Greetings, and welcome to the Nykode Therapeutics third quarter 2023 financial results webcast. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. At this time, I'd like to turn the call over to CEO, Michael Engsig. Thank you. You may begin.
Thank you very much, Daryl, and thanks everybody for dialing in to this webcast for our third quarter results, 2023. Starting out with the formal part, our forward-looking statements. We assume you're all familiar with those. So on that note, we'll move forward. I'm happy to have with me here today, as usual, Agnete Fredriksen, our Co-founder and Chief Business Officer, as well as Harald Gurvin, our Chief Financial Officer. Just a quick intro. Our third quarter has been another eventful and successful quarter for Nykode Therapeutics, where we've seen a lot of progress along our strategic pillars, which are all aligned at building the leading immunotherapy company in the space, focused on the space of oncology and autoimmune diseases.
So for our lead asset and wholly owned asset, VB10.16, we've seen significant progress with all our trials. Start by mentioning our VB-C-04, which is our next step towards patient and markets in the recurrent metastatic cervical area, where we've had FDA IND approval for the trial, which means it's basically ready to start. And we are now in the process of finalizing the last preparations with the U.S. sites so they can start opening up and recruiting patients. We've also initiated the VB-C-03 trial, which is our first step to expand the therapeutic scope of VB10.16 into head and neck, another large and unmet need for HPV16 driven cancer types.
This is a trial we run in partnership with Merck, where we combine VB10.16 with KEYTRUDA or pembrolizumab in recurrent metastatic head and neck patients. We've shown very exciting data from the VB-C-02 trial that we reported on earlier this year, which further substantiates the long-lasting immune responses, again, supporting the development expansion of this program here also into the earlier cancer stage treatment settings. And on that note, we are now on the back of our successful direct placement in October, also starting up the VB-C-05, which is going to be our first step into the locally advanced cervical cancer setting. On VB10.NEO, which is Nykode's fully individualized cancer vaccine that we developed in partnership with Genentech, we've also seen very good progress.
We were able to report the trends of the safety evaluation of the 9 mg dose, which is the first time ever we used 9 mg in patients, and no safety concerns reported from that analysis, which gives us further encouragement and enthusiasm for not only VB10.NEO , but also for other programs. Again, here, we also showed additional analysis at our Capital Market Day in New York back in September, supporting the long-lasting immune response, including immune responses long after we have stopped the vaccination.
On the Regeneron partnership, which is a multi-program partnership, centered around five different programs, we were able to at our Capital Markets Day in September in New York to show preclinical data generated by our partners, Regeneron, demonstrating that our APC-targeted vaccine technology can induce potent T cell responses against targets that are subject to central tolerance, which means we can break the tolerance for patients' own antigens and proteins. That opens up a lot of potential for our vaccines in the space of tumor-associated antigens. We've also seen significant progress on our tolerance platform, which will constitute a potential new therapeutic vertical for Nykode.
We showed very compelling proof of concept data with our autoimmune disease platform at the Capital Markets Day in New York, which shows efficacy both in the EAE, which is a preclinical model for multiple sclerosis, as well as the NOD model, which is a preclinical model for type one diabetes. We are continuing to explore selected and asset-focused partnership opportunities for the tolerance platform. And then we have shown additional exciting data around our technology when we presented at the conference in Boston, a preclinical data that demonstrates superior immune responses elicited by our technology, whether we deliver it as DNA or mRNA. So regardless of the modality, we showed that adding our technology to the vaccines induces a broader and faster response.
Agnete will, in a few seconds, be taking you through some of these data in detail. We're in a solid financial position. At the end of third quarter, we had $159 million in cash, and after the period ended, we also executed successfully a private placement that raised $45 million, and so very importantly, an incoming of significant international biotech specialist investors, which was the primary goal of the placement. We were received notification from the tax authorities also in October confirming their original stance on the taxable payment for our upfront from Genentech.
