

(Operator Instructions) Richard Ramanius, Redeye.

Richard Ramanius

Hello, good afternoon. The first financing question namely about the prefunded warrants. How many are still outstanding? And how much money do you expect to get from them? And when could you expect to receive that money?

Christian Kanstrup

Yeah you can say it's around USD4 million that still outstanding. And this is related to technicalities that the nominal value of the underlying share for the warrant is held in escrow. So it's around USD4 million that we haven't received yet, and we will receive that as the prefunded warrants are exercised.
You can say and exactly when that is going to happen is difficult to predict, but of course, it is shares that's paid upfront. So we would expect that those USD4 million are being released from escrow overtime right?

Richard Ramanius

And also wonder about ERVs vaccines and how what is your business development model because -- precision vaccines when you think -- possible to do a deal there? What kind of interest you see four precision vaccines in cancer?

Christian Kanstrup

But I think there's a lot of excitement in general around ERVs based concept and also the precision vaccine. I think question is here when we want to partner that also depends on how do the preclinical data that we will be generating when we establish proof of concept during second half, how do they look, it doesn't make sense to bring these assets further.
So I would say right now focuses on establishing the preclinical proof of concept for the precision ERVs based vaccine concept and then decide when is the right time to partner and as Peter said, I mean, there are several indication where it shows a high promise to have a precision based approach. So we will need to look at the yeah, the data compare that to the opportunity and then decide what's the right timing for potential partnering?

Richard Ramanius

Would you agree that there is a larger interest right now for infectious disease candidates than for cancer?

Christian Kanstrup

No, I wouldn't say that. I think there's equal excitement around the sides. And now we added the additional element of not only personalized vaccines but also precision based vaccines within the cancer and side of the business, which is a somewhat different approach than having a personalized approach.
So I wouldn't say that there's necessarily more interest in infectious diseases. There's a good level of excitement around the both sides. And of course, it's also clear that some of our competitors' data on the personalized vaccines was announced last year have create additional comfort that this is an exciting area where it makes sense to focus on.

Richard Ramanius

Yeah. And I also wanted to ask about the AI-DeeP or responder program, you have specifically one for checkpoint inhibitors because I was thinking since in the indications for certain approved uses in various cancers it says you need to have a certain level or certain level of a biomarker for PD-L1 levels. So -- if this could be your approach were approved that would be quite disruptive wouldn't that mean you would have to sort of redefined how you make indications for checkpoint inhibitors? That's my first question.
My second related is how -- what is your monetization model, how I mean, how could you earn money on this?

Christian Kanstrup

Birgitte do want to take the first part and then I can talk about the second part?

Birgitte Rønø

Yes, I can do that. So yes, it is correct that the PD-L1 tumor expression is yeah, a biomarker for some cancer indications, including non-small cell lung cancer and some of the other [huge] cancers. And we have also in our AI team model, we have also included the expression level of PD-L1, and we see that it is only contributing to a minor part of the whole precision of AI model. It's mainly driven by our PIONEER model and our ObsERV models, but it is correct that for some indications that PD-L1 expression is used as a treatment biomarker.

Richard Ramanius

Just wondering how -- wouldn't have to change? How you treated people if you're is a checkpoint response prediction tool is?

Birgitte Rønø

So what AI team is capable of is to identify the patients that most likely would not benefit from a checkpoint inhibitor treatment. So will not risk of excluding patients that would benefit from checkpoint inhibitors.

Richard Ramanius

Okay clear I understand.

Christian Kanstrup

And then to your question around how to monetize on that I mean that can be done in several way. Of course, you can say the most straightforward one is a positioning as a companion diagnostics and then it's being sold into as clinical setting or it could also, of course, be of relevance for a pharma company is undertaking clinical trials with checkpoint inhibitors. Because if you are capable of, say, reducing the trial population of a late-stage trial by upfront being able to exclude non-responders that meets a significant cost saving.
But I think where -- our focuses right now is focusing on how we can bring it forward in a clinical setting and help patients get onto the right therapy quicker and that could be as a companion diagnostic.

Richard Ramanius

Yeah, I think this is some interesting projects you have. And then my last question was, do you have any policy for takeover bids because it's no slips easy to your mind. When you see the investments that MSD made logical steps that might be to tried to make an acquisition.

Christian Kanstrup

Yeah and of course, we can't comment upon a partner any question like that it's something relevant has to be communicated because we will communicate that.

Richard Ramanius

Okay thanks that's where all my questions.

Operator

(Operator Instructions) Ahu Demir, Ladenburg Thalmann.

Ahu Demir

Hello again, I just wanted to ask one more question regarding the outstanding debt? What is the current debt on the financial front?

Christian Kanstrup

And I'm very happy to pass that question straight on to our CFO. But I can say it's a EIB loan.

Jesper Nyegaard Nissen

So basically our debt structure is pretty simple. We have a EIB loan, which is of a EUR7 million, and it has an expiry date of Q1 2028.

Ahu Demir

Okay got it. Thank you much.

Operator

Thank you there are no further questions, I would like to hand back to Christian Kanstrup, for any closing remarks, please go ahead.

Christian Kanstrup

Yeah, thank you so much. And I just wanted to say thank you to all of you for all the relevant and good questions, and thank you for listening in, we are excited about what has happened over the past several months here and equally excited about what's to come for 2024, and we are looking forward to keeping you updated on that. So thank you so much for listening in.