Q2 presentation. I am Hans Petter Bøhn. I'm the Chairman of the Board. With me here today, I have Ronny Skuggedal, our CEO, and I have Morten Luhr, our Strategic Alliance Manager and Business Development Manager. 2022, to say the least, has been a difficult year for PCI Biotech. At the beginning of the year, we were forced to abandon our lead project with fimaCHEM in bile duct cancer, as you know. Later now, we discovered that or we found that there was not sufficient interest among our shareholders and the finance community to finance our backup project with the fimaVACC in head and neck cancer.
As a result, we decided to close down and wind down the part of the company that is capable of running clinical trials. As a result, we will get an organization with approximately half the number of employees as we had at the beginning of the year. Needless to say, this has been difficult for employees as well as for shareholders, and also our partners and collaborators around the world. For this, I apologize. Yet, I believe the restructured and realigned PCI Biotech is our best option going forward. It is now time to lift our heads and look forward into the future with renewed enthusiasm and energy. With this, I pass the word to Ronny. Thank you.
Thank you, Hans Petter, for the introduction and the kickoff of today's presentation.
Sorry for that, some technical issues here at the start. Please pay attention here to the information about the Q&A session, which we will have towards the end of the presentation, where we open up for questions through a telephone conference facility, and you can also send in questions through the webcast console. Please also pay attention to our important notice and disclaimer. The agenda for today, I will first take you through some highlights. Morten will take you through our operational review and then key financials and outlook at the end before we have the Q&A. The highlights for H1 2022 on the corporate side. The reported efforts to finance phase 2 clinical trial did not under the current market condition result in a feasible way forward.
The company will not conduct a company-sponsored phase 2 trial with the fimaVACC technology. I will give you some background information about the considerations made before this decision was taken. We managed to establish a scientifically sound and interesting project, and supported by the preclinical data and the phase 1 data, we generated clinical expert interest, and we attracted KOLs in the field of head and neck cancer. We also aimed high for a checkpoint inhibitor supply agreement for the trial. We did not succeed with this. We had interactions with several ICI owners. It is widely acknowledged that ICI owners have clinical data as a prerequisite for a supply agreement. Nevertheless, we had interactions with them, but in this setting, we did not manage to attract sufficient interest from their end for a supply agreement.
Even though we had the phase 1 data, it was not enough at this stage due to being a healthy subject study. On the investor side, we aimed high to attract healthcare competent investors to be a lead investor for the financing round. The project was viewed upon by these investors as a project with a financing need of up to NOK 150 million. In the current market environment with very high competition for funds and the reduced risk willingness in the market, we did not succeed in attracting such a competent healthcare investor as a lead or cornerstone investor. Without such a cornerstone investor, we did not manage to attract sufficient commitment for a financing round of the indicated size.
On the back of this, we then took the decision not to pursue this further in the current market. Now we focus efforts and resources on non-clinical research, developing further the current pipeline opportunities while exploring new fields of use for the PCI technology. For fimaVACC, it's intratumoral immunotherapy, and for fimaNAC, it's dermatology and bioprocessing. Bioprocessing is a new field of use which we disclose for the first time today. Morten will revert with more details around this under the operational review. As Hans Petter said, this year has been challenging and difficult for the company. As we no longer run clinical projects, there has been a need for consolidation of the organization, including downsizing in several steps during the year. We now also need to take a complete downsizing of the clinical team.
This will be enacted during this H2 year. Downsizing is a tough exercise, but necessary under the current circumstances. I would like to thank all employees for their efforts over the years and for their understanding and cooperation in this difficult process. I'm also honored by the opportunity to lead PCI Biotech as a CEO going forward from tomorrow and to further build upon our opportunity for future progress. Taking into account the recent changes, the company has now a financial runway into 2024 with the current plans. We continue to explore financing and strategic opportunities as the non-clinical pipeline matures. These strategic opportunities are primarily based upon scientific rationales, but corporate actions are also included in these efforts to keep all options open. First of all, it will be scientifically motivated.
The results from preclinical studies done in collaboration with our partners in Zurich strengthened our understanding of the immunological effects of the PCI treatment and the potential for its use in intratumoral immunotherapy. This immunotherapy focus area is supported by a PhD grant received by the Research Council of Norway. Under this project, we are exploring intratumoral immunotherapy, aiming to identify novel treatment combinations to increase the response rate of checkpoint inhibitors. For fimaNAC, the focused development for applications specifically suited to the strengths of the technology is determined to be dermatology and bioprocessing. As I said, bioprocessing is a new field of use for PCI Biotech. The platform technology for use in the exciting field of mRNA therapies was presented by the CSO Anders Høgset on site in the U.S. in May.
