Evaxion Biotech A/S (NASDAQ:EVAX) Q4 2023 Earnings Call Transcript

Evaxion Biotech A/S (NASDAQ:EVAX) Q4 2023 Earnings Call Transcript April 2, 2024

Evaxion Biotech A/S isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Christian Kanstrup: Hello, everyone, and a very warm welcome to this Evaxion Business Update Conference call on the back of our Full Year 2023 Results. I'm Christian Kanstrup. I'm the CEO of Evaxion. With me today, I have Birgitte Rono, our Chief Scientific Officer. I have Jesper Nissen, our Chief Operating Officer and Chief Financial Officer. What we will be covering today is I will be giving a brief welcome, also a brief corporate update. Then, we will have Birgitte dive into the R&D and business update, and Jesper will be covering the 2023 financial results. After a few conclusive remarks by me, we will be heading into the Q&A session. So, looking forward to an interactive session. Before getting started, I just want to direct your attention to the fact that we will be talking about the future today.

And of course, when talking about the future that entails uncertainty. So, I do direct your attention to the forward-looking statement slide, which is contained in the presentation deck for today. With that, let me give you a brief summary of where we are today. First of all, we have refined our strategy. We have launched it and it's well anchored. And just to remind you, this is about our three-pronged business model, and I would touch upon it in a few seconds. Then we have also seen strong progress on our financing strategy. We have now cash into Q1 2025 secured. We have MSD GHI as our largest shareholder, very pleased with that. We have also seen solid progress on our R&D and business strategy. We have reached a key milestone in the MSD vaccine collaboration.

We have our precision vaccine project on track. And just today, we also released exciting and strong EVX-B1 data. Across the business, we have been focusing on optimizing our cash burn, but important so without compromising our long-term growth opportunities. That also entails that we have been optimizing the organization, and we are focusing on investing for maximum return on investment. So, all in all, I would say, we are very pleased with where we are at this point in time in the Evaxion journey. Let me just give you a brief corporate update. I just wanted to recap a little bit on our strategy and our refined strategy. We have a three-pronged business model, which is based upon our AI immunology platform. Important here is also that we are having a multi-partner approach to value realization.

A biotechnologist in a lab wearing an apron and safety glasses, working on a biopharmaceutical process.

So, when you look at our strategy, the core of the strategy, that is the AI immunology platform. Our leading and validated platform for fast and effective discovery, design and development of novel vaccines. Based upon this platform, we have the three-pronged business model to realize value, one is targets, one is pipeline and one is responses. The target piece, that's around a multi-partner approach focusing around either single or multiple target discovery design and development agreements. And here, the MSD vaccine collaboration we have is a good example of what we want to achieve within the target prong of our business model. Then we have our pipeline. This is about our own development for select high-value programs, bringing these programs to a major value inflection point before we pursue partnering.

And here, of course, we are excited about the upcoming one-year Phase 2 data for EVX-01, which we expect in the third quarter. Finally, we have the responder prong, which is really about utilizing our core capabilities within data and predictive capabilities to develop responder models. And here, we had the proof of principle for our checkpoint inhibitor model in the fourth quarter last year and are looking to progress that in a partnership-based approach. So, our strategy, core AI immunology and then it's about targets, pipeline and responders in a multi-partner approach. Then a brief update on our financing strategy, which has been a key element to progress that over the past months here. And I'm very pleased to see the strong progress we have seen here.

In December '23, we closed a $5.3 million private placement. Here, we welcomed MSD Global Health Innovation Fund as a shareholder, very pleased to see MSD on the cap table. In February, we closed a $15 million gross public offering. Also here, we had MSD GHI participating. And that now means that MSD GHI is the largest shareholder of Evaxion with just below 15% ownership. In parallel with this, we have been intensifying our focus on value realization via partnering. We have the ambition to fund our 2024 operational cash burn of $14 million by business development income and to do so, it's critical that we have the right focus on advancing various partnership discussions. So, all in all, a significant progress on our financing strategy, and as I said, cash into Q1 2021.

So that was the brief corporate update I wanted to give before handing over to Birgitte, to have Birgitte give us an update on all the exciting things that have happened within the R&D side of the business over the past months. Birgitte, will you take it from here?

Birgitte Rono: Yes. Thank you, Christian. So today, I'm excited to give an update on the recent progress achieved in full specific R&D pipeline programs. So, let's turn to Slide 9. We have communicated initial encouraging data from our EVX-01 personalized cancer vaccine Phase 2 trials. We have increased our focus on developing a persistent cancer vaccine with broad applicability for our EVX-B1 staph aureus vaccine. We have completed studies with an undisclosed partner, testing our AI immunology designed antigens in a large animal model of surgical site infection. Further, we've made significant progress in our EVX-B3 vaccine development program with MSD reaching the first milestones. So, if we turn to Slide 10, we see our pipeline, and we are advancing vaccine candidates for both cancer and infectious diseases, and all these vaccines are designed based on our AI immunology platform.

Our pipeline includes several vaccine candidates, candidates at various stages of development and that exemplifies our commitment to saving and improving lives with AI immunology. If we look at our EVX-01 Phase 2 trial on Slide 11, this is our most advanced program in metastatic melanoma. And for each patient that is enrolled in the trial, we manufacture a tailored vaccine that is fitting the tumor profile and the immune system of the individual patients. Once the patients are enrolled, they are administered with anti-PD-1 pembrolizumab, which is the standard of care for this indication, and then they are treated with our personalized EVX-01 vaccine at week 12. If we move to Slide 12, we have monitored the ability of the EVX-01 vaccine to induce a specific T cell response in the first five patients.

