OncoSec's (ONCS) CEO Punit Dhillon on Q4 2016 Results - Earnings Call Transcript

| About: OncoSec Medical (ONCS)

OncoSec Medical Incorporated (NASDAQ:ONCS)

Q4 2016 Earnings Conference Call

October 13, 2016, 04:15 PM ET


Punit Dhillon - President, and Chief Executive Officer

Richard Slansky - Chief Financial Officer

Sharron Gargosky - Chief Clinical and Regulatory Officer


Jason McCarthy - Maxim Group

Kumar Raja - Noble Financial

Yi Chen - Rodman and Renshaw


Hello and welcome to today's conference call for OncoSec Medical Incorporated Fourth Quarter 2016 and Fiscal Year End Financial Results. My name is Andrea and I will be your web event specialist today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded today. An archive of this call will be available on OncoSec's website following the meeting.

It is now my pleasure to turn the call over to Mr. Richard Slansky, Chief Financial Officer at OncoSec. Mr. Slansky, the floor is yours.

Richard Slansky

Thank you, Andrea. Good afternoon and welcome to our fourth quarter and fiscal year-end financial results conference call. Before we begin, I'd like to inform you that today’s call may contain certain forward-looking statements relating to our business including but not limited to our plans to develop DNA immunotherapies and delivery technologies. Any statements about our goals, expectations, beliefs, plans, designs, objectives, assumptions or future events or performance are forward-looking statements.

Please keep in mind that actual or results may differ from the expectations as discussed, and as a result of different factors, including outcomes of clinical trials and product development programs, evaluation of potential opportunities, the level of cash consumption, the assessment of OncoSec's Technology by potential corporate partners, capital market conditions, timing of events and other subjects. We believe our statements are based on reasonable assumptions, however, these statements are not guarantees of performance and involve known and unknown risks and uncertainties that may cause the actual results to be materially different from any future results expressed or implied by such statements. Important factors which could cause actual results to differ materially from those in these forward-looking statements are detailed in our filings with the Securities and Exchange Commission. We disclaim any duty to update forward-looking statements.

Now I'm pleased to introduce our President and CEO, Punit Dhillon. Punit will lead us through our call today. Punit?

Punit Dhillon

Thanks, Richard, good afternoon everyone, and thank you for joining. I'd like to take a moment to review the agenda for our call today. First I will share an update on corporate achievements since our last conference call, then Richard will provide an overview of our fourth fiscal quarter and full year financial results for the 2016 fiscal year. I will then close with a brief overview of upcoming corporate event, our corporate strategy and upcoming milestones and finally Dr. Sharron Gargosky, our Chief Clinical and Regulatory Officer will join us in opening the floor for a Q&A session.

Now onto a discussion of the progress we have achieved this past quarter and the 2016 fiscal year at large. In the first quarter of our fiscal year 2016 we continue to advance the development of our lead clinical program ImmunoPulse IL-12, dosing and undergoing database lock for our successful monotherapy Phase 2 trials and focusing on the anti-PD-1 nonresponsive patient population in melanoma.

The development of ImmunoPulse IL-12 in combination with anti-PD1 checkpoint inhibitor represents a potential immunotherapy product for melanoma patients that are progressing on anti-PD1 therapy. We have enrolled over 20 patients in our Phase 2 combination clinical study of ImmunoPulse IL-12 with Merck's KEYTRUDA or pembrolizumab. It is in focus on melanoma patients that are considered non-responders to anti-PD1 and OncoSec remains on track to announce interim data at the three-month follow-up later this quarter.

Subject to these interim results and discussions with the FDA, we expect to submit a registration directed study for ImmunoPulse IL-12 by the end of calendar 2016. We have also continued to expand our research pipeline and broaden our engineering efforts relating to new devices that will be launched with our next clinical candidate with a goal of providing meaningful clinical benefit to patients and investment value for OncoSec shareholders and stakeholders at large. We are well pleased with the progress we have made the past year.

Now I'd like to share with you some of the details and data related to our pipeline development. First, I'm pleased to announce that we'll be presenting an oral poster presentation at the Annual Meeting of the Society of Immunotherapy of Cancer or SITC that will be held on November 11 to 13 in National Harbor, Maryland.

