Good morning and welcome to Oncolytics Biotech’s Fourth Quarter and Full Year 2020 Conference Call. All participants are in a listen-only mode. There will be a question-and-answer session at the end of this call. Please be advised that this call is being recorded at the Company’s request.

I would now like to turn the call over to Jon Patton, Director of Investor Relations and Communication. Please go ahead..

Thank you, operator. Good afternoon, everyone, and welcome to Oncolytics Biotech’s fourth quarter and full year 2020 conference call. Earlier today, Oncolytics issued a press release providing financial results and corporate updates for the fourth quarter and full year 2020.

A replay of today’s call will be available on the Events and Presentations section of the Oncolytics website approximately two hours after its completion. After remarks from Company management, we will open the call for Q&A.

As a reminder, various remarks made during this call contain certain forward-looking statements relating to the Company’s business prospects, and development and commercialization of pelareorep, including statements regarding the Company’s focus, strategy and objectives, the Company’s belief as to the potential and mode of action of pelareorep as a cancer therapeutic, the design, aims and anticipated benefits of the Company’s current or pending clinical trials and other statements related to anticipated developments in the Company’s business.

These statements are based on management’s current expectations and beliefs and are subject to a number of factors which involve known and unknown risks, delays, uncertainties and other factors not under the Company’s control that may cause actual results, performance or achievements of the Company to be materially different from the results, performance or expectations implied by these forward-looking statements.

In any forward-looking statement, in which Oncolytics expresses an expectation or belief as to future results, such expectations or beliefs are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will be achieved.

These factors include results of current or pending clinical trials, risks associated with intellectual property protection, financial projections, actions by regulatory agencies and those other factors detailed in the Company’s filings with SEDAR and the SEC.

Oncolytics does not undertake any obligation to update these forward-looking statements except as required by applicable laws. Now, I will turn the call over to Dr. Matt Coffey, President and Chief Executive Officer of Oncolytics Biotech.

Matt?.

First, the aim to confirm pelareorep’s immunotherapeutic mechanism mechanism of action to reinforce the promising survival benefit of IND-213; Second, they aim to validate the clinical utility of our novel blood-based biomarker measuring T cell clonality to predict patient response to pelareorep; And finally, they’re designed to evaluate pelareorep’s ability to enhance the efficacy of checkpoint inhibitors to improve breast cancer patient outcomes.

I’ll discuss in a moment, there’s a robust and growing preclinical and clinical datasets supporting the synergistic potential of pelareorep checkpoint inhibitor combination therapies. Over the past year, we’ve made strong progress in all three of these objectives successfully achieving key milestones, despite the pandemic.

Several of these milestones were a result of our continued progression of our AWARE-1 window-of-opportunity study in early stage breast cancer. As a reminder, the study is being conducted in Spain by SOLTI and represents the first use of our clinical supply agreement which Roche.

By doubling the number of AWARE-1 study centers, we were able to accelerate patient enrollment following Spain’s reopening last spring. Today, we are thrilled to say that we have fully enrolled study’s first two cohorts, which examine the effects of pela treatment with or without checkpoint inhibitor therapy.

Evaluation of these cohorts is the core objective of AWARE-1, as these patients have HR+/HER2- breast cancer, the same subtype we intend to examine in future registration study.

AWARE-1 has generated very promising interim data to date, which confirms and tell us immunotherapeutic mechanism of actions and highlight how it acts on both the tumor and the patient’s immune system to aid in the fight against cancer.

Now, on a high level, these data show that pela generates an adaptive T-cell-based immune response that can train the immune system to fight cancer and that remodels normally immunosuppressive tumor microenvironment, thereby making them more amenable to checkpoint inhibitor therapy.

Taking a deeper dive into these interim results, I’ll discuss our most recent AWARE-1 update at the 2020 San Antonio Breast Cancer Symposium. These data show that reo increased tumor PD-L1 expression in all evaluated patients, with expression increasing by an average of 105-fold.

This is a powerful result that speaks to pelareorep’s potential to synergistically combine with checkpoint blockade therapy, as the approval of checkpoint inhibitor is contingent on a minimum PD-L1 expression level in multiple indications.

Data presented at the San Antonio Breast Cancer Symposium also showed that 72% of evaluable patients saw an increase in CelTIL, the study’s primary endpoint and a measure of tumor inflammation that’s associated with favorable clinical outcomes.

Notably, the maximum increase in CelTIL and increase of an approximately 300% was observed in the cohort 2 patient, receiving pelareorep in combination with checkpoint blockade therapy.

These data complement our previously reported AWARE-1 results, which are shown that pelareorep treatment results in a high level of consistent tumor-specific viral replication, an average 14-fold increase in intratumoral CD8 T cells and the generation of new presumptive antiviral and antitumor T cell clones that may facilitate a long-lasting immune memory effect against cancer.

