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Good morning. My name is Sharon, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oncolytics Biotech's third quarter results conference call. [Operator Instructions] I will now turn the call over to your host, Michael Moore, Vice President, Investor Relations and Corporate Communications. Mr. Moore, please go ahead.
Thank you, Sharon. Good morning, ladies and gentlemen, and thank you for joining us on our third quarter 2018 financial results and corporate update call. With me on the call this morning from Oncolytics are Dr. Matt Coffey, President and Chief Executive Officer; and Kirk Look, Chief Financial Officer. On today's call, Dr. Coffey will review our progress in the third quarter, provide an update on our clinical development plans and strategy, including our program in metastatic breast cancer that consists of our window of opportunity study and the planned Phase III registration study. We will also review the other combination studies we are conducting or plan to conduct over the next 12 to 18 months. Kirk will review our financial results and activity for the third quarter. I'd like to point out that certain statements made on this call such as those relating to our clinical development plans and business development plans are forward-looking within the meaning of applicable securities laws. Please refer to our third quarter press release and MD&A for important assumptions and cautionary statements related to forward-looking information. I will now turn the call over to Dr. Matt Coffey. Matt?
Thanks, Mike. Good morning, everyone, and thanks for joining our call today. I'll just direct you to our forward-looking statements as we will be making a number of these forward-looking statements. And I wanted to start the call by just reminding everyone of what a tremendous year it's been, 2018, in terms of making progress. It sets the stage for what we believe will be a transformation in the company in 2019. We wanted to provide an overview on our thinking now that we've had more feedback on the Phase III with KOLs, pharma partners and our current thinking around biomarkers and how we think we have identified potential markers that will predict for overall survival in our various patient populations by better measuring the immune response to the license of the tumors. We'll give an update on our metastatic breast cancer program and how we're positioning it for the Phase III, some guidance on our immune checkpoint program and why we think it's such a pivotal time in oncolytic viruses and how pharma is trying to position these agents as we move to registration.Now the emerging role of pelareorep, I wanted to start off -- we've had a lot of questions. People have asked me, "Matt, why are you not using REOLYSIN anymore as the name of the product?" And the reason for this is in our interactions with the FDA during our special protocol assessments, it came to their attention or one of the reviewers' attention that the name REOLYSIN rhymes with the existing chemotherapy -- chemotherapeutic bleomycin, so REOLYSIN/bleomycin. The concern was this may lead to dosing errors, transcriptional errors. If the pharmacists misread REOLYSIN for bleomycin, there was a chance that it would lead to misdosing of patients. What the FDA requested is that we use the generic name, or the use end name, pelareorep, to avoid any confusions. And frankly, the marketed name, I believe, will be likely in the privy of our strategic partner who will want to name it to be consistent with their existing franchises. So as a go-forward, we refer to reovirus as -- our proprietary strain as pelareorep until such time as our strategic alliance renames the product. But the benefit of a generic name is it's not subject to change, and it is specific to our strain of reovirus so we're quite happy to use that.Now the emerging role of pelareorep. I think over the last 24 months, we've been able to reposition our agent as what's going to become a very important segment of immuno franchise, hopefully for the breast -- the treatment of breast cancer but certainly beyond that. Now where we think -- we have the most interest is in metastatic breast cancer due to the fact that we've seen a significant increase in overall survival in this patient population. As a result of this, we went and presented data to basically every pharma company, as we're hoping to get a strategic partner to run the Phase III with us. Our thinking is we would like to do this in conjunction with pharma so that we could retain a co-promote for North America. But while we were having these discussions, we opened the data room up and people went through, so what began to emerge was a picture, not only of our virus but other viruses as a backbone or a standardized backbone for immune checkpoint inhibition. And these interactions through BD resulted in committed relationships now with Roche in metastatic breast cancer. The point of this will be to develop or confirm our biomarker thinking as well as to suggest whether or not we should add a third arm to the existing SPA. We have 2 collaborations with Merck, one in pancreatic, which I'll touch on today. We believe we started enrollment. We're waiting for a confirmation but also a second study in multiple myeloma. We have a collaboration with Bristol-Myers Squibb and Celgene, both of these also in multiple myeloma, which is an excellent test system for our agent in heme malignancy. Now last year, we established a partnership with Adlai Nortye. They've in-licensed new products as well, and we're looking to see these studies starting in China here very quickly. But really, the thinking is these agents are significant in engaging the immune system through the creation of their genome and through their infection process. In our particular instance, the viral double-stranded RNA promotes an inflamed phenotype, and we'll touch on this and why this is so important, but I think this is the first time and we'll touch on the deals that have been done. Large pharma