The oral poster presentation is titled Phase 2 study of Intratumoral plasmid Interleukin 12 or IL-12 with electroporation in combination with pembrolizumab in stage 3 and 4 melanoma patients with low tumor infiltrating lymphocytes. We plan to present new clinical data from our phase to investigator sponsored trial led by University of California San Francisco to assess the combination of OncoSec's investigational intratumoral therapy ImmunoPulse IL-12 in combination with Merck's KEYTRUDA in patients with unresectable metastatic melanoma and a low likelihood of response to an anti-PD1 alone.

As a reminder in August 2016 we announced the publication of research in the Journal of Clinical Investigation or JCI that was led by our Chief Clinical Strategist, Dr. Daud which shows that melanoma patients with a low frequency of CD8 that are high in PD-1 and CTLA4 positive are unlikely to respond to pembrolizumab.

Patients in our Phase 2 combination clinical study were selected using the JCI published biomarker assay that would suggest a low likelihood of response to PD-1 [inhibitor] [ph]. Therefore we are seeking to increase these patients likelihood of response to an anti-PD1 inhibitor such as KEYTRUDA when giving in combination with ImmunoPulse IL-12.

In addition, yesterday for this month's publication Dr. Daud published a manuscript in a journal of clinical oncology titled, Programmed Death-Ligand 1 Expression and Response to Anti-Programmed Death 1 Antibody Pembrolizumab in Melanoma. This paper provides further support for the clinical relevance of additional biomarker assays for PD-1 non-responder population.

In this current journal of clinical oncology publication, Dr. Daud and his team explored the relationship between anti PD-1 activity and PDL-1 expression in patients with advanced melanoma were treated with KEYTRUDA and found that PDL-1 expression in pretreatment tumor biopsy samples were correlated with the response rate and the progression-free survival and overall survival.

We anticipate leveraging these biomarker assays and additional assays to facilitate the development of our pipeline. Because this new clinical data on our Phase 2 combination trial is under embargo by SITC until 8:00 AM Eastern Time on November 8, we will not be discussing it further until that time. We look forward to sharing data from the study at the SITC meeting.

Following this data announcement, we will discuss opportunities for further collaboration since the anti-PD1 resistance population in melanoma is a large unmet need. The data we will be announcing at SIT will add to our body of existing data that was presented at the American Association of Cancer Research or AACR annual meeting in April by Dr. Alain Algazi for the Melanoma Centre, at the UCSF Helen Diller Family Comprehensive Cancer Center.

We've discussed long term follow up data from patients who were treated with ImmunoPulse IL-12 and later went on to receive an anti-PD1 or PDL-1 therapy. As presented at AACR, 14 evaluable cases were treated with ImmunoPulse IL-12 and then went on to receive anti-PD-1 PDL-1 therapy. The PD-1, PDL-1 associated overall response rate among the cases was 64%.

Furthermore 8 of these 14 patients received anti-PD-1 or PDL-1 with no intervening therapy and after treatment with ImmunoPulse IL-12 of these 8 patients an overall response rate of 75% was observed. Although the study was small and retrospective in nature, these response rate are much higher than the expected 30% to 40% seen with anti-PD1 monotherapy.

The synergistic nature of ImmunoPulse IL-12 with anti-PD1 was best highlighted by the multiple supporting biomarker analysis in this presentation. So the overall immune [indiscernible] studies is what we’re referring to.

Now, I'd like to take a moment to discuss the retrospective data and how the prospective study fits into our overall melanoma developments strategy. For advanced melanoma patients, we have been building a strong portfolio of supportive clinical data that shows the safety, tolerability and anti-tumor activity with ImmunoPulse IL-12. As you may recall, we have previously reported positive interim results from the Phase 2 melanoma trials that included best overall response rate of 31% and a clinical benefit rate of 48% [indiscernible] either a partial or complete response or disease stabilization.

