Greetings, and welcome to the Nykode Therapeutics Q1 2025 Financial Results Presentation. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question-and-answer session will follow the formal presentation. You may ask a question at any time by typing it into the Ask a Question feature on your screen. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Engsig, CEO of Nykode Therapeutics. Please go ahead, Michael.
Thank you very much, Kevin. Also from my side, a very warm welcome to all participants to this webcast for our first quarter results and updates from the business. A quick reminder of our forward-looking statements, assuming you are all familiar with this kind of forward-looking statements, we will move on. As usual, I am very happy to have with me here today, Agnete Fredriksen, our Chief Scientific Officer and Head of Business Development and Co-founder, as well as Harald Gurvin, our Chief Financial Officer. Together, we will try to take you through a deep dive in the business update and the financial numbers for the first quarter. Happy to report that we have finalized the organizational streamlining that we set out to do and announced in the beginning of the year.
We have finalized that in the first quarter, and we'll maintain a very strong focus on cost control in the company going forward, which will, in turn, allow us to execute on our future priorities, which we look forward to update you on in the near future. We have also had Susanne Stuffers elected as Chair of the Board at the Extraordinary General Assembly on the 23rd of April. We have included a very brief bio on the right of this slide here, which we'll invite you to read further. We have also announced the approved dividend of 1 NOK, Norwegian krone per share, which was approved at the annual general meeting on the 26th of May.
We have announced that we will be providing an update and further details to the company's strategy and priorities in connection with the second quarter results for 2025, which we expect towards the end of August this year. Once again, I want to take the opportunity to express our gratefulness and thankfulness for the continued commitment from our employees as well as our shareholders. In addition to those events, we have also seen a good stream of data come out from the research lab. We did publish the final phase II data from our VB10.16 C-02 trial in the peer-reviewed BMC JITC journal. The data did, as we have announced earlier, confirm the prolonged benefits and vaccination effect that we also saw in the interim analysis. We will have one slide on that a little bit later.
We did also, in the first quarter, present a string of new preclinical data from our immune tolerance platform, which again demonstrates the APC targeted platform's ability to modulate multiple arms of the immune system against supporting a broad application in autoimmune disorders. Our meeting will take us further into the key data from that presentation. We will be presenting new data from the two trials, VB10.16 C-O2 as well as VB10.NEO N02 , at the upcoming ASCO, which starts in a few days, again highlighting the potential of Nykode's immunotherapy platform to induce robust and durable immune responses across multiple tumor types. We will take you a little bit further into those data also in this call here, and just a little bit of a heads-up, reminding everybody of the limits to what we can publish before the actual posters are released.
Switching to VB10.16 , our lead asset, our lead clinical asset, as mentioned, we were very happy to see the final data released in the BMC JITC journal in the beginning of the year, a peer-reviewed journal with a high impact factor, which again underscores the importance and significance of these data. As we have previously highlighted, the publication also again mentioned the favorable safety profile of VB10.16 in combination with the T-cell easing up in 52 patients. It confirmed the durable efficacy with a median overall survival of 24.7 months and an objective response rate of 29% in the PD-L1 positive subgroup. There is a lot of other good, interesting data in that publication. We are just here drawing your attention to a few of the ones here.
Again, most importantly, is a general information of the prolonged benefit and vaccination effects that we've seen consistently with VB10.16. We are heading to ASCO now to present further data from the same trial. The journal did present the final key analysis on the primary and most important end points, but we will continue to release data as we dig further into the data pool. We expect a lot of further interesting insight coming out of this trial in the coming period. We'll be presenting some of those at ASCO in a couple of days, which, and we'll just draw attention to a few of those, does see an association between the T-cell response, the HPV16 specific T-cell response, and patients with reduced systemic immunosuppression during treatment. We also see an association between tumor microenvironment characteristics and response rates.
Both of these provide interesting insights into both the mechanism of action of the vaccine as well as the ability to target the appropriate most optimal patient populations in the future. Again, here, we do find at least signals elucidating to the treatment's effect on systemic immunosuppression and support the importance of identifying the right patient populations for optimal efficacy going forward. Our CO-3 trial is on track. In the CO-3 trial, we are investigating VB10.16 in combination with pembrolizumab in first-line head and neck patients. The part one trial, which is the one we are currently in, part one of this trial, is exploring increasing dose level in a group of patients. And we have enrolled, as you see in this figure here, one patient at 3 milligram, six patients at 6 milligram, and six patients at 9 milligram.
