Good day, and thank you for standing by. Welcome to the Evaxion Biotech Q2 Results Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Per Norlen. Please go ahead..

Thank you, operator. Good morning and good afternoon, everyone. I'm Per Norlen, Chief Executive Officer at Evaxion. And with me today is Jesper Nyegaard Nissen, Chief Operating Officer and Interim Chief Financial Officer at Evaxion since August 1. First, before we start, a note on forward-looking statements.

Let me remind you that the following discussion contains certain statements that are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.

Because forward-looking statements involve risks and uncertainties, they are not guarantees of future performance, and actual results may differ materially from those expressed or implied by these forward-looking statements due to a variety of factors, including those risk factors discussed in the company's annual report Form 20-F and the company's current and future reports submitted to the Securities and Exchange Commission, SEC.

With that said, I'm pleased to welcome you to today's conference call. During the call, I will provide you with a brief overview of the excellent progress we made across our pipeline and on our core AI technologies over the past six months.

I will then turn the call over to Jesper, who will review our financial report for the second quarter of 2023, and then we will open up the line for questions. We have a presentation which you can follow, and this is Slide 1, and we will start by taking a quick look at today's agenda, which is on Slide 2. So, Slide 2.

I will start with our recent communication on our staphylococcus aureus vaccine EVX-B1, where we were pleased to present preclinical proof-of-concept data showing that the vaccine candidate can clear staphylococcus infections.

We will also show the early-stage clinical data reported on AACR 2023 and ASCO23, indicating that patients treated with our vaccines, EVX-01 or EVX-02, in combination with the checkpoint inhibitor experienced a treatment benefit and with good overall tolerability.

Further, I will provide an update on our next-generation personalized cancer vaccine candidate EVX-03, which is approaching the clinic as well as our novel AI technology observed, that's been used to identify a new source of antigens for personalized cancer vaccines. And that's planned for clinical validation through the EVX-03 program.

And of course, the financial update with second quarter financial results as presented by Jesper. So, let's start with EVX-B1 on Slide 3. So, move to Slide 3. In late July, we presented novel data on our vaccine candidate for prevention of staphylococcus aureus disease, EVX-B1, at the Gordon Research Conference in New Hampshire, USA.

The vaccine candidate has been generated using our AI technology. And apart from the protective effect demonstrated in the sepsis disease model, which we have shown previously and that you can see for reference on the left-hand side, we have now assessed the ability of EVX-B2 to clear bacteria from internal organs.

And if you take a brief look at the graph on the right-hand side, the results are quite clear. No bacteria could be detected in any organs four weeks after bacterial challenge.

The program is currently in late preclinical development and we are in discussions with a potential partner on its future development and commercialization in accordance with our strategy. So, now let's switch to oncology and our clinical programs for personalized cancer vaccines, that's Slide 4.

So if you have the right slide in front of you, you should be able to read EVX-01 on the top, and it should show the readout of our clinical Phase 1/2 clinical trial in metastatic melanoma.

EVX-01 is a personalized peptide-based cancer vaccine, where patient-specific tumor mutations, so-called neoantigens, are identified using our AI technology pioneer.

These neoantigens are ideal targets for cancer vaccine and that they derived from tumor mutations and therefore, only exists in tumor cells, which means that the treatment can become very specific for the tumor with less risk and negative effects on healthy tissue.

In the first human trial, six biweekly doses of EVX-01 were given in combination with PD-1 therapy. The treatment was well tolerated. And of the 12 patients that completed the trial, eight showed an objective response to the treatment.

If you look on the graph on the right-hand side, you should see a horizontal black line indicating the tumor size at the start of treatment. You can see 12 bars, which represents the best objective responses for each patient in the trial.

If the bar goes up, tumors increase in size, and if the bar goes down, this means that the tumors decrease in size. And to our excitement, most bars do actually go down. And for eight of the patients, the outcome fulfills the criteria of a treatment response. We're obviously really enthusiastic about these results.