We continue to believe that Nykode has a strong position, and our way of treating the tax from this upfront is correct, and we will appeal this decision. Our CFO will add further details to that during the financial review. Quick look at the pipeline, which we've expanded to include the VB-C-05 trial now, and the pipeline is, in general, a testament to the diversity and versatility of our platform, spanning a long range of tumor types, both with our lead asset in VB10.16 and our fully individualized cancer vaccine, as well as making significant steps into the field of autoimmune diseases. With those words, I'm going to hand over to Agnete to take us through an R&D update.
Thank you, Michael. And first, just a quick reminder of the technology that we are developing here at Nykode. We are creating APC-targeted vaccines, meaning that the vaccine antigens, when we deliver them with our technology, will be specifically targeted to antigen-presenting cells through binding to surface receptors on these cells. And this is something we can use in order to direct the immune response in different directions. For oncology purposes, we use a targeting unit that specifically binds subsets of antigen-presenting cells, attracts these antigen-presenting cells to the injection site, and ensures internalization inside the antigen-presenting cells, also effectively through the cross-presentation pathway, which has shown to give us a stronger and broader CD8 T cell response than with other targeting units or with non-targeted vaccines. Go to the next, Michael.
VB10.16 is based on this platform. You can see to the right here that we have CCL3L1 in the targeting unit, and we have two full-length antigens from HPV16, E7 and E6, in the antigenic unit of our vaccine. It is an off-the-shelf therapeutic cancer vaccine built on a plasmid DNA format and targeting the most prevalent oncogenic HPV strain, which is HPV16. It's wholly owned by Nykode, and we are... If you go to the next. We have this year, earlier this year, finalized a trial, the VB-C-02 trial, where we have seen some compelling data supporting further development with VB10.16 in different HPV16-driven cancers.
I think the last quarter here, we have seen some relevant updates from other therapies operating in the space. Importantly, we've seen data coming out from the first paper of four trials, where we now have some data to benchmark the efficacy of atezolizumab as monotherapy in PD-L1-positive patients. As you see here, with 15.8% ORR, 1.9 months median progression-free survival, and 10.6 months overall survival. And this compares then favorably when we look at the data where we have tested VB10.16 plus atezolizumab in a comparable patient population as possible.
We then see an ORR of 29% and median progression-free survival, 6.3 months, and the median overall survival, not yet reached at the time of the analysis, and also updated back in August with an estimated median of 24 or 25 months. We also have this quarter seen some interesting updates from KEYTRUDA pembrolizumab, where the ORR was reduced to 17%, for instance, compared to earlier data. So we feel that this quarter has further substantiated the data and the relevance for moving VB10.16 forward in additional trials related to HPV16 driven cancers. If we go to the next.
One of the additional data we have shown this quarter is more details on the T cell responses and the kinetics of the T cell responses that we observed in the VB-C-02 trial, where we see a very long lasting durable immune response throughout the entire year of treatment. And we've shown before that this correlates with clinical efficacy. We believe the durability is important and also substantiates the clinical data that we just went through. If you go to the next. So, our current plans with VB10.16 in order to move this product into all relevant indications that we see that we can add a benefit, clinical benefit for the patients. As mentioned, we have now the data from VB-C-02 that validates further development.
The plan is with VB-C-04 first to do a faster market strategy than in second-line cervical cancer. This is the trial that we are now pursuing and have an IND approved, as Michael mentioned. Then, importantly, we see lots of value in expanding into additional indications, where head and neck is the largest indications, and here we move into first line, when combined in PD-L1 positive patients as well, where we have initiated the trial this quarter. And then, we have additional untapped potential that we now have the opportunity to move into, within the adjuvant setting, where we have recently then disclosed with also the recent capital raise that we are now planning to move into adjuvant cervical cancer as well. Can you go to the next?