is finally paying attention to this area. The reason they're thinking this is so important is largely due to the fact that it seems there's a good rationale for combining viruses with checkpoint inhibition. And we'll touch on why this has been so difficult. Combinations of checkpoint inhibitors have been toxic. Combinations with checkpoint inhibitors and IMiDs have likewise been toxic, but the safety profile of the viruses, and especially our virus with a database that suggests there really is no side effect, is very compelling. The fact that we can stimulate a pro-inflammatory response or basically lighting up the immune system to the presence of this tumor is very significant, and there's a very strong rationale for why we'd want to combine this with checkpoint blockade.Now when people think viruses, I think your first thought is to run to HIV, it's to run to the flu. Most viruses don't actually cause illnesses or if they do, it's species-specific so the human interaction with them is very minor. But when people think gene therapy or oncolytic viruses, they immediately get into the thinking of intratumoral injection, and this has led to an approval with T-Vec. It's a very important agent, but the difficulty with intratumoral is it's a specialized delivery system and it lends itself only to accessible lesions. Cancer, unfortunately, is a metastatic disease so we need to be able to treat beyond an injectable lesion. Our viruses are also in significant segments where we have existing viruses and we add checkpoint inhibitors to them. We add immune stimulatory agents. Pelareorep is a little bit different. It's an IV administration so it's a standardized dose. And because it's unmodified, it doesn't require special handling procedures. Now importantly, it's an unarmed virus so we don't carry agents that would stimulate the immune system. Instead, we rely upon the virus' innate ability to infect preferentially -- or pardon me, replicate preferentially in tumor cells that really lead to this engagement of an innate and adaptive response. And we'll talk about this now. Now the thinking of reovirus has evolved somewhat. We talked about this before, but when we started this program, everything starts in a tissue culture plate and the virus is very, very good at lysing tumor cells but not normal cells. And the reason for this was basically recognition of the virus genome in normal tissue. So reovirus is a poor pathogen because when it enters the cell, it removes its outer coats so that it can start making copies of its genetics and make copies of itself. Now the genome of reovirus is double-stranded RNA so as the cell -- as the normal cell allows the virus to start making copies of its genome, it's immediately seen by the immune system. Now double-stranded RNA is a very important signal to the immune system. And it's so important, in fact, that your body has evolved mechanisms to block protein translation. What I'm saying is it's able to block the virus making protein copies of itself, and it does this to a protein called PKR, which will bind these double-stranded RNA elements and stops the cell from making more copies of protein. Now PKR is called a pattern recognition receptor, and these are a very old form of our immune system. What they are is proteins in cytoplasm that recognize microbes through their genetics, through flagella, through various, basically, patterns, if you will, and hence the name pattern recognition receptor. Now PKR recognizes double-stranded RNA and blocks protein translation. This is the first step in preventing viral spread. Now other pattern recognition receptors also recognizes double-stranded RNA, and this is again why double-stranded RNA is such an important signal. The body recognizes it as non-self. And in an effort to block any infection, these pattern recognition receptors when engaged with double-stranded RNA began a cascade of signals that result in the immune system basically being very strongly shaken to life. Agents or recognition receptors like MDA5, RIG-I, toll like receptor 3 and PKR work in concert to cause a release of interferon and other chemical danger signals that are pro- inflammatory. This is a really quick way of blocking the infection. Now in tumor cells, the steps are very similar but we have a nonfunctional PKR. So what happens is the virus will internalize in these cancer cells. It will start making copies of its double-stranded RNA genome, but here, PKR can't block the infection. It's unable to stop translation. So what happens is the virus is able to make basically a photocopier of itself. It's something that creates more of the genome, and it's called an RNA to RNA polymerase. Now this is a very active little enzyme, and it starts creating pools of double-stranded RNA in the cytoplasm. And as the cells become infected and make copies and lyse, what we're getting is very high accumulation of double-stranded RNA within the tumor. Now as a result of this, we get a release of these pro-inflammatory signals, and this is where we see our side effect profile. As the patients are releasing interferon, we're starting to see the patients become unwell. We're starting to see fevers, malaise, aches and pains. But importantly, if we look at the immune system, what we find is an increase in our natural killer cells, now these are our innate response. These are drawn to the site of infection. And again, what they're trying to do is restrict viral growth and limit viral spread. So these chemical signals coming from the tumor now alert our NK cells that there's a problem, and they'll come to the site of infection and will do their best to eliminate the infection by targeting and killing these infected cells. Now as a consequence of this, what we get is maturation of dendritic cells and T cells that also become drawn to the site of the infection. But here, what we've done is that T cells are expanding and they're learning to recognize tumor epitopes and viral epitopes. And what this results in is a learned immune response. In animals that are cured