Nykode Therapeutics AS (NYKD) Earnings Call Transcript

Greetings, and welcome to the Nykode Therapeutics Second Quarter 2025 Strategy Update and Results Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to CEO, Michael Engsig. Please go ahead, Michael.

Thank you very much, Kevin. And also from my side, a very warm welcome to everybody to this Q2 webcast and not least our long-anticipated strategy update from Nykode. Before moving on, I just want to remind every one of you of our forward-looking statements. We assume you are familiar with those. And on that basis, I'll quickly move on. As usual, I am very pleased to have with me here today, Agnete Fredriksen, our Co-Founder and CSO; and Harald Gurvin, our CFO. Before moving into the strategy update, which I believe you've all been waiting for at this time point here, we'll adjust very quickly or briefly review the key highlights from our Q2 report, which was also announced or issued this morning here. And because we are focusing most on this call today on the strategy, we'll be reviewing the Q2 a little bit briefer than usual. Still, we did have a couple of very important events during the quarter from the VB10.NEO. We did announce key data from our N-02 trial at ASCO in 2025 in Chicago. And these data once again highlights our VB10.NEO program's ability to induce a robust and durable immune responses across multiple tumor types in a heavily pretreated patient population. And just to remind you here that the number of biotech companies that do have an established manufacturing platform and epitope selection algorithm and actually clinical data is very small. So we'll be reviewing more on that one later today. For our VB10.16 program, we are conducting the part 1 of the C-03 trial, which is, in essence, a dose escalation program. We have enrolled all the patients there. So 13 patients spread along 3 different dose levels. So 1 patient in 3-milligram, 6 patients in 6-milligrams and 6 patients in 9-milligram doses. And during the quarter, the so-called Trial Safety Group did what we call safety clear, all of the doses for that program, which again underlines VB10.16's very favorable safety profile. Nykode has entered discussions with Regeneron regarding the future of the collaboration programs. And these programs are no longer included in Nykode's updated strategy or our financial forecasts. And finally from my side, Susanne Stuffers was also elected as Chair of the Board at the Extraordinary General Assembly on the 23rd of April this year. I'm going to hand over to Harald for a quick review of the Q2 financials.

Thank you, Michael. Looking at the key financials for the second quarter. Total revenue and other income came in at $200,000 compared to $600,000 in the second quarter of 2024, which was driven by less revenue from Genentech and Regeneron. Total operating expenses reduced from $12.4 million in the second quarter of 2024 $6.9 million in second quarter of 2025, reflecting the reduced organization following the organizational streamlining finalized in the first quarter of 2025 and with full effect expected in the third quarter and also reduced clinical activities. We recorded a net profit of $900,000 in the second quarter of 2025 compared to a net loss of $7.3 million in the second quarter of 2024, mainly due to reduced operating expenses and also unrealized currency gains relating to our cash held in Norwegian kronas and the noncurrent receivable relating to the tax case denominated in the same. A cash dividend of NOK 1 share was approved at the Annual General Meeting held on 26th of May 2025, and the dividend totaling $32.3 million was paid on 12th of June. We are still well capitalized with a cash position of 70 million at the end of the second quarter. And with that, I will give the word back to Michael, who will take you through the updated strategy.