It's better than you would expect from PD-1 alone, and it speaks to the strength of our AI technology in selecting the right neoantigens for personalized cancer vaccine. This was EVX-01, but we have also reported data from our DNA-based cancer vaccine EVX-02, that's on the next slide, Slide 5. It just say EVX-02 at the top.

This is a clinical trial of EVX-02 in combination with nivolumab, a PD-1 blocker as adjuvant therapy to prevent cancer relapse after a complete surgical resection on malignant melanoma over 12 months. It's a DNA-based therapy. The image shows the DNA plasmid carrying the genes for patient-specific neoantigens.

So, the vaccine is administered as DNA and then translated to neoantigens in the patients, and the results look very promising. All 10 patients that have completed the vaccination with EVX-02 were relapse free at the end of the trial.

The vaccine was well tolerated in all patients and induced a new antigen-specific T cell immune response in all patients, which can be seen as a proof of mechanism for our DNA vaccine technology. But we do not plan to develop this vaccine candidate further for the time being. And why you may ask.

Well, it's because we have already developed a next-generation vaccine based on EVX-02 and the new vaccine -- candidate is called EVX-03, and which we intend to prioritize. Let's move to Slide 6. So, EVX-03. EVX-03 is the first-ever personalized ERV cancer vaccine.

It builds on EVX-02, meaning that it's a DNA-based personalized cancer vaccine, but it has two major upgrades. One upgrade is the addition of a genetic immune adjuvant, which aims to boost the immune system risk, immune response to the vaccine.

The other upgrade is the addition of a novel vaccine target, so-called ERVs, which I will come back to you in a minute. Let's start with the genetic immune adjuvant. This is a chemoattractant molecule, which is incorporated into the DNA plasmid, as shown for EVX-03 to the right of the picture.

EVX-02 is a plasmid on the left-hand side, incorporating DNA coding for neoantigens, whereas EVX-03 on the right-hand side, in addition, incorporates the DNA sequence for the genetic immune adjuvant, which is shown in green.

The DNA plasmid is administered to the patient under adjuvant, a chemoattractant molecule called CCL19 is produced inside the cells of the patient at the injection site. And the consequence of this is that the genetic adjuvant attracts immune cells to the vaccination site, which is thought to make the vaccine much more effective.

Preclinical data supporting these claims were presented in detail at our R&D Day in May, and you are welcome to visit those presentations at our homepage. The second upgrade of EVX-03 is on the antigen side. Personalized cancer vaccines are usually dependent on neoantigens, which are created by mutations in the tumor.

This is how the immune system can identify and attack tumors. But it's not the only way for the immune system to identify tumor.

Using artificial intelligence and specifically our novel AI technology observed, we have identified a novel source of tumor-selective antigens that can be used for personalized cancer vaccines, so-called ERVs, which stands for endogenous retroviruses, and which are also included in EVX-03 as shown to the right.

Let's switch to Slide 7, and our novel AI platform ObsERV. So, Slide 7, ObsERV, it's our AI technology for identification of ERVs, and ERVs constitute a novel source of cancer vaccine antigens that may allow effective treatment also patients who are unresponsive to today's cancer immunotherapies.

But what are ERVs? Well, ERVs are viral DNA leftovers from historical infections throughout human history. And we all have it. In fact, about [8%] (ph) of our DNA has viral origin. But no need to worry, this DNA is resting and do no harm to us, at least not under normal conditions where ERVs are under tight control by our genetic machinery.

But in cancer cells, these control mechanisms often break down, leading to selective expression of ERVs on human cancer cells. And these ERVs, of course, ideal targets for the immune system. The cancer cell basically waits with a red flag saying, "I don't belong here. I'm infected by a virus," and potentially leading to an immune attack.

And that seems to happen quite regularly. We have recently shown that patients that produce ERVs in their tumors may survive longer.

If you take a look on the left-hand side in this slide, you can see two survival curves in patients with low tumor mutational -- sorry, low tumor mutational burden, or TMB, which means that there are a few tumor mutations.