So, in totality, you see the programs here. VB-C-02 is finalized, but importantly, we've continued to follow these patients for survival. So, we will come back with updated survival data in the first quarter of next year. For VB-C-03, we have initiated the trial, so it's currently enrolling, and we have today also guide events. We aim to have a recommended dose for the phase II for the part two and the second half of 2024. VB-C-04, we will initiate the trial now within the end of the year, and VB-C-05 trial in low-grade cervical cancer. We have now started to develop the protocol. So if you go to the next.
When we look at VB10.NEO, VB10.NEO is our fully individualized cancer neoantigen based vaccine. We have shown you before that we have the ability to select new antigens based on our own proprietary method and create uniquely broad CD8-dominated T cell responses. We see responses in all patients and this quarter as well we were able to show some very intriguing data on the durability of the T cell responses in this trial. Where we can see that you can see here on the figure to the right, that the T cell responses continue to be strong and durable throughout the year on treatment.
But importantly, also here, we see that the T cell responses remain strong also up to at least one year after the last dose of the treatment. Again, supporting the durability of these relevant T cell responses. So in detail on the VB10.NEO, we have two clinical trials. The VB-N-01 trial is finalized. That's where we do the 3 mg dose in combination with the checkpoint inhibitor, and that's where we have the data that we have presented. The VB-N-02 trial is an ongoing trial, also in recurrent metastatic cancer. It's covering more than 10 different indications, and this is where we test higher doses as well.
So we have basically cleared the 9 mg dose, which is the first time we tested 9 mg of our vaccines in patients. And this is in this trial, done in combination with atezolizumab. So next slide. Then we can move on to the interesting new field. As mentioned, we are currently now focusing on taking advantage of the progress we've seen in oncology, but also recently then seeing some very nice progress on using our platform as inverse vaccines for treatment with antigen-specific immune tolerance for autoimmune diseases. In particular, in—you should recognize this figure, so it's really based on the technology that we have previously worked with, with it within Nykode.
We have here changed the targeting unit so that the antigens will be delivered to a different substance. So antigen-presenting cells also trigger different signals within these antigen-presenting cells. We can also use our second-generation technology, where a transfected cells with a DNA plasmid in this context can also secrete additional cytokines that affect the antigen-presenting cells and use the immune response in the desired direction. And here we want a completely different immune response profile. We will get regulatory T cells that are antigen specific, which then can inhibit or delete the CD8 specific effector T cells that have been generated and are unwanted in patients with autoimmunity or allergy and all circumstances like that. If you go to the next slide.
We have back in September then been able to show s ome very intriguing data from the two different mouse models that are proving that we are able to generate an immune response that can treat autoimmunity. We see efficacy in an EAE mouse model, which is an MS-like mouse model, where we can see these inverse vaccines can prevent serious disease using all those very low doses of antibody protein. Interestingly here as well, on a technology focus, we see a reduction of disease-associated cytokines that we can achieve with much lower doses compared to if we compare that with non-APC-targeted antigens. So showing the unique benefits of our technology. We have also seen efficacy in a type one diabetes model, as you see here to the right.
So, very nice to see this in two different models. This opens a therapeutic market for us, where in autoimmune there is a high unmet medical need, but we also can see this in the future moving to allergy and also in transplant rejection. And then a busy, busy quarter. We have also, this last year, been able to demonstrate, that we can also formulate the APC-targeted vaccine technology, with mRNA, lipid nanoparticle, technology. And we have compared them in-house, our vaccine, either delivered as a DNA, or mRNA, and compare that with the more standard mRNA-based vaccines, only encoding the exact same antigens. And we do see a stronger and broader T cell response when we use our technology targeting these antigens to antigen-presenting cells, also importantly, as an mRNA-based vaccine.
So we are nearly doubling the number of immunogenic antigens, when we target, these, in this context, 20 different antigens and antigen-presenting cells. We also see that they are primarily driven by CD8 T cell responses. So it's very nice for us to now see that the APC-targeted technology has benefits, across different, formats and formulations. So it validates for us a very broad application and also, obviously, partnering potential of, of our platform in developing cancer vaccine across various axes and, and formulations. I guess I hand it over to you, Harald.