50% of the patients also had regression in at least one distant untreated lesion, demonstrating that [indiscernible] effect of ImmunoPulse IL-12. In addition a second cohort was added to our Phase 2 melanoma trial to evaluate an alternative dosing frequency and to assess additional biomarkers furthering the scientific understanding of ImmunoPulse IL-12.

Earlier this year we announced that we’ve completed patient enrollment in this trial, enabling us to complete data capture and start a complete analysis of the trial data. We expect the full data readout for the monotherapy study to be submitted for manuscript and clinical publication by the second half of 2017.

I’d like to switch gears and briefly discuss the aforementioned ongoing phase 2 investigator sponsored trial combining ImmunoPulse IL-12 with Merck's approved anti-PD-1 agent KEYTRUDA. This is focused on patients with advanced melanoma and will now read out the first interim data at SITC in November. With leadership from our clinical and regulatory teams, we intend to use this package of melanoma clinical data along with the retrospective data presented at AACR and the prospective data being presented at SITC to advance our melanoma development strategy.

Based on the cumulative data to-date, we expect to submit a registration directed study for ImmunoPulse IL-12 by the end of calendar year 2016. The focus of our near-term business strategy and R&D expenditures is predicated on the belief that the market opportunity for ImmunoPulse IL-12 and the PD-1 non-responder patient population in melanoma followed by subsequent cancer patients who are progressing on PD-1 so other indications hold immense value due to the demonstrated safety and tolerability profile by IL-12.

This is a starkly in contrast to the current competitive landscape in immuno-oncology. We believe there is a clear pathway for ImmunoPulse IL-12 in the current market and we will continue to advance our melanoma trials towards registration in order to address this great unmet need in oncology.

Now I just want to spend some time giving you a brief update on our preclinical efforts and device delivery system. Our new ImmunoPulse product will leverage our latest advancement in electroporation and further position OncoSec as a leader in Gene Transfer technologies and Cancer immunotherapy.

On this note we’re thrilled to announce that we've made significant progress in the field of gene electrotransfer. In fact members of our discovery research team presented new study results in two posters at AACR's special conference on engineering and physical sciences in oncology which took place in June. And we also gave a subsequent keynote presentation which took place in September at the 2016 International Bioelectric symposium in Rostock, Germany.

We presented new data related to our Tissue-based Real-time Adaptive Controlled Electroporation technology or TRACE [indiscernible] applicator or Helix. This data showed that these technologies have the potential to reduce procedural frequency as well as enhanced usability by physicians.

Together we believe that these novel technologies will improve a patients experience to gene electro-transfer and improve their therapeutic outcome which will help broaden the adoption of gene electro-transfer technologies in the field of Immuno therapy. The TRACE and Helix technologies are central to OncoSec's next-generation device development and represent a significant advancement in the field of electroporation technology.

Existing electroporation systems apply fixed pulses independent of tissue conditions that are typically optimized by trial in error. The new TRACE technology brings together OncoSec's research and engineering efforts to adapt pulses to tissue conditions in real time and then detect when optimal conditions have been achieved to complete the electroporation treatment.

The new Helix applicator integrates engineering advancements to function synergistically with the TRACE technology and together both these technologies are testament to the expertise of OncoSec's engineering and research teams and we believe that these novel technologies are a breakthrough in the field of electroporation therapy.

As we look beyond the proof-of-concept stage for our intratumoral immunotherapy programs, these advancements are a major step forward in being able to consistently deliver more advanced therapeutic agents with the potential to target multiple facets of tumor immune subversion.

I’m going to go into further details on our upcoming milestone for 2017 fiscal year but for now I’d now like to turn the call over to Richard Slansky to provide the financial results for Q4 of 2016.

Over to you Richard.

Richard Slansky

Thanks, Punit, and good afternoon again everyone. We issued our financial results via press release today and filed our Form 10-K after market close. For the fourth quarter of fiscal 2016, we reported a net loss of $6.6 million or $0.39 per share. This is compared to a similar net loss of $6.5 million or $0.48 per share for the same three months period last year.

For the fiscal year ended July 31, 2016 we reported a net loss of $26.9 million or a $1.63 per share based on weighted average shares outstanding of 16.5 million. This is compared to a net loss of $21.2 million or $1.67 per share for the same period last year.

