Transcript: Brad Thompson Conference Call

The following is posted for informational purposes only and so that the text can be searched and referenced. Although I have made every effort to ensure accuracy, no warranties are made or implied. I encourage everyone to listen to the call here.

Transcript of Brad Thompson's Conference Call made October 24, 2007.

Good afternoon, ladies and gentlemen. And welcome to Oncolytics Biotech’s clinical program update call. At this time, all participants are in listen only mode.

Following the presentation we will conduct a question and answer session for analysts and institutional investors. I’d like to remind everyone that this conference call is being recorded today, Wednesday, October 24 at 2 P.M. eastern time.

I will now turn the conference over to Dr. Brad Thompson, President and Chief Executive Officer of Oncolytics. Dr. Thompson, please go ahead.

Brad Thompson: Thank you Luke.

Good day and welcome to the Oncolytics biotech, Inc. web cast. My intention today is to provide information regarding the cyclophosphamide Reolysin co-therapy trial announced yesterday, and also to provide brief update on our clinical trial and manufacturing program for our lead product Reolysin.

Before I begin, I would remind you that certain matters discussed during this web cast will constitute forward-looking statements that are subject to risk and uncertainties relating to Oncolytics future financial, clinical, or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. Those factors which may are detailed with Canadian and US security commissions which can be accessed at www.sedar.com and www.sec.gov. Please note that Oncolytics is under no obligation to update any forward-looking statements discussed today and investors are cautioned not to put undue reliance on these statements

As a reminder, Reolysin is Oncolytics’ formulation of the reovirus. A naturally occurring virus widely found in the environment. It has not been genetically altered or engineered. Reolysin is neither a gene therapy nor a cancer vaccine.

It is composed of a fully replication competent virus that is able to directly kill tumor cells that have an activated Ras pathways. Approximately two thirds of all cancers and virtually all metastatic disease has an activated Ras pathway. This is very important when you consider the potential of this product in a commercial context. Ras targeted therapeutics have potentially broad applications in cancer therapy.

For the last 18 months we have learned that Reolysin causes the death of cancer cells in two ways:

First, as the results of the normal viral infection of the Ras activated cell. The virus enters these cells then replicates which then causes subsequent cell death. Virus is therefore directly cytotoxic. The second is a result of the first. Various studies conducted by our colleagues in the US and the UK have verified that the viral induced cell death generates a secondary immune response against tumors.

Oncolytics clinical development strategy for Reolysin integrates both clinical and business objectives. Our business objective is to maximize the potential usage and therefore sales of Reolysin. We are developing Reolysin as an appropriate alternative to or addition to the standard of care treatment of a broad range of cancers. This business objective can be achieved however after regulatory approval of Reolysin. Those approvals require a carefully planned and executed clinical program designed to prove safety and efficacy of Reolysin. At the present time, we are examining the use of Reolysin using either a local or intravenous delivery depending on the trial. We are currently studying Reolysin as a monotherapy and in combination with radiation and chemotherapy. To date we have treated 139 patients in our clinical trials. Reolysin has been well-tolerated and anti-tumor activity has been observed in all trials reported on to date.

Results from two separate phase I IV monotherapy studies, one US and one in the UK, have been presented. Several important points from these studies are relevant to future studies.

First is that the product was well tolerated in humans at the highest dose and with multiple administrations. This finding allows us to examine Reolysin in a phase II environment, which we are now doing. Second is that the product is produces specific tumor clinical responses in patients at sites in the body away from the sites of administration. These responses are measured by objective tumor response, tumor marker response, and/or confirmed histopathology. These effects are noted in patients with a functional immune system that respond to in the exposure of the virus. The immune system apparently does not block the virus from reaching the tumor and replicating within it. In other words we use Reolysin on its own, we know that it can navigate past various physical barriers and the body's immune defenses, reaching and infecting tumors in a variety of locations in the body and then replicating in them. As a result we've proceeded to multiple phase II program examining the effects of Reolysin delivered intravenously as a monotherapy, sarcomas, and in conjunction with the National Cancer Institute, melanomas and ovarian cancer. Both of these studies will help us to determine the products future direction as a monotherapy.

Results emerging from our monotherapy program are very exciting, however, some equally exciting basic research conducted in a number of laboratories has indicated that immune modulation may improve response rate in clinical studies rather markedly. The exact mechanism has not yet been determined. A number of studies using cyclosporine or cyclophosphamide in combination with Reovirus in animal models, demonstrated increased tumor response, and/or survival, compared with the virus itself.

Most significantly, in many cases, the animals became tumor free after treatment with the combination. Further animal studies have revealed that the best dosage regime that minimizes toxicity and retains efficacy is when cyclophosphamide is administered before Reolysin administration begins. This indicates that transient immune modulation may work best.

The study announced yesterday follows this dosage regime. The varying doses of cyclophosphamide given and day minus 3 combined with constant IV Reolysin from day 1 to day 5 at 3x10th TCID 50 per day, which is a standard IV dosage.
The primary goal of this study is to measure the minimum dose of cyclophosphamide that cause immunomodulation measured in number of indicators including anti-body levels, T and B cell responses to determine when immunomodulation occurs. This is one of the studies that if successful will be heralded as a major breakthrough.

