Analyst Conference Summary

conference date: November 14, 2019 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2019 (Q3, third quarter 2019)

Forward-looking statements

Overview: Continues clinical development, with VB-111 for ovarian cancer in a Phase 3 trial with an interim efficacy readout expected Q1 2020.

Basic data (GAAP):

Revenue was $0.1 million, flat sequentially from $0.1 million, and flat from $0.1 million year-earlier.

Net loss was $4.9 million, down sequentially from a loss of $4.7 million, and up from a loss of $5.4 million year earlier.

Diluted loss per share (EPS) was $0.14, down sequentially from $0.13, and up from $0.15 year earlier.

Guidance:

Believes has cash sufficient for 2 years of operation.

Conference Highlights:

Dror Harats, M.D., CEO of VBL Therapeutics said "Our OVAL Phase 3 potential-registration trial of VB-111 in ovarian cancer is progressing well and we look forward to an important interim analysis expected in the first quarter of 2020. The interim analysis will be based on CA-125 response, a disease marker which correlated with survival benefit in our Phase 2 study in platinum-resistant ovarian cancer patients. We also look forward to the launch of an investigator-sponsored trial of VB-111 in recurrent GBM and an NCI-sponsored trial in colon cancer, expected before the end of 2019" The prior timeline for the interim data was that it would be reported in Q4 2019.

The Phase 3 trial of VB-111 with chemotherapy in platinum-resistant ovarian cancer continued enrollment as planned. 350 patients will be enrolled with overall survival as the primary endpoint. VB-111 has orphan drug designation in this indication. There will be an interim analysis in Q1 2020, but just for the CA-125 response. Final data from the prior Phase 2 study in ovarian cancer demonstrated a statistically significant dose dependent increase in median overall survival in patients treated with therapeutic dose vs. low dose of VB-111. Current therapies on the market showed PFS, but not OS, so VB-111 could be a superior therapy. In Q4 announced the number of centers for the OVAL study would be increased, particularly in Europe.

We expect the launch of a Phase 2 clinical trial with the National Cancer Institute, of VB-111 in colon cancer in combination with a checkpoint inhibitor, in Q4 2019.

The commercial gene therapy manufacturing facility received certification by the EU in Q2 2019.

An IND application for an investigator-sponsored Phase 2 trial of VB-111 in recurrent glioblastoma (rGBM) went into effect with FDA. The IND was submitted by Dana-Farber Cancer Institute. Details on the trial will be presented at the upcoming Annual Meeting of the Society for Neuro-Oncology, November 20 - 24, 2019. Despite the failure of the earlier Phase 3 trial, we see renewed interest from the oncology community in the potential of VB-111 to treat recurrent Glioblastoma (rGBM) based on MRI analyses performed by UCLA. This seems to indicate the monotherapy was more effective than the combination therapy used in the Phase 3 trial. Recruitment in two investigator-sponsored studies for VB-111 in rGBM are expected to commence in H2 2019, one with a checkpoint inhibitor, the details of the other were not announced.

In 2018 signed a strategic exclusive option license agreement for VB-201, an anti-inflammatory molecule, for veterinary use, with potential payments to VBL that may exceed 50 million euros during the license term. Partner was not named, nor the upfront payment amount. VBL retained worldwide rights for VB-201 for the treatment of humans.

Has a strong preclinical pipeline. The MOSPD2 program goal is to file an IND in 2020 to start clinical trials. VBL presented more preclinical data on VB-600 MOSPD2 platform at the European Committee for Treatment and Research in Multiple Sclerosis (or ECTRIMS) conference in October 2018.

VBL's gene therapy pharmaceutical grade manufacturing facility in Modiin, Israel, that was established to support the commercial supply of VB-111 for the first indication, was certified by an EU Qualified Person as being in compliance with EU Good Manufacturing Practices (GMP). This will support commercialization of VB-111, if approved.

Development of MOSPD2 antibodies towards IND applications for inflammation and in oncology, expected by year-end 2020. The cancer version will be the bispecific VB-602, the inflamation version a monoclonal antibody.

Cash ended the quarter at $41.1 million, down sequentially from $45.1 million.

Cost of revenue was $0.0 million. Gross profit $0.0 million. R&D expense $3.8 million. SG&A $1.2 million. Operating loss $5.0 million. Other income net $0.1 million. The R&D expense is net of government grants.

Q&A summary:

Timeline change in Ovarian trial interim? Not just futility, looking to compare to Phase 2 trial biomarker. Patient for evaluation must be twice the normal level for CA-125. Need at least 60 evaluable patient. Trying to recruite high CA-125 patients. Delay for interim analysis should not lengthen the full trial. Will be in the last month of Q1. Otherwise the study is going well.

glioblastoma surgery? All patients will have surgery, all 3 groups, all blinded and randomized. After surgery the group that got placebo before surgery will be divided, half to get the drug and half placebo.

Anything to look for in interim analysis besides the biomarker? It is too early in the trial for OS or PFS. A later interim will look at these quite soon, and include a futility analysis, with 100 patients, in 2H 2020. In the first interim we can look at the combined data response rate, and will share that.

Colon cancer trial? Check point inhibitor will be nivolumab (Opdivo).

Fever is considered a side effects, about 40% get fevers, the same as in the Phase 2 trial.

MOSPD2 potential targets? For inflamation we have 2 potential candidates. Pre-clinical data is quite encouraging, will be presented at conferences. Will likely be first to clinic. Seems to work for NASH, but that would be later. We may want to co-develop it with a partner. The oncology bispecific version has done well in preclinical development. Could have a candidate in 2020, hope to go for a completely novel solid tumor candidate.

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