The increase in net loss for the year ended July 31, 2016 compared with the same period in 2015 resulted primarily from an increase in personnel related cost which were primarily stock based compensation. The progression of our clinical filed additional consulting services cost to support our device development and clinical activities and increase facility cost related to our new corporate headquarters.

There were no revenues for the fiscal year ended July 31, 2016 or July 31, 2015. Research and development expenses were $3.7 million for the fourth quarter of fiscal 2016 compared to $3.8 million for the same period in 2015.

Research and development expenses were $14.7 million for the fiscal year ended July 31, 2016 compared to $13.1 million for the same period in 2015. The increase in R&D expenses was primarily related to the increased clinical trial expenses, some additional outside service costs primarily related to device development, clinical consulting and sponsor research and increased facility and relocation costs and these were offset slightly by savings in engineering supplies, amortization expense and certain personnel costs.

General and administrative expenses were $2.9 million for the fourth quarter of fiscal 2016 compared to $2.7 million for the same period in 2015. General and administrative expenses were $12.1 million for the fiscal year ended July 31, 2016 compared to $8.1 million for the same period in 2015.

The increase in general and administrative expenses was primarily the result of non-cash stock based compensation expense, hiring additional personnel to support the growth of operations and an increase in overall operating expenses. As many of you may know, we closed a $10 million register direct financing with a dedicated healthcare fund on May 26, 2016.

We are very pleased with the support from this institutional fund and returns of the deal which were executed at a premium to market allowing us to continue to fund development and expand our runway into the fourth quarter of 2017.

This financing opportunity provided us with the capital to accelerate our development plan for our preclinical and clinical programs including our clinical development and registration strategy for advanced melanoma. These funds were also needed to help advance our next ImmunoPulse combination product as we work toward filing a new ImmunoPulse IND in the future.

We believe these milestones will take us to the next inflection point and support the long-term success of OncoSec. So it's crucial we provide the appropriate runway and focus necessary to achieve them.

Now with that additional capital, our cash position at July 31 was $28.7 million in cash and cash equivalents as compared to $32 million of cash and cash equivalents at July 31, 2015. Although we brought our burn rate down to about $1.6 million per month in the last quarter of fiscal 2016, we do expect our burn rate to increase with our commitment to drive toward a registration trial in melanoma in early 2017. However, we anticipate that our funds will be sufficient to allow us to continue to operate our business for at least the next 12 months.

Now with that, I will turn the call back over to Punit Dhillon to review some of our upcoming

milestones. Punit?

Punit Dhillon

All right. Before closing, I would like to re-emphasize OncoSec's upcoming development milestones. We plan to advance enrolment in the Phase 2 melanoma combination study and present interim clinical data at SITC in November, looking parallel to meet clinical and regulatory objectives to initiate a melanoma combination registration study, that's one of the most important priorities for the company.

We also plan to announce a novel multi-gene combination ImmunoPulse candidate which will be OncoSec's plan next clinical candidate. We expect to advance this into the clinic with our new devices incorporating the trace technology. And we're continuing enrolment and plan to complete the triple negative breast cancer biomarker study as a proof-of-concept in breast cancer and present interim data as discussed at future development plan.

We are looking forward to sharing these updates with you over the next few months. We also plan to have our first ever Investor and Analyst Day on November 17 that will be geared to the buy side and sell side community scientific and industry collaborator and other invited guests.

This Investor and Analyst Day will be presented as a live broadcasted video and a webcasted event. The Investor and Analyst Day will provide a comprehensive overview of the company and will be presented - the presentations will be made by the key opinion leaders, collaborators and our company's management and it will focus specifically in the following areas.

We will be providing a melanoma clinical development plan and overview of the registration study including a recap of all the clinical data. A presentation of new research and pre-clinical data to support a broader ImmunoPulse pipeline and we will also discuss the clinical and regulatory objectives to initiate our Phase 1 combination study of a new combination candidate. And we will also be making a special presentation and announcement regarding our new devices including showcasing new research data. We will distribute additional details regarding this important data for OncoSec very shortly.

