Good afternoon, everybody, and welcome to Ultimovacs' Q2 2024 business update and Financial Results. As usual, I have with me our Chief Medical Officer, Jens Bjørheim, and our Chief Financial Officer, Hans Vassgård Eid. We will go through the main news from this quarter, and as usual, if you have any questions, please use the system to send it to us, and we'll try to answer as many as possible at the end of this presentation. If we can move to the next slide, I have to show you the disclaimer, and if we move to the next slide, you know, we will. I will give a brief introduction. Jens will cover then the clinical update on UV1. I will have a slide on our novel drug conjugation platform.
Hans will cover the financial update, and then I will cover the news flow and end the meeting before Q&A. Okay, so let's proceed and move to the next slide. Again, you know, this quarter was mainly impacted by the results of INITIUM FOCUS. Of course, despite these disappointing results, you know, we are sorry for patients. We are still committed as a company and as a team to bringing UV1 across the next important data point, that is the DOVACC readout. These top-line results, as you know, the FOCUS, the more recent one now in August, show that we didn't meet the primary endpoint of improved progression-free survival, and there was also no improvement in overall survival.
As Jens will cover, you know, these results are still very important and will be submitted for publication in a peer-reviewed medical journal. In NIPU, as you know, we had encouraging results showing a clinical benefit, you know, presented last year. Also, pre-publication giving a little bit more details on the specific group of patients that responded better, and this was in the spring, but there will be an update by the investigators at post the presentation during ESMO now next month of September. DOVACC continues to have a good inclusion of patients, top-line readout expected first half of 2025.
Of course, you know, this quarter is impacted because we look at mid-May to mid-August in terms of the number of inclusion of patients is impacted by the vacation period in the Nordics and all over Europe. But we expect this will pick up, and there are several patients also in screening. You are all familiar that we implemented the cash preservation initiatives with the very important goal to expand the financial runway to the Q4 of 2025, and this is important because then takes us over the anticipated top-line readouts for the DOVACC trial. We also have an ongoing development of a novel drug conjugation technology platform, and I will cover that topic in more detail during the presentation.
So if we move to the next slide, I give the word to Jens. Jens, please.
Thank you so much, Carlos, and good afternoon, everybody. I will go through the clinical program. On the next slide, just as a recap for us, the background for the phase two program we are running. So, going back a few years, we had phase one trials that showed good and lasting immune responses after UV1 vaccine. It appeared to be a good synergy between checkpoint inhibitors and the vaccine in different patient populations, and it was a good and beneficial safety profile for the UV1 vaccine. So the ambition with the phase two program was to combine the vaccine with different immune therapy and in different indications to find a good home for UV1 moving forward. Therefore, we had a few things that needed to be in place.
The indications we are working in need to express telomerase, as that is what we are vaccinating towards, and also immune therapy should be approved in that indication. On the next slide, you can see the phase two program that we initiated. First, our sponsored own indication, malignant melanoma, with the INITIUM trial, as Carlos reported. Then we are also participating in four other trials in mesothelioma that reported at ESMO last year, and we'll have an update at ESMO this year in September. It was also presented in a journal during the spring this year, this study. For the head and neck cancer study, back in August, earlier in August, we presented top-line data from this trial. Unfortunately, this trial proved to be a negative one.
Still, there are two trials ongoing with the recruitment. In the DOVACC trial, as of now, 120 patients are recruited in this trial, and in the LUNGVAC trial, 31 patients are recruited. Moving on to the next slide, just a small background on the head and neck cancer group. So this is the seventh most common cancer globally, so it's a large indication. Telomerase is highly expressed in these patients, and pembrolizumab is considered a standard of care for first-line treatment of patients with PD-L1 positive head and neck cancer. Also, a few comments on the trial as such, it was,...
On the next slide, it was a randomized trial, one arm, 50 patients with the vaccine on top of pembrolizumab, and a control arm with 25 patients. The primary endpoint was progression-free survival at six months. All patients were followed up to 12 months in this trial before the database was closed, and they had a readout of the results. On the next slide, you can see the results from this study. Adding the vaccine on top of pembrolizumab did not meet primary or secondary endpoints in patients with metastatic or recurrent head and neck cancer. UV1 continues to show a positive safety profile in line with the other studies with similar events observed in the control arm and a good tolerability, so this was disappointing, but it's the top-line results from the FOCUS trial.