Together, these findings show that we are on track to achieve the three key objectives I mentioned earlier in the call, an example of how pelareorep increases intratumoral CD8-positive T cells and the recruitment of memory T cells, which are crucial requirements to remodeling tumor microenvironments that can enable the success of several immunotherapies.

Looking forward, we plan to report additional AWARE-1 results at AACR in April and final biomarker data from the study in the intended target population in the second half of the year.

These data readouts represent key milestones for the breast cancer program, and they will provide additional insights into the immune response generated in patients receiving pelareorep in combination with checkpoint inhibitor therapy.

Moving on now to BRACELET-1, our Phase 2 trial, evaluating the safety and efficacy of pelareorep-based combination therapies in HR+/HER2- metastatic breast cancer patients. Like in AWARE-1, the talent and dedication of the Oncolytics team allowed us to open sites and enroll patients in the trial despite the pandemic.

To date, we’ve activated 18 of 20 sites that are on track to achieve full enrollment in the fourth quarter of the year. The trial’s safety run-in has been completed with the Data and Safety Monitoring Board verifying pela’s outstanding safety profile.

This is in line with what we have observed with pelareorep across all of our clinical studies, as we have now treated over 900 patients with intravenous pelareorep yet to reach a maximum tolerated dose. We expect to report an additional safety update from the trial in the second half of the year.

As you may know, BRACELET-1 was designed in collaboration with Pfizer, Merck Serono and is being conducted under the hospices of PrECOG, a world-renowned research organization. This design is essentially identical to that of IND-213 study with two exceptions.

First, the study focuses exclusively on HR+/HER2- subset of metastatic breast cancer patients, which is the patient population in which we saw the most pronounced overall survival benefit in IND-213. Second, BRACELET-1 adds an additional study arm to evaluate pelareorep in combination with Pfizer and Merck’s anti PD-L1 checkpoint inhibitor, Bavencio.

As mentioned earlier, this design was developed to support the overall survival advantage observed in IND-213 by demonstrating pelareorep’s ability to induce robust antitumor immune response in near identical patient population.

Additionally, the study aims to validate T cell clonality’s utility as the clinical biomarker and evaluate the efficacy of pela checkpoint inhibitor combination therapy. Ultimately, we expect the continued progress of BRACELET-1 to complement our AWARE-1 data set and drive our lead breast cancer program towards a registration study.

We believe this program has been substantially derisked as we’ve demonstrated the ability to advance our trials, despite the pandemic, and generate a very strong clinical data set in the process.

These accomplishments add to our prior regulatory achievements, which include fast track designation and a special protocol assessment agreement for this program. As we continue to move forward in 2021, I’m confident that our highly talented employees, investigators and partners, will keep us on track to execute on our stated clinical objectives.

This will allow us to advance pelareorep towards regulatory approval while simultaneously positioning the Company for sustained growth. Now, I’d like to shift gears a bit and revisit some of the clinical data we’ve generated beyond early breast cancer program.

Over the past year, we made key stride across our pipeline, announcing clinical data in a variety of indications that highlight the broad applicability of pelareorep’s immunotherapeutic mechanism of action. I’ve discussed a lot of these data on prior calls.

So, rather than go through all of them in detail, I’ll briefly touch on the key results and then let Andrew talk a bit about how they’re driving our business development strategy.

In our gastrointestinal cancer program, we reported a greater than 90% clinical benefit rate in KRAS-mutated colorectal cancer patients in one study, and a greater than 80% increase in progression-free survival in pancreatic cancer patients with low level CEACAM6 expression in an NCI sponsored randomized study, highlighting CEACAM6 potential as a predictive biomarker pelareorep response.

These data, together with the prior data showing rapid maturation of dendritic cells, increased activation of CD8 positive T cells and upregulation of tumor PD-L1 expression following pelareorep treatment in GI cancers form the basis of our GI cancer program and our recently announced collaboration with Roche and AIO in a Phase 1/2 GOBLET study, evaluating pelareorep checkpoint inhibitor combination therapy in multiple GI cancer indications.

Last year, we also showed the benefits of pelareorep could extend to hematological malignancies, reporting fascinating proof-of-concept data in multiple myeloma.

When evaluating pelareorep in combination with the proteasome inhibitor, carfilzomib, we saw the activation of a profound inflammatory response, accompanied by a 50% overall response rate and an 83% clinical benefit rate in carfilzomib refractory patients who are notoriously difficult to treat.

These results indicate the first reported incidence of cytokine release syndrome associated with clinical response in multiple myeloma.