As you know, the RELEASE trial was terminated in the beginning of the year due to the competitive changes in the competitive landscape rendered the trial challenging to complete and potentially inadequate for approval. The available data have been reviewed and are insufficient to draw conclusions regarding the efficacy and safety of the treatment. It has been a swift wind down closure process for the trial and all major study closure activities are expected to be completed during Q3. Collaborations. In January, we established a new collaboration with a South Korean company named MDimune. Very recently now in August, we initiated a collaboration with a company named a European company named Mimetix. All our collaborations have the same motivation. Scientific enthusiasm from both sides to explore technical synergies in preclinical settings.
Considerations for further expansion of partnerships are impacted by many factors, not only the generated data, but also internal priorities, status of internal, other internal projects, strategic decisions, and so on. Based on such reviews by both parties, the eTheRNA and Aposense collaborations are closed during this year. Regarding the eTheRNA collaboration, it is a disappointment that the collaboration is closed, but the data was not convincing enough to generate enthusiasm from their end for further partnership. We move on to the operational review, and I'll leave. We'll ask Morten to go through that.
Thank you, Ronny. PCI Biotech is leveraging intratumoral immunotherapy to achieve a systemic antitumor immune response. Despite representing a major breakthrough in cancer treatment, a large proportion of patients do not respond to immune checkpoint inhibitors. Abbreviated ICIs, or the patients progress shortly after initial response. Optimizing checkpoint inhibitor and combined therapies dosage is difficult to achieve due to systemic adverse effects. Why is this the case? If we look at the figure on the left-hand side, administration of systemic treatment, tumor-targeted treatment, and intratumoral treatment is shown. Both systemic and tumor-targeted treatments are given intravenously.
This means that adverse effects can be severe, even fatal, and there may also be a suboptimal dosage in the tumor lesions due to insufficient amounts of therapy reaching the tumors. For clarity, this challenge is highly relevant for checkpoint inhibition, which is a so-called tumor-targeted therapy.
Combining checkpoint inhibitors with intratumor immunotherapy may overcome resistance to checkpoint inhibitor monotherapy, and I will elaborate on this in the next few slides. The advantage of combining checkpoint inhibitors with local immunotherapy is that for intratumoral treatment, systemic adverse effects are limited, enabling combination treatments not feasible with systemic treatment. These combinations may include components that target immunosuppressive mechanisms. Intratumor immunotherapy can trigger an immune response that exposes the tumor antigens, exploiting the patient's own tumor as a therapeutic cancer vaccine. This is a novel approach as it does not require identification of tumor-associated antigens or patient-specific neoantigens. Finally, treatment of one tumor lesion can induce specific immune response against other tumor lesions in the body. This systemic or whole body effect from intratumor treatment is consistent with what we have observed in animal studies.
The figure on the left-hand side shows tumor growth in mice inoculated with two tumors. One of the tumors was vaccinated with fimaVACC. The other tumor was untreated. The black and green lines represent various controls, where you can see that the tumors grew rapidly until the mice had to be sacrificed. The red field line shows the tumor receiving intratumoral fimaVACC vaccination, where fimaVACC abolished tumor growth. And what's particularly interesting to note is that the untreated tumor in the same animal showed a strong reduction in tumor growth, represented by the red dotted line. This result is consistent with intratumoral fimaVACC therapy achieving a systemic or whole body immune response.
Note that after some time, the non-treated tumor started growing again. This is likely due to immunosuppressive mechanisms and speaks to combining intratumoral treatment with checkpoint inhibitors to suppress this effect.
Currently, a wide range of immune stimulating agents are explored as intratumoral therapies, and among these, fimaVACC has shown to enhance the effect of several of the agents that are under investigation, and these are also listed here. PCI Biotech will explore novel approaches for intratumoral vaccination, and this is also supported by a PhD project. Moving to fimaNAC, chronic skin ulcers such as diabetic ulcers have a large unmet medical need. To give an example of how severe these conditions can be, diabetic ulcer has a mortality rate comparable to cancer. Care of diabetic ulcers accounts for approximately one-third of the cost for managing diabetes globally. This means that diabetic ulcers are a major burden to patients as well as the healthcare system.
Chronic skin ulcers often have complex biology that can benefit greatly from the ability of nucleic acid therapies to affect gene mutations, gene regulation, and tissue developmental programs. However, inefficient delivery has severely limited the use of nucleic acid therapies, where large body surface areas are particularly challenging. Data from animal experiments indicate that fimaNAC can strongly enhance the delivery of nucleic acids in skin. If we look at the figure on the right-hand side, fimaNAC improved delivery of luciferase mRNA to skin in mice by approximately 30 times as compared with naked mRNA. In other words, by enabling intracellular delivery of nucleic acids, fimaNAC may unlock the therapeutic potential of nucleic acid therapeutics in skin.