Thank you very much. And that concludes the Q2 part of this webcast. We will then move into the updated strategy part, which, no secret, it's -- we've been really looking forward to take you through these thinkings here. It's no secret also that it has been a tough last 12 months for Nykode company and the team. On the one hand, we were left with great technology, good data and a strong cash position. On the other hand, we had a disconnect between plans, inflection points and our cash runway. The first thing we did in that light was to bring down or bring control of our cash burn through a series of significant restructurings and prioritization efforts. This was a very painful but necessary process. And I cannot emphasize enough how grateful I have to the employees and all shareholders who stuck with us through those times. Secondly, and in particular, since April -- since the April events, we have, together with the new Board, carefully assessed the strategy and the options in front of us. And as I mentioned before, the management team is really looking forward to take you through what we think is a very exciting new strategy for the company. We looked at how we could most optimally deploy our capital on our pipeline to achieve meaningful data inflection points within our cash runway, while building as much value for patients and shareholders as possible. And that plan, which we will present today includes a robust Phase II randomized clinical trial for VB10.16 first line head and neck, which is expected to lead to significant data within our cash runway. Furthermore, we have also, we think, compelling strategies for VB10.NEO and -- or our tolerance program. We'll just quickly take you through the key highlights here. No surprise for you that we do consider VB10.16 our lead asset with the potential to deliver meaningful clinical data within 24 months. We have very strong confidence in this program supported by data from 2 completed and 1 ongoing clinical trial. And therefore, the key activity for us is to initiate a Phase II randomized clinical trial aimed at demonstrating proof of concept in first-line head and neck cancer. VB10.NEO is our individualized neoantigen therapy. And that field or the concept of INTs are looking at very exciting peer readouts over the next 18 months which we think can increase the conviction in the concept of individualized neoantigen therapies. Our job meanwhile is to strengthen our position as the most attractive unencumbered INT asset through a selected range of activities, which we'll review with you in a minute. Tolerance platform, the concept of tolerance induction could transform autoimmune disease treatment in the future. And we continue to see data generated in our laboratories, which supports the versatility of our platform and the differentiated perspective, and we will continue to invest in really pursuing a best-in-class tolerance induction platform with our technology. All this will be doing while keeping a very diligent cost discipline, which on the top of our well-capitalized position allows us to reach key inflection points within our cash runway. We have streamlined our cost base through a series of restructuring and prioritization efforts. And the current plan that we have in front of us do not foresee any significant growth in the organization or in the underlying cost base. We'll do a bit of a double-click on each of the programs to take you through the rationale and the plans before we open up for questions in the end. So VB10.16 does represent our lead asset, as we said. And that is based on the number of clinical data that we have previously reported from the 2 trials, C-01 and C-02, which, if we just highlight the key conclusions from that, that did show that our objective response rate in the PD-L1 positive patient populations of patients -- pretreated patients with advanced cervical cancer came out double what you would see with the historical trials for checkpoint inhibitor monotherapy. We saw more or less the same effect on median overall survival, so a doubling of what you typically see with checkpoint inhibitor monotherapies from historical trials. We have also, with VB10.16, shown a monotherapy effect in the premalignant setting in the C-01. And what we consider extremely important, we have shown that the clinical effect we observed in both C-01 and C-02 is associated with an antigen-specific immune response. And we do consider that a very important part of any cancer vaccines combined collective clinical data setting. In addition to the data we have published, we have obviously also been looking into the ongoing C-03 trial. And I'll remind you all, this is a very limited number of patients, but the preliminary data that we see from the C-03 does support our investments into this program in the first-line head and neck setting. So based on our conclusion that this is our lead asset, where we'll be able to drive the majority of shareholder value in the near term, our next step was to design a randomized Phase II trial, which will show VB10.16's contribution on top of the current standard of care, which in this case is KEYTRUDA monotherapy in a head-to-head comparison, which will have the ability to generate clinical data within the next 24 months. We chose the indication first-line head and neck based on both the unmet need in this market, the combined market potential and of course, also, again, with the ability to have readouts within our cash runway. In addition to generating very important proof of principle or proof-of-concept data within the program, we also do believe that this activity will be derisking the entire Nykode platform as randomized clinical data will have a validating spillover effect on all other APC-driven cancer vaccines we may deliver in the future, including VB10.NEO. And as a very natural step for the development stage, which VB10.16 is, we have also now had approval or acceptance for our INN name for VB10.16, which is abipapogene suvaplasmid or short is abi-suva. And hence forward, we will be calling VB10.16 abi-suva in our continued communication. So first-line head and neck or head and neck in total does represent a significant market potential for abi-suva. The total estimated market size for HPV16-driven cancer types -- cancer in head and neck is estimated to be USD 1.1 billion with a predicted CAGR of 9.2%. Patients -- the HPV16-driven head and neck patients are younger than the rest of head and neck patients and therefore, does call for more unmet need and stronger investments into this segment. We do see a remaining unmet need since the current standard of care does leave room for improvement and the majority of other head and neck-focused development programs seem to be focusing mainly on HPV-negative patient populations. When we look at the direct competitors in the HPV16-specific treatments, we do find strength in comparing our data to what has been reported to our competitors, which again gives us conviction that abi-suva has a role to play in this segment here. Quick look at the trial, which we will be calling Abili-T. It is going to be a randomized controlled trial enrolling up to 100 patients, randomized 1:1 into 2 arms. One arm will combine abi-suva with pembrolizumab. The other one, we will be giving pembrolizumab alone. We will, of course, be enrolling HPV16-positive head and neck patients, first-line, PD-L1 positive, and we will be analyzing the usual battery of endpoints with ORR and PFS and of course, also median survival as some of the key ones to look at for this trial here. We will be planning a series of interim analysis and very importantly, the first interim analysis, which will encompass approximately 1/3 of the patients is expected during 2027, which is within our estimated cash runway. So in summary, we consider abi-suva our key assets and key value driver. We do see a large remaining unmet need, which needs to be addressed. We have high conviction in our program based on 2 finalized and one ongoing trial, showing strong and durable efficacy, efficacy correlated with immune response, a very favorable safety profile. We've shown this both in advanced cancer and in premalignant setting. And as I said, in addition to the 2 finalized trials, the preliminary data from the ongoing trial also does indicate support and does indicate the same level of benefit on top of the standard of care, which gives us the conviction to move forward with this plan here. Our strategic approach is to start a randomized clinical trial and is designed both to show effect on top of standard of care and to deliver the first interim analysis well within our cash runway. I'm going to hand over the mic to Agnete, who will take us through the program for VB10.NEO.