We are currently on track to be making the pre-planned safety conclusions for doses, which would theoretically enable us to select the right dose going forward. We are also exploring opportunities to provide insights into preliminary data from this trial here in the second half of 2025. Looking forward to that, also. With those words, I am going to hand over to our leader to take us through our updates on both the VB10.NEO individualized cancer immunotherapy as well as our immune tolerance program. Our leader.
Thank you, Michael. So, this month, we will be at ASCO, as Michael mentioned, and we will also present data from the VVB-N02 trial. This is the trial where we have been testing VB10.NEO , which is a personalized DNA-based neoantigen vaccine, in combination with atezolizumab, in a dose escalation trial, phase I B. This was done in tight collaboration with Genentech. What you will learn from this poster is that the trial included heavily pretreated patients with a median of five prior lines of therapy across more than 10 different patients, including indications that are not known to respond to checkpoint inhibitors or immunotherapies, mostly PD-L1 low or negative, and/or have previously progressed on an anti-PD-1 or PD-L1 treatment.
That is also evident with the median progression-free survival being less than two months, meaning most patients progressed already at the first scan, which limits the ability to evaluate long-term immune responses as well as really the clinical response assessment. However, we are very happy to see that the neoantigen-specific immune responses were still observed in all patients. We did also observe de novo immune responses. That means immune responses to antigens incorporated in the vaccine that were not evident before vaccination, in 85% of the patients, bearing in mind that many of these patients, we only have one on-treatment sample available. For those patients where we had more than one on-treatment sample, we've also been evaluating the durability. We can see durable T-cell clone expansion in 82% of these patients. It is very promising on the immunogenicity signals here, in that patient population.
We do see a favorable safety profile, bearing in mind that this is the first trial where we have tested up to 9 mg of our DNA vaccine. The trial supports further development in solid tumors and other settings. We can go to immune tolerance. We have still continuing to work on our immune tolerance platform. We were in Boston in Q1 presenting new data from our immune tolerance program. This progress really shows that we have reached a stage where we have successfully been able to establish several tolerance-relevant methods and assets. This supports already insight into the mechanism of action and efficacy, but also importantly sets us up to accelerate further platform and lead candidate optimization now that these methods have been established and are functional.
We do also, for the first time, show durable efficacy in disease models, also when starting treatment after disease onset. To show you some of this data, we have been able to show durable efficacy also after starting treatment in mice that have already had a disease onset with clinical scores being above one. We see that only with two treatments here, starting at day 11 and day 15, 14, and no further treatments, we still see that the mice continue to be disease-free. Very promising data here. We have also been able to establish a method in-house where we can analyze the regulatory T-cells in detail.
We have established an adoptive transfer model, which gives us an opportunity to really characterize the effect of our antigen-specific T-cells in an abundance that gives us opportunities to really understand and characterize the T-cells and how it responds to the treatments. Here you can see that we are actually able to get up to 50% of the regulatory T-cells, the FOXP3 positive regulatory T-cells, when we have treated these mice with our vaccine. This is an assay allowing us to do these experiments within a week. Setting us up for really evaluating abundance of different versions of our platform in the future. It is also shown for the first time that we can also have an effect on reducing autoantibodies. We have previously focused on the effect on the disease development as well as on the T-cell compartments.
Here we show for the first time that we're able to reduce antigen-specific autoantibodies. We know these do play an important role in several immune, autoimmune diseases. It is very good to see and allows us to really test different versions now in the upcoming months and establish the platform. I think I give the word to you, Michael.
Yeah. Just to remind everybody that we have announced that we will be providing an updated and further detailed strategy for the company in connection with our second quarter results 2025, towards the end of August this year. They will center around the core priorities that we have for the company right now, which is VB10.16, VB10.NEO , and the immune tolerance platform. As of now, our priorities are to present the C-O2 data tomorrow and add that other opportunity that we find in the coming half year, continue to progress the C-O3 trial, allowing us to report both preliminary and full data from part one as well as plan the next step. Of course, in general, we are providing an update on how we see the development plan and strategy for VB10.16 going forward.
For VB10.NEO , our focus is on getting the NO2 data presented at ASCO, as well as here, update all of you on our strategic approach to position VB10.NEO as the most attractive and uncommon individualized cancer vaccine for the future when we expect to see a flurry of readouts from the general field of individualized cancer vaccines in the coming years. For immune tolerance, we will be looking forward to provide you further insights with additional data in the coming months on the path to optimize and establish our immune tolerance platform as potential best-in-class platform in this field here. Also here, we expect to be providing further details on our strategy going forward, which both could include exploring early partnerships as well as defining our own lead candidate programs. More on this in August. Looking forward to that.