of their disease, we can't reimplant the tumor. So we used to think of this really as a lytic response. That's important, but really what's important is the selective replication of the virus within tumor cells and the creation of these danger signals that alert our immune system that there's a very significant problem, the release of these interferons, the release of these pro-inflammatory signals to create -- cold tumor is hot, but also side effects of this double-stranded RNA are overexpression of PD-L1 on tumor cells, overexpression of PD-1 on T cells. And really, this is why we think there's going to be strong synergies with immune checkpoint blockade. This has actually changed our thinking also around how we measure those responders. And what we've done now is we think we've identified biomarkers of immune activations that correlate with overall survival, and we'll talk a little bit about the importance of these biomarkers and why we need to confirm these prior to the Phase III.Now the metastatic breast cancer program, this is our shortest path to a registration study is our thinking. We'll give a quick update on this plan and again, just provide assurances that this is a Phase III company. We have a Phase III asset. We're doing some supplementary data with strategic partners to confirm our thinking around biomarkers and to provide a recommendation whether or not our existing SPA program should include checkpoint blockade or not. Now the thinking for this came from a study that our colleagues at the National Cancer Institute of Canada ran and what we saw here was a dramatic increase in overall survival. Now in the intention-to-treat group, this is everybody on the study, we saw 7 months' increment in the median survival. So patients historically would survive 10 months. These were moved out past 17 so this is significant for the patients. This is time spent with family, and it's not a PFS benefit. It's an overall survival benefit. We've actually extended life. Now what's important about this also is it gives some important clues about how our agent is working. When we look at the control arm, I think there's 3 survivors overall out of nearly 40 patients. When we look at the test arm, what we get is 1/3 of the patients are still alive at the time of the analysis. And importantly, there's a delayed separation in the curve. This has become a reoccurring motif or a common type of observation in the field of immuno-oncology. And the reason for it is, is it takes some period of time for our T cells to expand, to recognize the new tumor epitopes and to basically position themselves to control the disease. In our instance here, it takes about 8 months. This is very similar with what you see with checkpoint blockade. Now this really affected some of our thinking so when we approached FDA and when we approached EMA, we went with the existing package and we said this is the data that was generated by the National Cancer Institute. And the guidance that we were given back is your agent is not acting predominantly cytolytically, but it's acting as though it's stimulating innate and adaptive responses. Now the biomarker work we've since developed confirms this, but one of the concerns that FDA expressed to us was without an effective biomarker, we couldn't identify early responders and we couldn't stratify for patients that would respond versus those that wouldn't. Now this is a significant hindrance to a successful Phase III because you're trying to just emulate results you saw in Phase II. With the biomarker, we can further refine and stratify for responders based on what we think is early immunological evidence of response. Now I'm going to talk a little bit why this is important later. But the addition of a biomarker significantly derisks our Phase III program and potentially shortens our regulatory time lines by a significant margin. Now not only did the FDA point this out as a potential risk and very strongly encouraged us to capture this data in the Phase III, potential partners were cautious about moving into a Phase III without a biomarker. In this day and age, large pharma has bet a lot of money in the world of biomarkers. As an example, Roche bought Foundation Medicine, the entire company, to more spritely and adaptively be able to come up with biomarkers for their various programs. Now as I said, this data led to a lot of BD outrage, and it ended up with a lot of people in our data room. And the question that kept coming up, if the virus is causing such an inflamed phenotype, is there a reason to think that they should add checkpoint blockade to the breast cancer program, improving the outcome for those patients on reovirus but also expanding the franchise with checkpoint inhibition. And if you look at the next slide, this really speaks to why pharma thinks there's a role for pelareorep as a backbone for checkpoint inhibition. Now checkpoint inhibition is, I think, the most significant step forward in immuno-oncology. The ability to uncloak the tumor, the ability to reenergize our own immune systems to combat our disease is, well, more than significant. The difficulty is though it requires prerequisites. Patients have to have a certain amount of immune status left after pretreatment. They actually have to have those inflammatory cells at the site of the tumor so that they can actually be active, and the tumor cells themselves have to have PD-L1, the receptor, expressed if these antibodies are going to be able to work. Now as I've said, double-stranded RNA is a very significant dangerous signal in mammalian cells. And what we're looking at here on the left is a patient's bone marrow smear prior to any treatments, and you can see that there's very little expression of PD-L1. We're using an antibody here to stain for that. Now this patient receives one cycle of pelareorep with carfilzomib which is a proteasome inhibitor, which is the combination we're actually using with the Bristol-Myers Squibb study. And what we can see in 8 days, so from 1 Monday to the next Monday, we