ATLAS-IT-05 has now recruited 20 patients and results from all patients should be available soon. Most patients have received two to three lines of prior treatment, including several with two different checkpoint therapies, so the expected response rate from treatment with pembrolizumab alone would be low (see our discussion of this and comparison benchmarks in the initiation coverage).

The first data to be available is typically objective response rates. Two scans are necessary to confirm a response, with at least four weeks between them. In this case, the first scan after trial initiation will be after six weeks, then every nine weeks, so there is potential to measure a first confirmed response from all patients within the year. However, often a longer period of treatment is necessary to achieve a response, with the tumours shrinking until the 30% threshold is achieved. Median progression-free survival figures in second-line melanoma are usually short (2.7 months for ipilimumab alone in SWOG S1616), which might also be available this year, though the later the better. An interim readout from a smaller number of patients will be presented at ESMO in October. A decision on whether to include an additional 20 patients to arrive at a total of 40 will be based on an interim readout from slightly more than 10 patients. We believe this expansion will be necessary to draw firmer conclusions about efficacy.

The new trial in adjuvant melanoma will be called ATLAS-IT-06. It will be conducted in Norway at Oslo University Hospital, Radiumhospitalet. As it is a sponsor investigated trial, the costs for Lytix are low. The setting is similar to that of Verrica's study in basal cell carcinoma, as the object is to shrink the tumour size before surgery. It is not yet metastatic. However, often there are undetected micrometastases, leading to recurrence for many patients even though the main tumour was removed. A potential effect of LT-315 in this setting is the removal of residual cancer cells, such as micrometastates, which could prolong the life of the patients (recurrence-free survival is a typical endpoint here). Checkpoint inhibitors are used in this setting for this reason. In ATLAS-IT-06, LTX-315 will be combined with pembrolizumab (which Lytix will not have to pay for as it is an investigator sponsored trial).

LTX-401 is ready for a phase I study, but the application is on hold as the company’s cash position does not admit two simultaneous studies. Rather, Lytix focuses on LTX-315 and will continue with LTX-401 when the financial situation admits it. As financing is challenging for biotech companies right now, this is clearly the correct prioritisation.  

There has been a recent decline in the interest in oncolytic viruses among larger pharmaceutical companies, due to a history of failures. One would therefore be interested to know what the sentiment is concerning oncolytic molecules. In the conference call, the management of Lytix stated that they do not experience this lack of interest in their programs. Although Lytix’ molecules are also called oncolytic, they are in fact a different class of drugs. They are small molecules or peptides, while viruses are living organisms cultured in cells and dependent on replication in cancer tissue as their mode of action. This means their mode of action and production are quite distinct from oncolytic molecules. The administration of oncolytic molecules is also much less problematic, as there can be immune reactions against viruses but not oncolytic molecules. We agree with Lytix that their candidates represent a distinct class of drugs. However, it is important that potential partners also appreciate this.

Total operating expenses were NOK-34m in Q2, a sequential increase from Q1 (NOK-25m). This is the highest quarterly expense since 2021 as all sites are now open and a large number of new patients have been recruited. If the expansion cohort with 20 new patients is recruited, costs will likely remain high; otherwise, they should drop off as patients progress or die. The cash burn in the quarter was NOK-26m with positive working capital effects of NOK4m resulting in a cash position of NOK100m (NOK126m) that will last well into 2024.

The interest from investigators demonstrates that LTX-315 has potential in more settings than just advanced melanoma. We have included sarcoma, head & neck cancer and triple negative breast cancer in our valuation of LTX-315 to capture this potential. We therefore do not include adjuvant melanoma as an indication yet, since we believe this would overstate the potential and valuation of LTX-315. As new data is generated, we will reconsider this.