With those words, I'm going to hand over to you, Harald, to take us through the financial update.
Thank you, Michael. With the organizational streamlining finalized in the first quarter, we are on track for a sustainable cost base to facilitate execution of our long-term objectives. It's never fun having to say goodbye to good and talented colleagues, but we have transitioned into a leaner, focused, and not least motivated organization with a continued emphasis on cost control and strategic prioritization. The full effect of the restructuring is expected by the third quarter of 2025, and we will, as Michael mentioned, also provide updated guidance on cash flow and OpEx as part of the strategic update in connection with the second quarter 2025 report. Looking at the income statement, we had no revenue from contracts with customers in the first quarter following the cancellation of the contract with Genentech in November last year.
Part of the $245 million in upfront and milestone payments received under the contract were taken to income over time as the R&D services under contract were delivered. Following the cancellation of the contract, the outstanding balance of $6.8 million was taken to income in full in the fourth quarter. We can already see the effects of the organizational restructuring with employee benefit expenses of $3.7 million in the first quarter, down from $8.8 million in the same period last year. As mentioned, we expect to see the full effect of the restructuring in the third quarter. Other operating expenses have also reduced significantly from $7.2 million in the fourth quarter 2024 to $3.5 million in the first quarter 2025, reflecting the reduction in clinical activities.
Finance income and costs were net $4 million positive in the first quarter, which mainly relates to unrealized currency movements on Norwegian krone exposure. Overall, we recorded a net loss of $1.4 million for the first quarter compared to a net loss of $14.9 million for the same period in 2023. Moving on to the balance sheet, we had a strong cash position of $106.2 million at the end of the quarter. As previously communicated, we received a decision from the Norwegian tax authorities in October 2023 relating to the tax treatment of payments received under a license agreement entered into in 2020, which generated a pay bill of approximately $30 million to the tax authorities in the fourth quarter of 2023. Nykode is confident that the upfront payment has been treated correctly, a view which has also been confirmed by third-party tax authorities.
Nykode appealed the decision in the first quarter of 2024, and the payment has been booked as a receivable while we wait the outcome of the appeal. The receivable is in NOK, and the dollar amount in our accounts will fluctuate with movements in the exchange rate, which also explains the large unrealized movements in finance income and costs in the income statement between the quarters. In February this year, we received a letter from the tax authorities that we can expect a draft of the recommendation from the secretariat in the first quarter of 2026. Moving on to equity and liabilities, we had total equity of $134 million, which represents a strong equity ratio of 91%. With that, I will give the word back to Michael.
Thank you very much to both Harald and Agnete for taking us through this update.
I think, with those words, we are ready to open up for questions if there are anybody.
Thank you. If you'd like to ask a question at this time, please type your question into the Ask a Question feature on your screen. Once again, if you'd like to ask a question at this time, please type your question into the Ask a Question feature on your screen. Our first question today is coming from Geir Holom from DNB Carnegie. He says, "Vinay Prasad, the new head of CBER, has expressed skepticism toward cancer vaccines. Are you taking this into account in the planning of the next study? Also, what have your experiences been like running C-O3 in Europe?
Yes, thank you very much, Guy, for that question. Without trying to get into anything around U.S. politics at this webcast here, just address it, I think, from a more general point of view. Not entirely sure whether I share your view that he has expressed skepticism towards cancer vaccines as such, but I do agree that he has provided the usual and sound caution towards overemphasizing results from very, very early stage trials. We share, of course, that need for large and confirmatory clinical trials, which we see some of our peers have endeavored on and have also provided data from. I think the industry is, as usual, planning right now to provide the definitive proof of mechanism and efficacy for this class of therapies.
Our understanding is that his announcements have mainly concerned the mRNA modality, of which we are not, as you all know, we are focusing on the DNA modality as of yet and has different characteristics. We do not really see any significant impact on us from his statements, but do share the need for confirmatory data. I think that's a sound advice always. To the second part of your question, Guy, what have been our experiences running a C-O3 in Europe? I think overall only positive experiences. It's not the first trial we run in Europe. We've been running many trials in Europe and in many countries, many sites. Also in this case here, it's been a good experience, with very motivated clinicians in the sites.