go from 0 expression of PD-L1 to nearly 98%. Now commensurate with this, we see an accumulation of NK cells in the tumor that's statistically significant. We see a statistically significant increase in T cells. We see changes in the microenvironments. Not only do we get PD-L1 overexpression, but we get CTLA-4, IDO, we get release of chemokines and cytokines, and we basically set the tumor up for a response to checkpoint blockade. And I think this is what's exciting. The virus stimulates the immune system so well that we can get overall survival benefit, and we saw that in breast cancer, but potentially, we can even amp this up further by adding checkpoint blockade to it. Now this type of data is what has pharma very, very excited about oncolytic viral therapy. And it was exactly data like this that led to Merck's acquisition of Viralytics. It was Phase Ib data that demonstrated quite a profound inflamed phenotype and stimulated the acquisition of the company. So we're talking significant sums of money for any agent that can synergize in the checkpoint blockade area. Now our registration strategy is still tied very much to breast cancer, but it does contemplate whether we should add checkpoint blockade to that. Now we have a window of opportunity study that will begin first quarter -- very early in first quarter. And this was actually in response, first off, to a collaborative group called SOLTI. And later, it actually expanded into work we're doing with Roche in the area in terms of adding Tecentriq to this important area. Now we approached Aleix Prat who is now one of our KOLs with the results of the Phase III to see whether or not we could get their cooperative group, which has, I think, over 70 centers in Spain and Portugal, to participate with the study. Dr. Prat is internationally recognized as a leader in breast cancer. He helped with the thoughts around the Phase III. But again, one of the things that he highlighted is we didn't have an effective biomarker plan. We weren't able to tie overall survival to changes either tied to mutational status in the tumor or what we think now is more importantly changes in our immune repertoires, our activation levels of the immune system both innate and adaptive and tying this to overall survival. Now what Dr. Prat proposed to us was a window of opportunity study, and what this is, is a study where women are treated for 3 weeks with standard of care across various subtypes and we add the virus to this. At the end of that single treatment cycle, they go for a radical mastectomy, and what this allows us to do is capture the tumor tissue to see the changes that the virus has evoked in the immune system and whether or not it has increased the inflammation in the tumor. Now we have before reported very good objective responses in patients with hormone receptor positive, HER2/neu negative disease. In that subgroup of patients, we actually saw a near doubling of overall survival and that's why this has been the focus of our Phase III work. The AWARE study will look at this patient population, and we believe what we will see is an increase in inflammation or an increase in NK, natural killer, cells or T cells into the tumor tissue at the time of the mastectomy. Now previously, we reported no activity in triple negative breast cancer albeit in a very small subset. What we believe we see -- well, we will see in the triple negatives are accumulation -- or no accumulation of inflammatory cells compared to the hormone receptor positive group. Now interestingly, we don't have any experience with HER2/neu. These patients are normally treated with Herceptin. This could be potentially a new market for us or it could indicate that we should really focus on hormone receptor positive disease. Now the biomarkers are really driven around immune markers in the blood. And as I said, we believe we've identified one very strong and potentially a second biomarker that could identify patients responding to therapy as early as cycle 2, day 1. What this allows us to do is to set a threshold to say whether these patients are responders very early and further stratify for these patients on the study. This significantly derisks our Phase III program. And the AWARE study should confirm whether or not the changes in immune status correlate well with inflammation in the tumor. Now during this, Roche became aware of the program, became aware of some of the biomarker work and actually expanded our thinking in the biomarker work. And they reached out to us to say, "We think checkpoint blockade, based on what we know with your agent, should increase the activity." So half of these patients will receive Tecentriq. Half of them will not. And what we want to see in the presence of checkpoint blockade is even greater accumulation of these inflammatory cells and again defining the safety signal for us in the phase -- leading into the Phase III program. Now where does this lead us? If anything, it enhances our commitment to the Phase III. This SOLTI program, as I said, is 38 patients. But because they're only treated for 3 weeks, there's no follow-up. It's a biochemical test with some pathology so it's going to go very rapidly. We anticipate this will be finished by next summer with an enrollment period of anywhere between 3 to 5 months, and this is based on work that SOLTI has done in similar studies before. So with our Phase III, we have an improved SPA. And what this is, is guidance from the FDA that if we meet the predetermined endpoints, we can register the product for sale. Now the window of opportunity study, why it's so important is really to confirm a couple of things. First and foremost, we need to confirm it's acting as an immunotherapy, and this will be confirmed by accumulation of immune cells within the tumor mass. So again, what we're hoping is this release of interferon from the infected cells. The danger signal of the double-stranded RNA will cause natural killer cells and T cells to be drawn to the site of infection, predominantly in hormone receptor positive