Thank you, Michael. So there is no doubt that we are entering a defining period for individualized neoantigen therapies. We know that this space has a huge market potential. It's possible to treat basically all tumor types with an individualized neoantigen therapy. These days, we're actually looking at an ongoing Phase II and Phase III randomized clinical trial using this concept from our peers. And there's a strong focus these days on doing these trials in adjuvant setting, meaning in patients that's gone through a definitive treatment where the tumor mass is low and where these therapies are now actively being pursued. We've never seen higher investments in the space before than what we see now and these readouts -- key readouts from these years are expected within the next 18 months, so what we consider shortly. It's an emerging space. We see a huge potential market. And there are currently, as Michael alluded to, a few players that are in position to move into this market. There is also definitely room for technologies with improved efficacy, also with improved cost of goods and turnaround time, which is essential for succeeding with individualized therapies. We do believe Nykode is now well positioned as the most attractive unencumbered individualized neoantigen therapy. We intend to further strengthen this position as the most attractive unencumbered INT through selected activities ready then to leverage readouts. So going through some of the key data points that we see is putting us in a good space in this field. We have our own in-house proprietary AI algorithm able to select individualized neoantigens on each patient based on their biopsies and identification of tumor-specific mutations. We have even seen that within the 20 neoantigens that we select per patient our algorithm is ranking the top 10 higher than the top 20 -- or the 10 to 20 neoepitopes. So there is even a correlation between the epitopes that we select to be -- predicted to be high-risk immunogenic and those that are actually proving to be immunogenic in our patients so far. In general, we can say that we have seen strong immune responses in our clinical trials and clinical data, showing that is selected neoepitopes are able to elicit immune responses in patients. These are even in heavily pretreated late-stage patients. Some of these, particularly in N-02 also received few vaccinations, which increases our confidence in the platform's ability to induce immune responses. And we expect to see this even further strengthened if we, in the future, we move into adjuvant setting. We see the majority of the patients having epitopes are able to reduce de novo responses, meaning eliciting an immune response to epitopes that were not able to see an immune response before vaccinations, up to 100% of the patients do see an immune response to the vaccine-induced neoantigens. So we are in good space here. Importantly and more importantly than off-the-shelf vaccines, our manufacturing is essential to succeed in this space. We do have a robust supply chain. We have, over time, significantly improved the turnaround time. As you can see here, today, the current setup allows a robust 7-week turnaround time in clinical setting, and we do also look into potential for further improvements that are tangible within a short time frame. We have an established supply chain with all vendors involved in full turnaround time here, and we do have a clear path to also competitive cost of goods. If we can go to next. So in summary, VB10.NEO is well positioned as best unencumbered individualized therapy. There's a huge unmet medical need. We know we can potentially treat all tumor types with this treatment. So there will be space for multiple players. We do see a readout from these multiple large randomized trials from peers expected in the next 18 months that will be definitively impacting the interest in the field of individualized therapies and also have spillover effect for off-the-shelf T-cell therapies. We do have competitive strength. Both we have clinical data, strong immunogenicity in heavily pretreated patients. We do have proprietary algorithm, proven to identify the most immunogenic epitopes. The fact that we are focusing on a plasma DNA technology is providing us with a competitive manufacturing time as well as cost of goods, which will be essential in the future and our robust manufacturing process is able to take -- proven to be able to go through this entire process from tumor sample to drug manufacturing in a robust manner. Our strategic approach now is to further strengthen this position with timely and streamlined investments aimed to further improve our competitive advantage and follow the field tightly as we move forward. We go to the next, our tolerance program. First of all, a little background on the antigen-specific immune tolerance to what we're aiming for here is really a new way of thinking about autoimmune disease treatments. The current problem is that the treatments that are available