I want to again take this opportunity to extend a deep-felt gratitude to both the team and the company who kept grinding and working hard through the period of transition that we have been through in Nykode, but also indeed, and as much, the investigators who have worked hard and tirelessly to enroll the patients into our trial and provide the treatments and collect the data. Of course, also to the patients and family who have entered this trial in a period of turbulence for Nykode. We remain extremely grateful to all stakeholders for this one here. Maybe also for curiosity, I want to say that it has been a positive experience to involve Norwegian sites in the conduct of this trial here.
Whenever we can, we try to also at least use some clinical sites in Nykode's home country. If we can move on to the next question.
Certainly. Our next question is coming from Georg Tigalonov Bjerke from ABG Sundal Collier. He first says thank you for taking the questions, and there are two questions. First one is, can you provide some insight into why Genentech chose to enroll patients with so many prior treatment lines? There is a follow-up.
I think I'm going to hand over the word to you, only to take us through this first part of the question.
Sure. I mean, I do think, if you look at the history of how clinical development in cancer vaccine has been done, it is not unusual to start with a patient population that do not have any other alternatives for this early testing of new kinds of treatments. That is what happened here. Remember that we started this trial also before the first real studies with cancer vaccines in adjuvant settings that were started with IITs, in particular indications where there are not that many options for treatment, started. There has been a dramatic change in how early we see cancer vaccines being developed in a clinical trial setting. We have been in dialogue with Genentech to change the patient population and focus on earlier lines. That was the discussion we were heavily engaged in before the collaboration was terminated.
Full agreement that this needs to be tested in a different patient population in the future. I can only say that, of course, Genentech, if it was possible to see dramatic changes in some of these really, really hard to treat patients, that's obviously a fast-to-market option. But with so limited follow-up, it's hard to give the vaccine even a chance to change the course of the disease. We were in full agreement with Genentech that we needed to move into a different patient population for the future.
Hello. Are you ready for the follow-up?
Yeah.
What is the current status of the data rate for the entire N-O2 dataset?
We can't comment in detail on that until the final, final negotiation with Genentech is signed and concluded. I do think you can appreciate that we are allowed to share the N-O2 data at ASCO, with all the details of importance included in the poster. That is what I can say today.
Thank you. As a reminder, if you have a question today, please type it into the Ask a Question feature on your screen. Our next question is coming from Shan Hama from Jefferies. It's in several parts. I'll ask them one at a time. The first part is, what was the rationale for issuing a dividend?
Thank you very much, Shan. Although, as you all know, decisions on dividends is really a board matter, but we'll try to address this from a high-level point of view. The decision to issue the dividends is, as it always is in these cases here, a balanced consideration on the capitalization of the company compared or versus the, or in consideration of the near-term clients and capital needs for the company's operations. In the current case, the board did conclude that it was prudent to issue out a part of the cash service of Nykode to the shareholders.
and that, of course, reflects that we feel right now that with the current cash position, post the dividends issue, we are well-positioned to execute on the plans that we are expecting in front of us near term.
Second question from Shan Hama from Jefferies is, have you had any recent communications with Regeneron to indicate commitment to the partnership?
We are, as always, not really in a position to provide further updates on Regeneron. There are pros and cons when you enter partnerships. There are many, many pros, and one of the few cons is that you lose the control of the communication. We cannot really say anything from that partnership until we are saying something. As soon as we can say something, we would be saying something. Of course, we always have ongoing communications with our partners.
The third part of Shan's question from Jefferies is, is the goal to keep VB10.16 wholly owned, or are you looking to partner out as soon as you have material data?
Yes. Also here, I think we are on the plan that we have been for a long time. We do not think that a company like Nykode should be planning for commercializing a product like VB10.16 ourselves. The long-term plan for VB10.16, and I'm saying long-term with some hesitation here, is to find the right partner for VB10.16 to commercialize the product going forward. From there, it's always a matter of finding the right balance between building up value, which translates to shareholder value on the asset before you find that partner, and of course, also the ability and availability of the right partner out there.
We will continue to develop our assets, but with a very clear intention of identifying a good, suitable partner to really accelerate the further development of the asset as soon as possible. When exactly that will be is also extremely difficult to answer with full certainty, but definitely our plan is to find a partner for VB10.16 at some point during the development.
Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.
Thank you very much for all of you listening in here this morning here to our Code One webcast. As I said a couple of times, we are very grateful for your continued commitment to Nykode, and we look forward to be providing further updates and details to our corporate strategy in connection with the second quarter announcements towards the end of August. With those words, I want to wish you all a good day.
Thank you. That does conclude today's webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.