Participants

Christian Kanstrup; Chief Executive Officer; Evaxion Biotech A/S

Birgitte Rønø; Chief Scientific Officer; Evaxion Biotech A/S

Thomas Schmidt; Chief Financial Officer; Evaxion Biotech A/S

Thomas Flaten; Analyst; Lake Street Capital Markets

Swayampakula Ramakanth; Analyst; H.C. Wainwright & Co., LLC

Presentation

Operator

Good day, and thank you for standing by. Welcome to the Evaxion Biotech business update full year 2024 conference call and webcast. (Operator Instructions) Please note that today's conference is being recorded.
I would now like to hand the conference over to your speaker, Christian Kanstrup, CEO. Please go ahead.

Christian Kanstrup

Thank you so much, and good morning, and good afternoon to all of you, and a very warm welcome to this Evaxion full year 2024 business update call. I'm Christian Kanstrup, CEO of Evaxion. With me today, I have Birgitte Rono, our Chief Science Officer; Thomas Schmidt, our Chief Financial Officer; and Mads Kronborg, our VP of Investor Relations and Communications.
And I think it's fair to say that 2024 was a super exciting year for Evaxion with lots of achievements throughout the year, and we are looking very much forward to be giving you an update on the year. And the agenda and what we intend to cover.
First of all, I will start out recapping on 2024, looking ahead into 2025 and some of the significant milestones that we see in front of us. Birgitte will be taking us through the R&D update. Thomas will cover the 2024 financial results, and I will be having a few conclusion remarks before we, as usual, jump into the Q&A.
And another thing that is, as usual, is the forward-looking statements, we will be talking about the future. And of course, talking about the future entails uncertainties. Hence, I direct your attention to the forward-looking statements slide on slide number 3.
And with that, let's get into the agenda and start out with a recapping on '24 and looking ahead. First of all, as I already said, I think it's fair to say, 2024 was a year of substantial progress across Evaxion. That goes for all parts of the business.
If we look at business development, if we look at R&D, if we look at our platform and also when we look at financing. I'm truly proud of what the team and the whole organization has achieved throughout the year.
I think it's also fair to say that it has provided us with a very strong foundation going into 2025. But if we start out looking at business development, here, of course, we entered into the transformational partnership with MSD in September 2024, a very important achievement for the year.
And I'm also happy to say that we are tracking well towards potential option exercise in the second half of 2025. Birgitte will also be getting back to this. Also, I'm pleased to say that our current business development pipeline supports our ambition of at least two new agreements.
Just to recap, we have a very strong focus on partnering as a way of realizing value of both our platform and pipeline and of course, maintaining a business development pipeline which can generate future partnerships is important to us. From an R&D point of view, we have continued the successful execution of the ongoing EVX-01 Phase 2 trial.
We presented convincing one-year data in the fall of last year. 69% overall response rate at the one-year readout of the ongoing Phase 2 trial and 15 out of 16 patients showing a reduction in tumor target lesions, truly exciting data which makes us look very much forward to the two-year readout that we will be having in the second half of the year.
What we have also done is established a completely new precision cancer vaccine concept, deploying our AI-Immunology platform, targeting nonconventional endogenous retroviruses, tumor antigens, which are shared across patients. This is exciting because it broadens the potential of cancer vaccines and a precision-based approach is a very nice complement to our personalized cancer vaccine, EVX-01, which is complemented nicely.
Looking at the platform, AI-Immunology, it's a core of our business. and, of course, ensuring ongoing development and the performance improvement of the platform is critical for staying off the forefront of AI-derived development of novel medicines. And here, I'm very pleased that we last year launched a novel toxin antigen predictor, which allows us for developing even better bacterial vaccines.
This continuous improvement of the both capabilities and the performance of AI-Immunology remains a priority to us. Last but not least, financing is, of course, an important factor in our business. And here, I'm pleased to say that we are a public offering and other capital market activities have extended our cash at hand to mid-2026.
In addition to that, Merck or MSD Globe Health Innovation Fund have invested in us for the third time now holding a close to 20% equity stake. We are very pleased about the strong relationship we have with the Merck or MSD Global Health Innovation Fund and are pleased to see the continued and ongoing support and of course, welcome them as a significant shareholder in Evaxion.
If we then turn to the next slide and look ahead. We have quite significant value triggers coming off throughout the year. I'm also pleased to say that we already delivered on our first milestone for the year which is the all patients completing dosing in the EVX-01 trial. While we also will be presenting later on this month actually at the AACR meeting is additional EVX-01 data.
Looking into the second half, a number of significant milestones here. The MSD, Maxine collaboration and the decision on option exercise is expected in the second half, could generate up to $10 million in income to Evaxion if MSD exercises the options to both.
