Circio Holding ASA (CRNA) Earnings Call Transcript

Welcome to Circio. My name is Erik Digman Wiklund. I am the CEO. And today, we are hosting a webcast to provide an update on both corporate and R&D progress. I have with me CFO, Lubor Gaal, and lots of participants, so glad to see everyone here. We have received several questions beforehand. We will cover them at the end in the Q&A, and it will also be possible to submit questions directly in the meeting if you use the Q&A tab. With that, we dive into the presentation. Important forward-looking statement. Please take notice. To begin with, I would like to give you an update on the market situation for circular RNA and how that's progressed. So circular RNA is a very novel therapeutic format. It really only emerged in the biotech and pharma space in therapeutic development in 2021. So this is a young field, less than 4 years old. No one yet has entered the clinic with a circular RNA project, but we see several companies have raised substantial funds. A couple of the big pharmas have made moves like Merck and Pfizer have entered into the space, and we know the rest are sitting on the side and following the field. There was one interesting update early this year, Vertex, a gene editing CRISPR company made a deal with Orna Therapeutics, which by many is considered the pioneer in synthetic circular RNA. This deal had a substantial upfront, $65 million. And Vertex is acquiring a license to utilize Orna's oRNA, their proprietary circular RNA format packaging LNPs for genetic blood diseases, delivering Vertex's gene editing toolbox. So a highly relevant deal for the field, and I think it's an important validator for circular RNA in general. I'd like to also highlight another important transaction that happened. Novartis late last year, acquired a company called Kate Therapeutics. Kate Therapeutics is developing a suite of AAV gene therapy vectors, which are targeted against muscular dystrophies, the lead one being the same as Circio's lead program. So we are deploying our circular RNA technology in AAV gene therapies as a first step for a proof of concept of the technology, and we are specifically also active in these diseases. I think both of these deals highlight the potential of what we're doing and are relevant in their own right to Circio and illustrating the potential of what we're doing. We have had a broad program to build our visibility in both the scientific and industry media and journals and conferences. And this is important because we are a small company in the Nordics. We're developing a completely novel technology for circular RNA that really no one else is doing it. So getting the message out, showing what we're doing is very important. This can be highlighted scientifically by oral presentation we had at ASGCT. So this is the flagship gene therapy event in Europe, which was in October last year. Two of our eminent scientists also published a wide-ranging review in Nature reviews earlier this year. I highly recommend this article for anyone interested in the therapeutic potential of circular RNA. It gives a very thorough review of the space, including both the synthetic circular RNA approach and the vector approach, which Circio is deploying. In addition, we've been covered in industry media, been on podcasts. So we're getting the word out there. So this means people are aware of the company, they're aware of our technology and start following what we do. Moving on to a technology update. We, late last year, announced that we had established a novel circVec Generation 3.0, which further extends the potential and power of our expression system. On the left-hand side of the slide, you can see the evolution from our circVec 1.1, which is the first-generation circVec construct that we brought out. And this -- important to remember, this was already outperforming mRNA-based expression. So that first one was already better in terms of durability than what you could achieve with mRNA expression. And then we systematically have improved various aspects of both the RNA and DNA side of our technology, and we've now arrived at our 3.0 cassette, which with the incremental advantages now actually improves 27x in vitro. This is over our 1.1. Now this means our technology is more potent. That's, of course, very important. It also is important for IP reasons. We now have various design features that we can patent, some already are patented, some we are drafting patents for in order to broadly protect the technology. And maybe even more important, you kind of need to figure out all of these steps along the way in order to get to something that is equivalent to what we can achieve. So the know-how here is critical. This is not going to be trivial for anyone else to replicate and achieve the same type of expression that we are. So we are confident we have something powerful and we have something that is well protected. What we have showed to date is the circVec 3.0, and what we call plasmid DNA. Now plasmid DNA is, you could say, a technical workhorse. It's what you use in the lab to explore, test, validate but it's not really suitable as a therapeutic format. But it's the easiest and quickest technology available for lab work. So that's what we showed you in December. What we have done since then is start to move our circVec 3.0 into other DNA and viral vector formats that can actually be used as a therapeutic in the future. So this is an important step into making our findings therapeutically relevant. And we have now successfully established