The induction of a cytokine release syndrome, which can be effectively managed but with well-established therapies, highlights the ability of pelareorep, carfilzomib combination treatment to induce robust immune cell activation and tumor lysis in multiple myeloma patients.

These data, together with our prior results from a trial showing a dramatic increase in PD-L1 expression with pelareorep treatment provides yet another example of pelareorep’s immunotherapeutic effects. Lastly, I’d like to discuss some interesting data we see in neurological tumors, which come from clinical studies, spearheaded by our collaborators.

On our last call, I reported the completion of ReoGlio, an investigator-sponsored Phase 1b trial. This trial evaluated the combination of pela with granulocyte-macrophage colony-stimulating factor alongside standard chemo radiotherapy and adjuvant temozolomide for the treatment of newly diagnosed glioblastoma multiforme or GBM.

Since that call, we presented results from the trial at a 2020 Society of Neuro-Oncology Annual Meeting. These results showed that pelareorep-based combination therapy was well -- was safe and well tolerated and produced compelling signal of efficacy in newly diagnosed GBM patients.

The estimated median progression-free survival in all evaluable patients was 7.8 months, which is encouraging, given the survival rates typically observed in this extremely challenging indication.

Notably, improvements in median progression-free survival correlated with the dose of pelareorep administered, with patients receiving a low dose or a high dose of pelareorep, having estimated median PFS of 6.1 months and 9.4 months, respectively.

We will continue to prioritize the execution of clinical milestones in our breast, GI and hematological cancer programs. We believe that ReoGlio data highlighted an intriguing opportunity for pelareorep that we will evaluate carefully over the coming months.

Now, as I previewed earlier, we also recently saw some very interesting preclinical data with pelareorep in a mirroring solid tumor model to evaluate the potential synergies between pelareorep and CAR-T cell therapy. These data came out of the Mayo Clinic from the lab of Professor of Immunology, Dr.

Richard Vile, a world-renowned expert and key opinion leader in oncolytic viruses and adoptive T cell therapy who joined our Scientific Advisory Board in the fourth quarter of last year. Through these preclinical studies, Dr. Vile has begun to address a critical question about pelareorep.

And that question is, do the immunotherapeutic effects observed in AWARE-1 and other clinical studies position pelareorep to synergistically combine with immunomodulatory agents such as checkpoint inhibitors or beyond checkpoint inhibitors. To answer this question, Dr.

Vile and his colleagues evaluated pelareorep CAR-T cell combination therapy in a solid tumor model. Now, despite their success in hematological cancers, CAR-T therapies have not historically been successful against solid tumors, due to immunosuppressive tumor microenvironments that promote T cell exhaustion and exclusion.

This was the scientific rationale for this preclinical study as AWARE-1 data have demonstrated pelareorep’s ability to recruit T cell to solid tumors and reverse the immunosuppressant microenvironment.

The results from the study showed that this rationale was well founded, as they directly demonstrated pelareorep’s ability to synergistically combine with CAR-T cells and enable their success against solid tumors and preclinical model.

Specifically, the results showed that loading CAR-T cells with pelareorep vastly improve their persistence and efficacy in mice and start contrast to prior studies, showing that the oncolytic virus, VSC actually weakened CAR-T cells.

The efficacy of pelareorep loaded CAR-T cells was then further enhanced by treating mice eight-day later with an intravenous pelareorep boost, which led to generation of highly persistent CAR-T cells, the inhibition of recurrent tumor growth and ultimately tumor cures.

These synergistic effects appear to be specific to pelareorep as following CAR-T pelareorep therapy with an intravenous boost to VSV did not prevent recurrent tumor growth.

Ultimately, the successful translation of these results into the clinic would represent a major accomplishment as it would substantially broaden the applicability of CAR-T cells to a variety of highly prevalent and difficult-to-treat solid tumor indications.

We are now specifically pursuing a partnership strategy to further development of pela as an enabling technology for CAR-T cells and additional immunotherapies that stand to benefit from its clinically demonstrated ability to recruit immune effector cell to solid tumors.

It is our goal to identify partners that will take the lead on this development pathway and assume the research responsibility and costs associated with it. Through this strategy, we aim to minimize risk while retaining upside in the form of upfront, milestones and royalty payments.

With that, I’ll now hand the call off to Andrew to call about how we are leveraging pelareorep inherent advantages and our robust clinical data set to drive our BD efforts and the advancement of our pipeline programs.

Andrew?.

Thanks, Matt. As we said in the past, our goal is to secure global clinical commercialization partnership to both facilitate pelareorep’s approval and maximize its commercial opportunity.

Our efforts to achieve this goal are bolstered, first, with pelareorep’s robust clinical data set; second, pharma and biotech companies, and improving the efficacy of checkpoint inhibitors by pairing them with oncolytic viruses. This is demonstrated through several deals done by companies such as Merck, BMS and J&J.