for patients today, even the latest advancements, they still focus on treating the symptoms. They do not address the underlying root cause of the disease. That also means that there are side effects that are frequently impairing the quality of life of these patients, and it's not offering a potential cure. We have 1 out of 10 in the global population is actually affected by autoimmune diseases, meaning that the market size is huge, and there is a huge need and a huge potential for novel treatments in this space. The future, we believe and the field believe could be antigen-specific immune tolerance, which is a new way of addressing these diseases, addressing really the underlying cause of the autoimmune disease, which can offer the prospects of a cure, and that will obviously increase the number of patients that can get a meaningful treatment and significantly improve the quality of life. We go to the next. The approach that we are taking here is to induce fully antigen-specific immune tolerance, and that's by targeting these epitopes that are causing the disease. We do that by using our technology and making sure that these disease-causing epitopes are presented to the immune system through our APC targeted technology in a manner that can lead to the upregulation of regulatory T cells that are focusing on downregulating this antigen-specific disease-causing effector T cells and effector B cells. If you go to the next. This field is new. We are still looking for potential first approval of any therapies in this space. We have -- we are seeing quite a few Phase I trials, but it's still new and holds a lot of promise. What we consider the best approach here is to aim for generating the best-in-class antigen-specific immune tolerance platform. The ideal platform in this space should aim at generating long-lasting efficacy, ideally at the late onset in the disease caused by therapy, and we can see that we need this in preclinical models, and it should be with convenient dosing. So far, we have also recently presented long-lasting efficacy in the late onset model in this MS model that we are working with, with only 2 doses long-term efficacy. This is something we are now focusing on expanding and looking into a range of disease models to support this strong ability to change the course of the disease. Another important criteria is to generate specific regulation of not only one of the disease-causing immune cells, but all major autoreactive disease-causing cells. We have actually, in the last year, demonstrated regulation of all major autoreactive cells. That means we have seen downregulation of autoreactive B cells that are secreting autoreactive antibodies as well as downregulating of disease-causing effector T cells and upregulation of regulatory T cells. This provides us with a unique ability to further look into the versatility of our technology. We are the only company harboring a technology that can really fine-tune these immune responses by working with our APC-targeted technology and really understand what would be the optimal way of generating the perfect immune response that is leading to the most effective therapy for a range of autoimmune diseases. Another aspect in this field is that we are still working on with the optimal antigens across multiple of these diseases. The ability to incorporate multiple antigens into one vaccine module and also using AI solutions in order to identify and select and combine these antigens is going to be a huge benefit for the field. We have recently shown that we can use our AI-powered vaccine design to generate these multi-antigen vaccines. And we have validated these leads into vaccine constructs that are functional in vitro, and we are now looking into demonstrating their in vivo translatability. We will continue to invest to demonstrate best-in-class technology and substantiate Nykode's position in this novel therapeutic area in the next period. So to summarize, we are increasing our investment based on the latest achievements in order to develop the best-in-class antigen-specific immune tolerance platform. There's a huge unmet need. As I said, the current treatments are not optimal for the patients. And if we succeed with this field, this can be considered the holy grail of treatment in autoimmune disease therapies. We do have a range of competitive strengths in this field. Our promising data in the preclinical models do show this long-lasting efficacy also in late-stage disease. We have the potential of providing the unique best-in-class modulation of the immune responses through our APC-targeting technology that we don't see with any other players in the field. So our strategic approach is to focus now really on substantiating and increasing the confidence in the platform's ability to be best-in-class, ready to then enter into drug development in the future with or without partners and establish this disease-specific immune tolerance across a range of disease. And I think we'll hand over to Harald again.