both circular and linear synthetic DNA formats expressing our circVec 3.0 design. So these are created, validated in vitro and they're currently in in vivo testing. We have also built AAVs based on the circVec 3.0. Now AAV is a bit [indiscernible] to work with in vitro. So here, we're moving straight to in vivo experiments. So that's why this is ongoing and not has a check mark yet, but the constructs are generated, and we currently have mice running around in their cages, which are being treated with these vectors. So important message, the 3.0 design has now been transferred successfully into these vector types, and this is important validation. And each of these also require their own steps of optimization to make the work in each relevant setting. When it comes to these DNA formats, they need to be delivered. They can't just be injected into a patient, then it would be broken down. You need delivery chemistry to make them survive and enable them to get to the right cell that you're targeting. So here, we have established several collaborations, as those of you who follow the company will know, whereby we test different delivery technologies to get our circVec DNAs into specific organs of interest. And one of these collaboration partners is a company called Certest. This is an LNP company. Remember what I said before with the Orna deal, for example, that is LNP-delivered circular RNA. So here, we're going with LNP-delivered DNA that then is expressing the circular RNA in the target cell. We have tested multiple tissues with this LNP delivery, and we're particularly encouraged by this data here from spleen. So if you look on the left-hand side, we are delivering a vector expressing luciferase, is a protein that lights up in the mouse from mRNA. And on the right-hand side, we're making the exact same protein just using circular mRNA. This is with the circVec construct. Now very interestingly, with mRNA, we get a lot of expression in the liver early on and then it disappears. You see the durability is short, we only get expression in the liver. However, with circVec, we see early on no expression in the liver. And we don't want that expression in the liver because that's not the organ we are targeting. However, over time, from week 3 onwards, it starts building up in spleen. And you can see very specifically and increasingly, we're getting signal in spleen much, much longer than what you achieved with the mRNA. So this now creates a novel opportunity for us where we can actually get our circVec DNAs into the spleen. Spleen is where immune cells are. So an obvious potential application here could be in in vivo cell therapy as a future application. So we're very excited about these data, and we're currently exploring them further to more fully understand what cell types we are reaching and what therapeutic programs would make sense to start based on this delivery possibility. You can do some cool analysis and here is a 3D bioimaging that we've done on these mice to pinpoint exactly where the expression is and the color shows you where we're getting signal from circVec. And you can see we're getting strong signal and it's very clean. It's only in the spleen, nowhere else. So this is exactly what we're after, potent specific delivery as little expression anywhere else as possible. That was DNA delivery. I also mentioned the AAV. We think AAV is probably the shortest path to enter the clinic and to achieve a business development collaboration because this is a more established technology. And currently, basically all approved gene therapies more or less are based on the AAV vector with just 1 or 2 exceptions. So classic AAV will transfer a gene into a patient that has a genetic defect, and that gene will be expressed by a linear mRNA and make the missing protein. Now we are simply exchanging the standard mRNA expression system with circVec and then CircVec will make a circular mRNA expressing the protein. So everything else is equal. It's exactly the same AAV on the outside. The difference is whether it will make the protein from circular or linear mRNA. What we're aiming to achieve here and the feedback we're getting from the market is if we can demonstrate something from between 3 to 5x enhanced protein expression versus classic mRNA AAV, this would be very interesting to companies and scientists that are working in the AAV field. But AAV biology is complicated. You can't just copy paste what we have done in plasmid DNA and expect that immediately will work. So this takes some time to fiddle around with. It also takes time to generate different AAV designs. So far, we have successfully with our circVec 2.0, remember, we're now at 3.0, made AAVs that are roughly doubling the protein expression in vitro. We know it's possible. We know it's feasible to make AAVs that make more -- or more potent protein expression. We have tested several AAVs in vivo. And we showed you early data from this experiment back in December. We're now up to week 15 with these mice. And we're starting to see a trend where circVec is beating the mRNA vectors after 60 days. The line start separating when you average out all the mice. And after 90 and 106 days, which are the 2 latest measurements, we roughly have 50% higher expression. So it's feasible, validated that it works. I think we still need to increase this advantage before this becomes really clinically relevant and interesting to partners. And obviously, we are very excited now to test our new circVec 3.0s, whether they may boost that expression level up, so