The red line shows the survival in patients with few ERVs whereas the blue line shows the longer survival in patients with a lot of ERVs, presumably because such tumors with a lot of ERVs are more likely to be attacked by the immune system, and hence, the better survival.

And in preclinical models, we have shown that this can be used to make a personalized cancer vaccine that effectively combats tumors. So we believe that EVX-03 may be more effective than current vaccines that are based only on neoantigens. And notably, that it can be broadened -- we can broaden the target population quite significantly.

So why is that? Why do we think we can broaden the target population? It's because today's immunotherapies are more or less restricted to patients with hot tumors, which are tumors where there are many tumor mutations called tumors with high tumor mutational burden, or high TMB.

But ERVs seem to be equally highly expressed in tumors with few mutations or also called cold tumors. And these actually make up the majority of all patients' tumors. So, potentially a much larger target population, and we should remember that EVX-03 will contain both neoantigens and ERVs, and also our novel genetic adjuvant technology.

And that's why we refer to EVX-03 as a next-generation personalized cancer vaccines with potential for superior effect. So, we plan to submit an application for start of Phase 1 clinical trial for EVX-03 in Q4 this year and expect to be first in the world with a personalized ERV vaccine in patients.

So, in addition to the operational progress, we have recently signed an agreement with the Global Growth Holding Limited, including financial commitments totaling up to $20 million, available in tranches over the next three years, subject to SEC approval.

The financing is intended to cover the company's working capital needs, including the advancement of EVX-03 to Phase 1 readiness, while the actual initiation of clinical activities for EVX-03 are subject to additional funding. This was the updates from the operations. And now I would like to turn the call over to Jesper..

Thank you, Per. I will focus my comments on our financial results for Q2 '23 compared to Q2 2022. All of the numbers that I will review in this discussion will be approximate for easy sharing during the call.

For additional information regarding our second quarter results and prior-period comparisons, please refer to the business update and second quarter 2023 financial results press release and our Form 6-K, both filed last week. Starting with our expenses.

Research and development expenses for Q2 2023 amounted to $2.9 million, and general and administrative expenses to $2.7 million for the period. Research and development decreased by $1.2 million or about 29% compared to the same period last year.

The decrease was primarily driven by a decrease in external development costs of $0.7 million related to clinical trial activities. Further, a decrease we've seen in employee-related costs of $0.5 million due to reduced headcount in personnel. General and administrative expenses increased by $0.6 million or 28% compared to the same period last year.

The increase was primarily due to an increase of $0.3 million in external costs related to professional fees and overhead and an increase in employee-related costs of $0.2 million.

These increases are due to the timing of funding projects and business initiatives compared to 2022 and the expansion of the organization throughout 2022 to meet the requirements as a listed company. The net loss for Q2 2023 amounted to a loss of $5.7 million compared to a loss of $4.8 million for the same period last year.

As of June 30, 2023, we have $7.1 million in cash and cash equivalents. We expect our cash balance to be sufficient to fund operations into December 2023. Now, I would like to turn the call back to you, Per, for a few closing remarks before Q&A..

Thank you, Jesper. And now a brief look into the future. So looking into the rest of 2023, we expect to deliver on two important and near-term milestones. We plan to report interim results from the ongoing EVX-01 Phase 2 trial in patients with metastatic melanoma in Q4 this year.

And also in Q4 to submit a clinical trial application to start a Phase I study for EVX-03. But as mentioned before, this is subject to additional funding in the range of $5 million to $10 million secured before initiation.

So, in conclusion, I'm very happy about the progress and believe we have potential to develop vaccines that may truly improve the treatment of cancer as well as the prevention of infectious disease around the world. On behalf of everyone at Evaxion, I invite you to continue to stay in touch with the company and follow our progress in 2023 and beyond.

So, operator, over to you for Q&A..

Thank you. [Operator Instructions] We will not take the first question from the line of Thomas Flaten. Please state your company name and ask your question..