PCI Biotech aims to develop a simple fit-for-purpose solution for treating severe skin conditions with nucleic acid therapeutics. To this end, we will pursue a partnership-driven approach.
Bioprocessing is the manufacturing of biological drugs or ancillary materials, and the emphasis here is manufacturing. Compared with production of chemical compounds or drugs, these are highly complex processes that represent a limiting factor to treating more patients. Specifically, there is a need to improve yield as well as quality at lower cost. In the bioprocess space, we see at least three segments where fimaNAC may have a positive impact. This is cell culture, cell and gene therapy, and viral manufacturing, all rapidly growing markets. Development of bioprocessing technologies is less complex from a regulatory perspective compared to development of new therapies. This allows shorter timelines and lower cost of development. Importantly, there is an urgent need for novel technologies in areas where fimaNAC has shown promise.
If you combine the rapid growth in this space, fimaNAC's promising results, as well as PCI Biotech's shift towards non-clinical opportunities, this has become an increasingly interesting area to explore for PCI Biotech. For example, in many bioprocesses, there is a need to deliver or edit nucleic acids of cells in culture. The table on the left-hand side shows the wide range of nucleic acids fimaNAC has successfully delivered, either naked or in various vehicles. Moreover, fimaNAC has successfully delivered nucleic acids to approximately 80 different cell types in culture. If we move to the figure on the right-hand side, you can see that fimaNAC results were obtained from cells in culture in relatively low volumes. In bioprocessing, cells in culture are used for manufacturing. The main difference from fimaNAC being that they are grown in larger volumes.
This means that the knowledge obtained from fimaNAC in vitro models is highly transferable to bioprocessing. PCI Biotech is currently developing enabling technology for bioprocessing in-house, and we are pursuing multiple applications with a partnership-driven development strategy. Our main partnering targets will be leading biotech and contract development and manufacturing organizations. Looking at the bioprocessing, processing pipeline below, I would like to emphasize that we are developing enabling technology for bioprocessing, which follows a different development path than drug development, reflected here in the feasibility, prototype, and commercial timeline. We will perform in-house feasibility studies to understand where fimaNAC has the greatest potential, building on existing experience and results.
We will then target partners to develop prototypes for specific applications which may ultimately be commercialized. Importantly, we will work closely with the partners to develop solutions that address their needs from the get-go. That's it from me.
I will give the word back to Ronny.
Thank you, Morten, for the review. On fimaCHEM, I will draw your attention to the last bullet here on swift closure of the RELEASE study. Last patient discontinued the study in May. All clinical sites were closed during June. All major study closure activities are expected to be completed during Q3. We are very happy here for the swift and cost-effective closure process, and full credit to the clinical team for their efforts in this setting. Our research collaborations. During the year, two collaborations have been closed and two new are established. As previously communicated, we report on material changes in these collaborations. While data generated under the current agreements are confidential and publication disclosure of these data require mutual agreements between the parties.
Yes, we have not given up on publication of data from the top ten pharma collaboration, for aiming for a scientific journal. Please remember that these data are already published via scientific conferences. These collaborations can be, in general, classified into two different categories. Data generating mode and assessing mode. All at different stages. Among the current collaborations, I can say that MDimune, Mendus, and Mimetix are in the active data generating mode, while OliX and IMV Inc. have no current experimental activities. In addition, I can say that IMV Inc. has been in idle mode for a while due to circumstances at their end. Based on the recent review of all collaborations, the collaborations are retained.
Regarding Olix, I know that there have been some speculations around PCI Biotech going into the clinic with them, and that is not the case now at this stage. We move on to corporate. Organizational changes. As mentioned several times earlier today, consolidation of management team, former CEO and CBO left in May, and CMO to leave in September. I'm, as I said, very honored to be CEO of PCI Biotech effective from tomorrow. The R&D team is now fit for a purpose for the future projects that Morten reviewed, and downsizing of the clinical team will be enacted during this half year. On the financial side, now with the recent changes, the estimated financial runway is into 2024. RELEASE closure cost, estimated future cash effect of -NOK 5 million from first of July this year.
The organizational changes will of course, reduce the costs over time, while we will see reduced costs from Q3 regarding RELEASE. We are exploring financing and strategic opportunities as the non-clinical pipeline matures. By the end of June, we had NOK 76 million in cash, and for the quarter we had cash flow from operating activities of -NOK 18 million and close to -NOK 40 million for the full half year. This will be, of course, significantly reduced going forward. The outlook. We will leverage the PCI technology within immunotherapy, nucleic acid therapeutics, and bioprocessing. For fimaVACC, intratumoral immunotherapy, and here the goal is to identify novel treatment combinations or approaches to increase the response rate of checkpoint inhibitors. It's a novel approach as it does not require identification of tumor-associated antigens or patient-specific neoantigens.