we get a bigger advantage. I'd also like to point out here that AAV biology is complicated. It's complex, and it's not fully understood exactly how AAVs, what their life cycle is like. It also means that there is more experimental variability. And that's why I show you here 4 animals in each group. On the left side is the circVec on the right side is mRNA equivalent. So the aggregate here is an advantage to circVec, but there is relatively large variability between the animals. And this is just a fact of the matter when you're working with these type of biological systems. So it takes some time to iterate, optimize, extend, do bigger experiments in order to fully capture the advantages. And right now, we're testing multiple AAVs in parallel. And this is just what it's like. This is what biology is. And we are systematically working to robustly generate data packages that we then can convince others are meaningfully better than mRNA vectors. So early promising, looks good, very excited to test our new vectors, and that brings me to the next slide, which shows you our ongoing program. So based on the data and the new vectors, we have a very rich in vivo program ongoing. The first line on top here is the spleen data that I showed you. We've tested with Certest LNPs, IV delivery, very encouraging signals in spleen. We're now -- have terminated these mice, and we're doing post-mortem tissue analysis to understand more fully precise expression, what cell types are expressed, et cetera. We then have 2 ongoing in vivo experiments, one with the nonviral DNA vectors. These are ongoing, and we expect first interim readouts during April. And then shortly after that, we've initiated an AAV experiment with multiple different AAV designs, including both 2.1 and 3.0 versions, IV delivery and certain designs are specific to muscle or heart, which are tissues of particular interest for us in addition to the spleen. This also will generate the first interim data during April. Now the AAV experiment, as you saw before, needs to run maybe 60 days before you start seeing the difference. So here, we have to track and see how it goes. We're also starting 2 experiments now in April, where we're following up on the Certest data. So we're going to test Certest expression with other vectors and the 3.0 design and validate these results with the spleen delivery. And we're also preparing to run experiments now soon where we're going to express other proteins that may be more therapeutically relevant than the luciferase than, which we're using for imaging purposes. So these are our own ingoing in-house experiments that are ongoing. I think in particular, the AAV experiment is of interest when it comes to business development. Here, we know exactly what companies and what level of interest there is. And as soon as we have data that is sufficiently robust, we will follow up with potential partners. We are also very actively now collaborating with and searching for delivery companies that can enable us to access interesting tissues. Now this is for our DNA vectors. We have the Certest and 4baseBio collaborations, which have been publicly announced. In addition to that, we actually have 4 other undisclosed collaborations with partners that have various types of delivery tech that we are testing. One of these are already ongoing and the 3 on the bottom here are starting in the near future and will also generate data during Q2. Now these are then experiments run by the partner where they're also investing resources and funds into running in vivo testing with our circVec construct. So we're very happy to see companies wanting to work with circVec, and this also gives us multiple shots on goal where we can understand what the delivery format is the best option for getting circVec DNA vectors to the right cells and tissues and then highlight to us what the best therapeutic opportunity may be. I think particularly the 2 last ones here are of high interest, both scientifically, if these work, that would be extremely interesting data in itself. And these collaborations are with companies that are potential collaboration partners also going forward for them to deliver their own drugs using circVec. So these could lead to deeper and larger deals in the future if successful. The third one here is actually a novel technology to get to the spleen. So we're digging further into that spleen opportunity, found another chemistry, and we're going to compare that to LNP with Certest and see what works best and maybe they can even be combined. So that's another track we're now actively pursuing to see what circVec can achieve in the field of cell therapy. This is a short summary of our priorities. Hopefully, it was clear from my presentation. We are validating 3.0. We need to get the 3.0 into multiple vector formats and confirm that they are effective. The gene therapy applications are therapeutically important. We want to enhance on current gold standard vectors and short-term watch out for our development in AAVs, in particular, at least circVec 3.0 AAVs. And as these data mature, we're actively searching more partners and specifically on the AAV side. I think we're very happy with the collaboration setup we now have on the drug delivery on circVec DNA, and these will let read out and then choose which collaborations we prioritize for continued development beyond the ongoing experimental work. So with that, I hand over to my colleague, Lubor, who will summarize the financials from 2024 and also our financial prospects going forward.