Needless to say, a very important milestone for us and also, as I already mentioned, pleased to see that the collaboration is on track. Then we will have the two-year readout on EVX-01 in the second half of the year as well with a strong one-year readout.
We are very much looking forward to that. We will be selecting lead antigens for our CMV vaccine candidate, which now is a fully owned candidate which we also are looking forward to. And then building on the precision vaccine concept or comments I had just before, we will be selecting lead vaccine candidate in the second half as well.
Throughout the year, two other significant milestones, business development, we have the ambition of generating at least two new agreements in 2025 and are working hard towards that. And continuing building our pipeline is also a priority with a multipartner approach, partnering around existing pipeline candidates just as we included the EVX P2 in the collaboration with MSD, then we need to continue to build the pipeline with novel candidates in order to ensure that we have an attractive and broad pipeline of novel vaccine candidates, which we can partner via our multi-partner approach.
Here, we have the target of two new pipeline candidates within infectious diseases, one in the first half and one in the second half. Also here, pleased to say that we are well on track towards meeting that. Just a very quick recap on our focus.
Our focus is on deriving value from both our platform and our pipeline. And the unique nature here is the complementarity of having a dual focus on platform and pipeline, which is driven by the unique capabilities and properties of AI immunology and the multidisciplinary capability that we have built around our AI-Immunology platform.
Focus of the platform, that is to enter into high-value, low-risk partnerships around target discovery, design and development of novel vaccine candidates, the MSD collaboration around EVX-B3 is a good example of that.
And then it's, of course, also deploying the platform to expand and build our own pipeline just as we have the target of these two new infectious disease candidates for the year. Pipeline that is around advancing select high-value programs into preclinical and early clinical development, leveraging our multidisciplinary capability base and then pursue partnering at the right point in time.
The partnering with MSD around EVX-B2 is a good example of what we want to do here. And of course, we have EVX-01 in Phase 2 development and very much looking forward to the clinical data readout later on this year.
So focusing on both platform and pipeline, but being able to do so in a cost-effective way by the unique features of the AI-Immunoonty platform and the multidisciplinary capabilities we have around that. We are confident that this strategy will generate significant opportunities going forward and are executing in full focus on that. And then before handing over to Birgitte, I would just touch a little bit on a few recent events.
In January, we completed a public offering and together with other capital market activities, we have raised USD17 million this year, extending our cash runway to mid-2026. As already mentioned, MSD Global Health Innovation Fund participated in the offering. But what I'm also very pleased around is to see other health care-focused investors in the public offering.
With that offering, we have had a very nice expansion of our investor base and looking forward to continuing the collaboration with those investors we got in, in that round. We have also communicated that we are in agreement on discussions with the European investment bank around conversion of EUR3.5 million out of the EUR7 million loan, we have with ERB into an equity type instrument.
Originally, we had communicated we expected that completed in the first quarter. We can see that some of the legal documentation takes longer to complete than anticipated but now we are expecting to complete this in the second quarter. This will enable a significant simplification of our balance sheet and also save cost in terms of interest payments going forward.
So we are looking forward to having that loan conversion converted into equity. We, in 2024, got a delisting determination from NASDAQ. We are very pleased to say that has been withdrawn here in the first quarter. We are now in full compliance with all NASDAQ listing requirements.
Another thing that makes me proud and happy is the ongoing efforts in the whole organization in terms of optimizing our spend, and that has enabled us to have a 2025 operational cash burn at USD14 million, which is the same level as 2024 despite an increased activity level.
And this ongoing spend optimization is, of course, important because it allows us to do more while still being very cautious in how we spend our cash. Finally, also for the first quarter, EVX-01 completed dosing, I already mentioned that. What we also have announced is that we have extended the EVX-01 trial from two to three years.
Important, this is not because we haven't seen good data or the data we expected on the contrary it's because we have seen very good data and we had the opportunity of in a very cost-effective way, given patients are in the trial given we had EVX-01 already produced to extend the trial with one year at minimum cost.
And this allows us to generate three-year data on this truly novel personalized cancer vaccine, which will create for a very strong data package. So excited about that opportunity of expanding the trial and Birgitte will also be getting back to them.
And with that, Birgitte, I will hand over to you to give an update from an R&D point of view.

