Evaxion Biotech A/S - Earnings Call - Q2 2025

Transcript

Speaker 1

Hello, and welcome to Evaxion Biotech A/S's second quarter 2025 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. I would now like to turn the conference over to Birgitte Rønø, Interim CEO and Chief Scientific Officer. You may begin.

Speaker 3

Thank you for that. First and foremost, welcome to our Q2 2025 business update and financial results. I am Birgitte Rønø, Chief Scientific Officer and Interim CEO of Evaxion Biotech A/S. With me today, I have Thomas Schmidt, Chief Financial Officer, now permanent CFO as of August 1, and Mads Kronborg, Vice President of Investor Relations and Communication. Today, I will start with a short introduction followed by an R&D update, and then Thomas will present our Q2 financial results. Lastly, we are, of course, as always, open for questions. Before we begin, please note that today's presentation contains forward-looking statements based on current expectations, and actual results may differ from this. Since last quarter, we have made significant achievements, and with the partnership with Merck & Co., we are on track towards potential option exercise in the second half of 2025.

Our business development pipeline remains solid and supports the FY targets. However, we do see that the challenging financial markets and increased regulatory uncertainty are impacting deal execution in general. Key R&D events and progress include EVX-01 two-year clinical efficacy data accepted for an oral presentation at the ESMO Congress in 2025. Treatment in the main part of the EVX-01 phase 2 trial is completed, and patients have been recruited for the one-year extension phase. We have also expanded our R&D pipeline with EVX-04, and we'll get back to the details around this. Further, we have received a grant from the Gates Foundation allowing for risk and cost-free application of the platform in yet another disease: polio. On the financial side, we have cash at hand until mid-2026, and we have converted our loan from the European Investment Bank to equity with an immediate increase in equity with $4.1 million.

Since last quarter, we have achieved an additional milestone with the initiation of the EVX-04 program, and we are well on track with the many exciting milestones coming up in the second half of 2025. If we take a closer look at our R&D pipeline and recent progress, we have a very broad R&D pipeline of AI-Immunology™-designed vaccine candidates spanning across two key disease areas: cancer and infectious diseases. Today, I'll walk you through some of our latest progress in key R&D programs. I'll start with our lead asset, EVX-01, our personalized peptide-based cancer vaccine currently in phase 2 clinical development. I would also, as mentioned before, point your attention to our recently added pipeline program, EVX04, a discovery program with the objective of developing a preventive vaccine against group A streptococcus. Lastly, I'll present our progress in our lead program, that is EVX01. Back to EVX01.

EVX01 is, as mentioned, currently in phase 2 and is being developed as a first-line treatment for advanced melanoma. As I mentioned earlier, our upcoming two-year data from the EVX01 phase 2 trial will be presented at the ESMO Congress in October. The ESMO Congress is one of the most important and prestigious medical oncology conferences in the world, and we are very much looking forward to this as it gives us a great opportunity to interact with a global audience, including potential partners. To this end, we are currently finalizing the two-year clinical outcome data for preparing it for the ESMO presentation and partner discussions. As we talked about earlier, we have extended the EVX01 phase 2 study, allowing us to obtain three-year clinical outcome data. During this extension phase, EVX01 will be administered as a monotherapy, allowing us better to understand the vaccine's standalone effect.

The extension involves minimal additional costs as clinical trials remain active and vaccine production is already complete. Furthermore, we are planning to seek advice from FDA around the path to registration for this compound, as we believe that this is important for any potential partner to understand this path. The strategy for the asset remains unchanged, and we are actively seeking partners that can take the compound through the last steps of clinical development towards registration. Another key recent achievement is the grant we received from the Gates Foundation, and in this collaboration, we are applying AI-Immunology™ to design a subunit vaccine against polio. The project is progressing according to plan and in close dialogue with the Gates Foundation and the Polio Program Officer.

This initial grant could potentially lead to further projects and plans with the Gates Foundation or any other partner, as we saw that the announcement of the grant generated significant attention to our platform and pipeline. Further, we are making strong progress in our infectious disease vaccine pipeline, and as mentioned in June, we announced the expansion of the infectious disease R&D pipeline with the addition of the EVX04 program. This program aims at developing a preventive vaccine against group A streptococcus, also called GAS. Development and testing of a potential GAS vaccine has been traced back to 1923, yet no vaccine exists today. We have conducted initial computational analysis, demonstrated that AI-Immunology™ can identify novel vaccine targets to combat the pathogen. We have ongoing and future planned activities that include identification and testing of novel antigens for immunogenicity, functionality, and protection in mouse models and in vitro assays.