Thanks, Erik, very much. We appreciate the large attendance of our shareholders to the meeting, and I'm really looking forward to giving you a presentation on the financial strength and the results. 2024, we substantially strengthened our financial position. We raised NOK 30 million in equity financing in 2024, as you can see, about NOK 20 million or close to NOK 20 million from the rights issue in July and more than NOK 10 million from the warrants exercise in December. At that time, the interest in our shares was that high that we were always to put a private placement on top of the warrants exercise period. So with that, we were able to attract a lot of equity financing. Next step. So we -- also in 2024, we were able to arrange a financing commitment with Atlas that guaranteed financing until June 2025. This was possible because we did a tight cost control. There were, of course, certain conditions attached to the financing commitment from Atlas, and we reduced non-R&D expenses by more than 40%, and I will go more into our cost control in the next few slides. A very important event also was the loan waiver by Business Finland of about NOK 70 million. This was a very important achievement by the finance team because the repayments were due in 2024. And looking at our current burn rate, very small burn rate that would have been -- represent a significant portion of our payment burn rate. And this is -- so it's been a very important achievement for the future of the company. Also, of course, very important, we reduced our exposure -- bond exposure to Atlas from a high level of NOK 45 million down to NOK 15.5 million. Next slide. So here are the financial results from 2024 versus 2023. As you can see, clearly, we have been able to reduce our operating expenses extensively. This has, of course, come also in the transition from a -- basically putting on hold the ONCOS clinical development and becoming a preclinical company that reduced our R&D expenses by 75%. We also, of course, reduced the payroll expenses. We had to rightsize the company for the new strategy and a lot of employees unfortunately had to leave the company. And so the payroll cost actually reduction would have been even higher percentage-wise. But in 2023, the entire management team as well as the finance team in Norway agreed to a voluntary pay cut. So if you were to compare our 2024 payroll versus 2022, it would be even higher reductions. We also reduced the operating expenses. We really cut down on everything that was not essential. We even terminated our office lease. We reduced travel. We reduced legal fees. We really try to minimize our expenses outside of R&D to an absolute minimum. So that brought us to an operating expenses of minus NOK 43 million for the year versus NOK 101 million next year. Again, here highlighted is the wave of the ONCOS loan, which I mentioned in the previous slide. This, as I said, was a very important financial event for the company and that really secured or lowered the burn rate going forward. So this is an important achievement, of course, for the future as well. So the net cash at the end of the period was NOK 18 million based primarily on the fundraising that we did during the year. Next slide. So what does the company look like right now? As I said before, the organization really was rightsized for the purpose. Clearly, it's a lean and efficient team. I really want to give kudos to the entire team at Circio. People are very flexible and taking on additional task. Clearly, ideally, of course, we would have more FTEs to take care of certain activities and responsibility, especially as a public company, but we are really trying to create a minimum burn rate and people are very flexible in taking on additional tasks. So this is only due because we have a highly dedicated team. As we said, mostly, the R&D team is focused, of course, on generating a data package for transaction. As Erik just mentioned in the previous section, we have a lot of things going on. These are very important events, and we're looking forward to these results in the near future so that we can, of course, leverage them and generate value for our shareholders by attracting new investments or partnerships. On the cost base, as I said before, we have cut very, very low to a cash burn rate of NOK 4 million a month. That was also a requirement for the financing commitment for Atlas. More cost cutting is unlikely unless really -- it really basically have to be a reduction in FTEs. But we are very, very careful how we spend our money and how we invest money so that we really can maximize our current resources in R&D and to generate the results we need for the next steps. Next slide. So we are continuously exploring, of course, multiple financing options. We understand the situation very thoroughly, and we are looking for potential investors. So we are continuously exploring all options and talking to many interested parties. We're also, of course, talking to Atlas and have been able -- and Atlas has agreed to extend the financing commitment beyond June 2025. So this gives us a security and really gives us a runway that we can now use in order to explore the financing options I just mentioned above. We're also exploring all kinds of transactions. So we also have several assets in our drawers, some of which we cannot actively pursue right now because we don't have the funding for that. We have explored with other interested parties whether they could take it forward. So we are continuously being very creative about maximizing all -- the value of all assets that we have available to us. And this is only because our technology, as Erik said, is very versatile and can be taken in different directions. We are focusing, as he said, on AAV and gene therapy, but there are other applications possible, and we are, of course, pursuing all options in order to attract investments into Circio. And on business development, as Erik was saying before, we are now very well known. We have done a very good job in industry publication and journals to -- and people are really well known about our circVec technology. We are actively going to business conferences and partnering events to talk to pharmaceutical companies as well as gene therapy companies about the application of our technology, and we are in dialogue with many companies about potential collaborations. which brings me up to the near-term milestones. As you can see here laid out