Birgitte Rønø

Thank you, Christian. So we have a broad R&D pipeline of AI-Immunology designed cancer vaccine candidate spanning two major disease areas, cancer and efficious disease. Today, I'll walk you through some of our most important programs where we made significant recent progress.
So I'll begin with our lead asset, EVX-01. This is our personalized peptide-based cancer vaccine currently in Phase 2 clinical development, as Christian just mentioned. Then I'll touch on the advancement in our precision cancer vaccine program targeting this novel class of tumor antigens that we have seen are shared across patients.
And then I'll give an update on our two bacterial vaccine programs, EVX-B2 and EVX-B3, which are part of the licensing and option agreements that we have with as Christian mentioned earlier. And finally, I will give a brief update on our cytomegalovirus or CMV vaccine program.
So EVX-01 as mentioned, is currently in Phase 2 and is being developed as a first-line treatment for advanced melanoma. And EVX-01 includes multiple patient-specific neoantigens that we have identified with our AI immunology platform based on the patient's unique tumor mutational profile.And we have administered EVX-01 in combination with the checkpoint inhibitor, anti-PD-1 from Insteel with a goal of enhancing clinical efficacy.
So as Christian mentioned, we shared a one-year interim data at the ethanol Congress in September last year. And we reported an overall response rate of 69% comparing favorably to historical pembrolizumab monotherapy data. And further, we showed that 79% of the EVX-01 vaccine new antigens induced a specific immune response in the patients, confirming the precision and predictive power of our AI immunology platform.
And building on this positive data and to further explore the ability of the immune response and also the clinical response, we have, as Christian mentioned, extended the Phase 2 trials one additional year to allow us to collect three-year outcome data. And notably, during this extension phase, EVX-01 will be administered as a monotherapy, allowing us to better understand the vaccine's stand-alone epay.
And as Christian also mentioned, this extension involves minimum additional costs as the clinical trials are already up and running and the vaccines are actually ready to be used. We are looking forward to sharing further updates on this program first at the upcoming AACR Annual Meeting later this month and then to present two-year efficacy data in the second half of '25.
So let's turn our focus to our promising precision cancer vaccine concept. In this program, we're using AI-Immunology to design a precision vaccine targeting these nonconventional antigens, so-called ERV tumor antigen that are shared across patients.
And at the ESMO Immuno-Oncology Congress in December, we presented preclinical proof of concept data demonstrating that our vaccine concept induced a strong antigen-specific T cell responses into immunogenic and in human immune cells and further that we could inhibit the tumor growth in preclinical models.
And as Christian also alluded to, we believe that this precision efforts could allow for a broader applicability of these cancer vaccines also for patients that are less likely to respond to conventional cancer immunotherapies. And with this very promising data in hand, we are on track for selecting the lead candidate in the second half of 2025.
So our collaboration with MSD continues to progress as planned. In 2023, we entered into a target discovery collaboration, focusing on a bacterial pathogen causing severe medical issues and where there is no existing vaccines approved. And in 2024, this collaboration was significantly expanded to include an option and license agreement for our proprietary EVX-B2 gonorrhea vaccine candidate.
And we received an upfront payment of USD3.2 million with a potential USD10 million upon option exercise and further up to USD592 million per product in milestone payments. So both EVX-B2 and B3 are advancing steadily, and we remain on track for a potential option exercise in the second half of '25.
So we also made strong progress in our cytomegalovirus vaccine program. And CMV is a widespread viral pathogen with high global seroprevalence. It caused severe complications, especially in immunocompromised patients and also congenital inspection can lead to severe birth defects and yet no approved vaccines currently exist.
And with AI-Immunology, we have identified novel B and C-store targets, which can complement known antigens such as glycoprotein B. And this program was initially launched in partnership with Expression Biotechnologies, as Christian mentioned, and we now have acquired full rights positioning us to drive the program forward independently.
So with these very positive data, we are on track for vaccine antigen selection in the second half of 2025. So just to wrap up, we've seen significant progress across our pipeline in both oncology and infectious diseases. And we are extremely excited about what lies ahead and I'm looking forward to updating you on our programs as they continue to advance.

