Zacks Small Cap Research – OTC Markets Hosts Virtual Investor Presentation with Christian Kanstrup, CEO of Evaxion Biotech, and Brad Sorensen, Senior Analyst at Zacks SCR – Technologist

NASDAQ:EVAX

Anthony Kraus: Hello, and welcome to Virtual Investor Conferences. My name is Anthony Kraus and on behalf of OTC Markets, as well as our co-host, Zacks Small Cap Research, we’re very pleased you have joined us for our next live presentation from the Evaxion Biotech. Our session will be moderated by Brad Sorensen, Senior Equity Research Analyst with Zacks Small Cap Research. Please note you can submit questions for the presenter in the box to the left of the slides. You can also view a company’s availability for one-on-one meetings through the Schedule Meetings tab found on the conference platform. At this point, I’m very pleased to welcome Christian Kanstrup, Chief Executive Officer of Evaxion Biotech which trades on Nasdaq under the symbol EVAX. Welcome, Christian.

Christian Kanstrup: Thank you so much.

Brad Sorensen: Great to be here. Thanks for joining us. Full disclosure, I cover Evaxion, and I’m really excited about the story they tell. Hopefully, you guys have read some of the research that I put out because it’s a really exciting story. One aspect is that I get tired of hearing all of the large model AI stuff and Evaxion actually productively uses AI. It’s exciting to hear that. I’m going to turn it over to Christian and let him give an overview of the Evaxion, and then we’ll go through some questions and answers. If you have questions, just put them in there, and there’s a place where you put them in the chat room, and I’ll get to them towards the end of it. But I’m going to let Christian go ahead and give you an overview of Evaxion right now.

CK: Excellent. Thank you so much, Brad. It is a pleasure to be here and a pleasure to give you a presentation on Evaxion. I’m Christian Kanstrup, I’m the CEO of Evaxion. And who are we? I mean, in essence, we are a pioneer in the fast and effective AI-powered development of new medicines. If you look at us, we have developed a multidisciplinary capability set. We have a state-of-the-art wet lab and animal facilities. We have a broad pipeline. We have a pre-clinical and clinical pipeline across cancer and infectious diseases. We have a business model, which we call our three-point business model. Then, we have a multi-partner approach to value realization with several partnerships in place. The core of the company is our AI platform. We call it AI Immunology, which is a clinically validated and leading AI platform for fast and effective discovery and development of new vaccines.

CK: One thing you should know about Evaxion, which is quite interesting, especially in these days with a lot of talk about AI, is we were actually founded as an AI-first company, and we were founded back in 2008, i.e. long before there was even talk about AI in the broader population. We were founded with the objective of using computational methods to decode the human immune system to address unmet serious medical needs. That has taken us to today, where we have spent the past 15 years developing and maturing our AI platform to the stage we are now, where we are a clinical-stage TechBio. We have a validated, leading AI platform, AI immunology, for fast and effective vaccine-targeted discovery, design, and development. Currently, it’s trained in cancer and infectious diseases. Our purpose is quite simple. It is saving and improving lives with AI immunology.

CK: What’s also important to know is, of course, we are targeting significant unmet needs in large markets, being in cancer and infectious diseases. Today, we have 10 million annual deaths a year due to cancer. We have 8 million annual deaths a year due to infectious diseases. It’s very clear we need more effective treatments for many cancer patients despite all the advancements we have seen over the past years. We also have many infectious diseases where we have no approved vaccines today. I can mention that aureus, gonorrhea, or CMV, and that’s especially a problem because antibiotic resistance is continuing to increase. In terms of the markets say, if we look at the immunotherapy market within cancer, where we are as well, it’s going to be at almost 300 billion market by 2030. The metastatic melanoma market, where our lead candidate EVX-01, the personalized cancer vaccine, is in phase II.

CK: That’s going to be a $7.5 billion market by 2030. The infectious disease market alone will be around 70 billion by the end of this decade. So, look at us as an AI platform for fast and effective discovery and development of new vaccines within cancer and infectious diseases targeting significant markets. Our strategy is a three-pronged business model we use to execute our strategy. The core is our AI e-knowledge platform. Then, we have three prongs. One is called targets. It’s around a multi-partner approach focusing on either single or multiple vaccine target discovery, design, and development agreements. We collaborate with Merck or MSD. It’s now called Part of the World, where we 2023 entered into a discovery and development collaboration for an infectious disease with a significant unmet need. We have the pipeline where we are focusing on bringing forward our own select high-value programs into major value inflection points. And here we actually, just during the weekend, presented a one-year clinical phase II data on our lead acid personalized AI-designed vaccine EVX-01 in metastatic melanoma.