disease. What we're also looking for is increased expression immune markers like PD-L1 on the tumor cells or PD-1 on T cells as well CTLA-4, IDO and others. What we would also like to do is capture whether or not Tecentriq or a checkpoint blockade enhances this inflammatory response. And lastly, we're going to confirm what we think our biomarker thinking is now that we've had some success and we'll be reporting on this biomarker work first quarter next year. If this is the case, it significantly derisks the Phase III program and really does is provide some guidance to us and our potential pharma partners as to whether we want to change the existing SPA and add a third arm of adding the checkpoint inhibitor. So what we'd look at is standard of care, standard of care plus virus, standard of care plus virus plus checkpoint blockade, if it's recommended by what the outcome of the AWARE-1 study is. Now it's entirely possible that we're just going to pharma, we should proceed as is under the existing SPA, but what it also gives us is confirmation that our biomarker is active. This, as I said, we believe will shorten our reg development times as well as, hopefully, even some of the clinical times. And again, going forward, potential pharma alliances were very concerned that we didn't have a biomarker. We now believe we have one, and we'll be able to test that, I think, very effectively in the AWARE-1 background. But this sets the stage for the Phase III. It derisks it. It potentially speeds it up. And in either case, we think it significantly enhances the chance that this Phase III is going to be run with a pharma partner, either with or without checkpoint blockade.Now all of this work that people have done in reviewing our due diligence room has led to a lot of BD outrage. So this BD outrage in metastatic breast cancer has actually created opportunities beyond metastatic breast cancer and into the use of immune checkpoint inhibitors, which appear to be where pharma really wants to position these agents, and we'll talk about that in a moment. Now our clinical pipeline really starts with the Phase III program. And as I said, right now, the thinking is it's going to be pelareorep with paclitaxel, which is standard of care. We may wish to add a checkpoint inhibitor to that. This is going to be informed by AWARE-1, which is our pelareorep standard of care plus Tecentriq. This will begin very early next year and will be done by summer. This is the gating study for the Phase III. It provides us the supplementary data and confirms our biomarker thinking. Now pelareorep in pancreatic cancer, as I said, we're very excited. We think it actually began enrollment today. We're waiting for confirmation, but that's how soon it will be starting. If it's not this week, it will be in the next week or 2. But again, we're now underway with our pharma colleagues to really investigate and exploit the use of the virus with checkpoint blockade. Pelareorep with KEYTRUDA in multiple myeloma will begin next quarter, and pelareorep with Opdivo we think will begin this quarter. We have ongoing studies with Celgene. But again, all of these are open-label studies. All of these are to inform pharma of the potential utility of the virus as an immunotherapy, a stand-alone immunotherapy but importantly, potentially a standardized backbone across checkpoint blockade and across other areas, including CDK4/6 as well as PARP, where we've recently reported some positive synergistic data. All of these studies are open label and provide real-time information to our potential partners to make informed decisions. We're looking to potentially see interim data in multiple myeloma before the end of 2019 as well and we'll be reporting on some exciting results at ASH in multiple myeloma that we believe provide a strong rationale for adding checkpoint blockade.Now we've been working at this for a while. And if you look at the market environments, it's really led to a period where there is a lot of excitement around checkpoint blockade. Now Amgen opened the door with the acquisition of BioVex. That was Phase III material. Now Merck acquired Viralytics and I like the Viralytics story because it's similar to ours. It's an RNA virus that creates double-stranded RNA transcripts, which signal the immune system and causes a pro-inflammatory cytokine response. Now the difference here is their approach largely focused on intratumoral or intravesical, that is they delivered it into the bladder for bladder delivery. Our focus is systemic. It's a similar story in terms of it promotes a pro-inflammatory response. It causes lysis. It causes immune system activation. It's also a wall-type virus so I think there's a lot of parallels that can be drawn. I'm a big fan of their management and their science behind it. And again, I'll point out that this was acquired for $396 million based on Phase I data. This is how pharma values these agents, where they see these agents going. Now other recent sort of acquisitions or partnership has been AbbVie with Turnstone, BMS with Ciox, Merck KGaA with VIREAD, Boehringer Ingelheim acquires ViraTherapeutics, Janssen acquires BeneVir. Now it's important to point out all of these partnerships, or at least certainly the majority, were preceded either by an IST or some form of active collaboration. Now this is why we think it's so important that we run these ISTs with pharma so that they have a say in the biomarker plan, they have a say in what data is captured, they have a say in even some of the interpretation of the data. But at the end of the day, it is our data. It's data we can share with other partners. It's data that the partners themselves can see and review. And it's led to an expansion in our BD activities. This has applied pressure. And now this week with these studies getting underway, we're generating data in real-time that we think will lead to the strategic alliance that will allow us to offset our Phase III costs.Now on that, I'm going to switch gears and let you guys listen to Mr. Kirk Look, our CFO.