Christian Kanstrup

Thank you, Birgitte. I think we can only all agree that it has been a truly exciting year across both cancer and infectious diseases and that surely makes for an exciting 2025 as well. But let's look a little bit more at the past year and zoom in on the numbers. So Thomas, will you take us through the financials, please?

Thomas Schmidt

Yes. Thank you, Christian and Birgitte. If we move to the financials and the financial highlights to start with, for 2024, we have recorded revenue of $3.3 million. Coming from the actions -- option and license agreement with MSD, which Christian mentioned earlier. This certainly also may generate income for the future.
As Birgitte says, we are on track to the next -- towards the next milestone payment in the second half of this year. Plus, of course, then hopefully, in the years beyond. In 2024, we've also seen lower spend compared to the previous year.
And this has very much been driven by the full year impact from the changes that we made back in 2023 and certainly also ongoing cost optimization and further initiatives in order to manage our cost and cash burn. We are certainly trying to make the best use of the cash that we have at hand. And end of December 2024, cash and cash equivalents were at $6 million, which is slightly up from $5.6 million end of 2023.
But of course, then also having made the effort of investing into our pipeline and platform. We've seen significant improvements in our equity and the financial position through the -- also the recent capital market activities. And with now our existing cash position, we estimate that we have sufficient funds to fund our operating and capital expenditure requirements into mid-2026.
And important to note is that, that takes us beyond the point of a potential option exercised by MSD and also beyond our two-year clinical data readout on EVX-01. If we look at the profit and loss statement of 2024 we have had a net loss for the year of $10.6 million.
That's corresponding to $0.20 per basic and diluted shares -- share, which is also a slight or improvement, so to speak, still a loss, of course, but versus 2023, where we had a loss of $22 million. Again, the loss was really driven by improvement in our recognized revenue but certainly also, as mentioned, the reduction in our R&D and G&A expenses.
Most of that came certainly from a reduced head count but we've also made changes throughout the entire organization, including management and the full year impact of that, plus, as mentioned, the general cost optimization is ongoing and has really played throughout the entire 2024.
Looking a little bit ahead for 2025. Christian also mentioned that we expect that our operational cash burn is on par with 2024. Meaning, again, also around $14 million for the year, and that is despite that we will increase our activity level throughout the pipeline and platform elements.
Balance sheet, we have certainly improved the equity throughout 2024 as mentioned and continuing to invest in our pipeline and platform. And also in the beginning of this year, we have further -- have successful equity improvement. So cash and cash equivalent as January 27 were $11.9 million and our public offering, which closed on January 31, we could add a gross proceeds of $10.8 million to -- towards our cash and cash position.
With that also, we are well above the NASDAQ minimum requirement on equity and shareholders' equity which also, again, as Christian mentioned before, also, we managed, therefore, really to be back in full compliance with the Nasdaq requirement, not only in now in Q1, but expect to be that also for the remaining part of 2025.
Cash runway will take us to mid-2026, as already stated, and again, just to do that once again, that will further extend with a potential MSD option exercise should that happen and assuming that exercise will happen in the second half of '25, we will have a cash position well into 2027.
And with that update on the financials, I hand it over to you, Christian.