Thank you, Agnete. We are well positioned to execute our updated strategy with a cash position of $70 million at the end of the second quarter. With disciplined execution and strong financial focus, we will reach key inflection points within the estimated cash runway into 2028. This does not include the pending tax case where we have booked a noncurrent receivable amounting to $32.2 million at the end of the second quarter as further described in the quarterly report. As communicated in the first quarter, we have received a letter from the tax authorities that we can expect a draft of the recommendation from the secretariat in the first quarter of 2026. Nykode is confident that we will receive a positive ruling in the tax case, also based on advice from third-party tax experts. A positive outcome would push the cash runway even further into 2029. And with that, I will give the word back to Michael for some closing remarks.

Thank you very much, and I'll just close this down before we open up for questions. I really hope you can all sense our excitement and enthusiasm with this new strategy for Nykode. For VB10.16, we will be initiating the randomized clinical trial controlled trial, which we think this platform needs now. We'll be doing it in a large patient population with a very sizable market opportunity. And we'll be doing it with a time line that allows us to reach meaningful interim analysis within our cash runway. For VB10.NEO, our individualized neoantigen therapy, we continue to see that market as an extremely interesting concept with several key peer readouts within the next 18 months. Some of them could come very soon. We believe our technology is very well positioned to be one of the most attractive unencumbered assets at this time point, and we want to be in a position to leverage any shifts in the deal activity should that come. For tolerance, we continue to believe we have potential best-in-class, and we will invest to strengthen that position. And all of this we'll be doing on the platform of being very well capitalized and a cost discipline that will allow us to reach several meaningful inflection points within our cash runway. I think at this time point, Kevin, we are ready to close down and open up for questions from the audience.

[Operator Instructions] Our first questions today are coming from Geir Holom from DNB Carnegie. The first one is, I understand that the details of the trial design have not yet been finalized, but in boarder terms, how would you define a successful outcome for this study?

Thank you very much, Geir, for these questions. And as with all trials in our field, it is going to be a little bit of a collection of endpoints that we would be looking at. As you know, with these trials, the first data point that we can read out is typical objective response rate. And we do see from the C-02 trial as long as the -- as well as the preliminary insights we have to the ongoing C-03 trial that VB10.16 or abi-suva does tend to lift the ORR compared to the standard of care alone. So that's going to be a meaningful parameter to look at. But as we have reported earlier, we are at least as excited, if not more excited, by the durability parameters that we see from the C-02 trial. So we will, of course, also be looking forward to see how abi-suva on top of pembrolizumab lifts both the progression-free survival, the duration of response and the median overall survival. And of course, the benchmark that we will need to beat in this case here is the respective data points from KEYTRUDA alone since that's what we will be comparing with head to head.