And the data from this trial will be published in a journal in the near future. Moving on to the next slide, we now look at towards ovarian cancer. So in ovarian cancer is also a quite large indication. It's the eighteenth most common cancer overall. Standard treatment for these patients include surgery, chemotherapy, PARP inhibitors, and bevacizumab. Several studies have shown that if you combine PARP inhibitor with a checkpoint inhibitor, you have better efficacy for patients. Also, in this indication, telomerase is highly expressed, which is important for the UV1 vaccine. If you take a look at the trial as such on the next slide, this is a large trial. 184 patients will be included in this study. It is a maintenance trial, meaning that patients are treated with chemotherapy.
If they respond to that chemotherapy with a partial or complete response, they can be included in this trial. There are three arms: one olaparib arm, which is a standard of care, for this patient population. Then there is an in-between arm, olaparib durvalumab, which is there to get a numeric understanding of the efficacy from durvalumab only. And then there is the third arm with the vaccine UV1, olaparib, and durvalumab. The statistics in this study is between the triple combination arm and the olaparib arm. Also in this trial, progression-free survival is the primary endpoint, with the secondary endpoints for overall survival, response rate, and safety. The top-line results for this trial is expected first half of next year. Moving on to the next slide. Just also to update on this.
So the LUNGVAC trial is a trial in patients with non-small cell lung cancer that don't have the mutations in EGFR and ALK and others. In this study, 138 patients are planned to be included. And two arms here, one with PD-1, cemiplimab, and one with UV1, cemiplimab. Primary endpoint in this trial is also progression-free survival, and secondary endpoints, other efficacy endpoints and safety. The top-line results are expected in first half of 2036 for this trial. And as we have done earlier, we will update on the top-line results in the Q4 presentation later. Moving on to the next slide, I give the word back to Carlos to present the novel drug conjugation platform. Thank you.
Thanks, Jens. So if we move to the next slide, you know, why are we talking about a novel drug conjugation platform? As you know, we have been spending a lot of time in the team in developing a new technology for cancer vaccines. You know, with one example being the TET vaccine that we tested clinically in prostate cancer. We, in order to optimize that formulation of that vaccine, we had to develop a novel conjugation technology that you know, as I mentioned, was initially formed to optimize the expansion of our vaccine pipeline. So this novel conjugation technology is really the result of several years of work by our research and CMC teams.
The key benefits is that this is a very flexible conjugation technology, and there's the potential to be broadly applicable to a variety of therapeutic modalities, particularly in the creation of innovative drug conjugates with favorable pharmacological properties. This means that, you know, in addition to the space of oncology, this can be used, potentially in other therapeutic areas. What is, of course, very exciting. We are currently conducting preclinical proof of concept research and we'll seek external validation of this novel drug conjugation platform by, you know, talking, discussing with the experts in this area. We see a significant value proposition within this technology, representing a major opportunity for Ultimovacs for future pipeline growth and expansion of potential collaborations.
We are currently going through several of these tests, and we expect to provide an update to the market before the end of 2024. Okay, so if we move to the next slide, we move into the financial area, and I give the word to Hans.
Thank you, Carlos. If we move on to the next slide, on the key financials. By the end of the Q2 , Ultimovacs had a cash position of NOK 170 million , roughly $16 million. During the Q2 , we implemented a cash preservation program to sustain the financial runway. As Carlos mentioned, this includes a workforce reduction of approximately 40%. The cash preservation initiative secures that the expected financial runway will last until the Q4 of 2025, beyond the expected readout of the DOVACC trial. When looking at the cost during this runway period, most of the costs are committed costs, so there is limited free cash available for alternative use.
Based on the current plans and forecasts, the cash burn rate to the end of this period, meaning towards the end of 2025, is estimated to be roughly NOK 15 million per quarter. Looking at the key financials, the EBIT or the operating profit was minus NOK 45 million for the Q2 . Year to date, for the first half, was minus NOK 74 million , and the profit before tax was minus NOK 45 million for the quarter and minus NOK 68 million year to date for the first half. Looking at the operating expenses, the main component here being R&D and IPR expenses. These costs were approximately at the same level in the Q2 this year as the previous quarters.
Going forward, the operating expense level should be expected to be reduced, partly as clinical trials are finalized and partly as operational adjustments, including the mentioned workforce reductions, will start to have effect in the second half of 2024. If we move on to the next slide, I would like to mention that there was a small typo in the material that was distributed this morning. Below the table, we see a sentence specifying the cash holding by the end of the Q2. The correct version is what we show here, NOK 170 million , which we also referred to on the previous slide. The version sent out this morning showed 270, so we apologize for that typo.