And on the graph to the right, you see the data from this initial analysis. In all of the five patients we have assessed so far, we see a strong and specific response against the vaccine antigens. And further, we have confirmed the favorable safety profile of EVX-01, which we also observed in the Phase 1 study. And the next significant milestone is one-year clinical readout in Q3 this year. So, on Slide 13, we have a little bit of information about one of our cancer vaccine innovation programs. We have intensified our efforts significantly for this program. And based on the discovery of the highly conserved novel class of tumor antigens, so-called endogenous retroviruses, we have developed a precision-based cancer vaccine concept with potential to broaden the applicability and to treat more cancer patients with a vaccine.

Upcoming milestone for this program is preclinical proof-of-concept in Q424. So, if we turn to our infectious disease program on Slide 14, we have a little bit of highlights from our B1 project. This morning, as Christian mentioned, we announced that we have some very encouraging results from this program against Staphylococcus aureus infection. So, we and an undisclosed collaborator we tested our vaccine antigens against Staphylococcus aureus in a clinically relevant animal model of surgical site infections. And we saw that our antigens, they protected the animals against surgical site infections indicating promising potential for our clinical efficacy. And currently, we are engaged in discussions with the collaborator regarding the past forward.

So, for our EVX-0 B3 (sic) [EVX-B3] program, we have tested or we have designed a vaccine. And this program is conducted in collaboration with MSD. We have used our proprietary platform, AI immunology, and we have identified novel targets against the bacterial pathogen causing severe health issues. So, we have now concluded on the antigen discovery and enzyme phases, and that marks a significant first milestone for the development of the vaccine candidate. And next milestone is conclusion on target discovery and validation work in collaboration with MSD in the second half of 2024. So, in summary, we've made substantial progress across our pipeline candidates, and we are eagerly anticipating and inciting 2024, marked by some significant milestones ahead.

Christian Kanstrup: Thank you so much for this update. Truly exciting events that has taken place here. And now, I will hand over to COO and CFO, Jesper Nissen to take you through the 2023 financial results.

Jesper Nissen: Thank you, Christian. I will focus my comments on our financial results for the full year of 2023 compared to the full year of 22. All the numbers that I review will be approximate for easy sharing during the call. For additional information regarding our full year results and prior period comparisons, please refer to the business update and full year 2023 financial results press release and the Form 6-K as well as the Form 20-F that we both filed last week. Starting with our cash burn. This we have in 2023, as Christian talked to had to focus on optimizing without compromising our long-term growth opportunities. The external spend as well as the organization has been slimmed to reflect our focused strategy and intensified focus on value realization via partnering.

We have reduced the organization in terms of FTEs to the tune of 30% during 2023 and more than half the cash burn when comparing to cash burn entailed in the approved budget for 2023 to the expected cash burn shared as part of the Company milestones for 2024. As of December 31, 2023, cash and cash equivalents were $5.6 million. Following the public offering in February 2024, resulting in net proceeds of $12.7 million, we expect that our existing cash and cash equivalents will be sufficient to fund our operations and capital expenditure requirements into February 2025. If all prefunded borrowings, including the public offering are exercised, we expect necessary funding will be in place into April 2025. If we look at our expenses, research and development expenses for 2023 amounted to $11.9 million and administrative expenses to $20.4 million for the period.

R&D expenses decreased by $5.1 million or about 30% compared to 2022. The decrease was primarily driven by a decrease in external development costs of $3.2 million related to clinical trials. Further, a decrease we’re seeing in employee-related costs of $1.8 million due to a reduced head count and a shift in our employee mix. Looking at general and administrative expenses, they were at $10.4 million, an increase of $2.2 million or 27% compared to the period last year. The increase was primarily driven by an increase of $1.3 million in external costs related to legal fees, professional fees and cost related to capital ratios and an increase in employee-related costs of $1.9 million related to full-time effect of 2022 hires and changes in senior management.

These increases are due to the timing of funding of projects and business initiatives compared to 2022 and the expansions of the organization throughout 2022 to meet the requirements as a listed company. Looking solely at Q4 2023 versus Q4 2022, the G&A costs were down $0.3 million to 2.1 million or 13%. This is primarily driven by a reduction in our D&O insurance, but also following the reduction in other external spends. The net loss for 2023 amounted to a loss of $22.1 million compared to a net loss of $23.2 million last year. And with that, I would like to turn back to you, Christian, for a few conclusive remarks before the Q&A.

Christian Kanstrup: Thank you so much, Jesper. And to end up here with a few conclusive remarks. I think if we look at the past six months in the action journey here, I think it's fair to say that the events we have seen unfolding confirms a strong strategy execution. We launched our refined strategy. We anchored that, and we are now executing upon it. Importantly, of course, it also alluded to the progress with the MSD vaccine collaboration. We had the encouraging initial Phase 2 data from EVX-01, and we are progressing our precision vaccine project, which I'm very excited about. So strong progress on the strategy execution, and we are looking very much forward towards the upcoming milestones in 2024. The first milestone we had in our externally communicated milestones across EVX-B1, the conclusion of the final MTA started with a potential partner that we announced today with encouraging data.

Now we are in discussions with the collaborator on path forward. Throughout the remainder of the year, we would have several important milestones, both from a platform, from a compound and from a partnership point of view, and we are looking forward to keeping you all updated on the milestones as we progress them. So, with that, I would say thank you for listening to the presentation here. And now, I'm looking forward to the Q&A session, and we will open the floor for questions.

Operator: [Operator Instructions] And the first question comes from the line of Ahu Demir from Ladenburg Thalmann. Please go ahead. Your line is now open.

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