And finally, there are pelareorep’s inherent advantages over other oncolytic viruses. Now, since Matt has already highlighted point one in this part of the call, I’d like to speak briefly about points two and three, starting with the last one.

Almost all other oncolytic viruses in development either have at least one and often both of the following two characteristics. They require special handling procedures due to biosafety level 3 classification or they require intratumoral delivery and, therefore, cannot reach metastatic disease.

Pelareorep, on the other hand, is administered systemically by nursing staff, requires no special handling procedures and has been clinically demonstrated to selectively replicate in local and metastatic tumors.

These characteristics offer us substantial competitive advantages over other oncolytic virus companies as we pursue partnerships with industry leaders.

In our pursuit of these partnerships, we are following approach that has a track rate of success based off those large pharma deals I mentioned earlier, which have typically been preceded by initial collaborations designed to evaluate the feasibility of potential combinations.

In 2020, we successfully executed on this approach, fostering collaborations with industry leaders inside of Roche with the Phase 2 IRENE and Phase 1/2 GOBLET trials.

While these trials target triple-negative breast cancer and GI cancer, respectively, there are several parallels between the two trials that demonstrate that the broad applicability of pela’s mechanism of action.

In both triple-negative breast and GI cancers, the approval of checkpoint inhibitors is contingent on minimum tumor PD-L1 expression levels not seen in many patients.

Low PD-L1 expression levels and immunosuppressive tumor microenvironments, ultimately limit checkpoint inhibitor efficacy in these indications, with only about 20% of triple-negative breast cancer and approximately 20% of GI cancer patients responding to these therapies.

Despite these low response rates, checkpoint inhibitors have been commercially successful in these indications with the checkpoint inhibitor market as a whole expected to reach $55 billion worldwide by 2025.

Given pelareorep’s intravenous route of administration and the extensive synergy data Matt mentioned earlier, we believe there’s an exciting opportunity for pelareorep to help checkpoint companies accelerate their growth by increasing the number of patients who are eligible for and respond to checkpoint therapy.

It was this opportunity that ultimately facilitated the collaborative IRENE and GOBLET trials.

As a reminder, IRENE is a Phase 2 study evaluating pelareorep in combination with insights, anti PD-1 checkpoint inhibitor, retifanlimab in triple-negative breast cancer patients, while GOBLET is a Phase 1/2 study evaluating a combination of pela in Roche’s anti PD-L1 checkpoint inhibitor, Tecentriq in patients with metastatic pancreatic, metastatic colorectal and advanced anal cancers.

Notably, these trials will also collectively evaluate the utility of the T cell clonality and CEACAM6 biomarkers Matt mentioned earlier.

We look forward to the continued progress of these trials over next year, with the initiation of dosing GOBLET expected in the first half of the year and an interim safety data update from IRENE expected in the fourth quarter.

Together, the IRENE and GOBLET trials are just the latest examples of how we are successfully executing our business development strategy as they follow the temple laid out in BRACELET and our ongoing study with BMS, evaluating pela Opdivo combination therapy in multiple myeloma patients.

Looking forward, the progression of these clinical studies, particularly those in breast cancer, will be our primary focus.

However, we also recognize that pelareorep’s clinically demonstrated ability to upregulate PD-L1 expression and recruit high concentration T cell solid tumors expands its business development and partnership potential beyond just checkpoint inhibitor combinations.

As Matt mentioned earlier, we have already seen exciting preclinical data suggesting that pelareorep synergistic benefits can be extended to additional immunotherapeutic agents, and we are pursuing a partnership strategy based on these findings.

As we progress through 2021 and beyond, we are committed to executing this strategy in a way that preserves our primary focus and resources centered on advancing our clinical study, particularly breast cancer.

We aim to do this by relying on high-quality partners to spearhead pelareorep’s development as an enabling technology for CAR-T cells and other immunotherapies that require immune cell infiltration in solid tumors.

This will allow us to achieve an optimal risk-benefit balance as we take advantage of pelareorep’s potential to synergistically combine with a variety of additional immunotherapeutic agents inside the PD-L1 checkpoint inhibitor class that is our current development focus.

With that, I’ll turn the call over to Kirk Look, our CFO, to discuss our financial results for the fourth quarter and full year 2020.

Kirk?.

Thanks, Andrew. Good morning, everyone. I’m pleased to report, in 2020, Oncolytics was able to establish and maintain a strong financial foundation while advancing the development of pelareorep. Our cash and cash equivalents improved to $31.2 million at the end of 2020 compared to $14.1 million at the end of 2019.