Thanks, Matt, and welcome to the call, everyone. I'll provide an overview of our financial results, and I invite you to review our news release and MD&A for additional information. R&D expenses for the third quarter of 2018 were $1.9 million compared to $1.7 million for the third quarter of 2017. The increase in R&D for the quarter is primarily related to foreign exchange losses due to the translation of our U.S. currency, partially offset by the stabilization of our clinical trial expenses. In the current quarter, our clinical trial activities are mainly related to closing out certain fully enrolled clinical trials, safety data management and updating regulatory documents connected to our clinical program. G&A expenses for the third quarter of 2018 were $1.5 million compared to $1.3 million for the third quarter of 2017, with the rise in expenses relating to our continued investment in our U.S. operations as we've expanded our office space in San Diego, California and incurred additional personnel costs.Net loss for the third quarter of 2018 was $3.3 million or $0.20 per share compared to a net loss of $3 million or $0.20 per share post consolidation for the third quarter of 2017.As of September 30, 2018, we had cash and cash equivalents of $16.2 million, a $4.4 million increase over the $11.8 million we had on December 31, 2017.With the window of opportunity study, a very quick and reasonably inexpensive study, being the only study Oncolytics is currently sponsoring, our burn rate is stabilized, and we can now advance our collaborative studies into 2020. This includes all of our collaborations along with some of the important clinical and data milestones to come from these studies.We were also active in the third quarter and subsequent to the quarter's end securing financial strength for Oncolytics. We announced a dedicated equity purchase agreement with Lincoln Park Capital in late September and an at-the-market facility towards the end of October. As outlined in the announcements, these are both at our discretion and do not create dilution until used, but they do create financial strength, which is something very important to us as we approach an important time of negotiations in 2019.Finally, a high priority for us remains the funding required for our Phase III program, which we believe we can do through a partnership that allows us to maintain at least a co-promote scenario in North America. As Matt alluded to earlier, we believe our overall clinical development program provides data that enhances the potential for a successful registration program and successful partnering activities. As we see the emerging data from these open-label studies and negotiate from a position of financial strength with potential pharma partners, we will be able to determine the best funding options at that time. With that, I will now turn the call back over to Matt before we open it up for Q&A.
Thanks, Kirk. We've accomplished so much in 2018, and I think that's going to pale to what happens in 2019 for the company. We're running and we're preparing for a total of 5 combination studies with large pharma. We anticipate that this data will ultimately lead to the strategic alliance that we've been looking to get in place over the last 12 to 18 months. These studies will generate news and important data that will advance our partnership discussions and provide critical information that these potential partners need for their investment and partnering decisions. It also, I think, will significantly derisk the Phase III program by allowing us to identify those patients likely to respond at baseline, but further to identify those patients who are responding to treatment, and we believe we can identify this as early as cycle 2. Now we've created a competitive environment for potential partners while we generate this data, all of it in real-time and all of it open label, all while we drive to our Phase III registration program in metastatic breast cancer. 2019 should prove to be the most valuable year in the company's history with significant catalyst value inflection points throughout the year. Now with this, operator, we're open for questions.
[Operator Instructions] And your first question comes from Wangzhi Li with Ladenburg.
And maybe just a little bit color further on the window of opportunity study. What specific biomarker you could expect and are those bio-marker, is it well-established in case it's positive you want to implement in the Phase III? Are they ready to go or you need to do some further work to really make it a Phase III ready biomarker?
Without being too coy, we submitted this for presentation next quarter. We did see a correlation between this biomarker and an overall survival benefit. It looks quite good although the end was small, and this is why we want to run it for the AWARE program. Without giving away too much detail, basically, it's a measure of adaptive response. This came to us actually by way of some of our strategic alliances. It's an assay that they've very readily used for checkpoint blockade. They thought it would be adaptable to our situation. We worked with one of their recommended vendors. And actually, out-of-the-box, it was -- it appears to be predictive. So we'll give a full account on this, hopefully, in a poster or presentation section at the next ACR, but it does look very robust. We're working with one of our potential partners to further gate this. This is something that they have a lot of experience with, and they think it's even a very attractive biomarker to run with basket studies because we could very quickly identify, especially with checkpoint blockade, those patients responding and those who aren't so we don't have to necessarily wait for the OS data. We think we can detect immunological changes much earlier than that, which is a good way to get rid of failed arms or expand those that look successful. But they'll be -- assuming it gets accepted, there'll be a full presentation. But it is robust, it is accepted, and it is something that our partners are using.
Okay. Got it. And also maybe, if you can -- I know you already talked quite something in detail, but maybe friend potential outcome from the window of opportunity study. What's the top potential scenarios and how that affects the Phase III study? And if you added this Opdivo combination arm, how that would affect the SPA with FDA? Will that still be in effect or will it be changed?