CK: Finally, the third prong we have is responders, which is about harnessing our data and predictive capability to develop responder models. It’s slightly different than both targets and pipelines because this is not as such about a therapeutic product, but this is about utilizing the core capabilities we have in terms of being able to develop responder models. The first model we have developed here is a checkpoint inhibitor or responder model that, with a high degree of accuracy, can predict who are the patients who won’t respond to a checkpoint inhibitor. Being able upfront to identify that a given cancer patient won’t respond to a therapy is, of course, a huge value, not only for the patient getting the patient onto an effective therapy quicker, but also for society because you save costs in insurance and better clinical outcomes.

CK: I want to leave some time for Q and A, Brad. Then I’m just going to summarize the highlights of Evaxion AI immunology. That’s a core platform. Our validated AI platform for vaccine discovery, design, and development. It has a very unique modular architecture with a number of building blocks, which allows for a high degree of scalability. We have a clinical and pre-clinical pipeline, which offers several value triggers already mentioned EVX-01 in phase II, where we just had the first one-year readout. We have several pipelines as it’s ready for partnering. I think it’s also fair to say that the potential in our platform is clearly validated by recent partnerships, including the one with Merck or MSD I talked about, which we went into last year. Not only do we have MSD or Merck as collaborators within AI immunology target discovery and validation, but we also have them as a shareholder.

CK: They are our biggest shareholder, with around 15% of the company. Then we have a number of milestones for this year where we already have delivered successfully on a number of these both across the clinical and pre-clinical assets, which we see set to drive value. The final thing worth mentioning is that we have also been changing our focus from developing and maturing our pipeline to monetizing the assets that we have at hand. That’s a process we started earlier this year where we, based upon the significant and highly exciting pipeline we have developed, have shifted focus outwards and are currently engaged in a number of potential partnerships and discussions aiming at monetizing the assets that we have at hand.

CK: We have the ambition of generating business development income or cash-in this year equal to our cash burn. So, at an exciting time in the Evaxion journey, we have been having a significant head start compared to many of the other AI companies in the sense that we started earlier, and now we are at the point where we are about to monetize on our assets. And Brad, over to you.

BS: All right, thanks. Yeah, it’s a great overview. A lot to dig in there. I think I want to start at a higher level. Actually, we can do that by having you explain the AI and what that has to do with the business, how it develops, how it helps the efficiency of the company and the development of these treatments. But also, there’s some great news this morning that was just released that you can talk about during that response, and one of your platforms has another update. I’m going to just start there because that, I think, is at the core of what you guys do.

CK: Yeah, as you say, it is the core of what we do, right? That’s what the company was founded and based upon. We were founded, as I said, as an AI-first company. Then we have been building all the other capabilities around the platform. We have two parts of the business. One is the cancer, and the other is the infectious disease side of things. Essentially, this is about being fast and effective in developing novel vaccines. For instance, if we look at the infectious disease side of business, reverse vaccinology, it takes three years to identify a vaccine target.

CK: And then actually many of those targets identified with reverse vaccinology, they turn out not to be effective targets. With our AI immunology platform and the two modules we have for infectious diseases, we can actually design and discover a target in just 24 hours, i.e., significantly faster than what you do with conventional methods. What’s also important is that we can also discover targets that you can’t find with conventional methods. We have shown how we can outcompete reverse vaccinology. This is only possible because of the high amount of data that we have been collecting, the training of our AI model that we have been enabling a high degree of predictability and ability to predict and select the right targets when the cancer side of the thing of the business. Then we’re talking about personalized cancer vaccines. And here, of course, if you have to design a cancer vaccine for the individual patient, then speed is of the essence. When you get cancer, you want to have therapy as quickly as possible.

CK: And if you have to spend a lot of time designing the therapeutic with conventional methods, that won’t enable an effective therapy for cancer patients. With our pioneer model, which is the prediction model we are using for cancer, we also, here, in 24 hours, can identify the exact right targets that need to go into a personalized cancer vaccine. So, in essence, it enables speed, a high degree of accuracy, and predicting and selecting the right targets.

CK: That brings us back to the news that we had out today around the model, which is called EDEN. We use this model for bacterial and infectious diseases. Today, at a conference in Finland, we launched an upgraded version of this EDEN model aiming at one thing: being able to predict the right targets even better and also predict toxins.