Hey, guys. This is Thomas from Lake Street. A couple of quick questions. Per, you mentioned in your prepared remarks that you were discussing the staph aureus program with a partner.

Has the deal been struck there? Or is this part of a partnership discussion for a deal that yet to be announced?.

So say that again, what was the question if we already have announced the partner or....

You mentioned that you were discussing with the partner the future for the staph aureus program. I was curious if there was a partnership that had already been struck, or is this was a potential partner..

No -- yes. Thank you for that question, Thomas. Yes. So, sorry if that was confusing. Yes, I would refer to our strategy for these infectious disease programs, which is to find partnerships quite early. So, we are in partnership discussions on some of our assets and including this product, and we have not yet announced a partnership.

So that will be done in due time when a partnership is in place. But we do not have -- we have not signed a partnership yet..

Got it. And then for the EVX-01 readout in the fourth quarter, I believe last time -- last quarter, you thought that you might have up to 20 patients in that readout.

Do you have any updates for us on how many patients you expect to have? And what format that release will come in press release versus scientific meeting?.

Yes. We intend to present the interim data at the end of this year at one of the important -- well, cancer conferences and SITC would be one such conference, but it's yet to be finally determined. And we expect to present data from the first, say, handful of patients.

But as you say, we have recruited patients, but we have also reduced the size of the trial. So currently, it looks to be slightly less than 20 patients, the exact number of patients to be determined. But as you say, we will report the first handful of patients towards end of the year at the conference..

Excellent. And then just one final one.

The cash runway into the fourth quarter, does that depend on additional use of the ATM or the Lincoln Park facility? Or can you get into December using the $7.1 million that you had at the end of June?.

Yes, that's correct. So that -- the runway is currently communicated with that assumption that we get additional funding..

Excellent. I appreciate taking the questions. Thank you..

Thanks so much..

Thank you. We will now take the next question from the line of Ahu Demir. Please state your company name and ask you question..

Good morning and good afternoon. I am Ahu Demir calling from Ladenburg Thalmann. Two questions from us. One follow-up to Thomas' question about EVX-01 Phase 2 study.

How many of the patients are in the timing stage? Are all patients are in the timing stage versus boosting stage? And do you plan to follow up these patients and continue with the boosting stage as well?.

Yes. So to the trial, and as you referred -- thank you, Ahu, for the question. We have -- this is a trial where we combine with PD-1 and we -- which is given to the patients the first three months, and then they continue and then we give the vaccine in combination.

So, we have initiated vaccine treatments with EVX-01 in a bit more than a dozen patients, and we are expecting to administer the vaccine to the last few patients quite soon. So, it's all more or less closing in on the number of patients we'll have in the trial.

So, sure -- did that answer your question?.

So, all the patients will actually have the boosting basically. So, it will be, as I understand, between week 12 to 24, you have the timing section.

So, these are the patients you have a much longer follow-up?.

Yes. Sorry, now I understand. So yes, we do not know that yet, of course. So it's quite a lot of patients has been entering the trial during the spring. So, we are not yet there where we will know if they will go into the next phase of boosting.

But that is the plan for patients if they stay on the trial and if they're not progressing that they will be offered boosting..

I see. So all the patients will see end of this year would be at the timing stage basically? Is that....

Yes, that will be the data we'll present at the end of this year, yes..

Okay. Helpful to know. And my second question is ERVs. This is something relatively new compared to new antigen approach. So I am curious how do you select your ERVs? How specific are they among patients or within an indication? Just curious if you could elaborate on the ERV side..

Yes. I can give some more background. So there's a lot of ERV DNA in all humans. And as I said before, these are more or less randomly expressed in some cancers when the machine -- control machinery breaks down. That seem to be around, say, 10,000 or 20,000 different ERVs that can be expressed.

So, finding they are very different from each -- from patient to patient. And that said, there are sometimes in some patients that could be overlapping ERVs. But we are in this trial looking for producing a fully personalized vaccine towards ERVs, and that's really where we are unique.