in quite details are the upcoming data. This is basically a different display of what Erik just presented to you earlier. So very important here, of course, are the near-term data here, which we -- and some of this, which we'll be presenting at ASGCT 2025 in mid-May. This is the premier event in our field. It's attended by thousands of scientists and many companies, of course, and we will strengthen and deepen our relationship with interested parties at this conference. And then in the more longer future, we see some value inflection points. This, of course, depends on the near-term data that was shown in the first half of '25. So if this data looks very good, then, of course, that will be putting fuel in our engine to talk to interested parties about a potential transaction that -- but I want to be also clear that this will start the discussions so don't expect everything to happen in one day. These collaborations are complex discussions. And of course, complex discussion require time to resolve. And so -- but it really gives us near-term opportunities to have these meaningful discussions with pharma companies. And then in the future, of course, the more data, the more possibilities we have to do transactions. So of course, as Erik saying, we are working on many different fronts, using different delivery formats, which enable us, of course, to have multiple discussions with different parties. Next slide.

I think this was the final slide, and thank you, Lubor. I can also add that we intend, as Lubor said, to present update from our in vivo program at ASGCT 2025. And shortly thereafter, we will host a deeper scientific webcast for our investors. This will then probably be last -- during the last 2 weeks of May after data has been presented at ASGCT. So stay tuned for a presentation then of the outcome or interim data from this broad in vivo program that we've just described. So with that, we can move to Q&A.

We received several questions by e-mail beforehand. And we can start by addressing one specifically on delivery. I think several people have find it complicated to navigate all the different vectors and delivery types we talk about. So when we speak about vectors, a vector is something we utilize to get circVec delivered to the correct cell or tissue in a patient to be able to make a therapeutic. And you can do that either with viruses or you can do it with DNA. The advantage of using a virus is that this is a very effective tool at transporting genetic material. This is what virus has evolved to do. So you use a virus, you really fast and easily get your DNA to where it wants to go. Now the problem with virus is that it elicits an immune response. So you gain immunity to the virus and then you can't redose. So using viral such as AAV vectors is effective, but you can only dose one time. And then as it wears off, you can't go back and give the patient the therapeutic again. DNA holds the promise of repeat dosable gene therapy for the future. So using synthetic DNA, you avoid this problem of immunity to the virus. So that's a big advantage. It's also going to be much cheaper to manufacture. The problem with the DNA is that it has to be delivered somehow. It has to be packaged into a technology that gets the DNA where you wanted to go. If you just inject the DNA, it's going to be degraded. It's not going to go anywhere. So that's why we have these delivery collaborations. So one track, improving AAVs. Here, we don't rely on partnerships really. We can just take AAV viruses. These are well known, make them with circVec, push them forward and then manufacturing and development is all known. That's why we say this is probably the shortest path to get into the clinic and get a deal. But longer term, we're really excited about this prospect of DNA-based repeat dosable gene therapy, and that's where we're investing resources into it. But there, we need collaboration partners with delivery technology, such as Certest, 4baseBio are examples. Then we're using LNP. LNP is the way the COVID vaccines are delivered, for example. The advantage is that it's well understood, they work. You can actually use them in patients, they are approved, commercially available. However, AAVs are really inefficient in reality. They -- most of the DNA or RNA you deliver gets degraded. So maybe 99% of everything you give actually is lost on the way and only 1% makes it into the cell. So everyone is searching for next-gen LNPs or next-gen other chemistries that is better than LNP for the future. And these other 4, we described in terms of drug delivery collaborations, are companies with either variants on variations on LNPs or completely other chemistries that we can use. So these are now testing. And we will look at what is best for a specific purpose and then pursue these going forward. So hopefully, that explained this delivery and vector question in a bit more detail. Following that, we can cover a question we received on competition and how we are comparing to the other circular RNA companies. Now the other circular RNA companies, more or less all of them are making synthetic circular RNA and then package them in LNPs. This is good for vaccines and sort of shorter-term durability therapeutics, but it's fundamentally different to what we are doing. Remember, we're making vectors, DNA or virus that express the circular RNA. So we don't directly compete. Orna is not a direct competitor of Circio. We are simply using the power of circular RNA for different purposes. So when you're looking at competitors for Circio, you need to look at the specific disease or vector type. For example, in terms of an AAV for muscle disease, a competitor would be other AAV companies targeting that same disease area, and we will have to be better than those. So my point is that we shouldn't get too hung up on circular RNA companies as competitors, but rather look at the specific context. Having said that, success in the circular RNA field in general is a great validation for us as well. So showing that circular RNA works and is better than mRNA in any setting is going to be super helpful for everyone active in the space. Following on, we can have maybe for Lubor here, business development. Twofold question, Lubor. Can you talk a bit more about the Certest and 4baseBio collaborations specifically? How these have evolved and whether the data is good? And secondly, if we are on track to achieve a business development deal this year?