Thank you, Agnete. Nykode is financially well-positioned to execute the company's strategy over the next years with a cash position of $159 million at quarter end. This is before the post-quarter events, which we will come back to on the next slide. As previously stated, we continue to explore and prepare for a potential listing on the Nasdaq Global Market in the U.S. We can unfortunately not give any guidance on timing, which will depend, among others, on market conditions and our plans. Next slide, please. Moving on to the post-quarter end events, we successfully raised $45 million through a private placement in late October. The main objective of the private placement was to broaden the shareholder base with international investors, which are important ahead of an envisaged future U.S. listing.
The transaction was multiple times oversubscribed, and we're also very pleased that there was significant participation from international life science specialist investors. As previously communicated, we also received a decision from the Norwegian Tax Authorities, where they reiterated their position that upfront payments received under the Genentech agreement and reentered in 2020, should be recognized as taxable income in full in 2020, rather than the use of taxable gain/loss account, whereby part of the taxable income will be deferred to subsequent years based on a 20% declining balance. Nykode continues to believe that the use of taxable gain/loss account is the correct treatment of the upfront payments, a view which has also been confirmed by third-party tax experts.
The decision will generate a payable of approximately $ 30 million, and Nykode will appeal the decision, but will settle the payable to the Norwegian Tax Authorities in the fourth quarter, while we await the outcome of such appeal. Next slide, please. Looking at the income statement, we reported revenues of $2.8 million in the third quarter and $10.9 million for the first nine months of 2023, relating to the R&D activities under the agreements with Genentech and Regeneron, which is up from $700,000 and $4.5 million for the same periods in 2022. Our other income represents government grants from SkatteFUNN and the Research Council of Norway, where we had two projects running at quarter end.
Looking at employee benefit expenses and other operating expenses, we have been ramping up both the organization and our research and development activities over the last years, resulting in increased expenses. Please note that the year-to-date employee benefit expenses for 2022 include a non-cash reduction of $7 million, relating to social security cost accrual on share-based payments, and that operating expenses, both for the third quarter and year-to-date 2022, include a non-recurring cost of $6.3 million. In line with increased interest rate levels, finance income has increased, mainly due to increase in interest income. So overall, we recorded a net loss of $10.2 million for the third quarter and $29.8 million for the first nine months of 2023.
Then moving on to the balance sheet, we had a strong cash position of $159 million at quarter end, which is again, is pre the post quarter as referred to earlier. Trade receivables are down till the year end due to receipt of the $2.5 million milestone under the Genentech agreement in the first quarter. Next, please. Moving on to the equity and liabilities, we had total equity of $130 million, which represents a strong equity ratio of 75%. And with that, I will give the word back to Michael.
Thank you very much, just finishing off with the last slide before we open up for questions. Looking at the focus areas for the next 12 months, we are looking at a busy time period, starting out with our efforts to get the VB-C-04 trial, our next step into the recurrent metastatic cervical cancer setting up and running. As we mentioned, we have received the IND approval, so we are in the process of finally finalizing the last agreements with the sites and getting the patients into the trial. We've also said that we will be putting a name to the next oncology program from our internal discovery engine, and we'll be doing that in 2023, so imminently.
We are also looking forward to update you from the VB-C-02 trial, where we have indicated we'll be able to give an updated analysis of survival data for the patients that are in the trial. That's planned for the first quarter 2024. We, as I, we said, have initiated the VB-C-03 trial, and if everything goes along the planning, we should be able to, in the end of 2024, be recommending a phase II dose for the part two of that trial, which we will then enter discussions with the authorities on. So, planned for the end of 2024.
Then we again, if everything continues according to our plan, should see the VB-C-04 trial, part one, finalizing enrollment also towards the later part of 2024. Then we, of course, also look forward to update you on the development and the progress in our autoimmune disease program, which, as we've mentioned, does constitute potential new therapeutic vertical for Nykode. And with those words, I'm going to hand over to the operator to take us through the questions.