In conclusion, we have made and are continuing to make significant progress that will allow us to execute on our strategy to develop and commercialize DNA based intratumoral cancer immunotherapy.

So at this time, we would be happy to address some of your questions. And as a reminder, Dr. Sharron Gargosky, our Chief Clinical and Regulatory Officer will be joining us for the Q&A.

Question-and-Answer Session


[Operator Instructions] Our first question comes from the line of Jason McCarthy with Maxim Group. Your line is open.

Jason McCarthy

Hi guys. It sounds like things are going well, couple of questions. In the Phase 2 study, the combination study the 20 patients where we will see the first 15 patients in November, I know that patients in the study are considered non-responders given Dr. Daud's publication about PD-1 and CTLA 4 expression are you going to go back and look at histology data from those patients as well to confirm levels of expression or who may or may not be responders. I know it's not a part of the protocol but is it something that you thought about?

Punit Dhillon

So Jason if I can understand your question, are you referring to the JCI paper and the TIL-based assay that is looking for CDA expressed for PD-1?

Jason McCarthy


Punit Dhillon

So we are actually using that assay as a prerequisite to enroll the patients. So if you remember that paper kind of nicely summarize that based on this quantification of the CDAs, if you are expressing over 30% or if you have over 30% of these CDAs then you are 100% likely to respond to anti-PD-1; but if you are below 20%, then you are 100% unlikely to respond to anti-PD-1, and Sharron, I will let you correct me but I believe the cut-off for our current trial is 25%.

Jason McCarthy

Okay. And going back to the monotherapy work, are you going to be looking or can you do some data analysis on PD-1, CTLA 4 in that study as well?

Punit Dhillon

Yes, so that is unlikely at this juncture because this - one of the important components for the ongoing combination study was collecting the biopsies prior to treating the patients and those biopsies are what it's used for, the TIL-based assay. So although we have the biopsies in our previous clinical trials it might be - we may not have enough to actually make any statistically significant statement, it could be a pretty futile exercise to do that but with the current study because it has the samples, we plan to have a complete immune correlative package to coincide with their clinical data.

Jason McCarthy

Okay, great. And the data should be announced or are expecting in November of this year.

Punit Dhillon

Correct, as we announced today, we got, we received the late breaking abstract acceptance, so we will be looking forward to presenting that at SITC.

Jason McCarthy

Great, thank you so much for taking the questions.


Thank you. Our next question comes from the line of Kumar Raja with Noble Financial. Your line is open.

Kumar Raja

Okay, great. Thanks for taking my questions and congratulations on all the progress. So the 25% cut-off threshold in the real world what percentage of patients meet this threshold and also recently in non-small cell lung cancer, there has been differences between pembrolizumab, as well as nivolumab. What are your thoughts on melanoma and for your Phase 3 trials, you guys plan to continue with KEYTRUDA, will there be some patients treated with nivolumab, just your thoughts on that?

Punit Dhillon

Sharron would you like to take that?

Sharron Gargosky

Yes sure, thanks Punit. Hi Kumar. So I think your question, your first question was around the 25% threshold that we're using in the assay to define non-responders and basically it's an assay that looks at the overall population and 100% of the patients who show that biochemical phenotype will have been shown to be non-responder to the pembrolizumab.

So if you believe the literature that’s out there that says, 60% to 70% of the patients will not respond to the anti-PD-1 therapy or the pembrolizumab then that's the size of the population that we're looking at evaluating and has that unmet medical need to actually look at our combination therapy in that patient group.

With regards to the differences between pembro and nivo, we have a very small dataset right now where we look at a patient’s prior medical history, you can see if they have been pembro or whatever other therapies. So I don’t know if we can really speak to that at this point with our melanoma patients, but right now yes, our experience has been with the KEYTRUDA product and our combination study that will be presenting the data at SITC and subsequently we are therefore planning to move forward with KEYTRUDA as that's our first preference with our experience in that product.

Kumar Raja

And with regards to the discussion with FDA on the Phase 3 trial design what would a discussion involve? Would it depend on the patient population, patient size or the checkpoint inhibitors you guys to plan to use there?