Christian Kanstrup

Excellent. Thank you so much, Thomas. And also thanks again to you, Birgitte. Let me just provide a few conclusive remarks. If we look at the overall picture, I would say, Evaxion has never been in a stronger position fundamentally.
We have been delivering strongly on our pipeline, both from a cancer and infectious disease point of view. We are in the fortunate situation that the EVX-01 continues to deliver very strong clinical data. And we have a lot of activities within the infectious disease area where there are significant unmet needs, given many of the indications that we are targeting don't have any approved vaccines today.
So combining that with a transformative agreement with MSD, MSD as a significant shareholder and a solid cash position, we are in a very strong position fundamentally which provides a solid basis for 2025. And I would say here that we are well positioned for strong '25 execution.
We have our milestones, our value triggers and our priorities locked in. And the full organization is around that. And we are well on our way towards executing upon our 2025 priorities.
This all comes from having a clear strategy with a strong focus on monetizing value through business development via both the platform and the pipeline. And that, of course, also leads to several key value catalysts coming up in 2025, we are talking about the potential option exercise from MSD, EVX-01 Phase 2 data and of course, a number of other important milestones coming up throughout the year.
So I think I speak on behalf of the whole management team and the whole organization, but I can say that we are very pleased with where we are and definitely looking very much forward to 2025. And with that, we will open for Q&A and take any questions you might have.

Question and Answer Session

Operator

We are now going to proceed with our first question. Thomas Flaten, Lake Street Capital Markets.

Thomas Flaten

Christian, I was just wondering, as you select new pipeline candidates, you've got two infectious disease and an ERV candidate that you're going to select this year. How are you certain that those will be partnerable assets? Are these being done with input from potential partners? Is it based on literature. I'm just curious if you can take us through that decision-making process a little bit.

Christian Kanstrup

Yes, no. Thanks, Thomas. I think that's a super relevant question, of course, because it is about creating partnerable assets, especially when you have a multi-partner approach, then you need to make sure that what you're developing is also what people want.
Of course, it all starts with, you can say, the unmet medical need and the commercial potential. That's like the first gate that you can, of course, find many areas where there's either not a whole lot of unmet need or the commercial potential is not sufficient.
So that's the number one priority. And then we do actually -- and that's what we are planning for both, say, the ERV-based concept, but also some of the infectious disease candidates we are working on. We're aiming at taking early dialogues with potential partners saying this is what we intend to do from a preclinical package point of view.
Are there any other things you would see, not because we want to engage necessarily in partnering discussions now, but solicit the input from future potential partners. And I do believe that it's very important that we get this input early.
So the preclinical program can be shaped in the right way. Of course, we have a lot of things we would like to do, but we also need to make sure that we have the package that potential partners are asking for. And Birgitte, I don't know if you want to say a few more words on this.
But this early consultation is definitely something that we have -- will have focus on for, you can say, the ERV program for some of our infectious disease programs, especially when you are in areas where -- which are novel and you're breaking new ground, then it's critical to understand what would a potential buyer want to see as early as possible.

Birgitte Rønø

Yes. So especially for the two new infectious disease vaccine candidates that we will nominate this year. I mean that is as the option as you also allude to, Thomas, that it could be coming from partner discussions, but we also have done a lot of work on looking into different options.
We have a long list of potential diseases to target, and we've done as you call it, late to our analysis looking into the medical need, the commercial potential and visibility. And we are definitely ready to launch a new program in this first half of 2023 (sic - 2025).

Thomas Flaten

That's super helpful. And with respect to expression Biotech, handing the rights back to the CMV vaccine, can you give us some color behind that? Was the decision on their end? Was it a joint decision? Is there any capability that you're losing in the development program with them no longer being a partner?

Christian Kanstrup

Let me first answer the overall. I mean, the decision was at their end. The way the program is structured is that either party could terminate, then the rights would go fully back to the other parties.
So you can say we have not had the cash up or anything, but have as per contract acquired the full rights, which we are very pleased with and then to the capabilities, if Birgitte, you can speak to that. But I think we have definitely a good plan in place and looking forward to drive this forward on our own.