I’m also happy to report today, we’ve been able to continue building on our financial position, having raised over $20 million from our at-the-market facility in the first part of 2021. Importantly, as of today, our cash and cash equivalents are now approximately $50 million, and our financial runway now extends well into the second half of 2022.

Our operating expenses for the fourth quarter of 2020 were $4 million, remaining relatively consistent with 2019’s fourth quarter expenses of $4.1 million. For the full year 2020, our operating expenses were $12.5 million compared to $9.6 million for the full year 2019.

This change is largely due to increased directors and officers insurance premiums, increased investor relations and business development activities and associated professional expenses. Research and development expenses for the fourth quarter of 2020 were $4.1 million compared to $2.7 million for the same period last year.

For the full year 2020, R&D expenses were $12.9 million compared to $10.8 million for the full year 2019. In the current quarter and full year 2020, in addition to progressing our AWARE-1 and BRACELET-1 studies, we also began trial initiation activities related to our GOBLET study.

In 2020, we also made changes to our R&D personnel to better support our clinical development program.

Now finally, net loss for the fourth quarter of 2020 was $9.3 million compared to $19.4 million in the fourth quarter of 2019, equating to a net loss per share of $0.21 for the 2020 period and a net loss of $0.71 per share for the 2019 period on a consolidated basis.

The net loss for the full year 2020 was $22.5 million compared to $33.1 million in the full year 2019, equating to a net loss per share of $0.56 for the 2020 period and a net loss of $1.50 per share for 2019 on a consolidated basis. With that, I’ll hand it back to Matt..

Thank you, Kirk. Before we move on to Q&A, I just want to note how incredibly proud we are of what we’ve achieved over the last year. It is truly a testament to an extraordinarily talented and dedicated team of employees and partners. Thanks to their hard work, we’ve generated strong clinical data across all our pipeline.

Together, these data illustrate how pelareorep’s immunotherapeutic effects leave it poised to have wide-ranging clinical benefits.

On the strength of these data, we continue to steadily progress towards a registration study in our lead HR+/HER2- metastatic breast cancer program while simultaneously executing on additional studies that broadened pelareorep’s commercial opportunity.

This execution in turn, fosters our industry partnerships, which deliver additional value to our stakeholders. Looking ahead, we will continue to be data-driven as we advance pelareorep’s development.

We will be strategic in our approach, prioritizing the execution of our stated clinical milestones while selectively engaging partners to generate value where additional opportunities arrive.

We expect to continue achieving a steady cadence of value-creating milestones throughout 2021 and beyond as we work to generate value for shareholders and most importantly, improve the lives of our patients. With that, I’d now like to open the lines to take some questions.

Operator?.

[Operator Instructions] Your first question comes from Wangzhi Li from Ladenburg. Your line is open. Wangzhi, are you on mute? He has taken himself out of queue. The next question comes from Patrick Trucchio from H.C. Wainwright. Your line is open..

Good morning. I have a follow-up on the Mayo Clinic study that showed pela vastly improved persistence and efficacy of CAR-T cell therapy. First, I’m just wondering if you can frame for us how this data compares to other combination preclinical studies with CAR-T in solid tumors.

Was this the first positive preclinical data generated in combination with an oncolytic virus?.

It’s interesting. I mean, the concept of using an inflammatory causing agents to promote CAR-T access to the tumor is, I think, a novel idea. I mean, we’ve seen City of Hope published something about six months ago. The difference though is, we’re actually seeing cures with reoviruses, which I find fascinating.

And the second aspect is the method of carriage. What they’ve done, if you look at the evolution of CAR-T work, I mean, the first generation CAR-T were pretty primitive. They didn’t persist very long. And eventually, generation two, they introduce costimulatory molecules either CD28 or 41BB.

The third generation, which we’re currently in, actually has both of those costimulatory molecules. So, the CAR-T persists much longer, which just means they have a greater opportunity to do their job.

The fourth generation, people are actually going to sacrifice one of those costimulatory molecules, to give up that persistence to include genes for things like IL-12 that will recruit additional T cells.

The interesting thing is basically what the Mayo has done has generated a de facto fourth generation CAR-T by adding an inflammatory element to the CAR-T that’s stably expressed and held to the CAR-T. So, as opposed to generating just a single chemokine or cytokine, having the virus present actually generates a cascade.

And I think the unique thing here is that you’re actually getting the cures in animals. And the one thing that really fascinates me if you read the paper, some of these animals at day 40 and day 50 started to experience tumor regrowth.

And with the investigators that Mayo demonstrated is you can go in with specifically reovirus, add that to the bloodstream and it reengages those T cells to eliminate the tumor mass. And we’re comfortable saying that the T cell, because the model that they’re using, doesn’t actually support reovirus replication.