Turning to our review of our ongoing monotherapy trials, we are continuing to enroll patients in our phase I component of our glioblastoma in the US. The phase II sarcoma in the US is all also actively enrolling.

Enrollment in the NCI sponsored phase II melanoma study should commence in the very near future as NCI filed its protocol with the USFDA this past spring. Our combination therapy studies continue at pace as well, as noted at the AACR meeting today in San Francisco, we have one patient left to treat in our UK-phase Ia/Ib trial testing intratumoural administration of Reolysin in combination with radiation. We issued a news release on September 28th outlining positive interim results of that trial study and further results of that Ia/Ib trial are being presented at the AACR conference as we speak.

UK phase II combination trial testing local delivery of Reolysin in combination with radiation is also ongoing. Enrollment in the dose escalation component of our three drug combination studies in the UK is also continuing. Once the dose escalation components are completed, we’ll move directly into constant dose cohorts for all three studies.

As we said in the past the goals not only to come up the product as efficacy, but one that is commercially viable and can be produce a commercial scale. From this basis we have advanced our manufacturing initiatives parallel to clinical development of the product. Recently we have completed the initial scale up of our manufacturing process to 100 liters, which is for us commercial scale.

Through the exercise we have instituted a number of process improvements that have resulted in increase of total yield. Once we have confirmed this data will be reporting on the specific results of the 100 L scale. That concludes my comments today. I’d like to thank you for your time and attention this afternoon and remind you that this presentation will be archived on our website for 90 days. Operator we are now ready for questions.

Operator Luke: Ladies and gentlemen will now conduct the question and answer session. Your first question comes from David Miller from Biotech Stock Research, please go ahead.

David Miller: Hey good morning guys from the AACR conference. Thanks for having the call and updating us. The first question I have is that with the result that you are seeing in and combination with particularly cyclophosphamide is that… at what impact will that have on the trials are ready have running or what trials you might launch next.

BT: That's a very interesting question, if you can parallel the results we saw animals to humans using cyclophosphamide in combination with Reovirus I think you're going to see a...and I hate to say this because I think it cliché…a major paradigm shift in the viral therapy area.

What we're faced with is a relatively good response rates with the product as a monotherapy. And if we've prove that for this study as a monotherapy it certainly would be more than suitable to carry on and get the product approved. But it would always be less than the theoretical and the use of immune modulators is in our opinion and many other people’s opinion a possible way to push these responses up to the theoretical maximum. If we get that it's going to entail a complete rethinking of this whole viral therapy area. If you are getting response rates up to what like what we are seeing in animals. We have a bit of a conundrum because then you have a new therapy coming through that will be completely competitive with frontline therapies all by its self. I think we'll be a little bit reluctant to combine cyclophosphamide, Reolysin and say anyone of the taxhol in one cocktail. So our plan would be if the results are as we hope they are in the cyclophosphamide study to move directly to a fairly large phase 2 study and then really pin down what a registration path would be with that.

DM: You've done some humans with this combo though haven’t you with Reolysin they’ve got some cyclophosphamide, or no?

BT: No, we have not. In some of our other studies have immune modulation by default, if you want to think of it that way. Certainly radiation co-therapy, sterilization of immune system if you want to call it that in the radiation field. When you look at antibody responses radiation study, which is now out, you don't get nearly the antibody responses with Reolysin combined with radiation than you would with Reolysin alone. Also things like gemzar immune modulator…and we are conducting a study in the UK so we have a number of “immune modulation-ish” components going on in existence. But this one is the first deliberate attempt to directly modulate the immune system at dosages that are clearly sub-clinical for cyclophosphamide as a chemotherapeutic. This is directly interfering with the immune system in a way that should result, again if it mirrors the animal model, in some very interesting clinical responses.

DM: So the key mechanism of action here that you think is that is something as simple that it down regulates the antibody response so you're just not having as many of your viral particles mopped up by the immune system.

BT: I think we have a lot of correlation but no causation in the immune data we have to date. I’m not sure if antibodies are or a non-antibody B-cell subclass or one of those T-cells subclasses that we are down regulating.

As you know, a lot of immune modulators down and up regulate certain classes simultaneously. That certainly the case…it's one of those things that I don’t think we’ll see until we look for it. And for all I know the first signal that we’re getting is that we’re seeing very different clinical responses and we’ll have to backtrack to find out what it is.

This is really groundbreaking work, this particular study, I think it will get us away from the correlation and get us into the causation specifically in the immune system.

DM: You also mentioned that 100L scale up going, congratulations on that, I know that was a big stepping stone for talking to partners. Can you go over again what's next in that process and how soon the manufacturing lots from that we’ll be seeing in the clinical trials.

BT: We’re currently working at the 40L scale with our first clinical lots starting to come through with that…which is, we were working at the 20L scale before. The key for us is for the manufacturing to get up to that level is actually two purposes. One is thinking ahead towards future sales of course. And as you know with biologics a lot of the process look interesting in the clinic, but then people can make them or they cost too much or something like that or they are not reproducible.