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please refer to the Ask a Question text box on your webcast player. One moment, please, while we poll for your questions. All right, so our first questions are going to come from Gonzalo Artiach with ABG, an equity analyst. His first questions are: Could you give us some color on how the recruitment in the head and neck study is going? So far, you have two clinics active out of the eight that are planned. How is the interest from clinicians on taking part of the study, and how comfortable are you with the guidance provided today on dose decision by H2 2024?
Hey, thank you very much, Gonzalo. I think you may have misread the information in our report today. We mentioned two sites, two countries where we are up and running. That's not meant to say that we only have two clinics active. We are not providing detailed progress report in between the major milestones of these clinical sites yet. So we'll not be providing quarter by quarter status reports. So what we said this morning is that the first two countries are fully open and active. The rest of the eight planned countries are in the process. In total, if I do not remember incorrectly, we are planning 26 sites spread over those eight countries.
I can assure you there is not a lack of interest from neither sites or the investigators to participate in this trial here. Everything is still on plan for us.
Thank you. A follow-up. You explicitly mentioned a potential U.S. listing in the future. Do you have any guidance here or some color on what you would—on what would be ideal for you to do it?
You want to address that, Harald?
Yeah, thank you. You know, we are of course in the fortunate position that we are well capitalized, so there is no rush to do a U.S. listing. It will also depend on among other market conditions, as I said, which are not the best at the current time. So we cannot give any specific guidance on the exact timing, but we do continue to prepare for it.
Okay, thank you.
And of course, let me just add also that, of course, it was a good milestone to get those international life science specialist investors on board through the capital raise.
Okay, thank you. And then another follow-up. Given the fact that TIVDAK only achieved an ORR of 17.8% in the confirmatory trial, would it be fair to expect less pressure from the FDA in terms of a potential accelerated approval of VB10.16 and cervical cancer, for example, by a lower expected ORR by the FDA?
Thank you very much, Gonzalo, for that question. Obviously, we have also noted the data from reported around the TIVDAK from the ESMO. And I think we have the same sentiment that you're mentioning here, but I don't think it would be fair of us to speculate how FDA will react to these data here. We have to say from our point of view, we feel these data, as Agnete mentioned during her review, confirms the unmet medical needs in this patient segment, so second-line recurrent metastatic cervical cancer patients. And we also feel this speaks to a potential position for VB10.16 in that field.
We agree that it's fair to consider the bar to have been lowered slightly, but other than that, I think it would be premature to speculate how the FDA would look at this.
Okay, thank you. Our next questions come from equity analyst, Geir Hiller Holom, with DNB Markets, and it says: Could you please elaborate around how you envision the timeline for your planned VB-C-05 trial in adjuvant setting, and how many patients you plan to include in the trial?
Yes, thank you very much, Geir. It is on the border of being premature, so you have to take this as our tentative plans. We did reveal some of our thinking around this trial design at the Capital Markets Day in New York back in September, and we are sort of thinking the same direction to date. For us, this will be a double-blind randomized phase II trial. We are so far thinking around a potential one-to-one randomization, could be designed differently, but that's—let's say that's the basic assumptions right now. You could expect somewhere between 80-100 patients entering each arm of that.
Exactly how we would have to design the primary endpoint, on that front, which of course would then drive the duration of that trial, still is subject to internal discussions inside Nykode, but also with potential parties who will be running this trial together with both investigators as well as potential suppliers of the checkpoint inhibitor. We are starting this trial up as fast as we can. As you all know, the potential use of the proceeds from the direct placement is centered around getting this trial up and running. So, I would advise that you, for your planning purpose, assume that the trial would be kicking off roughly 12 months plus from now.
Potentially, slightly into the first quarter of 2025 for the kickoff of the trial.