It’s B16 model, which in vitro doesn’t actually support replication. So, I think this is a massive breakthrough. And I think it’s really the love child of the AWARE-1 study because I think that’s the first clear examination of how the virus is engaging the immune system, how it’s remodeling the tumor microenvironment to become so pro-inflammatory.

And I think what Mayo has done here is taken the learnings of AWARE-1 and applied it to a specifically new area in CAR-T, and I think it’s very promising. We’ve actually had a lot of interest from pharma in this regard. Patrick, as you know, CAR-Ts are a very hot item right now. But their challenges are -- they don’t target solid tumors.

They can with the virus. They don’t persist long, but again, they can with the virus. Eventually, we’ve seen that the CAR-Ts run out, their populations are depleted by six or eight weeks post treatment.

But what the Mayo Clinic has demonstrated is that by boosting, you can somehow reengage or increase these populations of T cells, which is fascinating because, again, it speaks to the fact that we must have some immature T cells or CAR-Ts that are present that can be restimulated or reengaged through a boost of the virus.

And I think, as a commercial entity, you can very well see kits where virus is applied to the CAR-T at the factory. And booster shots will be provided for the patients if there is recurrence or if there is only a partial response the patients have, I think, a serious chance at improving those outcomes..

You just alluded to it, but if you could just give us an idea of how -- an idea of how discussions are going around potentially partnering the pela program in combination with CAR-T. I’m wondering if the level of interest has increased following the recently released preclinical data.

And what would the timing for that something like that look like or next steps look like in terms of moving the program forward in combination with CAR-T in solid tumors, specifically?.

Well, it’s interesting actually. Because if you consider it, we’re in partnership with multiple parties around the Phase 3 breast cancer program. But, the Phase 3 breast cancer program is about to start a Phase 3.

So for a corporate partner, the barrier to entry is quite higher because they have to be sure that the randomized Phase 2 was legit, valuable, that all the supportive studies of AWARE-1 and BRACELET are adding to that knowledge. Because we’re going to be looking for a larger upfront because of the Phase 3 asset.

But, the firm partner is going to be immediately incurring cost for that Phase 3 registration study.

So, as opposed to the deals that you see in the preclinical and Phase 1, Phase 3 where you get a $10 million or $20 million upfront payment, and then they forget about you for five years, when you come up with a proof-of-concept and there’s the promise of billions way down the road, we’re looking for investment immediately.

Now, the CAR-T opportunity, I think, flips that on its head a little bit because it’s, again, going back to a new therapeutic area. So, it would be a Phase 1 partnership opportunity.

So, I think it will be much easier to engage partners because we’re not looking for that massive upfront with copayments on enrollments and regulatory filings and manufacturing filings and all the marketing that happens during a Phase 3 program.

What we’re simply looking for is a partnership with upfront milestones and royalties in the Phase 1 environment. So, I’ll let Andrew speak to it, but we think the transaction ability of that type of arrangement can happen much more rapidly than what we’re doing in the breast cancer space.

Andrew, would you like to add to your experiences of the level of interest we’re seeing?.

Yes. I think the interest is strong. It addresses one of the critical unmet needs of the CAR-T therapeutic space. As you already alluded to, Matt, it’s a different dynamic.

And it’s a different dynamic because you’re trying to decide whether you’re going to license this with an eye towards an eventual downstream Phase 1 trial first as opposed to eventual Phase 3. So, the ask is more modest. We’ve looked at a lot of deals. We think that we are definitely credible in what we are aspiring to do.

And we said the upfronts are more modest. You’re not talking about a Phase 3-ready asset. So, we think that there’s -- that we’re going to have some success here. We’re excited about it. Obviously, news at 11 on it because the data only just came out, so we’re still baking it from a BD perspective.

But, I’m especially heartened by what we’re seeing so far..

Got it. And I’m wondering what your views are then on combining pela with bispecifics, particularly those targeting CD137 and PD-L1 or other costim domains with the checkpoint inhibitor and potential there as well, both combinations with solid and liquid tumors in those combinations..

I think that opportunity is vast. The CAR-T space is super sexy right now because the results they are seeing in hematological malignancies are just so impressive. They’re taking five-year survival rates of 7% and moving it to 70%. And they’re doing it with the patients on immune system, which I find, I think, very empowering to the patients.

The difficulty is the manufacturing of CAR-Ts. Because they’re autologous, they have to come from the individual patients. They have to be genetically modified. They have to be expanded. The patient then has to be immuno-depleted, and then it goes right back to the patient.

So, collectively, the cost and time and expense of CAR-T make it very much a niche product. Now, there are companies that are developing allogeneic CAR-Ts. So, one donor would generate T cells. They would be genetically modified so that they wouldn’t be immunologically foreign to multiple parties.