It's a local treatment with systemic or global effect, and we are building upon the promising existing preclinical data. For dermatology, the goal is to simplify treatment by developing a fit for purpose solution. There is an unmet medical need for chronic skin ulcers, severe conditions with few treatment options. We have existing promising results on delivery of nucleic acids to skin in mouse models. Bioprocessing is the new joker we played out here today. It is a fast-moving market with need for a new level technology. As Morten reviewed earlier, it's shorter time to market at lower cost than development of new therapies. fimaNAC has demonstrated the ability to deliver nucleic acids to numerous cell types in culture, which is a highly transferable process to bioprocessing.
We need to produce results in this new setting, and this is what we are going to focus on going forward. It's important to understand its early stage, but as I said, it's the new joker. With that, I'll open up for questions through the telephone conference system. Please, operator.
Thank you. Ladies and gentlemen, to ask a question, please press five star on your telephone keypad. To withdraw your question, please press five star on your telephone keypad again. We will have a brief pause while questions are being registered. As a reminder, please press five star to get in queue, and to withdraw yourself, press five star again. It does not seem like we have any questions at this point, so I will hand it back to the speakers. Please go ahead.
Thank you. From the webcast console, there are some questions about the OliX collaborations. I think I addressed that during the presentations. The question is, are there any interest for a deal to go into the clinic, from OliX side for hair loss? At this stage, PCI Biotech is not in a position where we are going into the clinic with OliX. With that, there are no other questions on the webcast console that has not been addressed during the presentation. If there are no more questions from the telephone conference.
We do have a question from the conference call. The question is from Sven Erik Syvertsen. Please go ahead. Your line will now be unmuted.
Good morning. My name is Sven Erik Syvertsen here. I think you mentioned in the presentation that you needed up to NOK 150 million to finance the fimaVACC phase two study. As far as I remember, I think Per in the past have more talked about NOK 40 million-NOK 50 million for such a small study. So 150 seems like quite a lot of money to do such a study. Can you say a little bit more about why you need so much money for this study here?
I think the answer to that is that up to NOK 150 million includes more than just the study. It includes the full organization. It includes all the other projects that we have reviewed today. It also includes a certain runway for as a buffer after the study is completed. Regarding the study, I also elaborated a bit around this checkpoint inhibitor collaborations that we did not succeed. It added to the total budget, but it was not a showstopper for the evaluation of the project. It added to the budget.
What you are saying, there is no way you could have done this study quite a lot cheaper than NOK 150 million?
There is of course, options to do a smaller study. We aimed for a study with around 20 patients, and this was carefully reviewed and several scenarios were on the table. To have a solid study to move forward, we landed on a study of up to 20 patients, and that was what we were going for, and considered that smaller studies was not wise to pursue.
PCI Biotech is also involved in a salmon louse project, which I think is supposed to be completed next year. Can you say something about this project, how this is going?
Yes, you are correct that the sea lice project is subject to a grant, two-year grant, ending end of June the next year, I think. All the practical experience and practical things are done by the Institute of Marine Research. I can confirm that the project is going forward according to plan, and there are experiments going on. This is fully in the hands of our collaborator.
Another project you're involved in is this DARPA consortium, which aims to find new ways to fight infections without using antibiotics. Any news to share from that project there?
Nothing new to report on that project.
To conclude, as it looks today, are you involved in any studies, projects that looks like they will likely continue to clinical trials?
All the collaborations we have are in preclinical settings. As I said, before this project can move on to a clinical setting, there must be new agreements in place, and such agreements will of course be disclosed and reported.
Yeah. The question was, do you think it's likely that any of the things you are involved in will progress to clinical?
All the projects.
Is it likely that anything will?
It's high. Of course, biotech is high risk, as you know. All these projects would have not been continued if we didn't see any future for the projects. There are opportunities within all projects to move forward. I can't determine any likelihood for that to happen. Of course, if there are no opportunities going forward, we would have closed the collaborations.
Yeah. I guess based on what you're saying here now I guess it's not likely based on what you know today, based on results you have so far, it's not likely that any of them will continue to clinical trials. Like, I know you're optimistic, but based on what you know today, it doesn't look likely.
I wouldn't say put it that strong. I would say, or to repeat myself, that all projects have an opportunity to move ahead. If they hadn't, they would have been closed.
Yeah. On the other hand, now is the time, if you have some positive news, it's the time for sharing those positive things here now. After all, I guess the bad news the shareholders have got so far this year. Any positive news should be shared. If you have anything that's looking quite encouraging, you should share it.
Understood. Are there any other questions from the telephone conference facility?
There are no more questions at this moment, so I will hand it back to the speakers.
Thank you. Yes. With that, I say thank you for your attention, and see you soon.