A follow-up from Geir Holom -- yes, this will be a follow-up from Geir Holom from DNB Carnegie. Could you please elaborate on your considerations for selecting the geographical territory or territories in which to pursue the trial, for example, Europe and the U.S.? And what key steps remain before initiation?

Yes. Also a very good question, Geir. So we are still in the phase of planning the operational execution of this one here. So we do have some optionality in terms of selecting the regions. I would advise everybody to consider Europe a key region for us to run this trial in, and that's not least based on the very good experience we have from the ongoing C-03 trial, which is in the same indication, first-line head and neck patients. So here, we've had very good experience with several of the sites across a number of countries in this trial here, and it is natural to expect that we'll continue leveraging that relationship and those experiences here. We may decide to add further countries and are in the process of deciding that -- analyzing and deciding that right now, and we'll be able to give you more insight to that as we take those decisions over the course of the next couple of months. You also asked what the next key steps in the initiation is. So first of all, we have now finalized the design of the trial here. We are discussing that with our potential partners, MSD, and have, of course, had a very good discussion with them also, had very, very good input to the design from MSD. Next step is to submit the protocol along with supportive documentation to the authorities in Europe as well as additional regions we might want to include into the study. We expect to be doing that over the course of the coming months through the rest of 2025. And as long as we haven't had feedback to that process, we can't give you a very precise timing for when we expect to see the first patient in. But I would, again, here advise you to think in terms of mid next year.

Our next question is a follow-up from Geir. Could you also share your perspective on the competitive landscape within the relevant patient population as well as your assessment of potentially competing assets currently in clinical development?

Yes. So I would divide those -- that question into 2 different types of competing assets. There are other assets in development for head and neck, including some that actually has been showing encouraging data. Our assessment and the assessment we also get from the external advisers we talk to is those assets will mainly be focusing on the HPV-negative head and neck segment for very natural reasons when you consider their mechanisms of action. So we do not see those assets as the key competitors or the direct competitors in the field of HPV16-driven head and neck cancer. If you look at the field of direct competitors, so that means HPV16-specific therapies, over the last couple of years, we have seen the number of competitors decrease significantly with several of the assets failing their clinical trials and some of the companies actually no longer in operations. We do see a few competitors that we consider our main competitors in the field here. When we compare to the data, the sparse data that have been reported from those competitors, we do think our immune responses comes out on top of that one. We think we have an edge, a competitive edge in the dose regimens when comparing to what the competitors is seeing. And there's so far been no data that gives us any indication that we would be coming out with inferior data neither on immune responses, objective responses or durability responses.

Our next question today is coming from Eivind Haugan from Abraxas. With the current leadership in the U.S. Health Department that are to put a carefully very anti-modern vaccine technology, are you looking to run future trials in Europe instead of the U.S.?

Yes, thank you very much, Eivind, for that question. I am -- and this obviously is on my own account. I would encourage everybody to be a little bit careful putting an equal between the messages you've seen towards prophylactic vaccines directed to infectious diseases in the U.S., where I do agree there's been some very strong messages coming out from the administration on the one hand. And on the other hand, oncology immunotherapies directed towards treating advanced -- or locally advanced cancer types like Nykode is doing, I have not sensed the same level of messages from the administration directed towards immunotherapies that Nykode is engaged in. So I do not feel that level of concern. Still, as I mentioned before to the other question, our plan right now is to conduct the next Phase II trial with Europe as the core area. We're not taking a firm decision not to include U.S. at this time point here. But as I said, based on our very good experience conducting the trial in Europe, you should see Europe as the core area for the Abili-T trial with abi-suva.