Okay, thank you. Our next questions come from the line of Arvid Necander with Carnegie. It is, there's a couple of questions here. So the first one is: Among the ongoing clinical trials, the open-label VB-C-03 appears to be the one capable of generating new data in 2024. Specifically, when can we anticipate the first data from this trial, and what type of data will the readout include? And then I'll do the second part.
Very good. So as you've mentioned, Arvid, and thanks for the questions. We are anticipating to be able to have the first readout from this trial from the part one, which is the dose-escalating part of it, at the end of next year, which would allow us to recommend a dose for the second part, what we call a recommended phase II dosing here, which we'll then have to enter negotiations or discussions with the authorities on. We don't anticipate that to be a difficult discussion, but as always, once you start discussing with the authorities, it gets a little bit out of our control. So right now our plan is to give the market an insight into what those data shows, towards the end of next year.
Mind you, that will be mainly centered around the safety of the first doses that we have run the patients into. So, in short, at end of next year for the first interim analysis or the first results from the dose escalating part of the VB-C-03. Next question, please.
Thank you. The follow-up was, can we anticipate an interim readout from the VB-C-04 study, and if so, when or at what degree of enrollment? For example, at what proportion of the planned total enrollment could this occur?
Yes. So we do anticipate to do an interim analysis of the VB-C-04 after part one is conducted. So that's the randomized part where we've enrolled 30 + 30 patients into the trial. And the protocol is designed in a way that we can do that, earliest three months after the last patient gets into the trial. With the timeline we've given you here, that would mean at the earliest, we would, let's say, cross the last patient data point into the first quarter of 2025. Give us an additional time to clean up and analyze the data. So expect around mid-2025, plus, give or take, as the base case plan for an interim analysis from the VB-C-04 trial.
Next question, please.
Thank you. Our next questions come from the line of Luis Santos with H.C. Wainwright... How should we look at the market opportunity for the tolerance induction platform? Any guidance on the next update for the Tol APC targeting pipeline?
Yeah, thanks for the questions, question, Luis. So, I think we all know that the autoimmunity landscape is a huge market opportunity, and there's also a huge medical need, in particular, to finding treatments that are antigen-specific. So we do experience a lot of interest in the field with these preclinical data that we've been able to show you now. As a basis, if you heard, we know that top 10 autoimmune drugs in 2022 had a worldwide $26.5 billion market. So, this is a huge opportunity for us in the future. Any guidance on the next update? So we have guided now that we will come with next update in 2024.
Second half, 2024, we will come with more updates. As you may know, we've been working in principle in two parallel workstream. One has to identify the platform that we will use in the future across different products development for autoimmune diseases. And that will be able to work on over the next period so that we identify the targeting unit and the format and formulations, et cetera, and how we will use that as a platform in the future. And then obviously, we're also starting to look at our first project and where we will go internally in the company.
Importantly, maybe as a third pillar there, we experience a lot of interest from potential partners, which we may take advantage of to accelerate development with certain assets within the space of autoimmunity in order to take full advantage of the platform and learn as much as possible, as fast as possible. Next question.
Thank you. And yep, the follow-up: How would a potential partnership on the mRNA LNP delivery platform look like? Would it involve a licensing deal of the delivery platform or licensing of a pipeline asset?
Yeah, good question, Luís. I think you could look at this in a similar fashion as what you've seen us do before. We do believe that there are companies out there with mRNA specific interests and also specific expertise. We are not primarily pursuing a deal of out licensing the entire mRNA platform. It would be focused on particular assets, one or a few assets, that would be carefully selected with the right partner with the right expertise for a defined scope, obviously, in the first place. That's our strategy.
Thank you.
Thank you.
Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to Michael Engsig for any closing remarks.
Thank you very much, Daryl, and thanks everybody for listening in to our quarterly webcast here. We, of course, as you can feel very enthusiastic about the progress this quarter, and look forward to continue building this company into the leading immunotherapy company focused on oncology and autoimmune diseases. With those words, I'd like to wish you all a good day. Thank you.
Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect at this time. Enjoy the rest of your day.