CK: Toxins are a very important target for infectious or bacterial diseases. And now, we have expanded the model also to cover this target. Then that’s what we have been doing for the past 15 years. We have constantly been developing and maturing the models and spending a lot of time validating the model, both from a clinical point of view and a pre-clinical point of view. It is about making these constant learning loops where you feed the model with the new data, with proprietary data, with public data, to increase the predictive capabilities of the model.

BS: Yeah. I think I want to go back to something you said at the beginning and point that out, that this company isn’t just from the last year or two when the AI’s gotten a lot of press. This was 14 years ago, and these models have been developed. As Christian said, they learn. We all know that AI models one of their features is learning from going through these things. They’ve had 14 years of experience and data and everything else.

BS: There are two questions on this, and then we’ll get to more specific treatments. But one is, with partnerships, are other companies looking to use your AI models? Are they looking to use your data? Are you looking to combine data? Are they looking to run their data through your model? Is there… Or how is that? Or is it all of the above?

CK: I would say the main interest we are seeing, and that’s also where we are focusing, is twofold. It’s either on new target discovery collaborations, just as the one that we have with Merck where we are using our platform to discover and design new vaccine candidates. Again, back to your point from just before, we have been training and working with the model for many years. On top of that, as I also said in the beginning, we have our own lab. We do have our own animal facility.

CK: That also means we have a very efficient process for generating our proprietary data. Whenever the AI team makes some predictions for a novel vaccine candidate, we can go straight into the lab, design the vaccine, go straight into the animal facility, and test it out. That has meant that we have this process where we can continuously feed our models the new proprietary data. That is also what attracts potential partners. We can be a one-stop shop from the early discussions around a given infectious or bacterial or viral infectious disease to discovering a possible target against that and doing all the early development. We are seeing interest from partners in target discovery collaborations.

CK: The other thing is also fair, Brad, to say that we are seeing a lot of interest from potential partners in our existing pipeline assets, which are all AI-derived vaccine candidates, as I said, clinical states cancer pipeline, and a super exciting pre-clinical states infectious disease pipeline. It’s a fairly broad-based interest, but we are not looking to partner around the data itself. I mean, we have, of course, a number of collaborations around data. Still, it is around the vaccine candidates and all the discovery of novel vaccine candidates that we are focusing on from a partnership point of view.

BS: Okay. Great. Then, last question on the broader AI models: have you had, or has your company had, or do you know of discussions with the FDA that would, because of the capabilities of AI, maybe shorten the approval process or require fewer human trials or something like that? Anything like that?

CK: Yeah, we have had multiple discussions with regulatory authorities in different parts of the world. Also, of course, given that we are running EVX-01, which is being run in Europe and Australia, just as we have a fast-track designation from the FDA. So, as such, I don’t see it necessarily shortening the development of, say, a phase III trial. However, regulatory authorities are also interested in how to encompass AI within the current regulatory framework.

CK: I think that the general view is that this will be the future. We need to make sure that we also account for that from a regulatory point of view. But I think that the fact that we have the FDA fast-track designation for EVX-O1 also shows that there’s no concern from, for instance, the FDA as to this AI-derived vaccine candidate.

BS: Yeah, the FDA is sometimes slow to come around to these things, but I’m glad you’re on the cutting edge of letting them know what’s happening. Any investor that’s listening that is involved with this knows that’s an understatement. I’ve buried the lead here, but there’s really exciting news from testing, getting more granular and specific treatments that you’ve had. Do you want to detail the announcement from earlier late last week, on EVX-01 and tell investors what that means?

CK: Yeah, I’d be happy to. To recap, EVX-01, that’s our lead candidate. It’s a personalized neoantigen vaccine in Phase II development for metastatic melanoma. You should see metastatic melanoma as the first indication. The concept of a neoantigen-based cancer vaccine would apply to many solid tumors. Here, we have conducted a Phase I-II trial, which we reported last year, which showed very strong data. We had a 67% overall response rate in that Phase I-II trial and a strong immune response across the different patients. And, of course, with so strong Phase I-II data, you’re always a little bit concerned going into your Phase II trial and having the first clinical readout, which we presented at a conference in Barcelona this Saturday. But we saw a 69% overall response rate in this Phase II trial at the one-year readout, i.e., even better than what we saw in the Phase I-II trial.

CK: So very encouraging data. We also saw that we saw 15 out of the 16 patients had a reduction in tumor size. I would say very strong data confirms that the concept of a personalized vaccine designed for the individual patient based upon neoantigens holds up. Of course, you can say still a smaller population, with 16 patients, for regulatory purposes, you will need a much larger randomized control trial. However, this strong data indicates a high commercial potential of EVX-01 in metastatic melanoma.