Birgitte Rønø

Yes. So Expression Technology, they were doing some of the production part of the entity. And of course, we're looking into other solutions for getting the antigens into our lab and to test them and we have also experienced that when we have partner dialogues is not always the right approach to come with a very defined modality partners also tend to have their own preferences.
And therefore, we would also need to test our AI-Immunology identified targets on a few different like model. So that's the ongoing work currently. And then we are, of course, preparing for the selection of the vaccine antigens in the second half of 2025.

Christian Kanstrup

So you can say we, of course, have truly enjoyed the collaboration with Expression biotech over the past couple of years and have been very pleased with that.
Then I think this also gives us quite a unique opportunity for deploying some of the learnings that we have had over the past couple of years in many of the partnering discussions that we have had as to having some degree of flexibility in how you pack or wrap the final vaccine candidate. So we have -- as I said, we have a good plan in place and are looking forward to selecting lead antigens in the second half of the year.

Operator

(Operator instructions) Swayampakula Ramakanth, HCW.

Swayampakula Ramakanth

A couple of -- a couple of quick questions. The first one being on EVX-01. So in terms of the data coming out at AACR, what data should we be expecting and then more importantly, as we wait for the two-year data point coming up later in the year, based on your conversations with potential collaborators to date, what amount of data do you think eventually is sufficient for a transaction because this is a program that's been -- that I think has produced a pretty good set of data. So what else are people really looking for?

Birgitte Rønø

I can start. So for the presentation at AACR, we will be presenting biomarker data and also additional T cell data from the patient. And we have already had some of these earlier data, and we have now collected more samples and analyzed more samples from the patients. So it will be a more in-depth biomarker presentation at AACR.

Christian Kanstrup

And then for the, you say, data, what's needed, I do think that the data that we are currently generating and also we'll be generating over the remainder of the trial, that is the data that we need. What is also then important for, you can say, an eventual transaction. That's definitely also there's a lot of people waiting to see what are the data Merck and Moderna is going to generate going to look like.
And of course, here, we were pretty encouraging that Moderna was out of the TD Cowen conference earlier this year saying that they are anticipating approval in 2027. Hence, continued good progress with their personalized cancer vaccine.
And I would not expect that one would need to wait until approval, but it will be interesting to see some of the early Phase 3 data from that trial. That's clear that people are also awaiting that. So I would say, we have what I feel is needed from an EVX-01 point of view. And then there's some level of confirmation that those data would also hold up in a larger scale later stage Phase 3 trial, which we hopefully will see later on this year.

Swayampakula Ramakanth

Perfect. And then regarding the ERV vaccines that you plan to work on, what types of cancers could potentially be the indications that we could use this vaccine to evaluate?

Birgitte Rønø

Yes. Really good question. Okay. So we have worked with the ERV concept for quite some time now. We have looked into a lot of data from different cancer indications and have mapped out the indications where there is a high very burden as we called it and that has led to the development of this position group vaccine concept, where we can see that in specific indications, that these sequences are shared across the patients.
And we have a list of these cancer indications that we would like to work more on, and we will most likely also share some more information by the end of this year on possible indications to move forward with.

Swayampakula Ramakanth

Okay. And then the last question from me. Regarding EVX-B2 and B3, would you be releasing any data ahead of submitting to MSD or as you're submitting to MSD for their decision on exercising the option?

Christian Kanstrup

No. You could say for B2, MSD is doing some confirmatory work on the data that we have generated. Hence, we will not be releasing more data there. B3, that's the finalization of the current -- of the work plan that we agreed in 2023. That's being completed. And the major part of work there is with MSD as well.

Operator

(Operator Instructions) We have no further questions at the moment registered. So I will now hand back to Christian Kanstrup for closing remarks.

Christian Kanstrup

Thank you so much. And I just want to wrap up by saying thank you to all of you for listening in, and thank you for the questions as well. As already said, 2024 was a very exciting year, creating a strong foundation for 2025. We are now in execution mode and we'll be focusing on delivering on our key milestones for the year.
So we are definitely looking very much forward to 2025. And we'll, of course, make sure to keep you all up to date on all recent events of Evaxion. So once again, thank you so much for taking the time for listening in, and we will stay in touch.

Operator

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good day.