So, that you could grow it up more like a cell-based therapy, which will, I think, dramatically expand the opportunity for CAR-Ts like dramatically expand it, because it gets past that individualized aspect of it.

The great thing about bispecific is they’re showing very much like CAR-T, fantastic results in hem malignancies, especially B cell malignancy. But they really have been challenged by the solid tumor microenvironment because they’re exclusionary to T cells and they’re exhausting T cells.

With bispecific antibodies, what we can do, and what actually colleagues of ours in the Netherlands have demonstrated, you can turn an ineffective model in solid tumors into one where you get very effective treatment into the animals. I think we have multiple targets that we can pursue.

And I think we can probably do this across partnerships as well because each company has their own unique epitope that they’re interested in. In terms of costimulating, they’re targeting things like PD-L1. I think that’s just the tip of the iceberg.

I really believe that this approach because its ability to expand T cells, activate T cells and recruit T cells, we’re just beginning to understand how valuable this asset is and how many different areas it can be used against.

And I think we’re fortunate that we have talented scientific advisory board members and collaborators that are exploring the use of these agents in areas that I don’t think people had even thought about using them 12 months ago..

[Operator Instructions] Your next question comes from Wangzhi Li from Ladenburg. Your line is open..

Hi. Thank you for taking my question. Again, sorry for the technical issue earlier. So, congratulations on the progress. Maybe first starting with this CAR-T part, just one technical question.

Is this going to be manufactured separately from the CAR-T or into post -- also preloaded? So, can you provide more color on the manufacturing for this approach?.

Absolutely. I mean, that’s one of the big things that we’ve been looking at. I mean, by the time things actually entered the public domain, like a poster or publication, we’re -- I think, people aren’t aware of the length of time it takes to get the volume of results that are required to get to a publication.

I mean, it’s not measured in days, it’s not measured weeks; it’s measured in months and years. So, we’ve been thinking about this question from a commercial aspect. And actually, we’ve had it with even some of our potential partners.

The two options are, you can add the virus, because basically, all it is, you have an [indiscernible] product or a collection of blood cells in this instance, CAR-T cells that are kept at 4 degrees so that they’re viable but in stasis. They’re not replicating. They’re not doing anything.

We then simply take a solution of virus and saline and apply to those CAR-T cells at 4 degrees, so that what you eventually get is adherence of the virus through its cell receptor to the outside of the CAR-T cell. And we want to do this at an MOI that engages a sufficient number of virus per cell that it will actually track well to the solid tumor.

Now, the options are, we can do that at the facility, which they would create the blood product or the CAR-T product, they would terminally differentiate it by growth factors and what have you, at that point, we could actually apply the virus.

And what’s nice about doing it in the factory setting, if you will, is there’s a high level of control because it’s a GXP environment. So, there will be a lot more SOPs, a lot more rigor, a lot greater ability to have testing equipment like [Technical Difficulty].

That really is dependent on stability studies, how long the virus persists on the CAR-T, and those studies are underway. The other aspect that we can do is, obviously, CAR-Ts are made in the factory. They are then returned to the hospital center for infusion into the patients.

Prior to the infusion, we can have the pharmacists at the hospital make up the solution, apply it to the virus, rocket, so that there’s proper adherence over the course of an hour and then applied to the patient. So, both are available to us. Really what’s going to dictate is the stability study.

The strong preference from industry partners is to sell the whole thing as a kit. So, there would be basically the generation of this fourth CAR-T that signals to the immune system. That retains both costimulatory molecules plus the chimeric T cell receptor and then, obviously, have that quality controlled to release from the clinic.

That’s the preference. But it will really depend on how long that combination product is stable..

Got it. That’s helpful. And then, you also mentioned the bispecifics and I assume the T cell engagers, and because the virus assumed to increase the T cell infiltration, I think you’ll make mechanistically synergy with T cell engagers.

So, have you sort of tried -- used the also engineering virus to express the T cell engagers locally inside the tumor, T cell engagers. So then energize it with oncolytic virus..

That is the other point. I mean we’re somewhat limited by the payload size of reoviruses, but it is something that we’re exploring right now with our translational research scientists..

Okay. Got it.

Maybe last question on AWARE-1, the final data set, just a little more color you can give, just more new data from the other three cohorts, or are we going to see anything new for the quarter one or two?.

It’s predominantly new results for cohort 1 and 2, because of the volume of tumor tissue that we get, we can do a great deal of research. So historically, we presented things like TCR-sequencing with immunohistology. So basically, very early characterizing, which cells are present.