It's a great question. The AWARE-1 study, it's not, as you point out, the population that we ran the randomized Phase II in, but the benefit of it is we actually get the entire tumor tissue so it allows us to better characterize the immune response. We believe what we will see though is inflammation, certainly in the hormone receptor positive HER2/neu negative group. What we hope the biomarker will do is allow us to basically identify those patients who have more inflammation, who have more recognition of new epitopes and basically use that as the potential biomarker going forward. Now because we have the whole tissue and because only half the patients are going to get access to Tecentriq, if we see an increase in cellularity, or what that means is if we see an increase in the inflammatory cells in the tumor, it could potentially recommend a role for Tecentriq in a very broad market that they have not yet envisioned. If that's the case, I think we would look to run this with a strategic alliance so it'd be a 3-arm study. We would -- potentially could go back to FDA to inform them that we now have a biomarker or we believe we have a biomarker that potentially, checkpoint blockade is recommended. But in speaking with potential partners about this, what's nice if we do see a signal coming out of checkpoint blockade in breast cancer, we could simply add an arm to the study, and it would be standard of care, standard of care virus, standard of care with a checkpoint inhibitor. What's nice about this is if -- with the biomarker, if we're not seeing any benefit at all with checkpoint blockade, we can drop that arm and move ahead as we did. If we are seeing a betterment with the triplet, it allows for a 3-arm comparison. It allows us 2 potential ways to win, either with the checkpoint blockade or without it. So it becomes a very attractive clinical design for us and potential partners because, potentially, it expands checkpoint franchise into an area that has not been successful for checkpoint blockade to date. And if it doesn't, then you'd end up with hopefully a multibillion-dollar product that's applicable in second-line breast cancer.
Got it. Last question is have any of the investigators provide any guidance in terms of timing for data reports for the Phase II KEYTRUDA combo trial in pancreatic cancer and the KEYTRUDA and then nivolumab combo study in multiple myeloma?
These are ISTs so I mean, investigators have control over when the data gets presented. But Deva Mahalingam, and I should have pointed this out, Deva Mahalingam is a very good investigator and a very good colleague. Deva actually ran the study with reovirus and gemcitabine. And what he demonstrated there was no change in PFS but landmark survival in pancreatic cancer of 50% at 1 year and close to 25% at 2 years, which is unheard of. I have never seen reports beyond 4%, 5% at 2-year in pancreatic cancer, especially in the patient population that was enrolled into that study. Now as part of that work and as part of Deva's thinking that this was checkpoint blockade, he added KEYTRUDA. That was actually his study design. So that small KEYTRUDA study that we did was again Deva's thinking. And the results there were sufficiently positive that he was able to get Merck to sign an IST and provide KEYTRUDA for the study that he's now running at Northwest University. So he's taken lessons learned from the small KEYTRUDA study, refined it and has run it in his program. The other nice thing about Deva is Deva likes to present his data even when it's not final. He has had a history of presenting interim results. We're hopeful that he continues to do this. Likewise, the gentleman running the multiple myeloma study at Emory and at the Norris Cancer Center, they've all presented interim data. I mean, I think this is a good chance to get some biomarker data out, some response data and certainly with the bone marrow smears, some pro-inflammatory cytokine response and enhancement of inflammation in the bone marrow. So we strongly encourage these guys to present data early and often. And to date, they've been happy to do so.
Your next question comes from John Newman with Canaccord.
Wondering if you could talk a little bit about the recent abstract that you released regarding multiple myeloma combination data that we'll see at ASH.
Yes, that was actually work done by Craig Hofmeister and Doug Sborov. They're actually the gentlemen who are involved with the Opdivo study with BMS. What they found there is patients who had -- and we've seen this with other studies as well. There was very good response rates in patients who had not been very heavily previously exposed to proteasome inhibition. Those patients who respond, they were able to see an uptick in PD-L1 expression. The very heavily pre-treated group that had just failed the proteasome inhibitor had less impressive results. So again, it solidifies our thinking that the virus really benefits from a cellular stress response that this allows the virus to propagate more easily, to spread more easily and as a result of this, get much better inflammation. Now I should point out the slide that we used with the checkpoint inhibitors that shows the inflammation, this is actually Dr. Hofmeister's work. And what's interesting about this is he's demonstrated that this massive inflammation is much enhanced by having susceptibility to the proteasome inhibitor. He's looked at this as a monotherapy and we do see inflammation, but it's not as striking as this. Likewise, when a patient has just failed carfilzomib, we get inflammation but it's not as dramatic as someone who has some susceptibility to the proteasome inhibitors. So it does seem that the virus does benefit from active cytotoxicity. We've seen this on our breast cancer response. What we found in subset analysis patients who had received taxanes very recently did not do as well as those who had not received taxanes in the -- in previous 12 months. So it does seem that the washout period really benefits the results of this. And this is going to be presented early December at ASH. There's some really nice figures in that. And I think, again, it strongly supports a role for reovirus being a standardized backbone in checkpoint blockade.
And you mentioned that it seemed like patients that had not had heavy prior exposure to proteasome inhibitors showed a better response when the reovirus was added. Have you seen any correlations, one way or the other, regarding prior IMiD treatment?
That's a good question. And I'm not sure that we've looked at that. If you're at ASH, I strongly encourage you to bend Dr. Hofmeister's ear, and he'll be a much better person to give you that answer.
Your next question comes from Rahul Sarugaser with Paradigm Capital.
So thanks for the additional color on the window of opportunity study. So just a couple of questions here. So you mentioned that you will be biopsying based on a mastectomy after. So I wanted to clarify how many patients do you expect to enroll in the study? And what is the time from administration of pelareorep to the mastectomy and biopsy?