Sharron Gargosky

The Phase 3 will be a confirmatory classical study design comparing standard-of-care with what we can do above that with our IL-12 therapy and based on what we know the clinical landscape is today it will be our IL-12 plus or minus the pembrolizumab therapy would be a simple as that – unless the landscape changes dramatically, right.

Kumar Raja

Yes, okay, thank you so much for taking my questions.

Sharron Gargosky

Thank you.

Punit Dhillon

And Kumar if I can just add to that, I mean that is what the reason why we continue to emphasize the registration - the registration directed study for melanoma as our competitive position relative to the melanoma landscape does set us apart in terms of the developing timelines with the rapidly shifting landscape. So with our current registration plan, we expect that we would definitely be able to meet that unmet medical need.


Thank you. Our next question comes from the line of Yi Chen with Rodman and Renshaw. Your line is now open.

Yi Chen

Thank you for taking my questions. Just to clarify that the interim study result will be based on the first 15 patients, correct?

Punit Dhillon


Sharron Gargosky

Yes, that's correct. The first interim analysis that we’re presenting at SITC is on 15 patients who at least had 12 weeks of treatment or in some cases much more and will be presenting some of those primary end points with that dataset.

Yi Chen

And you expect to enroll 42 patients by the end of this year, sorry, by the end of the calendar year, yes this year right 2016?

Sharron Gargosky

Yes, that was our intent. I have been very excited by the data we’ve seen in our first 50% of the patients that we have enrolled right now and we're actually in discussions about amending this protocol such that we can extract even more data to fulfill that unmet medical need of PD-1 progressing patients and how we can benefit with the combination therapy. So, that’s currently in discussion so...

Yi Chen

So if the interim data readout is really positive, it is possible that the rest of the study protocol could be modified to become a pivotal trial.

Sharron Gargosky

Sorry, please Punit…

Punit Dhillon

Go ahead Sharron.

Sharron Gargosky

Yes, it couldn't be pivotal because that’s not the way the study was designed and it is an IST sponsored study with OncoSec. We would still go forward with our own classic study and it would be supported in our BLA filing. That's why our own study with the patients coming into the trial who are actually progressing on the PD-1 therapy and then we give them the combination to try and rescue and get those patients into remission either partial or complete is the focus we need to make and this data of the interim that we are presenting is very supportive of that but that first group of patients is only biochemically defined as the non-responders. And we would like to amend that protocol to look at patients who are progressing and extract those, but it’s not going to be powered and significant enough to be able to do our full study which we are planning to present and take to the agency.

Yi Chen

Right. So when do you expect to have data from the 42 patients?

Punit Dhillon

We will have the full data from the current ongoing study in 2017. At this moment we're focusing on discussing the interim data results and then we’ll follow with the full data package as all these patients mature in the beginning part of next year or the first half of next year.

Yi Chen

Okay. Can you give us any color or regarding the possible patient enrolment requirement for the pivotal trial, the patient number that need to be enrolled.

Punit Dhillon

Well, we can get into that but we prefer to wait, to discuss that until after the SITC data and then layout the whole registration development plan. So I think that's part of the reason why we have taken the opportunity on this call to actually lay out that we're planning to have an Analyst and Investor Day on November 17, where we would focus much of that discussion on the entire registration development plan in melanoma.

Yi Chen

Okay. Thank you.


Thank you. This concludes the Q&A session. We will now turn the call back over to Mr. Dhillon for his closing comments. Mr. Dhillon?

Punit Dhillon

Well, thank you again for participating and thanks for those wonderful questions. We are happy that everyone participated for our fourth quarter and fiscal year end conference call. And on behalf of the Board of Directors and the dedicated team at OncoSec, we truly appreciate your ongoing support and confidence in OncoSec as we continue to advance our immuno-oncology pipeline.

And if you have any further enquiries or need clarifications on the topics that we discussed today, please don’t hesitate to contact us. We're looking forward to providing additional updates on our Investor and Analyst Day on November 17 and on our next conference call which is scheduled for Thursday, December 8.

Thank you again for your time and attention this afternoon.


This concludes our teleconference for today. You may now disconnect. Have a good day.

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