BS: Yeah, it was great news, and people suffering from cancer are desperate for that great news. It’s always good to see. Let’s see, where do we want to go next? You’ve also had some good news recently with the EVX-B2 mRNA vaccine. Do you want to outline that? I believe there is a partnership with that.

CK: Yeah, I’ll be happy to. That’s the news we had out mid-last week. EVX-B2 is our pre-clinical vaccine candidate against gonorrhea. Let’s remind ourselves here that there are no approved vaccines against gonorrhea today, and it is a growing health problem across all parts of the world. In late 2023, we entered into a collaboration with a South African company, Atkinson Biologics, to take our peptide-based EVX-B2 vaccine and test it out in an mRNA construct. What we presented last week was a pre-clinical proof of concept for the vaccine candidate in an mRNA construct.

CK: And you say, why is this important? This is important because it shows that our platform, the targets, or the vaccine components that predict are working independently of the delivery modality you have. We already showed our pre-clinical proof of concept for EVX-B2 in a peptide-based vaccine, and now, together with Atkinson, we showed the pre-clinical proof of concept in an mRNA-based construct. That confirms that our platform is delivery modality-agnostic, i.e., it doesn’t matter which delivery modality a potential partner prefers. The targets we predict and select based on the model can be applied in any delivery modality. That’s, of course, important when you look at the different preferences among potential partners. Some prefer mRNA; some prefer DNA. Again, others prefer peptide-based. This is a strong confirmation of the scalability of our AI immunology platform. So, there is very exciting data to get out as well.

BS: Yeah. We’re almost out of time, and I don’t want to bury this because it is a rarity. You might not have heard I cover biotechs, but the vaccine’s goal… I want you to talk a bit about the financials because everybody’s interested in cash burn and the things that accompany your stage. But I heard you say you’re trying to be cash-neutral here this year. If I heard that right, confirm that and talk about cash on hand and how you’re generating more cash.

CK: Yeah, that’s correct. Our ambition for 2024 is to generate business development income or get cash-in equal to our annual cash burn. This would also be a major milestone for the company, given that we have been a cash-burning company for many years. But given the strategic pivot, we made towards the end of last year and have been focusing on accelerating, executing upon this year where we are saying, okay, let’s monetize on some of our exciting assets. Let’s partner with these. With that comes the ambition of being cash-neutral, and we have an annual cash burn of around 14 million US dollars. That’s what we have the ambition of generating in the income. You can say, of course, that business development is always uncertain with whether the deal materializes.

CK: It is ambition, but with a strong interest, that we see from pharma and other potential partners in our platform and pipeline. We see it’s a stretch but still a realistic ambition, so that’s what we’re looking to achieve. Going from being cash-consuming to cash-neutral would be a significant milestone for a company like ours. We are executing our different business development activities very hard to bring in partners to take on the assets and bring those forward. We, of course, have a unique ability to bring new assets into the pipeline with the AI immunology platform, where we can quickly discover novel vaccines and bring them into pre-clinical development.

BS: Thank you. Like I said at the beginning, it’s just great to see a company using AI for beneficial things, and it’s transforming the way you develop. I think this will be the wave of the future, and Evaxion is at the cutting edge of this. We are almost out of time. Are there any last words you want to say to investors? Leave them with some message about the company?

CK: I would say that we are a pioneering TechBio with a truly novel personalized cancer vaccine, in phase II. We have the validation of our platform and what we do by having MSD in as both an R&D partner but also as our single largest shareholder. On top of that, we are at a financial pivot in the evacuation journey in the sense that we have now shifted focus toward monetizing and partnering the assets we have been developing for many years. The fact that we were founded as an AI-first has given us a significant head start compared to many of the newer AI companies today. We are at a super exciting point in the Evaxion journey, and of course, there are always risks and uncertainties, but this is a broad pipeline we have developed with the capability base. I think we are set to execute our strategy well, which is also evident by the number of milestones we have already achieved this year.

BS: I agree with that. Thank you. That’s a great summary, so we have to wrap it up. I will echo that this company has a huge pipeline and is at an inflection point, so I encourage investors to look into it. They have more treatments that we didn’t have time to go through, which are very exciting and promising, and there’s news coming out every day. It’s a good company to follow. I encourage you if you want to know more about the company or if you have other questions, there will be a way after the call that you can set up meetings with company management. I appreciate everybody’s time. Thank you for joining us, and have a great day.

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