Great question. This will look at triple negative hormone receptor positive, HER2/neu negative and HER2+ patients, to roughly 12 patients per subset. Patients are biopsied at baseline. They're treated for a 3-week period, 21 days plus or minus 5 days from the mastectomy so the patients can get it -- well, basically 21 days up to about 26 days so there's a window there to allow for the surgery to get in. With the full mastectomy, we can get the full biopsy with immunohistochemistry so it's more than just a biopsy. It's the actual disease. We can look at the entirety of the mass, the normal surrounding tissue. And again, what we're hoping to see is much more double-stranded RNA and much more inflammation and much more lysis in the hormone receptor positive. We're hoping Tecentriq actually enhances this benefit. And again, we're hoping to see a safety signal. We don't expect there to be any toxicities with Tecentriq based on our limited data with KEYTRUDA and our animal experiments. But until you do the experiment, you don't know.
Great. That's very helpful. And in terms of then progressing to selection of biomarker and then taking that to the FDA for an amendment on the SPA, do you have an estimate on sort of what that will take, what that process will look like and the amount of time that, that would take?
We can start sharing the biomarker work now. As I said, we're significant -- well, we're happy enough with it that we submitted it for publication. It's done in collaboration with another group so we were hoping to present it a little bit earlier, but we had to get it through all the legal to get the press or the abstract out. I think the FDA will look at this positively. I mean, they were the group that strongly encouraged us to identify the biomarker. They provided guidance that in this area that looking at innate and adaptive responses are more easily quantifiable and have often been correlated with patient benefits. So we looked at this with a lot of our archival tissue and actually were able to demonstrate in an indication that this biomarker would predict for overall survival as early cycle 2 day 1. We do need to verify this in breast, but the biochemistry is the biochemistry. We're just looking at innate and adaptive response. In terms of adding a third arm, it would really be, I think, up to our potential strategic alliance whether we wanted to go back and do another SPA or an amendment to the SPA. The SPA, typically, is not required when you have an overall survival endpoint. It's more typical to see an SPA when we have a surrogate endpoint. We would still recommend the overall survival as the primary. If we were to file an amendment, as I said, these studies are open label. We could be seeing data here March-April time frame. We could be amending the SPA during the conduct of AWARE-1 so that as soon as we had the final study reports, we hopefully would have the SPA in hand. But again, this would be, we believe, done in collaboration with a strategic partner so this would be in conjunction with them. So the thinking of whether an SPA was required and the timing of any amendment to it could be as early as during the conduct of AWARE or right after, but typically, these SPAs have a 30 to 60 turnaround time so no more than 2 months. For them, I mean, they have agreed to the activity of the agent in the Phase II. They have agreed that the results were significant enough that only a single study was made so it'd basically be their review time on adding a biomarker that we'll be in discussion with them and whether or not a third arm is recommended.
Great. And then one last question then in terms of deriving a partnership because you talked about that discussion happening in parallel with the FDA, so in terms of having that -- enough evidence to really incentivize the pharma partners that you talked about earlier, what sort of time line are looking at based on the data generation from the window of opportunity study? And after that, I'll leave it there.
I think there's enough historical examples. I mean I would point everyone to the Viralytics story. I mean, they entered to the IST. They generated some results and were acquired shortly thereafter. If you look at the other one that was actually preceded by, I think a mezzanine financing, I want to say that Boehringer, I think, actually participated in a mezzanine financing of ViraTherapeutics and acquired them within 18 months, and those are preclinical results. Pharma's paying big money for these assets right now. They're also spending big money on very limited data. The only group that really had later-stage data was T-Vec and it was during the conduct of a Phase III so it would be very difficult to figure out what was going on. So I think the real-time data, I think, Rahul, that the biomarker results we just received them as later -- or earlier this month, and they were striking enough that we were able to pull an abstract together very, very quickly. We're just communicating this now with potential partners because, again, this was something that, I think, everyone felt was critical to be involved in the Phase III program because, again, it just significantly derisks it. And the signal here is very, very good whether or not it's going to be applicable across all indications or if it's going to be seen in the indication that we are reporting it in, will yet to be seen. But I mean it's immune activation so it should be applicable to all of our indications.
And we're currently out of time. At this time, I will turn the call over to the presenters.
Thanks, everyone. We appreciate everyone being on the call today and look forward to updating you on our future progress. As I said, keep an eye out for us at ASH. And then leading into the new year, we're starting with the pancreatic cancer study, imminently. We'll be starting the Opdivo study here imminently. It's an exciting time for us. We're generating the data that we need for our strategic alliances, and we're very appreciative of the patients, their families, our KOLs and our pharma partners in moving us to the point that we are now and into a very exciting 2019.
This concludes today's conference call. You may now disconnect.