Thanks, Erik. Yes, the relationships are going very well. We have found some very interesting results. As Erik has presented in his presentation today, some of the results from the Certest collaboration we have presented to you today. This was about the spleen delivery. So these were quite exciting results. And as Erik was saying, we are in the process of confirming and extending those results. 4baseBio is ongoing, and we will present results as soon as possible, but these are going well this relationship. These are only 2 of the -- I think 4 or 5 relationships we have ongoing, 2 of which we are about to sign and start. So we have -- get a lot of interest actually from drug delivery companies that -- which Erik called the vector companies. And I just came back from a partnering meeting last week where we have received interest again from other parties, who want to work with us because other companies realize the novelty of our format and the properties that this can really bring as these are people, of course, who are very close to our biology, understand the benefit that our approach brings over other approaches. So this is very encouraging. And to some degree, we know we have to be careful, who we are partnering with and select with. So this is actually a very active field. And so we hope, of course, we can announce some of them fairly soon about these potential collaborations. And so we are, in that way, always doing partnering deals. Of course, we need more data from these -- partially sometimes from these collaborations in order to go forward and sign with larger companies deals later this year. I want to mention or highlight, as Erik was saying, that some of these companies that we're doing this as a test phase to test our technology. And should the results meet the expectations, then this, of course, lead to a much different relationship and future transaction or potential collaboration going forward.

Thanks, Lubor. We can follow up with a question on IOVaxis as well as TG progress. There is interest in that. We didn't really talk about that in the presentation. So TG, this is our cancer vaccine legacy program. This is currently in 2 active clinical trials. These are cancer vaccines targeting KRAS mutations. Our cancer vaccines is a bit of a complicated field at the moment. There has been several negative data readouts. So that has made it difficult to finance and fundraise for this particular modality, but we're starting to see good data emerge, and there is results coming out later this year that maybe can change the dynamic in the field. Fortunately, we've been able to set up our TG program largely with external partners. So the funding is mainly from outside parties and then supported by Circio. Progress on the trials has -- recruitment has been a little bit slower than expected. But for the trial in Oslo in multiple myeloma, I think we're getting close to the end of recruitment. And there is a plan to submit data to EHA conference later this year. So there should be an update at that point from the Oslo study. Then we have a much larger study, which is in the U.S., where this TG cancer vaccine is being tested in a triple combination in collaboration with Georgetown University, Janssen or J&J as well as BMS. There, we're testing TG01 triple combo in pancreatic and lung cancers. And I think this study is currently in a safety review of the safety cohort. And then once that's cleared, it will proceed. We are a bit at arm's length in these 2 trials. So we have less control and less frequent updates, but I expect in the second half of the year, there should be initial interim results coming from the Georgetown study. But these are noncore to the company. I think we view it a bit opportunistically. If the data is good, it may enable us to continue the program or raise funding for that specifically. With that, maybe Lubor, you can provide an update on our discussions with IOVaxis, the potential partner in China.