So -- and these ERVs, they are selected based on likelihood to induce a strong immune response, given that they are relatively long foreign peptides that can be actually quite a large number of epitopes on each Europe, so we can find a very, say, high-quality antigens whenever we find a strong expression of these ERVs in patients.

And it's based more or less in the same way as when you select the new antigens that you look for how well they match the immune system of that patient. So, you need to predict the shape of the patients' immune receptors and also the shape of the epitopes on the ERV, and then how likely they are to adhere to one another.

That is one of the key factors we look at, but there are many more aspects to it..

Got it. Thank you very much for taking my questions..

Thanks so much, Ahu..

Thank you. We will now take the next question. It comes from the line of Swayampakula Ramakanth. Please state your company name and ask your question..

Thank you. This is RK from H.C. Wainwright. Good afternoon, Per. So, a quick question on EVX-01. So, on the Phase 1 portion of that study, you had presented some interim data on the nine patients.

Is there going to be an additional data in the next update that you're going to be presenting at the end of this year? Or is it mostly going to be initial data from the Phase 2 portion of the study?.

Yes. Thank you, RK, for that question. So, at ASCO this year, we presented the full data set. So, as you mentioned, we previously have shown interim data from nine patients. But at ASCO in June, we presented -- and the slide that's in the presentation today is actually on 12 patients, which is a full patient set where we do have eight responders.

So there, we have already presented the data. We will likely publish the more scientific details later on, but we don't intend to present additional clinical outcome data on these programs. So that's already final.

At the end of this year, we will focus on the interim data of the Phase 2 trial, which is a slightly different design, and it's then sites in Australia and in Europe. So, it's a multi-center trial..

Really good. And then on the ERVs, I'm just trying to understand a little bit more on the ERV.

Are the ERVs expressed uniquely based on the patient or are they expressed uniquely based on the indication?.

Yes. That question, I would say, is uniquely based on the patient. We think there could be some overlaps sometimes depending on the cancer.

And maybe if you reason around how they're expressed if the sort of -- if there is a signal to express a certain part of the genes in a patient, then -- if that signal is common between patients, there may be an overlap between those ERVs. But usually, the expression of that is completely independent.

So, to answer your question a bit more simply, we think it's highly patient-specific, but with the potential to find some overlap. We don't -- are not looking for overlap in the first trial. So, there is fully personalized.

But it's possible that you can find a subpopulation where there is some overlap and you can produce a common drug for several patients..

So, one last question on the ERV again. Do you need -- is there a certain threshold in terms of expression of the ERV for you to make a personalized vaccine against it? Or are you....

That's a very good question, I think, because this is really the key challenge with neoantigens that you need a lot of mutations in order to find enough high-quality neoantigens to make a vaccine. And that's really why personalized cancer vaccines today are restricted to, say, melanoma, a few more indications, lung cancer and so on.

And in other indications where there are a few mutations, maybe it's just a few percent of the patients where you can actually make a personal neoantigens vaccine. With ERVs, we find a slightly different profile. It's not the same indications where they're highly expressed. It's often expressed in patients with cold tumors.

So, it really allows for treating -- making a cancer vaccine for patients with a complete cold tumor without any neoantigens. And -- but in EVX-03, we actually plan to do both. We will sequence the tumor. And if they have good neoantigens, they will -- this will be included in the vaccine.

And then it will be complemented by strong ERVs at the same time. So, we try to pick the best from both worlds. Hopefully, we can also expand the target group quite significantly..

Thank you. Thanks for taking all my questions..

Thank you so much, RK..

Thank you. [Operator Instructions] There are no further questions at this time. I would like to hand back over to Per for final remarks..

Okay. Thank you, everyone, for joining, and thank you for all the questions, and we look forward to stay in touch. Thank you. Bye..

Bye..

That does conclude our conference for today. Thank you for participating. You may now disconnect..