The more advanced things that we can actually do because we have so much tissue is a NanoString. We can define what’s happening at the molecular level. We can actually look at what genes are being expressed, what the changes to the chemokine, cytokine environment are, but we’re also doing imaging mass cytometry. And that’s a very valuable tool for us.

Because it allows us to look at a tumor section, look where the viral replication is and see in a spatial orientation, which immune cells are brought to the infection, because what we want to see is a massive influx of inflammatory cells that are CD8-positive T cells. What we don’t want to see is tumor-infiltrating lymphocytes that are Treg.

And the reason for that is why -- whereas CD8 is promoted inflammatory or pro-inflammatory events, the Treg cells largely suppress that. Now early data that we have from a collaboration with Halozyme is that the virus will actually accumulate both with the ratio being in favor of the CD8, so we get more inflammatory than anti-inflammatory.

But, when we add the checkpoint inhibitor, what we’re finding is there’s a decrease in Treg. So, with things like imaging mass cytometry, we can actually see which cells are brought in, which assistant or associated cells are there.

Our antigen-presenting cells effectively generating the T cell response that we see because it’s going to be both presumptive antiviral and anti-tumor but we can really start characterizing that response.

And I think using new systems like PD-L1 expression or the VENTANA PD-L1 expression, we could actually see how many patients are converting from patients that wouldn’t normally be eligible for checkpoint blockade and to those who are because you can imagine, if we get 20%, 30%, 40%, 50% increases in patients who are eligible for checkpoint blockade, and what I’m saying is agents are indications like triple-negative breast cancer, where you have a threshold PD-L1 requirement to get access to that drug.

If we can improve that by 10%, 20%, 30%, 40%, it’s a massive difference to the bottom line for agents like Tecentriq. So, it gives us a lot of data. Now the focus really is going to be the difference between cohort 1 and cohort 2, which is the primary thrust of the AWARE-1 study because it really lets us design that Phase 3 program.

And as we alluded to on the call and earlier, where we’re seeing the CelTIL changes have largely been in cohort 2 which adds the Tecentriq. So, we think in terms of getting a pro-inflammatory event, it looks like the checkpoint inhibitor is actually playing an important role.

But through NanoString technology, through imaging mass cytometry and immunohistology, we’ll have a much better picture of what the contribution of the checkpoint inhibitor is. We’ll also provide additional data on cohorts 3, 4, 5. But, those cohorts are pre skinny.

There are only like sort of four or five patients each, which was by design, it was exploratory to see whether or not we could get viral replication. And I think this is important because we’ve never seen this level of viral replication in the tumor. Normally, we get a lot of double-stranded RNA, which is our pro-inflammatory signal. But.

to see that much viral protein basically suggests when we’re seeing 80% tumor infection in the tumor, we’re looking at a time point of three weeks, but I think what people don’t recognize, once you’ve gone down that road of replicating the virus, the cells aren’t viable. They’ve already introduced apoptotic pathways.

So, when we see 80% of the tumor being productively infected, what were de facto saying is 80% of the tumor mass is now not a tumor mass. It’s a viral factory. And inevitably, those cells will go towards cell death, whether it be apoptosis or phagocytosis mediated by monocytes.

So, I think breast cancer, the more data that we get out of it, I think the more compelling it is. It explains why we see single-agent activity. And again, I’d have people look at the publication like GOL [ph] and Moody. When we use virus as a monotherapy, we actually did see objective response and anthracycline-refractory breast cancer patients.

And it took six months for it to manifest as an objective response. So, really, what that tells us is there’s that engagement of the immune system that takes time in a patient to manifest. And then, seeing those exquisite overall survival results in IND-213, again, points to the fact that breast cancer is unique in its responsiveness to the virus.

And then, what we’re seeing on the AWARE-1 stage, just in terms of the amount of viral replication, the rapidity of that replication and its engagement of the immune system, I think taken together to really tell a very compelling story of why breast cancer is such a great indication for us. It’s such a great lead.

But, then behind that through Andrew’s activities and the rest of the team’s activities, we have been able to engage groups like Roche to look at other signals we’ve had in GI, where the NCI demonstrated a near doubling PFS in patients that express CEACAM6 at a low level, which is a common feature of a lot of pancreatic cancers.

And then, we’re coming out of Montefiore that demonstrates clinical benefit in the vast majority of patients with KRAS disease and engagement in the immune system. So, I think through these collaborations, we have a unique opportunity to really tell a beautiful story..

At this point, I have no further questions in queue. I turn the call back over to the presenters for closing remarks..

Well, again, I appreciate it’s early, especially for the people on the West Coast. So, thanks, everyone, for joining us on the call. We look forward to our continued advancement of pelareorep. And we’ll keep everyone updated along the way. Thanks, everyone..

Thank you everyone for joining us today. This concludes today’s conference. You may now disconnect..