So we've spent a lot of time and energy specifically on that for the long term view. The medium term view is to produce enough clinical material to support very large scale studies which are coming right up to the gates now. And one 40L batch, just as an example, is enough to crank out more than 20,000 dosages for our maximum IV dosages. Assuming we near those at the 100L scale we can run a pivotal study on a 100L run. And that’s critical. Critical supply in biologics is often constricting factor in enrollment, and we won't have that.

The third part of course is the partnering. Partners are shy at the biologic processes and they like to see it at a commercial scale. A 100L should be to commercial scale for us a 100L facility would crank up between a million and a million and a half dosages per year just out of a single tank. And that’s certainly enough for a launch of a product.

DM: Alright, and just make sure that I’m certain about this, you have produced at the 100L scale?

BT: We’ve done our initial 100L run and we are just re-doing it, because we have to confirm these things. Once does not a process make. Twice does. So later this year will be completing that work and will certainly announce the final data off of that. And to finish off your question (then we’ll transfer over), we’ll do clinical lots, the expectation is we’ll do our first 100L clinical lot in 2008.

DM: Thanks very much for answering my questions.

BT: Thank you.

Luke: Your next questions comes from Joe Pantginis from Canaccord Adams

Joe Pantginis: Hi Brad, good afternoon, thanks for doing the call. A couple of quick question, really sort of tied together, granted pivotal programs, etc., will be driven by the data, and you know, the new cyclophosphamide study, but with that in mind can you give us an idea of what your initial commercialization strategy might look like and just tying into that can you remind us again, what your partnering strategy is up to date right now. Thanks a lot.

BT: As we talked about before, one of the good and bad things about Reolysin is that it’s very broadly active within each cancer indication and is apparently synergistic with virtually everything at least in the lab, which complicates your clinical studies in the early days. Presumably when we get it approved it would be lovely to have that kind of activity. So what we’ve done is set up a clinical program that…basically the two sides of the coin. We’ve picked on the monotherapy side, I would certainly focus time and attention on the registration paths on the sarcoma study. It’s one of the few monotherapy areas where I could believe that we can actually make Reolysin the standard of care for particular indication. Patients with sarcoma that have pulmonary involvement don't have a standard care. So something coming through could be considered that. For the rest of the world, for the rest of things, we have to be looking into being incorporated with existing standards of care. And certainly the results from the three drug combination studies that are ongoing in the UK, plus the radiation combination therapy, will lead toward registrations paths and we believe that probably two of those will be ready to move on to the registration paths. It's really hard to anticipate which of the drug combinations. I’m pretty comfortable that there is a radiation co-therapy registration path. So you’re looking at a monotherapy, probably in a sarcoma, or a related disease. The combination with radiation moving in and one of the drug combinations. Again, as you just said the wild card is the cyclophosphamide study. If it doesn't work I will be glad that we had done it, because then we know that immune modulation at least of that kind doesn’t make a difference. And that’s just important to know. I think it would bother me for the rest of my life if we didn’t try it. It’s too enticing to see what a difference it makes. Because if it looks like it does in the animals then would be very very glad we did it. If it works on up side then all bets are off. It will really change our thinking about everything.

With respect to partnering people that we talk to are being consistent with what they would like to see out of this program from the very start. They want to see that we can make it, the product, they want to see if we can generate an IP base, the want to see that it’s safe in relatively large number of patients and we’ve certainly passed that milestone. And to see a variety of early phase II data, which we’ll have for people starting next year. I would anticipate that once we have that data in hand than then that process will proceed as we all hope it does.

JP: Great. Thanks Brad.

Luke: Your next question is a follow up from David Miller of Biotech Stock Research

DM: What’s the timing and the starting of the cyclophosphamide combo in humans.

BT: Starting from when the first patients enroll?

DM: When will the trial start and when will we see data?

BM: well we actually have more…we’ve paralleled tracked a lot of the approvals that you have to through in the UK, along with MHRA. I think that one or two committees left to go through. We have site initiations scheduled for next month. So, one would hope that we would be in enrolling certainly before Christmas. And I think given the interest sites have expressed in this. I know they are already looking for patients, enrollment should go fairly expeditiously. The big question is at what dosage do you see any modulation at. If you see it in that first cohort it would be done after those three patients. I mean we will enroll more patients at that constant dose but you'll be moving straight into a phase II very quickly. So it really depends on that dosage and I think we’ll be kind of wanting to report on it on a regular basis, in real time, because there is a huge amount of interest in this particular study. I have more were people look over my shoulder for this study that I ever thought possible. It's just a really interesting study and all the other viral companies of course are interested in its outcome too, because if it works out then expect you’ll see this kind of thing incorporated in other people’s therapies as well.

DM: Great thanks.

Luke: Dr. Thompson, there are no further questions at this time please continue.

BT: I’d just like to thank everybody for their time and attention. I know especially for all those people down at AACR down in San Francisco would have to take time out from other meetings to come and listen to the call. Again, if anybody has any comments or questions. They’d like to direct off line. They can contact us at Oncolytics Biotech Inc. would be happy to discuss anything. Thank you for your attendance.