GAS infections can cause a broad spectrum of health issues, including severe invasive infection and also the development of immune-mediated life-threatening conditions. There is an increase in antibiotic resistance and therefore a great need for finding novel treatment solutions. With EVX04, we are hopefully able to offer such a solution. Lastly, I will briefly touch upon our EVX01 program. In this program, we are developing a multi-component vaccine for the prevention of CMV infections. We are in early preclinical development, heading towards lead antigen selection in the second half of 2025. We believe that an efficacious vaccine should contain both B and T cell antigens and also glycoproteins that are known to be essential for viral entry. Despite many years of focus, no vaccine is approved for CMV, but with AI-Immunology™, we believe that we can develop an efficacious vaccine that targets the virus from multiple angles.

This multi-target approach stands out from traditional methods that have been focused on a limited set of glycoproteins involved in viral entry. Combating the virus from numerous angles is expected to enhance the efficacy of future vaccines. With our proprietary platform, AI-Immunology™, we are uniquely positioned to optimize already known antigens and further to identify novel B and T cell types. To give an initial insight into the data in this program, we have designed a proprietary glycoprotein B antigen, and that is one of the glycoproteins essential for viral entry that demonstrates superior ability to neutralize the virus. Further, we are currently pursuing top-rank B cell antigens identified with the AI-Immunology™ platform, and initial data demonstrate induction of a potent humoral or antibody immune response in immunized animals.

Several T cell epitope vaccines designed targeting multiple genes in the viral life cycle have been completed, and they all induce a strong cellular immune response. In summary, we do see significant progress across our pipeline in both our oncology and infectious disease programs, and we are well on track for our next milestone. We look forward to updating you as our programs continue to advance. With that, I will give the word to Thomas to present the financial results.

Speaker 0

Yes, thank you, Birgitte. I will now, of course, go through the financial highlights, but we'll start first and foremost with a summary of the agreement that we have made with the European Investment Bank that really fundamentally helps our capital structure. On July 11, we finalized a debt settlement agreement with the European Investment Bank where they converted €3.5 million of the total €7 million loan, and that was converted into equity via a purchase of ordinary Evaxion shares. Our Evaxion shares and the purchase price was $4.87 per ADS, representing an 89% premium versus the closing stock exchange on July 11. That immediately, also in July, then increased our equity by $4.1 million, and also then, of course, both simplified our balance sheet and certainly reduced our overall liabilities.

Furthermore, also looking forward, it improves our cash flow and certainly also the repayment, of course, that we need to do at the end of the loan agreement in 2028. All in all, a very good agreement that we have reached with the European Investment Bank. As mentioned, as the agreement was done in July, it is, of course, not included in our Q2 financials, but will eventually be once we get to Q3. Q2 financial highlights. First and foremost, our cash position is at the end of June: $14.7 million. With an operating cash burn that we still expect to be around $14 million, that also means that we have cash in hand to fund operations until mid-2026. Important to note, that takes us past the potential option exercise by MSD and also past our two-year data readout on our EVX01 study.

Overall, our overall spend was reduced in Q2 2025 compared to the same period last year, which mainly reflects project timing. We still expect for the full year to be at a similar level versus last year from a spending perspective also. Total equity end of June of $6.2 million obviously strengthened compared to the end of last year due to the capital market activities we've done in the first half of the year. Again, this will further be strengthened in July as we have the agreement registered with the European Investment Bank. Our Q2 profit and loss statement shows an operating loss of $4.3 million, which again compares to $4.6 million in the same period last year. R&D project costs are expected to increase in the second half year, in the two coming quarters, while we still expect operating expenses in line with 2024.

This also means that we expect, as mentioned already, the operational cash burn of approximately $14 million for the full year 2025. Our net financial expenses of $4.7 million in Q2, compared to $1.8 million net financial expenses in Q2 last year, in both years driven by reassessment of our derivative liability. Important to note is that the derivative liability in 2024 came from the February public offering in 2024, while this year it comes from our January public offering. Two independent and different derivative liabilities. Our net loss for the quarter of $4.8 million compared to a net loss of $6.2 million same period last year, and the main difference is exactly the difference in net financial expenses. That's the driver behind that difference.