If you look at the key cost components, payroll expenses, we have significant variations in the component called share option cost. The share option costs varies significantly between quarters, depending on the development in the share price. So in the Q1 this year, and the Q2 last year, 2023 , there were high volatility and significant drops in the, in the share price, giving negative, or reversals of, of the accruals for Social Security tax related to, to the option program, giving negative cost elements. So it's hard to compare between periods. What is, from a cash perspective, most important is the regular payroll expenses.
And looking at those, you will see that these are very stable this year compared to previous year, NOK 10 million for the Q2 and NOK 26 million year to date. Moving on to the external R&D and IPR expenses, we see that the cost level this year, NOK 27 million, was significantly lower than the same period last year. It's important here to mention that these R&D expenses were particularly high in the Q2 of 2023 when you make this comparison, primarily due to higher costs from the initial trial in that period and also CMC costs. These are further specified on slide 20, further out in the presentation. For other operating expenses, there are no major changes from previous year.
On the next slide, we see the quarterly operating cash flow, and operating cash flow in the Q2 of this year was approximately NOK -50 million , which is somewhat higher than the EBIT of NOK -45 million. And as mentioned, we expect continued quarterly variations in cash flow and cost, but we do expect a significant decrease over the next quarters compared to the previous quarters, due to the implementation of the cash preservation initiative and completion of key activities. On the next slide, we share the quarterly breakdown on the profit and loss statement for information purposes. So with that, we move on to the next slide, and I give the word back to Carlos.
Thank you, Hans. So if we move to the next slide, I think, you know, we continue to deliver on promised results. Unfortunately, not as positive as we would expected, but that's the reality of biotech. Fortunately, as a company, we had different studies, and now we can, you know, look forward to receive the DOVACC ones next year. As I mentioned, in terms of news from our side as a company, it will be the presentation of the technology and business opportunity for the novel conjugation platform technology towards the end of the year. And then next year, you know, the first results to be expected are the DOVACC results.
So if we move to the next slide and just to you know as a summary we continue to be committed to bringing UV1 across the next value inflection point but also to continue to develop our novel drug conjugation platform. We are now of course a smaller team and then really focusing on the obligations that we have as a company as a listed company as a company that has patients being enrolled and also a team putting a lot of effort in the developing the novel drug conjugation platform. That as I mentioned we expect to update you before the end of the year.
The cash preservation initiatives that was a very extensive work done by the team, and that unfortunately also resulted in we had to have some downsizing, but now this cash runway is anticipated to be to the Q4 2025 . And as mentioned several times, you know, this is important because it expects us to take us beyond the results from the DOVACC trial. So with this, I want to thank everybody for the time to listen to us, and we can move to the Q&A.
Thank you, Carlos. The first question is related to the drug conjugation platform. Have external parties, such as AstraZeneca, expressed interest in the drug conjugation platform, particularly considering financial support? Carlos?
Yes. Yeah, I will answer that. We haven't shared yet with the external parties the technology. So we are currently finalizing some of the tests, and although that is an objective, this is pure Ultimovacs' novel technology, and it has not been shared with anyone outside.
Thank you, Carlos. Then a financial question: How do you plan to stay a going concern towards Q4 2025 and end of cash? I'm happy to answer that, Carlos, unless you would like to do it.
No, no, no, please go on.
Yeah. It's clear that going forward, the funding situation of Ultimovacs will be a key element which the management team and the board will focus on. It's clear that when you move towards the end of a financial cash runway period, funding and financing is a key element that we need to resolve. We don't have any specific answer or able to give any details on this, but we can assure that this will be a key priority going forward based on the pipeline we have. Another question related to the new technology platform, Carlos. Can you add some more color to how the tech platform can be used and market size?
No, I cannot do it at this moment, and you know, we will provide that update before the end of the year, but it's important to refer this as, you know, there is no market size, because this is not a single application, so this technology can be used across, you know, multiple different therapeutic areas, not just on oncology, so that will have to be the reflection of where, when, in which compounds and conjugations this technology will be used to provide that, but it's more the potential to be really used broadly, not just in oncology and not just in vaccines.
Thank you, Carlos. That was, in fact, all the questions we have received.
Okay.
I'll give it back to you, Carlos.
Okay, thanks. So I want to thank Hans and Jens for, again, supporting me in this webcast. And of course, thank everybody that is attending, participating, for your questions and time dedicated. And we will continue to be in touch, and hopefully, the next point of communication will be, you know, around the new technology. So thanks, everybody, and have a good rest of the day.