Turning to the balance sheet, our equity of $6.2 million, it certainly further will be strengthened in July or has been strengthened in July as we have booked the conversion into equity from the European Investment Bank. A derivative liability from the public offering, as mentioned in January 2025, net impacts our equity of $0.4 million as of the end of June. Cash at hand was $14.7 million. It is really important to note that this gives us a cash runway until mid-2026. Both past our potential MSD option exercise and past our EVX01 two-year data, but also importantly, the cash runway projections into mid-2026 do not yet include the potential MSD exercise or any new business development deals. Both will, in that case, further extend our cash runway. With that, I hand it back to Birgitte for some closing remarks.

Speaker 3

Thank you, Thomas. Lastly, as conclusive remarks, I would like to highlight that we do have a strong operational momentum, and we are tracking towards several potential value catalysts. Business development remains a key priority, and multiple parallel partnership discussions are currently ongoing. As Thomas mentioned, we have cash at hand until mid-2026, and that takes us, as Thomas also explains, beyond the EVX-01 two-year data and the potential MSD option exercise. With that, I would like to thank you for your time and your attention, and we'll be happy to answer any questions.

Speaker 1

Thank you. Ladies and gentlemen, as a reminder to ask a question, please press *11 on your telephone, then wait for your name to be announced. To withdraw your question, please press *11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Thomas Flaten with Lake Street Capital Markets. Your line is open.

Speaker 2

Good morning. Good afternoon. I appreciate you taking the questions. Birgitte, I was curious if you could maybe detail for us what remaining steps are there in the process for Merck & Co. to make a decision on whether or not they want to option either or both of the programs?

Speaker 3

Thank you for that question. We have been running one of the collaborations, the EVX-B3, since September 2023. We entered into this R&D collaboration, and there's been a lot of very exciting data generated under this collaboration. We are currently, according to the plan, timelines are kept, and we are heading towards the conclusion here in the second half of 2025. The EVX-B2, this is more a type of, I would say, evaluation collaboration. MSD has been looking into our data and been conducting some studies on their side. We are on track in terms of timelines and also heading towards this conclusion in the second half of 2025. All in all, it looks very promising, and we are progressing according to the plan.

Speaker 2

I appreciate that. One final question. If you look at the business development conversations you're having, are they primarily on the infectious disease side? Is there some oncology interest? Can you maybe just give us a sense of what those discussions look like?

Speaker 3

Yeah. No, it's across the R&D pipeline and assets across the two therapy areas and also centered around what we call target discovery collaboration, where we apply AI-Immunology™ and find novel targets for a certain pathogen. It's a mixed picture at the moment, but definitely dialogues across. Some are more mature than others, and I think that's just the name of the game. Of course, I know there's a lot of curiosity around this, but as you know, we cannot say a lot about this until there is a signed contract. We remain optimistic and do see also new dialogues starting.

Speaker 2

Got it. I appreciate you taking that question. Thank you.

Speaker 1

Thank you. Please stand by for our next question. Our next question comes from the line of Charles Wallace with HC Wainwright. Your line is open.

Speaker 2

All right. Thanks for taking my question. This is Charles on for RK. I had a question about the data at ESMO coming up. How will the two-year data, like the clinical outcomes, compare to the one-year data that was presented? How many of the patients from year one will be seen in the two-year data? Also, with the extension to the third year, how many patients will you enroll additionally? Thank you.

Speaker 3

Hi, Charles. Thank you for those questions. We have not yet disclosed the two-year data for EVX01. You have to be a bit patient here. We have, of course, since our last update of the clinical data, the one-year data, gathered additional information and scans, etc., of all the patients. We still have 11 patients active in the trial. A lot of the patients are faring extremely well. More to come on this. For the extension phase, it's a subset of the patients that have now consented to participate in this additional year. They will receive two doses of EVX01 without concomitant pembrolizumab treatment. This allows us to look further into the mode of action of EVX01 without having this background of the checkpoint inhibitor. We have not yet said a lot about how many patients, etc., because there's still, yeah, we will come back with more information on this.

Speaker 2

Perfect. Thank you for taking my questions.

Speaker 3

Thank you.

Speaker 1

Ladies and gentlemen, as a reminder to ask a question, please press *11 on your telephone. I'm showing no further questions in the queue. I will now like to turn the call back over to Birgitte for closing remarks.

Speaker 3

Thank you for that. Finally, I would just like to say thank you for all of you participating in this business update and financial result. We are, of course, as always, looking forward to updating you on the further progress. Thank you.

Speaker 0

Thank you.

Speaker 1

Ladies and gentlemen, that concludes today's conference call. You may now disconnect.